Agriculture to Turkey

Trends and opportunities

The market

Turkey’s agricultural resources include land, water and climate conducive to farming. It is a significant agricultural producer and exporter and has the advantage of a strategic location straddling Europe, the Middle East and North Africa.

According to the OECD, Turkey ranked first in the European Union (EU) and seventh in the world by agricultural production in 2018. 1

Turkey is a world leader in the production of hazelnuts, apricots, cherries, figs and quinces. Turkey’s top agricultural export products are hazelnuts (56% of worldwide hazelnut production by 2017) flour, and prepared nuts. 2

Turkey is a significant importer of agricultural products such as cotton, live bovine animals, wheat and muslin, soybeans, sunflower seed/cotton hides and skins, feed ingredients. In 2017, agricultural imports totalled USD$ 14.4 billion with a dramatic annual increase by 17%.3 Cotton, wool, hides and skins are currently the most imported goods from Australia where they are either used for local consumption or processed prior to re-export as finished goods. 

While Turkey’s agricultural production has doubled over the last decade, its contribution to Turkey’s gross domestic product (GDP) has declined to 6% of GDP due to urbanisation and foreign investment into other sectors such as manufacturing and services from 8-9% levels a decade ago. Agriculture remains a strategic sector by the Turkish government and is a significant contributor to total exports (10%). It provides 20% of total employment in the country.4 The Turkish Government’s agriculture policy stance is historically very protectionist utilising both tariff and non-tariff barriers to minimise agricultural imports into the country. However in 2018, the Turkish Ministry of Agriculture and Forestry granted a total of USD$3.6 billion in agricultural subsidies, including in livestock to producers.5

Significant progress has been made in recent years in agricultural policy such as integrating environmental concerns into agriculture; strengthening the legal framework; reforming institutions; and improving rural policy. These changes have made the sector more attractive to foreign direct investment (FDI). Unfortunately. The productivity and efficiency of the Turkish agricultural sector is still hampered by:

  • High fragmentation: there are 25,000 predominantly small, family-run enterprises/farms making change difficult to implement;
  • Low levels of mechanization and low usage of farm optimisation: the industry dependent on government subsidies, keeping prices artificially high.
  • Small-scale productions: growth and efficiency is being hampered by the country’s high cost of machinery
  • High rates of illiteracy rates among farmers6

Opportunities

Turkey has a large domestic market of 80 million people. The population is experiencing rising wealth leading to increased demand for westernised products and technological solutions. Australia’s share of Turkey’s agricultural commodity and related service imports is historically low. Based on Australia’s global agribusiness credentials, there is significant scope and potential for growth of Australia’s profile in this market sector, especially in the following key areas:

  • Export of agricultural commodities particularly in commodities in which domestic production is insufficient to meet local needs (livestock and dairy herds) and processed products for re-export  (skins and hides, wheat, cotton and wool)
  • Agricultural services and equipment to enhance quality and productivity

Export of agricultural commodities

The demand for the import of live animals for slaughter has been rising due to increased wealth and population rises in the country combined with import barriers on packaged meat. The trade is heavily regulated with import quotas on both slaughter and breeder stock used to improve domestic herd quality.
Turkey’s import of live animals and meat was up 66 % compared to 2017 and Turkey became one of the largest importers of live animals and meat importing with around 900,000 heads of cattle and 50,000 MT of meat in 2018.

Turkey's current system of procurement for live animals (slaughter) and meat for the domestic market is fully controlled by the government. Turkish Milk and Meat Board (ESK) is the only government affiliated body which is permitted to import meat with zero tariff. 

Most of these live animal imports are from Latin America (mainly Uruguay and Brazil), Europe and small volumes from Australia. In 2018, Australia exported around 280,000 sheep and 26,000 cattle to Turkey.

Australia’s cotton exports to Turkey increased to A$131 million in 2017. Turkey has recently emerged as a significant destination for cotton from Australia and represents one of the major imported quantities to the market. Turkey is well known in the international cotton trade and although imports from Australia have been variable, Turkish buyers are now focused on the quality of Australian cotton.

Turkey’s cotton imports were 401,000 MT (1.8 million bales) during the first six months of MY 2017/18 (August 2017 – January 2018), which is about 30 %  higher than the same period last marketing year due to increased local demand. The United States was the leading supplier with 118,000 MT, followed by Greece with 70,000 MT, Brazil with 58,000 MT and Australia with 41,803 MT.

Turkey has a large textile industry capacity driving the demand for cotton, and due to low domestic cotton product, the country will continue to import cotton for years to come.

Wool is a minor player in an industry dominated by cotton and polyester and mainly focused on export to the EU, to which Turkey is the third largest foreign supplier. Turkey's apparel exports boosted textile imports of all fibres including wool tops and fibres. Wool apparel fibre imports from leading suppliers such as Australia and New Zealand  remained firm during 2018.
Despite its natural advantages, the Turkish agricultural sector faces major issues related to low productivity, low levels of mechanisation and lack of technical capability.
To keep pace in Turkey’s changing economic profile, productivity through mechanisation; consultancy and improved animal husbandry must be improved to ensure competitiveness on a global scale.

Approximately 60% to 70% of all milk production in Turkey is sold without proper processing.  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 seeking to invest in dairy cattle and improve herd quality as well as in areas such as, hygiene control for raw milk collection, processing, machinery and consultancy for production of dairy products.

Wheat production is expected to reach 19.3 MT in 2020 while consumption will increase to 19.6 MT. Turkey will remain a net importer of wheat and cover opening up  opportunities for overseas investors in technology transfer and productivity improvements.

The Southeastern Anatolia Project (GAP) is Turkey’s largest regional development scheme seeking to make the region a major world exporter of agricultural products with close proximity to Middle East markets worth an estimated USD$ 200 billion.  It already hosts 50% 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.

Australian capability in all areas of agriculture, particularly animal husbandry and genetics, dry land farming and irrigation and crop management are also well recognised in Turkey.
Prospective opportunities, beyond the live animal trade, which are expected to be realised within the next three years include:

  • Breeding and genetic stock improvement
  • Consultancy services across the whole supply chain
  • Veterinary services, health and reproductive management
  • Irrigation technologies
  • Agri-food industry (dairy and grains)
  • Biosecurity and consulting services

Tariffs, regulations and customs

Despite the remaining challenges, agricultural policies in Turkey are becoming internationally ‘friendly’ and aligned with EU accession talks and redefined priorities for the industry. Since 2000, the government has introduced necessary and effective policies aimed at opening up the industry with increasing success. The Ministry’s motto  “Big Agricultural Sector means Big Turkey” is defining the governmental approach and support for this sector.

Traditionally, the agricultural sector in Turkey has been highly protected, with taxpayers and consumers carrying the high cost of 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; thereby reducing the historically large role government has had in agriculture. 

Despite the EU alliance, Turkey continues to maintain various tariff and non-tariff barriers to control and restrict imports, particularly for agricultural products. The specific examples that affects potential Australian exports include honey. Although Turkey has no import ban on honey, the Turkish Ministry of Economy implemented a high custom tariff import, thus making it difficult for Turkish businesses to import honey. Custom legislation also requires special laboratory testing for ingredients. However, as there are no qualified laboratories in the country to provide this testing, a government officer needs to visit the exporting country to conduct an audit at the expense of the exporting company - making the exporting opportunity unfeasible.

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.

The legal infrastructure of agriculture is mainly based on regulations and/or communiqués and/or circulars rather than on laws. The reason for this is that the Turkish constitutional system does not allow laws to be adopted, amended or abolished easily. Therefore governments have traditionally preferred to publish regulations, communiqués, directives, or circulars. The majority of the regulations on food and agricultural products are prepared and published by the Ministry of Agriculture.  However, there are also regulations published by other Ministries, such as the Ministry of Finance. More than one hundred implementing regulations of Law no. 5996 have been published and enforced by Ministry of Agriculture since 2011. The Turkish government informs international bodies, such as the WTO, about possible or actual regulation changes, but this is not always consistent. Exporters should be aware that there may be some variation among Provinces in applying legislation. This may be due to the lack of guidelines for the enforcement of rules in some cases.

Marketing your products and services

Market entry

Market visits are very important in having a good connection with buyers. Finding a good reliable partner that has good affiliations with the local industry is essential in marketing products that need distribution.

While business relations are increasingly European in manner, it is still relevant to understand and appreciate Turkish business customs.  Most notably, 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. Direct partnerships with individuals who understand the Turkish market may also enable greater insights into the products best suited for export.

The Ministry of Agriculture, Food and Livestock’s General Directorate of Protection and Control (GDPC) requires proper documentation on all food imports.  There are also key food safety issues in line with the EU which means that it is essential to have working knowledge of current and relevant laws. Regarding the import process, there are also key steps which must be fulfilled. Again a working understanding of these provisions will ensure the importation process avoids any unnecessary hold-ups.

Links and industry contacts

Ministry of Agriculture and Forestry
https://www.tarimorman.gov.tr/Sayfalar/EN/AnaSayfa.aspx

All Food Importers Association
www.tugider.org.tr

General Directorate of Meat and Milk Board (EBK)
www.esk.gov.tr/en

General Directorate of Agricultural Enterprises (TIGEM)
www.tigem.gov.tr/

Union of Dairy, Beef, Food Industrialists and Producers of Turkey
www.setbir.org.tr

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1 Food and Agricultural Organization of the United Nations Statistics Portal (Gross Production Values),  OECD (2018);  Agricultural Policy Monitoring and Evaluation 2018, OECD Publishing, Paris. DOI: https://doi.org/10.1787/agr_pol-2018-en

3 WTO Country Profile, http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=TR

6 BMI Turkey Agribusiness Report Q3 2018