Journal of Food, Agriculture and Environment

An analysis of Turkey’s import demand for cotton with special emphasis on US cotton

Author(s):

Ferruh Isin ^*, Bulent Miran

Recieved Date: 2009-06-02, Accepted Date: 2009-09-29

Abstract:

Efforts towards the liberalisation of trade in agricultural products in the world have had an impact on cotton. In connection with this, Turkey has changed its policies regarding subsidies for agriculture and especially cotton and these subsidies have gradually been decreased. On the other hand, parallel to developments in the textile sector, the textile industry’s demand for cotton has increased. As a result of this, Turkey’s own production has reached a state where it is unable to meet the domestic demand and there have been significant increases in the import of cotton. This study uses the Linear Approximate Almost Ideal Demand System (LA/AIDS) to estimate Turkey’s import demand structure, import vulnerability, import demand elasticities and expenditure elasticities. The countries which are important in the Turkish cotton market are the U.S., Greece, Syria, Israel, Egypt and the former Soviet Union. Turkey’s cotton import demand elasticity is elastic for the U.S. (-2.90), Greece (-1.86), Israel (-2.36) and Egypt (-3.31) but is inelastic for the former U.S.S.R. (-0.16) and Syria (-0.31). There is significant competition for the Turkish cotton market between the U.S. and Israel, Egypt and Greece. U.S. cotton significantly affects the exports of these countries to Turkey. A 1% decrease in U.S. cotton prices, ceteris paribus, will reduce the import demand with regard to Israel, Egypt and Greece by 6.68, 6.13 and 1.64%, respectively. Greece’s share in Turkey’s import cotton market is at an important level. However, experimental results do not show a strong competition between U.S. cotton and Greek cotton in comparison with the others. Turkish cotton expenditure elasticities are elastic for Greece (1.31) and U.S. (1.24), and are inelastic for Egypt (0.78) and former U.S.S.R. (0.84), but approximately unitary for the Israel and Syria.

Keywords:

Cotton import demand, elasticities, Almost Ideal Demand System, Turkey

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Journal: Journal of Food, Agriculture and Environment
Year: 2009
Volume: 7
Issue: 3&4
Category: Agriculture
Pages: 295-300

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