Turkey Eliminates Import Tariff on Necessities to Curtail Rampant Food Price Inflation

In August 2021, the food price inflation rate was 29% compared to 2021. The main reason for this situation is the decline in production and yield due to droughts, increase in international commodity prices and the Turkish Lira’s depreciation against other currencies. Turkey announced the elimination of tariffs on essential products like chickpeas, lentils, and wheat, rye, barley, oats, and sorghum seed for sowing. The zero tariffs were applicable from September 08, 2021, and will continue to December 31, 2021. After this period, the tariffs will revert to the former levels, which range from 19.3-130 percent, depending on the commodity.

Food prices across the world were up by roughly 33% during August 2021 in comparison to the same period last year. The price increase was seen across essential commodities like vegetable oil, grains, and meat. The situation is particularly grave in Turkey, where the annual consumer prices rose to 15%, second only to Argentina among emerging markets and by far the highest in the OECD. Consumers in Turkey are spending large amounts of money to stock up on rice and pasta to avoid swallowing even higher prices in the months ahead. It is unlikely that the situation in Turkey will get better as the country continues to battle with extreme weather, soaring freight and fertilizer costs, shipping bottlenecks, and labor shortages compounding the problem. Furthermore, the country’s dwindling foreign currency reserves have made imports very costly which continues to add pressure on the increasing domestic prices.According to the latest data, a fifth of the average household budget in Turkey is going to food, with the rate reaching up to 30% in low-income groups. Millions of people in low- and middle-income groups are highly vulnerable to food prices inflation and food insecurity issues.

According to Turkey Statistical Institute, in August 2021, the food prices were up 29% year-on-year, compared to overall consumer inflation of 16.59% in the same period. For popular products like cereals and processed food, including bread, the price increase was hovering at nearly 20%.

Source: Trading Economics.

With more than 20 of Turkey’s provinces seriously affected by decreasing precipitation, the average precipitation levels have fallen 25% below normal seasonal amounts, highlighting the ever-growing impact of global warming across the country. The southeast is the worst-hit region where crops like wheat, barley, and red lentil yields are expected to drop by 20% to 80%. A combination of factors such as drought, population growth, and migration could make Turkey a country plagued by food insecurity in the next decade unless adequate measures are taken. The problem has been further aggravated due to the increasing cost of imported goods which also impacts the domestic food and feed prices as well.

As a consequence of production decline, it is expected that domestic production will not be able to meet the growing demand of Turkish consumers, which means that the country will rely more on imports. Recently, Turkey has announced the elimination of tariffs on Chickpeas (HS 0713., Lentils (red - HS 0713., green - HS 0713., others - HS 0713., and wheat, rye, barley, oats, and sorghum seeds for sowing (1209. The announced zero tariffs will be applicable for the period September 08, 2021, to December 31, 2021. It is expected that the tariffs will revert to the former levels, which range from 19.3-130 percent, depending on the commodity from January 1, 2022.


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