The gap between demand and supply, along with bad weather conditions, caused a drastic increase in potato and onion prices in Turkey from May to June 2018. The increase in prices is too high compared to the decrease of 1% in production, which apparently stems from the timeserving interventions of the distribution monopolies and supermarket chains.
According to the numbers released by the Wholesale Market Hall Directorate of İstanbul Metropolitan Municipality, 1 kilogramme of potatoes cost between 1 and 1,8 Turkish lira (nearly $0,4) in May, while it costs between 2,5 and 3,5 lira (more than $0,7) on June 19, which shows that the prices have increased by 94%. When compared to the prices in June 2017, it is also seen that the annual rise is nearly 75%.
There are several reasons for the increase in potato prices. Turkey produced 4,8 tonnes of potatoes in 2017, approximately 5% of which is to be exported. But Georgia’s suspension of the potato purchase from Turkey from March on due to a disease in potatoes caused a pile-up in storages, and 350-400 thousand tonnes of potatoes piled up in storages were obliterated, which prevented the high production of last year to have an effect this year.
Moreover, the rise in the prices of oil and foreign currencies resulted in an increase of the expenses of farmers, which was projected on the final consumer. However, the most important reason of the volatility was the stockpiling of traders who saw the reduction in production due to bad weather conditions. Mediators and supermarket chains noticed the tendency of increase in prices, and turned this situation into an opportunity, resulting in much higher increases in prices compared to the reduction in production.
The same thing goes for onion, as well. 1 kilogramme of onions was sold for 1-1,6 Turkish lira ($0,3) in May 2018, while it costs 3-5 lira ($1) in June. The annual increase in the prices of onion is even higher than that of potatoes: 400%.
It is seen that the increase was not caused by insufficient production. The data provided by the Turkish Statistical Institute (TÜİK) shows that the amount of onion produced always increased in the years 2015, 2016, and 2017. However, it is also seen that the width of the area of production has lessened. Farmers’ unions comment that the increase in prices was caused by bad weather conditions, again, which was seen by mediator and supermarket chains, and the prices have rocketed accordingly.
Food prices have been on the rise in Turkey compared to the rest of the world for a while now. In early June, the Food and Agriculture Organisation of the United Nations (FAO) announced that the Food Price Index increased by 1.2 and became 176.2 points in May.
The food inflation in Turkey in May was 11%. While food prices in Turkey have been high for a long time, Abdolreza Abbassian, a senior economist of the FAO, stated that the main reason behind it was the devaluation of Turkish Lira.
