Turkish government's pseudo-fight against inflation

SoL columnist Oğuz Oyan answered the questions of soL news about the Turkish government's latest attempt to reduce the impact of increasing food prices on the public before the local elections
Tuesday, 26 February 2019 11:07

The ruling AKP government in Turkey started municipal sales of cheap vegetable and fruits, for which the people started to form and wait in long lines in front of "regulation sales points" in centers of big cities. While the government attempted to promote cheap vegetable sales as a fight against inflation, the government critics assert that this is an election investment of AKP.

Turkey is battling with high inflation with a 31 percent annual increase in food prices. The price of eggplants, cucumbers, and tomatoes have jumped 81 percent, 53 percent, and 39 percent, respectively, over the past year. 

SoL columnist Oğuz Oyan answered the questions of soL news on the reasons for the high inflation in food prices in Turkey, the effect of large-scale privatization on the current situation and the validness of the claims that this is actually an election investment.

A Price increase in foods is an important aspect of the increase in the cost of living. What is the effect of privatization in this matter?

Milk Industry Institution (SEK) and Meat and Fish Institution (EBK) were institutions well known by the public due to their nature which directly affected the consumers, they were direct producers in their sectors. They used to purchase significant quantities of products from independent producers according to demand. In this manner, although their market capacity was approximately 10 percent, they had a regulating effect on prices in terms of the producers. Their wholesale sales contributed to price regulation, but also these institutions could participate also in the retail market and regulate the prices in this market. They used two marketing strategy for their products. The first strategy was to distribute their own products to shops and supermarkets with their own trademarks and second via retail sale stores they opened in various regions of large cities. These were the successful ways of contacting with the public.

On the other hand, a subsidiary of Agricultural Sale Cooperative Unions (TSKB), GİMA which participated in large scale retail marketing business for various household needs was an important mechanism in delivering the goods of TSKB, SEK and EBK to the consumer without any intermediaries.

AKP government realized the problems caused by the absence of such institutions quite lately and Meat and Milk Institution (ESK) which was established by AKP in order to eliminate the pressures, failed to fulfill the responsibilities of its predecessors. In fact, the AKP mindset which was the leader in privatization never had the intention to fulfill these responsibilities.

As the rings of the chain began to fall apart starting from the production of agricultural input goods, foreign input goods and food monopolies started to dominate the domestic market. With certain amendments (for example Seed Growing Law in 2006) the domination of foreign capital on the domestic market was facilitated. This mindset which forced agricultural production under the domination of foreign capital has established Regulation Sales Points these days as a temporary solution for its failed agricultural policies and as a political tool for the upcoming elections.

Did AKP find a new strategy which it can apply after the elections? Or is this just a step taken only for the upcoming elections?

Even if there were no elections in the near future, AKP would feel obliged to act regarding the inflation in food prices. Because this issue is very important and can suddenly turn into a political legitimacy issue. Although we have not yet witnessed in Turkey very often, the reactions against the increase in food prices have acted as a trigger in initiating significant social incidents in the Middle East. AKP government would be in a very vulnerable position in the elections if it did not act in this issue. Thus they needed to make a move even if it deteriorated the public loss or even if they generated loss over the sales. No doubt, concealing the issue of selling at loss and moving forward with the rhetoric “Erdoğan is fighting against the middleman” and arguing that this move is a hit against the intermediaries is more suitable to the politics of AKP.

As a matter of fact, this application will not continue after the elections. Probably, the regulation sales points will not vanish directly after the election but continue until the end of April and in May as the food products of the new season become plentiful, this application will be halted.

On the other hand, if the inflation in food prices cannot be taken under control, AKP may take into consideration new interventions to the supply of food products both in order to maintain its political legitimacy and also due to the request of capitalists for government intervention to wage goods such as these food products.