Agriculture fares well in 2009 despite economic turbulence

Global increases in grain and food prices seem to have benefited Turkey’s agriculture sector as it enjoyed growth in 2009 amid fluctuations in government support programs, public outcries over food containing genetically modified organisms (GMOs) and the establishment of a gene bank.

The sector, employing nearly a third of the economy, is an important powerhouse due to its position as one of the main sources of employment in rural areas, especially in the lesser-developed regions of the East and Southeast. Employment, one of the most important indicators of an economy’s well being, rose by 6 percent in 2009 in the agriculture sector compared to the peak of employment in 2008. The sector employed 5.97 million people at the height of the season in July, 2009, compared to the 2008 peak of 5.62 million people. As the rest of the economy struggled with the burden of unemployment as the aftereffects of the financial crisis sunk their teeth into Turkey, the agriculture sector enjoyed what seemed to be a boom.

As unemployment was reaching levels of 16 percent in 2009, the agriculture sector, as a result of the general rise in employment during peak months, actually siphoned workers off from the rest of the economy. The number of workers in the agriculture sector as a share of the number of workers in the economy actually increased, from 25.5 percent in the peak months of 2008 and 2007 to 26.9 percent in 2009, signaling that this traditional vocation was once again becoming attractive.

Exports, the first economic activity to shrink from a global slump in demand like the one experienced after the economic crisis, actually grew in the Turkish agriculture sector, crossing the $1 billion mark for a month’s worth of exports for the first time. Exports increased by 2.5 percent in October 2009 -– the height of exports for the year -- compared to the October 2008 peak. While the aggregate economy was experiencing a slowdown in exports, a slowdown of about 28 percent when comparing the first 10 months of 2009 and 2008, the agriculture sector responded to the increasing price of food in the global market by ramping up production. “This is the sector which is most affected by an expensive Turkish lira,” said Uludağ Vegetable and Fruit Products Exports Union Chairman Orhan Gençoğlu yesterday. “If in 2010, labor, energy and other resource costs go up, but the lira does not lose value, then we are going to have a very difficult time in 2010.”

As agricultural production is highly seasonal, it is not uncommon to see the sector shrinking on a quarterly basis as production takes a hit during the colder seasons. Farmers’ Association of Turkey (TZD) President İbrahim Yetkin said in a speech in Ankara yesterday that an absence of drought and natural disasters had helped to boost production in 2009 compared to the previous year. Looking at quarterly growth rates for the sector, he revealed that the sector shrank by 0.4 percent in the first quarter of 2009, a bit better than the second quarter performance in 2008 -- a 0.7 percent contraction. However, the second quarter growth of the sector in 2009 rivaled 2008, with a 6.4 percent boost to the sector. As a share of gross domestic product (GDP), however, it seems that 2009 was a slightly worse year compared to 2008; the share of agriculture in GDP was 10.0 percent during the peak of the season in 2009, compared to 10.2 percent in 2008. Both these figures are trumped, however, by the 1983 figure of 21 percent.

‘Noah’s Bin’ commences

Turkish farmers enjoyed favorable conditions in the market this year, as a lack of droughts led to an abundant harvest.

The government kicked off the year by announcing that due to the droughts experienced in recent years throughout the world, the Ministry of Agriculture and Rural Affairs would be building the third-largest gene bank in the world, “Noah’s Bin,” in order to protect and preserve genetic diversity threatened by global warming. The ministry later announced that it would be undergoing a restructuring to consolidate the workload of several ministries and increase efficiency, and also changing its name to the Ministry of Agriculture and Nutrition.

The government’s first step in reorganizing its subsidy programs to farmers was to unveil a TL 2.6 billion support program for hazelnut producers after revealing that it would cancel procurement orders for hazelnuts in an attempt to end production on unauthorized land. Turkey, which is the world’s largest hazelnut producer, was facing trouble with abundant harvests in the past few years that put a burden on the Soil Products Office (TMO). The TMO was procuring hazelnuts from farmers -- mostly located in the Black Sea region -- but found itself quickly running out of space as farmers produced hazelnuts on illegal land. The subsidy program would encourage farmers to stop growing on unauthorized land by providing them with a direct incentive for hazelnuts currently being grown on authorized land. However, Turkish Union of Agricultural Chambers (TZOB) President Şemsi Bayraktar stated in July that the state should not leave farmers to fend for themselves in the free market and added that it must remain involved to ensure the establishment and protection of fair conditions. The president of the Trabzon Commodity Exchange (TTB), Mehmet Cirav, speaking on the issue, noted that the absence of the TMO and the Hazelnut Growers’ Union (Fiskobirlik), a union that also purchases hazelnuts from producers, will only affect 20 percent of the market and thus not influence farmers as seriously as once thought.

GMOs take the stage

In October the Ministry of Agriculture passed a bill to control the import of foods containing GMOs. The bill restricted the import of food items whose ingredients contain more than 0.9 percent GMO-derived content. The legislation drew ire as it was seen as allowing foods containing GMOs to enter the country freely, while Minister Mehdi Eker struggled to answer false accusations that his ministry was allowing the free importation of GMOs. “Our goal was to create a regulatory framework that would control food with GMOs more tightly. We wanted to protect the health of consumers and the public. Unfortunately, people calling themselves ‘experts,’ people who had no prior experience with the issue, confused the public to the fullest extent,” he noted at a food security conference in December.

After the public was riled up about the possible danger of GMO foods making it to the dinner table, the Council of State ruled to prevent parts of the regulation from fully entering into effect. The Ministry of Agriculture submitted another biosecurity bill to Parliament in December that prohibits the production of foods containing GMOs in Turkey, establishes a biosecurity commission to control the use of GMOs in the country and makes it mandatory to secure permission from the ministry to transport these products through Turkey. The original GMO regulation controlling the importing of GMO-containing products was accepted near the end of the year by the Council of State on an appeal filed by the ministry and is currently being implemented.

Sugar refineries auctioned off

The privatization of sugar refineries also created much noise this year in Turkey, as the state speeded up privatization efforts after a Council of State ruling to halt the sale of sugar refineries. “What we intend to do is to bring a more rational atmosphere to Turkey’s sugar industry,” Privatization Administration (ÖİB) Chairman Metin Kilci said in August, referring to the possible sale of 25 sugar refineries. Şeker-İş, the union representing workers in the sugar production business, went against the privatizations, claiming that they would lead to the loss of 9,000 jobs. At whispers of Gulf capital looking to purchase state-owned Turkish Sugar Refineries Corporation (TÜRKŞEKER) facilities in Kastamonu, Kırşehir, Turhal, Yozgat, Çorum and Çarşamba, sugar unions attempted to join forces to offer their own bid for the factories. In the end, Ak-Can Şeker Sanayi Co. won the privatization bid at $606 million, noting that they would be pursuing other refineries in other privatization efforts as well.

Taking into account the dismal performance of the Turkish economy in 2009, the agriculture sector fared relatively well. With new regulations controlling GMO production in place, along with the exposure of the largest hazelnut industry to the free market, it remains to be seen whether the sector will outperform the recovery expected in 2010. Whatever the case, Turkey’s agriculture sector’s performance in 2009 showed the world that it is still a force to be reckoned with.