New pastures: A varied climate and fertile soil make the country a regional breadbasket

Grain has a long history in Turkey. In the foothills of the Karacada ğ Mountains in the south-east, wild grass that is genetically identical to the first grains domesticated 11,000 years ago still grows. Today, agriculture remains a cornerstone of the economy, employing a quarter of the workforce and contributing more than 8% to GDP, according to the Turkish Statistical Institute (TurkStat).

Those numbers show a decline from a decade ago, when farming accounted for 10% of GDP and employed more than a third of workers. Still, it remains a giant in the region, thanks to a favourable and varied climate as well as rich soil structure. Roughly 40% of land is arable, making Turkey a key producer for a variety of crops. It is the world’s number one in hazelnuts, figs, apricots and cherries, and is second for lentils, honey and peppers, according to the General Directorate of Agricultural Production and Development (TÜGEM). It also ranks in the top five for walnuts, olives, chickpeas, tomatoes and aubergines. Other key products include grains, oil seeds, cut flowers, poultry, milk and dairy, fish, cotton and tobacco. Overall, crops account for just over two-thirds of agricultural production, livestock makes up about a quarter, and fisheries and forest products contribute 7%. The OECD estimates that Turkey is the world’s seventh-biggest agricultural producer.

GRAIN: Turkey is the king of wheat in the Middle East, producing nearly half of all that is grown in the region. Worldwide, Turkey is the 10th-biggest wheat producer, and the 2011 harvest saw a near-record yield of almost 19m tonnes. Still, the country is alternately a wheat importer and exporter, depending on the size of the harvest, and despite the 2011 record, it still had to import an estimated 1.3m tonnes, mainly from Russia, to cover demand, driving wheat prices to their highest yet. In early 2012 the Turkish Grain Board (TMO) reversed course and issued a tender to sell 200,000 tonnes of wheat and barley to foreign firms to clear out old stocks. Demand from flour mills helps drive consumption. Turkey is one of the world’s top wheat-flour exporters and sold more than 1.8m tonnes abroad in 2010, a five-fold increase in 10 years. The record prices are also in large part due to more wheat being used for animal feed. Corn output in 2011 was estimated to be 3.6m tonnes, according to the US Department of Agriculture (USDA). With inadequate corn stocks, poultry producers are using wheat as feed. Corn supplies are also affected by a 130% tariff on imports.

GM STANCE: Tough regulations banning the import of genetically modified organisms (GMOs), passed in 2010, have created an additional barrier to sourcing corn from abroad. Concerns about the risks to public health posed by GMOs, corporate control of the food supply and harm to biodiversity helped usher in legislation that includes fines and a prison sentence of up to five years for those convicted of growing or importing GMOs. “Turkey uses EU regulations as a basic reference for its own GMO rules, but in some ways it is ahead of the EU, including its ban on planting GMO products and jail terms for violators,” Tarık Nejat Dinç, who heads Greenpeace’s agriculture campaign in Turkey, told OBG.

However, rising food prices are undermining inflation targets and could sway politicians to ease GMO curbs, activists have said. The US, which plants the world’s biggest share of GM crops, has lobbied the government and food producers to allow GM corn imports. In December 2011 the Official Gazette reported that the Biosafety Council had already approved 13 varieties of GM corn for animal feed and three kinds of GM soy. It appears to be a slippery slope: in February 2012, it began considering lifting the ban on nine more kinds of GM feed corn, and applications for another 40 GMO products, including some for human consumption, are pending. “Turkey is moving in the wrong direction by making GMO imports easier,” Dinç said.

Proponents of looser regulations argue that GMOs will boost yields and lower prices, making Turkish products more competitive abroad and affordable at home.

REFORMS: Turkish agricultural policy is often dynamic, though some would call it ad hoc. Restructuring began in the 1980s, including privatisation and the elimination of trade barriers, which helped make Turkey the Middle East’s biggest exporter. Agricultural exports, including processed foods, more than tripled from 2002 to 2010, reaching $13bn, about 11% of the total, according to the minister of agriculture, Mehdi Eker.

Among the stated objectives of Turkey’s agricultural policy are to maintain food security and safety, raise productivity, enhance competition and improve self-sufficiency, boost farm incomes and develop rural areas, and align laws with EU standards. The government offered financially unsustainable price supports until 2001, when World Bank-backed reforms brought about more market-oriented policies, although Turkey still offers subsidies for fertilisers and fuel, invests in infrastructure and imposes some trade barriers against imports. Moreover, the TMO also intervenes in the grain and nut markets to buy up surpluses. Since 2000, it has purchased almost 18m tonnes of wheat alone.

The Agriculture Law passed in 2006 sought to harmonise farm policy with that of the EU, including tackling environmental concerns. But negotiations with the EU on agriculture, fisheries and six other chapters of the acquis communautaire were suspended in 2006 over the country’s refusal to allow Greek Cypriot ships and planes to use Turkish harbours and airports.

Even if talks were resumed, Turkey would struggle to meet EU benchmarks before discussions on the farming chapter could commence. The biggest obstacle is aligning the supports with the Common Agriculture Policy. The government’s 2012 budget allocates TL7.2bn (€3.06bn) in support payments to farmers, part of TL11bn (€4.68bn) in funding for agriculture, according to Eker. The government wants to boost production to $150bn by 2023, which would make it one of the world’s top five producers and raise exports fourfold to $40bn, Eker said, but did not elaborate on how.

TOP CROPS: Recent harvests have been a mixed bag for Turkish crops. Among key products, hazelnuts and other tree nuts had a “devastating” year in 2011 because of poor weather conditions, with output of hazelnuts, grown largely in the Black Sea region, plunging to 400,000 tonnes, according to the USDA. On the other hand, the hot weather helped cotton reach 650,000 tonnes in 2011. Consumption is still twice that, thanks to the world’s fourth-biggest ready-to-wear manufacturing sector. Better irrigation and high cotton prices worldwide have promoted an expanded cotton crop area in Turkey, now estimated at 480,000 ha. Sunflower oilseed production in 2011 rose to 925,000 tonnes, as the impact of a drought in Thrace, the main sunflower region, was offset by planting in other parts of Turkey.

About a third of Turkey’s fresh food exports are citrus, and the main destinations are Russia, Ukraine, Iraq and Iran, according to the Agricultural Food Platform in Mersin, a major citrus-growing region. “In the past few years production of most citrus varieties has been increasing slowly but steadily. 2010 was a good year... and 2011 is predicted to be a good year as well,” a December 2011 USDA report said. Oranges account for a little less than half of citrus production and reached an estimated 1.73m tonnes in 2011. Tangerines and lemons each make up 23% of this, or 874,000 tonnes and 850,000 tonnes, respectively. Grapefruit output came in at 240,000 tonnes in 2011, the USDA said.

FOOD PRICES: Even as farmers plant more land and technology gains support productivity levels, food prices are rising fast, up 11.2% in February 2012 alone, the biggest increase among the basket of goods used to measure inflation, TurkStat said. Turkey has some of the world’s costliest meat, which has slashed per capita consumption to about a third of that in the EU. High fuel and feed prices are partly to blame, but the main culprit is poor breeding, Sinan Öğün, the coordinator of the Middle East Sustainable Livestock Production, Biotechnology and Agro-Ecology Research and Development Centre at Zirve University in Gaziantep, told OBG. “Turkey has primarily relied on the by-product of the dairy industry to produce meat. It can be seen in dozens of efficient meat-producing countries around the world that suitable beef and lamb breeds have to be used if you are to yield meat productively,” Öğün said. “When other countries with similar conditions can produce meat for under $2 per kg and Turkey struggles to keep itself afloat at $4, there is something very wrong.”

LIVESTOCK: Some 11.4m head of cattle and almost 30m sheep and goats constituted the nation’s herds in 2010, according to TurkStat. Even as production of meat dropped 12% in 1991-2009, Turkey kept its curbs on imported live dairy and beef cattle, sheep, goats and poultry, as well as their meat, citing sanitary reasons. Then, as prices skyrocketed in 2010, it allowed limited imports of red meat by slashing tariffs from 145% to as low as 30%. The Ministry of Agriculture (MoA) reports 2.5m animals were imported in 2010 and 2011 at an estimated cost of $1.77bn. This harmed local producers, with some of the biggest domestic breeders abandoning beef production. As tariffs were again raised incrementally in 2011, consumers began to pay dearly for meat once more, suggesting that temporary measures may not resolve Turkey’s livestock problem. It also threatens new ones: Customs officials have made hundreds of busts at Turkey’s borders with Iraq, Syria, Bulgaria and Georgia. Local media reported that in 2010 alone, illegal seizures more than tripled.

FRAGMENTED: More commercial farms are springing up, particularly in the Aegean and Mediterranean coastal areas, but most farms are still typically family-owned. Due to inheritance laws, the sector is heavily fragmented: more than 90% of farm households have a maximum 20 ha of land, and nearly two-thirds of all farms are smaller than 5 ha, according to the OECD. The average farm size is 5.7 ha, compared with 17 ha in Europe and more than 100 ha in the US. Limited budgets make it difficult for family-run farms to afford the technology that will make agriculture more productive. However, fragmentation has also allowed for one of Europe’s fastest-growing organic sectors. This has been supported by state incentives, including sharply reduced interest rates on agricultural loans to organic farmers. Some 383,000 ha were managed organically in 2011, a seven-fold increase since 2003, the MoA said. That is about 1.6% of all farmed lands. Total output of 216 types of organic products rose 4% to 331,362 tonnes in 2010, according to TÜGEM. Most are exported.

FOREIGN INTEREST: Foreign interest in Turkey’s agricultural sector is growing. The Investment Support and Promotion Agency estimated that Gulf funds could spend up to $9bn in Turkey, most of that on food and agriculture. Many Gulf states are dependent on food imports, and Turkey can supply their grains, pulses, oil seeds, fruits, vegetables, poultry and dairy, as well as fish and honey. Figures from Saudi lender National Commercial Bank show that Turkey exported $144m worth of agriculture products to Saudi Arabia in 2009. Qatar and the UAE also plan to invest heavily in the country to produce food for back home (see analysis). Large international and domestic companies are looking for land in the South-eastern Anatolian Project (GAP) region to establish facilities, especially for livestock breeding, Mushin Gümüş, an official with the Turkish Agricultural Credit Cooperatives, told local press in April 2011. GAP is a TL42bn (€17.85bn) development scheme that includes irrigation and hydropower projects and investment in infrastructure, education and health. As for small and medium-sized farms, the European Bank for Reconstruction and Development (EBRD), backed by assistance funds from the US, launched a €400m facility to bolster lending in November 2011. A month later DenizBank, the country’s largest non-state agriculture lender, signed a €40m credit line with the EBRD to offer local farmers loans of up to €2m.

WATER, WATER: The OECD says Turkey’s overall water quality is high, although pollution from fertilisers is a problem in some irrigated areas. Development has gathered speed under the 2008 GAP action plan, which aims to put another 1.06m ha of land under irrigation, eventually constituting 20% of the irrigable total. Turkey consumed just 41% of its water potential in 2008, but rapid urbanisation, climate change, hydroelectric projects and more agricultural output could push that to 100% in 10 years, according to the State Hydraulics Works. As agriculture consumes two-thirds of water resources, it must begin to do so more efficiently.

FISHERIES: With around 8000 km of coastline and numerous rivers and lakes, both marine and freshwater fisheries abound. One out of four sea bass and bream consumed in Europe is Turkish, according to the Turkish Exporters’ Assembly. The sector targets exports of $3bn by 2023 from $500m today. Total fish production was 653,000 tonnes in 2010, according to the MoA, of which 167,000 came from aquaculture. Commercial fishing from wildlife fisheries still accounts for 75% of output. Turkey has 16,000 fishing boats, 600 dragnets and 750 trawlers, the Istanbul Chamber of Commerce said. The government wants to make Turkish fisheries the biggest in Europe by 2023. Depletion of fish stocks in a growing problem, however. Even the boats selling fish sandwiches on Istanbul’s Golden Horn use Norwegian mackerel after overfishing decimated Black Sea stocks, according to local media reports.

“We want projects that don’t demolish fishing habitats, but build new ones,” Eker said in 2011. “We are exploring ways to help fish spawn and to enhance the presence of marine fishery.” The Istanbul Fish Producers’ Association says marine pollution is the greatest threat to the city’s fishermen. Other factors include warmer water temperatures that have forced migration of bonito and other fish before the annual fishing ban is lifted in September 2012. The trade group also wants the minimum legal length that was introduced to protect young lüfer, the Bosphorus Strait’s iconic but threatened indigenous bluefish, lowered to 18 cm from 20 cm. The Turkish Marine Research and Foundation, which runs a campaign to end the sale of bluefish under 24 cm, wants fishermen more strictly controlled and new protection zones established in the Sea of Marmara. Newspapers reported that illegal trawlers in Istanbul have jumped by 600% to 300 vessels in recent years.

OUTLOOK: Turkey’s suitable climate and proximity to Europe and the Middle East make it a target for agricultural investment. The government’s investments in infrastructure and the potential for consolidation of small-scale farms also make it attractive. However, there is concern that Turkey not sell the whole farm, with sector players suggesting a foreign-investment review board that could ensure majority stakeholders are Turkish, as well as provide oversight and policy coherence. Despite reforms over the last two decades, efficiency and productivity remain low compared to the rest of the economy. The OECD recommends an end to trade- and production-distorting measures, while continued research and development will also be essential.