EXECUTIVE SUMMARY 15 EXECUTIVE SUMMARY
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1 EXECUTIVE SUMMARY 15 EXECUTIVE SUMMARY The Turkish agro-food sector has the potential to significantly contribute to the country s overall economic development, but its ability to do so will depend largely on productivity growth. To achieve this, a fundamental challenge will be to overcome the buffer role traditionally played by agriculture; labour resources must be re-allocated to more efficient uses within and outside this sector. In essence, agricultural productivity growth in Turkey will depend on the extent to which the country s overall economic and human development enables rural people to generate income outside low-technology agriculture. Turkey has made significant progress in economic and social development since the early 2000s, but economic growth has slowed. The economy remains vulnerable to the risks of high inflation and high current account deficit, and its growth drivers need to be rebalanced in favour of greater reliance on external rather than domestic demand, and on domestic savings rather than external borrowing. This requires further progress on structural reforms in areas such as product and market regulation, labour market, education, and the social security system. There is considerable potential for productivity gains across the economy by improving firm-level productivity and re-allocating resources to higherproductivity firms. Turkey implemented various policy initiatives to stimulate investment and promote private sector activity. However, state control in certain economic sectors and the complexity of regulations pose some challenges, and the costs of doing business are higher than in world s best performing economies. While the tariff regime is liberal overall, the lack of trade facilitation reduces gains in competitiveness resulting from trade. Labour market regulations are rigid and increase labour costs, perpetuate informality in labour relations, and impede structural adjustment. In 2016, the government launched a new Action Plan which aims to improve the business and regulatory environment and includes a number of labour and product market reforms. Businesses face moderate tax burdens, and investors enjoy significant tax concessions. Financial markets have seen rapid growth; finance is facilitated through interest concessions and financial grants for businesses investing in less-developed regions, and for small and medium-sized enterprises, while the provision of reduced-cost credit for the agricultural sector is a long-standing policy. However, tax and credit policy incentives may be eroded by the rigidity and complexity of business regulations that increase the costs of doing business. Segments of the business sector represented by smaller businesses operate on an informal basis, and are unlikely to be exposed to policy incentives built into formal regimes. A reform of the regulatory system to make it more flexible would help to integrate more businesses into a rule-based framework and to provide policy incentives with broader effects. For the agricultural sector, the challenge is more complex and long-term, as it involves moving towards a fully-commercial farming system. There is a substantial lag in the availability and quality of infrastructure. In recognition of this, the development of infrastructure has been made a national priority: large investments have already been undertaken and ambitious plans formulated. Current infrastructure projects address many of the major needs of rural areas. Where agricultural productivity is concerned, there is a need for stringent monitoring and assessment of impacts of infrastructure development on the availability and quality of agricultural land and on cross-sectoral shifts in skilled labour.
2 16 EXECUTIVE SUMMARY Progress has been made in the area of education, helped by overall income growth and considerable poverty reduction, as well as educational reforms. Nevertheless, the average level of education remains modest. The education gap is particularly large in rural populations, which continue to lack essential skills, thus curbing the capacity of the sector to increase efficiency and innovate. Various initiatives for better education have been undertaken, and multiple objectives have been set. Maintaining the momentum in educational improvements by emphasising the inclusiveness of rural, low social economic status citizens, as well as of women in general, is critical to ensure agricultural development. Turkey s agricultural policy is focused on increasing agricultural production for domestic and external markets. To achieve this, the government mostly relies on price protection at the border, price premiums, and variable input subsidies. As such, the structure of agricultural producer support is distortive of market conditions and is unlikely to increase producer incentives to employ production factors more efficiently. As a result, agricultural productivity growth is constrained in the long term. Policy transfers oriented towards long-term productivity improvements such as agricultural knowledge systems, plant and animal health systems, and food safety constitute a very small share of total support provided to the sector. The transformation of the farm structure through large-scale land consolidation has recently become a major policy undertaking. Reduced fragmentation of farmland is expected to improve land use, with potential benefits for agricultural productivity and natural resource management, including water resources. The objective of environmental sustainability has been progressively integrated into agricultural policy, and specific support to producers has been introduced to stimulate the adoption of environmentally-friendly practices. Rural development is becoming a more prominent policy focus. Nevertheless, environmental sustainability and rural diversification measures currently attract a relatively small share of government spending for agricultural development. Significant efforts have been made since the early 2000s to build up national Science, Technology and Innovation (STI) capacities and to introduce new governance principles and support measures in the STI area. Tax concessions and assistance through public-private partnerships have been provided in order to stimulate business R&D. Agriculture and food are national STI priorities, and therefore benefit from special public funding schemes for priority areas. R&D outputs in the agro-food area have rapidly increased, and there has been active integration of national research into international R&D collaboration frameworks. However, there is room for improvement in STI performance, particularly where quality and impacts of STI are concerned. Policy recommendations encompass the following key areas: Improve the conditions for overall economic development in order to enable sustained agricultural productivity growth, by advancing structural reforms in areas such as product and market regulation, the labour market, education, and the social security system; pursuing efforts across policy areas to ease the rigidity of the regulatory framework, reduce the costs of doing business, and eliminate business informality; improving trade facilitation; and continuing the development and consolidation of environmental regulation, while strengthening both its implementation and environmental monitoring. Enhance capacities and services that are essential for agricultural development, in order to remove major capacity constraints to sustainable productivity growth. This can be achieved by pursuing improvements in infrastructure, with a stronger focus on impact assessment and the monitoring of publicly-funded projects; consolidating and up-scaling specific initiatives for offfarm employment in rural areas into a nationwide rural diversification framework; achieving higher education participation targets while also ensuring good quality of education; enhancing measures and underlying resources to enable the greater inclusion of rural populations in education; and promoting government-industry co-operation in agricultural education, particularly vocational education and training.
3 EXECUTIVE SUMMARY 17 Reorient agricultural policy towards better productivity and sustainability outcomes, by shifting away from support based on subsidising output and input prices; moving towards a more balanced distribution of public resources in the provision of general services for the sector; further downsizing and eventually eliminating transfers to state-owned enterprises and agricultural co-operatives; accomplishing farmland consolidation plans; and developing irrigation systems while ensuring efficient water-sharing mechanisms, water pricing, and the financial viability of systems. Enhance the efficiencies and impacts of the agricultural innovation system by increasing the policy focus on the quality and relevance of Research and Development (R&D); reinforcing these criteria in the performance evaluations of scientists, projects, and institutions; maintaining human capacity-building for STI as a principal orientation of the STI strategy, supported by the necessary resources; enabling increased R&D investment and activity by agricultural and food businesses; improving awareness of the opportunities for business development through R&D and innovation; raising the awareness of intellectual property rights amongst potential innovators; increasing the resources and human capacity of the rural extension system at local level; and encouraging the supply of extension services by private consultants. Strengthen policy analysis in order to better inform potential policy changes, and build the necessary databases and policy-relevant information. The issues that require broader analytical evidence include: agricultural productivity trends and its determinants, in particular the impacts on productivity of changes in farm size structure; the potential effects of the decoupling of agricultural support from the production of specific commodities; opportunities and pathways for rural economy diversification and off-farm employment; the impact of infrastructure and rural development projects on agricultural productivity and off-farm employment; and the effectiveness and efficiency of policy instruments to support R&D.
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5 From: Innovation, Agricultural Productivity and Sustainability in Turkey Access the complete publication at: Please cite this chapter as: OECD (2016), Executive summary, in Innovation, Agricultural Productivity and Sustainability in Turkey, OECD Publishing, Paris. DOI: This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at or the Centre français d exploitation du droit de copie (CFC) at contact@cfcopies.com.
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