It’s not about the chicken, it’s about the law...

The appointment of audit trustees to 13 companies producing white meat in Turkey has caused serious confusion. These 14 white meat producers had previously been investigated by the Competition Authority, and 11 of them had been fined 7.3 billion liras. This operation, carried out by the Competition Authority in past years, is a normal process. However, the fact that the latest operation was conducted by the Ministry of Justice, that the Ministry of Agriculture was not involved, and that police and prosecutors were involved, changes the nature of the operation.

Initially, the issue was reflected as exorbitant price increases. Here, I am quoting two charts shared by economist İnan Mutlu on his X account.

While food inflation has been at 611 percent since January 2022, the increase in chicken meat prices is 372 percent... 

In the period from 2020 to January 2024, while the rate of increase in beef and chicken meat prices moved in parallel, after April 2024, beef prices skyrocketed, while chicken meat prices remained almost stable.

Again, in the first 5 months of this year, according to industry representatives, chicken meat prices increased by 11 percent, while inflation increased by 16.6 percent.

It is clear that the main justification here is not the argument of exorbitant prices. However, let us also note this: it is possible for firms to form a cartel without setting exorbitant prices. Therefore, it is natural for an investigation to be opened. I have no objection to the issue being questioned in terms of competition. However, at the same time, these companies account for 80 percent of Turkey's poultry production. 

For this reason, every step taken must be evaluated not only in terms of competition law but also in terms of supply security. The point I am trying to understand is why this process was carried out by the prosecutor's office and the police instead of the Competition Authority.

How will the involvement of police measures and the fact that the Minister of Justice personally announced the issue to the public affect Turkey's already severely deteriorated investment climate? Let the Minister of Finance, Mehmet Şimşek, who goes abroad to give presentations at every opportunity, and the Governor of the Central Bank provide the answer.

Almost many economists were saying, "Interest rate policy alone is not enough in the fight against inflation. Effective fiscal policies should be included in this, both in terms of expenditures and revenue collection, and policies that will ensure production increases, especially in food products, should be prioritized." Leave aside the policies we proposed to ensure production increases; we may soon face production contractions that will cause serious increases in white meat prices.

Turkey's current annual poultry meat production (including chicken and turkey) is around 2 million 800 thousand tons. 300 thousand tons of this is exported. The 13 companies to which audit trustees were appointed account for 80 percent of total production. 

While red meat prices were three times the price of white meat, they have now jumped to 5-6 times, and even 9 times. Currently, the price per kilo of boneless chicken thigh, sold as chicken fillet, is 269 liras... Beef fillet is 2359 liras. Exactly nine times more. According to an archive I kept of prices at a large chain market two years ago to monitor my own expenses, chicken fillet was 199 liras and beef fillet was 819 liras. The ratio has increased from 4 times to 9 times. 

If price increase is the sole justification for intervention, why the gap between beef and chicken meat has widened so much in the last two years should also be questioned.

While 45 kg of red meat is consumed per person per year according to the world average, this rate is around 14 kg in Turkey. A significant part of society cannot consume red meat. Therefore, the public is turning to white meat consumption. Annual white meat consumption has reached 25 kilos from the 20-kilo level. The world average is 17 kilos. While we are well below the world average in red meat, we are above the world average in white meat, and the increasingly impoverished society is turning to chicken meat, which we call poultry. Foreign capital is investing in chicken meat. It is clear that other capital groups will also invest in white meat according to this trend.

One of the claims discussed on social media is, "While the red meat market is shrinking, the white meat market is developing. Are they going to seize the companies?"

Some may consider this question a conspiracy theory. However, the real problem is not this. The problem is that such a possibility is being seriously discussed in the markets. What paves the way for such comments is the increasingly deepening environment of distrust.

Those who should participate in the discussion on this issue are private sector institutions such as TOBB and TÜSİAD. These institutions did not raise their voices when TELE1 was seized. I guess they will remain silent now as well. We tried very hard to explain our concerns to the capital in time. "Free press is not needed by journalists, but primarily by you" we said...

Because in such environments, the biggest risk for an investor is not taxes, not interest rates, not exchange rates. The biggest risk is not being able to be sure about the future of property rights.