Withdrawal of Cooperatives Pressured Hazelnut Producer Income
· Tarım Dünyası
The weakening of agricultural sales unions' market power through reforms supported by the IMF and World Bank has left producers, particularly in strategic products like hazelnuts, facing a shrinking buyer base and fluctuating price pressures.
Policy Transformation in Agricultural Unions
Within the framework of IMF-supported programs in Turkey, the Law on Agricultural Sales Cooperatives Unions was amended, severing the direct financial ties of unions with the state. These institutions, granted autonomous status, were forced to operate as traders. For many years, while the Turkish Grain Board (TMO) purchased wheat and Tekel purchased tobacco; unions regulated the market for other essential products at floor prices. With the removal of the purchasing system, which was financed by Support Price Stabilization Fund (DFİF) loans, the financing channels provided through Ziraat Bank were closed, and the practice of the state covering losses was terminated.
Strategic Weight of Unions in the Market
According to data shared by agricultural writer Ali Ekber Yıldırım, 16 agricultural unions operating across Turkey were purchasing and marketing the harvests of 733,000 farmers. These structures were buying 25% of cotton production, 27% of hazelnuts, and 30% of seedless raisins. They also held market shares of 43% in sunflower and 15% in olives. Unions were the largest buyers in the market for strategic products such as rose petals, lentils, pistachios, and red pepper.
Financing Cutoff and Production Risk
In the 1998/99 harvest period, unions utilized $1.2 billion in loans for purchases totaling $1.4 billion. In the following 1999/2000 season, $569 million in loans were used for purchases amounting to $337 million. Fiskobirlik alone secured 147 trillion Turkish Lira in financing in 1999 to make purchases worth 153 trillion Turkish Lira.
Ali Ekber Yıldırım, a World Newspaper Agriculture Writer, pointed to the risks the process would create, stating:
Agriculture is entering a difficult phase.
Government officials and politicians of the time attempted to reassure producers with the following statement:
We will not let the farmer leave their produce in the field...
However, despite the promises made, the cutoff of DFİF loans paved the way for producers to sell below cost and for agricultural production to decline.
Yield and Price in the Hazelnut Market
Every season before the hazelnut harvest, significant debates arise over production and floor price estimates. In the 2017-2018 season, buyers estimated the yield at 600,000 tons of shelled hazelnuts, while the producer side expected a maximum of 550,000 tons. Yield speculations that did not reflect reality caused prices to fall rapidly against the producer. The price of shelled hazelnuts, which reached 20 TL per kilogram at the beginning of the previous season, dropped to below the 10 TL band due to manipulative expectations and a lack of oversight.
Expansion of Production Geography and Yield
While hazelnut production was previously concentrated in only 3 provinces, accounting for 87% of the total production, the production area has now spread to 39 provinces and covers 700,000 hectares. Annual shelled production has surged from 80-90 thousand tons to 600-650 thousand tons, with 400,000 families relying on this crop for their livelihood. While yields on the Black Sea slopes are 80-100 kg per decare, yields in the flat and irrigated areas in the West reach 150-200 kg per decare. One kilogram of shelled hazelnuts yields approximately 0.5 kg of kernels.
Export Revenue and Market Structure
Of the 600-650 thousand tons of shelled hazelnuts produced across Turkey, 300-325 thousand tons of kernels are processed. In a market where annual domestic consumption is around 50,000 tons, at least 250,000 to 275,000 tons of kernels are exported annually. In return for this export, Turkey's economy receives an annual foreign exchange inflow of $2.0 to $2.5 billion. However, the limited number of buyers and the fragmented nature of producers in the market directly undermine market stability and income potential.
Direct Purchases and Contract Farming Model
The global trade of hazelnuts is managed by 8-10 international firms abroad and approximately 800 traders domestically. According to findings reported by Ali Ekber Yıldırım, foreign buyers are now bypassing intermediaries and purchasing directly from producers. The share of direct purchases in the market has risen to 60%. Large buyers also establish contract farming models, thereby controlling quality and establishing absolute dominance in determining market prices.
Fiskobirlik Experience and Vacated Regulation
Fiskobirlik, founded in 1938, was a key player in the hazelnut market with its 50 cooperatives and 250,000 producer families. The institution stabilized the market by announcing floor prices during the harvest season with its 200,000-ton storage capacity. In the process of weakening unions following World Bank recommendations, Fiskobirlik was sidelined in 2006. With the gradual withdrawal of the tasked TMO from the market, the field came under the complete control of free traders and foreign exporters.
Buyer Power and Price Pressure in the Market
In free market conditions, the presence of very few powerful buyers against a large number of unorganized sellers shifts the power to dictate prices to the buyer side. Producers, due to urgent cash needs and limited storage facilities, quickly dispose of their produce. The producers' demand for floor prices to be maintained at the 10-12 TL level remains unfulfilled due to the absence of a market-regulating mechanism. This situation reduces not only the income of farmers but also the country's hazelnut export revenue.
Need for Cooperativism for Agricultural Future
Producer organization is essential for the sustainability of the agricultural sector and to prevent it from becoming dependent on imports. The removal of unions carries the risk of creating supply shortages in strategic products such as cotton, sunflower, and olive oil. Shortcomings in old cooperative managements do not necessitate the rejection of the cooperativism model. Protecting farmers will be possible through well-structured, strong cooperative umbrellas and the re-establishment of producer unions.