Agricultural Economics The Institutional Framework of Turkish Agriculture
Dec 28, 2015
Agricultural Economics
The Institutional Framework of Turkish Agriculture
Institutions
Humanly devised constraints that shape human interaction: provides the structure of formal and informal economic,
political and social behavioral rules. Institutional environment: Values and basic ground
rules of the society (traditions, norms and religion); political, social and legal rules that form the basis of production and exchange.
Institutional arrangements: Formal and informal rules of conduct for specific types of interaction.
Organisations: Formal and informal entities that rule the governance process
Reforms During the Early Republic of Turkey Izmir Economics Congress (1923) suggested protectionist
development strategy with cautious promotion of private sector. Recognized the critical role of agriculture in economic
development. 1925, a heavy tax on peasants was removed. 1927, the law on Industrial promotion led in the growth of the
sugar, cotton, flour milling, coal, iron and gasoline industries. 1930, marks the year when Sümerbank and Etibank were
established. Law of land reform Ziraat Bank
Evolution of Interest Groups and Formal Institutions Gained momentum in 1950s. Labor Unions (1947) Merchants’ and industrialists’ associations
started to grow, including the Turkish exporters’ association (İhracatçı Birlikleri), the Union of Chambers and Commerce and Industry (TOBB), the Turkish Confederation of Employers’ unions (TİSK), Turkish Industrialist and Businessman Association (TÜSİAD)
A Chronology of Policy and Institutional Developments in Turkey Period / Motivation: 1923-1945 / Catching up
with the West Economic/ Trade/ Agricultural Policies• Closed economy• Import-substitution policy• Agriculture for food self sufficiency
Period / Motivation: 1946-1960s / Collaborating with West, adopting Western institutions (participation & democratisation)
Economic/ Trade/ Agricultural Policies• Partially open economy• Import substitution policy• Agriculture supports industry & trade
Period / Motivation: 1970-1980 Establishing social stability by modifying the institutions adopted earlier
Economic/ Trade/ Agricultural Policies• Partially open economy• Import substitution policy
Period / Motivation: 1980-present Integrating with and competing in international markets
Economic/ Trade/ Agricultural Policies• Open economy (except agriculture)• Export promotion policy• Customs Union completed, process of EU
application speeded up
Competition Rules
Early 1980s: Structural adjustment programs with WB and IMF.
Economic role of the state was substantially restricted
Over the 25 years, various laws and regulations were adopted to support and promote competition.
Institutional Environment: The Ottomans
1. Ruled by religion and traditions;
2. Ottomanism – Multinational Empire;
3. Millet system – separation of non- Muslim from Muslim & religious freedom to non-Muslim
4. Elite’s rule – mixture of bureaucrats from minorities in all spheres of life
5. Minimal scope for change due to traditional and religious institutions
6. Religion an essential part of governance of the Empire
Institutional Environment: Kemalist Principles (1923-1950)1. Republicanism - sovereignty vested in the
nation2. Populism - all people in Turkey are equal
and all of them are Turkish citizens 3. Etatism – state to regulate economic
activity and engage in areas where private enterprise is inadequate
4. Reformism – radical means to replace traditional with modern institutions
5. Secularism – separation of state and religion; of religion from cultural, educational and legal affairs; independence of institutions from religion & religious institutions
Institutional Environment:Republic of Turkey (1950-present)1. Parliamentary democracy; the Kemalist principles in the
constitution Somewhat weakening state sovereignty2. Sovereignty interrupted by military interventions3. Some rights of minorities recognised only recently4. Weakening etatism – strengthening market economy,
privatisation of state monopolies after 19805. Significant economic reforms after 1980 but in some aspects a
stagnant society6. Weakening secularism – state often used to support religious
thought and institutions for political purposes
Institutional Environment:EU
1. Multi-level government; EU-level Commission, Council, Parliament, Court; Basic philosophy: mixture of supranational and intergovernmental
2. National identities respected 3. Respect for human rights and fundamental
freedoms of minorities4. Multi-level government, limited role for state5. Economic integration as a driver of integration in
other policy areas6. Separation of state and “church,” though
differences exist between member states
Intended Functions of Institutional Environment: Institutions function among the following three
areas:
1. Agricultural resources
2. Agricultural research
3. Agricultural production
Agricultural Resources: Institutions
Intended Functions of Institutional Arrangements Related to Agricultural Resources To organize agricultural resources:
Land (ownership, renting, inheritence) Labor (contracts, social security) Water (use and distribution) Environment (soil, water, air)
Administrative and Implementing Organizations for agricultural resources Land, Labour, Water, Environment Directorate of State Hydraulic Works, Water
Users’ Org, Ministries of Agriculture & Rural Affairs (MARA) and Environment-Forest; Social Security Inst; Labour & Employer Unions, BAGKUR (union for self-employed in agriculture) ………..
Agricultural Research: Institutions
Intended Functions of Institutional Arrangements Related to Agricultural Research To organise agricultural research, technology
and innovation NARS, Agricultural knowledge and information
system, R&D partnership Science and Innovation activities Technology and generation transfer
Administrative and Implementing Organizations for agricultural research Research, Technology, and Innovation Scientific & Tech Research Council,
Undersecretariats of Treasury & Foreign Trade, State Planning Org, Council of Higher Education, Ministries of Education, Health, Env.-Forest; Universities; MARA; Agr. Research Orgs, Provincial Ext. Adm, Chambers of Agr., Farmers’ orgs, NGOs, Development Orgs;
Agricultural Production: Institutions
Administrative and Implementing Organizations for agricultural production, markets and trade Production, Markets and Trade Turkish Competition Authority, Chambers of
International Trade, High Accreditation Council, Ministry of Foreign Trade, Ministry of Trade and Industry, State Planning Organisation, the Court of Appeals, the Council of State, the Inter-University Board; Agricultural Banks, Agricultural Sales Cooperatives, Agricultural Credit Cooperatives
Resource Institutions: Land
Rand-related reasons for declining productivity
Contributing factors: Land fragmentation, land inheritence, large-scale water resource development unsuitable to the needs of small farms and underdeveloped water rights
Cadastral work Land consolidation by the authorities
Resource Institutions: Labor
Ministry of labor and security Social Insurence Organization (SSK) Minimum wage Union law Arrangements regarding part-time, flexible
work, workplace safety, children’s work conditions
ILO standards
Resource Institutions: Water
Legislation on water rights and and ownership is complex
General Direcorate of Rural Services DSI
Resource Institutions: Environment 1983 Environmental Law Polluter pays principle Large number of regulations endorsed since
then in support of the law, spcify emission and discharge standards, and require pollutants to obtain discharge permits
Erosion, residues, water pollution
Technology Institutions
Agricultural Research Policy TÜBITAK, MARA, SPO and the Ministries that
control the state-enterprise research organisations. National Agricultural Research System (NARS) National extension system considerable national and international effort has
gone into building up the national extension system. Yet there is dissatisfaction at all levels with its performance.
MARA organises the national extension services. MARA’s effectiveness, however, in coordinating the
contributions of the universities, its own directorates and research units, and their links with the extension services has been strongly criticised
Market Institutions
Competition and agricultural markets Ensure stable income and living standards for
rural population Often in conflict with the aim of competition
policies to ensure maximum welfare for the sociaty as a whole
Competition rules and agricultural market institutions do not often go hand in hand
The unsustainable fiscal, economic and social costs of agricultural policies led Turkey to reform the agricultural subsidy system in 2000 to contribute fiscal stabilization and to promote allocative efficiency. The reform named as “Agricultural Reform Implementation Project” (ARIP) focused on three main themes:
The first was to phase out the government intervention in the output, credit and fertilizer markets and the introduction of direct income support (DIS) for farmers through per hectare payment independent from the crop choice.
The second theme, closely related to the output price support of the first theme, has been the commercialization and privatization of SEE’s, including TURKSEKER (The Turkish Sugar Authority) and TEKEL (Turkish Tobacco Authority); restructuring of TMO (Turkish Grain Board) and quasi-governmental Agricultural Sales Cooperative Unions (ASCUs) which in the past intervened to support certain commodity prices on behalf of the government.
The third theme is one-time alternative crop payments. It provided grants to farmers who require assistance in switching out of surplus crops to net imported products. The program was intended to cover the costs of shifting from producing hazelnuts, tobacco and hazelnut to the production of oilseed, feed crops and corn.