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Turkey’s agricultural decline drags down related industries

The alarming decline in Turkey’s agriculture, the core reason behind soaring food prices, is having a spillover effect on agro-industries, especially the food and beverage sector as well as other industries that manufacture inputs for the agricultural sector.
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Turkey’s skyrocketing food inflation is expected to be a major factor swaying the vote in the March 31 local elections, threatening blows to the ruling Justice and Development Party (AKP). Scrambling to soothe popular indignation over soaring prices, the government has tried out a series of palliative measures, the latest of which was the launch of subsidized vegetable sales at tents and mobile stalls in Istanbul and Ankara, the country’s two biggest cities. The cheap sales are meant to obscure the core reason of food inflation, which is the decline in agricultural output, while putting the blame on and demonizing middlemen. The election results are likely to show how successful this tactic has been.

According to the Turkish Statistical Institute (TUIK), consumer inflation rose 1.1% in January from the previous month and 20.4% on a 12-month basis. The government had hoped to slow inflation via various tax cuts, but got an unpleasant surprise from weather conditions. Heavy rains, floods, whirlwinds and storms hit greenhouses in production hubs such as Antalya, Mersin, Izmir and Mugla, causing a big shortage on the market. As a result, vegetable and fruit prices rose 30% in January and 64% on a 12-month basis, while the overall food inflation was 6.4% for the month.

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