K. Murat Yıldız / Duvar English
The heavy cost of living, especially food inflation, has become a major problem as noted in a study recently made public by Kadir Has University in Istanbul. According to the study, nearly 35 percent of Turks say that economic hardship, unemployment and the high cost of living were their main problems.
In a recent move to combat high prices, the Turkish Post started to sell food, starting with sunflower oil, below market price through its website. Similarly, the government sold cheap agricultural products at municipal markets before the most recent local elections, but stopped this practice after the elections concluded.
As early as summer of 2020 President Erdoğan, during a live interview on state TV, said “unfair price increases are a terror, we will not allow this” and added, “we will continue the crackdown on those fraudsters and robbers, and hold them accountable.”
Ministry of Trade takes action
As complaints about food inflation started to find their way even to pro-government outlets, the president became more vocal about the issue. ‘The crackdown’ was repeatedly mentioned by President Erdoğan. The Ministry of Trade announced recently that they fined 495 companies nearly 15 million Turkish liras (2.1 million dollars) for price gouging. The ministry noted that most fines were issued for ‘overpriced’ products such as sunflower oil, chicken, eggs, flour, fruits, and vegetables.
Other than the fines, following Erdoğan’s statements, pro-government accounts called for boycotts of the country’s largest supermarket chains on social media, many of whom are government-affiliated and even rumored to be linked to the president's family.
“My neighborhood market had a huge takeaway food section that got shut down. It had a delicatessen, fish, and meat section which was sized down. The liquor section was also downsized and the imported products section has only a few products now. I don’t think they would do that if they were making as much profit as the president claims,” a retired bureaucrat from an upscale neighborhood in Ankara told Duvar English under the condition of anonymity.
“I have a family of three and an above-the-average income, but even I am struggling. Some products I used to buy have become a luxury. Food I used to buy in kilos I now buy in grams. I really wonder how people are surviving,” he concluded.
The government should not dictate prices
“I have been exporting goods from Germany to Turkey since the late ’70s. Doing business in Turkey was not easy back in the day as the state was very protectionist. This changed in the mid-80s under Prime Minister Özal and after Turkey signed the customs union agreement with the European Union,” a German Turk businesswoman told Duvar English.
“Now hearing President Erdoğan talk about price controls reminds me of those days. If this becomes a common practice it will certainly scare off investors. No one would prefer to do business in a country where the government dictates the price of the goods and services,” she added.
“Today by a presidential decree, telecommunication taxes were increased by 33 percent I read. Who are they going to blame for that?” she asked.
Populist and authoritarian economic policies are doomed to fail
“They are losing popularity. This is why they act in this authoritarian and populist way. You cannot run an economy with scalar relationships,” former Economy Minister Ufuk Söylemez told Duvar English.
Pointing to recent promises of reform and a highly-praised departure from unorthodox economic policies he added that “this contradicts the promise of reform. Did you ever see such a case in the EU where the government gives orders to the markets? You cannot claim to be a free market economy and act this way."
“Yes, if there is price manipulation authorities have to take action. A free market doesn’t mean there are no rules, but even if this the case you don’t act in this populist and authoritarian way. They tried this before. They wanted to put a cap on prices and rents, but they failed,” he concluded.
Food prices won’t drop this way
“The government took similar actions back in 2009 when potato and onion prices increased. They raided warehouses. Farmers feel today that they have been treated like terrorists. Food prices won’t decrease with government orders, raids, and threats. This is the result of economic and agricultural policies,” Ali Ekber Yıldırım, a prominent agriculture columnists, told Duvar English.
“Without adopting appropriate agricultural policies you cannot tame food prices. In addition to chronic problems in this regard globally there is an increase in food prices due to the pandemic, especially with certain products,” he added.
“Agriculture-related government enterprises have been privatized. Recently sugar factories have been privatized. More than that, state agricultural institutions act like importing agencies. They no longer support local production. Scaring off supermarkets, raiding producers, and trying to sell food via the post office is at best a contradiction. I am really curious who is behind this idea.”