The preferential tariff agreement (PTA) signed between Iran and Turkey last year drew severe criticism by Iranian experts, arguing that the decision to reduce import tariffs on Turkish products could harm domestic manufacturers. As per the agreement, Turkey receives tariff and quota reductions on 125 commodities including furniture, cosmetics, and apparel, while Iran obtains discounts on 140 minerals, petrochemicals and agricultural products.
Capitalizing on its PTA with Iran, Turkey’s Minister of Economic Affairs, Nihat Zeybekci, recently announced that certain food products including potato may be imported in view of the rising domestic prices.
Following his remark, speculations grew that Turkey may soon turn to Iran for purchasing cheap potatoes in a move to tackle food inflation of around 14 percent in its domestic market.
Potato prices in Turkey have more than tripled since the beginning of 2014 to 5 Turkish Lira per kilogram. Potatoes costing 60 kurus per kilogram could be exported from Iran and sold in Turkey’s markets for only 1.5 Lira.
Whether or not the move will benefit Iran by increasing potato exports to the neighboring country, Persian daily, Ta’adol, has investigated; asking an expert from Iran’s chamber of commerce, industries, mines and agriculture (ICCIMA) his opinion on the Turkish government’s recent decision.
Shamsali Hadizadeh, the head of Agriculture Committee at ICCIMA, is not very optimistic about the move, noting that the Turkish market does not provide a sustainable market for Iranian products in the long-run.
“Turkey is currently seeking an immediate solution to the issue of inflation in its food market, and will most probably stop importing potato as soon as the problem is solved,” he was quoted as saying, adding that the move would then lead to oversupply in domestic markets and create heavy losses for the Iranian farmers.
He also noted that the move could work to the disadvantage of Iranian consumers, as reduced production would subsequently increase the prices in the domestic market.
He further pointed that the imbalance in the domestic potato market could be detrimental to exports. “Previously, the Iranian authorities had to stop potato exports after prices in the domestic market began to rise. This led to Iran losing many international markets which were traditionally a destination for Iranian potatoes,” he said.
Also pointing out the issue of water scarcity in Iran, he said often times exporting potato is not economically viable as it is a highly water-intensive crop. “Potato export is profitable and justified only if it is cultivated efficiently,” he added.
