Looking at Agriculture from a Public Policy Perspective

Agricultural Production:

Today, agriculture is one of the most important issues for the governments of countries to think about and plan. Today, societies are trying to overcome the inadequacy created by the increasing population and decreasing cultivation areas with the high productivity level that can be achieved with new production techniques. Even the periodic changes in agricultural production require the governments of countries to be very careful and cautious about planning and agricultural supports. Because agricultural production is based on a process and full control over this process is not possible. In this process, in which many variables from market conditions to global conjuncture, from climate conditions to terms of trade are effective, it is possible to control only a few of the factors. Nutrition of the society stands out as a public policy issue with this aspect. As a result, the continuation of production, which is the most important link of the chain in a healthy functioning agricultural products market, has to be the most important target of public policy.

Depending on the development of capitalism, dependence on inputs has developed primarily in agricultural production. The USA, which gained the power to direct world trade especially after the second world war, gradually dominated the seed, fertilizer and pharmaceutical market within the scope of input-dependent agricultural production, which it called the "green revolution" in the 1960s. We can say that agricultural production, which has become dependent on inputs, has become dependent on the process, especially after the Uruguay Rounds held between 1988-1992. This "process dependent"(1) structure created through value chains enabled companies controlling the process to have a say in agricultural production. This situation had a significant impact on agricultural production and trade all over the world. However, these developments in world trade are a different dimension of the issue. Within this dimension, there are also vital issues such as development programs under the leadership of the public after the second world war, creation of the division of labor in global trade with (conditional) aids made to different countries of the world. Therefore, it is not possible to discuss agriculture in all its dimensions here. I close this bet with the fact that the control of the agricultural production process has passed into the hands of companies.

Domestic Terms of Trade and Land Rent in Agriculture:

In order for agricultural production to continue continuously and in a balanced way, producers must provide a certain income. Producers are supported with different support systems in almost every country of the world so that the producers can make a profit. Thus, the nutrition problem of the society is also solved. However, if the domestic terms of trade (the ratio of the average price index of the agricultural products produced by the farmer to the average price index of the industrial products to be purchased for reproduction) are not formed in favor of the agricultural product, the farmer's income from production will decrease and perhaps turn into a loss. In this case, the farmer will choose not to produce. Therefore, it is an important public policy issue to maintain the domestic terms of trade at a level where the producer does not give up on production. Because when there is no production, there is no option other than imports to fill this gap in a short time. However, in this case, you do not have the chance to buy the product you want at the price you want.

Another situation that may lead the producer to give up the option to produce is that the ground rent is formed at a higher level than it should be. The factor that causes this is also the reason why the use of the soil for agricultural purposes is abandoned. Especially in the construction of high value-added structures (housing, business center, etc.), the land rent rises and exceeds what it should be. In this case, the landowner prefers construction, not agricultural production. Once such a political choice has been made, saying "we will not allow construction on agricultural areas" is nothing but disingenuous political rhetoric. In terms of political power, the reason for making this choice (growth with the construction sector) may be to ensure economic growth by activating many sectors in a short time. However, it should be known that this preference is not sustainable. The insistence on this choice cannot be explained on economic grounds.

Although it may seem more expensive, whether it is an agricultural or industrial product, producing a product domestically may be more beneficial for the economy than buying it from abroad. Considering the employment created, the decrease in foreign dependency and the other sectors that feed on production, it is a great danger that the idea of ​​"we give our money and import" is on the agenda as an option in the formation of public policy. This idea is also an acknowledgment of the lack of planning and the lack of a fair and balanced agricultural support system. If so, it can be said that agricultural policy as a public policy is built on personal expectations. When an agricultural product is difficult to find in the market, the customs duties on the import of that product are reset and the purchase from abroad through the importer company(s) both puts the domestic producer in a more difficult situation and provides unfair profits to the importing companies. This is also an indication of the flaws in public policy. Because the most important feature of all public activities is the observance of the public interest. All public activities that are not in the public interest are illegitimate and legally problematic.

How did it come to this point in agriculture?

When the pandemic process started in the world (early 2020), it was discussed that this process could inevitably lead to a food crisis. In fact, some exporting countries decided to restrict exports in some agricultural products at that time. In an article I wrote in March 2020, I stated that this could be the beginning of the period in which we will experience the negative consequences of agricultural policies (4). In fact, the precautions to be taken were expressed by many experts. There was every reason to provide fair and balanced support to the farmer so as not to experience a food crisis at least. Yet this was not done. Although the problems created by direct income support are known, input support to reduce the production costs of the farmer was not applied. Most importantly, the grain intervention purchase prices (5) announced for 2021 remained very low as a result of the economic developments in the last quarter of 2021, but the farmer sold his product at a low price. While commodity prices rose all over the world, these increases in agricultural inputs were much more astronomical. The increase in fertilizer and diesel prices was enough to prompt farmers to reconsider their decision to plant.

Considering the wheat import; Import amount, which was 1,116,575 tons in 2002, became 10,793,000 tons in 2019/2020, after being 6,458,000 tons in 2018/2019. On the other hand, it is seen that the cultivation areas decreased from 78,669,000 decares in 2015/2016 to 68,463,000 decares in 2019/2020 (2).

Expectations for 2022, on the other hand, point to a further deterioration. Many farmers state that they do not plant and some of those who do state that they cannot use fertilizers. A. Ekber Yıldırım, who wrote about the subject in his column in Dünya Newspaper, explains that the lowest production of wheat in the last 14 years and in barley in the last 32 years is expected, based on TUIK production estimates. The main reasons for this are; In addition to the increase in seed, pesticide, fertilizer and diesel prices, the abnormal increase in foreign currency prices due to economic problems. Another important factor is that the price increases occurred mostly after the product left the farmer's hands (3). Yıldırım also emphasized in his article that there will be a very difficult period in terms of both production and consumption in all agricultural products in 2022.

Experiences in meat and dairy products are events that should be examined with caution in terms of public policy processes. Due to the prices determined by the national milk council, which is responsible for determining milk prices, without taking into account the input costs, many of the milk producers who made losses sent their cows to slaughter. The council, which acted without foresight in timely price determination, increased the prices later, but this could not solve the problem. On the website of the National Dairy Council, the price valid as of April 1, 2022 is 5.70 TL/lt. As of 15 May 2022, 7.50 TL/lt. It has been updated (6). From the point of view of consumers, no one wants to buy milk and dairy products at high prices, but in a system where the producer is not protected, the consumer should be aware that they may have to reach that product at much higher costs. In other words, if someone makes a political statement that "we make our people drink milk cheaply", this is not goodness, it is populism disconnected from reality.

What to do next?

The consequences of public policy choices emerge over time. To point out that markets and retailers are responsible for the increase in food prices is like sweeping the mistakes made in agricultural policy processes under the carpet. Don't get the impression that I'm defending the markets here. Because the structures that make the producer dependent on the production process in global trade and make a profit from it constitute the systemic part of the problem. However, it will not be easy to ensure food safety and access to healthy and continuous food unless solutions are produced that no one will lose, with the participation of stakeholders in the process from the production of agricultural products to their delivery to the markets. Each of the factors that increase the costs of producers is a public problem and is the subject of public policy. It is possible to collect these problems under the headings of input costs, production, transportation and exchange rates. Sometimes a wrong made can make all the right meaningless. Putting the public under a huge interest burden by saying "I am not raising the interest rate" will not only cause the exchange rate to rise uncontrollably in the long run, but will also put the producer in a difficult position. Public policy is not a field of stubbornness. Unless the requirements of science and reason are done, it is not possible to get rid of the processes in which individual preferences determine the fate of the society. In other words, public policy should not be a process formed and carried out by the decisions made by a person. Planning, fair and balanced support and effective supervision in agriculture should form the pillar of public policy. This view is included in the conclusion part of my doctoral thesis, which I completed in 2011.

Another important aspect of the issue is that the preferences of the political power should not go beyond the limits of the law. The most important feature of the neo-liberal period is that the public's place in the public policies implemented in this period is in the secondary plan. If the public interest is not observed in a public activity, it is not possible to stay within the law. There are more or less violations of the law, and a privileged segment may gain unfair advantage from public resources. Any problem you see around you cannot be handled independently of the political power that has taken the responsibility of governing. Looking at problems from the perspective of public policy requires this.

Footnotes:

(1) Özkan Leblebici, Tarımda Küreselleşme Bağlamında Değer Zincirleri ve Türkiye'de Şeker Üzerine Bir İnceleme, Basılmamış Doktora Tezi, Ankara Üniversitesi, 2011.

(2) TÜİK Verileri, https://arastirma.tarimorman.gov.tr/tepge/Belgeler

/PDF... E.T.:22.05.2022

(3) A.Ekber Yıldırım, Tarım ve Gıdada 2022 Yılı Daha Zor Geçecek, Dünya Gazetesi, 2.10.2021

(4) https://www.blogger.com/blog/post/edit/

6437777967896832870/3072594389127060211

(5) https://www.tmo.gov.tr/Upload/Document/alim/

2021/hubmudalimfyt.pdf

(6) https://ulusalsutkonseyi.org.tr/ulusal-sut-konseyi-sogutulmus-cig-sut-tavsiye-fiyati-5-381...