Global variables affecting agricultural product and food prices in Türkiye: An analysis with Structural Vector Error Correction Model

Purpose: The aim of this study is to identify the factors contributing to the price increases observed in food products. In this study, the global determinants of prices in agricultural and food products and their effects on the Turkish economy were addressed. The aim of the study was to identify the factors causing price increases in food products. Design/Methodology/Approach: In the study, the dependent variables included in the model were the CPI for food and non-alcoholic beverages, the CPI for unprocessed food, and the PPI for agricultural products, while the independent variables were the exchange rate (average of USD and Euro), the agricultural products export index, the agricultural products import index, Brent crude oil prices, and the international food price index. The short- and long-term causal relationships among these variables were examined through the Vector Error Correction Model (VECM) cointegration test and the Granger causality test, based on monthly data for the period 2003:01–2025:01. Findings: According to the research findings, among the variables affecting agricultural and food prices in Turkey were the international food price index, Brent crude oil prices, and the agricultural products export index. In the models where the CPI for food and non-alcoholic beverages and the CPI for unprocessed food were the dependent variables, it was determined that shocks originating from the independent variables converge to equilibrium in the long term. The findings reveal that in Turkey, the exchange rate and the agricultural products export index are not causal factors for the CPI for food and non-alcoholic beverages, nor for the CPI for unprocessed food. In contrast, Brent crude oil prices and the international food price index were identified as causal factors. Additionally, no long-term relationship was found between the PPI for agricultural products and the independent variables, and it was determined that the exchange rate, agricultural products export index, Brent crude oil prices, and the international food price index were not causal factors for the PPI for agricultural products. Originality/Value: Although similar studies exist for Turkey, the distinguishing feature of this research is that it is the first to simultaneously analyze the CPI for food and non-alcoholic beverages, the CPI for unprocessed food, and the PPI for agricultural products together with the independent variables of exchange rate, agricultural products export index, agricultural products import index, Brent crude oil prices, and the international food price index.