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      I.          INTRODUCTION

Upon smart technologies, in particular, those which are based on artificial intelligence becoming more active in the agricultural industry, subsidies that can be spared to agricultural producers and farmers are milestones in terms of productivity growth through modern methods in agricultural implementations. That said, in consideration of subsidies spared, and platforms and solutions provided by start-ups for modernization in agriculture, farmers may be liable for breach of subsidies conditions as well as issues arising out of agreements concluded with start-ups. This article will be first scrutinized modernization studies; and in the following section, farmers’ and producers’ liabilities in the scope of subsidies provided for the sake of modern agriculture will be mentioned.

    II.          MODERNISATION TECHNOLOGIES IN AGRICULTURE AND INNOVATIVE TENDENCIES

The global density of urban settlement and increase in immigration from villages to cities has caused employment issues in the agricultural sector. On the other hand, the high immigration rate to cities and competition conditions that emerged as a result of intense employment in the services sector has led companies to seek digitalization work, in particular in the last 10 years. As the agricultural sector has now been considered by the digitalization work, the use of digital and smart technologies in the agriculture sector has gradually commenced growing.

In the scope of digitalization work in agriculture, innovative attempts based in particular on artificial intelligence are remarkable. For instance, ForFarming, being a domestic start-up that hosted notable investments worth TRY 2.4 Million and TRY 12 Million delivers vertical agricultural solutions based on artificial intelligence and Internet of Things in confined areas such as greenhouses. Thanks to these features, the smart agriculture technology which enables the producers to produce fresh and healthy agricultural products without the need to use pesticides have now entered the market. [1]

Likewise, tarla.io, an agricultural technologies start-up which was awarded a data visualization prize, leaving 450 teams from 67 countries behind in the competition relating to mitigation of effects caused by climate changes that were organized by the 23rd  Conference of the Parties held in Bonn City, Germany in November 2017 provides producers the most accurate timing and conditions for planting, fertilization, irrigation, pesticide application, and harvesting implementations, utilizing the predictions which rely on the algorithm is devised. The algorithm database as developed by the start-up enables the gathering of data on the weather and the soil conditions as per each field, thanks to which producers nearby can make to-the-point decisions, as the algorithm helps grow productivity and enables making prospective predictions. [2]

Similarly, foreign start-ups lionize digitalization and smart agricultural implementations in the agricultural industry. In this regard, many foreign start-ups such as A Growing Culture, a start-up which provides a platform on which small-sized farmers exchange information and benefit reciprocal documentations, and on which legal support is provided to producers; Agrando, a start-up which provides outputs for the agricultural sector, as such offers the most convenient prices, considerations and improving ideas; Agrologies, a start-up which facilitates single-click irrigation anywhere in the world thanks to the irrigation sensor integrated to the smartphone; Auroras, a start-up which provides support in making decisions in agricultural issues; Biorfarm, a start-up which enables consumers to access contracted farmers who make top-quality production and who possess necessary certificates, and as such removes intermediary agents in supply process and brings consumers and producers together; Coolfarm, a start-up which enables confined garden control and which makes production on vertical gardening basis, they all prove that the agriculture sector’s share in start-ups ecosystem is highly growing. [3]

 III.          SUBSIDIES INTENDED FOR MODERNISATION IN AGRICULTURE AND AGREEMENTS CONCLUDED WITH START-UPS

In the digitalization trend which began to take root in agricultural implementations with the uprise in modernization work in agriculture, one can, beyond doubt, articulate that, in the wake of dissemination of such innovative technologies, economic benefits also play an important role on the part of producers in terms of preferability. With this being said, it is most often unrealistic that producers living in rural areas would undergo certain economic obligations as per their economic conditions to grow productivity. Therefore, like all countries, Turkey too issues subsidies to agricultural producers.

Turkish government regulated the Communiqué on Supporting Agriculture-Based Economic Investments in Scope of Rural Development Supports (the “Communiqué”) to popularise agricultural Technologies among producers, which entered into force following its publication in the Official Journal dated 21 November 2020 and numbered 31311. The Communiqué also aims to support investments covering innovative technologies to contribute to generating capacity for regional development within common rural societies. In this regard, one can suggest that paving the way for modernization and technological developments in agriculture is among the objective pursued by the Communiqué.

Article 8 of the Communiqué classifies the investments which can benefit from subsidies. In this respect, it is set out in article 8 paragraph 1 of the Communiqué that, investments in medical and aromatic plants, herbal products, and animal products, aiming to achieve, in particular, technologic innovation and/or modernization will benefit from the subsidy support. In this direction, it is provided for those elements such as process, desiccation, frosting, packing, storage, the building of new establishments and capacity increase are specific implementations that fall within the ambit of subsidy support.

Likewise, it is laid down in paragraph 2 of the same article of the Communiqué that building of modern greenhouses with air-conditioning, irrigation and fertilization systems and technology and/or modernization relating to the production of agricultural products will also be considered among investment projects which can benefit from subsidies. In our opinion, implementations the examples of which were mentioned above and which are smart/artificial intelligence-oriented concerning the temperature, irrigation, fertilization, and building of modern greenhouses capable of growing productivity can also benefit from subsidies under the Communiqué since they constitute technologic and modern projects. It is possible to suggest that the popularisation of the use of the above listed and similar smart implementations are encouraged as per the provisions laid down under the Communiqué.

It is provided for in article 37 of the Communiqué that the producers, or the investors as expressed by the Communiqué, may be deprived of the subsidies, or the subsidy agreement may be terminated if they do not comply with the project as proposed to the Ministry of Agriculture and Forestry. Therefore, we are of the opinion that in case of any disputes which may arise from the said agreements, the administrative jurisdiction will be authorized to settle the disputes. [4]

The liabilities of the producers regarding the state subsidies are such in brief, whereas the agreements concluded between the producers and companies which offer smart or modern agricultural solutions require another legal assessment. Thanks to the developing technology, agreements between companies and producers have now begun to be concluded upon the acknowledgment by the latter, of a legal text offered by the former in electronic media rather than a conclusion on hard copy documents. In any events, in the determination of the latter’s liabilities in case of any breach of such agreements, the provisions laid down under Turkish Code of Obligations numbered 6098 (“TCO”), and if applicable, Turkish Commercial Code numbered 6102 (“TCC”) will be considered.

It should be pointed out in this respect whether the producers may be regarded as merchants in terms of TCC. To that end, regard must first be had to the legislation where the terms “producer” and “farmer” were set out. The term “farmer” is defined in article 3 of the Code of Agriculture numbered 5488 as “real persons and legal entities who, as the owner of the property, tenant, sharecropper or sharefarmer, makes agricultural production continuously or for at least one production term or growing season”; while in article 2 of the Code of Agricultural Reform on Land Arrangements in Irrigation Fields, as “those who earn their keeps by adding, in part or in whole, their corporal and intellectual capabilities, through agricultural work”. Likewise, the term “producer” which stands for the term “farmer” in agriculture sector is defined in article 2 of the Agricultural Producers Association Code numbered 5200 as “real persons and legal entities who, by making production of any kind of herbal and animal products as well as fisheries by way of huntsmanship and growership, offer these in market”, while in article 3 of the Code of Agriculture Insurances numbered 5363 as “Real persons and legal entities who engage in herbal and animal production”.

The said legislative provisions are not binding on the fact whether farmers are qualified as merchants in terms of TCC. Because pursuant to TCC, the term “merchant” presupposes that there must be a commercial enterprise and such enterprise must be, even partially, operated by a definite person. Accordingly, the said provisions do not, on its own motion, entail that real persons or legal entities who are qualified as farmers and/or producers and/or agricultural producers are deemed as merchants just because they offer the products they produce in their fields for sale. For qualification of farmers as a merchant, in their own enterprises, processing, marketing, and sales of the products they produce in their fields are required.

In the event that farmers satisfy the criteria as prescribed under TCC, which will qualify them as merchants and which will put them under the obligation to act in prudence; as such the dimensions of the farmers’ liabilities will go beyond, in which case, the disputes arisen will be settled by commercial courts.

 IV.          CONCLUSION

With developing technologies and in the globalizing start-up ecosystem, interest for initiatives towards the agricultural sector has been growing day after day. As a result of such growing interest, emerging competitive and innovative needs enable access to many inspirations in the agricultural industry. As such, farmers are positively affected by innovative trends. Indeed, the growth in productivity by means of digital and smart technologies, instead of achievement through traditional agriculture methods encourages states to issue subsidies in this area. In this regard, like in all countries, Turkey provides farmers with subsidy supports for the dissemination of technological methods in agriculture.

It is an inevitable fact that, as gains from the modernization and innovative technologies in agriculture, many legal disputes are likely to arise both between farmers and the state, and between farmers and start-ups. In the resolution of such legal disputes, it is of crucial importance to scrutinize the farmers’ legal status as per the legislation as well as to determine the parties’ liabilities beforehand, to remove legal uncertainties for all actors in the industry.

Kind regards,

Kılınç Law & Consulting

[1] https://www.tarvenn.com/tr/forfarming-investment-second-round-tarvenn-hydroponic-smart-agriculture-company-artificial-intelligence-startup/; (access date: 05.03.2021).

[2] https://egirisim.com/2017/11/17/tarim-da-artik-bildigimiz-tarim-degil/; (access date: 05.03.2021).

[3] https://medium.com/@tarlaio/tar%C4%B1m-ve-g%C4%B1da-giri%C5%9Fimleri-neler-yap%C4%B1yor-4000bd68a019; (access date: 05.03.2021).

[4] Court of Jurisdictional Disputes, 2016/461 Merits, 2017/6 Decision, dated 20.02.2017.

Innovation & Fintech
Kılınç Law & Consulting's Innovation & Fintech department represents established companies with regards to their digital endeavors

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