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FOOD & AGRICULTURE

Turkey’s potential in agro-food sector and export capacity

Food and agricultural production of Turkey shows a wide diversity. The sector is crucial in terms of main economic indicators such as employment, inflation and narrowing the foreign trade deficit. Overbearing in country’s exportation, food and agriculture is the major contributor to GDP and growth

 

Around 40 percent of Turkey’s land area is arable. Turkey’s agriculture offers a large range of products such as grains, pulses, oil seeds, fruits and vegetables, cut flowers, poultry, dairy products, honey and tobacco. Apart of agriculture, fisheries and seafood production is a large sector of the economy, contributing with 26 percent to GDP. Crop production and livestock together account for 67 percent of the total agricultural production. Agriculture has an important impact on the social and economic development of Turkey since it meets the majority of the population’s food requirements domestically and prevents Turkey from being dependent on international sources. It also supplies the raw materials of other sectors dependent on agriculture.

According to the UNIDO Industrial Development Report, agriculture is of high importance in Turkey and is fragmented to a normal extent. Turkey experienced a continuation in its economic transformation from agriculture towards industry and the services sector. Currently, the main target of Turkish food and agricultural production is to harmonize the related activities and regulations with the EU acquis communitaire.

The Turkish food sector is becoming more advanced due to retailer demands for higher standards and investments by food manufactures. The liberalization of the alcoholic drinks sector since 2003, after the privatization of the former state alcohol and tobacco monopoly, has encouraged new companies to enter the market. Turkey’s packaged food industry is highly fragmented.

Being a Muslim country, Turkey also has the potential to sustain growth from the Halal food industry. According to the World Halal Forum, the global Halal food industry is expected to reach US$ 650 billion in 2010.6 Recently, organic products have become popular and expensive commodities in developed countries. Both the area of land under organic crops and the number of producers in Turkey has increased from 0.23 percent and 14,401 in 2005 to 1.58 percent and 43,096 in 2010 respectively. Organic production is highly diversified and the main products are textile crops, protein crops, and cereals.

ORGANIC PRODUCTION

Turkey is on the list of the top ten countries globally in terms of the number of organic producers (43,000 farmers compared with 400 thousand in India). It also accounts for half of all organic farmers in the EECA region.8 At the same time, Turkey is a important producer of organic export-oriented products (nearly 250 kinds of agricultural products). Another growing trend is the edible packaging material that is a product of research by Turkish Scientists and uses more flexible film compared to competing products on the market. The flexible film is made using egg white and corn protein and natural substances, and is able to kill microbes in food. The new packaging is 500 percent more flexible than those currently on the market, as claimed and will be in production three to four years from now.

FOOD AND BEVERAGES

The food and beverage industry forms a large part of Turkey’s economy, generating 4.2 percent of GDP and 12.3 percent of manufacturing output. In 2008, the food and beverage industry generated US$ 45 billion of output and US$ 7.4 billion of value added, which represents about 0.7 percent of GDP and 10.3 percent of manufacturing value added. Per capita output was US$ 634.60. The industry experienced a decline in 2001 but an increase of 54 percent in 2002. Between 2003 and 2008 the industry was growing steadily at about 16 percent annually from. While the volume of food products has increased over this period of time, the performance in terms of share of output and value added was declining until 2007, after which there was a slight increase in 2008.

In 2008, the food and beverage industry employed 288,600 people (or 11.4 percent of the entire manufacturing labor force). Employment increased during the 2001 to 2009 period, as did labor productivity. In 2009, there were 34,781 enterprises operating (or about 10.8 percent of all manufacturing enterprises), most of which were private, small or medium-scale enterprises. Between 10 and 12 percent of the food processing enterprises are relatively modern and of a large size. The capacity utilization rate is around 70 percent for the food and beverage sector.

Expenditures in R&D represented 4.03 percent of manufacturing R&D. Important subsectors include the pastry and milling industries, biscuits, processed fruit and vegetable products, sugar and confectionery, chocolate and cocoa products, vegetable oil, meat and meat products, pulses, tobacco products, tea products, non-alcoholic drinks, ready-made food and baby food. The bakery subsector forms the majority (65 percent) of food and beverage companies in Turkey.

According to the Federation of Food and Drink Industry Associations of Turkey, bottled water is the most produced drink in the Turkish beverage industry, accounting for around 50 percent of production capacity.

TRADE REGULATIONS

Turkey has a liberal trade regime. The legal basis is the Act on Regulating Foreign Trade, the Act on Customs (amended in 2009), the Decrees on Import Regime and on Export Regime (2011), the Decree on the Regime of Technical Regulations and Standardization in Foreign Trade; the Act on Free Zones (2010) and the Act on Customs Tariff Code.

A review of customs duties by products and countries is published annually. The Ministry of Customs and Trade adopted a Communiqué (which entered into force in January 2013), which sets minimum safety requirements on safety risks for a number of products. According to the new import regime, control certificates are required only for animal and animal products. Plant and plant products are no longer required to have control certificates prior to import. Imports of food products into Turkey are allowed only if they conform to Turkeys Food Codex Regulations (renewed in 2011), which have been harmonized with the European Union regulations.

Import tariff s on consumer food products range from zero to 225 percent, but most products face tariff s in the range of 40-50 percent. Tariffs can vary and often depend on whether there is a need to import or not.

Turkey has been a member of the WTO since March 1995 and is an observer to the Agreement of Government Procurement (GPA) accession with a 0.959 percent contribution to the WTO budget in 2012. The simple average of import duties for agricultural goods applied in 2011 was 41.7 percent. The latest Trade Policy review by the WTO Board was carried out in February 2012.

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