Effects of developments in world bio-energy markets on Turkish agricultural sector: Impact analysis by using a partial equilibrium agricultural trade model

This study analyzes the changes in world and domestic market food prices and production volumes basing on the developments and policy changes in world and Turkish bio-fuel markets. In the analysis various partial equilibrium scenarios are carried out by using Agricultural Trade Policy Simulation Model framework.One of the findings of the study is that the demand and supply effects of liberalization policies are smaller than the effects of policies that motivate the production of bio-fuels. It can be stated that the goals and policies of countries towards production and consumption of bio-fuels yield in a greater distortion in agricultural markets compared to rural development oriented policies. Another finding of the study is that the latest modality of the World Trade Organization together with the bio-fuel policies resulted in an increase in the prices of foods analyzed in this study. This increase in world prices occurs due to the shift in cultivated area from food to fuel based production.The affect of world price change on domestic market in Turkey arises in two directions. While the domestic price change in wheat and maize markets does not follow the trend in world prices, in rest of the product markets the trend follows the trend in world prices. In the markets where impact of liberalization on imports is greater then exports, a fall in price is experienced and a rise in prices is observed in the opposite situation. The analyses show that bio-fuel production in Turkey can be done by using more sugar beet, when Turkey does not change the current crop pattern. Under the same conditions, production of bio-fuels by utilizing soybeans and rapeseed does not seem possible unless some policies targeting the use of these two products are implemented.