26. Turkey
Turkey’s transfers to agricultural producers as a share of gross farm receipts are slightly above the OECD average. Support to producers was about 20% of gross farm receipts in 2019-21, a decline from 24% in 2000-02. Most support (64% in 2019-21) takes the form of market price support (MPS) enabled by tariffs, combined with reductions of exporters’ debts and equity injections to state enterprises. This is well above the OECD average. Producer prices were about 15% above border prices in 2019-21, primarily because of support for potatoes, wheat, sunflower seed and beef. Prices of other commodities align with border prices. The remaining support mainly comprises premium payments to producers of specific commodities, area-based payments provided in the form of crop insurance, and payments to defray the cost of diesel and fertiliser. Concessional loans featured prominently in the policy response to COVID-19 pandemic in 2020 and raised the PSE above trend in that year.
General support to the sector (GSSE) was 2.3% of the value of agricultural production in 2019-21, down from 15.4% in 2000-02. However, 2000-02 had unusually high duty loss payments due to a surge in inflation, and general support in 1986-88 more closely reflects historical averages. Support to irrigation infrastructure is the largest component of GSSE, about 66% in 2019-21. The next-largest element is duty loss payments and equity injections, about 27% in 2019-21. Total support to the sector was 1.6% of GDP in 2019-21, down from 3.8% in 2000-02, reflecting its shrinking role in the economy over that period.
Turkey adopted the Green Deal Action Plan in 2021, with targets and actions to increase the sustainability of agriculture. The main actions foreseen are reductions in the use of pesticides, anti-microbials and chemical fertilisers, developing organic production, increasing renewable energy use in agriculture, and improving the management of waste and residues.
The first meeting of the new Water Council was held in March 2021 to determine Turkey’s short, medium and long-term water strategies. A water management policy will be developed with relevant stakeholders, including farmers, academics, non-governmental organisations and the public sector. A pilot study was put in place during the 2021 irrigation season to establish a water pricing system where users pay higher fees if consumption increases. This pilot will expand to include all irrigation facilities with proper water metering infrastructure.
Turkey prepared its National Food Systems Pathway in 2021 within the scope of the UN Food Systems Summit. Turkey’s national pathway includes 10 priorities and 117 actions connected with the five Summit action tracks to transform food systems and achieve the Sustainable Development Goals by 2030.
The Nationally Determined Contribution (NDC) of Turkey allows increasing emissions until 2030; there is no specific emissions reduction target for agriculture. The government set a target of net-zero emissions by 2053, but the path to achieve this is not clear.
Emission reductions in agriculture rely on increased efficiency in land and inputs use. However, existing policies to defray the costs of fuel and fertiliser can be counterproductive to this. Moreover, government investment in agriculture knowledge and information systems is low relative to other OECD countries.
Agricultural policy has a strong influence on production decisions, and state enterprises are an important part of the product marketing system for certain commodities. Reducing the role of state enterprises in agricultural markets and replacing self-sufficiency targets and planned agricultural production with a focus on competitiveness and efficiency will promote resilient sector growth, provided that sensible environmental policies to ensure sustainability are also in place.
Considerable investments were made in developing the irrigation system. Recent moves to investigate the potential for water pricing are a welcome development and lessons learned from the pilot phase should be applied. Sustainable water use will be important for climate resilience in the sector.
The COVID-19 pandemic resulted in temporary reductions of tariffs for many important agricultural staples. This is an opportunity to improve market openness and ease food price increases for consumers by making these changes permanent.
Overview of policy trends
Before 1980, an import substitution policy was in place and agriculture was tightly controlled to meet policy objectives, which included maintaining stable grain prices, increasing yields and production and developing exports. Some agricultural products were taxed while others received subsidies, but the sector was a net payer to the government budget overall (OECD, 2016[1]).
From the 1980s until 2000, the sector was a net beneficiary of support, directed towards import-competing farm products. The main agricultural policy instruments were price support for crop products and input subsidies. Programmes provided low-cost credit, agricultural chemicals, seeds, irrigation and fertiliser. Livestock production was supported mainly by border measures.
State enterprises managed intervention buying, in the form of State Economic Enterprises (SEEs) as exclusive purchasers of grains, pulses, sugar, tobacco and tea; and Agricultural Sales Cooperative Unions (ASCUs) responsible for horticultural crops, cotton, oilseeds, nuts, and olive oil. Support prices were announced after planting, and farmers received payment a year or more after harvest and delivery. These bodies also maintained stocks, executed exports, issued export licenses and distributed input subsidies.
After 2000, the country embarked on a process of structural reform as a condition for receiving macro-economic stabilisation assistance from the IMF and World Bank (Burrell and Kurzweil, 2007[2]; OECD, 2016[1]). These reforms were carried out between 2001 and 2008 through the Agricultural Reform Implementation Project (ARIP). ARIP was intended to improve efficiency in the agro-food sector by removing market distortions, and contribute to fiscal consolidation. Under ARIP, Turkish agricultural policy was oriented towards closer alignment with the EU’s Common Agricultural Policy.
Reforms after 2001 reduced the State’s role in setting prices, marketing, and trade of agro-food products. SEEs and producer co-operatives were made independent to varying degrees and at different speeds, and became more exposed to market conditions. Structural adjustment in agriculture was promoted through aid to convert land to alternative production, or land consolidation, and with transition support and aid for rural development. This period also saw a shift away from output and input subsidies towards direct income support payments, although high border protection for agro-food products remained in place (OECD, 2011[3]).
Since 2010, production-linked payments were re-established for many products. Current agricultural policies also include import tariffs, fixed purchasing prices, export subsidies, deficiency payments (income support payments), insurance support and input subsidies (mostly through interest concessions). In addition, there is an emphasis on infrastructure, particularly for irrigation, also connected to rural development objectives.
The PSE was mostly in the range of 25-30% of agricultural gross farm receipts over the past two decades. After 2018, exchange rate movements have reduced the importance of market price support and support has been lower on average (Figure 26.4).
Overall, nominal support increased since the late 1980s. Budgetary payments grew, starting with the move towards decoupled payments in the early 2000s, and remained significant through successive reforms that changed their basis. Budgetary support jumped in 2020 as a consequence of exceptional spending related to COVID-19, mainly for concessional loans and interest concessions. Macroeconomic conditions such as the exchange rate and inflation are likely to be important drivers of support levels in the near term.
Main policy instruments
The majority of support comes through market price support, consisting mainly of tariffs on imported products, though recent exchange rate movements have reduced the relative importance of this form of support. Budgetary support comes through price-stabilising (deficiency) payments and area payments based on production characteristics. Purchases of inputs and marketing of major commodities is handled through State enterprises (SEEs) or collective marketing boards (ACSUs), which have price-setting power. Irrigation infrastructure is the main target of general support to the sector.
Export subsidies apply to 14 commodity groups, out of the 19 groups eligible under Turkey’s WTO commitments. These include 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 apply at the farm level for sugar beet. Under the Nairobi agreement, export subsidies are to be phased out by the end of 2022.
The Basin-Based Support Model (Havza Bazlı Destekleme Modeli) targets self-sufficiency in strategic agricultural products and planned agricultural production. Agricultural areas are divided into 941 basins, each identified with a set of strategic products that will receive support in that basin. Deficiency payments are set to raise the price of specific commodities to encourage a certain pattern of production according to the government’s evaluation of ecological sustainability and economic suitability. R&D is targeted to increase the yield and quality of local varieties. Basin- and product-based fertilisation and chemical pesticide guides and plant-based water consumption guides are in place.
The Support Model of Domestic Production in Livestock (Hayvancılıkta Yerli Üretimi Destekleme Modeli) aims to meet increasing red meat demand, improve breeding, determine breeding regions, use pastures rationally, fight animal diseases effectively, reduce calf losses, and increase exports by ensuring sustainable milk production. The model sets pasture livestock breeding zones. Within these zones, grants for investments and for purchase of pasture livestock are available to producers. Support is also provided for rangeland improvement and some veterinary services, and breeding centres are to be established by private breeding associations to supply heifers to ranchers.
There are several forms of area-based payments. 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” based on current area of production.
State-supported agricultural insurance (TARSİM) comes through a public-private partnership where private insurance companies deliver uniform policies to farmers. The state pays between 50% and 67% of the total insurance premium on behalf of farmers.
The Environmentally Based Agricultural Land Protection Programme (ÇATAK) helps to increase soil and water quality and sustainability of renewable natural resources. It promotes minimum tillage practices and efficient irrigation practices in areas of intensive agricultural activities. The programme also targets raising awareness of producers on agri-environmental issues and increasing agricultural income by reducing input costs. ÇATAK specifically targets the negative impacts of agricultural practices on the environment. The programme is expected to mitigate CH4 and CO2 emissions through the actions mentioned above. Since 2006, ÇATAK has provided economic incentives to farmers in 58 provinces (payments of TRY 45-135/thousand m2 according to the technique used).
Climate change mitigation policies in agriculture
Agricultural emissions, mostly due to enteric fermentation, accounted for 13.4% (68.0 MtCO2eq) of Turkey’s total greenhouse gas emissions in 2019, up from 12.5% (42.4 MtCO2eq) in 2005. To this amount should be added most emissions from fossil fuels consumed by agriculture, forestry and fishing (2.1%, i.e. 10.9 MtCO2) and a minor amount of annual soil carbon losses from agricultural land (0.2%, i.e. 1.1 MtCO2). Emissions from agriculture increased since 2008 because of the growing number of livestock, which generate a large amount of methane. Agricultural activities represent the largest national source of methane and nitrous oxide emissions.
The Turkish Grand National Assembly ratified the Paris Agreement on 6 October 2021, which entered into force on 10 November 2021. The government set a net-zero emission target by 2053. Turkey did not yet submit its mid-century, long-term, low-GHG-emission development strategy to the UNFCCC. There is no specific target for agriculture in its Nationally Determined Contribution, and emissions are projected to increase at least until 2030 (but less than the business-as-usual scenario). Mitigation actions mentioned are fuel savings from consolidation of agricultural land, rehabilitating grazing lands, controlling fertiliser use, implementing modern farming practices and encouraging minimum tillage farming techniques.
Turkey focuses on improved efficiency of input use to reduce agricultural GHG emissions. Specific programmes and activities currently in place contributing to reducing GHG emissions are:
Domestic policy developments in 2021-22
Global markets are increasingly sensitive to environmental performance. In particular, the EU Green Deal will affect Turkey, both as a candidate country and as a Customs Union partner. In light of this, the government considers that the green transformation of the Turkish economy and industry is essential for sustainable growth, export competitiveness and to preserve and deepen Turkey’s integration with the EU market.
In response to these international market changes, Turkey adopted its own Green Deal Action Plan, published in the official gazette in July 2021. This action plan includes targets and actions on sustainable agriculture. The main actions foreseen are reduced use of pesticides, anti-microbials and chemical fertilisers, development of organic production, increasing renewable energy use in agriculture and better managing waste and residues.
In 2021, a Water Council was established to help determine Turkey’s short, medium and long-term water strategies. It was agreed that a water management policy will be developed with relevant stakeholders, including farmers, academicians, non-governmental organisations and the public sector. The first meeting to discuss the water management policy was held on 29 March 2021. The Water Council has eleven working groups (Water Efficiency, Management of Water at Basin Scale, Water Law and Policy, Water Safety and Wastewater Services, Protection and Monitoring of Water Resources in Quality and Quantity, Impact of Climate Change on Water Resources and Adaptation, Decision Support Systems in Water Resources Management, Development of Water Resources, Agricultural Irrigation, Storage Facilities, Water, Forestry and Meteorology).
Within the scope of UN Food Systems Summit, Turkey prepared the National Pathway of Turkey in 2021. Turkey’s national pathway includes 10 main priority areas and 117 actions in connection with the five Summit action tracks, in order to transform food systems and achieve the Sustainable Development Goals by 2030.
Developing fair access to safe and nutritious food, particularly for vulnerable groups
Improving public health, food safety and strengthening inspections and controls with innovative methods
Encouraging the sustainability supply and value chain in the agri-food sector and reducing food loss and waste
Raising consumer awareness and promoting sustainable consumption
Developing more inclusive policy for disadvantaged groups in the agri-food sector
Building the resilience of food systems against climate change, natural disasters and unexpected crisis
Coverage under the state-supported agricultural insurance continues to expand. Revenue Protection Insurance is now available for wheat producers in the city of Konya as a pilot project as of the 2021-22 crop year. Revenue Protection Insurance covers 70% of insured farmer revenue against yield losses and price variations. In 2021, 2.25 million insurance policies were issued and TRY 2.1 billion (USD 237 million) of state insurance premium support was provided.
In 2020, Turkey published its national strategy document on Prevention, Reduction and Monitoring of Food Loss and Waste and its action plan in co-operation with the FAO. The action plan aims to intensify efforts at national, regional and international levels to prevent food loss and waste. The campaign is still ongoing but already shows positive results. Reduced food waste has saved households an estimated USD 80 million. Awareness of the meaning of “use by” and “best before” dates has improved. Households are reporting better portion sizing at meals and more recycling of food waste.
The “Turkey Agricultural Drought Strategy and Action Plan, 2018-22” is in its final year. Activities continue 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. As part of the strategy, Drought Management Plans are to be completed for 25 basins by the end of 2023. Between 2014 and 2021, 15 such plans were completed. Responsible institutions must report on the implementation of the Management Plans every six months.
Within the framework of the “Rural Development Investments Support Program”, 50% grant support is available for the installation of irrigation systems (drip or sprinkler). Approximately 330 000 producers were supported by grants and credit support, and pressurized irrigation systems were installed on a total area of 1.12 million hectares by the end of 2021. Since 2003, the use of closed system irrigation projects has been accelerated to reduce loss and leakage. In 2003, only 6% of irrigated area used piped irrigation networks, but by 2020 this had increased to 29%.
In the irrigation season of 2021, a pilot study was put in place to charge higher water usage service fees when more water is used. This pilot will be expanded to include all irrigation facilities with proper infrastructure. Centrally monitored measurement facilities were installed in storage facilities and irrigation networks with an area of 500 hectares and above. These measure water flows during storage, transmission, distribution and discharge. These facilities will eventually support volume-based water pricing.
Specialized Organized Industrial Zones Based on Agriculture, which are designed to advance women's employment, sustainability and zero waste objectives, will continue to be supported in order to increase the competitiveness of the agricultural sector with quality and reliable production and branding, and to ensure agriculture-industry integration.
Trade policy developments in 2021-22
The average rate of customs duties applied in 2021 for basic agricultural products outside the Customs Union Common External Tariff was 58%.
In 2021, a Free Trade Agreement (FTA) with the United Kingdom, revised FTAs with EFTA and Bosnia-Herzegovina as well as a Preferential Trade Agreement (PTA) with Azerbaijan came into force. The ratification process of the Montenegro FTA is continuing. FTA negotiations are actively ongoing with five countries: Ukraine, Japan, Thailand, Somalia and Indonesia.
Trade policy responses to the COVID-19 pandemic
To ensure domestic supplies, tariffs were reduced and in-quota import amounts increased for several commodities. As of 8 September 2021, customs duty rates on certain agricultural commodities were removed until 1 January 2022. These duty rates had been 45% for wheat, 35% for barley, 25% for maize, 130% for oat, rye and sorghum and 19.3% for chickpeas and lentil. The 27% tax rate for sunflower seed for oil and the 36% tax rate for unrefined sunflower oil were also removed until 1 January 2022. The export of pasta, bulgur and wheat semolina is subjected to registration as of June 2021 and export of chickpeas as of October 2021.
Turkey has the 11th largest economy in the world as measured by GDP in PPP. Per capita GDP has tripled since 2000 and is above average for the countries included in this report. Turkey has a large agriculture sector that employed almost 18% of the country's working population and accounted for 6.7% of GDP in 2020. Turkey is a net exporter of agro-food products, which accounted for 11.8% of all exports recently (Table 26.3).
GDP growth was estimated at 9% in 2021, but is expected to slow as the effect of inflation on private consumption more than offsets a sustained boost from net exports. Macro policy uncertainty after multiple central bank interest rate cuts has led to a sharp decline in the exchange rate in the second half of 2021. Inflation is high and has long been well above the official target of 5%. Accelerating inflation, now at 19.6%, has raised concerns about near-term financial stability (Figure 26.5). The pandemic exacerbated structural challenges related to high unemployment, low labour force participation and widespread informality in the labour market (OECD, 2021[4]).
Turkey is 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. Turkey is a major producer of wheat, sugar beets, milk, poultry, cotton, tomatoes and other fruits and vegetables, and is the top producer in the world for apricots and hazelnuts as well as the largest global exporter of quinces and raisins. Agricultural trade has been steadily increasing and Turkey is a net exporter. Most imports are products destined for further processing, while most exports are products for consumption (Figure 26.6).
Agricultural growth has been predominantly based on total factor productivity (TFP) growth and increased use of inputs (Figure 26.7). Improved productivity may be connected to increased irrigated area, opening more land to intensive production.
Agriculture uses about 85% of the freshwater abstracted by all sectors. Water stress is increasing and above the OECD average (Table 26.4). Average precipitation is expected to decline as a result of climate change, increasing stress on the hydrological system. Nitrogen and phosphorus balances have also been increasing, and phosphorus balance is well above the OECD average due to intensive livestock production. Agriculture represents 4.3% of energy use, below its share of GDP (6.7%), but it accounts for a relatively high share of national GHG emissions (13.4%).
References
[2] Burrell, A. and M. Kurzweil (2007), “Distortions to Agricultural Incentives in Turkey”, Agricultural Distortions Working Paper Series 48388, https://doi.org/10.22004/ag.econ.48388.
[4] OECD (2021), OECD Economic Surveys: Turkey 2021, OECD Publishing, Paris, https://doi.org/10.1787/2cd09ab1-en.
[1] OECD (2016), Innovation, Agricultural Productivity and Sustainability in Turkey, OECD Food and Agricultural Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264261198-en.
[3] OECD (2011), Evaluation of Agricultural Policy Reforms in Turkey, OECD Publishing, Paris, https://doi.org/10.1787/9789264113220-en.