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Turkish potato growers confronted with rising production costs

Turkish potato growers confronted with rising production costs

Due to increasing production costs related to the devaluation of the Turkish lira, profit margins of potato growers in Turkey are declining by the day.

October 1, 2018
The potato price in Turkey was a major point of discussion in June when the price of one kilogram of potatoes went up as high as 1.25 USD.

However with the start of harvest in many production areas, the prices dropped to a more typical level.

Nevertheless, neither the growers nor the consumers are satisfied.

Due to increasing production costs related to the devaluation of the Turkish lira, profit margins of potato growers are declining by the day. The wholesalers in the middle put a lot of pressure on the growers.

Consumption figures are rapidly dropping as well due to the decline in the average purchasing power of the Turkish consumers. A Turkish household usually consumes on average 4 sacks of potato annually but this figure dropped by 50 % according to recent numbers.

Last year around this time, potato prices in retail were around 0.25 USD whereas nowadays the prices are around 0.43 USD per kg. However the price paid to the growers remains the same, between 0.15 – 0.20 USD per kg. But when we compare last year’s production costs and this year’s production costs, the cost of seeds went up by 25 %, the cost of fuel went up by 45 %, the cost of fertilizer went up by 35 %, the cost of irrigation equipment went up by 25 %, the cost of labor went up by 40 % and the transport costs have increased by 60 %. On average the growers have experienced a 30 % increase in their production costs while their sale price is pressured to remain at the same level by the wholesalers which is causing them to sell products at almost no profit or in some cases at a loss.

Consequently a lot of growers are at the crossroads and seriously considering to give up their growing business. This will also have major consequences for the consumers as the supply will drop because of many growers quitting the business which in turn will result into a shortage of supply and increase in prices. So it is not too far fetched to think that potato prices will jump back again to 1.5 USD per kg levels if the growers problems are not solved.

Another problem that potato growers experience is the lack of proper cooling facilities in the production regions.

Growers in Kose district of Gumushane, a city located in northern Turkey, for instance have to throw out a lot of products if there is no buyer available in the market because they do not have any cold storages available in the area. The growers are asking for the state to intervene and solve this problem. Potato production is the main source of income for the people living in the area and the production areas are rapidly declining due to the aforementioned cold storage problem. Potato production areas went down by nearly 65 % in a span of few years.

Growers note that their losses are as high as 50% and it is impossible for them to stay in the business with this level of waste.

Growers believe that if the state can provide some assistance and build a cold storage facility for all growers to use, that would solve most of their problems and they can increase their production volume to back where it was a few years ago.
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