Perspectives on Economy and Public Administration

H. Işıl Alkan

Neoliberal agricultural policies, food sovereignty and Turkey

Abstract: Agriculture is a privileged sector owing to every nation’s desire for feeding their population with their own production and nondependence on other countries. The sector has also played a crucial role in Turkish economy since the establishment of the Republic until the 1980s and due to these features, the sector has been largely supported by governments within that period. However, starting from the 1980s, the neoliberal policies which were highly adopted by governments changed this tendency. The necessities of the neoliberal policies such as reducing or eliminating agricultural subsidies/supports, restricting certain agricultural production areas, facilitating the imports of agricultural products and privatizations have all together caused a departure from agriculture in Turkey. Due to high costs, agriculture has been “impractical” and many producers/farmers have given up or limited their agricultural production in the course of time. Various agricultural products have begun to be imported from foreign countries due to high production costs. Eventually, the neoliberal policies have initiated “de-agrarianization” process in the country. In conjunction with the “de-agrarianization” process, the migration from rural to urban has increased, and agricultural production – the primary activity of the rural – has decreased considerably. Turkey is forced to import many agricultural products which she exported earlier; moreover, the country has lost her self-sufficiency concerning food that she previously owned. The decrease in agricultural production and export and the substantial increase in agricultural imports have also deepened the current account deficit of the country; consequently, macroeconomic problems have occurred in providing the balance of payments in the last decades. The aim of this chapter is to evaluate the effects of implemented neoliberal agricultural policies since the 1980s in the framework of food sovereignty in Turkey. The study not only unearths the results of implemented neoliberal agricultural policies but also targets developing policy proposals to save the country from foreign dependency and economic impasse.

Keywords: Neoliberal policies, agriculture, food sovereignty

JEL Codes: E61, F62, Q18

1 Introductıon

Agriculture as a sector holds a vital position both for developed and developing countries in the world. Although the sector is generally associated with the production of food through farming systems and is seen as the main means of providing self-sufficiency in food, it is much more than that as it constitutes the ←7 | 8→backbone of the economic system in many countries. Nominately, agriculture is the source of livelihood for millions of people in the world, is the main employer sector especially in rural regions of (mainly developing) countries and is a significant contributor to national income. The sector also provides raw materials to the leading industries. In terms of international trade, agriculture again plays a vital role. Agricultural products constitute the main items for international trade for many countries; in other words, agriculture is an important determinant for the balance of foreign trade. Because of the stated characteristics, all countries attribute special importance to agriculture. However, it is necessary to state that the sector is even more important for developing countries that have not completed their industrial development (Kaynak, 2007: 218–219).

The share of agriculture in the economy decreases as the countries evolve in general. However, this does not mean that agriculture is a sector that gradually loses its importance worldwide. The world’s major global powers have been attaching great significance to agricultural production and have been protecting the agriculture sector from past to present. The United States, England, France, Holland, Belgium and Germany are the outstanding countries in this regard. The agriculture sector has been of great importance for many decades in Turkey. It has undertaken substantial tasks in the way of development, employed a significant portion of the population, made important contributions to the national income and provided the production of foodstuffs necessary for the nutrition of the country’s population. With her agricultural production capacity, Turkey was recognized as one of the few self-sufficient countries in terms of food until the 1980s. However, the adopted neoliberal agricultural policies in the last decades reversed the country’s self-sufficient position and jeopardized the country’s food security and sovereignty. The aim of this study is to unearth the impacts of neoliberal agricultural policies on economy, agriculture and food sovereignty in Turkey. In this context, the first section includes general information about the implemented agricultural neoliberal policies, especially after 1980. In the second section, the concept of food security and sovereignty is discussed and the effects of adopted neoliberal policies on agricultural production, import and food sovereignty is investigated. The findings are summarized and policy proposals for the issue are tried to be developed in the last part of the study.

2 The implemented neoliberal agricultural policies in Turkey after 1980

Agriculture sector has been considered as a strategic sector from the establishment of the Turkish Republic until the 1970s and has always been supported due ←8 | 9→to this reason. Since the 1930s, governments have always supported agricultural production and have tried to increase productivity in agriculture. The incentive policies applied by the state were influential towards the 1940s, and the production amounts of significant agricultural products such as wheat, barley and corn increased greatly (Marguiles and Yıldızoğlu, 2003: 289). The 1950s were the years of adoption of a new economic model that focused on the agricultural sector in Turkey. In this period, agriculture was mechanized in parallel with the widespread use of tractors and the sector entered a rapid development process (Günaydın, 2010: 161). The 1960s were the years of intensive farming technology. Unlike the 1950s, the country’s economy and agriculture were protected against external competition in the 1960s (Köymen, 2008: 136). However, the process of protecting and supporting agriculture ended in the late 1970s. The 1970s are the years of stagnation in world economy; the oil crisis emerged in these years. The stated negative developments also impressed Turkey, the economic depression affecting the masses and the capital classes occurred in the country. Consequently, due to the worsening economic crisis, Turkey was forced to make an agreement with the International Monetary Fund (IMF) at the end of the 1970s (Boratav: 2016: 141–149). In brief, the agriculture sector has played a driving role in Turkish economy until the 1980s. Governments gave more priority to agriculture in comparison with the other sectors. Considerable resources have been transferred to the agriculture sector accordingly. Thus, the share of agriculture in gross national product, employment and export was remarkable until the 1980s. The decisions of January 24, 1980, which were put into practice to get rid of economic crisis in Turkey, have vastly affected the agricultural policies in the country (Narin, 2011).

The first agriculture-related application of stabilization policies aimed at improving the free market rules was to increase fertilizer prices in January 1980. The prices of artificial feeds, seeds, agricultural machinery and irrigation fees have increased very rapidly after 1980 (Şahinöz, 1989: 320–321). In conjunction with the neoliberal adjustment, the scope of subsidy has been narrowed, agricultural product prices have been suppressed and internal terms of trade has turned against agriculture sharply (Günaydın, 2010: 162). Boratav mentions that internal terms of trade fast turned against agriculture, especially in the 1978–1988 period. Agriculture was exposed to the heaviest and longest price shocks in this period (2016: 168).

After 1980, subsidized lending to the agricultural sector has been reduced and the conditions for credit usage have been aggravated. The share of the loans allocated to the agricultural sector in total loans has also decreased continuously. The survey conducted by Turkey Union of Chambers of Agriculture reveals that ←9 | 10→the average prices of agricultural products increased 12.5 times (taken 1979 as the base year), while the prices of agricultural inputs increased 25 times in the period 1976–1986 (Şahinöz, 1989: 321–322). In the 1980s, changes in the foreign trade regime affected the scale of agricultural production considerably. Import and export of food and agricultural products were liberalized and taxes and fees applied to imports of food products were significantly lowered especially in 1984. As a result of this policy, the volume of imports of food and agricultural products increased by more than two quarters during the mid-1990s. Many agricultural sectors were adversely affected from this notable increase in imports. Significant increase in imports of live animals and meat originated, local production and animal husbandry declined. Additionally, import of dairy products such as cheese, oil, ice cream were increased in the country (Keyder and Yenal, 2015: 115–116; IMKB, 1996:40–41).

At the beginning of the 1990s, a kind of improvement was observed; the coverage of agricultural support increased with political concerns, subsidy prices improved, agricultural loans increased and some farmers’ debts eliminated (Şahinöz, 2011. 465). On the other hand, the 1990s were the years when many state economic enterprises (SEEs) were privatized. Significant agricultural SEEs (such as SEK, EBK, ORÜS, TZDAŞ) were privatized during this term. Another phenomenon that marked the agricultural policy in the 1990s has been the 1994 crisis. Agricultural products within the scope of support were limited and credit privileges granted to Agricultural Sales Cooperatives were removed. The agricultural policies were linked to a regulatory order in accordance with the World Trade Organization (WTO) agricultural agreement and the developments expected in the European Union (EU) Common Agricultural Policies (CAP) in the 7th Five Year Development Plan prepared in 1995. In this context, by reducing government intervention in the prices of agricultural products, removing input subsidies gradually and limiting the cultivation areas of some crops with excess supply, orientation to the production of agricultural products which were demanded were aimed (Narin, 2011).

Turkey was forced to renegotiate a deal with the IMF in December 1999 to overcome the crisis that shook the global economy and to reduce the severe inflation experienced during the 1990s. In this context, Turkey signed the 17th standby agreement in December 1999 and the 19th standby ended in mid-2008. Hence, the country had to fulfill all demands of the United States and the EU in this process, which extended to mid-2008 (Kazgan, 2013: 333). The reforms in agricultural policies and the reduction of subsidies came to the fore in order to reduce the cost of subsidies and base price implementation. In this context, the Agriculture Policy Reform Package (ARIP) prepared by World Bank (WB) was ←10 | 11→adopted by the year 2000. The commitment to keep the financial balances given to the IMF would be fulfilled with this reform package. The main objectives of the ARIP were to validate free-market conditions in the agriculture sector; in this regard, eliminating base price implementation and subsidies on inputs and loans were the main targets. The restructuring of some state-owned enterprises operating as SEEs (such as TEKEL, Çaykur, EBK and SEK) and agricultural sales cooperatives (such as Çukobirlik, Tariş, Trakya Birlik) was also aimed. Moreover, the ARIP has adopted the direct income support¹ policy. In other words, support prices and input subsidies would be abolished, and instead, income support would be provided directly to the producer (Keyder and Yenal, 2015: 198–200).

Another policy transformation was to limit the sowing area of products with excess supply or to apply alternative product support in this period. Excessive product accumulation and product eradication were tried to be avoided in some products such as tobacco, tea, hazelnut by this way (Kazgan, 2013: 334). However, the ARIP, with its neoliberal transformation, has not been very popular among producers and state; consequently, by 2005, some price supports and input subsidies were brought back. In April 2006, the Agricultural Law, which included new agendas and regulations, was enacted. This law foresees the removal of direct income support in 2008, by providing support to farmers in various categories. The ARIP and direct income support policy was terminated as required by law in 2008, input subsidies and product-based support policies have been increased since then (Keyder and Yenal, 2015: 201–205). On the other hand, article 21 of the Agricultural Law concerns the financing of agricultural subsidy and underlines that the source to be separated from the budget cannot be less than one percent of the gross national income (Official Gazette, 2006). However, between 2007 and 2009, when the agriculture and food crises were experienced intensely, the share of the agricultural support from the budget was 0,65 %, 0,58 % and 0,45 % of the GNP, respectively, which meant a decline trend contrary to the provisions of the law. Especially in 2009, the share allocated from budget to agricultural support was also less than the year 2002 (Günaydın, 2010: 172).

Tab. 1: Share of Agriculture Sector in GDP and in Total Employment Between 1980–2016 in Turkey (TURKSTAT, 2018a, TURKSTAT 2018b)