What are the Structural Problems in the Agriculture Sector? How Do Support Mechanisms Work?

Introduction

Although nearly one third of the country's population lives in agricultural or rural areas, the share of agriculture in national income is only 8-10 per cent. The most striking trends in the agricultural sector in Turkey are the prevalence of small commodity production, highly fragmented land distribution and low productivity. The population growth rate in the agricultural sector is above the national average, which leads to the shrinkage of land through inheritance and accelerates migration to urban areas. However, the widespread land structure divided into small pieces increases the costs and leads to inefficiency in agricultural production. There is a modernisation and transformation in agriculture and animal husbandry in the world. Today, the agricultural sector is a sector developed with new technology and modern economic norms. Therefore, for the rapid transformation of the agricultural sector, land consolidation and the use of new technology are inevitable in our country. 

The agricultural sector, which is greatly affected by natural conditions, faces many problems related to production, marketing, price formation and agricultural income. Due to these problems, the price mechanism, which acts as a bridge between producers and consumers in the agricultural products market, cannot function effectively. The reason for this is that the demand and supply of agricultural products have different characteristics compared to other segments. As it is known, the price and income elasticity of the demand for agricultural products is very low. Supply of agricultural products, on the other hand, is greatly affected by natural conditions and responds to prices with a delay due to its structural characteristics. A rigid demand with low elasticity and yearly changes in production fluctuate the prices of agricultural products to a great extent. Fluctuations in prices affect the segments using agricultural products as inputs, the share of agricultural products in the consumer budget, exports and producer incomes. For this reason, the state intervenes in agricultural product markets. The intervention of the state in agricultural products can be indirect in the form of input support to reduce the cost of the product and quotas aiming to limit the supply and increase the product price, or direct in the form of price subsidies and price support such as premium system and direct payments.

In Turkey, different policy approaches and the need for reform in the agricultural sector have been brought to the agenda. The agricultural support policies that have been implemented so far have lost their effectiveness due to the inadequate reflection of the supports provided to the target group, the inability to realise the determined objectives, the heavy financial burden on public resources, and have come to the agenda as factors that hinder development targets. In the agricultural sector, it was envisaged to replace the agricultural support system, which was ineffective in financial terms but burdensome, with a support policy that could be effective, and for this purpose, a radical policy change was made with the Direct Income Support (DGD) implementation. The letter of intent given to the International Monetary Fund (IMF) on 9 December 1999 and the letter of intent given to the World Bank on 10 March 2000 played a major role in this policy change. In the letter of intent, it was stated that the medium-term objective of the reform programme in agriculture was to reduce the burden of agricultural support policies on the budget and consumers by phasing out the existing support policies based on subsidised inputs, credit and price supports for basic products. It was committed to replace the abolished subsidies with a direct income support system targeting small farmers. In Turkey, the Farmer Registration System (ÇKS) and FSA implementation, which was started as a pilot scheme in 2000, was extended throughout the country in 2001. In 2001, the upper limit land area was set as 200 decares and 10 million TL was paid per decare. As of 2002, the upper limit land area was increased to 500 decares and the amount of payment was increased to 13.5 million TL. DGD payment per decare was determined as 16 million TL in 2003 and 2004.

Direct income support (DGS) is a policy instrument that is implemented in the form of transfers from public resources in order to affect the income level of target agricultural producers. In a broad sense, this policy instrument is implemented in the form of transfers made to producers independent of production (pure decoupling or decopled payments) or compensatory payments, differential payments or premium system (deficiency payments) that are to some extent related to production, without being associated with current and future production quantity, input use or income levels. Production-independent direct income payments (decoupled payments) require that income payments to producers are independent of market prices and production. With this practice, farmers make production decisions based on expected market incomes. In developed countries, direct income subsidies are paid to increase farmer incomes without increasing production. However, it is difficult to determine the improvement in income distribution and increase in production efficiency through income support. It is also stated that direct subsidies incentivise rural areas more than other subsidies and increase employment, and if the practice is abandoned, an employment flow towards other sectors will occur due to the decrease in the incomes of those in the sector. 

As it is implemented in Turkey, FSA is not a policy instrument that includes structural adjustments and will create developmental effects on the agricultural sector. In this sense, it can be said that FSA is an agricultural policy implemented with the aim of providing purchasing power to producers in order to compensate for the loss of producer income that will arise with the removal of existing supports and the formation of prices in the free market by ensuring the registration of farmers. The main feature of this policy instrument is that since the support is not dependent on products, there is no intervention in the market functioning, production, consumption and foreign trade decisions are completely determined according to market prices and the policy implementation does not cause social welfare losses. 

1- Structure and Problems of Agriculture

After 1980, with the liberalisation and deregulation process implemented, the state gradually tended to withdraw from the agricultural sector. This process has gained new dimensions with the harmonisation with the Common Agricultural Policy of the European Union (EU), the obligations imposed by the agricultural agreements signed as a result of the Uruguay Round negotiations, and the guidance of international organisations such as the International Monetary Fund (IMF) and the World Bank. The share of agriculture in gross domestic product (GDP) started to decline rapidly after a long period of stagnation. While it declined to 25.8 per cent in 1980 and 17.3 per cent in 1990, it fell to 13.6 per cent in 2000 and to 9 per cent in 2006. In 2000, the share of the agricultural population in the total population was still high at around 35 per cent. Another factor determining the place of agriculture in the economy is its share in foreign trade. In the 1980-2006 period, there was no significant increase in the foreign trade of agricultural products in Turkey; on the contrary, the share of agricultural products in total foreign trade decreased from 7.5 per cent to 4.1 per cent. In the same period, the share of agricultural products in total exports increased from 0.64 per cent to 2.1 per cent at the end of the period. Foreign trade statistics of the agricultural sector show that Turkey has changed from being a net exporter of agricultural products to a net buyer in the post-1980 period. In the 1980-2006 period, exports and imports of agricultural products increased by two and twelve times, respectively. Especially in the short period of January-November 2006-2007, exports and purchases increased by 6.7 per cent and 61.6 per cent, respectively. In 1980, Turkey was a net foreign buyer of seven products; in 2006, it was a net foreign buyer of 13 products. Although its share in total GDP, population and foreign trade has decreased since the beginning of the planned period, agriculture still maintains its economic and social importance in Turkey. However, the agricultural sector has structural characteristics and problems specific to Turkey. These characteristics and problems in the agricultural sector are summarised below:

According to the 2001 general agricultural census results; since the amount of irrigable land is very small, dry agriculture is predominantly practised. Therefore, agricultural production is largely left to natural conditions. Almost half of the arable land is used in cereal production. More than half of the enterprises producing cereals have less than ten acres of land and do not have the chance to market their products. These producers use almost all of the product they produce for their own consumption. Inheritance law in Turkey has led to fragmentation and shrinkage of agricultural lands. Small and fragmented agricultural lands have led to a decrease in productivity and downsizing of enterprises. In this situation, producers do not have the opportunity to make profitable agriculture.  

After 1980, as a result of the gradual withdrawal of the state from the agricultural sector with the liberalisation tendency, institutions such as the General Directorate of Agricultural Control and Quarantine and the General Directorate of Soil and Water, which provided various services to farmers in the past, were disbanded, which led to disruption of service procurement and thus to a decrease in productivity.

Large increases in the prices of basic production inputs such as fertilisers, pesticides, seeds, agricultural machinery and diesel fuel have increased the cost of production and reduced the profits of farmers to a great extent, and even caused them to incur losses and incur debts. In addition, the inability to improve the soil is another factor that reduces productivity.

Under the guidance of the UPF and the World Bank, the input and credit supports given until 2000 were transformed into direct income support (DGD). This practice did not contribute to real producers, but rather benefited landowners who were not engaged in agriculture at all.

Farmers face problems in marketing the products they produce because they are not sufficiently organised. Support for the organisation of farmers and marketing of products is very inadequate and unstable in Turkey. Agricultural co-operatives do not provide marketing services and generally provide limited support to their members in terms of input and credit. 

With the liberalisation of foreign procurement since the 1980s, production in agriculture and animal husbandry, especially in animal husbandry, has contracted. Turkey, which used to be the largest livestock producer and exporter in the region, has now become an exporter. With the privatisation of the Feed Industry, Meat and Fish Institution and Dairy Industry Institution, producers have resorted to selling or destroying their products far below their value.

Due to the lack of production planning, producers produce more than necessary in some years and less in others, and cannot sell their products in years when the product is abundant. Consequently, the income of producers fluctuates constantly and the demand for other segments is destabilised.

The increase in agricultural production has been lagging behind the rate of population growth in recent years, hence the food deficit has been growing. While the population increased by 18.3 per cent in the 1990-2000 period, the increase in agricultural production was 13.8 per cent. The resulting food deficit is increasingly being met by foreign purchases, leading to an increase in foreign trade deficits. With the support policies implemented in the agricultural sector, farmers have been driven away from agriculture. In addition, with these practices, foreign trade has decreased and foreign purchases have increased, which has led to foreign exchange loss.

2- Factors Causing Change in Agricultural Support 

The burden imposed on the budget by the agricultural support policies implemented in Turkey until 2000, the prominence of political preferences in the determination of support prices, insensitivity to market conditions and the obligations arising from the agreements to which Turkey is a party necessitated a change in agricultural support policies. Although this change was partly influenced by public financing constraints, partly by Turkey's obligation to comply with the EU Common Agricultural Policies in the process of full membership to the EU and the obligations imposed by the WTO Agreement on Agriculture, it was mainly caused by the Structural Adjustment Programmes signed with the UPF.

Internal factors 

The internal factors that led to the change in agricultural policies in Turkey can be listed as follows; support purchases and input subsidies implemented until 2000 put a significant burden on the public budget, foreign debt burden had a limiting effect on support policies in terms of budgetary possibilities, current account deficit indirectly affected support policies by increasing credit purchases and foreign debt burden, and very short-term support policies were implemented instead of long-term policies due to structural problems and political instability in the agricultural sector in Turkey. Moreover, SEEs and public banks supporting agriculture borrowed at high interest rates in a high inflationary environment and interest burdens for these debts, which were not paid on time, exceeded the principal amount. Therefore, it is not the agricultural sector, but the economic conjuncture of high inflation and high interest rates and the mismanagement of the administration that caused the increase in the cost of supporting agriculture. In the 7th Five-Year Development Plan, it is stated that agricultural support policies will be restructured in order to develop production in accordance with market signals under free competition conditions and to use public resources more rationally. In this framework, it is aimed to reduce state interventions in the prices of agricultural products and instead to provide subsidies to registered producers; to phase out input subsidies; to limit the cultivation areas of products with excess supply by taking into account the production, product quality and types and land conditions of products with excess supply; and instead of these, to orientate towards the production of products with domestic and foreign demand. 

External Factors

The external factors causing changes in agricultural policies in Turkey can be listed as the reforms regarding the liberalisation of foreign trade in agriculture within the framework of the WTO Agreement on Agriculture, Turkey's obligation to comply with the EU Common Agricultural Policies in the process of full membership to the EU, and the orientation tendencies of the UPF and the World Bank. 

3- Agricultural Support Policies: 2000-2007 Period

Since 2000, one of the practices aimed at changing agricultural support policies in Turkey has been the ARIP and the other was the "Agricultural Strategy (2006-2010)" in 2004. The agricultural strategy document aims to create an organised, highly competitive and sustainable agricultural sector that addresses economic, social, environmental and international developments as a whole within the framework of the principle of efficient use of resources. According to this document, harmonisation with the EU Common Agricultural Policies and taking the WTO Agreement on Agriculture as a basis, and the implementation of support instruments for agricultural production under market conditions that will not disrupt market mechanisms are taken as basis. In this document, agricultural support instruments are listed as FSA, differential payments, livestock support, support for environmental protection programme, compensatory payments, crop insurance payments, rural development support, R&D services including competitive research grants, export incentives, some input support when necessary, credit support and the use of similar support instruments.

FSA and Area Based Agricultural Supports

According to this practice, farmers who actually produce crops on agricultural lands by using agricultural production resources were paid per decare. The upper limit of the land size to be paid was set as 200 decares. In 2002, the upper age limit of 78 years was introduced in the definition of farmer and the size of the land to be paid was increased to 500 decares. In 2005 and 2006, the lower limit of land size was announced as one decare and the upper limit as 500 decares. In 2007, it was decided to pay 3 YTL per decare for organic farming and 1 YTL for soil analysis. The farmer registration system has gradually expanded throughout the country over the years. However, since the lower limit was raised to one decare as of 2005, the number of registered farmers decreased. In this system, since product prices will be formed in the market, production will be determined according to market signals, and therefore, there will be no disruption in the market due to intervention.

Input Support

Input support consists of fertiliser, diesel, electricity, seeds, hanging fruit saplings, pesticides, irrigation water, low tariffs for electricity used in water pumps and investments.

Premium Payments

The premium payment, which first started in 1993, continued in the 2000s. The scope of the premium payment was expanded with the "Decree on the Payment of Support Premium to the Producers of Stumpy Cotton, Oil Sunflower, Soya Bean, Canola and Olive Oil" numbered 2000/1561 and the implementation communiqués of TKB. In addition, premium payments were started to be made to fresh tea producers with the Decree Law No. 2007/12516 "Decree on Payment of Support Premium to Yas Tea Producers for the Year 2007 Product "1 . 

Alternative Crop Supports

In this framework, it was planned to reduce the cultivation areas of crops such as hazelnut, tobacco and sugar beet, which have excess production in Turkey, and to grow crops such as corn, sunflower, soya, fodder crops and red lentils, which have a production deficit in the country, in the areas gained. Therefore, it is aimed to create new product patterns by reducing the production areas of products that have become a burden on the state treasury.

Incentives

It is an incentive paid per litre of milk to the producers who sell milk to the processes producing dairy products. Implemented in 1987, the milk incentive premium is still continuing. The pedigree registry application has been initiated in order to improve breed breeding. In meat production, meat incentive premium was introduced in the second half of 2004 due to high feed prices, low meat purchase prices, high interest rates on loans, inability to licence animal markets, kombina and slaughterhouses, and most importantly, inability to effectively prevent smuggled animal and meat entries, which put breeders in a difficult situation.

Compensatory Measures

These measures can be listed as Tea Pruning Compensation, Potato Wart Support, Quota Application in Tobacco, Dismantling Cost and Income Difference Payment in Hazelnut and Natural Disaster Payments. 

Livestock Support 

In order to develop animal husbandry in Turkey, the Decree Law No. 2000/467 "On Supporting Animal Husbandry" was published. The implementation of this decree covers the five-year period between 2000-2004. This decree regulates issues such as encouragement of fodder crops production, encouragement of certified breeding cattle, encouragement of artificial insemination, encouragement of new artificial insemination teams to be established. In addition, with the Communiqué No. 2004/7, for the calves born as a result of artificial insemination from cattle registered in the pedigree register and for the producers who purchase and use queen bees during the production season of that year from the enterprises that have been granted a production permit, per queen bee per animal in the purified enterprises and per unit litre of milk obtained from these enterprises with the Communiqué No. 2004/13, With the Decree Law No. 2001/3170, support payments and incentives were made per litre of milk to producers selling milk to milk processing plants producing dairy products with double-walled boilers, pasteurisers or UHT systems, and with the Communiqué No. 2003/16, support payments and incentives were made to trout, sea bream and sea bass breeders who have aquaculture certificates. In addition, in order to protect animal genetic resources, it was decided to make support payments of 350 YTL for bovine animals and 60 YTL for ovine animals and 30 YTL for ovine herds for the development of domestic animal genetic resources for 2007.

Import Protection and Export Subsidies for Agricultural Products

In order to protect agricultural producers or agricultural production against foreign competition and to encourage producers, duty-free imports of pharmaceutical raw materials or duty-free imports of breeding animals are allowed. In addition, in order to protect agricultural producers, high customs duties are applied to minimise foreign competition and to protect domestic producers, adhering to WTO rules. In Turkey, incentives for the export of agricultural products are categorised into two groups: product-based incentives and incentives for enterprises. On the other hand, incentives for enterprises are provided within the framework of support for domestic specialised fairs of international nature; support for environmental costs; research and development assistance; employment assistance; support for participation in fairs abroad; support for opening offices/stores abroad, support for business and brand promotion activities; support for patent, utility model certificate and trademark activities; support for branding of Turkish products abroad, promotion of the image of Turkish goods and support for TURQUALITY®; market research and marketing support and training and consultancy assistance. 

Support through Prices and Purchases

With the 5 April 1994 decisions, the scope of support purchases, all costs of which were borne by the state, was limited to cereals, tobacco and sugar beet. From 1994 to 2002, there was no change in the scope of support. In 2005, with the Decree No. 8872 "Decree on Payment of Support Premium to Cereals Producers", support per kilogram was introduced to the producers of domestically produced wheat, barley, rye, oats and paddy on condition that the sales certificate is shown. Since Turkish Sugar Factories A.Ş. has not been completely privatised, sugar beet purchases continue. In addition, tobacco purchases are also made by TEKEL A.Ş. However, TEKEL A.Ş., which was privatised in 2002, was sold to the private sector on 22.02.2008. Thus, the practice of incentivising agricultural production, which affected agricultural markets through support purchases, was terminated.

Agricultural Insurance Support

"Agricultural Insurance Law" numbered 5663 was enacted in 2005 in order to eliminate the grievances of producers in the face of natural disasters. Within the scope of the law, 50% of the insurance policies of the producers are covered by the state. In 2006, hail, animal life insurance and frost insurance programmes were initiated in 90 districts on a pilot basis. By the end of 2006, a total of 10,592 policies were issued, 370 in animal life, 10,002 in crop production, 216 in greenhouse insurance and 4 in poultry life insurance. It is aimed to generalise the agricultural insurance practice throughout the country in 2007. Agricultural Insurance covers crop insurance, greenhouse insurance, dairy cattle life insurance, poultry insurance, aquaculture insurance and excess of loss support. In 2007, it was stated that 50% of the policy amount within the scope of agricultural insurance would be covered by the state.

Support for the Protection of Agricultural Lands for Environmental Purposes (ÇATAK)

"Project for the Protection of Agricultural Lands for Environmental Purposes" (ÇATAK) has been prepared in order to protect water and soil quality and natural vegetation in sensitive areas exposed to erosion and adverse environmental impacts, to prevent erosion, to abandon the production of surplus agricultural products, to apply alternative products and production models and to prevent environmentally damaging agricultural activities. This project is planned to be financed by the state budget between 2006-2010. Payments were determined as 40 USD for the first and third categories and 90 USD for the second category per decare for three years. However, it is stated in the regulation that producers who benefit from this support cannot benefit from DGD.

Research and Development Supports (R&D Supports)

In order to develop information and technologies related to the priority issues required by the agricultural sector and to transfer them to farmers and agricultural industrialists, the Decree Law No. 2007/12410 on "Support Payment for Research and Development Projects" was published. Implementation Communiqué No. 2007/42 sets out the procedures and principles of the support. In 2006, YTL 3 million was allocated for R&D support to be used in emergencies. 

4. Transformation in Agricultural Support Policies and General Evaluation

Change in Premium System

The premium system applied to oilseeds such as bulk cotton, oilseed sunflower, soya bean, grain corn, canola and safflower, for which Turkey has a supply deficit, has been changed as of 2007. In the new premium system, WTO rules and the 10% de minimis support dimension, the EU Common Market Order harmonisation acquis and the transition to the structural support programme will be taken into account. The structural support programme includes basic payment (single payment) system, use of technology, organised and contracted production, quality criteria, certified seeds and products, stock exchange registration of products and registration of the sector as a whole. The implementation of the new premium system will be carried out with a five-year BKK covering the years 2007-2011 and an implementation communiqué to be issued every year, premium amounts will be determined on an area basis without any additional increase in the 2007 support premium budget, the premium support for product sales (YTL/kg) in practice will be transformed into a payment system on an area basis, two thirds of the total support on an area basis will be paid as basic support and one third will be paid as support for registration and controlled qualities such as technology, quality criteria, certified seed use, organisation, contracted production and stock exchange registration. 

Amendment in FSA

At the end of 2007, the Minister of Agriculture and Rural Affairs announced that the FSA was more beneficial for large landowners than for small farmers, that the way agricultural subsidies were provided would be changed as of 2008, and that subsidies would be provided according to productivity and regional product pattern. He also stated that as of 2008, regional support would be introduced and regional support would be differentiated according to the product. The change in agricultural subsidies was included in the Action Plan announced by the 60th Government on 10 January 2008, in the article coded SFL-01 as "Agricultural subsidy practices will be reviewed and transformed into a form that will contribute to the agricultural sector to achieve a competitive structure". Implemented in 2000, FSA was paid to landowners every year per decare of land they owned, even if no production was carried out on it. However, since 2008, it has been decided to support the product, not the land. In practice, the government will determine which product will be supported and how. Many civil society organisations have commented on the abolition of FSA as a positive development.

General Evaluation

The FSA, which started to be implemented in Turkey in 2000, was based on the principle of making payments per decare only on the condition of sowing. Therefore, it was a form of support that did not aim to increase production, and was more of a social aid than an agricultural support. Therefore, although it was criticised by many, it was implemented for eight years and a farmer registration system was established. In addition, the premium support for oilseeds, cereals and tea, which Turkey has a supply deficit in this period, has been a tool of production planning, although its share is low. During the 2000-2008 period, agricultural subsidies and their share in GDP increased, but never reached 1 per cent. When the revised GDP (1998-based) is taken into account, it is observed that this share has fallen even further. The share of these supports in the budget, on the other hand, has increased over the years. In 2001, 49 per cent (YTL 501 million), in 2002, 79 per cent (YTL 1.469 billion) and in 2003, 83 per cent (YTL 2.320 billion) of the agricultural budget was used for FSA. Since 2006, the share of FSA has been reduced. 

General Analysis of FSA Implementation

According to the studies conducted in Turkey, a statistically significant relationship was found between the variables of age of the owner, membership to agricultural cooperatives, gross production value obtained from the enterprise, enterprise land width, number of pieces of land, property land width and cultivated land width between the enterprises benefiting and not benefiting from the FSA payment. The calculations and observations made in the research area confirm that small producers have difficulties in entering the system, whereas large producers benefit more from the system by taking into consideration the expenses to be incurred since the amount of DGD they will receive will be higher or by dividing their land to the upper limits determined in various ways (200 and 500 decares). The results of the research also support the fact that with this form of implementation and the current structure of agriculture, the FSA is far from being an instrument that will ensure that the support provided reaches the poor farmers as claimed in the IMF letters of intent. 

In addition, it is stated that the FSA policy, which has been substituting agricultural support purchases and input subsidies since 2001 in Turkey, does not affect agricultural production with its current implementation in Turkey, and that FSA payments paid on land create an imbalance between regions, holdings and products.  Since there is no criterion that determines the low income of farmers in making the DGD payment, there is no social approach to support small farmers. In order for a support to be social in nature, it should favour disadvantaged groups and have features aimed at eliminating the existing income imbalance. It can be said that the FSA, which targets poor farmers in order to eliminate the income imbalance among farmers, is a tool for establishing the Farmer Registration System (FRS) as implemented in Turkey. In addition, it is also possible to say that, as a side effect of the FSA payment, it gives purchasing power to large farmers and increases their resistance against market forces. It should be noted here that if the support to be given for a product or a target group does not enable a structural improvement in both cases, it may lead to misuse and waste of resources. Depending on the product to be selected, it will affect not only that product and its producers, but also the markets of complementary and substitute products, and wrong implementations may lead to disruption of balances. A support to small farmers will encourage small farmers to remain in agriculture, structural improvements will not be achieved and the number of agricultural workers will not be reduced. 

The aim of agricultural policies is not to protect and look after small enterprises and guarantee their existence, but to ensure that they reach an optimal size and enter into a rational working environment. In the process of realising this objective, a distinction must be made between farmers and peasants, and who is a farmer and who is a peasant must be determined. After this distinction, enterprises that actually produce for the market should be supported with agricultural subsidies, while the others should be supported with social support projects in a way not to cause social problems. There are different subsidy systems applied for different purposes in the world. In Turkey, there may be different applications according to the purpose determined. In Turkey, it is seen that FSA does not yield favourable results since its purpose is not clearly defined except for the ÇKS.

In line with the research findings, recommendations that can shed light on both regional and national agricultural policy makers are presented below; 

• FSA should be a direct support to income. In other words, those who earn income from agriculture should benefit. Sales receipt (producer receipt) can be made compulsory instead of farmer certificate. In order to ensure an effective implementation of direct income support, it should be associated with and supported by programmes such as regional and rural development and environmental protection.
• If it is to be implemented as social assistance, the purpose should be clear and limited to the target group (poor farmer orientated).
• If it is politically palatable, it can be regional/local.
• If it is aimed to enlarge enterprises, it can be paid to large enterprises (mergers, consolidation, sales between siblings).
• Membership to producer organisations should be a condition.
• In terms of product orientation, it can be linked to previously supported or deficit products and input use.
• In Turkey, Direct Income Support may offer opportunities as a national agricultural support policy in terms of having a less disruptive effect on the economy. However, in order for this to be realised and for the policy objectives to be achieved, it is critical that the objectives of direct payments are well defined and clearly demarcated. The policy implementer should recognise that the objective cannot be achieved simply by fulfilling a number of technical issues. It can be said that Direct Income Support implemented for an appropriately designed purpose will be effective both in achieving policy objectives and in ensuring the efficient allocation of resources.

Conclusion

ARIP was implemented within the framework of the agreement between Turkey and the World Bank in 2000. With this project, it was aimed to abolish price and input supports, to switch to FSA and to reduce government intervention by privatising state enterprises operating in the agricultural sector. Thus, the transformation process in agricultural support policies in Turkey started. Since this period, support policies have mainly taken the form of FSA and premium payments. However, FSA could not create a productive and competitive agricultural sector that should develop on the basis of productivity. These payments had nothing to do with production and productivity; on the contrary, they led to the transfer of more resources to producers with high income levels rather than poor producers. With the way it is implemented, it can be said that FSA is not a support method compatible with Turkey's agricultural production level and the socio-cultural structure of producers. Moreover, there have been continuous disruptions in FSA payments. For example, livestock, drought and support premiums for 2007 have still not been paid. In addition to all these setbacks, the implementation has also been beneficial. Most of the agricultural lands in the country were registered and a farmer registration system was established. In 2004, farmers registered in the farmer registration system started to receive support according to the crop group they cultivate, and a crop pattern started to be established in the country. 

In order to harmonise with WTO rules and the EU Common Market Order, agricultural support policies in Turkey have started to transform into a new form since 2008. Accordingly, it was announced that the subsidies would be given according to productivity and regional crop pattern. However, the planting of crops has started, and since the government was not ready, no announcement was made as to which crops would be supported in which region and on which land. It is possible to say that the FSA payments based on land create an imbalance among enterprises in the research region. Producers with larger average enterprise size receive more support per enterprise than producers with smaller average enterprise land. In addition, small holdings cannot benefit from FSA payments due to reasons arising from the practice and they cannot be registered. In this way, the DGD payment, which is paid only on the basis of land without being associated with production, contributes more to large landowners and less to small landowners, rather than correcting the income distribution as expected, and further distorts the existing balance. 

On the other hand, with the appropriation in the 2008 budget, 2007 payments will be realised, therefore there is no appropriation for crop support in 2008. Moreover, there is no explanation on the diesel and chemical fertiliser support given as DGD payments. In addition to FSA, premium payments have also been included in practice. These payments have been directed to oilseeds such as cotton, oilseed sunflower, soya bean, grain corn, canola and safflower, for which Turkey has a supply deficit. However, in order to harmonise with WTO rules and EU Common Agricultural Policies, it was announced that the premium system applied to oilseeds would be changed as of 2007. In the new system, efforts have been initiated to transform the premium per kilogram into area-based support. Accordingly, the form of support for crops such as canola, corn and safflower, which are used in biodiesel production and have a supply deficit, is being changed. With this practice, premium payments are not increased, but converted into area-based support, as in the case of FSA.

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