Drought over the winter will lead to higher costs at fruit and vegetable bazaars in 2014, but Turkey's agricultural ambition remains unfazed, with a burgeoning agribusiness sector also attracting new investors over recent months.

Recent investor interest in the agribusiness sector could be a sign of things to come in Turkey's wider agriculture sector, which has traditionally been dominated by smaller holdings. The government has ambitious plans for 2023, although higher prices due to drought conditions are likely to pressure consumers over 2014.

Agriculture accounts for 10% of GDP—or $62 billion—and approximately 25% of employment. The sector is also a large exporter, with $17.7 billion in agricultural goods leaving Turkish shores for foreign markets in 2013, up from $4 billion in 2002, and dominated mainly by fruits, vegetables, and cereals. A robust agribusiness sector is also drawing attention from foreign investors, with Abraaj Group wrapping up a deal to buy 80% of dairy company Yörsan in late 2013, while meat producer Namet also received the attention of Gulf-based investors in January 2014. But there is much to be done if Turkey is to reach its potential, with the rapid urbanization of past decades having left the countryside unorganized and lacking in labor. A relaxing of foreign ownership laws, however, could be the boost Turkey's agricultural sector requires.

A shortage of rain over winter caused drought conditions in much of the country moving into 2014, affecting harvests and squeezing families at their weekly fruit and veg weigh-in. But when the rains return, things are likely to get back on track quickly in what is becoming a dynamic sector. A nascent organic sector is also emerging, hoping to capitalize on increasing domestic income and demand for Turkish specialties—including hazelnuts and apricots—in foreign markets.


The agriculture sector has increased its contribution to GDP from $23.7 billion in 2002 to $62 billion in 2013, on growth of 161%. The country has 38.43 million hectares of utilized agricultural land as of end-2013, up just a pinch from 38.40 million at end-2012. That yields exports that were worth $17.7 billion in 2013, up 343% from 2002 when the figure was a far more modest $4 billion. Total agricultural foreign trade was worth $34 billion in 2013, up from $8 billion in 2002 according to the Ministry of Food, Agriculture, and Livestock.

Growth is also evident as you dive deeper into the details. As of end-2013, there were 52.93 million head of livestock, including 14.4 million cattle, 29.28 million sheep, and 9.23 million goats. That is up on 13.9 million cattle, 27.44 million sheep, and 8.38 million goats in 2012. And the animals certainly aren't going to waste; Turkey produced 996,125 tons of meat, 18,223 tons of milk, 1.76 million tons of chicken, 94,694 tons of honey, and 54,784 tons of wool in 2013, all up on 2012. In cereals and crop products, the production of wheat was up slightly from 20.1 million tons in 2012 to 22.05 million tons in 2013, although the category will be negatively impacted in 2014 as a result of unfavorable rainfall over the winter. Turkey also produces barley, maize, sunflowers, cotton, and sugar beets, to the tune of 7.9 million, 5.9 million, 1.5 million, 2.25 million, and 16.48 million tons, respectively, in 2013. In TurkStat's fruits, beverages, and spice crops category, the country's largest production for the year occurred in grapes, with over 4 million tons produced. Next came apples, at 3.1 million tons, oranges, at 1.78 million tons, olives, at 1.67 million tons, tea, at 1.18 million tons, and hazelnuts, at 549,000 tons. According to the latest fishery statistics, released by TurkStat at end-2012, 396,322 tons of sea products were produced, along with 212,410 tons of aquaculture production and 36,120 tons of freshwater products.


Turkey's swelling domestic consumption and potential for exports to the region has seen its agribusiness industry attract foreign attention in recent years. The biggest deal of 2013 was Abraaj Group's purchase of an 80% stake in Yörsan, a local dairy giant. “We like food as an industry, and, in our view, Turkey is the food basket for the region because of its fertile and arable lands, large population, and solid export opportunities," Selçuk Yorgancıoğlu, Regional Head & Partner at Abraaj Group, told TBY when assessing the purchase. And the deals haven't stopped there, with Bahrain's Investcorp snapping up a minority stake in meat producer Namet in January 2014, adding to the list of Gulf-based private equity firms hoping to get involved in a growing industry. Turkey's expertise in the halal foods category also opens up export potential to the Middle East, as well as Europe, with Goncu Consulting estimating that annual food exports from Turkey to the two regions could reach $150 billion in five years.


Over 4Q2013, rainfall was down over 31% on average and over 40% compared to the same period in the previous year. The drought conditions also threaten to increase the country's reliance on imports over the year, while exports may also fall. One category that could be most deeply impacted is wheat, which the country produced 22.05 million tons of in 2013—indeed, the Ceyhan Chamber of Agriculture warned that up to half of the Çukurova region's expected 2 million tons of wheat harvest, around 10% of Turkey's total, could be under threat depending on weather conditions over 1Q2014. Crop failures, therefore, could result in insufficient supply for the domestic market, while exports could also be impacted—Turkey exports wheat to markets including Indonesia and the Philippines. While imports can make up for any shortage on the domestic front, a weakened lira could result in a costly year for consumers, who are still getting used to an increase in the cost of the traditional simit, the cost of which has gone up at vendors by as much as 50% due to the increasing cost of importing the sesame seeds with which they are topped. But for now, Turks will be content with better rainfall over 2014, with the water supply to larger cities also threatened as dam waters dropped, in mid-January, to 35% across the country, down by 64% at the beginning of 2013.


Despite the barriers to entry to setting up in the organic sector—it can take three to four years just to prepare the soil—a long-term investment can pay dividends, and farmers in Turkey are taking notice. “Many farmers are becoming knowledgeable on the subject with larger numbers applying for organic certification every year," said Burak Bardakçı, Founder & CEO of Bata Foods, a prominent exporter of organic products. The Ministry is also on a mission, and is currently implementing the Promotion of Organic Farming & Control project. The project is already underway on the islands of Gökçeada and Bozcaada, famous for wine, with a “view to evaluating existing natural resources in the best way in order to increase agricultural production," said Minister Eker. Handsome subsidies are also on offer, with organic agricultural subsidies having begun in 2005 and organic livestock subsidies in 2011, which later evolved into species-specific subsidies. And while progress is slow, the sector has strong growth potential. “If you look at household dairy consumption," says Mehmet Özokumuşoğlu, General Manager of Doğan Organik, “organic products represent just 0.1%, but it is expected to rise to 2% within the next five years." Özokumuşoğlu is also clear on the reason for the growth, suggesting that as “the economy is growing and people are starting to make money, they want to buy healthy and quality products; that is helping to grow the organic market." He is also full of praise for related regulations, which he likens to those in the EU, while suggesting that subsidies of up to 50% in organic farming are “good for everybody."


The ruling AK Party has made Vision 2023 a central part of its manifesto, and the agriculture sector it set for a leading role. According to the plan, the sector's contribution to GDP will reach $150 billion by 2023, up from the current $62 billion. Certified seed production will also be boosted from 647,000 tons currently to 1 million tons in 2023, while there will be an increase in pastoral land to 7.7 million decares from 4.5 million decares currently. The cultivation area for forage crops is also earmarked for a boost to 4 million hectares by 2023, up from the current 2.7 million hectares. “In fisheries," continued Minister Eker, “we aim to increase aquaculture production from 212,000 tons to 500,000 tons and provide water resources with a total of 50 million fry for sustainable production." Agricultural exports will also be ramped up in time for the big year, with a target set for $40 billion, up from the current $17.7 billion.