TODAY’S – Weakening lira likely to boost food prices

Weakening lira likely to boost food pricesAs a result of a continuous dive in the value of the Turkish lira against the US dollar, food prices in Turkey are likely to surge in the near future, since nearly 85 percent of inputs in the nationand#39s agricultural production are imported from abroad, the Turkish Agriculturalists Association (TZD) has said.A steady drought and ensuing heavy precipitation last summer pushed food prices up across the country.

Prices decreased considerably later on amid plummeting oil prices, as oil is an essential input in agricultural production. Nonetheless, unfavorable currency movements in foreign exchange rates will probably inflate prices soon, suggesting that more than one factor has an influence on the food market in Turkey.

TZD President Ibrahim Yetkin said on Monday that the appreciation of the dollar has notably increased production costs for agriculture, since the industry is heavily dependent on imports from abroad. Underlining that all inputs in agriculture except electricity are purchased from outside, Yetkin said increased costs will push up market prices as a result.

Yetkin maintained that fertilizer, seed, fuel and pesticides make up between 80 and 85 percent of agricultural inputs, and Turkey imports all of them from abroad.Outlining that the prices are not affected by production costs only, Yetkin said, andldquoThe huge gap between producer and consumer prices stems from the disequilibrium between supply and demand.

andrdquoLamenting the difference between global and domestic prices, he added: andldquoThe prices in the world have been going down, [but] ours are increasing. This is an odd situation.

It occurs because a balance between supply and demand cannot be established and because there is a lack of [a] mechanism that may regulate the market.andrdquoThe UN Food and Agriculture Organization (FAO) said last week that world food prices kept dropping in February, reaching their lowest level in 55 months.

The overall FAO Food Price Index fell 1 percent to 179.4 base points, 14 percent lower than a year ago.

Underlining the importance of a regulatory body, Yetkin said: andldquoThe agricultural sector is abandoned in a free-market economy. Immediate rises in the [food] prices doesnand#39t mean that they [can] fall immediately.

It takes five or six months [for prices] to relapse.andrdquoandldquoIt will be producers who will suffer most from a strengthening US dollar The cost of production will increase and producersand#39 profitability will go down.

The deterioration [in profitability] will not be removed soon. It will also bring about an increase in [consumer] prices.

A decrease in prices is not so prevalent in Turkey. We need to get used to living with it [high prices],andrdquo Yetkin added.

SOURCE: Today’s Zaman