This chapter sets the context for the reform of agricultural subsidies begun in 2000. It first reviews the negative effects subsidies had on the economy that prompted the reforms. The rest of Chapter One concerns itself with the scale of fiscal tightening achieved through subsidy reduction.

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Chapter Two examines changes in agricultural terms of trade and Producer Support Estimates that have resulted from the subsidy reforms. It discusses the second main factor responsible for the reduction in agricultural income: reduced flows from consumers to farmers which have resulted from less market intervention by the state.

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Chapter Three focuses on how the reforms have affected the availability and use of agricultural inputs and credit and examines the impact of the subsequent elimination of fertilizer subsidies for farmers during the reform process.

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Chapter Four examines resulting changes in agricultural output structure and foreign trade flows. It first analyzes the trends in producer prices for Turkey’s major crops, looking at the trends in real prices relative to the base year 1999.

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Chapter Five examines the impact of the subsidy reforms on agricultural sector productivity at the national and regional levels and focuses on crop areas and value measures per hectare for the period 1997-2001.

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Chapter Six presents the analysis of survey data (from 2002) regarding the welfare impact on farmers resulting from the interaction between subsidy reduction and the introduction of the Direct Income Support program.

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