commercial banks at relatively high interest rates, were key factors in the country’s overall economic turbulence in the 1980s and 1990s.” (OECD 2011b, p. 10) Agricultural policies began to rely more heavily on markets starting in 2001 under the Agricultural Reform Implementation Project (ARIP). Under the ARIP, between 2001 and 2008, state-owned enterprises and the ASCUs were restructured, and the practice of administering commodity prices abolished. To ease the transition and to help prepare for EU accession, the government established a National Farmers’ Registry System (NFRS) that allowed farming households to receive direct income support de-coupled from production. The rationale for the policy change was to allow farmers to respond to price signals when deciding what to produce, while continuing to provide levels of income support similar to that received under the system of commodity price supports. Still, as a practical matter, the portion of total producer support that was de-coupled was never large and has dwindled since 2006.

As discussed, many producers in Turkey are shielded from international competition by an array of import tariffs, especially livestock, dairy and sugar beet producers.<sup>17</sup> In addition, floor prices for cereals, sugar and tobacco are supported through direct purchases. Production quotas are in place for sugar beet. Fresh and processed fruit and vegetables, derived food products, poultry meat and eggs receive export subsidies. Tobacco and hazelnut farmers benefit from a program to help them transition to other crops. Crops that are deemed in short supply qualify for premium payments, sometimes referred to as deficiency payments; oilseeds, olive oil, cotton, cereals, tea and pulses have benefited from the program in recent years. Interest rate concessions and direct payments encourage the improvement of livestock breeds and land improvements that protect soils and allow the consolidation of small tracts. De-coupled income support, instituted under ARIP, has been phased out, but farmers registered under the NFRS, receive so-called “diesel payments” and “fertilizer payments,” which totaled nearly $US 45 per hectare in 2011, are in practice de-coupled.<sup>18</sup> The livestock sector benefits from a variety of animal husbandry supports. The government also reimburses 50 percent of the premiums on an insurance scheme available to all producers, which covers field crops, orchards, greenhouses, cattle, poultry and bees against hail, frost and animal life. Most farmers are exempt from income taxes Taken together, these policies provide a level of support for producers greater than that provided by most OECD countries. Table 2 shows the average level of support between 1996 and 2011. The units in the table, known as Percentage Producer Support Estimates (percentage PSEs), are based on an OECD methodology that combines various types of interventions into an estimated average value for producers, relative to the farm-gate value (inclusive of support) of what they produce.<sup>19</sup> Because the methodology converts disparate interventions, like trade barriers and subsidized insurance, into value equivalents, the methodology is used to show the aggregate effects of those policies. Calculations based on the approach are often the basis for treaty negotiations. As the table reveals, all told, producers in Turkey receive greater support than do farmers in the EU. Among OECD countries, only Iceland, the Republic of Korea, Japan, Switzerland and Norway had higher percentage PSEs than Turkey in 2011.

As the table shows, this has not always been the case. Although farmers in Turkey have received greater levels of support than Chile or the United States, levels were lower than in the EU until recently. Support to farmers

> 17 This section relies heavily on the policy descriptions for Turkey in OECD (2011a), OECD(2011b) and OECD (2012).

> 18 Despite their name, these payments are de-coupled and are paid regardless of whether fertilizer or fuel are purchased.

> 19 The OECD defines the measurement thus: “The Producer Support Estimate (PSE) is an indicator of the annual monetary value of gross transfers from consumers and taxpayers to support agricultural producers, measured at farm gate level, arising from policy measures, regardless of their nature, objectives or impacts on farm production or income....The percentage PSE is the ratio of the PSE to the value of total gross farm receipts, measured by the value of total farm production (at farm gate prices), plus budgetary support.” Available on the Web at: http://stats.oecd.org/glossary/detail.asp?ID=2150 (downloaded Jan 27, 2013).

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