The main impetus behind the neoliberal policies first designed and implemented in the 1970s was to overcome the severe crisis of capitalism. Diminishing states’ capacity to intervene into the field of economy, multinational capital has tried to lift the barriers to its worldwide expansion. The neoliberal restructuring has resulted in the collapse of the social state; sharp decreases in public expenditures; privatizations; the withdrawal of state from the fields of health, education, and social security; the dissemination of flexible production techniques and outsourcing; systematic attacks on working class organizations; the relinquishment of the protectionist trade policies; and the global domination of the multinational companies.
The restructuring of capitalism could not have been accomplished without the worldwide deployment of some key regulations. International organizations such as the International Monetary Fund (IMF) and the World Bank (WB) have assumed that role, and forced developing and underdeveloped countries that have long been in debt to implement the so-called “structural adjustment programs.” Afterwards, the World Trade Organization (WTO) took to the stage. As result of such institutional interventions, a handful of multinational companies have succeeded in simultaneously controlling productive, financial and commodity capital on a global scale.1
The agricultural sector has not been immune from the neoliberal restructuring which requires abolishing support to small farmers, increasing interest rates of agricultural loans, privatizing or shutting down public agricultural enterprises, and promoting private companies instead of small-scale producers. Tobacco farmers have undergone this transformation process, which has forced many small-scale farmers and villagers to leave their lands in an extraordinarily harsh and painful manner. Thanks to the disposal of TEKEL, which had regulated the tobacco market for decades and thus had been seen as an obstacle prior to the full-blown market economy, the rearrangement of the field has been swift and extensive in Turkey.
Tobacco is a special product that has specific historic, economic, cultural and political ramifications for those living in Turkey. Thus, one should recollect the miserable history of the tobacco production on these lands so as to grasp the intricacies of the recent transformation process.
From Reji to Tekel
The Ottoman Public Debt Administration (Duyun-u Umumiye) was an organization established by European states to collect the payments which the Empire owed to foreign companies. It was authorized to confiscate revenues from the tobacco production, and the control of the tobacco market was given to a company named Reji. The period in which thousands of tobacco farmers died due to the strict restrictions implemented by Reji is still remembered because of its cruelty. In 1925, two years after the proclamation of the Republic, Reji was nationalized for four million liras, and thus the tobacco market and production was reorganized in accordance with the regulations of a state monopoly.
The support began in 1940. Due to the considerable increase in the popularity of the Turkish tobacco just before the Second World War, the production level increased disproportionately. First, the Domestic Products Turkish Joint-Stock Corporation, a subsidiary firm of Ziraat Bank, was assigned to regulate the tobacco market. Then, in 1948, TEKEL and its subsidiary firm Turkish Tobacco Limited Company began to assume this role. After the liquidation of the latter in 1956, TEKEL became the sole authoritative body that undertook price support purchases.2 The following three points can be considered the primary goals of the policy of price support purchases:
— To eliminate market imbalances caused by excess production and to pull the surplus product off the market so that producers gain fair prices.
— To keep the market price above a certain minimum level during the periods of stability.
— To maintain equilibrium between the price and the quality of tobacco.3
In the beginning, the subsidies of TEKEL were carried out in accordance with the by-laws issued annually by the National Protection Law (Milli Koruma Kanunu). In 1961 the Law No. 196 on Support of Sales Markets for Farmers’ Tobacco was issued. Accordingly, financial resources required to cover expenses were to be decided by the Council of Ministers, and possible losses were to be compensated with allowances by the Ministry of Finance. Until the enactment of the Tobacco Law in 2002, the General Directorate of TEKEL had been assigned annually to undertake the price support purchases with the financial resources allocated by the State Treasury. Through the subsidies, TEKEL was able to prevent price fluctuations and speculative tendencies in the tobacco market, mostly caused by foreign purchasers, and thus protected local tobacco farmers to a great extent.4
The Disposal of TEKEL
As the harmful and addiction-inducing effects of tobacco became clear, the first reaction of the public authorities was to prohibit its consumption. However, even the harshest fines could not have prevented its widespread use, and therefore governments have opted to levy excessively heavy taxes on it. Eventually, monopolistic authorities such as TEKEL were established to control production and consumption of tobacco and cigarettes.
Given the worldwide popularity of such an addictive product, private companies have always sought ways to be a player in the market. For instance, beginning from the mid-1960s private sector actors began to introduce new tobacco products with a secret increase of addictive substances into the world market. Three leading companies, Philip Morris, R.J. Reynolds (acquired later by JTI) and British American Tobacco (BTA), have succeeded in obtaining two-thirds of the whole world market in only 35 years.5
The encroachment of tobacco farming in Turkey by these cartels commenced in the 1980s in tandem with the neoliberal macroeconomic policies. In fact, even in the late 1970s, the American blended cigarettes that were smuggled clandestinely into the country were introduced in the domestic market. As these cigarettes became a status symbol, ‘oriental’ cigarettes produced from domestic tobacco began to fall from grace. Subsequently, the state monopoly on tobacco production has been destroyed, the prohibitions on the import of tobacco and cigarette were removed, and TEKEL began to produce American blended cigarettes. Finally, the Law No. 4733 on tobacco was issued, TEKEL was privatized, and the units that produce tobacco leaves were shut down.
Tobacco farmers are deprived of state support
Since TEKEL shut down the cigarette factories after the enactment of the Tobacco Law and the multinational companies produce American blended cigarettes, the demand for domestic tobacco produced in the Aegean, Mediterranean and Black Sea regions decreased significantly. Similarly, small farmers of East and Southeast Anatolia lost their corporate purchasers. However, it is estimated that 10-12 tons of shredded tobacco are still annually produced in the latter region, and the production figures tend to increase.
It was already clear that the tobacco produced in the East and Southeast Anatolia regions would lose its market in the aftermath of the disposal of TEKEL. Therefore, under the Agricultural Reform Implementation Project (ARIP), small farmers were supported so that they could shift their farming to alternative products. In the provinces of Adıyaman, Batman, Bitlis, Burdur, Diyarbakır, Hatay, Mardin, Muş and Trabzon, a total sum of 116 million liras were allocated to farmers for the duration of three years, in accordance with the Decision of the Council of Ministers in Support of Farmers that Produce Substitute Crops instead of Tobacco. The target group of the project, which was implemented for three years between 2009 and 2011, was 105,175 tobacco farmers. Yet, only 39,458 farmers put in an official application, and only 18,884,241 liras of the whole budget were used6 since there were no appropriate substitute crops that could grow on those barren lands.
After the restructuring of the agricultural production in Turkey in accordance with the basin-based agriculture model, which is best documented in the Turkey Agricultural Basin Production and Support Model, all agricultural lands in Turkey were divided into thirty basins. Even though tobacco had been traditionally produced in twenty three basins, the Production and Support Model did not entail tobacco farming, and therefore tobacco farmers were deprived of state subsidies, including subsidies for crude petroleum and fertilizers. The only state support provided to tobacco farmers was land analysis expertise. Furthermore, an “agricultural product” is defined as “all vegetal crops, animal products and aquaculture products except tobacco” in the “Proceedings on Subsidies for Agricultural Investments under the Scope of the Program for the Supports to Rural Development Investments.” In other words, the public authorities did not opt to support tobacco farming.7
After the enactment of the Tobacco Law, TEKEL was forced to withdraw from the tobacco market, and lost its authority to offer subsidies. The domestic tobacco market was handed over to large cigarette companies and global tobacco cartels. Contract farming has become the norm within a market in which TEKEL does not guarantee to give subsidies. Buying firms began to determine locations where they would purchase tobacco in accordance with the multinational firms’ orders. The contracts between farmers and buying firms imposed that price and quantity of tobacco to be traded would be determined before cultivation. Tobacco farmers did not have any chance but to accept such disadvantageous contracts that had nothing to do with negotiation, agreement or consensus. Farmers did not have a say on price, classification and the kind of tobacco to be grown. Quantities of crops to be purchased were decided unilaterally by buying firms. Legal mechanisms that farmers could use in cases of controversy were not clarified.
Standard form contracts are prepared by the Tobacco and Alcohol Market Regulatory Authority (TAPDK) without consulting the representatives of tobacco farmers. Governments do not assume their role as the guarantor of the market, let alone side with farmers. The system of contract farming attributes a decisive role to the private companies, and prevents small farmers from being part of the process as an organized force. Although the Tobacco Farmers’ Union, the trade union established by small farmers in order to hold a strong position against companies, won many lawsuits that were filed to liquidate the union, the legal and administrative regulations in Turkey are still a barrier to its proper functioning.
Annual price increases are equated with the inflation rate in the contracts. That is to say, there is no chance that real income of tobacco farmers would increase. According to a report commissioned by the Tobacco Experts Association, for the last five years the average income of tobacco farmer households has been 9146 liras. That means that the monthly income of these households is below the national minimum wage. The report also states that the average purchase price was 11.59 TL/kg for the 2012 tobacco crop, and 10.98 TL/kg for the 2013 crop.
Since the enactment of the Tobacco Law, farmers that still continue to cultivate tobacco due to infertility of their lands work out heavy deficits. Many of them seek ways to quit farming, and migrate to the slums of the big cities in the hope of finding decent job. A majority of the 301 mineworkers who lost their lives in the Soma disaster used to be tobacco farmers. Lands appropriate for tobacco cultivation are turning into wastelands as the villages of tobacco farmers become desolate.
During the twelve years after the introduction of the Tobacco Law, tobacco farming has almost completely died out. The number of tobacco farmers decreased from 405,882 in 2002 to 65,000 in 2014. The annual amount of tobacco production decreased from 159,521 tons in 2002 to 68,000 tons in 2014.8
The Disposal of the Tobacco Fund
On May 28, 1986, the Tobacco Fund was established on the basis of Law No. 3291. On February 21, 2001, the Law No. 4629 was issued to transfer the cuts made by the Fund to the general budget. The restrictions on the tobacco import were relaxed the same year. The primary objectives of the Fund were to improve and develop tobacco farming, support and educate tobacco farmers, finance growers’ cooperatives, and establish cigarette factories abroad to produce cigarettes from domestic tobacco. Yet, the Tobacco Fund was never used correctly.
The global tobacco companies that have commanding power over the Turkish governments thanks to the IMF and World Bank benefited from the European Union mechanisms to dispose the Tobacco Fund. Claiming that the Tobacco Fund signifies an extra tax which discriminates against them, these companies demanded that the Fund be promptly disposed of.
According to the relevant legislation, three dollars per kilogram of imported tobacco, and 40 cents per one packet of imported tobacco, were to be cut and relocated to the Tobacco Fund. However, according to the decision of the Council of Ministers on 29 December 2009, all cuts made regarding imported tobacco products and “homogenized tobacco or reconstituted tobacco” were abolished.9 Similarly, cuts made concerning leaf tobacco were to be lowered gradually beginning from 2010, and to be abolished in 2018.10 All these regulations signify a death blow to the domestic tobacco farming. The production cost per kilogram cigarette decreased by 15 percent as result of the sharp decrease in raw material costs.
The disposal of the Tobacco Fund is a major turning point after which Turkey, one of the most prominent producers of the ‘oriental’ tobacco, has progressively become an importing country where the global tobacco cartels obtain extremely lucrative profits. The total amount of the imported American blended cigarettes increased from 55,800 tons in 2002 to 90,000 tons –which cost nearly 550 million dollars– in 2014.11
Smuggling increases
The government officials think that they can struggle with pervasive tobacco consumption through prohibitions and high taxes. Yet, past experiences show that such measures are unfruitful in the face of the tobacco companies’ aggressive policies. Prohibitions proved to be ineffective. Between 2008 and 2011 the amount of cigarettes consumed in Turkey decreased 15 percent. Yet, in 2012 consumption level began to rise, and the total amount consumed increased to eight billion cigarettes
Due to the excessive taxes levied in the recent years, the tax burden on cigarettes is currently 82 percent. As would be expected, cigarette smuggling increased, raising the estimated financial losses of the Treasury to 7.5 billion liras.12
Tobacco companies encourage cigarette smuggling on the one hand, and produce tobacco products from cheaper imported tobacco on the other. Therefore, despite the taxes, they continue to make lucrative profits. To put it briefly, the government’s struggle with tobacco consumption is nothing but struggle with tobacco farmers.
Struggling with criminal tobacco companies
Multinational tobacco companies exercise absolute control over the Turkey’s tobacco industry. These companies cooperated with the Clinton administration in order to save themselves from paying penalties decided by the courts over tobacco consumption-induced cancer cases. Companies’ demands were accepted by the government provided that 375 billion dollars of compensation would be paid to the complainants and secret archives of the companies would be open to the public access. Since then, these archives showing companies’ harmful practices are accessible online. Details of the bribes given to the Turkish governments to enter into the market or fraud occurring during the disposal of TEKEL were revealed thanks to these archives.13
David A. Kessler, commissioner of the U.S. Food and Drug Administration from 1990 to 1997, proposed that tobacco companies be required to spin off from their corporate parents and that –if tobacco were not to be banned outright– tobacco manufacture not be subjected to free trade. Otherwise, Kessler concludes, a cigarette epidemic cannot be prevented. In his words: “My understanding of the industry’s power finally forced me to see that, in the long term, the solution to the smoking problem rests with the bottom line of prohibiting the tobacco companies from continuing to profit from the sale of a deadly, addictive drug. These profits are inevitably used to promote that same addictive product and to generate more sales. If public health is to be the centerpiece of tobacco control—that is, if our goal is to halt this manmade epidemic—the tobacco industry, as currently configured, needs to be dismantled. … [T]he industry cannot be left to peacefully reap billions of dollars in profits.”14
Despite Kessler’s strong words, TEKEL has been privatized and Turkey’s tobacco industry has been handed over to giant multinational companies that have committed crimes against humanity. What should be done is very clear: dismantle the tobacco companies and reform the tobacco industry by reinstituting TEKEL. This is the only way to rescue millions from being victims of the global tobacco companies.
1 Fuat Ercan, “Çelişkili Bir Süreklilik Olarak Sermaye Birikimi”, quoted in Umut Ulukan (2000), Türkiye Tarımında Yapısal Dönüşüm ve Sözleşmeli Çiftçilik: Bursa Örneği, İstanbul: Sosyal Araştırmalar Vakfı.
2 Özet, 1992, quoted in A.H. Gümüş, 2009, p.54.
3 Özet, 1992, quoted in A.H. Gümüş, 2009, p.54.
4 A. H. Gümüş, 2009, pp. 54-56.
5 Erol Sezer, “Ulusal Tütün Tekeli Yeniden Kurulmalıdır”, Bilim ve Ütopya, October 2006.
6 Tobacco Experts Association, 2002-2014 Report.
7 Tobacco Experts Association, 2002-2014 Report.
8 Tobacco Experts Association, 2002-2014 Report.
9 Tobacco Experts Association, 2002-2014 Report.
10 Tobacco Experts Association, Press Release, 31 December 2009.
11 Tobacco Experts Association, 2002-2014 Report.
12 Tobacco Experts Association, 2002-2014 Report.
13 “Kriminel bir sektör olarak tütün endüstrisi”, Cemil Ertem, Taraf, 29 January 2010.
14 David A. Kessler, A Question of Intent (2002), quoted in Erol Sezer, “Ulusal Tütün Tekeli Yeniden Kurulmalıdır”, Bilim ve Ütopya, October 2006.
