Agricultural Production Connectedness and Networks in Türkiye

Abstract

The world’s population has been growing rapidly and since the 2006–2008 global food crisis, it has been questioned many times that how the world’s growing population will be fed properly. According to reputable international institutions, the world may be insufficient to supply enough food in the near future, and this fact may cause many economic, social, and government problems. In Türkiye, these problems will be realized more harshly than in peer countries for some reasons. Türkiye has one of the highest population growth rates in the world, while it hosts the highest number of refugees in the world. In addition, Türkiye’s agriculture sector has been experiencing a harsh downfall recently and the country has been dependent on importing food and agricultural commodities. Therefore, in this paper, I investigate the connectedness and networks of agricultural production in Türkiye by using the connectedness approach of Diebold and Yilmaz (2012, 2014), which is based on the forecast error variance decomposition methodology of generalized vector autoregressive models. I use Türkiye’s most produced agricultural commodity data, which are barley, wheat, rye, paddy, lentil, chickpea, and oat. The material consists of annual production data from 1938 to 2019. According to the analysis results, Türkiye’s agricultural production has been highly connected. Our findings show that production shocks arising from wheat and barley have spilled over to other commodities. Agricultural production networks and pairwise spillovers also exhibit a similar result that most of the commodities are highly interconnected to wheat and barley production. Besides, pairwise connectedness results show that there are some strong and weak connectivity relations, and these can be used for the decision-making process, risk aversion, and risk-seeking purposes. Our findings have important implications for policymaking for institutions, diversification, and risk management for producers, suppliers, and traders.