Keywords: Turkey, EU enlargement, market integration, simulation modelling, EU budget, EU accession, partial equilibrium model, common agricultural policy, CAP, European Union, Turkish agriculture, agricultural prices, welfare gains, agricultural productivity
The challenge of integrating EU and Turkish agricultural markets and policies
This paper addresses the potential consequences of a political and economic integration of EU and Turkish agriculture and evaluates the resulting challenges. Simulation models reveal declining agricultural prices for Turkey in the case of market integration with the EU. This would lead to less production, more consumption and Turkey becoming a net importer of agricultural products. Resulting comparative static net welfare gains may amount 0.5 billion. More important, however, are the productivity effects which may be generated by the prospect of EU membership. A realistic range of outlays for implementing the CAP in Turkey is between 3.5 and 6.3 billion. The main challenge for Turkey in the years to come is to increase agricultural productivity. In order to channel EU funds into productivity-enhancing policies, the second pillar of the CAP is a more suitable instrument than direct payments which are based on area endowment and tend to capitalise into land prices.