Policy Impact Analyses

2024

Agricultural Support Simulations with TAGRIS (Turkish)

(Policy Impact Analysis with Turkish Agricultural Sector Model TAGRIS)

Report for "The Ministry of Agriculture and Forestry of the Republic of Türkiye"

The effects of following support policies on Turkish agriculture have been examined using the Turkish Agriculture Sector Model TAGRIS.

SIMULATION 1. Scenario of Paying 50% of Fuel Costs and 25% of Fertilizer Costs as Support
SIMULATION 2. Scenario of Paying 100% of Fuel Costs and 50% of Fertilizer Costs as Support
SIMULATION 3. Scenario of Paying 100% of Fuel Costs and 100% of Fertilizer Costs as Support
SIMULATION 4. Scenario of Paying 50% of Fuel Costs and 25% of Fertilizer Costs as Support (SIM1) and additionally, Paying 25% of Livestock Labor Costs as Support
SIMULATION 5. Scenario of Paying 100% of Fuel Costs and 50% of Fertilizer Costs as Support (SIM2) and additionally, Paying 50% of Livestock Labor Costs as Support
SIMULATION 6. Scenario of Paying 100% of Fuel Costs and 100% of Fertilizer Costs as Support (SIM3) and additionally, Paying 100% of Livestock Labor Costs as Support
SIMULATION 7. Scenario of Not Paying Any Support for Fuel, Fertilizer, and Livestock Costs

2021

Customs Union and Agricultural Products: An Armington Model Analysis on Turkey (Turkish)

(Policy Impact Analysis with the Armington Model)

with Mert SAKI

As a result of the liberalization trend that started after World War II and accelerated and continued to overcome the obstacles in international trade, the volume of foreign trade expanded. Static and dynamic effects of customs unions, which is one of the economic integrations created by countries and country groups within this liberalization trend, are an important issue. Custom Unions between EU and Turkey was established at 1996. The customs union covers only industrial goods and some processed agricultural products. The subject of the study is to foresee the static effects of the existing customs union on the basis of selected products if it covers agricultural products. Turkey's imports are measured to be realized within the scope of products handled from EU and rest of the world countries. In the analysis part of the study, the Armington model was preferred. The model accepts the assumption that the products are different due to geographical conditions and therefore the products are not perfect substitutes. Calculations were made over the import data for 30 products between 1995-2012. According to the simulation results, Turkey's total import demand for agricultural products is expected to increase by 25.4%. It is also estimated that imports from the EU will increase by 63%.

2018

Policy Changes and Their Effects in Turkish Agriculture - PowerPoint Presentation

(Policy Impact Analysis with Turkish Agricultural Sector Model TAGRIS)

Project of EBRD (European Bank for Reconstruction and Development)

The effects of following support policies on Turkish agriculture have been examined using the Turkish Agriculture Sector Model TAGRIS.

Simulation 0: Base Senario (2014-2016 Average)
Simulation 1: Custums Union (International Trade/Tariffs)
Simulation 2: 25 % Increase In Fertilizer Prices (Input Subsidy)
Simulation 3: 20% Increase in SEAP Irrigated Area (Investment, Resource Availability)
Simulation 4: 20% Increase in Irrigated Areas of SEAP and Central Anatolia Regions (Investment, Resource Availability)
Simulation 5: 20% Decrease in Cotton Deficiency Payments (Output Subsidy)
Simulation 6: 9% Net (of population growth) increase in GDP (Demand)
Simulation 7: Climate Change (Yields/Technology)

2018

Impacts of Agricultural Trade Liberalization between EU and Mediterranean Countries on Turkish Agricultural Trade: An Armington Model (Turkish)

(Policy Impact Analysis with the Armington Model)

with Volkan BEKTAS

Free trade agreements (FTAs) have become popular in recent years. One of these agreements is Barcelona Agreement (EUROMED), signed between European Union (EU) and 12 Mediterranean partner countries (MPC), including Turkey. Accordingly, association agreements have been signed between EU and MPC. However, these agreements have not completely included agricultural trade yet. The aim of this paper is to analyze the potential trade creation and trade diversion impacts of agricultural trade liberalization between the EU and MPCs on Turkey’s agricultural trade by using Armington trade model. Contrary to the traditional trade model, goods are not homogeneous in Armington Model. Trade data of 209 agricultural goods classified at 4 digit level harmonize system (HS-4) were used in the present analysis. The global trade of Turkey was disaggregated into 28 regions to distinguish the regional impacts. All Mediterranean partner countries, including Turkey, were explicitly included. The structure of the model assumes perfectly elastic export supplies for imports and perfectly elastic import demands for exports, and hence the model simulates the maximum possible changes in the imports and export for each goods. Results show that Turkey’s agricultural export will increase 4,1 %, while agricultural import will increase 9,7 %.

2012

Impacts of Agricultural Trade Liberalization Between EU And Mediterranean Partner Countries

(Policy Impact Analysis with the Armington Model and Turkish Agricultural Sector Model)

Report for SUSTAINMED (Sustainable Agri-food Systems and Rural Development in the Mediterranean Partner Countries Project) EU-FP7, Policy Oriented Research Project

In the first part of this study, using the Armington trade model, the agricultural trade liberalization between EU and mediterranean partner countries (MPCs) including Turkey is analyzed. For this purpose EU’s agricultural trade data at 8 digit level (Combined Nomenclature, CN) is used. As known, CN is comprised of the Harmonized System (HS) nomenclature with further Community subdivisions. Totally 207 agricultural sub‐chapters (goods) of CN has been seperately taken into account to represent the agricultural trade of EU. The agricultural commodities, intermediate and final products are defined according to the Combined Nomenclature. In the model, 27 regions are constructed in order to distinguish the regional impacts. All mediterranean partner countries including Turkey are seperately included as regions. In order to model the imports of EU, a nested constant elasticity of substitution (CES) function consisting of 27 import sources (regions) is employed. Similarly, the exports of EU is modelled by a nested constant elasticity of transformation (CET) function aggregator. The structure of the model assumes perfectly elastic export supplies for EU imports. Therefore, given a set of import demand and substitution elasticities, the model simulates the maximum change possible in the EU’s imports for each goods. Likewise, the model assumes perfectly elastic import demands for EU exports, hence again given a set of import demand and substitution elasticities, the model calculates the maximum change possible in the EU’s exports.

In the second part of this study, using the new version of Turkish Agricultural Sector Model (TAGRIS) the agricultural trade liberalization (or an EU membership) between EU and Turkey is analyzed. This analysis is taken from Eruygur (2008). The major purpose of this part is to evaluate the impact of Turkish integration to the EU on agriculture using an agricultural sector model for Turkey. The basic approach undertaken supplements the past efforts by incorporating Maximum Entropy to the positive mathematical programming, together with updated base period and including recent policy changes. Following the integration with EU, the net exports in agro‐food products decline mainly due to the expansion of trade in livestock products. Overall welfare effects of including agro‐food products in the customs union and membership are small. However, efficiency gains are worth to notice. Consumers benefit from declining prices. CAP supports are determinative for producers’ welfare. The results of the simulations provide also updated estimates about the possible size of CAP expenditures for Turkish agriculture.

2008

Common Agricultural Tariff of EU and Turkey: Trade Impacts on Third Countries (Turkish)

(Policy Impact Analysis with the Armington Model)

Turkey’s membership of EU will expand the coverage of already established customs union between EU and Turkey to the agricultural products. This involves not only a full liberalization of agricultural trade within the EU but also the implementation of a Common External Tariff. Trade diversion and creation effects for agro-food trade may emerge. In terms of article XXIV of GATT, the possible results of these counteracting effects are important. Trade diversion and creation effects of this possible development are analysed using the Armington assumption. The results show that Turkey’s ongoing trade flows with third countries will not decline. Trade creation effects dominate the trade diversion effects.

2007

Impact of EU Membership on Turkish Agriculture

(Policy Impact Analysis with Turkish Agricultural Sector Model TAGRIS)

Turkey’s membership to the EU will involve full liberalization of agricultural trade with the EU. The effects of liberalization are bound to depend on the path of agricultural policies in Turkey and in the EU during the accession negotiations. In order to evaluate the possible impacts of a variety of policy alternatives and scenarios, an economic modeling approach based on nonlinear mathematical programming has been used. The basic approach undertaken supplements the past efforts by incorporating Maximum Entropy to the positive mathematical programming, together with updated base period and including recent policy changes. Following the integration with EU, the net exports in agro-food products decline mainly due to the expansion of trade in livestock products. Overall welfare effects of including agro-food products in the customs union and membership are small. However, efficiency gains are worth to notice. Consumers benefit from declining prices. CAP supports are critical for the welfare of the producers.

2006

Impacts of Policy Changes on Turkish Agriculture : an Optimization Model with Maximum Entropy

(Policy Impact Analysis with Turkish Agricultural Sector Model TAGRIS)

Turkey moves towards integration with EU since 1963. The membership will involve full liberalization of trade in agricultural products with EU. The impact of liberalization depends on the path of agricultural policies in Turkey and the EU. On the other hand, agricultural protection continues to be the most controversial issue in global trade negotiations of World Trade Organization (WTO). To evaluate the impacts of policy scenarios, an economic modeling approach based on non-linear mathematical programming is appropriate. This thesis analyzes the impacts of economic integration with the EU and the potential effects of the application of a new WTO agreement in 2015 on Turkish agriculture using an agricultural sector model. The basic approach is Maximum Entropy based Positive Mathematical Programming of Heckelei and Britz (1999). The model is based on a static optimization algorithm. Following an economic integration with EU, the net export of crops declines and can not tolerate the boom in net import of livestock products. Overall welfare affect is small. Consumers benefit from declining prices. Common Agricultural Policy (CAP) supports are determinative for the welfare of producers. WTO simulation shows that a 15 percent reduction in Turkey’s binding WTO tariff commitments will increase net meat imports by USD 250 million.