FAO Regional Office for Europe and Central Asia Policy Studies on Rural Transition No. 2013-3 An overview of cooperatives in Turkey Nedret Durutan Okan Cüneyt Okan 2013 The Regional Office for Europe and Central Asia of the Food and Agriculture Organization distributes this policy study to disseminate findings of work in progress and to encourage the exchange of ideas within FAO and all others interested in development issues. This paper carries the name of the authors and should be used and cited accordingly. The findings, interpretations and conclusions are the authors’ own and should not be attributed to the Food and Agriculture Organization of the UN, its management, or any member countries. This paper was prepared within the “Cooperatives and their alternatives” component of the Agrarian Structures Initiative (ASI) which a regional program of FAO in Europe and Central Asia. The aim of this project is to identify the advantages, disadvantages of integrating small farms into markets through farmer cooperative groups and direct contracting in the region. Studies are prepared in different countries of the region to understand the enabling environment for these institutional innovations, and to propose policy changes in order to develop inclusive and fair value chains. More information on the Agrarian Structures Initiative and its projects is available here: http://www.fao.org/europe/agrarian-structures-initiative/en/ 2 TABLE OF CONTENTS ABBREVIATIONS and ACRONYMS ...............................................................................................6 A. HISTORY OF COOPERATIVE MOVEMENT IN TURKEY ........................................................8 Ahi Movement in pre-Ottoman Era .................................................................................................8 Country Chests during Ottoman Era ................................................................................................9 Movement by Fig Producers ......................................................................................................... 10 B. HISTORY OF STATE SUPPORT TO COOPERATIVES ............................................................ 11 Early Years of Republic ................................................................................................................ 11 Planned Period of National Development (1962 - today) ............................................................... 12 C. TYPES OF COOPERATIVES IN TURKEY ................................................................................ 14 Number of members ..................................................................................................................... 14 Primary cooperatives by type ........................................................................................................ 14 D. AGRICULTURAL COOPERATIVES ......................................................................................... 15 Classification of Agricultural Cooperatives ................................................................................... 15 Sub- categories of service cooperatives ......................................................................................... 16 E. MINISTRIES AND THEIR MANDATES FOR AGRICULTURAL COOPERATIVES ............... 18 1. Ministry of Food, Agriculture and Livestock (MFAL) ............................................................... 18 Agricultural Development Cooperatives (ADCs) ...................................................................... 19 Irrigation Cooperatives (ICs) .................................................................................................... 23 Fisheries Cooperatives (FCs) .................................................................................................... 24 Sugar Beet Growers’ Cooperatives (SBGCs) ............................................................................ 24 Agricultural Credit Cooperatives (ACCs).................................................................................. 26 2. Ministry of Customs and Trade (MoCT) ................................................................................... 31 Agricultural Sales Cooperatives (ASCs) ................................................................................... 31 F. APEX ORGANIZATIONS ........................................................................................................... 35 Unions (Area or Region-based) ..................................................................................................... 35 Central Unions.............................................................................................................................. 38 National Cooperatives Union (NCU) ............................................................................................ 39 G. WOMEN’s COOPERATIVES ..................................................................................................... 41 H. LEGISLATIVE FRAMEWORK .................................................................................................. 43 I. TAXATION .................................................................................................................................. 45 J. AUDITING ................................................................................................................................... 47 K. NATIONAL COOPERATIVE STRATEGY AND ACTION PLAN, 2012-2016 .......................... 49 L. OVERVIEW OF PERFORMANCE OF AGRICULTURAL COOPERATIVES ........................... 51 1. FAILURES OR WEAKNESSES OF COOPERATIVES ........................................................... 51 3 2. WEAKNESSES OF NATIONAL COOPERATIVE SYSTEM .................................................. 55 3. STRENGTHS AND SUCCESSES ............................................................................................ 57 PROSPECTS FOR INTERNATIONAL COLLABORATION .......................................................... 61 REFERENCES ................................................................................................................................. 62 FAO Policy Studies on Rural Transition ........................................................................................... 64 LIST OF TABLES TABLE 1. DEVELOPMENT IN THE COOPERATIVE SECTORS BY YEARS ................................................................. 12 TABLE 2. THE TOP EIGHT COOPERATIVES (2011) .............................................................................................. 14 TABLE 3. THE TYPES OF PRIMARY COOPERATIVES WITH THE HIGHEST NUMBER OF MEMBERS (2011) ............. 14 TABLE 4. TYPES OF AGRICULTURAL COOPERATIVES UNDER MFAL (2011) ......................................................... 19 TABLE 5. UNION OF AGRICULTURAL SALES COOPERATIVES AND THEIR CORE BUSINESSES ................................ 32 TABLE 6. UNIONS ESTABLISHED BY PRIMARY COOPERATIVES .......................................................................... 35 TABLE 7. CENTRAL UNIONS ESTABLISHED BY REGIONAL UNIONS .................................................................... 38 TABLE 8. FRAGMENTATION UNDER CENTRAL UNIONS ..................................................................................... 39 TABLE 9. WOMEN’S COOPERATIVES IN TURKEY ............................................................................................... 41 LIST OF FIGURES Figure 1. The Master Ahi Evran and an accession ceremony for the organization ............................................... 8 Figure 2. Mithat Paşa, the Governor of Nish (Balkans) and the founder of the Country Chests of the Ottoman Empire ..................................................................................................................................................... 9 Figure 3. Three fig producers who initiated the process for the establishment of TARİŞ Union of Fig Producers in 1912 ...................................................................................................................................................... 10 Figure 4. Ataturk and the first Parliament, 1923 ............................................................................................. 11 Figure 5. First workers (60’s) in Europe sent by the through the Project: Granting Priority to Villagers Who Set up Cooperatives for the Purpose of Sending Labor to Europe. ................................................................. 20 Figure 6. The mobile milk quality laboratory of Burdur Köy-Koop. .................................................................... 21 Figure 7. Milk quality laboratory in Burdur KÖY-KOOP facilities. ....................................................................... 21 Figure 8. Members of Kastamonu Forestry Cooperative on the job, Western Black Sea..................................... 21 Figure 9. Modern greenhouses of Vakıflı Village Agricultural Development Cooperative; Hatay in Mediterranean Region ................................................................................................................................................... 21 Figure 10. Recent investment made for pressurized system Eminler Irrigation Cooperative; Karaman, C. Anatolia .............................................................................................................................................................. 23 Figure 11. Çoğuplu Village Irrigation Cooperative in Uşak, Aegean Region ..................................................... 23 Figure 12.