Effects of government supports and credits on Turkish agriculture

Abstract

Purpose Domestic supports on Turkish agriculture have substantially increased over the past decade while empirical evaluation of their output impact is limited. Also, the existing literature often neglects potential spatial spillover effects of agricultural policies or subsidies. The purpose of this paper is to quantify the direct and spillover effects of Turkish agricultural domestic measures and agricultural credits use on the added agricultural value. Design/methodology/approach This study applied a spatial panel model incorporating spatial interactions among the dependent and explanatory variables to evaluate the impact of government support and credit on Turkish agricultural output. A provincial data set of agricultural output values, input factors and government subsidies from 2004 to 2014 was used to model the spatial spillover effects of government supports. Findings Results show that a one percent increase in agricultural credits in a given province leads to an average increase of 0.17 percent overall in agricultural value-added per hectare, including 0.05 percent from the direct effect and 0.12 percent from the spillover effect. Contrary to agricultural credits, a one percent increase in government supports in a province generates a mixed direct and spillover effects, resulting in an overall reduction of 0.13 percent in agricultural value-added per hectare in Turkey. Research limitations/implications This study could be extended by controlling for climate, biodiversity and investment factors to agricultural output in addition to input and policy factors if such data were available. Originality/value This study fills the gap in the literature by determining the total effect, including direct and spatial spillover effect, of domestic supports and credits on Turkish agricultural value. The findings provide crucial information to decision makers regarding the importance of incorporating spatial spillover effects in the design of agricultural policy.

Export competitiveness and concentration analysis of major sugar economies with special reference to India

“…Developing countries were oriented to eliminate these support mechanisms in a phased manner. But the developing countries are still continuing with subsidies and developed countries like EU, Japan and US are continuing with price support mechanism and complete liberalization has not been materialized in the industry till date (Koç et al, 2019). The common and versatile reason behind this behavior is the protection of domestic industries from cheap imports and to ensure the supply for domestic consumption for necessities (Nyankori and Hammig, 1991;Koç et al, 2019).…”

“…But the developing countries are still continuing with subsidies and developed countries like EU, Japan and US are continuing with price support mechanism and complete liberalization has not been materialized in the industry till date (Koç et al, 2019). The common and versatile reason behind this behavior is the protection of domestic industries from cheap imports and to ensure the supply for domestic consumption for necessities (Nyankori and Hammig, 1991;Koç et al, 2019). For instance, being an essential commodity in India, sugar manufacturing cost cannot be minimized with no means because sugarcane growing and harvesting costs are very high and after that transportation and labor charges exerts extra monetary burden on sugarcane growers (CACP, 2017).…”

“…Supposedly, if the countries ponder on the norms of trade liberalization and start allowing the cheap imports then local sugarcane growers may have to face a dilemma that how to switch to another crop instantly and at the same point of time, vested entrepreneurial and financial interest of millers of operating sugar units will be in danger. Nonetheless, Domestic supports in agricultural production yield the acceleration in agricultural value (Koç et al, 2019). Hence, the government continuously allows the export subsidies to promote export volumes, imposes import duty to curb cheap imports, compensatory packages like sugarcane development funds to millers and subsidizing the farming inputs for sugarcane growers to manage the cyclicality in this agro-manufacturing industry (Johnson, 1983;Mitchell, 2004;Sukhtankar, 2012;Mahadevan, 2009;Koo and Taylor, 2012;Goel, 2014;Singh, 2016).…”

Analysis of the temporal and spatial evolution characteristics and influencing factors of China’s herbivorous animal husbandry industry

“…Agriculture is an industry with strong sensitivity to policy issues. If the impacts of policy factors on industrial agglomerations are very small or even not significant, the most common reason will generally be that the existing policies cannot meet the industrial development requirements [ 25 ], or cannot significantly influence the production decision-making of the main agencies [ 26 ], and thereby have no significant spatial spillover effects [ 27 ]. The regression results of the policy dummy variables also show that neither the old policy nor the new policy can satisfy the industry’s development needs.…”

How to improve agricultural value-added in the MENA region? Implementation of Diamond Porter's theory in agriculture

“…The growth of AVA responds positively to agricultural credit. A 1% rise in farm credit results in a 0.17% increase in overall AVA (Koç et al, 2019). Sarma and Pais (2008) stated that bank credit not only increases AVA but also supports growth in GDP.…”