Turkey is a bridge between east and west, joining Europe with Asia, with a culture that looks in both directions. Turkey was, for centuries, one of the world’s great powers, but fell behind at the turn of the 20th century. In the 21st century, Turkey has produced spectacular rates of economic growth.
Turkey’s grain industry provides some good examples of its economic dynamism. It’s taken advantage of demand by some of its near neighbors, notably Iraq, to become one of the most successful exporting industries, while consolidation means efficiency is increasing fast.
According to the International Grains Council (IGC), total Turkish grain production in 2009 was 28.3 million tonnes, up from 27.2 million in 2008. Of that, 18 million tonnes was wheat, an increase of 1 million, while 3.8 million tonnes was maize, down from 4.2 million. Barley production is 6 million tonnes, up from 5.6 million.
The IGC puts Turkey’s total import gains for 2009-10 at 2.9 million tonnes, down from 4.3 million the year before. Its grain exports will be 3.4 million, up from 2.2 million.
Wheat imports, at 2.4 million tonnes in 2009-10 are at exactly the same level as wheat exports, according to the IGC. In 2008-09, wheat imports were 3.6 million tonnes, compared with exports of 2.2 million.
Maize imports are put at 300,000 tonnes, down from 500,000, while Turkey’s barley exports are expected to be 600,000 tonnes, having been unrecorded by the IGC the year before.
Turkey will also export a total of 1.1 million tonnes of soybeans this year, compared with 900,000 tonnes last year.
The Turkish grain sector is dominated by the Turkish Grain Board (TMO), a government body which works as an intervention agency, buying grain from farmers and traders. On Feb. 25, for instance, it sold 150,000 tonnes of milling wheat, 150,000 tonnes of durum and 100,000 tonnes of barley in an export tender.
Immediately before that tender, the U.S. Department of Agriculture’s (USDA) attaché in Ankara put TMO’s stocks of grain at 3.3 million tonnes of wheat and just under 1 million of barley.
In its annual report on the grain and feed sector, the USDA’s office in Ankara described TMO as "an active player" in the wheat market in marketing year 2009. "TMO started to procure grain on June 5, 2009 and procured 3.77 million tonnes of wheat in MY 2009," it said.
TMO is one of a series of government "General Directorates" which cover the sectors of agriculture and food production.
Turkey’s main grain-producing region is central Anatolia, which traditionally produces wheat and barley on its high plateau.
The average yield for wheat in Turkey is 2.5 tonnes a hectare, compared with 5.4 tonnes in the E.U., although fertilizer use in the E.U. is 2.5 times what it is in Turkey.
The thing that makes Turkey stand out in the global grains industry is its wheat flour export trade. According to the IGC, it will export 2.3 million tonnes of flour this year, making it the second-largest flour exporter behind Kazakhstan.
Turkey’s export success is partly due to the proximity of Iraq, which is set to import 1 million tonnes, but it’s also because of policy, which encourages the milling of flour for re-export.
Wheat is imported under an inward processing regime, with imports suspended (last year on May 15) when the domestic harvest begins and re-opened after it ends (last year on Sept. 15).
"This year TMO opened its wheat stocks to the wheat flour producers at the world price level," the attaché said. "Before this decision, Turkish wheat flour producers were importing high quality wheat under the inward processing regime. However at the lower price offered by TMO, Turkish wheat flour producers preferred to buy from TMO.
"Russia, Kazakhstan and Ukraine are the main high-protein wheat suppliers," the report said. "Turkey usually blends domestic wheat with high-protein imported wheat to produce its wheat flour."
It predicted increased wheat exports to the Middle East, Indonesia and the Philippines in the coming years.
"This will result in continued imports of high quality wheat to Turkey, unless the country can improve domestic production," it said. "One step that may be taken is a move to import higher quality seed."
For wheat flour, the attaché highlighted a 42% increase in exports for the first seven months of this marketing year, representing mainly higher exports to Iraq.
"Iraq, Sudan and the Philippines will remain strong markets for Turkish wheat flour," it said, noting a 116% increase in exports to Iraq from June 2009 to January 2010.
Indonesia has placed a 40% duty on imports of Turkish flour after an antidumping investigation. In the 2009 marketing year it was 25% of Turkish flour exports. The attaché predicted a sharp fall in Turkey’s flour exports in 2010-11.
Turkey is using its export boom to improve its milling industry. "The Turkish flour industry is consolidated and has modernized in the past five years," the attaché said.
According to Selcuk Bagci, assistant secretary general of the Turkish Flour Industrialists’ Federation, there are now 715 mills which can process 32 million tonnes of wheat. The average capacity is 128 tonnes a day, with most of them over 100 tonnes.
"Turkish flour industrialists are currently in the process of consolidation due to low capacity used, which brings up lots of problems," he said. "In 2004, we had around 1,054 mills with a capacity use average of 30%. Currently we managed to bounce it up to 45%. In five years, we are expecting to drop in number to 400 mills and jump up to 65% capacity use."
The industry is 100% privately owned, with no state-run mills.
Turkey also has 22 pasta factories, with a production capacity at 1.3 million tonnes, although output was only 52% of capacity in 2009. Pasta consumption in Turkey was down 4% in 2009 at 413,000 tonnes, an average of 5.7 kilograms per person.
Low durum production cut pasta exports in 2008-09, but they recovered to a record level in 2009-10. The attaché forecast exports of 250,000 tonnes in 2009-10, compared to 160,918 tonnes in 2008-09.
"After Iraq, Angola, Togo and Benin are the main markets for Turkish pasta exports," it said. "Exports to those countries increased in 2009, most significantly in Togo. The Japanese market is very important to Turkish pasta producers, not only because of the value of exports but also because they consider this the most prestigious export market."
BARLEY, RICE AND MAIZE
Barley has attractions for Turkish farmers. "Because barley is less susceptible to adverse weather conditions, farmers in Central Anatolia and Southeast Anatolia who face variable weather conditions prefer planting barley," the attaché said. "Barley traditionally has been the preferred feed grain in Turkey, especially for ruminants."
"Turkey traditionally exports barley to Middle Eastern countries," it said, although drought meant low shipments in 2007-08 and 2008-09. "TMO opened five tenders for grain exports between Oct. 2009 and Jan. 2010 and exported 480,000 tonnes of barley."
The country also produces paddy rice with the main production areas in the Marmara and Thrace regions.
According to the USDA, Turkey has 25,000 paddy rice farms and four paddy rice co-operatives. It has 104 paddy rice millers with a yearly capacity of 2.28 million tonnes.
Corn (maize) is imported duty free under an inward processing system, or with a duty of 130%. At the moment, the main sources are Ukraine, Romania, Russia and Hungary.
According to the attaché, total production of oilseeds in Turkey in 2009 was about 1.4 million tonnes, the lowest level for many years because of low cottonseed production. A recovery in cottonseed will get the figure up to 1.6 million in 2010.
Soybean production in 2009 was 45,000 tonnes, a tiny fraction of domestic consumption of 1.3 million tonnes. The government is trying to encourage production and the attaché said it is targeting a 600,000-tonne crop. Meanwhile, Turkey’s new biotech rules have created great uncertainty and confusion for soybean importers.
GM POLICY CONFUSION
Turkey’s agriculture ministry issued a new Biotechnology Regulation in late October 2009. It halted imports of transgenic food and feed ingredients, including soybeans, soy meal, corn, corn gluten feed, distillers dried grains and other products.
However, court challenges meant the regime changed several times after that. "Currently no product with transgenic content, from soybeans to feed ingredients to foodstuffs, can enter Turkey," a March 23 attaché report said.
It also explained that on March 19 a National Biosafety Law was approved by the Parliament. "For the National Biosafety Law to go into force, the Ministry of Agriculture must prepare and issue implementation regulations," it said. "At this time, it is unknown how restrictive these measures might prove to be."
Further uncertainty surrounds how the October 2009 regulation and the new law will interact.
"The Biotechnology regulation and the Biosafety 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 USDA said.Chris Lyddon is World Grain’s European editor. He may be contacted at email@example.com.