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FOOD & AGRICULTURE

A few points on food exportation

Necdet Buzbaş Chairman of Food Sector Employers’ Union

Necdet Buzbaş-Chairman of Food Sector Employers’ Union

We set some goals for year 2023, the 100th anniversary of the declaration of Turkish Republic. Such as being one of 10 biggest economies in the world, 2 trillion dollars GDP and 25 thousand dollars GDP per capita.

Within these goals, Turkey targets reaching its exportation up to 500 billion dollars and determined a strategy of having 1,5 percent of total exportation being made in the world.

Reaching foreign markets and competing on a level playing field have great importance in terms of achieving the vision of this strategy.

Taking the advantage of geographical environment, rich endemic flora and various microclimate conditions, Turkey has a strong potential for agriculture. In spite of ranking number 1 through Europe and number 7 through the world, the country is still far from fulfilling this potential.

Code 5996 on Veterinarian Services, Herbs’ Health, Food and Feeds describes the term “food” as following: “All products or substances processed, partially processed or unprocessed that is eaten, drunken or expected to be eaten or drunken by human beings.” Henceforth in this article, we are not going to separate the terms and use the phrase “food and agriculture.” Maybe it would be more limpid to distinguish processed food products (the food industry) and unprocessed food products (the agriculture).

Turkey achieved barely to increase the exportation of its processed food industry products as well as fruits, vegetables, hard shelled fruits which are traditional exports of the country. The sector shows an outlook of successfully supplying service and products to world markets with a shoreless corporate network support like many other sectors. Agricultural exportation increased 5,5 times worldwide in last 25 years where in same period, exportation of food products increased 7 times. This indicates a massive incline from unprocessed products to processed ones, the only way that producers should consider in terms of value-adding.

Food industry processes the raw herbal, livestock and sea products material and converts them to packaged, shelf stable and ready to use products.

Processed food exportation is highly preferred for the advantages such as protecting the product from staling, shipping long distances and high level of added-value. Herbal products has 86 percent of share in Turkey’s processed food exportation where livestock products has 10 percent and sea products has 4 percent.

Turkey exports substantially consumer goods and share of processed food is increasing. 74 percent of total added-value created by exportation origins domestically and 26 percent international. The country keeps its seat as a clear exporter with the dynamic and venturous feature of food industry. Even so, considering 10 billion dollars of export sufficient means ignoring the future potential.

Turkey’s leading export destination country is Iraq. With 19 product lines, this country has a share of 17 percent. Second biggest destination is Germany followed by three CAC countries (Georgia, Azerbaijan and Turkmenistan), Russia, Italy, Saudi Arabia and Iran.

The competition is rough and the profitability is low in international food and agriculture markets. Turkey’s job is even harder as its main export destinations are geopolitically risky countries. Turkey needs to sustain the quality of its products and increase brands’ reputations as the product groups of the countries in the region resemble.

Turkey indigenized an export-driven model of development after 1980. Today, all companies are in awareness of the importance of exportation. A few billion dollars of exportation used to made by a thousand firms in 80’s; now 65 thousand companies reached a total of 150 billion dollars. Despite being a high cost / low profit operation, exportation is an inbound way for foreign currency and ignitor for new investments.

We witness the food exporters announce their problems from time to time. Some of such problems are manageable, some are excluding them. Some are structural, some are cyclical…

Lack of raw material of good quality in world standards, high shipping costs, tax costs and instabilities in currency, lack of finance and insufficient incentives can be counted as structural problems where uncertainty in world markets, unfair competition, non-tariff barriers, marketing conditions are listed as cyclical problems.

Custom tariffs have a huge effect on today’s international trade system; however the non-tariff barriers are the main cause for problems on competition conditions. Such barriers can be listed as technical regulations and standards, precautions for health and herbal health, importation licenses, quantitative restrictions, precautions for anti-dumping, anti-subsidy and protection and also non-transparent custom operations. These barriers prevent Turkish exporters to increase their shares in current markets and also to find new markets. Government takes the main responsibility in defeating these obstacles and also exporters should take up the challenges in implementing the befitting regulations and standards to protect human life, herbal and animal health.

Iran’s demand on GMP (Good Manufacturing Practices) licenses from Turkish companies is a relevant example for that.

It’s intolerable for Turkish companies that are assertive on globalizing to have difficulties to obtain GMP licenses.

Turkey’s exportation of food products steer on a production and consumer oriented way. Yet, the chain effect is reversing in transforming food sector and consumer preferences designate the quality and quantity of the production. Geographical indication that we gain for our traditional and organic food products that we feed in our clean soil will partially help us defeating such obstacles.

Resources

Obstacles in Accessing to Market, Turkish Ministry of Economy, 2015

Agriculture Report, Turkish Exporters’ Assembly, 2016

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