The Shrinking Turkish Economy, Agriculture and Women Farmers

Abstract

Following the severe balance of payments crisis that erupted in 1999, Turkey signed a stand-by agreement with the IMF (International Monetary Fund) and obtained aid and credit. Faced with another crisis in February 2000, Turkey left the anchor rate initially adopted, accepting instead the flexible exchange rate regime. She followed other IMF and WB (World Bank) policy advices closely, reformed her banking system and dealt with bank failures, launched an accelerated privatisation programme, frooze the level of employment in government offices and SEEs (State Economic Enterprises), restricted wage rises, limited public investments to infra-structure only and decreased their level, reduced the budget deficit, targeting a positive ratio for expenditures other than investments over reveunes. Reform of the social security system to reduce its budgetary burden was also promised.For the agricultural sector, the program involved eliminating subsidies, discontinuing high support pricing and implementing, instead world market prices on agricultural products. Following EU (European Union) practices and backed by WB finances, farmers were distributed “direct income aid” per acre sown, with limits set both for land owners and tenants.These IMF recommended policies were started in 1999, 2000 by a coalition government of 3 political parties each with a different political and economic philosophy. They were followed till this day after a single party, with still a different philosophy came to power in the October 2002 general elections.As a result of consistent and continuous implementation of the above policies, the Turkish economy registered a remarkable recovery and her growth rate hit new highs. But the growth rate of the agricultural sector diminished precipitously; so did agricultural employment which meant a corresponding increase in the demand for employment in the non-agricultural sectors. This exodus from agriculture added to the yearly increases in the workforce seeking employment in the non-agricultural sectors. Thus, although total employment in the non-agricultural sectors started to rise significantly, changes in total employment were nominal, and total unemployment remained, more or less unreduced to this day. In the more recent years, total employment even increased.This high GNP growth rate uncompanied by reductions in unemployment has given rise to considerable social worries. Farmers were big losers. On 22.September.2004 the Chamber of Agriculture of Manisa province organized a protest meeting with the participation of nearly one-hundred-thousand farmers from all over Turkey. In the more recent years, widening current account deficit gave still another cause for concern over the future of the Turkish economy.In the meanwhile Turkey, after having been accepted a candidate member in 1999 finally strived in 17.December.2004 to obtain a definitive date to start negotiations for full membership, set as 3.October.2005. Presently the two parties are combing over the various sectors for harmonization with EU policies and stipulations. There is no doubt that agriculture will be one of the most difficult sectors and should take a long time to harmonize. Therefore, it should preferably be started at an early date. The real obstacles in the way to Turkey’s EU full-membership, however, seem to be more political and less economic, including the Cyprus issue a non-related Armenian issue and human right issues as concerns Kurdish population, the role of the military, etc.The government or at least some observers may have thought that the rapidly shriking agricultural sector since 2000 both as a percentage of GNP (Gross National Product) and employment is in conformity with the EU standards. But obviously the negative effects on employment outweights such a superficial consideration. The aim should be to increase the productivity in the agricultural sector, hence reduce the unsustainably high exodus of workforce from agriculture to other sectors. EU harmonization efforts, when started should help to increase agricultural productivity.The actual outcome of rapidly shrinking agricultural sector and agricultural employment should not be judged to be the deliberate result of IMF-advised policies. IMF and WB advices concerning implementing flexible exchange rates, eliminating agricultural subsidies, discontinuing high support pricing and following world market prices were, in essence, policies in the right direction. They ignored, however, the latest trend in the EU and the developed countries with regard to continued protectionism in agriculture, as evidenced in the WTO (World Trade Organization) meetings following the Doha Development Round: 1999 in Seattle, 2003 in Cancun and 2005 in Hong Kong. Moreover, for Turkey, two other developments, on top of the IMF-advised policy changes precipitated the negative fate of the agricultural sector. One was the inflow of finance capital, direct foreign investments and privatizations as well as foreign loans of private banks, which were mostly the result of renewed confidece in the Turkish economy. But these flows and increased supply of foreign exchange were instrumental in keeping the exchange rate at low levels. This in turn, had an adverse effect on fixing the aquivalent in Turkish liras of world market prices for agricultural products, thus unduly squeezing the profits of farmers. It also penalized Turkish industrial exports in general at a time when world markets were challenged by exports of low-wage and low-price Chinese manufactures. The second negative factor was the sharp rise in oil prices, which added a further burden on agricultural costs. These two factors also explain why recently Turkish current account deficit widened but it was unaccompanied by any significant rise in foreign exchange rates. Furthermore, for agriculture, all throughout these years the government and related agricultural organizations spent virtually no effort to raise agricultural productivity.With this historical perspective or background, section we shall review the recent changes in the Turkish agricultural sector and the situation of Turkish women farmers with the aid of statistics in the following sections. We will then proceed to draw conclusions about the future.