Increasing Agricultural Productivity:

Encouraging Foreign Direct Investments in the COMCEC Region

Peru, Chile, Mexico, Bulgaria, and Romania, all of which compete with Turkey in agriculture,

score better on ease of starting a business, getting credit, and protecting investors.

The Turkish Investment Promotion Agency, ISPAT, has undertaken a SWOT analysis (Figure 32)

of Turkey’s agricultural sector. For the most part, the conclusions reached by this analysis are

correct; however, certain elements are missing. On the positive side, Turkey is much more

attractive as an agriculture investment destination than most other COMCEC Member Countries

because of the depth and liquidity of its financial sector and capital markets, which make it

easier for investors – especially funds, which typically seek to exit their investments within five

to seven years – to exit via a trade sale or a public listing. Also, as part of the EU accession

process, in June 2010, negotiations on Chapter 12, dealing with Food Safety, Veterinary &

Phytosanitary Policy – one of 33 chapters that form the acquis communautaire – were

opened. Turkey’s Standards Agency is rapidly adopting EU food and agriculture standards and

integrating them with its own, and an estimated 75 percent of its standards are now in

conformity with EU requirements.

On the negative side, some of the investment climate issues cited above are not included in the

SWOT analysis. In addition, the agricultural reforms undertaken by the Turkish government

include land consolidation, increased subsidies (support payments increased fourfold from

2002 to 2012), interest-free credits, and other elements that may not necessarily increase the

competitiveness of Turkish agriculture. Also missing from the analysis is the threat of conflicts

with Iraq and Syria over water in the Tigris-Euphrates basin.

The SWOT matrix does raise a warning regarding dependence of many farms and small

businesses on subsidies. These must be balanced against other actions and reforms in the areas

of research and development, animal health, phytosanitary protection, laboratory and testing

facilities, gene banks, extension services, etc., which may be a better use of resources.