Document(s) 20 of 34

Introduction

The notion of self-regulating markets is a myth. Even in advanced industrialized countries, the state has always intervened in or regulated the market to some degree. The level of intervention varies with the regime of accumulation, the dominant discourse about the state–society relationship, and the nature of that society’s social, political, and ideological struggles. State intervention is particularly significant in the primitive accumulation phase of capitalist development, during times of economic recession, and in certain accumulation regimes, such as import-substitution industrialization. The recent tendency to privatize, deregulate, and decentralize the public sector has reduced the role of the state in the economy and made certain segments in society increasingly vulnerable. This paper examines the role of local government in shaping food policy and improving access to food, specifically in the case of TANSAS, a municipally owned staple-store project that turned into a supermarket chain in Izmir, Turkey.

From the time when Turkey was founded, in 1923, the modern Turkish state has played a very active role in forming the country’s food and agriculture policies. As well as encouraging industrialization and modern agriculture, the state has intervened in the economy directly, through various policy measures, and indirectly, through the activities of state economic enterprises. State economic enterprises have sought to create favourable conditions for the accumulation process in Turkey by offering essential services, infrastructure, and products that the private sector is unable to supply. Parallel to the actions of state enterprises are regulatory measures to protect producers through support pricing and protectionist customs policies and the consumers through subsidies or price regulations on major staples. State interventions and regulations have also been introduced at the local level. Municipal Law 1580 (item 15/43), for example, required local governments to take measures to lower the cost of living through such devices as offering basic consumer goods to consumers without intermediaries.

Industrialization in Turkey gained momentum after World War II. Production of nondurable consumer goods, such as textiles and processed food, dominated the manufacturing sectors in the 1950s. This gave way in the late 1960s and throughout the 1970s to a new emphasis on consumer durables, including household appliances and cars. Turkey’s endeavour to modernize agriculture was particularly instrumental in the success of this domestic industry. From the early 1950s on, Turkey mechanized and commodified its agriculture. This resulted in a major rural–urban population movement. Between 1950 and 1960 alone, the rural portion of Turkey’s total population declined

from 81.3% to 74.1%. This migration continued without interruption in the decades that followed. The rural “surplus population” constituted the basis for the urban proletariat and the informal sector and served as a captive market for domestic industry.

The conditions of workers with steady jobs and those of Turkish migrant workers employed in Western Europe improved considerably. Real wages increased steadily throughout the 1960s. Changes in labour laws gave people the opportunity to retire with a significant pension and severance pay after 20–25 years of work. For the majority of new pensioners, these payments offered the chance to open a workshop in their trade or a retail store. A new social class of petty bourgeoisie emerged out of the ranks of retired proletarians and public-sector employees. Even for the marginalized masses, the semiemployed, and the subproletariat who were unable to find jobs in the formal labour market, the urban boom offered new opportunities. Thousands of pedlars and petty traders responded effectively to the gap created by rapid urbanization, industry’s indolence, and government’s inability to provide effective services.

By the 1970s, thousands of small retailers and people operating service shops of all sorts were competing for a share of the urban market. Favourable customs barriers, resulting from import-substitution policies, enabled industry to dictate prices to the owners of small shops. Shop owners, in turn, in the attempt to maintain living standards for their families through commercial or service activities had no choice but to pass these costs on to their customers by increasing prices to whatever level competition would allow.

The nation’s economic situation declined dramatically in the mid-1970s, as a result of increases in energy and input costs that followed the oil crisis. Spiralling inflation and a serious foreign-exchange crisis required continuous devaluation of the lira and battered the Turkish economy throughout the 1970s. By the late 1970s, annual inflation was running at around 100%. Major staple items were in short supply. The rapid increase in prices encouraged retailers to keep some of the most desired items off their shelves, either to avoid losing in the inflationary environment or to benefit from it. Governments often accused retailers of contributing to inflation by hoarding or black-marketing items in short supply. Big line-ups would appear in front of stores where people believed they could buy such items as margarine, rice, sugar, cigarettes, or coal.

Emergence of staple stores

Throughout the 1970s, local governments in many municipalities intervened in the market, to penalize hoarders and regulate prices, by supplying major staples at a lower price. In 1973 the municipal government of Izmir authorized the city abattoir to sell meat and coal at a low price. In 1976, the Regulation Sales Directory (RSD) opened its first store in downtown Izmir and started selling basic staples, as well as meat and coal. In 1977, the RSD had eight stores carrying such items as meat, milk products, margarine, vegetable oil, pulses, rice, pasta, flour, soap, and detergents and a variety of food items produced by cooperatives and public enterprises. In 1977, the local government boasted of selling a kilogram of rice for 6.90 lira, whereas it sold for as much as 35 lira in the market. Despite such prices, the staple stores’ rate of profit that year was 14.3% (Izmir 1977). In a short time, staple stores became very popular among working-and middle-class urban residents. The success of these stores and the demand for regular supplies and low prices led to the emergence of TANSAS, in 1978, as a wholesale supplier for municipal staple stores.

Izmir had a series of social-democratic municipal governments throughout the 1970s, with a political commitment to intervene in and regulate the market to protect “consumers.” Despite the government’s best efforts in the inflationary environment of the late 1970s, real wages began to decline. Strikes, work stoppages, and political demonstrations became commonplace. In January 1980, the Turkish government adopted a set of stabilization policies recommended by the International Monetary Fund. These policies favoured a neoliberal course of action with the following emphases:

• Removal of price distortions through elimination of price controls and subsidies;
• Liberalization of trade through elimination of import quotas, reduction in tariffs, and implementation of realistic exchange-rate policies; and
• Reduction of the role of the state in the economy through privatization, deregulation, and reductions in government spending.

The new austerity package was designed to integrate Turkey more closely into the global economy and redirect economic resources to those sectors of the economy most able to adapt to this orientation. The success of this strategy depended on increasing the profitability and productivity of Turkish industry. This meant further reducing workers’ wages, as well as suppressing trade-union activity. The military coup of September 1980 made it possible to implement these policies without democratic opposition.

During its first 3 years, the military government outlawed strikes and scrapped existing collective-bargaining agreements. It introduced restrictions on the right to strike, the establishment of new unions, and the collective-bargaining process, as well as putting restrictions on severance pay, seniority rights, and social-insurance benefits. These measures were accompanied by a severe decline in real wages (about 50%, by some calculations) between 1977 and 1984. In this economic environment, affordable food became an important issue of political legitimacy and public policy.

In 1981, under orders of the martial-law authorities, the staple stores were transferred to the newly formed Staple Sales Directory. The number of staple stores increased to 14, and 4 new stores on wheels were introduced to improve accessibility in working-class neighbourhoods. By 1985, the number of stores was 32. They claimed to offer 25% savings to consumers, and they did offer services to about 70 000 families (about 14% of total households).

In 1986, TANSAS was incorporated as a retail enterprise and meat combine. This transformation of a public corporation into a profit-making enterprise was compatible with the dominant neoliberal discourse of the time and drew no noticeable public reaction. TANSAS started to expand its line of products and services. It introduced fresh fruits and vegetables, registered itself as a fresh-produce wholesaler at the city’s food terminal, and created a packaging company and a sausage factory. It also became the city’s food caterer.

By 1989, TANSAS had 66 retail outlets, three cafeterias, and a modern bakery, producing 20 000 loaves a day. TANSAS continued to play a role in regulating prices in the city. In 1990, it started putting ads in local newspapers, displaying prices of 100 staples, to control price increases. TANSAS was now a large price-setting enterprise in direct competition with local corner stores. In fact, by the early 1990s, TANSAS started offering wholesale products to independent grocery stores, claiming to be the “grocer

of grocers.” Turning local corner stores and independent grocers into TANSAS outlets was defended as public policy.

Observing the success of TANSAS, new supermarket chains initiated food-retailing and supermarket ventures. Independent chain stores, supermarkets, and hypermarkets started to expand into the Turkish market with 15 000–30 000 different products and with discount prices for bulk items. By 1996, Turkey had about 40 hypermarkets and 400 supermarkets. Major Turkish corporate ventures entered the supermarketing business, either independently or in joint ventures with major European chains, such as Metro Gross Market (Germany), Carrefour and Promodes (France), and GIB (Belgium).

The expansion of supermarkets during the 1990s greatly changed food access, pricing, and consumption. First, the independent corner stores, groceries, green grocers, butchers, and bakers started to feel the pinch. Many could no longer survive as family enterprises, and others ended up becoming small retail outlets of the major supermarkets. Second, the supermarkets, with their wholesale to retailers and retail or bulk sales to consumers, became the price- and trend-setters in the marketplace. Finally, as store sizes expanded, space limitations in the inner-city neighbourhoods pushed the supermarkets to suburban locations. The change in location, combined with bulk bargains, started to alter shopping and food-consumption patterns, particularly those of the urban middle class. Buying daily from local neighbourhood stores became a habit of the past, replaced with weekly shopping trips and bargain hunting for bulk items. Cars became increasingly popular, despite the traffic chaos, as they gave consumers easier access to better bargains and more choices. Unable to compete against supermarkets, more and more inner-city grocers changed over to specialty stores to serve wealthier middle-class clients. Interestingly, all of these changes occurred in parallel with the law-and-order initiatives of local-government authorities. Crackdowns on illegal pedlars selling food made access to cheap food even more difficult for a larger segment of the population. TANSAS continued to boast that it was still playing a regulatory role in the marketplace, but now the causes of the access problems were completely different. Operating as a supermarket chain, TANSAS was itself one of the problems (Table 1).

TANSAS continued to expand its operations and number of stores throughout the 1990s. By 1996, it had become one of the two biggest supermarket chains in Turkey. It had 91 stores, 13 of which were located in major resort towns outside the city limits. TANSAS stores were carrying about 14 000 different items, with 28–29% of these bearing the company’s label. Store sizes continued to increase, and TANSAS gradually expanded to suburban or out-of-town locations. Seven stores with more than 1 750 m² of space were responsible for 22% of sales (Table 2). TANSAS also owned shares in

Table 1. Market share of supermarkets and hypermarkets in various European countries, 1980–95.

Source: TANSAS (1996).

several other municipally operated companies specializing in such diverse fields as tourism management, insurance, computer consulting, and printing and publishing (Table 3).

Despite its claim to being a publicly held company, until recently, 94.27% of TANSAS was owned by the municipal government. In 1988, 5.22% of the shares were offered to the public. A TANSAS advertisement in the municipal government periodical, Izmir Buyuksehir Belediye Dergisi (1987), was highly reflective of the new notion of public enterprise:

TANSAS RETURNS TO THE PUBLIC WHAT IT TAKES FROM THEM

Corporations are formed to make profits. If this is not so, they will be in unfair competition with other enterprises, which is a crime according to law. TANSAS too makes profits, but TANSAS is owned by the public. Naturally, its profits will also be returned to the public.

In 1996, TANSAS revealed its intention to offer another 32.98% of its shares to the public. This was partly a response to the national campaign for privatization of state economic enterprises. Changes in the corporate tax laws required that at least 15% of the ownership of a publicly held corporation be in public hands. A quick check of various Internet sites revealed that TANSAS shares were snapped up on the Istanbul stock exchange. Significant TANSAS shares in the portfolios of various European mutual-fund companies were also an indication that TANSAS’s “public” was global, no longer just the citizens of Izmir.

Table 2. TANSAS stores by floor size, 1996.

Source: TANSAS (1996).

Table 3. TANSAS investments in other ventures, 1996.

Source: TANSAS (1996).

Finally, in the spring of 1998, a consortium of a private bank (Finansbank) and a holding company (Gucbirligi Holding) that had captured a 22% share of TANSAS, following the earlier privatization campaign, purchased another 29% of TANSAS shares from the municipal government. With this, the city’s share declined to 10% of the total. This was the end of the first municipally owned supermarket chain in Turkey (Turkmen 1998).

Lessons to learn

1. Local staple stores can play a vital role in improving food access, particularly for the urban poor and middle classes. Such stores, with their bulk buying capacities, limited shelf space, lack of concern for advertising and store appearance, and smaller profit margins, can offer cheaper effective alternatives to typical private retail distribution systems. Unlike food banks, they offer better selection and choice and more dignified access to affordable food and they operate independently of continuous private or corporate donations. Customers in staple stores choose items they need and prefer, without losing their self-respect. Staple stores can also indirectly regulate price levels in the marketplace, especially in highly inflationary environments. In these environments, they protect a large segment of the population from hoarders and speculators. These operations do not offer unfair competition to the existing retail systems but only complement them when they fail.
2. There are, however, no easy solutions for improving access to food. Often the cure becomes a problem. Although it protected consumers from high inflation and speculation in the 1970s, TANSAS inadvertently played a role in introducing and spreading supermarket chains in Turkey. The small neighbourhood stores that have been the livelihood of tens of thousands of small family operations are disappearing. Consumers have to travel longer distances, change their shopping habits (buy less frequently items that are less fresh in larger quantities), spend more time traveling, and store food items longer. This turns their households into a storage space for supermarket chains. Although what happened in this case was somewhat affected by a unique combination of events, expansion beyond the original purpose of improving access and regulating prices is potentially self-defeating for all staple-store operations.
3. Intense global economic pressure and international regulation have eroded certain powers of nation-states, shifting more and more responsibility to regional and local governments. This shift partly reflects recent tendencies toward the decentralization and restructuring of the nation-state and partly reflects the increasing demand from local populations for effective and representative government. Both the increasing vulnerability of certain segments of the urban population and the new roles of urban regions in the globalized economy highlight the importance of local-level policy-making. The neoliberal restructuring schemes, however, not only erode the nation-state’s role in the economy but also attempt to re-create the state on a corporate model. This creates a serious threat to the future of public enterprise and public policy. Using populist jargon, such as “less state,” elected governments can easily and irreversibly destroy years of effort in a very short time (Koc 1995). We challenge this vision and believe that governments should keep public agencies at least within arm’s length to create their capacities to serve the public interest, with or without the support of the state.

References

Izmir Belediyesi. 1977. Izmir 1977, Belediye Calismalari. Karinca Matbaaclik ve Ticaret Kollektif Sirketi, Izmir, Turkey.

Izmir Buyuksehir Belediye Dergisi. 1987. Izmir Buyuksehir Belediye Dergisi, 11 (Oct). Inside back cover.

Koc, M. 1995. Global restructuring and communities. In Wolensky, B.; Miller, E., ed., Social science and the community. Proceedings of the Conference on the Small City and Regional Community. Vol. 11. University of Wisconsin–Stevens Point Foundation Press, Milwaukee, WI, USA.

TANSAS. 1996. Tansas Halka Aciliyor. Izmir Buyuksehir Belediyesi Ic ve Dis Ticaret Anonim Sirketi, Izmir, Turkey. Brochure. 30 pp.

Turkmen, H. 1998. 28 trilyonluk ozellestirme. Yeni Asir (2 May), 5.

Document(s) 20 of 34