The agricultural sector plays an important role in the Turkish economy. The arable crop sector accounts for more than three-quarters of agricultural production in Turkey, and the most important products are cereals, followed by various types of fruit and vegetables.

Agricultural growth typically has been constrained by high interest and inflation rates, structural deficiencies such as fragmented and small holdings, a lack of grassroots farmer organizations, inadequate marketing facilities and inefficient open-market price formation. The average farm size is around 6 ha.

Turkey is the largest wheat producing country in the Middle East region and the third largest durum producer in the world. The Turkish government supports the grain industry through a variety of agencies and policies aimed to promote production and encourage value-added exports.

Turkey’s proximity to Europe, the Middle East and North Africa gives it access to large markets via the Black, Aegean and Mediterranean seas. Turkey’s domestic market, which is characterized by high population growth rates and increasing incomes, is expected to experience an increase in demand for more grains and oilseeds of higher quality.

The objectives of Turkish agricultural policy are set out in successive five-year development plans. Traditionally, the goals have been to stabilize grain prices, meet the nutritional needs of the growing population, increase yields and production, reduce the vulnerability of production to weather conditions, promote the application of modern agricultural techniques and develop the export potential of Turkish grains and grain products.

These objectives primarily have been achieved through a complex set of price supports, input subsidies and infrastructure investment, with domestic prices supported by intervention purchases. The measures are carried out by numerous government agencies that oversee agricultural policy, including state economic enterprises, agricultural sales cooperative unions and state-owned banks.

The state enterprises are involved mainly in agricultural marketing, with the Turkish Grain Board, or TMO, the main government body responsible for the grain industry regulation. TMO purchases surplus crop production with the goal of maintaining domestic stock levels. It also supports and regulates domestic grain prices.

Turkish producers can sell their grain to the TMO at a specified price or to the private sector. For grain that is not sold privately, usually because of its low milling quality, the TMO acts as the residual purchaser and exports the grain on the world market, usually at low prices, because of limited storage capacity.

The procurement price TMO offers is set at the domestic price support level, which is announced by the Ministry of Agriculture at the beginning of each marketing year and is often revised over the course of the year. In most years, domestic prices are above the government support prices, so most Turkish wheat is sold directly to domestic merchants and millers.

In December 1999, the European Union accepted Turkey as an official candidate for full membership, but Turkey must fulfill a list of political and economic obligations before it can become a full E.U. member.

The conditions that must be met under agriculture include: 1) increasing production through sustainable agriculture; 2) phasing out existing support policies and replacing them with a direct income support system targeted to low-income farmers; 3) establishing a land register system; 4) upgrading food inspection and control mechanisms; and 5) establishing a clear strategy for phytosanitary conditions.

As part of its strategy for accession, the Turkish government is reducing its role in agricultural marketing by privatizing its state enterprises and processing plants. Privatization has gradually reduced the role of TMO in grain marketing.

In the past, TMO, in addition to its domestic procurements, was active in regulating grain import and export activity through restrictive licenses and levies, which were applied to the private sector and from which the TMO was exempt. As part of government reforms, the level of intervention by the TMO has gradually been reduced, but the system remains in place for use by the TMO if deemed necessary.

On the domestic side, TMO has gradually reduced its procurement prices as part of its E.U. strategy, as well as at the request of the International Monetary Fund. But value-added processing continues to be encouraged through various import license schemes.

The government also is adopting reforms in the creation and development of agricultural producers’ unions, a development encouraged by the European Union. As a result, a law has been prepared that will enhance the establishment and functioning of the unions.

One major government project that has run into some obstacles is the Southeastern Anatolia Project, or the GAP, one of the biggest regional development projects in the world. The integrated, multi-sectoral project includes the construction of 22 dams and 19 hydroelectric power plants on the Euphrates and Tigris rivers designed to irrigate 1.7 million hectares of grains and oilseeds and generate about 20% of current electric requirements.

In the past few years, disputes with lending partners over compensation and displacement of people resulted in the government’s announcement that all remaining funding will come from the Turkish government, and the expected competition date, which was initially 2005, is likely to be delayed until 2008.

WHEAT AND FLOUR MILLING

The Turkish milling industry continues to consolidate and has become more sophisticated to meet changing domestic needs and world export challenges. The larger mills employ the latest in technology, and the industry is supported by a modern milling supply sector.

Turkey has slightly more than 1,000 flour and semolina mills, ranging from small operations to large industrial milling companies. In 1999, six flour milling companies were ranked among the top 500 Turkish companies based on sales volume, according to the Istanbul Chamber of Commerce.

Total annual milling capacity is about 24 million tonnes, wheat equivalent. Capacity utilization has been estimated by the Turkish Flour Millers Association at about 70%.

The Turkish Flour Millers Association currently has 272 members consisting of flour millers, wheat traders, machinery and equipment manufacturers and representatives from universities. The organization has a web site (www.unsanayi.org) that includes a weekly bulletin, news, announcements, futures prices and worldwide industry links.

Per capita consumption of wheat in Turkey is one of the world’s largest, averaging about 260 kilograms a year. About 85% of all wheat consumed annually is used to make bread and 7% to make pasta.

The Turkish domestic wheat crop generally is sufficient to meet domestic requirements every year depending on weather conditions. But the crop typically is low in protein, and millers rely heavily on high-protein wheat imports for blending to standardize the quality in domestic and export markets.

Although quality issues make it difficult for Turkey to export wheat, the import of higher qualities has enabled Turkey to become one of the world’s top 10 flour exporters, which coincides with the government’s emphasis on value-added exports. In the 10-year period of 1992-2001, Turkey’s flour sector exported an average 446,000 tonnes of flour per year.

Major flour export destinations are Iraq, Azerbaijan, Georgia, Libya and Algeria. But Turkey has exported flour to a total of 85 countries, 29 of which bought more than 10,000 tonnes.

Since 1999, the government, to help TMO keep inventories low and reduce costs, has not issued new wheat import licenses, except for millers who export flour and products and for wheat imports under E.U. tariff rate quotas and bilateral agreements with Romania and Hungary. The E.U. TRQ for duty-free imports totals 200,000 tonnes for milling wheat and 100,000 for durum, while the bilateral agreements allow duty-free wheat imports of 35,000 tonnes from Romania and 30,000 from Hungary.

Millers have complained because they need regular amounts of high quality wheat to meet both domestic and export demand, and the import restrictions impede sourcing this wheat. Consequently, they are urging the government to adjust custom duty rates and quantity levels based on market conditions.

COARSE GRAINS AND FEED

Turkey is among the world’s largest barley producers, and about 90% of barley is used for feed. The government continues to expand dairy, beef and poultry operations and is expected to maintain strict policies on beef imports to ensure rising beef demand is supplied by domestic origins for meat and grains.

Turkey has 539 feed mills, but only 430 currently are active, as a weak economy has forced some to close, at least temporarily. About 25% of the active mills are fully automated, with the remainder either manual or semi-automated operations.

Turkey’s organized feed industry produces around 11 million tonnes of feed per year, which is 85% of its actual capacity.

Animal nutrition in Turkey traditionally has fallen short of standards in other regions, such as North America and the E.U., and the Turkish Ministry of Agriculture has been conducting several research projects to raise feed quality criteria. Once implemented, rations are expected to improve, which probably will require more use of imported maize and soy products.

Currently, Turkey annually uses about 2.2 million tonnes of maize for feed, with 25% to 50% of that imported. Soybean imports stand at about 600,000 tonnes a year, with soymeal imports at 380,000 tonnes. Meat and bone meal use and import are banned to avoid the risk of BSE.

Aquaculture is a relatively recent industry in Turkey and enjoys great potential for development. From the beginning of the 1970s to 1999, the number of licensed fish farms increased from two to 1,444.

Total aquaculture production grew from 3,075 tonnes in 1986 to 63,000 tonnes in 1999. Production is dominated by inland operations, mainly of trout, which supplies 60% of the total.

From 1995 to 1999, marine production increased from 8,494 tonnes to 25,230 tonnes, and the major contributors are sea bream and sea bass. Because of the relatively high temperatures in the Black Sea, Atlantic salmon, which was cultured from the late 1980s to 1997, is no longer grown, with only rainbow trout in floating net cages produced.

Farmers purchase their feed from one of nine aquafeed manufacturers in the country. But several large fish farmers are trying to produce their own feed, as prices of commercial feed fluctuate considerably throughout the year. As of the late 1990s, only two aquafeed makers were using extruder technology, with pelleted aquafeed lines produced with conventional mechanical pressing technology.

Because of the growing demand caused by increased population and export, aquaculture production and consumption in Turkey are expected to grow. But the industry faces some significant constraints to potential expansion, particularly the bureaucracy involved in licensing fish farms, a lack of technical knowledge and insufficient exchange of know-how and cooperation.