1. IMPACTS OF EU INTEGRATION ON TURKISH AGRICULTURE
Erol H. CAKMAK
H. Ozan ERUYGUR
Department of Economics
Middle East Technical University (METU), Ankara

2. Introduction (Trade and tariffs) Model Scenarios & Results
Concluding Remarks
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March 15-16, Paris

3. Agro-Food Trade,
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4. Agro-Food Exports,
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5. Agro-Food Imports,
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6. Trade in raw and processed agro-food products, 1999-2005
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7. Bound and Applied Tariffs, 2006
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8. Turkey and the EU Turkey’s journey to EU started in 1963.
Membership, if it ever happens, will involve full liberalization of trade in agricultural products with EU.
Impact of liberalization on Turkish agriculture depends on:
the path of agricultural policies in Turkey and EU, and also on accession negotiations.
EU’s MED policies
Multilateral negotiations
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March 15-16, Paris

9. MODEL – 1/3
Economic Modeling Approach based on non-linear mathematical programming.
Model maximizes the sum of consumers' and producers' surplus following Samuelson (1952) and Takayama and Judge (1964).
Output prices are endogeneous to the model.
A single period static optimization model.
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10. MODEL – 2/3
Basic approach undertaken for supply calibration is Positive Mathematical Programming (PMP).
Calibration of Domestic Production
PMP with Maximum Entropy following Paris and Howitt (1998) and, particularly, Heckelei and Britz (1999 and 2000).
Calibration of Export Supply
Elasticity based PMP of Howitt (1995)
Elasticity based demand calibration.
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March 15-16, Paris

11. MODEL – 3/3 It covers about 95% of ag. production
Crop and livestock sub-sectors are integrated endogenously:
Livestock sub-sector gets inputs from crop production.
Foreign trade is allowed in raw and in raw equivalent form for processed products.
Foreign trade is differentiated for EU, USA and ROW.
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March 15-16, Paris

12. Regions in Production
The production side is disaggregated into four regions: Coastal, Central, Eastern, and GAP Region.
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13. Scenarios: EU-OUT, EU-CU, EU-IN
Base Period
Model
( )
2004 Policies
(Status Quo)
Year: 2004
Model calibrated to base period values and 2004 policy parameters
Baseline
Scenario
EU-OUT
2015
2004 Policies
(Status Quo)
Year: 2015
Model projected
to 2015
Projection to 2015
Impose estimated changes in population, income, import and export prices, input prices, yields and resource endowments until 2015
GME-OLS 2-step estimation process to forecast the values of these parameters in 2015
Policy change
in 2015
Integration
with the EU
EU-CU and EU-IN
2015
IMPACTS
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March 15-16, Paris

14. Projection Assumptions to 2015
1.4 percent population growth per year
Population growth rate is determined from FAOSTAT
1.3 percent net per capita income growth per year.
GDP per capita in 1987 prices (linear trend)
210,000 ha increase in irrigated area (150,000 ha in GAP and 60,000 ha in ROT)
Prices are adjusted to 2015 using FAPRI (2005) price projections and FAO export unit values data ( ).
Yield Increases until 2015: The yield growths are estimated using last 10 years data with GME taken last 45 years data estimates with OLS as support vector center points, i.e., a priori information.
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15. to 2015... EU-OUT: Baseline EU-CU: CU extended to agro-food products
EU-IN: CU+
Intervention purchases
Compensatory payments (cereals, oilseeds and protein crops and set-aside)
Other supports (durum, olive oil, coton, milk, beef, mutton)
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16. General Results - 1/2 Almost no change in total welfare
With CAP it increases by 2 %.
Without CAP slight reduction in producers’ welfare
Slight increase with CAP
Significant increase in the consumers’ surplus
Limited impact on total production
Membership brings 11% decrease in prices
Total consumption volume increase by 8%, but the expenditure declines by 5%
Significant decrease in the prices of livestock prodcuts
More amplified in the case of livestock prodcuts
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March 15-16, Paris

17. General Results - 2/2
Membership makes Turkey net importer in agricultural products
Boom in the imports of of livestock products can not be compensated by the increase in the exports of crop products
Membership changes the the volume of production and trade
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18. Impact on Net Exports
Apart from livestock products, net imports of cereals and oilseeds go up in CU or membership – wheat and maize
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19. On the other hand, net exports of pulses, fruits and vegetables increase – chickpeas, peppers, tomatoes, cucumbers, hazelnuts, apples, apricots and citrus
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20. CONCLUSIONS - 1/2 Overall welfare effect is small.
Consumers will definitely benefit from EU integration due to declining prices.
Increased consumption will be realized with a lower level of expenditure.
CAP supports are important for the welfare of producers.
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21. CONCLUSIONS - 2/2
Customs Union without CAP supports can be more problematic for some producers.
Livestock products will not be competitive. However, recent increase in the livestock productivity improved the performance of the sector
Net exports of crop products will be far from compensating the change in the net imports of livestock products.
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22. Agricultural Cost Estimate of Turkey to EU
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