PROF. DR. AHMET ŞAHİNÖZ: “THE SOUTHEASTERN ANATOLIA PROJECT (GAP) CAN SUPPLY ENOUGH FOOD TO THE WHOLE MIDDLE EAST”

Head of the Hacettepe University Department of Economics Prof. Dr. Ahmet Şahinöz replied the questions of the ORSAM Water Research Programme. Şahinöz shared his opinions about the food security and the conditions of the Southeastern Anatolia Project (GAP). Şahinöz told that Turkey should finish the GAP as soon as possible and raise its share in the food market of the Middle East and added that both Turkey and Middle East will derive a mutual profit from that. “The GAP can supply enough food for the whole Middle East; the Middle East enriches the farmers of the GAP.” said Şahinöz.

Ahmet Şahinöz: I graduated from Hacettepe University Department of Economics. I got my doctorate between 1974 and 1979 in France. I have been working in Hacettepe University since 1979. In 1985 I became an associate professor and in 1991 a professor. I worked as an associate dean between 1993 and 1995. During various periods, I worked as a vice chair. I have been working as the head of  department since 2006. I performed the senate membership between 2007 and 2010.

In general, what are the current conditions of the food market in the Middle East?

As I often researched the agricultural sector in my academic studies, the Middle Eastern food markets are my special field of interest. Although the Middle Eastern countries seem at first sight as rich countries, when we have a closer look we see that they possess every feature of poor societies. Namely, the wealth is limited in these countries, accumulated only in the hands of a small group. The larger part of the society, however, has the characteristics of poor countries. For this reason, the marginal propensity to consume which determines the income-demand relations in these countries is considerably high particularly in food products. When the income increases, the first thing that the people do is to satisfy their food consumption, that is, their biological and physical needs, in total their vital needs. This is one of the basic rules of the economics. In this regard, any income increase in the Middle Eastern countries accompanies an increase at the food demands. Namely, in these countries the income elasticity of the demand in terms of food products is quite high. This is the situation in theory. But we can see its status in practice when we look at the foreign trade statistics of the Middle Eastern countries. In the 1980s, I went to Paris for a Project. The Project was entitled as “The Middle Eastern Food Markets and Turkey”, the Project results were published later with the same name by the Bank for the Development of Industry. At that time, there was not such a common statistical data network. I went to the OECD to study the figures there. 15 Middle Eastern countries, from Libya to Saudi Arabia and Iran, both the oil producers and the non-oil producers, were researched all together as the non-oil exporters also benefit in a way from the oil income, and I observed that the region has turned into a great food market after the 1973/74 oil crisis.

The food imports of these countries had a fast increase following the 1973-74 oil crisis, that is, the period when the oil prices increased at once by 3-4 times. The oil prices that were 3 dollars at that time had not increased since the Second World War because oil was under the control of the Western enterprises. As both the oil and energy are the motors of the capitalist development, these enterprises had not increased the prices. In this way, they had contributed to the economic growth of the Western world. But when the oil prices had an immediate increase after the 1973-74 crisis, the extraneous income of these Middle Eastern countries rose by 3-5 times. I guess, after that date, the oil income of these countries raised from $30 billions to $90 billions and then to $200 billions. In the same way, the food imports had a rapid increase. Namely, this is a normal human behavior. They firstly raised the food imports. When the food import composition is taken into account, it is seen that these countries have a very large importation variety from wheat to milk, from milk to meat, from meat to cereals, water and livestock. I remember again quite clearly that the import rose in these 7-8 years from below $3 billions to over $20 billions and this figures, at that time, were very high.

Oddly enough, the oil prices in these countries started to diminish after 1983 and the unit price lowered to 10 dollars. But, in spite of that there was not a considerable decrease at the food imports of these countries. These were decreases at the imports of other products. This is called the racket effect in macroeconomics, it is a consumption theory found by Duesenberry and Modigliani. Briefly, people do not give up easily their consumption level even if their income decreases. This is the “irreversibility” rule. I made the calculation of that in my study for project-book: the elasticity of the food imports according to the oil prices is considerably high (0.6) during the period of increase and considerably low (0.2) at the period of decrease. This means that any decrease at these prices affect very little the food imports. What I want to say is that every Middle Eastern country has had the required income level for the food consumption for the last 30 years. However, the Middle Eastern countries do not have the agricultural production to meet that demand because of the geographical reasons. Briefly, it is not possible that these countries satisfy their food demands by means of their own productions because of the geographical reason. Therefore, the food imports of these countries are going to continue by gradually growing for long years.

What is the influence of the rapid population growth at that point?

With the population growth, the food demands increase and get diversified as well. And this means that there is a great potential in this region in terms of food markets and these markets are “natural markets” for Turkey. Why? Firstly because these countries are very close to Turkey in terms of geography. Secondly they have been sharing a similar culture since the Ottoman and as it is known culture does not change easily. And the culture shapes the consumption patterns of the societies as well. For example, a Turkish cheese, of course provided that it is produced at a certain quality, is preferred to the most famous French cheese of the World in this region because of the taste preferences. And this does not change easily with an immediate increase of income. The taste preferences are natural pleasures and habitudes that require 100 years to be shaped.

This is why I assert that the Middle East is a natural market for Turkey. But unfortunately when the statistics are taken into account, it is seen that Turkey could not take a share from these markets during the rapid growth of that food market, that is, after the 1970s. In the beginning of the 1980s, Turkey made a move for food export in this region. But it could take a share of only $1 milliard from the market of $20 billions. When in the middle of 1980s the violent food trade competition between the US and the Europe which was called the “subsidy war” ended up with a considerable decrease at the food prices, countries that were doing exports without high subsidies such as Turkey had to withdraw from the foreign markets. But actually Turkey has the capacity of supplying enough food for at least one third of these markets. Then who supplies the food now for these markets? They are the European Union, the USA, Australia, New Zealand, even Brazil and Canada. But unfortunately Turkey cannot benefit enough from these markets. But why cannot Turkey benefit? There are various reasons of that: the organization issue for the export, the advertisement issue, firm scale issue, the issue of settlement on the markets, the financing issue, the product quality issue, the Turkish agriculture’s production and fertility issue etc. But these problems can be resolved. Now the Turkish exporters can reach to every corner of the World.

Turkey can rediscover these markets and Turkey really must discover these markets because Turkey has a huge project which is called GAP. Turkey must make the GAP functional by activating this Project, by making it effective, dealing with the irrigation, fulfilling the deficiencies. Namely, there is water there in the huge water reservoir, next to it there is a huge arid plain waiting for water.  But we are not being able to irrigate it. The Turkish Republic should give priority to these investments. With the irrigated farming, there will be a need for a total production planning for the region. Why? In order to rediscover these markets and to conquer these markets in economic terms, Turkey need to make a production planning in the GAP area and this production planning should correspond to the structure of the food markets of the Middle Eastern countries because the producers of this region do not have the capacity of penetrating the foreign markets. They have neither the technical equipment, nor financial means and nor the knowledge to penetrate these markets. Therefore, in order to be penetrated into these markets, these producers need to be planned and oriented. And the people who are supposed to do that are the GAP administrator, the regional development agencies. Can you imagine that France exports peaches, cucumbers and the US exports oranges? Nevertheless, the products of this region have the possibility to be transported as quite fresh, directly to that region. The products of this region are much more healthy and natural than the products of the Western countries. The more income receives the Middle Eastern countries, the more they become sensitive to the environment issue and health norms. They also demand now for the organic hormone-free products produced with less fertilizer. The GAP area is an ecologically clean region which has not been polluted much with the industrial inputs. Turkey can conquer the markets by using also this factor. The GAP can supply enough food to the Middle East and the Middle East enriches the farmers of this region, I think.

We observe that a lot of countries give utmost importance to the food security. What is the reason of that? What is the importance of the GAP in terms of the food security of Turkey

The food security is a strategic target of all the countries in the World, without any exception. It has been confirmed especially after the Second World War. During the War, the European countries were obliged to the American food products. And this accompanied quite high political costs, too. These costs were not easy to cover. You may have a deficiency about any matter and you can fulfill it with another means; but you have to meet your need related to food just with food. There lies an obligation then. For example, you may be obliged to the foreign suppliers in the automotive sector, but this does not cause much effect, it is the same even for the cement and energy; however countries want always to guarantee their food security, this is a high level strategic target.

Turkey has not deviated from this strategic target until now. However recently we have seen sometimes that the food imports exceed the food export. This does not mean that Turkey has lost its food security. The food security does not mean that you must produce all the products that you consume. It means that you must have the capacity of producing an important amount of the strategic products, that is, the vital products of the alimentation and nourishment such as grain, meat, milk etc. However you do not have to eat and produce peaches. Exporting bananas from foreign suppliers does not mean that you have lost your food security. The population of Turkey has been growing as well as its income; however its agricultural production has been growing correspondingly as a result of the recent wrong agricultural policies. In that case, the food security of Turkey has been irrevocably imperiled. This process has recently started. One of the occasions which can stop this process is the GAP. If Turkey uses irrigation as well as technology corresponding to its soil and climate, not only enables it the food security of the Middle East that I just mentioned, that is, it can save them from being obliged to the American wheat, French fruit and vegetable; but also Turkey obtains a regional development.

Has the progression that has been made since the initiation of the GAP satisfied the expectations? To what extend?

The GAP is the biggest project of Turkey, the biggest project of the Republic, but unfortunately also one of the projects which have been ignored the most. The GAP was planned to be terminated in 1995, it was postponed to 2000. It was postponed from 2000 to 2005, from 2005 to 2010 and now it has been postponed to 2015. However Turkey has been losing millions of dollar for every irrigation channel that it could not build and delayed there because water is there, soil is there; however it cannot combine them and produce products. Actually with irrigation, enough fertilizer, enough agricultural pesticides, enough and good seed, the fertility can be increased by 3-5 times. Turkey have not been benefiting from those. In order to find out the reason of that, we should look at the 1990s, that is, the years of its expected terminations. The GAP is a project whose total cost of is $32 billions, but just a part of about $18-19 billions has been done. It seems that there are not any problems at the energy production. The dams have been constructed; however in terms of irrigation, only a part of 15-20% has been finished. While 1 milliard 800 million hectares have been planned to be irrigated, the total land of current irrigated farming is only 250-300 thousand hectares. The reason of that are the chronic budget deficits appearing in the 1990s. Turkey has gone through budget problems since the middle of the 1980s. Namely, Turkey has always had budget deficits. The budget of Turkey has never given the opportunity of making investments easily. Especially in the 1990s, the whole taxes collected by the state were covering only the interest costs. Therefore, there was a problem of creating an investment fund for the GAP. Maybe after the 2000s when the budget deficits were decreased to a certain level by means of the policies out of interest in 2005-2006, an investment in this area could have been done but unfortunately could not be done. Quite strong political will is required for that kind of investments because it is the political powers that take the investment decisions. This means that that kind of choice brings about not only economic results, but also political results. I think that by providing an economic, social, cultural development, the GAP can reduce the development imbalance between the regions which is one of the most important political problems of Turkey. And the achievement of this project can be a motivation source for the Eastern Anatolia Project (DAD) as well. But in my opinion first of all, this project should be terminated.

What should be the socio-economic expectations of the GAP? What were they, what happened? To what extend expectations can be executed?

The expectations in terms of energy have been satisfied, I guess. The results in terms of irrigation and socio-economics are at very low levels. The GAP is an integrated regional project. The economic and social progresses can be made along with the irrigation because the irrigation will increase the agricultural production and the agricultural production will both increase the employment and attract the agro- industry to the region. The total income of the region will increase. In this way, the cities will be developed and economic, social and cultural developments will be enabled. The economic development will make the region a center of attraction. But all these can be concluded with the termination of the projects in relation with the irrigation.

With the irrigation, salinization has also started in some areas. This had started years ago in Kızıltepe, Mardin. Is this problem because of the education inadequacy of the irrigation units and the farmers?

The state is responsible for the biggest problem of the GAP. Namely, it is the state itself who should bring into question the technical problems such as salinization and find solutions for them. Why is it the state itself? The people of the region have met for the first time with water and are not informed much about it. As they are not informed enough, they may ask to increase immediately their production and increase their income. This is a very normal desire for the farmers. It is the state power who can prevent this, that is, the state itself. Some researches have been done before in this region. The Çukurova University has prepared a product range for this region. Namely, it has produced a changing, alternative production plan. According to this plan, if cotton is planted one year, the next year cotton will not be planted, instead of it, a different product, something that requires less water will be planted. I give the example of cotton because it is cotton which is the most produced product of the region and according to the results of the researches the cotton is going to cover one third of the irrigated areas. This means that cotton can be planted only once every three years. But nobody obeyed to this condition because it is the cotton that provides the most income. The state, maybe not to discourage the people or because of political concerns, have not dealt much with the problem and everybody has started to produce cotton. This is why salinization etc. has come out. However, the state should fulfill the deficiencies not only by means of advice but also sometimes by means of mandatory mechanisms with the help of its irrigation units. Because there is a risk for eternal disappearance of the natural resources such as water and soil.

The GAP has not been terminated at the time planned. The GAP administration has been moved from Ankara to Urfa. Has it had any effect in favor of a more rapid progress of the Project?

I think that it was a right decision to move it because it is a Project of the region. Thus, the administration body must be in the region. However, the objective might be also that: from this move, it can be inferred that there is no hope for this Project any more, and for this reason it might be pushed aside. We will understand the truth from the amount of the investments that will be done in 2011 for the GAP, for the irrigation. In terms of efficiency, moving to the region and conducting the project on the place was a right decision. In order to eradicate the problems related to the GAP, the state must follow an active policy. By means of an active policy, you can increase both the economic and social efficiency of the region.

* This interview was done on February 1, 2011.