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Turkey Agribusiness Report Q1 2009
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Turkey |
Published |
7 November 2008 |
Number of Pages |
44 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Anatolia: Agricultural Paradise Turkey has one of the world's strongest agricultural sectors, due to its favourable climate and ecological conditions. The country is among the world's leading exporters in almost all the major agricultural product sub-sectors, and has a significant place among the world's biggest cereal-producing countries.
With approximately a third of the country's workforce employed in the agricultural industry, the government has made the development of this sector a priority. In BMI's new Turkey Agribusiness Report for Q109, we examine the challenges facing Turkey's agricultural industry.
Fragmentation To Consolidation In line with the country's development, the importance of the agricultural sector is changing and it will need to undergo some significant adjustments to remain competitive. Turkey's difficulties in adapting to these changes stems from the fact that its agricultural industry is largely fragmented, consisting of around 25,000 predominantly small, family-run enterprises. A number of new reforms are currently under way, aimed at reducing state involvement, improving the sector's competitiveness and are expected to ultimately boost output and most likely result in significant sector consolidation.
Currently, the grain market is regulated through the Turkish Grain Board (TMO), which announces the annual procurement prices for all grains. The TMO then buys grains at these prices from producers who are unable to obtain a higher price on the open market. Through its position the TMO monopolizes the import of certain key commodities which it uses as a mechanism to help control domestic prices, which are kept well above world prices. Having joined the WTO in 1995 with developing country status, Turkey was able to establish high tariff rates, while it also employs non-tariff barriers such as seasonal bans on import licenses and restrictive import regulation in order to protect domestic producers.
However, the government is coming under increasing international pressure to reduce its role in the agricultural sector, and has been slowly extracting itself from grain marketing since the 1990s in line with its objectives of market liberalisation and privatisation. Nevertheless, farmers still continue to receive government support through input subsidies as well as below-market interest rates for loans and fertilizer.
Investing For The Future Yet, it is not just through subsidies that the government has been supporting this sector. It has also been investing heavily in infrastructure and irrigation projects. The most high-profile of these projects is the Southeast Anatolia Project (GAP), which aims to improve economic viability, productivity and living standards in this region by increasing agricultural productivity. Such projects should have a considerable impact on production output as they will guard against the effects of drought. Given these government investments, we expect to see wheat production increase by 10.1% between 2008 and 2012. Meanwhile, corn production is forecast to increase by 43.9% to 2012. We also expect that rice production will increase by 17.6% between 2008 and 2012, reflecting the increase in land under irrigation due to ample water supplies. With production figures across all of these major commodities expected to increase, it is clear that government investments are paying off, although more reforms are still needed.
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