Turkey has been denied admission into the European Union (hereafter abbreviated as: EU). A variety of explanations for Turkish brush-offs have emerged; non-financial concerns are the mainstay of these. For example, in 2002 a long list of countries was being considered by the EU (Cyprus, Czech Republic, Estonia, Hungary, Malta, Latvia, Lithuania, Slovakia, and Slovenia); Turkey was noticeably absent. The Commission, the EUs executive arm, said Turkey didnt meet the political criteria even to get a possible date to start talks on membership. (Wall Street Journal)
Turkey had, contrary to the impression left by the EU commission, taken a range of steps at political reform such as abolishing the death penalty, granting Kurds greater freedoms of speech, and making substantial human rights improvements; and the article went on to speculate that: The real problem here is that many Europeans dont want Turkey in their club at all. Their view is that Europe is for Christians . . . What about the financial consequences of admitting Turkey to the EU? They said nothing about it. Turkish admission would pose financial challenges to the EU due to tariffs and subsidies attending its Common Agricultural Policy (CAP).
DEFINITION OF AGRICULTURAL POLICY
The Common Agricultural Policy (CAP) is a system of European Union agricultural subsidies and programmes.
The CAP combines a direct subsidy payment for crops and land which may be cultivated with price support mechanisms, including guaranteed minimum prices, import tariffs and quotas on certain goods from outside the EU. Reforms of the system are currently underway reducing import controls and transferring subsidy to land stewardship rather than specific crop production (phased from 2004 to 2012). Detailed implementation of the scheme varies in different member countries of the EU.
Until 1992 the agriculture expenditure of the European Union represented nearly 48% of the EUs budget. By 2013, the share of traditional CAP spending is projected to decrease significantly to 32%, following a decrease in real terms in the current financing period. In contrast, the amounts for the EUs Regional Policy represented 17% of the EU budget in 1988. They will more than double to reach almost 36% in 2013.
The aim of the common agricultural policy (CAP) is to provide farmers with a reasonable standard of living, consumers with quality food at fair prices and to preserve rural heritage.
Agricultural policies can be divided into two groups. The first group is called as productive policies since it aims at the improvement of efficiency in the use of resources both in production and consumption. Areas such as, research, reduction of transaction costs, infrastructural services, quality and standard control, crop insurance, and extension services, all geared towards increasing the economic growth, are included in this group. Second group which can be named as distributional policies, on the other hand, consists of policies such as price supports, deficiency payments, interventions at the border, input subsidies, subsidized credits, by which wealth and income are transferred to agricultural producers from the rest of the economy (Rauser, 1992). Economic and political returns of the policies embodied in the first group are paid back throughout the time, and especially during the initial periods, it requires to transform the institutional structure and use of public resources for effective organization. On the other hand, political returns of the policies that only include transfers, are recouped in the short run; yet according to the preferred tool, the burden of the transfers on consumers and budget could reach to unaffordable levels. With an historical perspective, governments in Turkey tend to choose the second group in order to strengthen their political power. Changes required in the agricultural policies of Turkey originate not from the size of transfers but from the type of preferred policies. Discussions on agricultural policies should not be based on the size of support, but instead should be the balance between the productive policies and distributional policies in the set of implemented policies taking into consideration international and domestic factors. The long-term objectives of agricultural policies obviously need to be the improvement of productivity in the sector. Otherwise, given the ongoing developments, the sector will face a challenging international competition. Major policies to accomplish the change are technological development, improvement of productive resources, and reduction in the price interventions. The major obstacle in getting rid of price intervention policies is the absence of markets or the existence of imperfections in some input and output markets. Clear definition of property rights in land is the major issue in rural areas. The lack of appropriate cadastral works prevents agricultural land markets to work, and it also limits the access of small farmers to credit. In the output markets, at least in some relatively less developed regions of Turkey the transaction costs are still high due to the lack of well developed exchange markets. The prevailing conditions of the markets hinder structural transformation. In addition, it constrains the set of policy tools or decreases the chances for success of the new policies. Regulation of the markets, correction of the externalities, and the provision of public goods are the major duties of the state. Hence, it is necessary to upgrade the capacity of agricultural policy environment to handle the policy reforms. The picture of the agricultural sector is not encouraging. Despite large transfers to the sector labor and land productivity measures are growing at declining rates. Trade position is shifting from being a netexporter of agricultural products to net-importer. The source of transfers is mainly the consumers with a significant welfare cost. The burden of support falls more on low-income consumers. The form of support contributes to income inequality, and the widening of absolute income differentials in the rural sector. Although rural income distribution is more equal than urban distribution, rural average income per household was 42% lower than the urban average in the last income distribution survey (SIS, 1997). Poverty is more prevalent in the rural area.
What will the Common Agricultural Policy cost in the condition of admission of Turkey?
Turkey would not only be subject to the market price level resulting from various market policies under the CAP, but to the CAP itself which is mainly financed by the EU budget. Main budgetary items are the direct payments to producers under the first pillar of the CAP, and payments under the second pillar of the CAP, including various types of rural development measures, e.g. payments under environmental programs and investment subsidies.
Due to the long period expected before accession, the time component is extremely important when analysing the effects of applying the CAP to Turkey. Four areas of interest play a major role, not least, the state of the CAP itself. Many reforms of the CAP yet to be implemented are already determined, including partial decoupling of direct payments under the Mid-Term Reform. Others can be guessed at on the basis of specific reform proposals, such as price reductions and direct payments foreseen for the sugar market regime. Still, for 2015 it seems arbitrary to formulate one future CAP. Rather the analysis needs to frame a set of scenarios of how the CAP could look like in 2015, and which components and to what degree would be implemented in Turkey in case of accession. The second important area of interest in determining the budgetary cost and net transfers to Turkey resulting from the CAP is the state of the Turkish agricultural sector at the time of accession. As a result of changes in world market prices, technological progress, increasing incomes and population, and many other factors, the Turkish agricultural sector will be different in 2015. In addition, accession itself will affect the allocation of resources in Turkish agriculture. A third determining factor for net transfers to Turkey is Turkeys contribution to the EU budget in case of accession. As the contribution of member states to the EU budget is mainly determined by the size of their GDP, shares in GDP are a good indicator for shares in the EU budget. But Turkeys share in the total GDP of a potential EU-29 in 2014 may be very different from that today, as economic growth in the EU-25 (-28) up to 2015 may be different from that in Turkey. And finally, the conditions of Turkish accession to be negotiated between the EU and Turkey will significantly determine budgetary flows. For example any transition periods for fully applying direct payments, the level of payments under the second pillar of the CAP, and the size of quotas for any quota products are all negotiable factors.
Governmental interferences with market process often reduce wealth creation by turning circumstances that would naturally foster cooperation between diverse peoples into those that instead foster division and bitterness. Since as early as 1963, Turkish applications to join the EU club have been rebuffed via various and sundry non-financial rationales, explanations, excuses and conjectures: Religion, human rights, and political criteria are examples. Straightforward demand/supply analyses show that admission of Turkey, a regional superstar in agricultural production and exports, would pose financial challenges to the EU due to its Common Agricultural Policy that interferes with free market process with tariffs and subsidies. (These tariffs and subsidies are a governmentally created Frankenstein; they grossly pervert the market processes that would naturally give rise to ever greater cooperation between the Turkish people and other Europeans. Such monstrous political transmogrifications of economic freedom make all of Europe, Turkey included, poorer.)
AGRICULTURAL POLICIES IN TURKEY: THE PAST AND THE PRESENT
Policies in the past
During the last decade agricultural sector in Turkey registered a very low growth rate (0.4%) with wide fluctuations. The historical development of real agricultural value added for the last half century suggests that, stagnation in agriculture is not a new phenomenon and appears to be a rule rather than an exception. Growth in real value added in the past has been in upward jumps in every 7-9 years. The magnitude of the jumps became smaller over time with fluctuations around the established levels due to weather conditions. Different policy weights in agriculture contributed to the jumps in the agricultural output: Increase in area sown in early 60s; support to using chemical fertilizers in late 60s; increase in irrigated area and support to mechanization in 70s; support to use of high yielding seeds, fallow reduction programs and new crop rotations in 80s have been the major technological and input augmenting developments that contributed to jumps in agricultural output. No significant productive advance has been realized in the last decade which resulted in the continuation of the stagnation of the earlier period. Stagnation of growth in agriculture is not valid for all sub-sectors. Cereals and pulses have a negative impact on the growth of output. Among cereals yield decline, especially of wheat is the major source of this negative contribution. The negative contribution of these major crops is offset by industrial crops, tuber crops, vegetable and fruits. Prior to the start of structural adjustment program in 1999, total producers subsidy in Turkey showed a significant increase. The contribution of agricultural policies to the farmers revenue increased by 2.7 folds, from USD 2.7 billion to USD 7.6 billion from mid-80s till the end of 90s. The average total transfer to agriculture between 1998-2000 was about USD 11 billion. About USD 7 billion reached the farmers. Consumers transfers through higher prices amounted to USD 5 billion, and the remaining USD 2 billion was paid from the budget. General services expenditures, USD 4 billion, made up the rest of the total transfers. Major item in the GSSE for Turkey consists of the expenditure of the state intervention agencies and cooperatives to implement government policies.
Agricultural policies in recent years
Turkey has embarked on an ongoing structural adjustment and stabilization program towards the end of 1999. Agriculture has been selected to undergo heavy adjustment due to the ineffective set of policies and its increasing burden on government expenditures in the last decade. Even without the macroeconomic stabilization program, several additional factors would have forced Turkey to enter into a phase of agricultural policy reform. New round of negotiations for WTO Agreement on Agriculture is expected to be a challenging process and the issue of alternative policy tools in agriculture will remain as a major item in the agenda of multilateral trade negotiations and hence in the domestic policy debates in the coming years. Turkeys candidacy for membership to EU has also added a new dimension for the changes in agricultural policies. Protective trade policies in major crops combined with government procurement, input subsidies, and heavy investment in irrigation infrastructure on a fully subsidized basis have created a net inflow of resources from the government to agriculture, but have had many negative effects on the sector and the economy at large. As it is mentioned in the previous section, the benefits of the subsidies have gone mainly to larger, wealthier farmers. In addition, the support system failed to enhance productivity growth despite its heavy burden on taxpayers and consumers. The reform program targets to diminish drastically heavy involvement of the state in the agricultural sector. The major aims of the reform are to decrease the distortions and the financial burden of support. Removal of the input (especially fertilizer and credit) subsidies, decrease the state procurement activities together with the privatization of the related state economic enterprises and restructuring of the sales cooperatives summarize the major parts of the program. Major additional rather new tool is the direct income support determined depending on the cultivated area. The direct income support (DIS) is intended to provide the farmers safety net as a result of the elimination of the current mechanisms of support. The DIS is not contingent on input use or output production decisions of the farmer, and hence it is decoupled. Currently, the payments are moderately targeted. The farmers are eligible to receive a fixed amount of payment up to 50 hectares of cultivated land. The government intends to make the DIS payments more targeted towards the poor in the future.
Elimden geldiğince türkçeye çevirip göndermeye çalışcam birazdan
Kaynak http://en.akademikperspektif.com/2015/02/01/turkeys-admission-european-union-common-agricultural-policy/ erişim 04.02.2015
Turkey had, contrary to the impression left by the EU commission, taken a range of steps at political reform such as abolishing the death penalty, granting Kurds greater freedoms of speech, and making substantial human rights improvements; and the article went on to speculate that: The real problem here is that many Europeans dont want Turkey in their club at all. Their view is that Europe is for Christians . . . What about the financial consequences of admitting Turkey to the EU? They said nothing about it. Turkish admission would pose financial challenges to the EU due to tariffs and subsidies attending its Common Agricultural Policy (CAP).
DEFINITION OF AGRICULTURAL POLICY
The Common Agricultural Policy (CAP) is a system of European Union agricultural subsidies and programmes.
The CAP combines a direct subsidy payment for crops and land which may be cultivated with price support mechanisms, including guaranteed minimum prices, import tariffs and quotas on certain goods from outside the EU. Reforms of the system are currently underway reducing import controls and transferring subsidy to land stewardship rather than specific crop production (phased from 2004 to 2012). Detailed implementation of the scheme varies in different member countries of the EU.
Until 1992 the agriculture expenditure of the European Union represented nearly 48% of the EUs budget. By 2013, the share of traditional CAP spending is projected to decrease significantly to 32%, following a decrease in real terms in the current financing period. In contrast, the amounts for the EUs Regional Policy represented 17% of the EU budget in 1988. They will more than double to reach almost 36% in 2013.
The aim of the common agricultural policy (CAP) is to provide farmers with a reasonable standard of living, consumers with quality food at fair prices and to preserve rural heritage.
Agricultural policies can be divided into two groups. The first group is called as productive policies since it aims at the improvement of efficiency in the use of resources both in production and consumption. Areas such as, research, reduction of transaction costs, infrastructural services, quality and standard control, crop insurance, and extension services, all geared towards increasing the economic growth, are included in this group. Second group which can be named as distributional policies, on the other hand, consists of policies such as price supports, deficiency payments, interventions at the border, input subsidies, subsidized credits, by which wealth and income are transferred to agricultural producers from the rest of the economy (Rauser, 1992). Economic and political returns of the policies embodied in the first group are paid back throughout the time, and especially during the initial periods, it requires to transform the institutional structure and use of public resources for effective organization. On the other hand, political returns of the policies that only include transfers, are recouped in the short run; yet according to the preferred tool, the burden of the transfers on consumers and budget could reach to unaffordable levels. With an historical perspective, governments in Turkey tend to choose the second group in order to strengthen their political power. Changes required in the agricultural policies of Turkey originate not from the size of transfers but from the type of preferred policies. Discussions on agricultural policies should not be based on the size of support, but instead should be the balance between the productive policies and distributional policies in the set of implemented policies taking into consideration international and domestic factors. The long-term objectives of agricultural policies obviously need to be the improvement of productivity in the sector. Otherwise, given the ongoing developments, the sector will face a challenging international competition. Major policies to accomplish the change are technological development, improvement of productive resources, and reduction in the price interventions. The major obstacle in getting rid of price intervention policies is the absence of markets or the existence of imperfections in some input and output markets. Clear definition of property rights in land is the major issue in rural areas. The lack of appropriate cadastral works prevents agricultural land markets to work, and it also limits the access of small farmers to credit. In the output markets, at least in some relatively less developed regions of Turkey the transaction costs are still high due to the lack of well developed exchange markets. The prevailing conditions of the markets hinder structural transformation. In addition, it constrains the set of policy tools or decreases the chances for success of the new policies. Regulation of the markets, correction of the externalities, and the provision of public goods are the major duties of the state. Hence, it is necessary to upgrade the capacity of agricultural policy environment to handle the policy reforms. The picture of the agricultural sector is not encouraging. Despite large transfers to the sector labor and land productivity measures are growing at declining rates. Trade position is shifting from being a netexporter of agricultural products to net-importer. The source of transfers is mainly the consumers with a significant welfare cost. The burden of support falls more on low-income consumers. The form of support contributes to income inequality, and the widening of absolute income differentials in the rural sector. Although rural income distribution is more equal than urban distribution, rural average income per household was 42% lower than the urban average in the last income distribution survey (SIS, 1997). Poverty is more prevalent in the rural area.
What will the Common Agricultural Policy cost in the condition of admission of Turkey?
Turkey would not only be subject to the market price level resulting from various market policies under the CAP, but to the CAP itself which is mainly financed by the EU budget. Main budgetary items are the direct payments to producers under the first pillar of the CAP, and payments under the second pillar of the CAP, including various types of rural development measures, e.g. payments under environmental programs and investment subsidies.
Due to the long period expected before accession, the time component is extremely important when analysing the effects of applying the CAP to Turkey. Four areas of interest play a major role, not least, the state of the CAP itself. Many reforms of the CAP yet to be implemented are already determined, including partial decoupling of direct payments under the Mid-Term Reform. Others can be guessed at on the basis of specific reform proposals, such as price reductions and direct payments foreseen for the sugar market regime. Still, for 2015 it seems arbitrary to formulate one future CAP. Rather the analysis needs to frame a set of scenarios of how the CAP could look like in 2015, and which components and to what degree would be implemented in Turkey in case of accession. The second important area of interest in determining the budgetary cost and net transfers to Turkey resulting from the CAP is the state of the Turkish agricultural sector at the time of accession. As a result of changes in world market prices, technological progress, increasing incomes and population, and many other factors, the Turkish agricultural sector will be different in 2015. In addition, accession itself will affect the allocation of resources in Turkish agriculture. A third determining factor for net transfers to Turkey is Turkeys contribution to the EU budget in case of accession. As the contribution of member states to the EU budget is mainly determined by the size of their GDP, shares in GDP are a good indicator for shares in the EU budget. But Turkeys share in the total GDP of a potential EU-29 in 2014 may be very different from that today, as economic growth in the EU-25 (-28) up to 2015 may be different from that in Turkey. And finally, the conditions of Turkish accession to be negotiated between the EU and Turkey will significantly determine budgetary flows. For example any transition periods for fully applying direct payments, the level of payments under the second pillar of the CAP, and the size of quotas for any quota products are all negotiable factors.
Governmental interferences with market process often reduce wealth creation by turning circumstances that would naturally foster cooperation between diverse peoples into those that instead foster division and bitterness. Since as early as 1963, Turkish applications to join the EU club have been rebuffed via various and sundry non-financial rationales, explanations, excuses and conjectures: Religion, human rights, and political criteria are examples. Straightforward demand/supply analyses show that admission of Turkey, a regional superstar in agricultural production and exports, would pose financial challenges to the EU due to its Common Agricultural Policy that interferes with free market process with tariffs and subsidies. (These tariffs and subsidies are a governmentally created Frankenstein; they grossly pervert the market processes that would naturally give rise to ever greater cooperation between the Turkish people and other Europeans. Such monstrous political transmogrifications of economic freedom make all of Europe, Turkey included, poorer.)
AGRICULTURAL POLICIES IN TURKEY: THE PAST AND THE PRESENT
Policies in the past
During the last decade agricultural sector in Turkey registered a very low growth rate (0.4%) with wide fluctuations. The historical development of real agricultural value added for the last half century suggests that, stagnation in agriculture is not a new phenomenon and appears to be a rule rather than an exception. Growth in real value added in the past has been in upward jumps in every 7-9 years. The magnitude of the jumps became smaller over time with fluctuations around the established levels due to weather conditions. Different policy weights in agriculture contributed to the jumps in the agricultural output: Increase in area sown in early 60s; support to using chemical fertilizers in late 60s; increase in irrigated area and support to mechanization in 70s; support to use of high yielding seeds, fallow reduction programs and new crop rotations in 80s have been the major technological and input augmenting developments that contributed to jumps in agricultural output. No significant productive advance has been realized in the last decade which resulted in the continuation of the stagnation of the earlier period. Stagnation of growth in agriculture is not valid for all sub-sectors. Cereals and pulses have a negative impact on the growth of output. Among cereals yield decline, especially of wheat is the major source of this negative contribution. The negative contribution of these major crops is offset by industrial crops, tuber crops, vegetable and fruits. Prior to the start of structural adjustment program in 1999, total producers subsidy in Turkey showed a significant increase. The contribution of agricultural policies to the farmers revenue increased by 2.7 folds, from USD 2.7 billion to USD 7.6 billion from mid-80s till the end of 90s. The average total transfer to agriculture between 1998-2000 was about USD 11 billion. About USD 7 billion reached the farmers. Consumers transfers through higher prices amounted to USD 5 billion, and the remaining USD 2 billion was paid from the budget. General services expenditures, USD 4 billion, made up the rest of the total transfers. Major item in the GSSE for Turkey consists of the expenditure of the state intervention agencies and cooperatives to implement government policies.
Agricultural policies in recent years
Turkey has embarked on an ongoing structural adjustment and stabilization program towards the end of 1999. Agriculture has been selected to undergo heavy adjustment due to the ineffective set of policies and its increasing burden on government expenditures in the last decade. Even without the macroeconomic stabilization program, several additional factors would have forced Turkey to enter into a phase of agricultural policy reform. New round of negotiations for WTO Agreement on Agriculture is expected to be a challenging process and the issue of alternative policy tools in agriculture will remain as a major item in the agenda of multilateral trade negotiations and hence in the domestic policy debates in the coming years. Turkeys candidacy for membership to EU has also added a new dimension for the changes in agricultural policies. Protective trade policies in major crops combined with government procurement, input subsidies, and heavy investment in irrigation infrastructure on a fully subsidized basis have created a net inflow of resources from the government to agriculture, but have had many negative effects on the sector and the economy at large. As it is mentioned in the previous section, the benefits of the subsidies have gone mainly to larger, wealthier farmers. In addition, the support system failed to enhance productivity growth despite its heavy burden on taxpayers and consumers. The reform program targets to diminish drastically heavy involvement of the state in the agricultural sector. The major aims of the reform are to decrease the distortions and the financial burden of support. Removal of the input (especially fertilizer and credit) subsidies, decrease the state procurement activities together with the privatization of the related state economic enterprises and restructuring of the sales cooperatives summarize the major parts of the program. Major additional rather new tool is the direct income support determined depending on the cultivated area. The direct income support (DIS) is intended to provide the farmers safety net as a result of the elimination of the current mechanisms of support. The DIS is not contingent on input use or output production decisions of the farmer, and hence it is decoupled. Currently, the payments are moderately targeted. The farmers are eligible to receive a fixed amount of payment up to 50 hectares of cultivated land. The government intends to make the DIS payments more targeted towards the poor in the future.
Elimden geldiğince türkçeye çevirip göndermeye çalışcam birazdan
Kaynak http://en.akademikperspektif.com/2015/02/01/turkeys-admission-european-union-common-agricultural-policy/ erişim 04.02.2015
