Turkey is a major force in international trade in processed products, well placed at the intersection of Europe and Asia to supply the big markets to its east with flour and import grain to supply its mills. Proximity to the Black Sea, giving it access to low-cost milling quality wheat, has helped the country develop a pivotal role in the region’s market. A sharp fall in the Turkish lira has created problems for the sector, making inputs more expensive.
According to the International Grains Council’s (IGC) October report, Turkey’s total grains production in 2019-20 will be 34.1 million tonnes, a number unchanged from its September forecast and up from 33.5 million tonnes in 2018-19.
Wheat production will be 19.2 million tonnes, another unrevised estimate, down from 20 million tonnes the year before. The country is set to produce 6.2 million tonnes of maize, also unrevised from the month before, and compared with 5.7 million tonnes in 2018-19.
The IGC does not list Turkey under rice producers, but according to a USDA attaché report dated Oct. 15, the country will produce 910,000 tonnes of paddy rice on around 100,000 hectares in 2019-20.
According to the IGC, Turkey’s barley production in 2019-20 will be 8 million tonnes, also unrevised, compared with 7 million tonnes the previous year.
The IGC forecast Turkey’s total grains imports at 10.8 million tonnes in 2019-20, up from 10 million tonnes predicted a month earlier but down from 11.1 million tonnes the year before. Turkey’s grain exports are forecast at 5.2 million tonnes, revised up from an earlier figure of 5 million and up from 4.8 million tonnes the previous year.
Its imports of wheat are forecast at 6.9 million tonnes, revised up from a previous forecast of 6.1 million and up from 6.8 million in 2018-19. Turkey’s wheat exports are put at 5.1 million tonnes in 2019-20, revised up from the earlier figure of 4.9 million and up from 4.8 million in 2018-19. It is expected to import 3.5 million tonnes of maize, unrevised since the previous month, down from 3.8 million in 2018-19.
On wheat trade, the IGC noted that “although there is still only a limited amount of trade data for 2019-20 (mostly up to end-August), last season’s strong pace of buying by Turkey appears to have continued into the new trade year. In contrast to other countries in Near East Asia, Turkey’s 2019-20 harvest was below average, which is likely contributing to solid import demand.”
Pointing out that some of the impetus for rising imports in recent seasons has come from re-exports of flour and pasta, the IGC said flour exports by Turkey in the first two months of the trade year were 1 million tonnes, down from 1.3 million in the same period in 2018-19, even though it forecasts a rise for the year as a whole.
Turkey’s imports of soybeans in 2019-20 are forecast at 3 million tonnes, unrevised from the earlier figure, and up from 2.8 million the year before.
An April 1 report on the grains sector from the USDA attaché highlights the challenge presented by a 40% drop in the value of the Turkish lira against the U.S. dollar over the previous year.
“As a response to the currency depreciation and ongoing domestic food price inflation problems, Turkey has put some new policies in place, including limiting exports of some wheat flour and some feed materials, such as broken grains,” the attaché said. “Increasing food prices continue to be an important issue in Turkey.
“One of the main concerns of grain producers in the coming season will be the high cost of chemicals used for production. Besides fertilizer, this also includes the high costs of pesticides, which may lead to lower use of fertilizer and crop protection materials, and therefore lower yields.”
The report also said a new licensed warehouse system for grain storage is being developed.
“As of February 2019, there were 67 active licensed warehouse operations (LWO) with a capacity of 3.3 million tonnes,” the attaché said. “There were only 19 LWO as recently as two years ago.”
The Turkish Grain Board (TMO) acts as the governmental authority in the grain market. It procures grain in a variety of ways, including at commodity exchanges and through licensed warehouses, through its branches across the country.
The attaché also explained that the government supports “fertilizer, gasoline, certified seed usage, and soil analysis.”
According to the European Flour Millers Association, there are 542 flour mills in operation in Turkey. Total flour production is around 12 million tonnes. The capacity utilization rate is around 45%, with capacity estimated at 30 million tonnes.
Flour imports are responsible for about 15% to 20% of the market of wheat obtained by millers, a function of the lack of availability of high-quality domestic wheat. Russia is the top supplier, along with the E.U., the United States and Ukraine.
The attaché put Turkey’s total production of wheat products at 21 million tonnes, with exports of wheat flour going to 160 countries.
“The industry is negatively affected by a new policy limiting exports of domestically produced wheat,” the report noted. “In response to the sudden depreciation in the currency in 2018 and concerns that flour exports would rapidly increase, in September 2018 the Turkish government instituted a new policy that prevented exports of flour made from domestically grown wheat to try to halt a rise in domestic flour prices.
“Through an amendment to the inward processing regime, Turkish millers are only able to export flour made from imported wheat. Exporters also are reportedly concerned about decreasing profits due to the economic environment as well as high competition in the sector, and there are concerns that the situation may lead to consolidations.”
The report put the number of active pasta factories in Turkey at 28, with a capacity of more than 2 million tonnes a year.
“Capacity use rate is around 80%,” the attaché said. “According to the Turkish pasta manufacturing industry, pasta consumption was about eight kilograms per person in 2018.”
There are also more than 140 factories producing bulgur, biscuit/cookie/crackers, and semolina.
The same report puts the number of active feed mills in Turkey at about 500, with a total capacity of over 30 million tonnes a year.
Growth in demand for rice is driven by rising population and increasing numbers of tourists, according to the attaché.
“The growth will be partly offset by reductions in consumption by the domestic population because of perceptions by some that rice is less healthy and has an inconsistent quality,” the report said. “In Turkish cuisine, rice is irreplaceable for making pilaf, one of the most common dishes in Turkey.”
One possible threat to the sector is food inflation.
“People with moderate incomes may shift from rice pilaf to bulgur pilaf in their daily diets in the future,” the attaché said.
According to a November 2018 attaché report, there were 36 (10 soybean and 26 maize) biotech crops approved for feed use in Turkey as of October that year, with none approved for food use or cultivation.
“Testing of imported products remains inconsistent and continues to be a considerable cost for importers,” the attaché said. “There is much misinformation in the Turkish media about GE products and their safety. This has resulted in a very skeptical public and widespread misunderstanding and fear about agricultural biotechnology.”