Essays on economic analysis of food prices in Turkey

Turkey is one of the countries facing high food price inflation in the world, especially in the last period. The thesis consists of three studies related to food prices in Turkey. In the first study, we aim to contribute to the ongoing discussion on the drivers of food prices with an in-depth-interview approach. The experts who have studied the issue in-depth or have worked in the industry for many years are included in the study, and a software package programme is employed to analyse the data obtained from semi-structured interviews. The qualitative study concluded that supply-side drivers are more decisive than demand-side drivers for food prices in Turkey. In particular, agricultural input costs play a fundamental role since most agricultural inputs are highly dependent on imports. Moreover, many problems are stated from mafia-like structures to the lack of competition in the food supply chain. The second study aims to examine the linkage between agricultural input prices and food prices in Turkey by using quantitative methods for the period from January 2015 to January 2020. Using various estimation techniques, we obtain robust results which state that there is a long-running relationship between agricultural input prices and retail food prices. Most strikingly, the long-run agricultural input price elasticities are found to be in the range of 1.30-1.36. In the third and final study, we investigate the impact of tax cut on agricultural input prices. In 2016, the Value Added Tax rate in fertilizer, which was 18 percent in fertilizer, was reduced to 1 percent. Then, fertilizer was included in the scope of the exemption. Using the difference-in-differences method, this study examines whether the decisions reduce fertilizer prices. Although there are limitations on data availability, the results of this analysis provide some hints that consumers received benefits from the tax reduction decisions.