Focus on Turkey

by Chris Lyddon
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Turkey lies at the meeting point of Europe and Asia. Much of the recent history of its grain sector has been driven by moves to harmonize its market regulation with the E.U. Its flour milling industry is notable for its high level of exports.

The International Grains Council (IGC) forecasts Turkey’s total grain production at 30 million tonnes in 2011-12, up from 27.7 million tonnes the year before. Of that total, 19 million tonnes is wheat, up from 17.5 million. The wheat total includes 3 million tonnes of durum.

Maize production is forecast at 4 million tonnes, up from 3.8 million. Barley production is forecast at 6.5 million tonnes, up from 5.9 million.

Turkey is a major importer and exporter of grain. According to the IGC, it will import a total of 3.4 million tonnes in 2011-12 (4.1 million in 2010-11). Exports are put at a total of 3.4 million tonnes, up from 2.4 million the year before.

Wheat imports are forecast at 2.8 million tonnes (previous year 3.6 million). Wheat exports are forecast at 3 million tonnes (2.4 million), including 100,000 tonnes of durum.

Maize imports are forecast at 200,000 tonnes (400,000 tonnes). Turkey is also forecast to export 300,000 tonnes of barley. The previous year’s barley exports were too low to be compiled by the IGC.

Turkey remains a major exporter of flour, according to the IGC. Its exports are forecast at 2.6 million tonnes in 2011-12, up from 2.4 million tonnes the year before. Of the list of exporters quoted by the IGC, only Kazakhstan, with 3 million tonnes, exports more.

Turkish Grain Board

The market is regulated by the Turkish Grain Board, founded in 1938 at a time when, as its yearbook makes clear, other countries were also coming up with institutions to manage grain markets. The board ran the market for 50 years by announcing a basic purchase price each year. From 1988 onwards, the system was adapted, until in 2009-10 a procurement system based on the E.U. model was out in place.

The board’s yearbook explains the importance of agriculture to Turkey.

“Our country is an advantageous country for agricultural production with climatic and ecological characteristics favoring a wide production range, and the country is in a good condition for self-sufficiency in agricultural production,” it says.

Grains account for 50% of the 2.43 million hectares of cultivable land. “Among the cereals, wheat is listed in the first rank with a 67% share in overall cereal production,” it says. “Wheat is followed by barley at a 25% share and maize with a 5% share.”

Flour sales

In a report published earlier this year, the USDA attaché explained where Turkey’s flour exports are going.

“Iraq, Indonesia and the Philippines are the most important markets for the Turkish wheat flour industry,” it said. “Indonesia and the Philippines need low quality wheat flour to make noodles. Empty containers returning to Asia are used to carry wheat flour at very cheap rates to Indonesia and Philippines.”

“The proximity of northern Iraq gives Turkish exporters an advantage in that market as well,” it said. “The main Turkish exporters to the Middle East are located in either the Gaziantep or Konya regions. Turkish truck drivers carry wheat flour to Nusaybin/Mardin and northern Iraq trucks drivers carry it from Nusaybin to Zaho for $5 per tonne.”

There is competition. “According to Turkish traders, Iran is trying to capture some of the market share in the Iraq wheat flour market,” the attaché said. “However, they believe that mills in Iran are using older technology and cannot produce the high quality wheat flour used for bread in Iraq.”

The attaché also highlighted pasta exports, expected to reach 280,000 tonnes in 2010-11. “Pasta factories in Turkey invested heavily in marketing year 2010 to increase their production capacities. However, a major challenge will be overcoming decreased durum wheat production in marketing year 2011 as many high quality durum wheat producers, especially in the Sanliurfa region, switched to cotton production,” the attaché said. “Pasta companies that have contracted with farmers will not have a supply problem, but the rest will need to import durum wheat in market year 2011. Pasta exports should reach 295,000 tonnes in 2011 with the help of new capacity improvements.”

According to the Turkish Grain Board, there are 682 plants producing flour in Turkey, with a total installed capacity of 32,430,829 tonnes and actual capacity utilization of 15,168,570 tonnes, a 47% utilization rate.

There are 20 pasta plants, with a capacity of 1,716,104 tonnes and actual production of 1,095,380 tonnes, or 64%.

Turkey also has 403 feed mills, with a capacity of 27,121,725 tonnes and production of 14,864,066 tonnes for 55% utilization.

Oilseeds deficit

Turkey’s production of oilseeds is insufficient to meet its needs, making it dependent on exports. The attaché put, in an annual report on the sector, its production of soy, sunflower and cottonseed at around 1.7 million tonnes in 2010-11 and predicted a rise to 1.8 million in 2011-12.

“Although sunflower seed and soybean production will decline, cottonseed production will increase,” the report said. “The Turkish government’s comparatively early announcement of production premiums for the MY 2011 crop, high world prices for cotton and ongoing uncertainties about imports of transgenic products are the reasons for the increase.

“The government’s continuing production premiums for oilseeds and support of quasi-governmental producer coops have influenced farmers to plant more oilseeds. The soybean area and production both increased about 50% in MY 2010, reaching an estimated 17,000 hectares and 60,000 tonnes, respectively.”

However, that remains a fraction of domestic consumption of 1.3 million tonnes. “MY 2011 production is forecast to reach about 50,000 tonnes in spite of the recent announcement that premiums would be increased 43% for certified soybean seeds,” it said. “Farmers indicate that it is hard for soybeans to compete with other crops, such as wheat, corn and cotton in targeted regions despite the repeated government premium increases.

“Production of canola as an oilseed is also increasing,” the attaché said.

The report put 2010-11 production at 48,000, up from 30,000 tonnes the year before.

“MY 2011 (June-May) production, however, is expected to decline due to continuing government support for sunflower seed,” the report said.

Uncertainty over biotech crops

Turkey approved its first biotech applications, three soybean varieties which were approved for feed use only, in January 2011, but the market is still hampered by uncertainty.

“Despite the approval, soy imports have not fully resumed as the Ministry of Agriculture decided on an unrealistic zero tolerance for any level of contamination of unapproved biotech varieties,” the attaché said. “Applications have been submitted for all biotech events approved by the E.U. However, it is not known when or if other events will be approved.”

“The biotechnology regulation and the Bio-safety Law have caused a great amount of confusion in the public opinion on GM products, uncertainty on imports of feed items, and also jeopardized developments in the feed industry and related sectors,” the report said.

The attaché also highlighted the role in the oilseeds sector of Agricultural Sales Cooperative Unions. Two of the ASCUs — Trakya Birlik and Karadeniz Birlik — support sunflower seed production. TARIS covers cotton and olive oil, Cukobirlik covers cotton and soybeans, and Antbirlik cotton and cottonseed. “All of the ASCU’s have thousands of members to whom they provide seeds, fertilizer and low-cost financing prior to planting,” the report said. “The ASCU’s then offer attractive prices after the harvest.”

It cites reports that Trakya Birlik purchased 325,000 tonnes and Karadeniz Birlik 29,000 tonnes of sunflower seed from their members in marketing year 2010. “The combined purchases of the two coops represent about 37% of the MY 2010 crop and is about 10% lower than the previous year due to increased demand by private crushers.”