EUROPEAN INTEGRATION

Common Agricultural Policy of the European Union

By

 MARAL EROL 

INTRODUCTION:

       Common Agricultural Policy of the European Union, which is going to be called shortly as CAP throughout this paper, has an interesting story of how a policy started with good intentions turn to a giant monster eating more than half of the Community budget. A considerable part of that story constitutes of the efforts to stop that monster. Today, CAP is one of the most important, most problematic and most developed areas of the Community policy. It is certainly the most expensive policy, with a cost of  about two thirds of the budget in the 1970's and still half of it; while it contributes only around 2,5 % to the total GDP and employs less than 7 % of the workforce in the 1990's. [1] It is also a widely criticized policy by the third countries, for it prevents the international free trade by protectionist measures.

CAP started as an effort to harmonize the agricultural policies of the member states and to give them a new direction through a more productive agricultural sector. This aim was over successfully reached and this time a problem of overproduction occurred, which brings a heavy burden on the EU budget because of the highly protective nature of the CAP. As a result, efforts to reform CAP has been made, since the 1980's.

       In the first part of this paper, I will try to elaborate on the importance, history and future of CAP. The second part of this paper deals with the Turkish aspect of the question; with references to the main agreements concerning the subject, comparisons of Turkish agriculture and that of the EU, a brief sectoral analysis of the agricultural products in terms of their competency in the EU markets and lastly an examination of the effects of Turkey's membership on the EU and on Turkey itself. 

PART 1

I. IMPORTANCE OF CAP:

       The importance of CAP (and also the  nature of its formation) is related to the importance of agriculture as a whole and the importance of having an agricultural policy in general.

       The first reason of why agriculture is so special is the nature of its products. Most of the agricultural products are vital necessities, and that forces the governments to follow a protectionist path in dealing with the agriculture.

       Second problem is the production process: Usually, technically most efficient way of production harms the society, (e.g. Small farmers cannot compete with big and highly efficient "agro business" companies.) and also the environment. So, governments and other  decision making institutions have to find a balance between  efficiency and its costs in determining an agricultural policy.

       The third problem is the degree of uncertainty involved in the agricultural production. Weather conditions play an important role in the volume and quality of the product, and sometimes an unpredicted factor, such as animal disease can cause big fluctuations in the production and consumption patterns. All these characteristics make agriculture a very volatile area of policymaking, and these are reflected in the CAP.

       Agriculture was a matter of concern for the Community, especially in the foundation process. There were several motives for this concern:

       1) The European countries came out of the 2nd World War, and the memories of that major war was crucial in forming their policies afterwards. Most of them were nearly starving, for agricultural surpluses went low, so this made them take every possible measure to guarantee an agricultural surplus in case of an emergency in the 1950's.

       2) Agriculture was not a very efficient sector in the 1950’s, it needed protection for further growth. The farmers usually had a lower standard of living than the rest of the population.

       3) France, which is an important political actor in the process of creating a common Europe, had a relatively large agricultural sector, and it wanted to protect this sector against the industrially developed economy of Germany.

       4) Agricultural vote was (and still is) very important in most of the European countries, especially in France. There is a problem of overrepresentation of farmers living in the sparsely populated agricultural areas as opposed to crowded cities, because of the nature of the representation system.

       As a result of al these conditions, CAP came out to be highly protective policy, strongly favoring the farming sector. 

II. HISTORY OF THE CAP:

A. 1950's and 1960's:

       The first document on agricultural policy was the Spaak Report, prepared in 1956. Its importance comes from the fact that it set the scene for introduction of agriculture into the Treaty of Rome. Wider objective of the report was "creation of the common market, within which agriculture was but one sector. "[2] So, in the beginning, the aim was a limited protectionism, not isolated from the rest of the world. However, creating a common market for agriculture was a more complex task than creating one in other sectors,  mostly because of national regulations and concerns.

       Treaty of Rome stated that a common agricultural policy should be pursued (article 3), and it set a transition period extending from 1958 to 1970 (article 40). The objectives and principles were stated in the articles 38 to 47 of the treaty. According to these the original objectives,  as stated in article 39 of the treaty were:

       1. To increase agricultural productivity by promoting technical progress and the optimum use of production factors,

       2. To ensure a fair standard of living to the agricultural community by increasing their per capita income.

       3. To stabilize markets.

       4. To assure availability of supplies. 

       5. To ensure reasonable consumer prices.

       Since the second and the fifth points are in conflict the editors tried to indicate some priority by the order of the points.[3]

       In article 43 of the treaty it is stated that a conference on a common agricultural policy should be convened to elaborate on the main lines of that policy. That conference was held in Stresa, in 1958. This was the conference that the CAP was founded formally, with two kinds of necessary policies:

       " I) a policy of market control (including the following three elements of the treaty) ;

                   - a market regulation, comprising an intervening body, competition rules and rules for foreign trade;

                   - a price policy, consisting in the setting of minimum prices by criteria as objective as possible;

                   - a fund to pay guaranteed  prices (guarantee);

       II) a structural policy ;

                   - production factors;

                   - production conditions;

                   - involving a fund for financing this policy at the EC level."[4]

       All implementations of the common policy of market control are based on three principles:

       1. Unity of the European market:

       Completely free traffic of agricultural products and a common organization to set one price for the whole market and to used the same intervention instruments in all member states. Besides, mutual adjustments on health, quality measures, etc. were thought of.

       2. Priority for EC's own products:

       Imports will be resorted to only if the European production is insufficient.

       3. Financial solidarity:

       That found expression in the European Agricultural Fund's Guarantee Division. All levies were to be paid in to the EAGGF, regardless of who collects them and all costs were to be paid from it no matter which state they are paid to. Usually, income of that fund, i.e. import levies from agricultural goods, was not sufficient to meet the expenses, and other financial means of the Community were used to compensate that difference. Guarantee Division is the more expensive part of EAGGF, for it is the part responsible for storage costs and subsidies, which make a large amount of EAGGF budget.

       The systems of market control and regulation are not the same for all agricultural products. Roughly, there are three systems:

       The first system (or scheme) applies to about 70 % of the production, namely cereals, sugar, beef and dairy products. These are the "classical" products among  22 product groups. There is minimum guaranteed wholesale price, below which the intervention boards buy up the surplus. Similar market schemes also apply to pork, fruit and vegetables and table wine, with more emphasis on storage and processing support rather than automatic sales guarantee at a fixed price.

       The second system can be called as "limited free price formation". Where there are variable levies on the imports from third countries to constrain their consumption, thus to create a more favorable environment for the Community products. This scheme consists of certain fruits and vegetables, flowers, eggs and fattened poultry, which are products with a short production cycle and which are not among the basic needs. Together, they make up about 25 % of the agricultural production.

       The third  scheme is a system of bonuses based on the quantity produced. It constitutes less than 5 % of the production, and is applied for products such as oilseeds and olive oil; to allow domestic production to be maintained at high producer costs, yet with consumer prices kept low.

       Besides that three-legged system, there is an export refund, paid to Community exporters, who export agricultural surpluses to third countries. In the financial side of that system, one fixed price should prevail throughout the market for the whole Community. However, the Community did not have a currency of its own, so the price was first expressed in ECU, and then recalculated in the national currencies. This meant that the changes in the exchange rate may cause price differences. To balance this, a system of levies and restitutions in the interior frontiers were introduced. This system was called MCA: Monetary Compensatory Amounts. However, that was breaking the unity and was later given up.

       On the structural part of agricultural policy, things developed slower than the market regulation part. A serious effort of coordination was needed before creating a common structural policy for agriculture. This was achieved by the Mansholt Plan, in 1968, and elaborated on through the 1970's. In its present form, it has three main elements, and the costs of it are met by the EAGGF, Guidance Division. The parts of the structural policy are:

       1. Support to management:

       It means support to investments aimed at technical progress, interest and investment subsidies. Another forms of support is improving educational and training possibilities for the farmers. For this aim, a network of consulting agencies is built up.

       2. Improvement of the trade channels for agricultural produce:

       Subsidies are also given to trade channels such as packing establishments, cold storage warehouses, dairy factories, slaughter houses, etc. There are also funds for producers to found cooperatives.

       3. Reduction of regional differences:

       Theses are supporting measures in the framework of an integrated development program.

       Agriculture has not figured as a subject in the later amendments, SEA and Maastricht, but continuous reform programs were adopted, because of the problems caused by the initial agricultural policy.

       B. Problems of the Initial System:

       The initial CAP, as stated in the Treaty of Rome and the Stresa Conference and elaborated by the reforms of 1960's, turned into a rather problematic system in the 1970's. Primary reasons for that are as follows:

       a) Objectives of aiming at both producer and consumer satisfaction were in conflict, and in time it became clear that the system strongly favors the farmers, not the consumers.

       b) Open ended nature of the support mechanism led to overproduction. Effective internal EC price was very high, because the standard measure of that price was decided as the highest price among all member states. Farmers  were also protected from outside effects by import restrictions. Moreover, they did not have a problem of finding a market, because of guarantee buyings. As a result, the more they produced, the more they gained, and there was no limit for that guarantee.

       In a sense, that can be seen as a success, for one of the original objectives -indeed the first one- was to increase production. However, that increase went too far and caused a great burden on the budget.

      c) The system was intended to favor small, low income farmers, but it did just the opposite in practice. Everything was set in such a fashion that more production brought more gains, and the ones who could produce more were the big farmers, not the smaller ones. Besides, per capita income of the farmers raised in nominal values, but in proportion to the society as a whole, it remained more or less the same.

       d) Mechanism of price fixing was done by political decisions, rather than supply and demand conditions.

       e) The evergrowing production became a great burden on the intervention mechanisms. That financial burden of guarantee buyings and subsidies were in fact on the taxpayers, which created a very unjust situation. In addition, the resources of the Community were running low, and a solution was needed to stop that in order not to go bankrupt.

       f) Export subsidies and import restrictions were causing great resentment of the third countries, and they were putting pressure on the EC to leave these protectionist measures.

       g) The more efficient ways of production with the aid of chemicals and other technological improvements were harming the environment.

       h) The green rate system, which is a special exchange rate employed for agricultural products in converting ECU prices to  national prices, tended to harm the efforts of creating a common monetary system.

       All of these conflicts and problems grew bigger in the 1970's and 1980's, making reforms inevitable.

       C. 1970’s and 1980's:

       Reforms of 1970's were largely aimed at structural improvements, while there are also some efforts to curb the overproduction tendency. These included modernizing of the farms, offering farmers lump sums in return for leaving the land, training them to raise the income earning potential, assisting farmers in mountainous and remote areas and some structural improvements at the processing and marketing systems.

       In the 1980's, more serious reforms were adopted to limit the production, because the policy could no longer be maintained as its current form. The idea of 1980's was improvement of incomes by cost reductions rather than output increases and assistance for structural improvement aimed at low income farmers.

       In 1984, the open ended system was abolished, with the quota put on milk. This meant that when the surplus product exceeds a certain level, there will not be any intervention to buy up that surplus. Later on, quotas were also adopted for the beef sector. These quotas were successful to some extent, but they did not help the budget from running out of funds. So, the Community started to seek a solution. Proposals were based on two major ideas:

       1. Set aside system:

       This meant compensation to farmers for taking land out of surplus production, and it was favored by Germany.

       2. Stabilizers:

       This was an output threshold, beyond which price cuts would be introduced as a deterrent. This was tried for milk and became successful. It was a measure especially backed by Great Britain, but this had a problem of deciding on the threshold.

       In 1988 Brussels Summit, it was decided to give the main emphasis on stabilizers, while providing set aside measures at the same time. Prize freezes and cuts for cereals and vegetables were introduced, together with a similar penalty system for oilseeds.

       D. 1990’s:

       In the 1990's, external pressure was more strongly felt to leave agricultural protection measures. An example is the Uruguay Round of GATT, starting in 1986 and concluding in 1993, where EC was put into great pressure from the Cairns group, backed by the USA. They demanded a 90 % cut in EC farm export subsidies and a 75 % cut in other agricultural supports. In response, Community agreed a 30 % reduction over an extended period.

       What shaped the reforms of 1990's is a reform package called the "Mac Sharry Proposals" or "Mac Sharry Reforms". This was the most radical attempt to return the CAP to a situation of balance, with the aim of breaking the linkage between the reward to farmers and their production. It was a fairly comprehensive system of proposals, including sections on environment and suggestions for re-afforestation. But the most important part of it is the measures for major products, namely cereals, milk and beef, which cover approximately 75 % of all production.

       In cereals, a 35 % target price reduction was offered in an extended period of three years, counterbalanced with compensation for small farmers who would suffer income losses and for set aside. Similar proposals were made also for oilseeds and other proteins.

       In the milk sector, an extension of the existing quota system was introduced, together with reduction in prices. Its counterpart would be compensation for farmers who volunteer to cease production.

       The mechanism for the beef sector was a reduction in the intervention price, which is to be reduced by 15 %, again in an extended period of three years. As in the case of cereals, compensation payments were offered to farmers who will suffer income losses. The mechanism for sheepmeat sector was somewhat different. Here, the aim was to reduce the size of flocks.

       Besides these specific measures, generally the report offered more environmental friendly types of farming (i.e. less use of pesticides and fertilizers), and early retirement schemes for farmers, with EU financement.

       These reforms had been successful in some areas, especially the cereal sector, but it is not easy to say anything about the future effects of them.

III. FUTURE OF THE CAP:

      Future plans of the CAP are in general further cuts in support prices, compensations continuing via direct payments and more comprehensive use of social and cohesion funds; with more autonomy to national governments, as stated in the Agenda 2000 proposals of 1997, which contain a section on agricultural regulations. Following paragraph is a quotation from the "Agenda 2000: The Legislative Proposals" page of the web site of EU:

       " All the agricultural proposals are due to come into effect in the year 2000.....As indicated in Agenda 2000, the further reductions in market support prices proposed and the increase in direct payments to farmers are designed to improve the competitiveness of the EU on domestic and world markets, thus reducing the risk of a return to the production of expensive and unsaleable surpluses while avoiding over compensation. Part of the reinforced direct payments will take the form of a financial envelope which member states can distribute, subject to certain criteria, thereby allowing member states to address their specific priorities......Moreover, there will be increased emphasis in the new CAP on food safety and environmental concerns......."[5]

PART 2

I. RELATIONS OF TURKISH AGRICULTURE AND THE EU:

     Ankara Agreement:

     Relations of Turkish agricultural sector and the EU dates back to the 1960's, with the first important formal agreement with the EC, the Ankara Agreement of 1963.  According to Article 11 of the Ankara Agreement,  the association regime set forth by the said agreement includes the exports and imports of the agricultural products as well, with special consideration to the Common Agricultural Policy of the Community.[6] In this framework, the Community gave concessions to some of Turkish agricultural exports with a transitional protocol added to the agreement and with the  Association Council decisions.[7] These concessions included tariff quotas, some reductions in the customs duties and some other financial facilities. According to the Article 2 of the Transitional Protocol, EC opened tariff quotas for four traditional agricultural products, namely, tobacco, hazelnuts, dried figs and raisins. These quotas were not fully used in 1964, because of limited time, for the agreement came into power by December of 1964.[8]

     In 1966, Turkey applied for an increase in these quotas, with reference to the Article 4 of the Transitional Protocol, which states that the tariff quotas can be increased by the Association Council from the second year of the agreement's coming into power. That application was accepted, and the quotas for these products (except for hazelnuts) were increased by 10 to 15 %.[9] With reference again to the Transitional Protocol (Art. 6 stated that in the third year of the agreement, Association Council can decide on Turkey's entrance to the Common Market with new products.), Turkey applied for new quotas for some sea products, which included mackerel, tuna fish, crabs, shrimps, lobsters, octopus and other sea fish. However, this regime was to be applied  until the common fisheries policy of the Community came into force.[10]

     With regard to the citrus fruits, a 20 % customs duty reduction was decided, with a limitation of 10.000 tons. If the exports exceed that amount, the Community has the right to take some measures. These regulations on citrus fruits were to be applied until a general regime on Mediterranean products came into force. There were also some quotas for quality wines and grapes coming from Turkey.[11]

    It can be concluded that these regulations had a positive impact on
Turkish exports to the EEC countries, by looking at the indices of some important agricultural products between 1963 and 1973, 1963 taken as the base year. The indices show that there has been more than five times increase in tobacco (from 100 in 1963 to 541 in 1973), and more than fourteen times increase in tea (from 100 in 1964 to 14178 in 1973). For some other products, the numbers were as follows: from 100 to 152 in raisins, from 100 to 118 in dried figs, from 100 to 243 in hazelnuts, from 100 to 136 in citrus fruits, from 100 to 276 in olive oil and from 100 to 105 in cotton. In wine, there has been an increase until 1970, and then the index fell from 412 in 1969 to 73 in 1973. In grapes the index rose from 100 in 1963 to 190 in 1973.[12]

     Additional Protocol:

     The Additional Protocol that came into force in January 1973 kept agricultural products out of Customs Union, and anticipated that Turkish agricultural policy to be harmonized with CAP of EU in a 22 years term; in order to reach a free circulation of agricultural products. That free circulation was not going to be automatically reached, however; but depend on the decisions of the Association Council.[13]

     Within this framework, EC gave some new concessions to Turkey, which can be examined in five main categories:[14]

     1)Products that have a zero customs tariff according to the preferential treatment to Turkey:

     These constitute of raisins, tobacco, figs, dried vegetables, etc.; which make up of 36.6 % of the 1973 agricultural export to the EEC-9.

     2) Products that enjoy a partial preference:

     These products constituted 26.8 % of the 1973 agricultural export to the EEC-9 and enjoyed a certain discount on the common external tariff. These were products like non refined olive oil, hazelnuts (the amount remaining within the quota), citrus fruits, etc.

     3) Products that did not enjoy any preferential treatment:

     These constituted of 22.8 % of our agricultural export to EEC-9 in 1973. In this category there were important export goods like hazelnuts (which remain outside of the quota), refined olive oil and tomato paste.

     4) Products with a zero Common External Tariff:

     These were products like cotton[15] or bagasse, and they made up of 9.8 % of the agricultural exports to EEC-9 in 1973. There was already no common external tariff applied to these products, so the agreement did not make a difference.

     5) Non-classifieds:

     These small amount of non-classified materials constituted of 3.7 % of our agricultural exports to EEC-9.[16]

     As a result, these concessions made a difference for about 63.4 % of our 1973 agricultural exports to EEC-9. (Categories 1 and 2 taken together.) To make a comparison on the importance of these concessions given by the Additional Protocol, the Lome Convention of 1975 can be taken into consideration, in which the Asian Pacific and Carribean countries were given a right of entrance without any customs duties for 96 % of their agricultural exports.[17] Moreover, the fact that similar concessions are given to other Mediterranean countries after their entrance to the EC undermined our "preferred" position, for these were our rivals in our most important products such as raisins and citrus fruits.

     With the association Council decision of 1980, an automatic system was introduced in the customs duty reductions, and it was agreed that these customs were to be abolished on a gradual basis until 1987; except for regulations according to calendar for some fresh fruits and vegetables, quota limitations for hazelnut and apricot pulp and a principle of auto-limitation for tomato paste.[18]

    However, it should be noted that these gradual elimination of customs did not mean the elimination of non-tariff barriers such as reference prices, minimum import prices, import calendars (In certain periods, common external tariff was applied against agricultural products coming from the third countries as a protective measure for community producers.),  changable customs duties, etc. Our exemption from the customs duties was limited to an "ad valorem" basis. Besides, some of our products has been rejected with the claim that they do not fit the health standards of EC, like potatoes or horse meat.[19]

     When it comes to Turkey's obligations, it can be said that they are more loosely defined. According to the Annex 6 of the Additional Protocol, Turkey has to apply a preferential regime in order to increase imports from the EC countries. Within this framework, Turkey started a preference margin in terms of taxation in the Import Regime of 1993, which is to be enlarged with the Import Regime of 1994.[20]

     Harmonization Efforts of Turkey:

     Turkey had further the obligation to harmonize her agricultural policy with CAP, according to the Article 33 of Additional Protocol. With the Association Council decision of 1980, an Ad Hoc Agricultural Committee was established to work towards this aim, however it could not perform its task because of several reasons.[21]

     In 1989, a memorandum was given to the Association Council to demand cooperation in the pilot sectors of cereals and fresh fruits and vegetables, but an answer could not be reached.

     An effort started in 1992 to create alternative policies for import-export balance in agricultural products. This was a system similar to CAP, with  measures like guarantee buyings and target prices, etc. This system was adopted first for cotton in 1992 and then for tobacco in 1993.[22]

     In the area of standards regarding animal and plant health, new regulations were adopted in fisheries and animal products. However, there are still obstacles in our exports to some member states in this area.[23]

     Other areas in need of further harmonization efforts are quality standards and health regulations in processed agricultural products, like tomato paste; and protection of consumer rights, which will be mentioned again in this paper.

     Developments after the Customs Union:

     After Turkey entered the Customs Union in 1995, there has not been so many differences in agricultural relations with the EU, for agriculture was not included in the relevant treaty. This quotation from a document of the Ministry of Foreign Affairs of Turkey entitled "The Customs Union Between Turkey and the European Union" states that:

            "...Although agricultural products are excluded from the treaty, Turkey is progressively adopting many aspects of the Common Agricultural Policy. The EU will take as much account as possible of Turkish agricultural interests when developing its agricultural policy. Progressive improvement, on a mutually advantageous basis, of the preferential arrangements for the trade in agricultural products is also envisaged...." [24]

            According to the Association Council decisions of 25th February 1998, quantitative restrictions and equal measures on imports and exports were prohibited, and two categories were created for agricultural products: first category was exempt from ad valorem duties, while for the products in the second category reductions and elimination of ad valorem duties was during a period and subject to certain conditions. There was also a cooperation scheme envisaged in the Article 4 of the same document.[25]

 II. COMPARISON OF TURKISH AGRICULTURE WITH EU:

         Agricultural Land:

            Total agricultural land in Turkey is 27,5 million hectares in 1986 numbers. This number is about 80 million hectares in EU, excluding pastures, for the same year. (That numbers are 49,1 million hectares and 129 million hectares respectively, when the pastures are added.) One problem about the productive use of agricultural land has been the practice of fallowing in Turkey. The amount of land left to fallow has been reduced, however, from 33,2 % of the total agricultural land in 1958 to 21 % in 1986, and attempts to reduce it further are continuing. A different problem in EU is the practice of leaving aside land because of overproduction.[26]

            Productivity:

            Agricultural productivity is lower than EU in Turkey. This difference was greater in 1970's, but Turkey showed improvement especially on some important products like tobacco or citrus fruits.[27] However, The EU countries showed a greater improvement during these years, mostly due to effects of CAP. 

            Structure of Agricultural Production:

            Weight of agricultural production is on plants and especially on cereals in Turkey, while it is on animal products such as dairy products and beef in the EU countries.  In 1986, 50 % of total agricultural land was used for cereal production in Turkey. This number was 28 % for EU countries for the same year.[28]

            Support for Producers:

            The producers of EU countries has been supported and protected by the means of CAP from 1966 onwards. That policy of support caused overproduction and the EU countries tried to curb that tendency since 1970-1980's.

            In Turkey, agricultural support mechanisms has always been criticized for not being efficient. Support for the producers were done by two means: "direct support", as in the form of financial aids to farmers or support for products; and "indirect support", as in the form of efforts to increase productivity, investment on infrastructure, etc. An important component of support for agriculture is the various cooperatives for producers in Turkey. Financial sources of support to producers are generally some funds set for this aid, Bank of Agriculture (Ziraat Bankasi), and state budget. An important problem about support buyings is that support does not go to the agricultural sector, but rather to some intermediary organizations. That is the most criticized point in direct support mechanisms.[29]

            Protection of Consumers:

            The EU has accepted it as a principal to protect the consumers within CAP. Difference between intervention prices and "social prices" for beef can be an example of that in practice. It is on average three times cheaper for consumer than the intervention price. (143 ECU per 100 kg. against 413.20 ECU per 100 kg in Belgium; 149.5 to 437.5 in France; 143 to 447.6 in Greece and 157.4 to 460.9 in Italy.)[30]  This kind of applications are usually employed in cereals and animal products.[31]

            In Turkey, protection of consumers is the responsibility of the state according to the constitution. However, this duty was not realized properly. Recently, a law on the protection of consumers is passed (enacted by the March of 1995), and some civil associations with this aim are founded. These efforts seem to be made mostly because of harmonization concerns with the CAP.

            Health Standards:

            Difference in health standards between Turkey and the EU countries sometimes become an obstacle on our exports to the EU countries. An example of this is the agricultural chemicals residual case. Some of our exports are refused by the importing countries for the amount of agricultural chemical residuals exceed the maximum value set by their standards. Another example of obstacles is the agricultural quarantine, which is applied to Turkish potatoes with the claim of carrying a certain plant disease.[32]

            Agricultural Workforce:

            With the effect of CAP on productivity, agricultural population decreased by 35 % between 1973 and 1982, while the agricultural production increased by 18 %.[33]           In Turkey, agricultural population also decreased, from 77,4 % of the total workforce in 1955 to 52,1 % of the total workforce in 1990. By the 1990 numbers, around 11.5 million people work in agriculture.[34] In 1993, the percentage of agriculture and forestry in total workforce has been 44.5 % and in 1997 it has been 41.9 %.[35] 

III. COMPETENCY OF TURKISH PRODUCTS ON EU MARKETS:

         In this part, chances of export to the EU markets of  Turkish agricultural products are  examined sector by sector.

            1. Cereals:      EU has reached a self sufficiency level of 138.3 % in cereals by 1986. In general, Turkey does not seem to have a chance in exporting wheat to the Union; for she is in serious need of these cereals herself, mostly because of nutrition traditions in the country. The only chance can be in maize or rice, depending on our level of self sufficiency in these products.[36]

            2. Legimunous Plants:          EU has a self sufficiency level of 75 % in legimunous plants by 1986, but it still buys about  half of the world import in that area. Turkey is an exporter country in legimunous plants, and our chances depend on increasing of our production.[37]

            3. Cotton: Cotton is produced in Greece and Spain within the EU, and production level is below the need. It is supported by the measures of CAP[38], but the EU is still a cotton importer. Cotton is used for textile and oil industries in Turkey, and also exported abroad. In this area, we may have a serious chance in EU markets.[39]

            4. Tobacco: In terms of tobacco, EU is a major buyer in the world, importing about 35 % of the world production. Tobacco is produced in Belgium, Germany, Spain, Portugal, Italy and Greece in the EU. However, Oriental type tobacco, which is a higher quality tobacco than Virginia or Burley type is only produced in Greece and Italy. (Greece produces 69 % of Oriental type tobacco in the EU.) Turkey may have a chance of increasing her tobacco exports to EU, for it is a major producer of Oriental type tobacco.[40]

            5. Sugarbeet:  Turkey is nearly self sufficient in sugarbeet production, thanks to modern techniques in production. However, EU is ahead us in terms of productivity in this area and it has a self sufficiency level of 135 % by 1986-1987. So, we do not seem to have any chance in sugar exports to EU.[41]

            6. Potatoes, Onion and Garlic:  In terms of these plants, Turkey is above the self sufficiency level. The same is true for EU, especially after the membership of Spain. We may have a chance of export if we can produce potatoes earlier than the normal time, but we also have rivals like Egypt, Cyprus, Morocco Israel, Malta and other North African countries in early potato production.[42]

            7. Oilseeds: Both Turkey and the EU is below the self sufficiency level in terms of oilseeds, and both import from outside to meet the domestic demand. It is not possible to export oilseeds before Turkey increases production and becomes self sufficient. Besides, olive oil is an especially sensitive issue for Mediterranean countries, so it may be better to turn to the third countries for olive oil export.[43]

            8. Fresh Vegetables: Although EU is self sufficient in that respect, it still imports from outside. It considers the period between October and April as "out of season", and gives more weight to imports from third countries in this period. It is possible to enter the market with advantage if Turkey can produce fresh vegetables 10-15 days earlier than the usual time.[44]

            9. Tea: EU meets its need totally with import from third countries, since tea is not grown in the EU. Turkey is one of the major tea producers in the world, after some countries like China, India and Sri-Lanka, and in that area we have a greater market chance with proper processing and packaging.[45]

            10. Fresh Fruits: Turkey is generally self sufficient in terms of fruit, and she produces surplus in some fruit types. The self sufficiency of EU in fresh fruits is around 88 %, while   this number is around 76 % in citrus fruits. Net demand deficiency of EU in citrus fruits is in grapefruits. "Turkish citrus production takes the 13th place among the world countries, while this figure is 5 among the Mediterranean countries."[46] Turkey has a rather high potential of export in terms of citrus fruits.[47] The chances of export can be in grapefruits, and in tropical fruits like kiwi and avocado in case Turkey increases production in these products.[48]

            11. Dried Fruits and Nuts: This category consists of dried figs, raisins, hazelnuts, nuts, pistachios, and almonds. EU has a self sufficiency of around 53 % in dried fruits, and this figure is around 65.7 %  in various "nuts" (i.e. fruits with a hard shell). Turkey is more than self sufficient in all of these products and is indeed dominant in EU markets as well as world markets in raisins, figs and hazelnuts. Increasing exports to EU in this field depends on increases in pistachio, nut and almond production.[49]

            12. Animal Products: In terms of animal based products such as dairy products, beef or sheepmeat, EU has an overproduction problem because of reasons discussed in the first part of the paper. Turkey is in the position of being a market in this field, for it is less than self sufficient, because of low productivity and some wrong policies followed in recent years in the animal sector.

 IV.  EFFECTS OF TURKEY'S MEMBERSHIP:

         Possible Effects on the EU:

            If Turkey is accepted as a full member of the EU, it might have some dramatic effects on the EU, for this would mean a 22 % of increase in the usable agricultural area, 41 % of increase in the number of farms and an increase of nearly 50 % in the agricultural workforce. Turkey is mostly self sufficient agriculturally, and its output has a  rather wide range, covering both northern and Mediterranean products. A large portion of this output is vegetables and vegetables are not an important product of support under the CAP, while Turkey is not a major producer of heavily supported products like beef or dairies. This might imply that cost of accepting Turkey would not be very high. Furthermore, most important Turkish export products, i.e. figs, raisins, hazelnuts, oriental tobacco and cotton, are not in a position to compete with most of the member states.[50]

            However, it is not clear what the outcomes may be, when the Turkish producers are given more incentives to produce like price guarantees and other kinds of supportive CAP measures. There can be a sharp increase in production levels, especially in cereal sector. Moreover, the guidance costs to modernize Turkish agriculture may cost a lot to the guidance section of the EAGGF.[51]

            Possible Effects on Turkey:[52]

            One problem with the CAP is the fact that it is a discriminatory policy, supporting some products more than others. This may have bad effects on Eastern Anatolian producers, who are already in a worse position than the Western Anatolian producers; while the latter are more likely to be supported by the CAP.

            A second problem is that it will cause an increase in the prices given to producers and this will be reflected in the consumer prices. Increased food prices will effect poorer sections of the society more seriously, and this may deepen the problem of income distribution.

            Moreover, increased food prices will lead to higher wages and an increase in the already high inflation. This would also have an effect of undermining the Turkey's low labor cost advantage.

CONCLUSION:

      Agriculture is a difficult sector to plan, and CAP has always been a very problematic policy area for the EU. With the 1992 reforms and proposals for 2000, it can be said that CAP is now a more logical policy. However, it is still costly, because money is also needed for reform programs, and there is also the problem of the newcomers, which will make new adjustments inevitable, for theses are major agricultural producers. Measures must be taken not to encourage any increase in agricultural production anymore, and to discourage fraud and abuse of the system of financial compensation. In general, it seems that further reforms of CAP is indispensable, as the conditions of the world and EU change. Success of the CAP will depend on its ability to adjust the new conditions.

The EU is one of the most important trading partners of Turkey. In the year 1997, 54 % of Turkey's total imports came from the EU-15, and 44,4 % of its total exports were sold to the EU-15.[53]

         When we evaluate the willingness of Turkey in becoming a full member of the EU in the light of all the information provided in this paper, it seems that the costs of the absorption of Turkish agriculture into the CAP may be higher than presumed for both sides. There are even claims that budgetary impact of the Turkey's membership would be greater than that of Greece, Spain and Portugal combined.[54] So, it does not seem possible to hope that the EU will welcome us in our present situation. Moreover, there are also certain costs for Turkey as well, and what the membership to EU will bring and what it will cost should  be well calculated before pressing for full membership.

 BIBLIOGRAPHY

Books:

·        Afanasiev, L. and Kolovnyakov, V., 1976, Contradictions of Agrarian Integration in the Common Market, Moscow, Progress Publishers

·        Avillez, Francisco, 1993, "Portugese Agriculture and the Common Agricultural Policy", Portugal and EC Membership Evaluated, ed. by Jose Da Silva Lopes, London, Pinter Publishers,  Chapter 2.

·        Coffey, Peter, 1996, Europe-Toward 2001, International studies in Economics and Econometrics, vol. 35, Netherlands, Kluwer Academic Publishers

·        Doğruel, Fatma (Doç. Dr.), 1993, Tarım Destekleme Politikaları ve Sonuçları: ABD, AT ve Türkiye, İstanbul, İstanbul Ticaret Odası

·        Gökdere, Ahmet (Doç. Dr.), 1989, Gümrük Birliği Açısından Avrupa Topluluğu ve Türkiye ile İlişkileri, Ankara, Ankara Üniversitesi Avrupa Topluluğu Araştırma ve Uygulama Merkezi Araştırma Dizisi Yayın No:2.

·        Gürakan, Tulu et.al., 1993, Topluluğun Tarım Ürünlerindeki Ortak Piyasa Düzenleri, Fiyat Politikaları ve Destekleme Sistemleri, Araştırma-İnceleme Dizisi, Ankara, Hazine ve Dışticaret Müsteşarlığı Matbaası

·        Harrison, D. M., 1995, The Organisation of Europe: Developing a Continental Market Order, London, Routledge

·        İktisadi Kalkınma Vakfı, 1974, Avrupa Ekonomik Topluluğu Türkiye İlişkileri Açısından Türk Tarımının Sorunları (Seminer, 25-26 Nisan 1974), İstanbul, İktisadi Kalkınma Vakfı Yayınları.  

·        Karabağlı, Aslan, 1989, Avrupa Topluluğu (AT) ve Türkiye Tarımının Verimlilik Pazarlama ve Dış Ticaret Açısından Değerlendirilmesi, Ankara, Milli Prodüktivite Merkezi Yayınları.

·       Milli Prodüktivite Merkezi Tarım Şubesi, n.d., AET Tarım Politikaları Karşısında Türkiye Tarımı ve MPM'nin Rolü, Ankara, Milli Prodüktivite Merkezi Yayınları: 55.

·        Molle, William, 1990, The Economics of European Integration: Theory, Practice, Policy, GB, Dortmouth

·        Redmond, John, 1993, The Next Mediterranean Enlargement of the European Community: Turkey, Cyprus and Malta, England, Dortmouth Publishing Co.

·        Swann, Dennis, 1995, The Economics of the Common Market: Integration in the European Union (8th edition), England, Penguin Books

·        Şahinöz, Ahmet (Doç. Dr.), 1989, AET-Türkiye Tarım Politikaları ve Dünya Pazarları (Ortadoğu), İstanbul, Türkiye Sınai Kalkınma Bankası Ekonomik Analiz Konjünktür ve Sektör İzleme Müdürlüğü.

·        Yedinci Beş Yıllık Kalkınma Planı Özel İhtisas Komisyonu Raporu, 1995, Tarımda Yapısal Uyum, Destekleme ve Uluslararası Piyasalara Entegrasyon, Ankara, TC Başbakanlık Devlet Planlama Teşkilatı Müsteşarlığı Yayın No: DPT: 2409-ÖİK: 470

Articles:

·        Bedestenci, Ali Kemal, 1990, "Türkiye-AT Tarım İlişkileri", Tarım Orman Köy, Mart 1990, 49, pp. 44-45.

·        Hızal, Yılmaz, 1989, "Avrupa Topluluğu (AT), Komşu ve Yakın Doğu Ülkelerine Turunçgil İhracı, Ekonomik Önemi ve Bunların Geliştirilmesi", Tarım Orman Köy, Kasım 1989, 45, pp.10-11.

·        Runge, Carlisle Ford, 1988, "The Assault on Agricultural Protectionism", Foreign Affairs 67 (1), Fall 1988, 133-150

·        Uludağ, Necati, 1989, Türkiye Turunçgil Tarımının Dünyadaki Yeri, Tarım Orman Köy, Mart 1990, 45, pp.6-7.

Web Sites:

·        http://www.europa.eu.int

·        http://www.die.gov.tr

·        http://www.mfa.gov.tr