Fresh Vegetable & Fruit Wholesale Revolution in Türkiye

The fresh vegetable and fruit wholesale sector in Türkiye has long played a pivotal role in ensuring food availability, stabilizing prices, and supporting agricultural livelihoods. However, the sector faced significant challenges due to outdated regulations, high informality, and inefficiencies in supply chains. Recognizing these shortcomings, the government enacted Law No. 5957 to overhaul the wholesale bazaar system and modernize the fresh produce trade. This article explores the far-reaching implications of this legislation, highlighting its impact on producers, consumers, municipalities, and the economy at large.

Overview of the New Law

The introduction of Law No. 5957 in Türkiye, aimed at reforming the fresh fruit and vegetable wholesale market which contributes an estimated 50 billion Turkish Lira annually to the national economy., marks a significant turning point in agricultural trade and rural economics. As Türkiye ranks among the world’s top producers of fresh fruits and vegetables, this new legislation is designed to formalize trade practices that have long been informal and fragmented. This shift could potentially revolutionize Türkiye’s food supply chain, bringing efficiency, transparency, and enhanced profitability to the sector, while addressing persistent challenges like inflation, product waste, and informal market activities.

Türkiye’s agricultural sector has traditionally faced systemic inefficiencies due to unregulated markets, informal trade, and the absence of a robust infrastructure to connect producers with consumers. Wholesale bazaars and markets, once central to the distribution of fresh produce, have struggled with outdated systems that often result in high transaction costs and limited access to accurate market information. Law No. 5957 seeks to address these gaps, introducing several innovations that could transform the agricultural trade landscape.

Key features of the law include the establishment of a Market Registration System (MRS), modernization of wholesale markets, and new regulations for neighborhood bazaars and producer markets. The legislation aligns with Türkiye’s ambitions to strengthen its agricultural sector and enhance its competitiveness in international markets. Despite being the fourth-largest producer of fresh fruits and vegetables globally, Türkiye's share in global agricultural trade remains disproportionately low, primarily due to inefficiencies in domestic trade systems.

Key Features and Benefits

1. Enhanced Commercial Transactions

A cornerstone of the new system is the Market Registration System (MRS), a centralized database designed to bring transparency to the trade of fresh produce. This platform enables stakeholders to access real-time data on prices, demand, and supply across different regions. For example, a tomato farmer in Antalya can instantly compare prices in Istanbul or Izmir, allowing them to make informed decisions about where to market their produce.

The system also facilitates connections between producers and traders, enabling farmers to identify reputable buyers and assess their commercial histories. This transparency reduces the likelihood of fraud and strengthens producers' bargaining power. Moreover, off-market transactions are now allowed, provided they are registered, reducing dependency on traditional wholesale markets and cutting intermediary costs.

2. Empowering Producers

Producers, the backbone of the agricultural sector, stand to gain significantly under the new law. Key provisions include:

• Reduced Costs: Transaction duties are now borne by buyers, easing the financial burden on farmers.

• Access to Markets: At least 20% of spaces in wholesale markets and neighborhood bazaars are reserved for producers and producer organizations. This ensures that small-scale farmers have direct access to consumers.

• Payment Security: Brokers and traders are required to provide guarantees, which can be used to compensate producers in cases of delayed payments.

• Expanded Producer Organizations: The law broadens the scope of producer organizations, allowing them to represent a larger number of farmers. These organizations can now engage in wholesale and retail trade without incurring additional duties.

The emphasis on producer empowerment not only boosts incomes but also promotes planned production, enabling farmers to align their output with market demand. This, in turn, reduces wastage and ensures a steady supply of fresh produce.

3. Consumer-Centric Reforms

The legislation introduces several measures to protect consumers and enhance their shopping experience:

• Lower Prices: By reducing intermediary costs and promoting direct sales, the law ensures that consumers pay fairer prices for fresh produce.

• Traceability: Sellers are required to provide detailed tags on product packaging, allowing consumers to trace the origins and safety of their purchases. This is particularly important for ensuring food safety and building trust in the market.

• Modern Shopping Environments: Neighborhood bazaars and producer markets are being modernized to offer clean, orderly, and hygienic shopping conditions. Additionally, regulations prohibit noisy sales practices, enhancing the overall experience for buyers.

By addressing issues of affordability, safety, and convenience, the law strengthens consumer confidence in the fresh produce sector.

4. Modernizing Wholesale Markets

Wholesale markets are integral to the fresh produce supply chain, serving as hubs for buying, selling, and distribution. The new law mandates significant upgrades to these markets, including:

• Infrastructure Standards: Markets must now include facilities such as auctions, cold storage, sorting and packaging units, and laboratories. These upgrades ensure compliance with food safety standards and reduce post-harvest losses.

• Administrative Reforms: Municipalities are tasked with overseeing market operations and ensuring compliance. Markets that fail to meet the prescribed standards within three years face penalties, including suspension of activities.

• Private Sector Involvement: Municipalities can collaborate with private enterprises to manage markets, fostering innovation and efficiency.

These measures are expected to transform wholesale markets into modern, efficient hubs that meet the needs of both producers and consumers.

5. Strengthening Municipalities

Municipalities play a crucial role in regulating the fresh produce trade. Under the new law:

• Revenue Sharing: Municipalities in production regions receive 25% of transaction duties, enabling them to improve services and actively participate in trade processes.

• Collaboration: Local governments can form unions to jointly establish and operate facilities such as cold storage and packaging units. This promotes regional cooperation and resource optimization.

By empowering municipalities, the law ensures that local governments can contribute to the development of a robust agricultural trade system.

6. Benefits for Brokers and Traders

The legislation also addresses the concerns of brokers and traders, ensuring their continued participation in the supply chain:

• Priority Leasing: Existing tenants of wholesale markets are granted leasing priority for a transition period of 12 years.

• Single Transaction Fees: The law eliminates multiple transaction fees for the same goods, reducing costs and grievances.

• Streamlined Processes: New administrative procedures simplify operations, making it easier for traders to comply with regulations.

These reforms balance the interests of brokers and traders with those of producers and consumers, creating a fairer and more efficient trading environment.

7. Macroeconomic Implications

The law has broader implications for the economy, including:

• Increased Tax Revenue: By formalizing the trade of fresh produce, the government can curb informality and boost tax collections.

• Reduced Inflation: Stabilizing fruit and vegetable prices help control inflation, benefiting the economy at large.

• Improved Global Competitiveness: Modernizing domestic trade practices positions Türkiye as a stronger player in international agricultural markets.

By addressing structural inefficiencies, the law contributes to the long-term sustainability of Türkiye’s agricultural sector.

Challenges and Future Prospects

While the new law offers numerous benefits, its implementation presents challenges. Ensuring compliance with infrastructure standards, managing the transition for wholesale markets, and educating stakeholders about the new system require coordinated efforts. Additionally, the gradual decline of traditional bazaars in favor of chain stores may impact small-scale vendors, necessitating measures to support their livelihoods.

Looking ahead, the success of the law will depend on effective enforcement and continuous stakeholder engagement. Collaborative efforts between the government, municipalities, producer organizations, and the private sector will be crucial in realizing the full potential of this reform.

Conclusion

The Fresh Vegetable and Fruit Wholesale Bazaar System represents a landmark shift in agricultural trade that has the potential to revolutionize Türkiye’s rural economy and food supply chains. By fostering greater transparency, reducing costs, enhancing market access for farmers, and improving food safety standards, this reform offers a comprehensive approach to addressing longstanding issues in Türkiye’s agricultural trade. If successful, this law could set a precedent for countries around the world seeking to modernize their agricultural trade systems and improve rural economic outcomes. Through these changes, Türkiye stands poised not only to improve its domestic market but also to increase its influence in the global agricultural trade network.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

Mithat Direk is serving the Department of Agricultural Economics, Selcuk University, Konya-Türkiye.

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