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Plant production lags behind animal production

19 March 20247 min reading

In an exclusive interview with Feed Planet, M. Ülkü Karakuş, President of TÜRKİYEMBİR, provided insightful assessments regarding the feed sector’s development over the past 20 years and the existing challenges. Karakuş extended an invitation to all stakeholders of the feed sector to attend the 15th International Feed Congress and Exhibition (TUYEM), organized in celebration of TÜRKİYEMBİR’s 50th anniversary.

M. Ülkü Karakuş
President of TÜRKİYEMBİR

Röportaj: Cemalettin Kanaş

The Turkish Feed Manufacturers’ Association (TÜRKİYEMBİR), dedicated to advancing the feed industry since its establishment in 1974, celebrates its half-century milestone this year. Serving as a vital link between agriculture and animal husbandry, the feed sector marks its 50th year as TÜRKİYEMBİR convenes all industry stakeholders. The 15th TUYEM International Feed Congress and Exhibition is slated to take place in Antalya from April 18th to 21st, 2024.

Ahead of the traditional TUYEM event, M. Ülkü Karakuş, President of TÜRKİYEMBİR, offered significant insights in an exclusive interview with Feed Planet. Karakuş highlighted the growing demand for animal products in Turkey due to evolving economic conditions, leading to an expansion in feed production. Emphasizing that “plant production lags behind animal production,” Karakuş recalled that as a consequence, a substantial portion of the raw materials for compound feed production, which has surged by approximately 400% in the last two decades, is sourced through imports. Providing statistics, Karakuş indicated that around 45% of the 27.9 million tons of compound feed produced in 2023 were imported. He further underscored how exchange rate fluctuations, soaring inflation, and escalating financing costs have escalated expenses for the feed industry, posing a hindrance for industrialists in pursuing new investments.

Addressing the issue of customs duties imposed to safeguard local producers against imported goods, TÜRKİYEMBİR President Karakuş recommends a thorough evaluation of market conditions during the decision-making process to prevent panic. Additionally, he highlights the impact of the absence of customs duties on oil imports, affecting domestic production and resulting in an indirect increase in meal prices.

Here are the responses provided by M. Ülkü Karakuş, President of TÜRKİYEMBİR, the spokesperson of the Turkish feed sector:

Could you discuss the effects of the inflationary environment, the increase in exchange rates and interest rates, and the rise in commodity prices on the feed sector?

The compound feed industry, positioned between crop and animal production, is primarily influenced by the market dynamics of cereals, oilseeds, and their by-products, as well as shifts in demand for animal products.

he inability of our crop production to match the pace of animal production, a considerable portion of the raw materials used in compound feed production are sourced through imports. Consequently, the feed sector is directly impacted by foreign market prices and fluctuations in exchange rates.

Furthermore, the surge in energy, transportation, labor, and other operational expenses, along with the escalation in financing costs due to high inflation and increasing interest rates, amplify the economic burden on feed manufacturers, leading to reluctance in making new investments.

The uptick in domestic prices resulting from high inflation contributes to a decline in demand for animal products, consequently reducing the demand for compound feed as well. This, in turn, leads to stagnation within the sector.

COMPOUND FEED PRODUCTION SURGES BY 400% OVER THE PAST TWO DECADES

What can you tell us about the import-export balance in the feed industry? In order to assess the trend in this regard, do you believe the sector is heading in the right direction?

Almost all of the compound feed produced in our country is consumed domestically. While our country is self-sufficient in terms of compound feed production, the same cannot be said for certain feed raw materials. We are obligated to import raw materials used in compound feed, especially oilseeds and meal, some cereals, and by-products. Approximately 45% of the 27.9 million tons of compound feed produced in 2023 was sourced through imports.

The rise in demand for animal food due to evolving economic conditions has consequently boosted the demand for compound feed. However, our plant production has failed to match this surge. Over the past 20 years, while our cereal production has seen a 25% increase and oilseed production surged by around 90%, compound feed production has skyrocketed by approximately 400%. Consequently, the import of vital raw materials, which cannot be adequately produced domestically, has become more of a necessity than a choice for our sector.

FOREIGN DEPENDENCE IN THE ADDITIVES MARKET LIKELY TO PERSIST

While there is some potential to increase the production of raw materials used in the feed sector through the implementation of policies aimed at boosting plant production by the government, it does not appear feasible to entirely eliminate the import of these products under current conditions.

MARKET CONDITIONS MUST BE CONSIDERED WHEN IMPOSING TARIFFS ON INGREDIENTS

What are your thoughts on the periodic customs duties imposed on the import of feed ingredients?

As customs duties are raised during the harvest season as one of the measures to safeguard local producers, it’s crucial to assess the situation in the domestic market. Imposing customs duties without this evaluation sparks a sense of panic in the market and leads to an upward movement in raw material prices.

For instance, last year in April, the decision to raise customs duties to 130% in order to protect our farmers triggered concerns of a rapid surge in grain prices. Despite both TMO (Turkish Grain Board) and the private sector holding ample grain stocks at the time, not releasing sufficient products into the market resulted in a temporary spike in grain prices.  

The elimination of customs duties on crude oil to reduce domestic oil prices results in a decrease in the capacity of oilseed crushers. This, in turn, leads to a reduction in domestic meal supply and an increase in meal prices.

RESOLVING FOREIGN DEPENDENCY IN ADDITIVES HINGES ON BIOSAFETY LEGISLATION

One of the critical aspects in feed production is additives. What are your thoughts on the level of import dependency in this sector? What can both the public and private sectors do to address this issue?

While feed additives are utilized in small quantities in feeds, they are predominantly crucial for animal nutrition. Approximately 90-95% of the raw materials used in these products are imported. To diminish reliance on imports in the supply of feed additives, which entail high investment costs, there is a necessity to bolster public incentives and research and development efforts. Moreover, addressing the obstacles stemming from Biosafety legislation for products employing biotechnological methods in the production process is imperative.

NOW WE CAN COMPETE WITH THE WORLD IN ANIMAL PRODUCT PRICES

What can you tell us about the current status of the competition between domestic raw material prices and global markets?

In previous periods, there were significant differences between domestic and foreign raw material prices. However, in recent years, it is noticeable that the costs of raw materials and animal products have been approaching each other in both developed and developing countries. This development has rendered the prices of animal products such as meat, milk, and eggs produced in Turkey competitive with global prices. It is essential to view competitive prices as an opportunity for enhancing exports and to incentivize export activities.

WE INVITE ALL OUR STAKEHOLDERS TO ANTALYA FOR TUYEM

In the 50th year of TÜRKİYEMBİR, the International Feed Congress and Exhibition (TUYEM) is convening for the 15th time. What would you tell us about the program?

The Turkish Feed Industrialists’ Association has been dedicated to advancing the feed industry and improving animal production in Turkey since 1974, always prioritizing the public interest. As we proudly celebrate our 50th anniversary this year, we are thrilled to announce the 15th TUYEM International Feed Congress and Exhibition, taking place at the Kaya Palazzo Golf Resort Hotel in Antalya from April 18th to 21st, 2024. Serving as the “meeting point of the feed industry,” TUYEM 15 will gather compound feed producers and all stakeholders from both domestic and international spheres. Together with esteemed speakers, we will delve into discussions on the current state and future directions of our industry.

We extend our invitation to all stakeholders in the feed industry, along with their families, to join us at TUYEM 15 as we celebrate our fiftieth proud year. For registration procedures and other details about our congress, please visit www.tuyem.com.

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