Rising Input Costs Swell Farmers' Capital Needs
· Dünya Gazetesi
Soaring input costs and high credit interest rates in agricultural production have pushed farmers' working capital needs to record levels, posing risks to planting areas and yields.
Rising Input Costs and Financing
Price increases in essential inputs for agricultural production have driven the working capital requirements faced by producers in the new planting season to record highs. Mehmet Akın Doğan, Chairman of the Yüreğir Chamber of Agriculture, emphasized that producers are forced to make upfront payments for expenses such as seeds, fertilizers, diesel, pesticides, irrigation, electricity, and labor months before their products are sold. Stating that current costs have exceeded farmers' equity, Mehmet Akın Doğan, Chairman of the Yüreğir Chamber of Agriculture, summarized the situation with the following words:
'Today, farmers need significantly higher capital compared to previous years to cultivate their land. As input prices rise, the money required for production also increases. When producers' own resources are insufficient, they have to turn to credit, but high interest rates create a significant burden here.'
A Specific Credit Model for Agriculture is Essential
Drawing attention to the fact that credit interest rates in the banking sector impose a serious burden on farmers, Mehmet Akın Doğan, Chairman of the Yüreğir Chamber of Agriculture, stated that the agricultural sector must be structurally separated from other commercial activities. Reminding that agricultural production has its own unique cash flow, Mehmet Akın Doğan, Chairman of the Yüreğir Chamber of Agriculture, made the following assessment:
'Despite the trend in policy interest rates, credit costs in the market are still high for producers. Agricultural production should be evaluated differently from other commercial activities. Farmers can only receive the return for their expenses, in most products, months later. Money does not circulate every month in agriculture. The producer first spends, then grows their product, and earns income after harvest. Therefore, the maturity and payment schedule of agricultural loans should also be compatible with this structure.'
Planting Areas and Investments at Risk
It is stated that high financing costs negatively affect not only current production but also modernization and efficiency investments. Mehmet Akın Doğan, Chairman of the Yüreğir Chamber of Agriculture, warned of yield loss, stating that producers are finding it difficult to see ahead:
'Farmers have to be more cautious about investments in machinery renewal, transitioning to modern irrigation systems, and increasing efficiency. Today, before investing, producers are calculating how to complete the upcoming season. When working capital is insufficient, the cultivation area can shrink, and the use of some inputs may be abandoned. The result of this is seen in yield and production.'