WASHINGTON, D.C., U.S. — After a record harvest last year in Turkey, grain stocks are full. Typically exporters were able to purchase corn as input through tax-free imports under Turkey’s Inward Processing Regime policy (IPR), but now will be unable to do so and will need to buy corn directly from the Turkish Grain Board’s stocks if they want to access a lower price than the domestic market, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in a May 3 report. 

Effectively, because it is estimated that the vast majority of corn imports are done under the inward processing regime, corn imports to Turkey are expected to seriously slow until this policy expires in November.

The General Secretariat of the Mediterranean Exporter Association, which is one of the 13 exporters associations under the umbrella of Turkey’s Ministry of Economy, on April 13 announced a ministry of economy directive which bans imports of corn until Nov. 30 for those entities which gained inward processing authorization certificate after April 10. 

According to the directive, exporters who gained an inward processing authorization certificate after April 10 cannot use their import certificates for importing corn from April 10 to Nov.  30. This was implemented through a new article added to the Inward Processing Regime Act. In order to access tariff-free grain, they will now need to buy corn directly from the Turkish Grain Board (TMO). According to the private sector, this Ministry of Economy directive is designed to help the TMO decrease their huge corn stocks.

Domestically Turkey produces about 6 million tonnes of corn, which typically satisfies about 80% of the demand. With the help of strong demand from the poultry and egg sector, Turkey imported nearly 2 million tonnes of corn in the previous year. As of January, Turkey imported 208,000 tonnes of corn in market year 2015-16. Russia is still the largest supplier with the advantage of low freight cost.

Turkey’s IPR system allows Turkish manufacturers/exporters to obtain raw materials and intermediate unfinished goods that are used in the production of goods which will be exported without paying customs duty on those imported raw materials and without being subject to commercial policy measures. The basic endeavor of the IPR is to maintain materials at the world market prices (since Turkey’s domestic market prices are set each year and are above world prices) and enhance the competitiveness of Turkish exporters. The IPR is widely used in the agricultural sector.

Manufacturer-exporters and exporters can use equivalent goods instead of the import goods stated on the authorization certificate. Equivalence is a procedure which allows the substitution of the goods in free circulation in place of the import goods stated on the authorization certificate. Authorization certificate can only be granted to the firms which can submit necessary documents to Ministry of Economy via General Secretaries of exporters unions.