Agriculture to Turkey
(Last updated: 27 Sep 2013)
Trends and opportunities
The market
Turkey’s diverse geographical and climate conditions make enable the production of a wide variety of good quality field crops, vegetables, fruits and livestock. Turkey is able to grow both Mediterranean climate crops and a number of sub-tropical crops. Crop output constitutes the majority (80 per cent, which is around 80 million tons) of the industry’s output, with the remaining 20 per cent coming from livestock.
Turkey has a far richer endowment of agricultural resources in terms of cultivable land and availability of water than neighbouring countries. Turkey is one of the few countries self-sufficient in food production.
Turkey’s volume and wide range of produce, and proximity to Europe, the Middle East and North Africa make the country a leading exporter in its region in the agriculture sector. Turkey is a net exporter in agricultural products (excluding farm inputs), with the fruit and vegetable sector being the most competitive. According to the Turkish Ministry of Agriculture, Food and Livestock statistics Turkey is the first in the European Union (EU) and the seventh in the world in the agriculture sector.
Export growth in agriculture products has risen from A$4 billion in 2002 to A$15.3 billion in 2011. Turkey is in the top five countries in the production of 30 and export of 26 agricultural products (in 2011 only Turkey exported 186 countries around 1500 different agriculture products). Turkey is the world’s largest producer of hazelnuts, apricots, cherries and poppy seeds and second largest producer of melons, cucumbers, leeks and strawberries. Turkey’s top agricultural export products are hazelnuts, flour, unmanufactured tobacco and prepared nuts.
Historically, the agriculture and livestock sector has been Turkey's largest employer (currently 30 per cent of the country’s workforce) and a major contributor to the country's GDP, exports and industrial growth. Despite the global financial crisis and drought, agricultural sector grew in Turkey and reached the most sustainable period of the last 50 years. Overall however, and in line with the global trend, the agriculture sector is declining in importance relative to the rapidly growing industry and services sectors.
Traditionally there has been a high level of government intervention in Turkey’s agricultural sector, with programs of price supports, input subsidies and marketing monopolies. More recently, the Turkish Government has supported the privatisation of markets, reduction of agricultural subsidies, the removal of trade barriers and the integration of Turkey into the global economy.
The market is increasingly opening up to a greater variety and volume of imports, and import levels are expected to continue to grow. The strengthening Turkish lira also means that foreign imports are increasingly affordable for farmers. Turkey’s agricultural imports in 2010 and 2011 (excluding processed food) reached US$6.5 billion (3.49 per cent of total imports) and US$9 billion (3.7 per cent of total imports) respectively. Turkey’s top imports are cotton, soybeans, hides and skins, feed ingredients, live animals and paddy rice.
(Source: United States Department of Agriculture, Report, 15 May 2012)
Turkey’s agriculture sector could be more productive, with poor mechanisation, small farm size, and uncoordinated and unplanned agricultural production. Turkey has a vast agricultural resource base with significant potential to expand output, particularly through increased crop yields. Mechanisation, consultancy and improved animal husbandry should ensure continued competitiveness on a global scale and a stronger negotiating position for potential EU membership.
Opportunities
While exporting to Turkey is more difficult than to other European markets, international products are becoming more widely accepted as per capita income and education levels increase. Given the enormous untapped potential, Turkey presents a rare opportunity, with the potential for ample returns, for exporters willing to commit to the market. Turkey’s consumer market of almost 75 million, growing demand for westernised cuisine, an improving economy driving a trend for high value products, booming tourist sector and an increasingly changing regulatory environment easing market entry for foreigners combine to make Turkey attractive for Australian agricultural exporters.
Despite the industry’s enormous, as yet untapped, potential, Turkey’s agricultural productivity indicators are not at par with international averages. The need for technology transfer and productivity improvements presents a prime opportunity for overseas investors.
A raft of recent reforms in the economy in general and the agriculture sector in particular have improved the investment climate for the agriculture and livestock industry. Investors originally active in other sectors are now investing in animal husbandry for breeding and milking, slaughterhouses for meat processing, farm modernisation, organic farming, food safety, etc. More new farms are being equipped with modern machinery, as mechanisation becomes more widely accepted and affordable, especially in western Anatolia where farmers tend to be wealthier and farms bigger.
Private companies are investing in dairy farms due to the lack of good quality milk, hygiene concerns and anticipated global shortages. These new farms are all in need of dairy cattle. Close to 60-70 per cent of all milk production is sold without any proper processing. On the verge of EU entry, there will be more business opportunities in the hygiene control of raw milk collection, processing, machinery and consultancy for production of dairy products.
Since 2007, live dairy cattle have been imported into Turkey from Australia, New Zealand, USA and Uruguay. Turkey also imported slaughter and feed cattle, slaughter sheep and goat and carcass meat from 2010 to 2012. As of mid-2012 the imports ceased, pending the development of new regulations. They are expected to recommence however timing is uncertain. The Australian livestock industry was swift to capitalise on this market opening and in 2010 Turkey became the second largest market for Australian live animal exports, importing nearly A$80 million in live cattle and sheep. The Turkish Government has recently stated that “importing live animals is not the answer but instead we should start working on how to assist our local producers by implementing the know-how”; supplying this ‘know-how’ is where current opportunities lie for Australian companies.
Turkey boasts the largest organically grown area in the Mediterranean region and is an open market for development, operating under the Organic Agriculture Law enacted in 2004 and modelled on the EU. It has attracted investment from France, UK and the Netherlands. Arable, pollution free lands make Turkey a prime location for organic production: 90 different varieties of agricultural products were organically produced in Turkey in 2002.
The Southeastern Anatolia Project (GAP) is Turkey’s largest regional development scheme, which seeks to make the region a major world exporter of agricultural products with close proximity to Middle East markets worth an estimated US$200 billion. GAP hosts 50 per cent of Turkey’s cotton production. Indications are that there is wide potential for the supply of agricultural equipment; operation, maintenance and management services; as well as storage, sorting and packaging facilities.
Tariffs, regulations and customs
Traditionally, the agricultural sector in Turkey has been highly protected, with taxpayers and consumers carrying the high cost of such interventionism. The non-feasibility of such policies, high tariffs, subsidies and entry barriers, led the Turkish government to reconsider its approach to the agricultural sector. In 2000 many reforms were introduced to promote fiscal stabilisation and allocative efficiency, as well as reduce the budgetary burden that such support imposed. Subsidies and price controls are slowly being phased out, reducing the historically large role government has had in agriculture.
The value of fiscal transfers, in the form of subsidies and government purchases of crop yields, was reduced from US$6.8 billion in 1999 to US$1.79 billion in 2002. Deregulation of the industry has resulted in the greater affordability of food produce, such as sugar and grain, and improved efficiency. These reforms have led to declining incomes for farmers, though this should correct itself overtime. Despite improvements, government investment in the sector remains at a high level, totalling 7-9 per cent of the total Central Government Budget over the last decade. However, part of this expenditure is comprised by short-term direct payments to farmers, who would otherwise struggle with the reduction of subsidies and other protection measures.
Despite these improvements, which are expected to continue, there are some remaining market entry difficulties:
- Imports of live cattle are allowed only from the countries that are approved by the Turkish Ministry of Agriculture (currently: Australia, New Zealand, USA and Uruguay)
- Harmonisation of the Turkish agricultural sector with the Common Agricultural Policy (CAP) is a priority in the Turkey-EU relations agenda but in providing incentives for European agribusiness suppliers to the market, could stymie a ‘real’ reform agenda
- A great deal of bureaucracy still exists at many levels of government as well as sensitivities within the agricultural communities themselves which hampers the effective identification of feasible projects for international collaborations
Regulations
The Ministry of Agriculture, Food and Livestock General Directorate of Protection and Control (GDPC) is responsible for managing import and domestic controls. GDPC is also the authorised body for:
- food and feed safety
- preparing relevant regulations and laws
- animal, plant and their products imports
- animal health and quarantine
GDPC requires proper documentation on all food imports and key steps must be fulfilled. A working understanding of these provisions and current laws governing the sector will ensure the importation process avoids any unnecessary hold-ups. There are also key food safety issues, in line with the EU, that must be considered.
Marketing your products and services
Market entry
While business relations are increasingly European in manner, it is still relevant to understand and appreciate Turkish business customs. Most notably, regardless of internet services and trans-national communications, direct and personal contact continues to drive much of the business in Turkey. Thus, it is often useful to visit the country and meet directly with potential partners and buyers. Such direct relationships will also generally translate into lower costs and greater productivity, resulting in higher net profits.
Finding a reliable partner who understands the Turkish market and has good links with the ministry is essential to market products requiring distribution and should also assist with the identification of products best suited for export.
Trade Events
Major agricultural exhibitions and trade shows in Turkey include:
- FoodIst 2013, 2-10 November 2013
- Eurasia Stock Breeding, 22-25 January 2014
- Mersin Agriculture & Horticulture Fair in Mersin, February 2014
- Animalia Istanbul, June 2014
- Agro Eurasia Fair, October 2014
Links and industry contacts
Ministry of Agriculture, Food and Livestock - www.tarim.gov.tr
General Directorate of Food and Control - www.gkgm.gov.tr
All Food Importers Association - www.tugider.org.tr
Union of Dairy, Beef, Food Industrialists and Producers of Turkey - www.setbir.org.tr
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.