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Turkish Cypriot Community : A review of the Dairy Sector and Recommendations for Policy Reform (Turco)

The Turkish Cypriot community (TCc) dairy sector is highly managed under a program characterized by administered producer prices backed with subsidies. The system is motivated by an understandable desire to shield farmers and consumers from volatile markets. The program transfers market risks from producers and consumers to the administrations’ budget. Because of the program, farmers have not faced market risks, but now face consequences related to the program’s budget-risk. The dairy program reflects the overall bloated public support system, lacking effectiveness and limiting to seize new market opportunities. A key recommendation of this report is that the program should be replaced rather than patched for two fundamental reasons. The urgency of the current budget crisis calls for change; however, there are two fundamental reasons to reform rather than adjust dairy policies. The report recommends replacing the current dairy program with a decoupled support system together with investment schemes.

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