Turkish Agriculture: Resilience Amid Economic Shocks

In an era marked by recurring global economic shocks from the COVID-19 pandemic to successive supply chain disruptions, rising energy prices, and persistent inflationary pressures the agricultural sector faces unprecedented uncertainty. The key question is no longer whether agriculture is affected by financial crises, but how deeply and through what mechanisms these economic tremors ripple through the system. For Turkey, where agriculture remains a vital pillar of both the economy and national identity, this issue carries significant weight. The sector employs roughly 17% of the national labor force and contributes nearly 6% to GDP (Turkish Statistical Institute, 2024). It also serves as a critical buffer for food security, rural livelihoods, and export earnings.

Traditionally, agriculture has been viewed as relatively resilient to financial downturns due to the inelastic nature of food demand people must eat regardless of economic conditions. Yet, in an increasingly globalized and market-integrated economy, Turkish agriculture is far from insulated. Input costs such as fertilizers, seeds, energy, and animal feed are often priced in foreign currencies, making the sector highly sensitive to exchange rate volatility. Similarly, tightening credit conditions and reduced access to agricultural loans during financial crises can constrain production and investment, particularly among smallholders.

In the short term, global shocks tend to manifest through price volatility, input shortages, and disrupted supply chains. However, the long-term effects are more structural: declining profitability, reduced competitiveness, and shifting labor dynamics as rural workers migrate toward urban areas. Climate change further compounds these vulnerabilities, amplifying the consequences of economic stress through droughts and unpredictable weather patterns.

The Turkish Agricultural Landscape: A Sector in Transition

Turkey’s agricultural sector, long a cornerstone of its economy and cultural heritage, is undergoing a profound transformation. As of 2023, about 15.4% of Turkey’s workforce remained employed in agriculture, a steady decline from past decades but still representing millions of rural livelihoods (TURKSTAT, 2024). This shift reflects a broader structural transition from traditional subsistence farming toward a market-oriented, capital-intensive system increasingly influenced by global trade dynamics and financial markets.

Agriculture in Turkey today generates a gross production value exceeding USD 65 billion annually, contributing significantly to national GDP and export earnings (Ministry of Agriculture and Forestry, 2023). The country ranks among the world’s leading producers of fruits, vegetables, nuts, and cereals, and it serves as a key supplier of agri-food products to Europe, the Middle East, and North Africa. Yet beneath these impressive figures lies a system facing mounting profitability pressures. Many farmers operate on narrow margins, with rising input costs particularly for fertilizer, fuel, and feed eroding income stability.

The sector’s increasing financialization has deepened its exposure to macroeconomic volatility. Agricultural production now depends heavily on credit financing, particularly short-term loans to purchase input and sustain operations. As a result, shifts in interest rates, currency depreciation, or banking sector liquidity directly affect farm-level productivity and investment capacity. This tight cooperation between agriculture and finance, while promoting modernization and export competitiveness, has also created channels for financial contagion.

Moreover, as Turkey’s agriculture becomes more embedded in global value chains, it is increasingly vulnerable to international price swings, trade restrictions, and geopolitical shocks. The transition, while positioning Turkish agriculture for long-term growth, demands renewed policy attention to financial resilience, inclusive credit access, and sustainable production systems to safeguard the livelihoods that depend on it.

Transmission Channels: How Financial Stress Reaches the Farm

The impact of global financial crises on Turkish agriculture is rarely immediate or isolated; instead, it unfolds through a network of interrelated transmission channels that link farms to broader macroeconomic dynamics. One of the most critical pathways is the credit and input cost channel. Financial instability typically triggers tighter lending conditions, as banks facing liquidity shortages or increased risk aversion reduce agricultural credit. Farmers, often categorized as high-risk borrowers, find it increasingly difficult to access affordable financing. This coincides with currency depreciation, a recurring feature of Turkey’s economic turbulence, which inflates the cost of imported agricultural inputs such as fertilizers, pesticides, and machinery. In 2023, imported input prices rose by more than 40% year-on-year (Central Bank of the Republic of Turkey, 2024), forcing many smallholders to cut back on essential inputs or take on costly informal loans, heightening the risk of insolvency.

A second channel operates through domestic demand and purchasing power. High inflation, averaging 65% in 2023 (TURKSTAT, 2024) has sharply eroded real household incomes, compelling consumers to prioritize basic staples over higher-value foods like meat, dairy, and fruit. This shift in consumption patterns has led to declining farmgate prices for perishable and premium goods, particularly impacting livestock producers and horticultural farmers. The result is a vicious cycle in which production costs rise while output prices stagnate or fall.

The third transmission channel involves investment and technological stagnation. Agriculture’s modernization depends heavily on sustained investment in mechanization, irrigation, and digital tools. However, during financial crises, uncertainty and restricted credit discourage long-term investment. As observed in recent OECD (2023) analyses, postponed or cancelled investments impede productivity growth and slow the sector’s transition toward sustainability and competitiveness, leaving Turkish agriculture more vulnerable to future economic shocks.

Differential Impacts and Structural Resilience

The effects of financial crises on Turkish agriculture are far from uniform, reflecting the sector’s diverse composition and varying degrees of exposure to domestic and international markets. Some segments demonstrate notable resilience, while others face acute vulnerability to external shocks. Among the more resilient segments are producers of staple crops such as wheat and barley, along with contracted crops like sugar beet and tobacco. These subsectors benefit from government intervention and institutional arrangements that stabilize prices. Guaranteed procurement programs, input subsidies, and pre-agreed purchase prices under contract farming models provide a critical buffer against market volatility. This safety net ensures production continuity even during broader economic downturns and helps preserve rural employment in key grain-growing regions.

Conversely, the livestock sector remains particularly exposed to financial stress due to its dependence on imported feed. Currency depreciation often accompanying financial crises drives up the cost of soymeal, corn, and other essential inputs, eroding profit margins and threatening production sustainability. Similarly, export-oriented producers of fruits and vegetables experience heightened risk from fluctuating global demand, rising transport costs, and tightening trade finance conditions. These vulnerabilities became evident during the COVID-19 pandemic and subsequent energy price shocks, when Turkish exporters faced delayed payments, cancelled contracts, and logistical bottlenecks.

Yet, Turkey retains a notable structural resilience stemming from the limited role of speculative trading in domestic agricultural markets. Unlike the United States or the European Union where futures and derivative markets can magnify price volatility, Turkey’s agricultural commodities market remains relatively insulated from speculative pressures. As the World Bank (2023) notes, the underdevelopment of agricultural futures trading in Turkey has inadvertently shielded farmers and consumers from extreme price swings caused by financial speculation, providing a modest but meaningful layer of stability within an otherwise vulnerable system.

Policy Recommendations for Crisis Mitigation in the Agricultural Sector

To safeguard the agricultural sector from financial instability and future crises, a comprehensive and forward-looking policy framework is indispensable. Agriculture serves as the backbone of rural economies, and its resilience directly determines food security, employment, and national stability. Therefore, policies must combine immediate relief with long-term sustainability to ensure that farmers remain productive even in challenging economic conditions.

First, strategic planning for food security should be at the core of agricultural policy. Governments must prioritize the cultivation of essential crops such as cereals and pulses by offering targeted subsidies, input support, and guaranteed procurement prices. This ensures that local farmers remain motivated to produce key commodities that form the foundation of national food security, even during market downturns or supply shocks.

Second, expanding access to affordable agricultural credit is vital. Strengthening the capacity of state-backed credit institutions such as the Türkiye Sınai Kalkınma Bankası (TSKB) and Ziraat Bankası can help farmers obtain timely financial assistance. Introducing flexible credit products with grace periods matched to agricultural production cycles and offering low or subsidized interest rates during crises will prevent farmers from falling into debt traps while sustaining production.

Third, risk management mechanisms such as agricultural insurance and warehouse receipt financing should be promoted. These tools can protect farmers from unpredictable losses caused by natural disasters or price fluctuations. Insurance coverage and collateral-based financing enhance farmers’ creditworthiness and reduce their vulnerability to shocks.

Finally, agricultural surpluses should be utilized strategically for national benefit. Excess production can support social safety programs, be directed toward humanitarian exports, or be stored as strategic reserves. Such measures not only stabilize markets but also create additional income streams for the agricultural sector, fostering resilience and sustainability in times of crisis.

Conclusion

The global financial crisis and its cascading economic shocks have revealed both the strengths and fragilities of Turkish agriculture. Once perceived as a naturally resilient sector, agriculture in Turkey now operates within a deeply interconnected economic system where financial volatility, currency depreciation, and global trade disruptions have direct and immediate consequences at the farm level. Rising input costs, tightening credit conditions, and inflation-driven declines in consumer purchasing power have collectively tested the sector’s endurance. While staple crop producers have benefited from government price supports and contract farming arrangements, high-value and export-oriented producers particularly in livestock and horticulture remain acutely vulnerable to external market fluctuations.

Yet, amidst these challenges, Turkey’s agricultural system retains a degree of structural resilience rooted in its diversified production base, government intervention mechanisms, and limited exposure to speculative financial trading. Moving forward, the country’s ability to withstand future crises will depend on strengthening its financial safety nets, expanding access to affordable agricultural credit, and promoting adaptive investments in technology and climate-smart practices. Ultimately, ensuring the stability of Turkish agriculture requires a balanced policy approach one that combines immediate macroeconomic stabilization with long-term sustainability strategies to safeguard livelihoods, maintain food security, and support the sector’s continued role as a cornerstone of national resilience.

References: CBRT; Ministry of Agriculture and Forestry, Turkey; OECD; TURKSTAT; World Bank.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writer is affiliated with the Department of Agricultural Economics, Selcuk University, Konya-Türkiye and can be reached at mdirek@selcuk.edu.tr

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