A thermal injection: Greenhouse expansion to boost agricultural investment

A drive to restructure Turkey’s agricultural sector includes ambitious plans to expand fruit and vegetable production and is set to open the door for foreign investors looking to meet demand back home. Buoyed by favourable geographic conditions and abundant rainfall, Turkey’s agricultural sector contributed $62bn to the economy in 2012, after growing steadily over the previous three years on the back of government investment in irrigation and infrastructure projects.

Bridging The Gap

The South-eastern Anatolian Project (Güneydoğu Anadolu Projesi, GAP), a regional sustainable development scheme, has played a major role in strengthening Turkey’s agricultural industry by providing infrastructure, planning and education for farmers. Since it was first set up in 1987, GAP has expanded into a TL42bn (€23.7bn) initiative that offers training to farmers in contemporary irrigation and cultivation techniques, while providing them with modern tools and equipment. The scheme has helped push up agricultural exports from $1.7bn in 2002 to $5bn in 2010, excluding processed food, according to data from Invest in Turkey. Foreign direct investment (FDI) in the agriculture sector has also risen over the years, reaching $2.1bn in the first 10 months of 2012, up from $14m in 2002, according to Agriculture Minister Mehdi Eker.

The south-eastern city of Şanlıurfa has benefitted significantly from GAP by using the scheme’s land consolidation projects and irrigation systems to transform itself into a hub for greenhouse fruit and vegetable production. With demand for produce in Europe rising, many EU states are eyeing the region’s investment potential. A total of 54,216 ha have been allocated to greenhouse production in Turkey, which ranks fourth for fresh vegetable cultivation in the world. The country is 11th on the global list for fruit production.

Verdant Springs

Turkey took steps to boost greenhouse production in 2000 by drilling 54 geothermal wells in the south-east. Today, geothermal greenhouses in Şanlıurfa hold a 24.5 MW capacity in an area of 106,000 sq metres. However, with Europe constantly looking to increase its imports of hydroponic produce, demand is outstripping supply. To boost capacity, Turkey plans to drill new geothermal wells in Şanlıurfa in 2013, which should provide investment opportunities for up to 1500 new greenhouses. According to Müslüm Yanmaz, president of the GAP Greenhouse Association, “In the past two years, investors from Holland, Dubai and Kuwait have put in offers to invest in greenhouse fruit and vegetable production, but we have not had the geothermal capacity to embark on such ventures.” Concerns have also been raised that mechanisation could result in job losses. Some 6.2m people work in Turkish agricultural fields, which are spread over 24m ha of land, according to the Ministry of Agriculture. Demir Sarman, CEO of Anadolu ETAP, a food processing and fruit cultivation company, told OBG that while innovation could reduce the need for manual labour, this does not necessarily mean that workers would be left jobless.

“The introduction of new technologies in the agricultural business has indeed led to a certain amount of labour dislocation,” Sarman said. “Yet, while farms in Turkey are using fewer employees, food and beverage manufacturing plants have increased their personnel. Higher productivity in agribusiness, through use of technology and educated manpower, has also helped Turkish producers lower their costs, strengthening Turkey’s competitiveness in international markets.”

On The Farm

The Ministry of Agriculture is spearheading plans to support small and medium-sized enterprises (SMEs) in the sector. The European Bank for Reconstruction and Development, supported by funds from the US, has launched a €400m facility to increase lending to small farms, while Turkey’s DenizBank signed a €40m credit line to offer loans to farmers.

The government has two goals for the sector: raising agriculture’s contribution to GDP to $150bn and increasing exports to $40bn. These are among the objectives to be met by 2023 when the republic celebrates it centennial, and will help make Turkey one of the world’s top five agricultural producing nations.