Turkish government, and the public, bears the costs of cheap sales

While the sales of vegetables and fruits through municipalities are becoming widespread, its positive and negative aspects continue to be debated. If we are to look at recent news stories, municipalities, in order to offer lower prices, either sell the products at a lower price than they buy or sell at the same price they buy but bear shipping and labor costs. 

One way or another, a loss in sales is in question. That is why small shopkeepers come out and say: “If they provide us the same conditions, we also can sell for less.” That’s because they know the process well and say that they are willing to sell the goods they buy from the producers with very little profit, if it were not for transportation and labor costs.

Transportation and Infrastructure Minister Mehmet Cahit Turan said on Feb. 13 that cheap sales will continue from Turkey’s National Marketplace Platform www.epttavm.com. “Within the scope of this project, we aim to eliminate intermediate service costs in the transportation of agricultural products to our citizens,” Turhan had said. According to the minister, the public will choose fruits and vegetables online and these will be delivered to them via the country’s postal service company PTT. As far as we understand from the news, PTT will either not receive any money or will charge very little. That means PTT will face losses in transportation and labor.

The fundamentals in the system that is being introduced is now clear: This is not a practice that will decrease the prices of the producers; it is one that will decrease the costs on the chain of the intermediates, or to be more exact, this is a sale method where the costs are taken over by the state.

This does not mean that the costs in the intermediate chain are eliminated; these costs are borne by the state. In a sense, it means there is “duty losses in fruits and vegetables” and this task is undertaken by municipalities, ministries and public institutions such as PTT.

For some time, we have been discussing concerns about the increases of duty losses on state banks. Turkey’s state-run Ziraat Bank had objected to the news in which duty losses were shown as the bank’s losses. The bank felt the need to explain that the duty losses are assumed by the state and therefore it does not mean the bank is facing losses.

Municipal sales of fruits and vegetables imply that the same method is being used in financing. Namely, the public will eventually bear the cost loss for the government’s practice of selling them at a cheaper price.

The loss that arises from selling fruits and vegetables for cheaper prices will appear on the municipalities and the PTT’s budgets.

Do you know what happens afterwards?

The Treasury becomes obliged to wire money to state economic enterprises and municipalities.

I don’t think that it is necessary to say with whose money the Treasury will compensate the duty losses but we should say it again. We are paying, with the taxes deducted from out paychecks or taxes we pay when purchasing services.

Even though it seems like the public is buying fruits and vegetables from cheaper prices, the cost is still the public’s to pay.