LONDON: Egg producers in Turkey have found themselves at the center of a growing debate over who is to blame for the country’s inflation crisis, as the government increases the pressure on businesses to keep prices down.
The nation’s anti-trust watchdog has stepped up its investigations and on-site inspections of retailers and producers since President Recep Tayyip Erdogan pushed back in September against businesses accused of profiteering. As a result, record fines have been imposed on some of the country’s largest chain stores for alleged price gouging. They deny any wrongdoing and are appealing against the punishments in court.
Meanwhile, the Competition Authority has warned that it expects to impose further fines after another investigation concluded that major retailers were conspiring with suppliers to raise prices. Last month, the watchdog announced it was investigating whether Turkey’s Egg Producers Association and its 29 members had abused market data to fix prices.
Surging food prices in Turkey are a key driver of soaring inflation, which approached an annual rate of 80 percent in June. The cost of food and non-alcoholic beverages last month had almost doubled compared with a year ago.
The country’s egg producers said they have no choice but to raise prices because imports have become more expensive as a result of soaring global inflation and the declining value of the lira. While egg prices have risen dramatically in the past year, they fell by more than 4 percent in June, compared with the previous month, as pressure mounted on the producers.
According to the US Department of Agriculture, Turkey produced approximately 20 billion eggs in 2019 but increases in feed costs meant output was already stagnant even before Russia’s invasion of Ukraine upended global grain markets. Farmers who import hatching eggs and day-old chicks have seen their costs rise as well.
“We have had numerous meetings with the inspectors from ministries before and those officials confirmed our price hikes were based on the changing cost of raw materials,” said Ibrahim Afyon, the head of the Turkish Egg Producers Association.
“Producers have been under stress because of verbal guidance by officials on keeping prices down in an economy where costs are rising rapidly, but we don’t believe we have done anything wrong.”
The government has stepped up the pressure on businesses since the country’s central bank began a round of monetary easing in the fourth quarter of 2021 that pummeled the lira, triggered outflows and fueled inflation.
Erdogan, who holds the unconventional economic view that high interest rates exacerbate inflation, has resisted growing pressure to raise the cost of borrowing, instead blaming rapid price increases on the private sector.
“Not all the price hikes can be explained by costs, demand and the fluctuations in world commodity markets,” Birol Kule, the head of Turkey’s Competition Authority, said last week.
“The lack of competition in some fields has an enhancing effect on inflation; it has a considerable influence on prices in Turkey.”