When the exorbitant price play of the markets added to the rise in prices due to the effect of inflation, prices rose excessively. in order to ensure price stability for agricultural products.
The “Fresh fruit and vegetable sector analysis report”, drawn up by the Competition Authority as part of the sector analysis carried out in the field of agricultural products, has been finalized.
According to the compilation made by the AA correspondent from the report, fresh fruits and vegetables are delivered to the consumer through intermediaries such as collectors, brokers, brokers and traders, changing hands in large number. The fact that the organization of fresh fruit and vegetable producers is not at the desired level leads to the lengthening of the marketing circuit and to the reduction of the amount received by the producer out of the money paid by the consumer.
While the increase or decrease in the prices of the final product directly affects the production of the following year, a deficit or an excess of production occurs. This is one of the main reasons for the instability of the prices of agricultural products.
Agricultural products are also affected due to factors such as climate, weather, drought, disease and geography. The fact that fresh fruits and vegetables are perishable products, insufficient storage facilities and short shelf life also lead to price volatility. While the marketing of these products is handled by the private sector in Turkey, brokers, traders and retailers generally support the marketing channel from producer to consumer.
While agricultural producers compete to a large extent, these actors mainly obtain the inputs they need from “oligopolistic” markets. The impact of this problem on producers must be mitigated. If this opportunity is not provided, it is expected that the agricultural industry will move away from profitability and the quantity of production will decrease, and therefore the prices of the products will increase.
– Suggestion “Create a national trade union centre”
Small-scale farmers often encounter intermediaries or brokers when selling their products. Because of these hand-to-hand transfers, the price of the product increases and this high price causes consumer demand to fall.
Agricultural marketing cooperatives play an important role in eliminating intermediaries who play a role between the producer and the consumer and in minimizing the profits of intermediaries.
Regional associations and a national pole for an agricultural sales cooperative operating independently to compete with large traders and industrialists who manufacture or export certain products, while being able to compete with local intermediaries, eliminate some of them, and bring some technical advantages to their members. advised.
– “The abuse of receptive power must be avoided”
The shares of the chain’s markets have also been discussed in the report. Thus, only 4 companies dominate more than half of the market. Looking at the top 10 players in the market, this figure rises to 63%. Figures show that concentration rates within the organized retail market have increased significantly over the years.
The increasing share of supermarkets in the retail sector has started to shape the market where products are produced, packaged and supplied. One of the results of this concentration appeared to be the increased buying power of these structures in the supply chain. The distribution of cash sales and long-term payments creates an important source of funding for the chain markets.
In the report, which indicates that agricultural producers have little bargaining power in their negotiations with other actors in the chain, it is stated that if the power of other actors in the supply chain is limited, it will be possible to ‘raise farmers’ incomes, security of supply and consumer prices to reasonable levels, and achieve goals together.
The power of retailers affects the consumer as well as the effects on the suppliers, with its consequences on the reduction of consumer preferences, the increase in prices and innovation. Because of their market power, retailers shape consumer demand, what, how and where consumers buy.
The market power of supermarkets at the retail level and their purchasing power at the supply level are mutually reinforcing. As market power increases, the retailer can buy on more favorable terms and these products can be offered to the consumer at lower prices. This leads to an increase in market power.
In the report, it was stated that since the market shares and purchasing power of companies operating in the field of FMCG retailing have increased significantly, regulations should be adopted in order to prevent abuse of purchasing power.
– “National production must be supplied with agricultural inputs”
The report also included recommendations on measures to be taken in terms of security of supply and price stability in agricultural markets.
As a result, agricultural production in Turkey is very expensive due to its dependence on imports and therefore the exchange rate of fuel, fertilizers, seeds and pesticides, which are the most important inputs. For this reason, subsidizing said inputs in the short term and ensuring as much domestic production as possible in these areas in the long term are important both for prices and for security of supply.
In order to ensure adequate production, “production planning” including export and import policies, formation of a commission under the Ministry of Agriculture and Forestry, and revision of support policies in part of production planning were among the report’s recommendations.
It was indicated that in order to shorten the supply chain, the functions performed by intermediaries (traders, brokers, transporters, warehouses) should be fulfilled through producer unions, in this context, producer unions should be restructured, and a commission should be formed under the direction of the Ministry of Agriculture, Forestry and Trade.
In the report, it was recommended to increase support mechanisms to increase farmers’ incomes, announce agricultural supports before planting and make them permanent, implement mechanisms to increase market transparency so that farmers can access market data such as production, capacity, stocks and trade, as well as mandatory price notifications.
In order to avoid undesirable production fluctuations, sharing current planting data in the most transparent way possible so that farmers can shape their production preferences in the agricultural sector was among the recommendations of the report.
In the report, which indicates that agricultural insurance must be expanded and protection must be strengthened within the framework of risk management in order to ensure the continuity of agricultural production, the importance of developing new mechanisms for financing of agriculture and to reduce financing costs was underlined.
In the report, it was also noted that in order to limit the purchasing power of market chains, measures against unfair trading practices should be implemented and such practices should be strictly controlled by the Ministry of Commerce.