Public regulatory and supervisory role must increase, its intervention in trade must be reduced

27 January 202010 min reading

“Turkey moved to a free market economy in 1983. It's been 36 years. The public has been withdrawn from many places through privatization and continues to do so. However, while it is aimed to reduce the power of the Turkish Grain Board, which I consider as important as the Central Bank, in the market, we observe that the exact opposite happens. The number of items TMO purchases was 3 before and now it has reached 13. Our friends who set out with the idea of regulating the market are unwittingly entering the system.”

Ülkü Karakuş President of Turkish Feed Industrialists Association

Ülkü Karakuş, President of Turkish Feed Industrialists Association (TÜRKİYEM-BİR) expressed the expectations of the feed industry for the year 2020. President Ülkü Karakuş, who participated in the broadcast of Kanal 5 days before the end of 2019, recommended that people in this sector should be allowed to make money in order to stop the rural depopulation and also for bolstering the development of agriculture. He pointed out that the regulatory and supervisory role of the public sector should be increased in the coming years while its intervention in trade must be decreased. The highlights from Karakuş's speech are as follows:

As the Turkish feed sector, we are a sector that is pioneered by the state but has been fully privatized 23 years ago and sustains production through the private sector. The feed sector, which is an exemplary sector where free-market conditions completely work, has reached a turnover of 50 billion Turkish Liras with 25 million tons of production. There are more than 500 feed factories in our country. Almost all of 81 provinces have feed production. As a sector, we act as a bridge between plant production and animal production. Therefore, the feed sector, which is a quite strategic one, is at the core of all sectors.

MOST IMPORTANT PROBLEM: QUALITY ROUGHAGE DEFICIT We have been growing by around 5-10% for many years. One of the reasons for this is the increase in intensive animal husbandry in connection with migration from rural to urban areas. In this case, the amount of concentrate feed naturally increases. However, the sector, which has achieved steady growth so far, seems to barely reach last year's figures when the figures for the same period of the last year are considered. Economic fluctuations from 2018 have been effective in this.

We import 12-13 million tons out of 25 million tons of raw material for our sector. We import those products, including oilseeds and legumes, that we cannot find in Turkey or don't meet the needs. If we are to list them, they are soybeans, corn, corn derivatives, by-products, residues such as ethanol, bran, trace elements, and premixes. Only these are around 10-11 million tons. We will pay 3.5 billion dollars for the import of these products for 2019. The amount of roughage in total nutrition needs to be increased. For this, it is necessary to increase the roughage production. The biggest problem today in Turkey is roughage production deficit.

66% OF FARMERS SAY THEY CANNOT MAKE MONEY With the rural-urban migration, the amount of arable land is decreasing. In order to reverse the ongoing migration, tasks need to be simplified. I would like to express it as follows: It is necessary to allow people active in agricultural production to make money from their products and occupation. Statistics show that 66% of them cannot make money from their effort: two thirds. This is a very high figure.

To make a comparison between agriculture, industry, and services; agriculture is the sector with the highest risk and uncertainty. Uncertainty is high in terms of weather conditions, animal health, and labor force. In the second week of August this year, the dollar exceeded 7 Turkish Liras. 40 percent of our turnover is indexed to foreign exchange. We got a lot of wounds until we recovered. Compared to last year, our total cost increase reached 50 percent.

INCENTIVES TO AGRICULTURE SHOULD BE TRANSFERRED CAREFULLY Agricultural production is being supported and encouraged in Turkey as in the entire world. The amount that will be transferred to agriculture in Turkey's 2020 budget is around 22 billion Turkish Liras. The previous year, it was 16 billion. That's not a small amount. Where and how to transfer this money should be considered very well. The government distributes 16 billion dollars, but imports are still increasing. This should be rearranged. So then the incentives don't work. Incentives are given for two things: either for increasing production or employment. We have not been able to move forward in any of them. Everyone has a plan for the distribution of this money and the plans are being amended frequently in the ministry. Short-term strategic changes are inadvisable in terms of efficiency.

70 percent of the costs of animal production is feed. The question of meat is actually a matter of fodder. Who takes care of the fodder problem will also solve the meat problem. Turkey's per capita meat consumption is around 38-40 kilos per year and is on the same level as the world average. This figured needs to be increased because we meet two-thirds of our meat needs from white meat. These two should be brought closer to each other in proportion. The presence of cattle and sheep in Turkey must definitely be increased. For this, our first priority must be to put dairy cattle breeding at the top and protect our dairy animals.

OPINIONS OF MORE COMPETENT PEOPLE SHOULD BE ASKED We have the competence and know-how to produce high-quality feed. We also increase our skills as time goes on. When we look at our neighboring countries, we see that there are many important markets here. Turkey purchases wheat from Russia, Ukraine, and Kazakhstan and became the global flour export leader. We can achieve the same success in feed as well. Turkey is in the heart of the Silk Road both from East to West and from North to South. For this reason, Turkey cannot ignore agriculture. Already agriculture is spoken more and more every day.

“Feed is the essence of food” is like a proverb of our sector. Feed prices are now 50 percent higher than it was four years ago. Under the current circumstances, there is no point in insisting on selling meat at the prices of four years ago. It is necessary to realize that this will withdraw the manufacturer from production. The number of accurate people who express opinions at the table where these issues are discussed should be increased.

Turkey moved to a free market economy in 1983. It's been 36 years. The public has been withdrawn from many places through privatization and continues to do so. However, while it is aimed to reduce the power of the Turkish Grain Board, which I consider as important as the Central Bank, in the market, we observe that the exact opposite happens. The number of items TMO purchases was 3 before and now it has reached 13. Our friends who set out with the idea of regulating the market are unwittingly entering the system.

Grain Board may be right in its part. However, as investors, we need to know whether Turkey is a free market. We started this process 36 years ago and this is how Turkey has developed. But now we see that the public sector is entering into trade. On the other hand, there are successful projects as well. At the end of 6-7 years of work, the grain prices could have been brought down to a level to compete with the world market. We have achieved this as of today.

In 2019, the state cannot and should not trade meat and milk. There are two things a government has to do. The state must regulate trade, but leave doing it to us. The government should not even dream of entering into the business of supermarket chains. Agriculture cannot be managed. It is something that can be managed, yet it can only be lead.

Turkish barley and corn are far above world quality. We have to compare ourselves with feed prices in the UK, Germany, France and Spain. Our prices for compound feed are below the prices in these countries. The quality is the same.

CHINA AND THE USA WON'T ENGAGE IN A WAR Most US bonds are in China. There will never be a fight between China and the USA. The world's largest soybean producer is the American continent. These are Brazil, Argentina, the USA, and Canada. The world's largest soybean importer is China. 150 million tons of soybean production of 350 million tons is subject to trade. 100 million of this is bought by only China from the American continent.

We used the term “golden plant" for soy during our faculty years. It is very difficult to meet the protein deficit without soy. Similar results are also possible for Turkey. We import 3.2 million tons of soy. We import about 3 million tons of corn. We import 1.5 million tons of bran. Some of them are brought in the scope of DIR (inward processing regime) and exported as flour, chicken, eggs, and fish. However, as we look across Turkey, it is 85% self-sufficient in cereals. We have a larger deficit in oilseeds.

WE CAN COMPETE WITH THE GLOBAL GRAIN PRICES NOW Now giving incentives for oilseed cultivation is on the agenda in Turkey. In fact, this is the way to do such things. Our becoming able to compete with world prices in cereals is not a success that has been achieved in a day. We reached here with the long-term efforts of the Grain Board and related sectors. We are ready to compete with the world in terms of feed production in a short period of time and this is what we desire to do. We produce 25 million tons of feed. Our installed capacity is around 38 million tons.

Anatolia is the richest region in the world in terms of endemic species. We have many seeds to protect. Seed improvement efforts should be increased.

The share of agriculture in the greenhouse effect is around 10-11 percent. In this sense, the most innocent sector is agriculture. Nevertheless, we are witnessing very intense propaganda that increasing production in agriculture has a negative impact on the environment.

If we manage our existing water resources well, we can increase the irrigable land by 50 percent. This is something very strategic. With dry farming, you get 200-250 kg of product. When you irrigate it, this figure doubles. We can provide self-sufficiency with available resources. For this, we have to prevent immigration that occurs much faster than expected.

I say 2020 is not the profit year but the year of shame. I have said the same for 2019. We have to ensure that the incentives given to agriculture go to the right place. A support package for more than 100 items is announced. All of them aim to increase production. However, there are far more items than needed. In order to ensure the return on the supports, these supports should be simplified. And when it comes to agriculture, the investment should not be expected to return fast.

IMPORTING MEAT WON’T HELP The regulatory and supervisory role of the public sector should be further increased and its impact on trade should be reduced. In 2020, we say that this sector should not be forgotten as the main heading. Imported meat and butchery animals should never be considered. As long as there are such decisions, you cannot attract people who are keen on production. Such moves will not bring benefit. I also know the background of the Meat and Milk Board. In the past, such moves have been tried and all failed. The way to protect the consumer is to protect the producer. But if you harm the producers directly in order to protect the consumer, the consumer, too, will suffer. You cannot protect the consumer without protecting the producer. The role of the referee here is a quit delicate line and needs to be discussed very well.

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