OILSEEDS MARKET IN TURKEY: THE IMPACT OF INTERNATIONAL PRICE AND ALTERNATIVE POLICIES ON SUPPLY, DEMAND AND SUBSTITUTE CROPS

Ali KOÇ, John BEGHIN, Frank FULLER, Şafak AKSOY ve diğerleri

This research analyzes the effects of agricultural and foreign trade policies on the production and usage (crushing demand, crude oil demand, oil meal demand, and import demand) of oilseeds in Turkey. The effects of some policies applied to oilseeds and substitute crops and the effects of those policies related to substitute crops on the production and usage of oilseeds are also investigated.

A simulation model of Turkey’s oilseed sector, which is composed of several multi-crop, partial equilibrium models, was developed to analyze the effects of various policies on the production and usage of oilseeds. The simulation model provides baseline projections for oilseeds and their products for the next ten years (until 2008).  In addition, the model can be used to calculate the absolute and proportional deviations from the baseline projections if alternative policies are put into operation.

The econometric models, parameters, and elasticities presented in this study can be used for several other studies. The elasticities calculated from supply and demand models, which were developed to complete the simulation model, could be utilized to find answers to several questions. In the second chapter of the report, per capita annual oil consumption figures by income classes, which were calculated from the Household Expenditure Survey Results conducted by the State Institute of Statistics, are also presented. These consumption figures indicate that, as income level increases, per capita oil consumption is also likely to rise. This fact is relevant to the research findings presented below.

The baseline projections demonstrate that, if the present policies for oilseeds and substitute crops are maintained, Turkey’s imports (net trade) of oilseeds and products will continue to grow.  Sunflower oil and soybean meal imports, in particular, will reach high levels by the end of the simulation period. The 1998 sunflower seed, soybean, and cottonseed imports, totaling 671 thousand metric tons (tmt), is expected to reach an average of 828 tmt over the last three years of the simulation period. The results also show that oilseeds imports at the end of the simulation period will be 1.23 times greater than the figure in 1998. In the last three years of the simulation period, the total import level of crude sunflower seed, soybean and cottonseed oils is expected to reach an annual average of 789 tmt. This figure represents a 135 percent increase over the calibration period. It is also estimated that soybean meal imports of 375 tmt in 1998 will reach an annual average of 985 tmt towards the end of the projection period. Provided that the projected results are realized, Turkey’s expenditures for imports of oilseeds and products will exceed $1.0 billion at the end of the projection period.

In the study, the effects of four different policy changes on the oilseeds market in Turkey were analyzed. The most important of these policy scenarios examines the effects of a reduction of tariffs for oilseed products on oilseed and crude oil imports. A second important policy scenario investigates the effects of a reduction in the producer prices of wheat and barley on oilseed supply. Assumptions for the scenarios and research results are presented in detail in Chapters 6 and7.

The results of the first scenario suggest that reducing the import tariff rates for oilseeds and crude oils during the projection period to the levels applied in 1995 will result in substantial increases in sunflower seed, soybean and crude oil imports.

The second scenario indicates that a 25 percent decrease in wheat and barley prices will result in a 3 percent reduction in wheat production after 2001, whereas barley, sunflower seed, and cottonseed production expands by 3, 3, and 3 percent, respectively. The results of this policy bring to the fore the fact that the price parity between wheat and barley is significant and that price increases or decreases which keep the parity at a fixed level will generate favorable conditions for barley. Under the price environment in the second scenario, cotton fiber production increases. This increase will be approximately one-third of the increase in cottonseed production.

The elimination of the tariffs in corn imports will not cause any notable increase in soybean production but will seriously reduce corn production. According to the results of this scenario, a 19 per cent reduction in producer prices for corn will result in a 20 percent drop in corn production after the year of 2000 and a 27 percent decline by the end of the simulation period.

The results obtained from this study demonstrate that independent price changes related to wheat, barley, sunflower, corn, and cottonseed without respecting the price parities between these crops are important reasons for observed production fluctuations.

Turkey’s imports of oilseeds and products have been growing rapidly. One of the policy options that may retard this growth is to reduce the support prices for wheat and barley. Bearing in mind that Turkey has been importing substantial amounts of cotton in recent years, policies reducing wheat prices in real terms can be considered as an important option. This reduction in grain prices will not only provide an improvement in consumer welfare but also be an important reduction in feed costs for the dairy and meat sector.

To offset the negative effects caused by a price reduction on grain producers’ income, efforts should be concentrated on finding solutions which would improve productivity. Direct income support can be considered for small farms. In recent years the increase in productivity of field crops, and wheat in particular, has been very slow. In wheat farming, nation-wide surveys should be organized to investigate the production techniques and the effects of production inputs on yield levels. Feasible policies should also be introduced to eliminate those factors restricting productivity improvement in wheat, since wheat occupies more than 50 per cent of the land allocated to field crops.

Considering the present capacity and capacity utilization rates in the oil industry in Turkey, importing oilseeds rather than crude oil and meal may be a rational option. To promote this option as more profitable for the crushing sector, as well as for the national economy, however, more detailed analyses on the margins and value added are needed. For such a policy option, import tariffs may be reduced for oilseeds while keeping them constant for crude oils. If such a policy is preferred, an intervention system should also be implemented in order to keep the effective producer prices of oilseeds from falling below those of the projected levels. For this purpose, a partial deficiency payment system can be considered (see Çakmak et al. 1998 for the economic effects of the deficiency payment system). Since there is neither an intervention price nor a system of deficiency payment for sunflower seeds, reductions made in import tariffs may adversely affect producer prices.

Yayının tamamını alabilmek için lütfen bizimle irtibata geçiniz