Feb. 26, 2011 -
PRLog -- BMI View: Although we are forecasting a minor slowdown in Turkish economic growth in 2011, the country will still see a strong domestic demand story over the medium term. This should divert demand away from staple goods such as rice and wheat towards more luxurious items such as beef. However, rising feed and fertiliser prices, combined with inefficient production methods, mean that the Turkish livestock sector will not be able to fully capitalise on the rising demand. Although the government is taking steps to increase production through the development of large farms, only poultry production will see strong growth within the livestock complex, although the domestic beef sector should benefit somewhat by import bans on finished beef products. Key Trends: 􀂃
Sugar production growth to 2015: 1.4% to 2.5mn tonnes. Strong demand combined with the quota system in place means that there are occasional shortages of sugar and large price increases. This, along with growing awareness of healthy eating principles, will keep consumption growth restrained. 􀂃
Barley production growth to 2014/15: 30% 9.7mn tonnes. This will be driven by growth in the livestock sector, as well as the relative resilience of barley over other crops since it is far less water-
dependent and better at surviving droughts compared to wheat and corn. 􀂃
Rice consumption growth to 2014/15: 4% to 658,800 tonnes. Although per capita rise consumption growth has largely stalled over the last decade, a rising population should ensure overall consumption growth over the medium term. 􀂃
2011 Real GDP Growth: 4.2% (up from 6.9% in 2010; predicted to average 5.2% from 2010 until 2015). 􀂃
Consumer Price Inflation: 7% year-on-year in December 2010 (down from 9% y-o-y in July 2009). Industry Developments Despite wheat export bans spreading throughout the Black Sea region and Turkey's heavy exposure to Russian production problems, having been the second largest recipient of the country's wheat exports (13% of total) in 2008/09, we believe that the Turkish wheat market will be well supplied in 2009/10. High imports in previous seasons (to mitigate previous droughts), along with the country's domestic surplus in 2009/10 that should lead to high ending stocks, will help the country mitigate regional supply problems. Of the 39 sugar producing companies in Turkey, 33 are general sugar beet refineries and the other six are known as SBS (or starch based sugar) refineries. After the government decides what the final production quota in a given year will be, the quota is then divided. The quotas have been the source of problems for the country, however, as they create distortions in the market. Although there have been attempts to change the law, it is unlikely that significant changes will be made until the industry is completely privatised, which is at least a few years away. As a result of the quotas, there is often a domestic shortage of sugar in the country, which is usually filled by illegal imports. As long as the quotas remain in place, it is likely that this smuggling will continue. With food price inflation still elevated, the Turkish Ministry of Agriculture in October 2010 explored import agreements with familiar producers such as Argentina, Brazil and Australia, but also players such as Bulgaria, which Turkey had an import ban on in recent years. The rise in inflation, particularly for beef prices, is a result of smaller beef stocks and diseases, which have been prevalent on Turkish farms in the past, and also limited production growth. Despite the problems, beef production has been held up, with an increase in slaughter weights. This has been driven primarily by the development of specialist cattle ranches, mainly in the west of the country. Improved genetic stock and nutrition mean cattle from these new farms have a higher slaughter weight and produce better quality beef than cattle raised in traditional mixed farms.
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