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Turkey Agribusiness Report Q4 2009Published by: Business Monitor International Published: Aug. 6, 2009 - 45 Pages Table of Contents
AbstractBMI 'sTurkey Agribusiness Report Q409 continues on the themes touched upon in previous reports.Turkey is one of the world's top agricultural producers and the industry is extremely vital to political, aswell as social and economic, wellbeing. This report looks at the fundamentals and dynamics across themain farmed goods in Turkey, while the Business Environment Overview section casts a broad gaze overthe entire industry.Since 2007, the country has been ravaged by one of the worst droughts in its history, which has piledconsiderable pressure on domestic water resources, even more so considering the high percentage ofagricultural output reliant on irrigated farming. Furthermore, neighbouring countries similarly affected -mainly Iraq and Syria - are putting pressure on Turkey to increase water flows from the Euphrates river,one of the main water sources in the region. The drought risk remains throughout the outlook period,threatening to undermine efforts to increase productivity across the sector. In addition to the drought, the global recession has taken a particularly hard toll on exports. The TurkishExporters' Assembly (TIM) reported how year-on-year shipments in June 2009 fell by nearly 33%, withagricultural exports contracting by 6.55% for the same period, although on a month-on-month basis therehas been a slight uptick in export growth. This is not to detract, however, from the poor macroeconomicoutlook for the country for the remainder of 2009, although BMI is very positive regarding themacroeconomic fundamentals once the recessionary dynamics fade. Some success has been achieved on the foreign direct investment front. The European Bank forReconstruction and Development (EBRD) has agreed to provide finance to the tune of US$193mn foragribusiness and small business development. The figure is reported to rise to US$300mn in 2010 andcould be used to marked effect in developing infrastructure. More recently, a group consisting of variousArab investment houses signalled its intention to facilitate substantial capital flows into Turkey; adevelopment which the government has used as a public relations tool to highlight investor optimism inlocal farming. According to Agricultural Minister Mehmet Mehdi Eker Turkey's food sales earn the country aroundUS$57bn per year, while overall agricultural production is estimated at US$57bn, highlighting theimportance of the sector, not just for domestic socio-economic wellbeing, but for the numerousinternational markets served by Turkish exports. EU accession draws ever closer, and as it does, BMIexpects to see a continued commitment to the agricultural reforms that have been so earnestly pursued bythe government. Turkey is a world leading nation when it comes to agricultural processing. According to Eker, the countryis ranked seventh in grains and cereals processing, while it is unsurpassed in adding value in the fruits andvegetables subsector. The potential to build significantly on this position is notable as investment flowsin, encouraged by the state's increasingly receptive stance, along with a solid banking sector, whichshould recover relatively quickly once the economy rebounds. Grains will continue to show strong output growth with Barley and corn both forecast sharper trajectoriesagainst the main crop, wheat. With wheat output forecast at 17.5mn tonnes by year-end 2013, Turkey willstill be one of the main grains players in Europe, although Kazakhstan is poised to overtake its position asEurope's top flour exporter. Turkish wheat harvests look unlikely to repeat the yields recorded before thedrought (in the three years to 2007, harvests of over 20,000 tonnes were recorded), so it would makesense that value-added processing receives increasing attention. Although the government has been slowly extracting itself from grain marketing since the 1990s in linewith its objectives of market liberalisation and privatisation, farmers still continue to receive governmentsupport through input subsidies, as well as below-market interest rates for loans and fertiliser. While mostwheat is now traded privately, the market is still regulated through the Turkish Grain Board (TMO),which announces the annual procurement prices for all grains. The TMO then buys grains at these pricesfrom producers who are unable to obtain a higher price on the open market. Through its position the TMOmonopolises the import of certain key commodities which it uses as a mechanism to help controldomestic prices. Turkey's EU accession ambitions makes this type of intervention increasingly untenableand we can expect an easing of such measures as we progress through to 2013. With regards to the growing sentiment for organic produce among consumers in the developed world,Eker says that his country has roughly 1mn hectares available for organic farming, which will lend itselfwell to said method of farming as the global recession dissipates. Get Full Details About This Report >> |
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