Analysing the impact of targeted bio-ethanol blending ratio in Turkey

Abstract

In Turkey, a legal requirement of blending bio-ethanol with conventional fuels has been imposed, and this is likely to increase in the future. The blending target policy is multi-dimensional as it has direct and indirect impacts on agricultural and factor markets, trade and budget deficit, income distribution, food security and on environment. In this study, policy analyses are carried out to investigate whether the blending target is feasible and sustainable in terms of the economic structure of Turkey. Analyses were carried out by employing an agricultural bilateral trade model and agriculture focused social accounting matrix. Findings suggest that target rate can be feasible and harmless on food security, if the extra required supply is provided through tariff reduction particularly on imports of wheat and maize rather than promoting their production through price premiums. For achieving sustainability of the target blending rate, new supportive policies have to be implemented to create alternative job opportunities in the rural areas and/or to shift farmers for alternative crops.