Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
72
next 30 years. The Turkish Government is actively supporting efforts to increase value added in
the agricultural sector, and in February 2011 approved the country’s first agriculture
technopark. Government has undertaken a drive to transform Turkey’s agricultural sector, with
plans to attract foreign investment and develop new technologies, including drilling new
geothermal wells to boost greenhouse production. Greenhouse production, additionally, because
its yields per hectare are superior to conventional field agriculture, and this form of production
helps to overcome problems with land availability. Other government-supported programs
include seed and soil improvement – Monsanto has set up several R&D centers in Turkey – as
well as the hugely ambitious South-eastern Anatolian Project (Güneydoğu Anadolu Projesi,
GAP), a regional sustainable development scheme that has provided infrastructure, planning and
education for farmers.
Since it was established in 1987, GAP has grown into a TL42bn ($23.7b) initiative that offers
training to farmers in contemporary irrigation and cultivation techniques, while providing them
with modern tools and equipment.100 Partly as a consequence of GAP, FDI in the agricultural
sector in Turkey has grown from about $14m in 2002 to more than $2.1bn in 2012. The city of
Şanlıurfa, as reported by Oxford Business Group (2012), has become a hub for greenhouse fruit
and vegetable production. Geothermal wells with a generating capacity of more than 24 MW
supply 104,000 m2 of greenhouse area, while the Government plans to drill new geothermal
wells in 2013 and 2014 to support at least 1,500 additional greenhouses. Altogether, Turkey has
more than 54,000 hectares in greenhouse production and is the world’s fourth-largest producer
of fresh vegetables.101
The government has set a goal over the next decade of doubling agricultural production to
$150bn and increasing exports to $40bn. If achieved, this would put Turkey on track to become
one of the world’s top five agriculture-producing countries.
Support to achieve these goals has come from a number of sources. The European Bank for
Reconstruction and Development (EBRD), supported by additional funds from the US, has
launched a €400m ($533m) facility to increase lending for smaller-sized farms, while DenizBank
has created a €40m ($53.3m) credit line for agricultural lending.
Risks, Challenges, Opportunities
Although Turkey offers one of the best investment environments in the COMCEC Region, there is
still room for improvement, especially when Turkey is compared to other countries with which
it competes for agriculture FDI and also in agricultural exports. Turkey, ranked 70th out of 185
countries in the 2013 World Bank Doing Business report, is slightly better than the regional
average for Eastern and Central Europe: Bulgaria is 66 th, Romania 72nd. Turkey scores worse
than the regional average on starting a business, dealing with construction permits, getting
credit, and protecting investors. But these are not the only countries against which Turkey may
be competing to attract FDI in agriculture and in export markets. Countries such as South Africa,
100 Oxford Business Group (2012), Economic Update Turkey: Greenhouse expansion to boost agricultural investment,”
February 19, 2013.
101 ibid