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AGRICULTURAL SUBSIDIES Meltem KARAGOZ Mehmet Onur BINGOL Sukru Ferat KORKMAZ

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INTRODUCTION Agricultural Subsidies on comparative Turkey-EU relations divided into six parts. These topics are: -Historical Background -Common Agricultural Policy -Agricultural Subsidies -Comparison of some of the EU member states and Turkey -Turkeys Current Situation According to acquis communautaire -Conclusion

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HISTORICAL BACKGROUND Turkey applied for membership in the European Communities in 11 July 1959. Ankara (Association) Agreement signed on 12 September 1963. Another development is additional protocol. The country was accepted as candidate to the European Union (EU) membership in 1999. On the specific chapter of agriculture; negotiations had started but the issue of agriculture and rural development is very hard to adopt. The screening started on 5 December 2005 and screening was completed on 26 January 2006 but this chapter had frozen at that year.

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COMMON AGRICULTURAL POLICY Before the Single European Act, all European countries managed their agricultural markets with complex devices.So a common market for agriculture needed. Firstly financial support was established and the European Council agreed in 1998. So The Common Agricultural Policy (CAP) is a system which includes European Union agricultural subsidies and programmes. The CAP has a history of successful change which was very successful in meeting its objective of moving the EU towards self-sufficiency from the 1980s onwards.

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THE CAP OF TODAY The CAP had been reformed. The policy of the CAP is more different than past today and it was evolved than when it was created by the Treaty of Rome (1957). Many important changes to the CAP were already made in the 1980s but, above all at the beginning of the 1990s. Critics argue that too few Europeans benefit. Only 5.4% of EU's population works on farms, and the farming sector is responsible for 1.6% of the GDP of the EU(2005). The European Commission is discussing new reform of the CAP now which includes the next financial perspectives packages for 2014.

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THE RELATIONSH P BETWEEN TURKEY AND THE CAP Turkey often engaged in very low value added forms of agriculture. The Agriculture Reform Implantation Project (ARIP) of 2001-2005 represents a new direction in agricultural policy and aims to bring Turkey more in line with the EU. The 2007-2008 world food price crisis has renewed calls for farm subsidies to be removed in light of evidence that had bad effect for the relationship between Turkey and CAP. Finally Turkey should take some measures for accommodate their policy to the CAP.

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AGRICULTURAL SUBSIDIES An agricultural subsidy is a governmental subsidy paid to farmers and agribusinesses to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities. Examples of such commodities include wheat, feed grains (grain used as fodder, such as maize or corn, sorghum, barley, and oats), cotton, milk, rice, peanuts, sugar, tobacco, and oil see. European Union countries can be benefited from these subsidies. For rural development and inadequate agricultural regions. To avoid unequal level of development. And to recover the weakened agricultural sectors.

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AGRICULTURAL SUBSIDIES Also, the agricultural expenditures can be generally financed by two funds. European Agricultural Guarantee Fund (EAGF) European Agricultural Fund for Rural Development (EAFRD)

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EAGF Direct payments to the farmers Therefore, can regulate the agricultural market In such ways; Intervention, and Export refunds

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EAFRD Finances the rural development programmes For all Member States Besides these institutions which are counted above, Maybe the most important one is Integrated Administration and Control System (IACS).

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IACS Covering all direct payments to the farmers Such as; Single Payment Scheme (SPS) And applies to a large extent to the new MS With having single area payment scheme (SAPS) Which are based on; Number of hectares or animals Held by the farmer.

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COMPARISON OF SOME OF THE EU MEMBER STATES AND TURKEY In this part, our focus point is the examining some of the major European Countries in the case of agricultural subsidies such as France, Italy,Spain and Turkey. France has been one of the most dominant agricultural centers of Europe for centuries. With about 730,000 farms, approximately 7 percent of the workforce is employed in agriculture or similar sectors such as fishing or forestry. In 2008 France received 9,940 Million in EU farm subsidies or approximately 18,862 per farm.

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DISTRIBUTION OF FRANCES SUBSIDIES

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FRANCE In that context, France is the most significant country within the borders of EU. France has an efficient agricultural sector. France, can make more contribution to CAP In exchange of that, their agricultural sectors can receive and benefited from agricultural subsidies.

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AGRICULTURAL SUBSIDIES IN ITALY The CAP was not very successful in Italy in its initial stages because subsidies did not cover several traditional Mediterranean products. The agricultural sector employed only 5.5 percent of the working population in 1999 and contributed only 2.5 percent of the GDP in 2000, with an output of over US$36 billion. This EU policy ensures that subsidies and incentives are offered in order to sustain prices and guarantee a certain level of income to farmers. In addition, Italian agriculture is suffering from changes in the climate and very poor management of the land. With only 5 percent of the land under cultivation, Italy is not self- sufficient in agricultural products, yet it enjoys an abundance of agricultural resources.

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AGRICULTURAL SUBSIDIES IN SPAIN Spanish agriculture has traditionally been most affected by the level of rainfall, since drought is always a threat. In 1999 a EU reform of the Common Agricultural Policy was approved as part of the Agenda2000 in Spain. The abundance of Spain's agricultural resources guarantees overall growth. As of 2005 France is also a net contributor and the more agriculture-focused Spain, Greece and Portugal are the biggest beneficiaries. Spain took 4242 Million agricultural overall subsidies in 1995, 4895 Million in 2000 and 6493 million in 2005

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In Turkey, Support for agriculture and rural areas can be made in different ways; Agricultural investment incentives,aid in the area of foreign trade and protection for importation, Incentive premium for milk, Restrictions and support payments for plantations, Soil improvement operations, Price supports for cooperatives, and Also agricultural organizations.

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Direct Income Support System With this system; Farmers, who have 1-199 dunam land, Can receive monetary assistance, In the form of donation

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IN OECD COUNTRIES; Farmers receive monetary support in the level of 36 dolar ( per land measurement of a thousand square meters ). In Turkey, prescribed support to farmers in the level of 5 dollars with Direct Income Support System.

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ECONOMIC CRISIS AND ITS REFLECTIONS Most recently, despite the continued impacts of the global economic crisis, EU continue to distribute the agricultural subsidies in accordance with crucial needs to some countries such as Greece, the Netherlands and Denmark. For instance, EU officials doled out approximately $ 70 million in the year of 2009. Moreover, since 2008, one of the biggest subsidies was $ 223 million which was given to the French sugar conglomerate Teroes, the aim was to aid the sugar industry. On account of the global economic crisis, this recovery was seen as a necessity (Times, 2010).

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CURRENT SITUATION ON RELATIONSHIP BETWEEN TURKEY AND EUROPEAN UNION ACCORDING TO ACQUIS COMMUNAUTAIRE Turkey's European Unions acquis program was published on April 17, 2007. 8 Sub-committee was established by EU-Turkey Association Council on 11 April 2000 for examine Turkeys harmonization to acquis communautaire. In this context, Turkey create new structures for harmonization to acquis in some areas. Also define set criteria about 11 chapters, such as Free movement of goods, Customs Union, Competition Policy Agriculture and Rural Development.

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FINALLY; I n order to conclude this presentation, we again will mention the Progress Report and Turkeys place in the Agricultural Policy. In this respect, there are any development in the field of quality policy and there was some progress in the field of organic farming. The negotiations had started but the issue of agriculture and rural development is very hard to adopt. In conclusion, the alignment with the acquis remains limited. In addition to this, most administrative structures which are related to the CAP have not yet been established.