Agricultural Policy Monitoring and Evaluation 2020

26. Turkey

Support to agriculture

Since the 1980s, transfers provided by the government have comprised more than 20% of farmers’ revenue, with most of this support directed at influencing the market price of agricultural products. Total support to agriculture has been as high as 4% of GDP, but has declined as the importance of agriculture in the overall economy has diminished and is now about 1.5% of GDP.

The level of support in Turkey fell in 2018 and 2019, driven mainly by reductions in market price support (MPS) resulting from a depreciation in the value of the Turkish lira. The reduction in MPS has been partially compensated by increased premium payments, which cover the difference between target and market prices. Those for cereals doubled between 2018 and 2019. The largest amounts of these premium payments for cereals are for wheat and barley, but rye, oats, and paddy rice also saw premiums double in 2019.

Despite the recent reduction, MPS still accounts for two-thirds of the estimated support provided to producers in Turkey. Premium payments, especially for cotton and wheat, acreage payments to reduce the cost of diesel and fertiliser, and subsidised insurance coverage for crops and livestock are the most important budgetary payments providing aid directly to farmers.

Expenditures on infrastructure development for irrigation are the largest form of support for general services benefitting the sector overall (GSSE), amounting to 75% of the GSSE. Financial support to state enterprises involved in commodity marketing is the other major form of such indirect support.

Main policy changes

The Eleventh Development Plan covering 2019-23 was established in July 2019. As for past Plans, its main objective is to develop an efficient agricultural sector that is environmentally, socially and economically sustainable. The Plan sets a number of measures and targets to be achieved by 2023, including increased production of red meat and oilseeds, land consolidation and use of irrigation.

The 2019-23 Strategic Plan of the Ministry of Agriculture and Forestry (MoAF) was also established in line with the Development Plan. It sets seven strategic objectives for the agricultural sector, including increasing food production, quality and safety.

Turkey's National Strategy Document and Action Plan on Prevention, Reduction and Management of Food Losses and Waste were prepared in collaboration with the FAO in 2019 as part of a new global initiative called the “Save Food” campaign.

Assessment and recommendations

• Currently, many commodity marketing enterprises established by the government require regular capital infusions. To put them on a more self-sufficient footing, the government could consider reforms to their operating conditions to allow more independence and flexibility. Allowing farmers more options to make use of other marketing channels can also impose more financial discipline on these firms while giving farmers additional flexibility to take advantage of market opportunities.

• The most important form of support to farmers is market price support. This is among the most distorting forms of support and a relatively inefficient way of supporting the incomes of farmers. A better option could be to help farmers obtain financing for investment and to deal with financial risk in the context of exchange rate uncertainty.

• Turkey allocates a relatively small share of spending on investments in innovation, services to farmers to help them improve their farming practices and education and training for farmers. Given the low estimates for productivity growth in agriculture, a greater emphasis on these essential services should be considered.

• Policy objectives currently mainly target production levels. Greater emphasis on improving productivity and efficiency in the context of environmental sustainability would likely yield better long term results for the sector.

• Turkey’s Nationally Determined Contributions (NDCs) to the 2016 Paris Agreement aims to reduce emissions by up to 21% compared with business as usual projections by 2030. There are no specific targets for agriculture and no current policies designed exclusively to reduce emissions from agriculture. Turkey has noted that plans will be made to reduce emissions via fuel savings, rehabilitated grazing lands, controlling the use of fertilisers and supporting modern practices including minimum tillage.

Policy responses in relation to the COVID-19 outbreak

Agricultural policies

Turkey’s Ministry of Agriculture and Forestry announced several measures or expected measures on 29 March 2020 to ensure that seasonal workers can continue to work. Agricultural workers will be provided with hygiene and personal protection products and allowed to travel to agricultural areas in order to take up work. Conditions for transportation and housing of seasonal workers are to be regulated.

Application deadlines for crop production supports for cereals and legumes have been extended to 29 May 2020. Application deadlines for oilseeds and olives, organic agriculture and good agricultural practices have been extended to 30 April 2020.1

The ministry has suggested that farmers refrain from using domestic or urban untreated wastewater for irrigation due to the potential for contamination by COVID-19. A guidance document on reuse applications of wastewater was released on 10 April 2020.2

Turkey has subjected lemons to export control amid a rising domestic demand due to the coronavirus pandemic. The restriction beginning early April 2020 will continue until the end of August 2020.3

The government of Turkey cut the custom duty to zero for 100 000 tonnes of paddy rice imports until the end of May.4

Agro-food supply chain policies

Measures will be taken to ensure access to agricultural inputs such as fertilisers, seeds and medicines or to prevent problems in distribution. To do this, stock control and inspection will be carried out at fertiliser dealers.5

Figure 26.1. Turkey: Development of support to agriculture

Note: * Share of potentially most distorting transfers in cumulated gross producer transfers.

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Support to producers (%PSE). For the past thirty years, support to producers has been above 20% of gross farm receipts (%PSE); it only recently declined below that amount in 2017-19 as exchange rate movements effectively reduced market price support (MPS) rates. Most support to producers is provided through MPS, one of the potentially most distorting forms of support and arising from market interventions, including export subsidies which are provided for processed fruit and vegetables, poultry meat and eggs (Figure 26.1). Single Commodity Transfers (SCT) for beef, sunflower seed and potatoes are more than 40% of commodity-specific gross farm receipts (Figure 26.3). Domestic prices were about 12% above world prices in 2017-19. Overall, total support to agriculture (TSE) represents less than 1.5% of GDP, but this ratio has been much higher in the past. Most of the support other than market price support is provided for the irrigation infrastructure. The PSE has reduced in 2019, driven mainly by higher effective border prices and a reduced price gap due to the aforementioned exchange rate depreciation (Figure 26.2).

Figure 26.2. Turkey: Drivers of the change in PSE, 2018 to 2019

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Figure 26.3. Turkey: Transfer to specific commodities (SCT), 2017-19

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Table 26.1. Turkey: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2017-19	2017	2018	2019p
Total value of production (at farm gate)	18 343	22 169	52 832	58 884	52 390	47 222
of which: share of MPS commodities (%)	55.0	70.6	65.9	67.9	64.8	64.8
Total value of consumption (at farm gate)	14 075	18 581	37 852	41 545	37 707	34 305
Producer Support Estimate (PSE)	4 304	5 922	9 701	14 163	8 245	6 695
Support based on commodity output	3 419	5 034	7 997	12 283	6 481	5 228
Market Price Support1	3 408	4 719	7 101	11 185	5 716	4 403
Positive Market Price Support	3 412	4 726	7 153	11 340	5 716	4 403
Negative Market Price Support	-3	-8	-52	-155	0	0
Payments based on output	11	316	896	1 098	765	825
Payments based on input use	885	426	662	817	754	415
Based on variable input use	850	302	419	526	395	337
with input constraints	0	0	0	0	0	0
Based on fixed capital formation	19	116	237	285	354	74
with input constraints	0	0	0	0	0	0
Based on on-farm services	16	8	6	7	5	5
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	0	25	1 042	1 062	1 011	1 052
Based on Receipts / Income	0	0	213	234	219	185
Based on Area planted / Animal numbers	0	25	829	828	792	867
with input constraints	0	0	154	187	130	145
Payments based on non-current A/An/R/I, production required	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	436	0	0	0	0
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	436	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	0	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0	0
Percentage PSE (%)	22.7	24.0	16.8	22.9	15.0	13.5
Producer NPC (coeff.)	1.23	1.26	1.14	1.22	1.11	1.10
Producer NAC (coeff.)	1.29	1.32	1.20	1.30	1.18	1.16
General Services Support Estimate (GSSE)	333	3 507	1 824	2 395	1 686	1 390
Agricultural knowledge and innovation system	67	29	106	156	91	70
Inspection and control	51	67	13	3	20	16
Development and maintenance of infrastructure	22	513	1 314	1 644	1 240	1 057
Marketing and promotion	95	2 888	391	591	336	247
Cost of public stockholding	0	0	0	0	0	0
Miscellaneous	99	11	0	0	0	0
Percentage GSSE (% of TSE)	7.4	37.8	16.1	14.5	17.0	17.2
Consumer Support Estimate (CSE)	-3 032	-4 513	-4 778	-7 686	-3 769	-2 878
Transfers to producers from consumers	-3 027	-4 547	-4 812	-7 788	-3 769	-2 878
Other transfers from consumers	-49	-64	-20	-61	0	0
Transfers to consumers from taxpayers	0	0	0	0	0	0
Excess feed cost	43	97	54	163	0	0
Percentage CSE (%)	-22.2	-22.5	-11.8	-18.5	-10.0	-8.4
Consumer NPC (coeff.)	1.29	1.30	1.14	1.23	1.11	1.09
Consumer NAC (coeff.)	1.29	1.29	1.13	1.23	1.11	1.09
Total Support Estimate (TSE)	4 637	9 429	11 525	16 558	9 931	8 085
Transfers from consumers	3 075	4 611	4 832	7 849	3 769	2 878
Transfers from taxpayers	1 611	4 881	6 713	8 769	6 162	5 207
Budget revenues	-49	-64	-20	-61	0	0
Percentage TSE (% of GDP)	4.0	3.8	1.4	1.9	1.3	1.1
Total Budgetary Support Estimate (TBSE)	1 229	4 710	4 424	5 373	4 215	3 682
Percentage TBSE (% of GDP)	1.1	2.0	0.5	0.6	0.5	0.5
GDP deflator (1986-88=100)	100	139 502	832 947	710 964	827 837	960 040
Exchange rate (national currency per USD)	0.00	1.12	4.72	3.65	4.84	5.68

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Turkey are: wheat, maize, barley, sunflower, sugar, potatoes, tomatoes, grapes, apples, cotton, tobacco, milk, beef and veal, sheep meat, poultry and eggs.

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Contextual information

Primary agriculture accounts for 6% of GDP and employs 18% of the workforce, making agriculture one of the most important sectors of the country’s economy. Turkey is a net exporter of agricultural products, which account for more than 10% of total exports, and access to world markets is a significant issue for the sector. Notwithstanding various structural bottlenecks, such as the predominance of small-sized, subsistence and semi-subsistence farms, Turkey ranks as a significant agricultural exporter of nuts, dried fruits, and some fresh vegetables; main export destinations include the European Union, Iraq, the Russian Federation and the United States.

Table 26.2. Turkey: Contextual indicators

	Turkey		International comparison
	2000*	2018*	2000*	2018*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	606	2 316	1.5%	2.1%
Population (million)	64	81	1.5%	1.6%
Land area (thousand km2)	770	770	0.9%	0.9%
Agricultural area (AA) (thousand ha)	40 479	38 001	1.3%	1.3%
			All countries¹
Population density (inhabitants/km2)	82	107	53	62
GDP per capita (USD in PPPs)	9 433	28 455	9 275	21 924
Trade as % of GDP	15	25	12.4	15.3
Agriculture in the economy			All countries¹
Agriculture in GDP (%)	10.1	5.8	3.1	3.6
Agriculture share in employment (%)	36.0	18.4	-	-
Agro-food exports (% of total exports)	13.2	10.2	6.2	7.3
Agro-food imports (% of total imports)	5.9	6.4	5.5	6.3
Characteristics of the agricultural sector			All countries¹
Crop in total agricultural production (%)	69	53	-	-
Livestock in total agricultural production (%)	31	47	-	-
Share of arable land in AA (%)	59	53	32	33

Notes: *or closest available year. 1. Average of all countries covered in this report. EU treated as one.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

While Turkey’s economic growth has been strong, it entered a period of macroeconomic uncertainty subsequent to a depreciation in the value of the lira since mid-2017, contributing to rising inflation and decreased investment. GDP growth was negative in late 2018 and early 2019 but recovered in response to stimulus actions by the government later in the year.

Figure 26.4. Turkey: Main economic indicators, 2000 to 2019

Sources: OECD statistical databases; World Bank, WDI and ILO estimates and projections.

Figure 26.5. Turkey: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Turkey’s agro-food imports are dominated by primary and processed products for further processing by the domestic industry. These accounted for 78% of total agro-food imports in 2018. In turn, processed and primary products for consumption are key export categories, accounting for 76% of total agro-food exports. The depreciation in the lira should favour exporters and reduce imports in the short term.

Figure 26.6. Turkey: Composition of agricultural output growth, 2007-16

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database.

Table 26.3. Turkey: Productivity and environmental indicators

	Turkey		International comparison
	1991-2000	2007-2016	1991-2000	2007-2016
			World
TFP annual growth rate (%)	1.0%	0.8%	1.6%	1.6%
			OECD average
Environmental indicators	2000*	2018*	2000*	2018*
Nitrogen balance, kg/ha	27.8	27.7	33.3	29.1
Phosphorus balance, kg/ha	8.0	7.0	3.3	2.3
Agriculture share of total energy use (%)	5.0	3.9	1.7	2.0
Agriculture share of GHG emissions (%)	14.1	11.9	8.1	8.9
Share of irrigated land in AA (%)	8.0	10.3	-	-
Share of agriculture in water abstractions (%)	75.4	85.2	46.0	49.0
Water stress indicator	18.6	25.4	9.9	8.9

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Description of policy developments

Main policy instruments

The main agricultural policy objective of the Eleventh Development Plan covering 2019-23, is to develop an efficient agricultural sector that is environmentally, socially and economically sustainable. The sector should provide an adequate and balanced food supply while making use of advanced technology to be internationally competitive. To achieve this objective, the Plan sets a number of measures and targets to be achieved by 2023, including increased production of red meat and oilseeds, land consolidation and use of irrigation.

In line with the Development Plan, the 2019-23 Strategic Plan of the Ministry of Agriculture and Forestry (MoAF) sets seven strategic objectives for the agricultural sector:

• Increasing economic welfare in rural areas, ensuring food supply by increasing yields and quality in agricultural production

• Ensuring food and feed safety from production to consumption by taking necessary measures for plant and animal health and animal welfare

• Protecting aquaculture and fisheries resources

• Ensuring sustainable management of land and water resources

• Efficiently combating climate change, desertification and erosion

• Protecting biodiversity

• Improving institutional capacity

Turkey is a signatory to the Paris agreement. Agriculture represents 7.3% of total greenhouse gas (GHG) emissions in the country. In its Nationally Determined Contributions (NDCs), Turkey proposes to reduce agricultural emissions through fuel savings resulting from consolidation of agricultural land, rehabilitation of grazing lands, controlling fertiliser use, implementation of modern farming practices and encouraging use of minimum tillage farming techniques.

Export subsidies are applied to 14 commodity groups, out of the 19 groups eligible under Turkey’s WTO commitments. This included processed fruit and vegetables, poultry meat and eggs. Export subsidies are granted in the form of reductions of the exporters’ debts to public corporations (for example, for taxes, and telecommunications or energy costs). Production quotas are applied at the farm level for sugar beet.

Deficiency payments, are provided as “premium payments” for products considered to be in short domestic supply. These payments are potentially directed to producers of 17 different agricultural products.6 The list of products actually supported is determined separately in 945 basins according to which are the most suitable ecological and economical crops with high yield and quality.

Payments based on area are provided under several different rationales. Hazelnut producers receive payments based on area of production. Farmers can also receive area payments for producing fodder crops or certified saplings, organic farming, using good agricultural practices, using certified seeds, and for the rehabilitation of olive groves. Each farmer registered under the National Farmer Registration System (NFRS) receives a so-called “diesel payment” and a “fertiliser payment” separately based on current area of production.

Support for soil testing and analyses that are a prerequisite for receiving fertiliser payments was re-introduced in 2017, and is primarily intended to aid authorised laboratories. The use of organic and organomineral fertilisers (a hybrid type of fertiliser produced by blending organic and chemical raw materials) is supported to reduce the use of chemical fertilisers, improve the structure of the soil, increase its productivity and water holding capacity. Farmers can also receive payments to improve animal breeds and farm production capacity (e.g. field levelling, drainage, soil improvement and protection and land consolidation).

Farmers and agricultural enterprises can benefit from interest rate concessions and concessional loans offered by the Ziraat Bank (TCZB) and Agricultural Credit Co-operatives (ACC). Interest rate concessions vary by type of agricultural operation (livestock breeding, irrigation, organic agriculture and users of good farming practices).

A number of regulations aim to control water and soil pollution and provide protection to wetlands. Land conservation payments are designed to maintain land quality and ensure sustainability of natural resources in agricultural lands. The government plays a major role in providing infrastructure investment, especially for irrigation, including within the South-Eastern Anatolia and Konya Plain Projects.

The Action Plan for the Programme on Enhancing Efficiency of Water Use in Agriculture, introduced in 2015, prioritises modernising irrigation infrastructure, extending water saving practice for agricultural producers through training and extension programmes, reducing agricultural water pollution, revising support policies based on water scarcity and improving the governance of water policies. The plan aims to decrease the use of underground water and increase the use of water-saving irrigation technologies.

Country Irrigation Guidelines were prepared and used in watershed-scale studies to determine the water needs within each watershed and to establish the basin water budget. The planning, design and operational phases of irrigation project are determined based on, climate, soil and topography features, as well as the current water potential in the basin and expected water consumption by farmers.

The 2014-20 National Rural Development Strategy was adopted in 2014 to deliver the EU Instrument for Pre-Accession Assistance Rural Development (IPARD-II).7 The initial budget for this was EUR 813 million (USD 901 million) but was subsequently reduced by the EU Commission to EUR 615.5 million (USD 682 million). As of the end of 2019, EUR 129.2 million has been granted to 3 792 projects under IPARD-II. These rural development projects require co-financing of beneficiaries, with the aim of mobilising private-sector resources. Public investments to improve agricultural infrastructure are targeted to boosting agricultural production and increasing the competitiveness of the sector. The MoAF also increased funding for IT projects, to improve data collection and the monitoring network and its efficient use, as well as to develop traceability in the sector.

Domestic policy developments in 2019-20

Turkey's National Strategy Document and Action Plan on Prevention, Reduction and Management of Food Losses and Waste were prepared in collaboration with the FAO in 2019 as part of a new global initiative called the “Save Food” campaign in line with SDG 12.3. This campaign aims to reduce food losses and waste by raising public awareness both nationally and internationally and disseminating good practices to avoid food waste. During Turkey’s G20 Presidency in 2015 a technical platform on the measurement and reduction of food loss and waste was established at the FAO together with IFPRI.

In order to encourage the sustainable use of forested areas and to take action related to SDG 13 on Climate Action and SDG 15 on Life on Land, the MoAF organised a tree planting campaign named “Breath for the Future” on 11 November 2019. As part of this campaign, about 13 million saplings were planted in just one day in all parts of Turkey.

A meeting of the Agriculture and Forestry Council was held in November 2019. This meeting brought together stakeholders in the agriculture and forestry sectors to develop plans covering the next 25 years. Council actions were gathered under eight main headings: i) Agricultural Production and Supply Security, ii) Food Safety, iii) Rural Development and Marketing, iv) Fisheries and Aquaculture, v) Soil and Water Resources, vi) Biological Diversity and Climate Change, vii) Forest, and viii) Institutional Capacity. Within the scope of the Council’s meeting, 38 actions plans were established.

Coverage of support to agricultural insurance has been extended to include more products and types of risks. In 2018, coverage had initially been extended to production losses of barley, rye, oats and triticale and covering risks related to drought, frost, hot winds, heat waves, excess moisture and excessive precipitation. It was further extended in 2019 to chickpeas, red lentils and green lentils. In 2019, more than 2 million agricultural insurance policies were issued, with the government spending TRY 2.5 billion (USD 424 million) to reduce premiums.

Within the scope of Combating Agricultural Drought, the “Turkey Agricultural Drought Strategy and Action Plan”, 2018-22, was published. The main pillars of the Action Plan are developing a capable institutional structure, taking a holistic and comprehensive perspective, and making the agricultural sector more resilient to drought. Activities in the Action Plan are grouped under five headings: i) drought risk estimation and crisis management, ii) ensuring a sustainable water supply, iii) effective management of agricultural water demand, iv) increasing support to R&D activities, training and extension services, and v) institutional capacity building.

Trade policy developments in 2019-20

The average rate of customs duties applied in 2019 for basic agricultural products outside the Customs Union Common External Tariff was 57.85%. Customs duties were reduced on cocoa shells, husks, skins and other cocoa waste. Customs duties on glucose syrup (other) and palm kernel oil used for coffee cream production were also reduced.

In 2019, Turkey put into force its Free Trade Agreement (FTA) with Kosovo and FTA revision protocols with Serbia. Turkey also updated its FTA with Bosnia-Herzegovina and Montenegro in 2019. FTA negotiations are actively ongoing with five countries: Ukraine, Japan, Thailand, Indonesia and Somalia.

Notes

← 1.  https://www.tarimorman.gov.tr/Duyuru/1151/Bitkisel-Uretim-Destekleri-Basvuru-Sureleri-Uzatilmistir.

← 2.  https://dosya.tarimorman.gov.tr/app/tr-TR/App/Download/TarimBulut/eb3140cb-bf55-4dd7-93fa-c60342294675.

← 3.  https://www.aa.com.tr/en/economy/turkey-subjects-lemon-to-export-control-amid-covid-19/1795208.

← 4.  https://oryza.com/49865/turkey-cuts-customs-duty-paddy-rice-imports.

← 5.  https://www.tarimorman.gov.tr/Haber/4452/Tarim-Iscilerine-Koronavirus-Tedbiri.

← 6.  Sunflower, rapeseed, maize, cotton, soybeans, wheat, barley, oats, rye, triticale, safflower, olive oil, paddy, dry beans, chickpeas, lentils, fresh tea.

← 7.  IPARD is the Rural Development component of the Instrument for Pre-access Assistance (IPA), created by the European Union to support candidate and potential candidate countries. IPARD aims to support adaptation preparations and policy development for the implementation and management of the Common Agricultural Policy, Rural Development Policy and related policies of the European Union.