Turkey is self-sufficient in food, feed and fiber and is a net farm exporter. Even so, the bulk of agricultural output is based in relatively small, inefficient farming operations. About 95% of total wheat and barley area is not irrigated.

Efforts to increase productivity include various policy and project initiatives. Among the most ambitious programs is the Southeast Anatolia Project (GAP), which aims to improve economic viability, productivity and living standards by consolidating the region as an agricultural export base.

GAP, a 30-year undertaking with a total cost estimate of U.S.$32 billion, consists of numerous research, development and social programs, as well as massive civil engineering projects including construction of dams and hydroelectric power plants on the Euphrates and Tigris rivers. Agricultural goals include increasing irrigation and mechanization, improving agronomic practices, providing education and training and developing credit programs.

The region currently accounts for 12.2% of Turkey's wheat production, 16.8% of barley output and 30.8% of the cotton crop.

The Turkish government since the early 1990s gradually has relinquished its involvement in some agricultural areas, including grain marketing, in line with its objectives of market liberalization and privatization. The government continues to support farmers through input subsidies that include below-market interest rates for loans and fertilizer and irrigation subsidies.

Although most wheat is traded in the private market, the Turkish Grain Board (T.M.O.) still sets support prices and purchases wheat when market prices fall below support levels. In recent years, government support prices have been well above world market prices.

For instance, in 1998-99, the support price for Anatolian hard red bread wheat was the equivalent of U.S.$204 per tonne, while the support price for 1999-00 is estimated at U.S.$195. Meanwhile, the world price for comparable quality wheat in 1998-99 was about U.S.$121, while the average so far this marketing year is about U.S.$115.

This price disparity has resulted in large quantities of wheat moving into T.M.O. hands, with the agency purchasing 5.1 million tonnes out of total production of about 18 million in 1998-99, which was a record harvest. This season, T.M.O. has purchased about 4.5 million tonnes of the 16.5 million harvested.

T.M.O. sells much of the wheat it acquires on the export market, and the increased supplies in 1998-99 led to exports of nearly 3 million tonnes, an amount second only to 1991-92 export sales of 6.2 million. Wheat exports in the current season are expected to decline to 1.5 million to 2 million tonnes.

T.M.O. also influences the markets through the setting of import duties, which tend to fluctuate depending on the domestic supply situation. Although Turkey is self-sufficient in wheat, imports remain important for millers to assure the qualities needed for specific flours and end uses. In recent years, imports have come primarily from Australia, the United States, Canada, Ukraine and Romania.

Although T.M.O. also continues to own the bulk of the country's grain storage capacity, the agency leases space to the private sector, and grain is freely marketed through a warehouse receipt system. The private sector cash market is active, and plans for a futures market in Ankara are in development.

Earlier this year, Cargill, Inc. opened a new 100,000-tonne grain terminal at Yarimca (see World Grain, November 1999, Page 6).

WHEAT AND FLOUR MILLING. Turkey's milling industry benefits from a strong domestic market, with cereals an important staple in the Turkish diet. About 13 million tonnes are consumed annually for food use, and per capita wheat consumption, at 200 kg, is one of the world's highest.

The growth in Turkey's milling industry in the past decade has been extraordinary. Although T.M.O. still owns one mill and holds shares in another, market reforms have fostered an explosion of new private facilities. In 1990, 604 mills were in operation, a number that had increased to 719 by 1995. Currently, 1,025 flour mills operate in Turkey. Most of the new mills are family-owned operations with daily capacities of 100 to 300 tonnes.

Annual milling capacity today stands at an estimated 25 million tonnes, wheat equivalent, up about 5 million since 1995. Flour production is around 10 million tonnes, resulting in capacity utilization rates of only 40% to 50%. Observers expect eventual consolidation will occur, improving overall utilization rates.

The Turkish Millers Association, which represents the nation's flour millers, currently has 190 miller members, up from 137 in 1996. The organization also counts an additional 80 members who are traders, educators and industry suppliers.

The rapid growth in flour milling capacity, along with government policies encouraging trade in value-added products, enabled the industry to focus on flour exports. In the mid-1990s, Turkey's soaring export business placed it among the top three world flour sellers.

In the past two years, sales have slipped, corresponding to the removal of a flour export subsidy. Without that subsidy, Turkish millers found it more difficult to compete with subsidized E.U. exports, but they are focusing now on ways to recapture export share.

In the domestic market, bread flour constitutes about 85% of consumption, with 7% for pasta, 4% for cookies and bakery products and 4% for bulgur. Bread use has been increasing at a rate of about 2% annually, with pasta use enjoying a slightly higher rate of increase.

Earlier this year, the Turkish government announced new wheat flour standards, which mills must meet within a year. The new flour codex defines specifications to ensure the production, storage, transportation and marketing of wheat flour using "proper techniques and hygiene requirements."

Under the new standards, flour is classified in two groups, bread and special purpose flours. The standards set a maximum moisture content of 14.5%, establish three bread flour types based on ash contents of 0.55%, 0.65% and 0.85% (dry matter basis), and mandate minimum protein levels of 10.5% for bread flour and 7% for special purpose flour. Requirements on additives, hygiene, packaging and labeling requirements also are covered in the Food Codex.

The baking industry in Turkey generally operates independently from flour mills. Although small- and medium-sized bakers traditionally have predominated, the number of large-scale industrial bakeries is increasing. In addition, acquisitions and partnership arrangements within the baking industry have led to expanded product varieties.

LIVESTOCK AND FEED. Turkey has a vital poultry industry, which is enjoying a 10% annual growth rate. Modern integrated operations continue to expand and increase market share.

Among the reasons for the poultry industry's recent growth are problems in the red meat industry. In 1996, the government imposed a ban on livestock imports, and the domestic industry, suffering from high grain and feed prices, began to shrink. With red meat supplies scarce and prices high, consumers turned to poultry as an alternative.

The government in September announced an end to the livestock ban, authorizing permits for the import of 2,500 head of breeding cattle. The action follows the government's late 1998 adoption of the Livestock Development Project designed to rebuild and strengthen that industry. Full implementation has been postponed because of financial difficulties.

The expanding poultry industry and the rebuilding of beef and dairy herds is expected to stimulate increased consumption of maize and feed. Estimates are that maize consumption should increase by 50,000 tonnes a year based on poultry demand alone, while progress with the L.D.P. could double maize feed use, which recently has averaged about 2 million tonnes annually.