RED PEPPERS & GREEN TOMATOES

Turkey 2016 | AGRIFOOD | REVIEW: AGRICULTURE

The industry is anticipating low yields this year due to unfavorable weather over the winter period, following a similar reality in 2014.

Turkey's agriculture sector is a true behemoth, accounting for 9% of GVA and 25% of employment. Famous for its production of dried figs and apricots, hazelnuts, and raisins, the nation's farmers have a market of over 75 million at their doorstep, with consumption patterns shifting toward packaged and processed foods as incomes rise.

The country is Europe's largest agricultural producer, and seventh globally, figures that have more than caught the eye of foreign investors. In early 2014, the Abraaj investment group snapped up dairy firm Yörsan for a cool $2.8 billion.

But it's not all good news for Turkish farmers, living in a country that is particularly susceptible to the elements. On the back of a drought leading into 2014 that saw prices skyrocket at fruit and vegetable stalls, the winter period in 2015 saw floods, frost, and snowstorms deal significant damage to crops across the country, leading insiders to warn of low yields and continued woe at the weekly fruit and vegetable weigh in. Regions particularly hit include Edirne, Muğla, Bursa, and Sakarya, all in the west of the country. Not willing to abandon its farmers to the elements, the government announced that producers losing over 30% of their production will be able to freeze payments on loans from state-run Ziraat Bank, a historic lender to the sector, and the Cooperative Agricultural Bank (TTKKMB).

The bad start to 2015 was also reflected in exports, which dropped 5.2% in January compared to the same month the year before. Agricultural exports for the month were worth $1.827 billion, or 16.9% of all exports from the manufacturing industries.

CROPS

The production of cereals and other crops dropped by 6.6% over 2014, with fruit production also down 6.2%. Vegetables bucked the trend however, up 0.4% on the previous year. In terms of tonnage, 59.6 million tons of cereals and other crops were produced, followed by 28.6 million tons of vegetables and 17.1 million tons of fruit.

Breaking those figures down, we see that the production of cereals alone fell 12.7% to 32.7 million tons over 2014, while wheat production dropped by 13.8% to 19 million tons, and barley production fell 20.3% to 6.3 million tons. Rice production also fell, by 7.8%, to 830,000 tons, while maize production was up 0.8% to 6 million tons. Farmers also pumped out 450,000 tons of chickpeas, down 11.1%, 325,000 tons of red lentils, down 17.7%, and 4.2 million tons of potatoes, up 5.5%. In oil seeds, sunflower production grew by 7.5%, totaling 1.6 million tons

In vegetable terms, winners included tomatoes (production up 0.3%) and cucumbers (up 5.2%), while losers included green peppers (production down 4.2%) and onions (down 6%).

Apple production fell by 20.7% in 2014, while other drops were seen in peaches (4.6%), cherries (9.9%), and apricots (65.4%). On the flip side, the production of bananas increased by 17%, while olive production was also up by 5.5%. Mandarin production also grew by 11.1%, while hazelnut production dropped by 25% and walnuts by 14.8%. The production of grapes and figs grew, however, up 4.1% and 0.5%, respectively.

MEAT & CHICKEN

As of May 2014, there were 14.9 million heads of cattle in Turkey, as well as 32.2 million sheep and 10.2 million goats. On top of that, there were 278 million heads of poultry, including 2.9 million turkeys. But the impressive farm animal flock isn't just for show; in 3Q2014, red meat production came in at just over 200,000 tons, down 7.3% on the previous quarter and down 1.9% on the same period in 2013. Diving into the details, cattle meat production was in at 175,350 tons for the quarter, with sheep meat production in at 21,631 tons.

DAIRY

With the largest milk and dairy production in the region, Turkey has attracted the attention of foreign investors in recent months. In early 2014, Abraaj Group snapped up dairy giant Yörsan for $2.8 billion. Growing urbanization, a shift to packaged products, and a trend toward organized retail has made the sector an attractive opportunity for investors.

In milk terms, plain milk represented 64% of turnover in the segment in 2013, according to Pınar Süt's Annual Report. Light milk accounted for 2.7%, fortified children's milk 3.1%, and fortified adults' milk 0.8%. Elsewhere, sales of flavored milk amounted to 30.5 million liters and generated a turnover of around $57 million. Pasteurized milk accounted for 12.6% of market turnover, while organic milk came in at 1.2%.

Cheese is also big business in Turkey, and is worth some $520 million a year in turnover terms, with yellow cheese representing 40%, and white cheese on (35%). Approximately 80,000 tons of the good stuff is produced every year. Investors must also not discount the hefty yogurt market in Turkey, which is also worth around $500 million a year. Ayran, a salty yogurt drink, is also worth approximately $70 million a year.

FISHERIES

Turkey has a rich coastline, with inland and aquaculture products also making an impact on overall production. Fishery production by 5.8% in 2013, the overall haul weighing in at 607,515 tons. Sea fish accounted for 48.6%, other sea products 7.2%, inland water products 5.8%, and aquaculture products 38.4%. And while the fishery catch was down 13.5% in 2013, aquaculture yield grew by 9.9%. Looking deeper, 52.7% of aquaculture production took place in inland waters, and 47.3% as sea. The East Black Sea accounts for 51% of all marine products caught, followed by the West Black Sea on 21.7%, the Marmara on 12%, the Aegean on 9.4%, and the Mediterranean on 5.9%.

2023

Like many sectors, the agriculture sector has its own specific targets relating to Vision 2023, a grand program that it is hoped will put Turkey among the top 10 global economies by the centenary of the Republic. Come the big year, it is hoped Turkey will be among the top five agricultural producers globally with gross production value of $150 billion and exports topping $40 billion

While production of many categories seemed to slip over 2014, mother nature can be the only guilty party. Two years of unfavorable weather has surely taken its toll, but in no way undermined the long-term prospects of the sector. Significant foreign investments are testament to the growth conditions that economic prosperity has brought to the table, with farmers now well equipped to feed a growing population and ramp up exports.