Interview / Cemalettin KANAŞ

A professional business life of more than 35 years in feed and animal production and 25 years of Presidency of the Turkish Feed Industrialists’ Association (TÜRKİYEMBİR)... In connection with this, TOBB Turkey Agriculture Assembly Presidency and ATO Animal Production Committee Membership... A zootechnician and businessman... I am talking about Ülkü Karakuş, whom national and sectoral broadcasting and publications are honored to host when it comes to feed and raw materials. In the first interview of 2023, we had the chance to talk to Mr. Karakuş about the past, present, and future of the feed industry. TÜRKİYEMBİR President Ülkü Karakuş states that the prices are quite competitive in the Turkish feed sector thanks to its multi-actor structure and says that the cessation of the increase in feed prices with the stagnation of raw material prices proves this. He states that the accusation that the industrialist, who continues production with self-sacrifice, raises prices unjustly is sorrowful. Saying that there is information pollution on GMO products, as in many other issues, Karakuş states that “approved transgenic products” do not have any negative effects on human and animal health. The veteran businessman criticizes the Biosafety Law in force noting that the current legislation causes congestion in the supply chain.

“Due to the fact that the number of approved varieties is very low in our country compared to the world and the EU, flaws and problems arise when importing these products and using them in feed. Legal proceedings are initiated against our highly respected feed producers due to unintentionally found varieties in the products they import. This situation burns out our industrialists. In order to overcome the problems experienced in this regard, the Biosafety Law has to be harmonized with the EU legislation,” TURKEYMBİR President underlined.

In our conversation with Mr. Ülkü Karakuş, we talked about systemic issues such as the history of the compound feed industry, the current situation in feed additive production, raw material supply, biosafety legislation, animal product exports, and raw materials, as well as current issues such as the Russia-Ukraine war/grain corridor, inflation, feed-raw material prices, and VAT rates. The answers given by TÜRKİYEMBİR President Ülkü Karakuş to our questions are as follows:

The industry and the press know you as an industrialist and the president of TURKEYMBİR who follows the developments moment to moment. Can we get to know you better?

I am a zootechnist and business person who has been working professionally in feed and animal production for more than thirty-five years. In addition to compound feed production, I am also a producer that contributes to animal production with poultry and cattle breeding. I also engage in raw material trade

So far, I have been involved in various tasks in many NGOs, and I have been involved in studies on agriculture, feed, and animal production within civil society. I have been serving as the President of the Board of the Turkish Feed Industrialists’ Association since 1998. On the other hand, I continue to strive for the benefit of the agricultural sector as the President of TOBB Türkiye Agriculture Assembly and a member of ATO Animal Production Committee.

WE SERVE AS A BRIDGE BETWEEN PLANT AND ANIMAL PRODUCTION

The pandemic, the Ukraine-Russia war, and inflation, which came on top of the chronic problems of the feed industry, bring prices to the agenda more frequently. Under these conditions, the significance of TÜRKİYEMBİR, which is the voice of the Turkish feed industry, is increasing. Could you give information about the structure, activities, and benefits of TÜRKİYEMBİR to its members, the sector, and the country’s economy?

Our Association, which was established in 1974 after the adoption of the first feed law, continues its activities as the sole representative of the compound feed industry in Türkiye to address the problems of our industry and to carry our feed industry further. TÜRKİYEMBİR guides the compound feed companies and members professionally, socially, technically, and economically, and helps the production to continue in an efficient and effective manner in accordance with the public interest.

The compound feed sector is a bridge that processes the products taken from plant production and offers it to the use of animal production. The compound feed sector uses most of the cereals produced in our country, such as corn and barley, and our producers transform these feeds into animal products such as meat, chicken, fish, eggs, and milk. In addition, the feed sector indirectly finances our producers engaged in animal production with forward sales. Therefore, any problem that may occur in the compound feed sector affects the entire agricultural value chain and the country’s economy. Turkish Feed Manufacturers’ Association takes the necessary steps to resolve the problems quickly by conveying the problems related to our sector to the relevant parties, thus aims to reduce economic losses. 

For this reason, these activities of our Association to ensure the sustainability of the feed sector make an important contribution to the continuity of the plant and animal production chain and to the development of the agricultural economy. Our Association has also played a critical role in resolving the problems reflected in our industry due to the pandemic and the Ukraine-Russia war. 

What would you like to say about the past, present, and future of the Turkish feed industry on the verge of the 100th anniversary of the Republic of Türkiye? What needs to be done to solve the structure of the sector and its chronic problems?

A feed factory was established as a private enterprise for the first time in our country in 1955 but could not survive for long. Turkish compound feed industry developed with the establishment of Yem Sanayii Türk A.Ş., a state enterprise, in 1956. And once the sector reached a certain level, Yem Sanayi Türk A.Ş. sold its factories through privatization and completely withdrew from the feed industry. Since then, our feed industry has continued to develop with the increase in animal production over time, the increase in awareness about animal nutrition, and the devoted efforts of the private sector.

Although more manpower was used in the first factories established for compound feed production, today feed factories are mostly operated with automation systems using state-of-the-art machinery. Thanks to the increasing orientation to machine power, the available capacity is increasing. Currently, there is a production capacity of 40 million tons of compound feed in double shifts in our country and approximately 65% of this capacity is used. Today, it is estimated that approximately 25 thousand people are employed in approximately 600 factories producing compound feed in our country.

93% of compound feed costs consist of raw material costs, and therefore, one of the primary problems of our industry is the difficulties experienced in the supply of feed raw materials. With the development of animal production over time, our plant production has become unable to meet the raw material needs of our feed industry, which continues to grow. For this reason, in order to meet the increasing raw material demand of our feed industry, raw materials such as soybean, some grains, bran, and meal must be imported. Approximately 12 million tons of 27 million tons of compound feed produced by our industry are necessarily supplied from imported raw materials. For this reason, raw material prices are also significantly affected by foreign prices and exchange rates. In order to increase crop production, first of all, it is necessary to solve our structural problems in agriculture and to implement the basin-based production model and land consolidation activities effectively. 

THE VAT BURDEN ON FEED RAW MATERIALS MUST BE REDUCED

Another problem we face in the sector is that our plant and animal product producers, who are both suppliers and customers of the feed industry, withdraw from the agricultural sector because they cannot profit from their work. The sufficient and regular income of people living in rural areas and engaged in agriculture will ensure the survival of the agricultural sector, which is one of the foundations of the economy.

The problems arising from biosafety legislation are still frequently on the agenda and cause disruptions and even congestion in our supply chain from time to time. In order to overcome our problems in this regard, at least the products approved for food purposes in the EU need to be permitted for feed purposes in Türkiye.

While the VAT rate is applied as 1% for most raw materials used in compound feeds, it is still 18% for starch residues, DDGS, and crude soybean oil. Reducing the VAT rate to 1% in the aforementioned feed raw materials will reduce the VAT burden of our industry and thus our costs.

What are your thoughts on Türkiye’s dependence on imported feed additives? What needs to be done about this matter?

In our country, we are dependent on imported feed additives important for use in feeds such as enzymes, vitamins, amino acids, antioxidants, flavorings, toxin binders, and preservatives except for some minerals. Premixes and amino acids are among the most imported feed additives.

WE ARE OPEN TO DEVELOPMENT IN FEED ADDITIVES

Although feed additives are used in small amounts in feed rations, they still significantly affect feed costs due to their high prices. Therefore, studies to produce them domestically at an affordable cost are very valuable to reduce feed costs.

We can say that the production of feed additives has not developed much in our country due to both the high investment cost and the use of biotechnological methods in the production phase.

Although studies on the domestic production of some enzymes used in the food and feed industries have been carried out by TAGEM in recent years, these studies are still at the initial stage. Support for such studies is welcomed by our industry.

During the pandemic, access to food went beyond being a price issue and the issue of food safety came to the fore. The ongoing war between the two breadbasket countries furthered these concerns. How do you interpret the reflections of the political developments of the world and the Black Sea, particularly the Ukraine-Russia war, on the global and national agenda?

Russia and Ukraine are two important countries that have a critical role in the world grain trade. These countries mean even more to us because they are our close neighbors with whom we trade very often. Ukraine and Russia meet 55% of the world sunflower seed trade, 32% of the wheat trade, 27% of the barley trade, and 20% of the corn trade. Therefore, they are in a very critical position in the world food supply. 87% of wheat, 80% of corn, and 82% of barley imported by our country are supplied from Russia and Ukraine.

TÜRKİYE’S STRATEGIC SIGNIFICANCE INCREASED

The disruption in the supply of raw materials from this region caused panic in many regions, particularly in Europe, and this situation brought along the rise in prices. Türkiye’s outstanding efforts to secure a safe grain corridor for the evacuation of grains in Ukraine relieved the markets and these efforts were welcomed globally. Our country has become an important center in terms of raw material supply and logistics in this process where supply routes are depressed. The tension between Europe and Russia has increased the significance of our country in international politics, and subsequently, negotiations were held for the establishment of an energy center in Turkey. In a period when the strategic significance of our country is increasing, it will be to the benefit of our country to take smart steps.

THERE IS MISINFORMATION ABOUT GMOs

One of the issues on which the industry has a consensus is that we are faced with a more conscious consumer group than in the past. In this context, is there any concern about GMO products used in feed production? What would you like to say about this?

The digital transformation and the development of technologies that we have been experiencing in recent years contribute to the increase of awareness of individuals on health and food safety. In contrast with the many advantages of digital transformation, one of the disadvantages is that it causes misinformation to spread rapidly without controlling its source. As in all matters related to food safety, some consumers are sensitive to the use of transgenic products. In addition, some people, who do not have expertise in this subject yet want to benefit from the interest shown in the subject, try to create an untrue perception about biotechnological products.

BIOSAFETY LAW MUST BE COMPATIBLE WITH THE EU

Transgenic products are produced by 18 million farmers across 29 countries around the world. These products are offered to users as a result of long scientific studies, after evaluating the risks to human and animal health and the environment. Approved transgenic products, which have been used as feed and food for more than 30 years all over the world, have not had negative effects on human and animal health.

Global production and trade of transgenic products are becoming more and more widespread. Approximately two-thirds of the feed raw materials that we have to import are transgenic, and almost all of the soybeans and more than half of the corn globally traded are transgenic. In our country, the import of products that are likely to be transgenic is around 650 thousand tons per month. Therefore, there is a high probability that these products will be found unintentionally in the raw materials that we have to import. Due to the fact that the number of approved varieties is very low in our country compared to the world and the EU, flaws and problems arise when importing these products and using them in feed. Legal proceedings are initiated against our highly respected feed producers due to unintentionally found varieties in the products they import. This situation burns out our industrialists.

In order to overcome the problems experienced in this regard, the Biosafety Law has to be harmonized with the EU legislation.

ALL OUR STAKEHOLDERS ARE INVITED TO TUYEM 14

You announced that the 14th edition of TUYEM (International Feed Congress and Feed Exhibition) which has been held every two years since 1992, will be held in Cyprus. Examining the program, I saw that many agendas such as climate change, animal protein deficit, developments in feed technologies, and current economic debates will be discussed. What would you like to say about the event?

TUYEM has become a unique meeting point for the feed industry, where feed industry stakeholders have come together with interest since 1992. We will hold TUYEM 14, which we had to postpone due to the pandemic, at Limak Cyprus Deluxe Hotel in TRNC this time on 27-30 April 2023.

On the 100th anniversary of our Republic, we will come together with our industry stakeholders to evaluate the development of our industry and share our views to carry our feed industry forward. In addition, we will discuss the advantages of the recent developments that increase the strategic importance of our country at TUYEM 14 with the slogan “CENTER TÜRKİYE”.

We invite all our industry stakeholders to TUYEM 14 and expect their participation and support in this outstanding event.

THE SECTOR IS HIGHLY COMPETITIVE, PRICES DON’T INCREASE UNJUSTLY 

Lastly, do you have anything you would like to add?

Extraordinary situations such as the pandemic, economic crisis, and the Russia-Ukraine war in the last few years have affected our country as well as the whole world. The disruptions experienced in the supply chain as a result of these extraordinary developments and the increases in raw material prices in both foreign and domestic markets were also reflected in the raw materials, the basic inputs of the feed industry. Even under all these difficult conditions, our industry continues its production with its devoted efforts, but the unfair accusation that the industrialist, who continues production with self-sacrifice, raises prices unjustly is sorrowful. Due to the intense competition environment in our sector, feed producers do not increase their prices as long as they can find feed raw materials, which constitute a significant part of feed costs, at affordable prices. As a matter of fact, since there has been no change in raw material prices in the last 3-4 months, it is seen that there is no increase in feed prices as well. 

EXPORT PROHIBITION DEPRIVES US OF FOREIGN MARKETS

Our country has now become able to compete with the world in terms of animal product trade, and this should be seen as an opportunity to increase our exports. Prohibiting the export of animal products will cause us to lose our export markets, which were obtained after much effort on our part. Therefore, supporting the export of animal products will be in the interest of our country.

Although official figures for feed production have not been announced yet, we estimate that production will decrease in 2022 due to the decrease in demand. We guess that the reason for this is both the decrease in purchasing power and the fact that the people dealing with animal production stopped production due to the inability to make sufficient income. For the continuity of plant and animal production, it is vital to encourage life and production in the countryside by developing policies that put the producer at the center.