Research on World Agricultural Economy

The Turkish Walnut Market: Price Transmission, Climate Impacts, and Policy Implications

ÇAĞLAR YURTSEVEN

Department of Economics, Faculty of Economics, Administrative and Social Sciences, Bahçeşehir University, Istanbul 34353, Turkey

DOI: https://doi.org/10.36956/rwae.v6i4.2376

Received: 25 June 2025; Published: 4 November 2025

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Abstract

This study examines the interplay of price transmission mechanisms, climate shocks, and exchange rate dynamics in Turkey’s walnut market using a Vector Autoregression (VAR) model. Analyzing monthly data on domestic producer prices, import prices, and production volumes, we uncover a counterintuitive inverse relationship between import and domestic prices: a 1% rise in import prices reduces domestic producer prices by 2.3% within two months, with a cumulative effect of 4.1% over five months. This suggests domestic producers lower prices to compete with higher-cost imports, revealing an "import competition effect" unique to this market. Exchange rate volatility amplifies this dynamic, with a 10% depreciation of the Turkish Lira raising import prices by 7.2%, accounting for 22% of their variance. Climate shocks further disrupt market equilibrium asymmetrically. Frost events trigger immediate production declines (−14.7%) and rapid price spikes (+5.3% within one month), while droughts cause protracted supply reductions (−8.4% over six months). Critically, climate shocks double the elasticity of domestic prices to import price changes (−0.47 vs. −0.23) and accelerate transmission, peaking within one month instead of two. Policy implications emphasize exchange rate stabilization (e.g., central bank currency swaps could reduce pass-through by 31%), climate adaptation (drought-resistant cultivars and drip irrigation may cut production volatility by 17–23%), and hybrid trade policies (seasonal tariffs with quotas). These findings underscore the vulnerability of perennial crop markets in emerging economies to global and climatic shocks, offering a framework for building resilience in analogous agricultural sectors.

Keywords: Turkish Walnut Market; Price Transmission; Climate Change; Drip Irrigation; Exchange Rate

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