Surge in potato price adds political pressure in Turkey

ISTANBUL - Reuters

A vendor sells potatoes to a customer in an open market in central Ankara. At a market in Küçükcekmece, potatoes sell for between 3 and 4 liras per kilogram, up from slightly more than 1 lira at about this time last year.

The humble potato has become a factor in Turkey’s political and economic turmoil as prices of the staple soar, hurting the living standards of poorer Turks just before the ruling Justice and Development Party’s (AKP) toughest election test in a decade.

At a market in the lower-income Istanbul suburb of Küçükçekmece, potatoes sell for between 3 and 4 lira ($1.33 and $1.77) a kilogram, up from slightly more than 1 lira at about this time last year.

That could be a political headache for the government at the best of times, but it comes just before March 30 local elections in which Prime Minister Recep Tayyip Erdoğan’s AKP will try to keep its dominance after a high-level corruption scandal erupted in December.

“I have never experienced such economic difficulty in my entire life before, during any other government. Of course I will say ‘stop’ to him (Erdoğan) at the elections,” said a 68-year old retired man shopping at a potato stall.

“I put my money in my pocket and it’s gone in days,” he added, looking angrily at an AKP campaign bus driving past with a speech by Erdoğan playing from loudspeakers.

Strong at polls

The retiree declined to be named, saying he was afraid of speaking publicly about politics. Tensions are rising ahead of the polls, with thousands of police officers and 200 prosecutors being dismissed or reassigned since the scandal emerged, in what Erdoğan’s critics see as a ploy to stifle graft probes.

The AKP still looks unlikely to lose power at the national level, partly because it can point to a strong economic record over the past decade - per capita incomes have risen by about 40 percent in inflation-adjusted terms.But rising potato prices are an economic as well as political headache for Turkey because inflation is now running far above the central bank’s target.

Growing inflation pressures, along with weakness of the lira, led the Central Bank to hike interest rates last week despite public opposition from Erdoğan, and may make further hikes necessary. These will raise companies’ financing costs, threatening to slow economic growth.

The soaring price of potatoes is to a large extent due to inefficiencies in Turkey’s food production sector, analysts say - a reminder that the AKP, although it presided over a decade of rising incomes, has not solved some of the country’s main economic problems.

“The issue is not the tomatoes or potatoes, but the structural problems in the Turkish food sector,” Burak Kanlı, an economist at Finans Invest, said in a report.

“Food price volatility in Turkey is seven times higher than the EU-27 average and the volatility is consistently increasing,” he said, making a comparison with the European Union.