Rise in Turkish food prices sparks fears of shortages

Turkey, a major agricultural producer, might find itself grappling with water shortages and food insecurity in the next decade unless it takes action to address growing problems in its agricultural sector.

With its food inflation already above 17%, crisis-hit Turkey is bracing for further increases in food prices amid looming declines in key crops due to drought, coming atop already serious problems in the agricultural sector and the country’s unremitting currency woes.

A fifth of the average household budget in Turkey goes to food, with the rate reaching up to 30% in low-income groups, according to official data. And with the country’s income distribution notoriously unfair, millions of people in low- and middle-income groups are highly vulnerable to food prices and food insecurity.

Inflation data, released by the Turkish Statistical Institute last week, show that food prices were up 17.49% year-on-year in May, compared to an overall consumer inflation of 16.59% in the same period. In some key categories such as cereals and processed food, including bread, the price increases were even higher, hovering at nearly 20%.

Moreover, the institute has made some alarming forecasts for the agricultural sector this year due to drought. Average precipitation levels have fallen 25% below normal seasonal amounts, highlighting the ever-growing impact of global warming.

The output of cereals and other vegetative products is expected to drop to 67.9 million tons from a record 71.3 million tons in 2020, according to the institute. The same study estimates that the output of wheat — a strategic crop and a key product for the food sector — will decrease 7.3% to 19 million tons from 20.5 million tons last year, the steepest drop in recent years. The overall decline in grain crops is expected to hit up to 5%.

More than 20 of Turkey’s 81 provinces have been seriously affected by decreasing precipitation since last year. In the southeast, the worst-hit region, wheat, barley and red lentil yields are expected to drop by 20% to 80%. Crop yields are expected to decrease by 25% in the central province of Konya, one of Turkey’s main breadbaskets, and by about 20% in Sivas to the east.

All this comes atop long-running structural problems that have been pushing up the prices of agricultural products and processed food, including shortages in the domestic agricultural output and a flawed chain from the farm gate to the consumer, in which middlemen make exorbitant profits.

As a result of production declines, the sufficiency rate — or the extent to which domestic production meets domestic demand — is bound to fall in many products. The gaps would require more imports, which, in turn, have been growing costlier due to the ongoing devaluation of the Turkish lira.

Turkey, which used to boast of being one of the rare self-sufficient countries in terms of food in the world, has become an agricultural importer in recent years.

In the 2019-20 market period, Turkey’s sufficiency rate in grain products stood at 87.8%, meaning the country had to resort to imports to meet the outstanding demand. The sufficiency rate was 89.5% in wheat and 75% in corn, a prime input in the fodder industry.

In the first four months of the year, the country imported $3.6 billion worth of agricultural products, including food and live animals, up from $3.5 billion in the same period in 2020. Though exports in the same category totaled more than $6 billion in the first four months, the figures illustrate a remarkable trend, where the worth of the country’s agricultural imports has risen to more than a half of the worth of its agricultural exports. In 2020, agricultural imports totaled nearly $10 billion, accounting for about 5% of all imports, a rate that critics see as a cause of concern for a country that is among the world’s largest agricultural producers.

The rising bill of imports has to do also with the increase in global commodity prices on top of the slump of the lira, which this year alone has meant a nearly 19% increase in the price of the dollar as of mid-May.

And while the problem of drought stems from global warming and affects many countries across the world, the decline in Turkey’s agricultural sector owes equally to inadequate and ill-advised government policies.

The main grievance of agricultural producers is that the ruling Justice and Development Party lacks a comprehensive vision and long-term plans for the sector. The government has frequently given the green light to imports to cover production gaps, paying little attention to price dynamics. This approach has not only failed to be a solution, but harmed local producers. With no clue about when and what imports the government will permit and incentivize, local farmers have been jumping from crop to crop, with many quitting the sector in the process. Young people, in particular, have been losing interest in agriculture, fueling migration waves to big cities. The drift away from agriculture has served to stoke Turkey’s unemployment rate, which stands at 12.9% officially, but reaches nearly 28% according to a broader definition of unemployment deemed as more realistic, meaning about 10 million jobless.

The goals of curbing inflation and ensuring food security are both dictating planning in the agricultural sector as well as a review of production and consumption patterns in line with the drier climate conditions. Simultaneously, Turkey needs to plan the use of its water resources, focusing on maximum saving. As experts warn, a combination of factors such as drought, population growth and migration could make Turkey a country plagued by water shortages and food insecurity in the next decade unless adequate measures are taken.

Al-Monitor

Tags: Turkey, rice