July 08, 2016
The interview - Ismail Kemaloğlu
This is your second term as the General Manager of the Turkish Grain Board, have you seen many changes in the industry since you were last in charge?
Turkish grain production, which was 28.8 million tons in 2008, has increased regularly since, and reached 38.7 million tons in 2015. Our total export product (wheat flour, pasta, bulgur wheat, semolina and biscuits) increased from 1.7 million tons to 4.1 million tons in line with the increase in production. Our finished product export destinations include more than 100 countries - mainly Iraq, Middle East and North African Countries. I observed that it has been a consolidation period in the sector; diversification in the product range, development in bakery products by different concepts such as pitta bread, pastry, lahvash rather than bread, the significant growth in the livestock sector.
Founded in 1938, initially the Turkish Grain Board was formed to deal with wheat affairs, ie. to prevent abnormal decreases or increases in wheat prices, and to protect and regulate the wheat industry. Nearly 80 years on, what are the current challenges faced by the Turkish Grain Board, and what are your present aims and objectives?
TMO is a regulatory institution. First, farmers need to sell their products at a reasonable price for the sustainability of production, and for that reason their basic needs also need to be resolved with the harvest. Two basic needs; storage and financing. The issue, which forced TMO for many years, is that the storage infrastructure of the market couldn’t come to the desired point. For this reason, dissemination of licensed warehousing is intended.
Among other things, the mandate of the Turkish Grain Board in 1938 was “to establish milling facilities and bakeries in locations to be determined”. Did this occur and how did that requirement lead to the milling industry Turkey has today?
TMO contributed to the development of the sector by establishing a bread production facility and flour-mill within the institution, as well as by participating in private sector investments to lead the flour and bread sector in our country. TMO withdrew from these activities in time.
Also, another key mandate was to organise and manage grain storage. How has this impacted the development of grain storage in Turkey and the overall development of the Turkish milling industry?
TMO led the grain sector with its accumulation of knowledge, experience and modern storage capacity of 4.5 million tons. The developing private sector has started building its own grain silos to meet raw material needs and reduce external dependence for that. On the other hand, TMO leads the sector for licensed warehousing which will provide many benefits for producers, traders and industrialists.
Within this scope, “TMO-TOBB Agricultural Products Licensed Warehousing Joint Stock Company”, which was established by the partnership of TMO and TOBB (Turkish Union of Chambers and Commodity Exchanges), started its activities in 2010. TMO carries out its activities with the sector in order to enhance and promote licensed warehousing.
Turkey is a major importer of wheat and other cereals and a major exporter of flour and milled products. How has this come about and what is the future development for the industry in this area of activity?
Turkey is not a net importer of wheat for domestic market needs. Turkey imports for the export of finished products. On average, our country’s wheat production has been 21 million tons and wheat domestic consumption has been 20 million tons in the past 5 years. Therefore, our wheat production usually offsets domestic consumption but we import wheat in order to supply raw materials for the exportation of finished products. The degree of sufficiency for maize in our country is about 85 percent. The sector’s need for raw materials has increased along with the developing industry and ever-growing finished product exportation. Industrialists have gained important markets in the international market. This momentum will continue to increase.
Turkey has a long-term goal of becoming a member of the European Union. Is the grain industry, its production, procurement and processing industries, operating within existing European policies or are there some areas, such as support and subsidies for instance, that have to be further aligned?
TMO prepared Grain and Paddy Rice Implementing Regulations in the scope of harmonisation with the European Union (EU) legislation and these regulations came into force in the 2009/10 purchasing period. As of this date, we have carried out purchasing activities in compliance with the EU standards. The progress reports that were prepared by EU Commission stated that the TMO’s regulations for EU harmonisation were seen as progress by Common Market organisations.
What do you think is next for the Turkish Grain Industry, where do you see it progressing?
Our grain industry has a high potential for development when the fact of its closeness both to the raw material sources and finished product importing countries is taken into consideration. For instance, the mixed feed sector, which is a bridge between plant and animal production, has increased 169 percent in the past 10 years and reached 20 million tons (2 percent of global production). Besides, our market diversity has increased in the recent years (such as wheat exports to 120 countries and pasta exports to 145 countries). We foresee an increase in our exports to countries other than Middle East and North African Countries with favorable conditions.