Turkey

by Chris Lyddon
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Turkey, between Europe and the Middle East, is an important grain processor which has carved out a major role supplying flour to countries in the region and around the world. Despite the turmoil in neighboring countries, Turkey’s grains sector has succeeded in maintaining trade.

“Despite all logistical problems, especially on the Iraq and Syria borders, the Turkish flour sector maintained the previous year’s performance after an abundant harvest,” the USDA attaché wrote in a recent update. “TMO (the Turkish Grain Board) is still selling domestic wheat for the wheat products exporters.”

“Following the downing of a Russian jet on the Syria-Turkey border on Nov. 24, 2015, Russia began to announce sanctions on Turkish agricultural products,” the attaché reported. “Especially in the first week after the event, some Turkish vessels could not depart from Russian ports due to phytosanitary issues. Contacts report that while some Turkish companies have reportedly faced pressures from Russian port authorities since the event, international companies have continued operations as normal and have been loading their vessels without problems.”

Millie Askew, analyst at the U.K.’s Agricultural and Horticultural Development Board, reported that Turkey was looking for alternatives to Russian wheat.

“Turkey may turn to importing a greater quantity of wheat from Ukraine but there could also be an opportunity for E.U. wheat,” she said. “With E.U. wheat export commitments slightly sluggish and down on the same point last year, an opportunity to ship more to Turkey would be a good option for the E.U.”

The International Grains Council (IGC) puts Turkey’s total grains production at 33.2 million tonnes in 2015-16, up from 24.6 million tonnes the year before. Its wheat production is put at 19.5 million tonnes, up from 15.3 million in 2014-15.

Maize production is put at 5.8 million tonnes, up 1 million, while barley production has risen to 7.4 million tonnes from the previous year’s 4 million.

Turkey’s grain imports in 2015-16 are set to fall to 4.9 million tonnes, from 8.8 million the year before. Turkey’s exports of grain will rise to 3.9 million tonnes from 3.4 million the year before. The import figure includes 3.6 million tonnes of wheat, down from 5.8 million the year before. Wheat exports are put at 3.8 million tonnes, up from 3.3 million.

The IGC predicts Turkey’s maize imports in 2015-16 at 1.2 million tonnes, down from 2.1 million the year before.

In oilseeds, Turkey is set to import 2.2 million tonnes of soybeans, up from 2.1 billion the prior year.

Turkey is a major flour exporter. In its most recent quarterly update on the world trade in wheat flour, the IGC put Turkey’s flour exports at 3.975 million tonnes in 2015-16, compared with 3.531 million the year before.

“A record domestic harvest has contributed to rapid early season shipments by Turkey,” it said.

It also noted rising demand in Iraq and Syria, where end users were “switching to imported flour due to the continued conflict which is adversely affecting local milling capacity.”

In a report published in January 2016, the attaché discussed the large crop, but also expressed concern over the new crop.

“The Turkish Grain Board procured nearly 5.4 million tonnes of grain after a record production for wheat, barley and corn in marketing year 2015-16,” the report said. “Much of Turkey is experiencing drought conditions. The impact is being felt most in Central Anatolia, Cukurova and the Southeastern Anatolian Project (GAP) region. However, the Thrace and Aegean regions are also affected.”

Traders are expressing concern for the next harvest, the report said.

Although favorable weather produced a record 2015 crop, there were problems.

“While yields are high, the quality of the crop is said to be low,” the report said. “Farmers in Central Anatolia suffered widely from low quality. All parts of Turkey are experiencing dry weather conditions, especially in Central Anatolia, Cukurova and Southeast Anatolia. Farmers in Cukurova had to irrigate winter wheat, which is very unusual. Some farmers have already replanted wheat, but some farmers are waiting until spring to plant corn.”

The report cited data from the State Waterworks Authority (DSİ) showing that the national average cumulative precipitation between Oct. 1 and Dec. 31, 2015, decreased drastically in comparison to previous years.

“Experts are concerned because Turkey faces a serious threat of drought this year due to the lack of rain and snow,” it said. “According to DSİ data, the national average cumulative precipitation between Oct. 1 and Dec. 31, 2015, decreased 30.2% compared to the long-term average, and decreased 29.3% when compared to the previous year’s average.

TMO ROLE

A USDA report on the structure of Turkey’s ministry of agriculture, food and livestock, looked at the importance of the Turkish Grain Board (TMO).

“TMO is the most important establishment regarding grain markets in Turkey,” it said. “TMO is a quasi-autonomous state enterprise responsible for regulating Turkish grain markets (wheat, barley, corn, rice).”

“With more than 100 branches across Turkey, TMO tries to keep the price at a level which allows production sustainability for farmers and supply security for consumers,” the report said. “For this purpose, TMO announces procurement price for grain after the harvest if they determine that local prices are too low for farmers. TMO also imports grain in case of shortages in order to decrease domestic prices.”

The government of Turkey sometimes authorizes TMO to import grain with zero tariffs, the report said.

“TMO intervenes in the markets to stabilize grain prices, regulates the import and export of grain, and announces procurement prices. During peak procurement periods, TMO opens temporary receiving centers around the country to assist in agricultural activities.”

700 MILLS

According to information supplied to World Grain by the Turkish Flour Industrialists Federation, the total number of mills in Turkey is approximately 700.

The federation said the eight largest flour-producing companies are large enough to be registered among Turkey’s top 500 companies, while the next eight are among the next 500 largest companies. The largest concentration of mills is in the Anatolian, Southeastern Anatolian, Marmara and Black Sea regions of Turkey.

There is a wheat flour mill in almost all the provinces of the country, with 202 in Central Anatolia Region, 135 in Marmara Region, 141 in the Black Sea Region, 94 in the Southeast Anatolia Region, 28 in the East Anatolia Region, 54 in the Aegean Region and 46 in the Mediterranean Region.

The federation said that an analysis of the locations and investment plants of the enterprises indicates that proximity to sources of raw materials, market, and utilities is important in the choice of location. The location of wheat-producing areas also plays an important role.

BREAD CAMPAIGN

The attaché also reported on a campaign by TMO and the ministry to raise awareness of the need to cut bread waste.

The daily bread consumption was 95 million loaves before the campaign was started one year ago but now it has decreased to 86 million loaves. The annual bread consumption was 35 billion loaves in 2012, and it decreased to 31 billion in 2013.

Traders are suspicious of these figures since their sales didn’t shrink, the attaché said. Traders estimated a 3-4% decrease in bread consumption due to the negative campaign against bread. “Mostly city dwellers are susceptible to these types of negative campaigns which make linkages between obesity and bread consumption,” it said. “It is very true that in metropolitan cities like Istanbul, Ankara and Izmir, diet has shifted from bread consumption to protein-based diets. But bread is still very important for daily life of the general population. Bread carries a lot of cultural value in Turkish society that is very hard to change, even with modern lifestyles.”

Key Facts

Capital: Ankara

Population: 79,414,269 (July 2015 est.)

Religions: Muslim 99.8% (mostly Sunni), other 0.2% (mostly Christians and Jews).

Location: Southeastern Europe and Southwestern Asia (that portion of Turkey west of the Bosporus is geographically part of Europe), bordering the Black Sea, between Bulgaria and Georgia, and bordering the Aegean Sea and the Mediterranean Sea, between Greece and Syria.

Government: Republican parliamentary democracy. Chief of state: President Recep Tayyip Erdogan (since Aug. 10, 2014; head of government: Prime Minister Ahmet Davutoglu (since Aug. 28, 2014).

Economy: Turkey’s largely free-market economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 25% of employment. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging cadre of middle-class entrepreneurs is adding dynamism to the economy and expanding production beyond the traditional textiles and clothing sectors. After Turkey experienced a severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an IMF program. The reforms strengthened the country’s economic fundamentals and ushered in an era of strong growth averaging more than 6% annually until 2008. Global economic conditions and tighter fiscal policy caused GDP to contract in 2009, but Turkey’s well-regulated financial markets and banking system helped the country weather the global financial crisis, and GDP rebounded strongly to around 9% in 2010-11, as exports returned to normal levels following the recession. Two rating agencies upgraded Turkey’s debt to investment grade in 2012 and 2013, and Turkey’s public sector debt to GDP ratio fell to 33% in 2014. The stock value of Foreign Direct Investment reached nearly $195 billion at year-end 2014. Despite these positive trends, GDP growth dropped to 4.4% in 2013 and 2.9% in 2014. Growth slowed considerably in the last quarter of 2014, largely due to lackluster consumer demand both domestically and in Europe, Turkey’s most important export market. The Turkish economy retains significant weaknesses. Specifically, Turkey’s relatively high current account deficit, uncertain commitment to structural reform, and turmoil within Turkey’s neighborhood leave the economy vulnerable to destabilizing shifts in investor confidence.

GDP per capita: $٢٠,٥٠٠ (٢٠١٥ est.); inflation: ٧.٥٪ (٢٠١٥ est.); unemployment: 10.4% (2015 est.).

Currency: Turkish liras (TRY): 2.94 liras equal 1 U.S. dollar (Feb. 22, 2016).

Exports: $153.6 billion (2015 est.): apparel, foodstuffs, textiles, metal manufactures, transport equipment.

Imports: $204.3 billion (2015 est.): machinery, chemicals, semi-finished goods, fuels, transport equipment.

Major crops/agricultural products: Tobacco, cotton, grain, olives, sugar beets, hazelnuts, pulses, citrus; livestock.

Agriculture: 8.1% of GDP and 25.5% of the labor force.

Internet: Code: .tr; 36.6 million users.

Source: CIA World Factbook

 

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