THE OTHER GROWTH FACTOR

Turkey 2011 | AGRICULTURE | REVIEW: AGRICULTURE

Growing global demand for food products breathes life into Turkey's stalwart agriculture sector.

Given the country's favorable climate and soil conditions, agriculture has been a mainstay of the Republic since its inception. While manufacturing and services have diminished the sector's portion of GDP over the last decade, agricultural production in Turkey has risen consistently over the same period. More recently, an increasing focus on food security and a rise in global food prices is pushing the agricultural sector back into international focus.

In 2009, the share of agricultural production in Turkey's GDP was 8.3%, with production in 2009 and 2010 valued at TL79 billion and TL92.8 billion, respectively. The agriculture sector employed approximately 5.6 million people in Turkey, constituting 25.2% of total employment.

Self-sufficient in food production since the 1980s, Turkey maintains its position as the world's largest producer of hazelnut, cherry, fig, apricot, quince, and pomegranate, and is a top competitor in a number of other products. In 2010 Turkey's exports of agro-industrial commodities were valued at $12.7 billion, making it the largest exporter of agriculture products in the Middle East and North Africa region.

AGRICULTURAL POLICY

Over the last decade the country's agricultural policy has been shaped to a large degree by a World Bank-initiated project called the Agricultural Reform Implementation Project (ARIP). Part of an IMF/World Bank program of structural adjustment following the domestic financial crisis in 2001, the project came to an end in 2009. Now in a position of economic strength, Turkey is designing its own post-ARIP agriculture policy. The new areas of focus in the post-ARIP age include rural development, regulatory issues in the field of environmental sustainability, innovation and technology, and international trade.

Current policy is shaped by the government's “Agricultural Policy Paper 2006-10" and “Strategic Plan 2010-14", which are intended to bring Turkey's agricultural policies into line with those of the EU. The current Agriculture Law includes direct income support, a rural development program, and a range of investment support activities, many of which are aimed at mechanization and commercialization. The current Agriculture Law includes a rural development program, and a range of investment support activities, many of which are aimed at mechanization and commercialization.

Current agricultural support instruments include basin-based difference payments, land-based support, compensatory payments, livestock support, agriculture insurance support, and agricultural loans at low interest rates. Funds are also allocated to selected credit supports, research and development, and rural development.

For 2011 the forecast budget is TL6.5 billion in subsidies. According to the OECD, its producer subsidy estimate (PSE) is 27%, coming in higher than the US with 13%, and lower than the EU with 37%.

CROP SECTOR

Turkey's fresh fruit and vegetable exports dropped by 1.22 million tons in 2010 compared to 2009. Despite this decrease, revenues increased from $811 million to $936.5 million, a sign that the brand value of Turkey's agriculture is on the rise.

Turkey dominates world markets in the production and export of hazelnuts, sultanas, dried apricots, and dried figs. Turkey ranks at the top in world fresh fruit and vegetable production with hazelnut, cherry, black cherry, apricot; it ranks second with fig, pistachio, chestnut, cucumber, leek, muskmelon, and watermelon. It ranks third with oil, apple, walnut, green bean, and onion production. Its climate and vast tracts of arable land are also particularly suitable for grapes, olives, sour cherries, and strawberries, as well as vegetables such as tomatoes, potatoes, leeks, peppers, and onions.

In the fresh fruit segment, grape exports rank at the top with 455,000 tons and an export value of $630 million. Grape exports are followed by lemon, orange, hazelnut, apple, cherry, and mandarin.

In the fresh vegetable segment, tomato exports rank at the top, with export revenues reaching $477 million in 2010. Tomatoes are followed by peppers, cucumbers, and zucchinis. Markets in Russia, the EU, and the Middle East are the biggest importers of Turkish tomato products.

Cereal crops are also a major component of Turkey's arable crop sector, and production in 2010 topped 32.7 million tons.

LIVESTOCK & POULTRY

In addition to crop production, livestock products—including meat, milk, wool, and eggs—contribute to more than one-third of the value of agricultural output. Turkish consumption of meat per head is about one-fifth of the EU average, while it is higher than the EU for lamb. Consumption of dairy milk and eggs are at half the EU level and three-fourths the EU level, respectively.

Traditionally, Turkey maintains a highly protected market for animal products, including import restrictions. In 2010, however, following years of virtually no official beef imports, the Ministry of Agriculture allowed the importation of carcass beef in response to diminishing cattle supplies and high red meat prices. The decision to allow red meat imports—essentially through the reduction of customs tax from 225% to 30%—was originally designed as a temporary measure. In May 2011, however, the customs tax was redefined at 60%.

In the two months between the time tariffs were lifted in October 2010 to the end of the year, Turkey imported around 49,000 tons of beef. Poland and Germany accounted for 76% of total imports.

The domestic milk and dairy industry, on the other hand, is strong. Cheese, in particular, holds a special place in Turkish cuisine as well as importance in foreign trade. Turkey is one of the largest producers of milk and dairy products in the region, and its rich variety of cheeses has made it a preferred supplier further afield.

In parallel with global trends favoring lower cholesterol meat, the domestic consumption of poultry has been steadily rising in Turkey and is expected to gain demand in international markets. In 2008, 80,000 tons of poultry products were exported valued at $85.6 million.

FISHERIES

Located between four seas, Turkey boasts 8,333 kilometers of coastline, making fisheries a potentially important sub-segment. Currently, however, fisheries represent only 0.3% of GDP and 2.7% of the agriculture sector. Turkey's most significant species is the anchovy, more popularly known as the hamsi. Production of anchovy hit 205,000 tons in 2010, with 115,000 tons consumed domestically. This was followed in volume by pilchard, sprat, Atlantic bonito, shad, and grey mullet. Carp is the largest inland water product.

While marine capture was down 6% in 2010, aquaculture increased 4.3% following a general rise in fish farming over the last decade. The most significant farmed species were trout, sea bass, and sea brim.

In 2009, aquaculture accounted for 24% of production in fisheries, but over 52% of the value. Because of its high value-added and low environmental impact relative to capture fishing, aquaculture has become a strategic growth area for the Ministry of Agriculture. In 2008, new mariculture zones entered into force as part of the overall coastal zone plans and management.

Turkey currently has approximately 1,900 fish farms. However, its long coastline and abundant inland waterways represent significant investment opportunities for aquaculture production.

ARABLE LAND

With food costs at their highest point since the Food and Agriculture Organization (FAO) began tracking them 20 years ago, agriculture is attracting more and more foreign investment. According to the UN, 30 million hectares of arable land worldwide has been purchased or rented by foreign capital in the last three years. This bodes well for Turkey, which has 24.3 million hectares of agricultural land but only 16.2 million hectares in use.

THE GAP PROJECT

The Southeastern Anatolia Project (GAP) is a regional initiative begun by the Turkish government in 1991 and scheduled for completion in 2013. Covering nine provinces in the basins of the Euphrates and Tigris rivers, its aim is to eliminate regional development disparities by focusing on economic, ecological, and socio-cultural sustainability. The total cost of the project is $42.1 billion according to 2010 prices, making it one of the largest development projects ever implemented by a singe nation.

Through the construction of 22 dams and 19 hydro power plants, the project has irrigated 1.82 million hectares of land, dramatically increasing the irrigable area of the region. Around 90% of this irrigated area is dedicated to cotton production, which has transformed the region's traditional subsistence crops into an exportable cash crop and allowed Turkey to reach near-record levels of cotton production.