Turkey’s livestock sector grapples with escalating feed costs, dwindling cattle inventories, and rising beef prices, despite quadrupled cattle imports in 2023. External challenges, including disease outbreaks and natural calamities, further strain this crucial industry.
The recent USDA report on Turkey’s livestock sector, crafted by Agricultural Expert Sinem Duyum from the U.S. Embassy in Ankara, unveils a complex web of challenges and opportunities. For the fourth consecutive year, Turkey’s cattle inventory is poised for contraction, reaching 15.6 million head in 2024. While the decline has driven beef prices up - a kilogram of ground beef soaring to 300 TL ($11.35/kg) in August 2023 - the underlying reasons, including skyrocketing feed costs and devaluing currency, delve deeper. Furthermore, local experts have estimated that while annual forage production stands at 60 million tons, the demand is closer to 72 million tons, further emphasizing the challenging production environment. Significantly, the count of large animal businesses has seen a decline. By June 2023, the number of cattle farms had reduced by 10% compared to the previous year, suggesting an industry under transformation and perhaps more consolidations in 2024. Surprisingly, despite these challenges, cattle imports in 2023 have quadrupled from the previous year, signifying potential market stabilization attempts. Government interventions, such as subsidized feed and elevated milk reference prices, aim at equilibrium but deliver mixed results. Meanwhile, external calamities like foot and mouth disease outbreaks and devastating earthquakes have added to the sector’s woes, with the latter causing significant damage to farm infrastructure in the southeastern regions and resulting in the death of thousands of farm animals.
CATTLE INVENTORY AND THE EVOLVING MARKET LANDSCAPE
The recent USDA report highlights a significant trend in Turkey’s livestock sector: the continuous contraction of cattle inventories. Given the added challenges faced by producers, especially the smaller ones, it’s no surprise that many are leaving the industry due to the challenging market conditions. With 2024 forecasted to be the fourth consecutive year of reduction, this trend raises concerns about sustainability and food security. By 2024, cattle numbers are expected to decrease to 15.6 million head, a year-to-year drop of 500,000. This decrease is attributed to farmers choosing to liquidate their herds, driven primarily by the escalating disparity between production costs and the farmgate price for milk. The sharp decline in cattle numbers by 4% in 2023 to 16.2 million head showcases the immediate ramifications of this economic squeeze on the farming community.
One noteworthy aspect of this development is its effect on retail prices. As the USDA report elaborates, the dip in cattle inventories has led to soaring prices for meat and milk. Turkey’s government has made attempts to counterbalance the escalating beef prices, such as authorizing feeder cattle imports in 2023. However, these interventions have had limited success, with beef prices still increasing to the detriment of the average consumer.
THE FEED CHALLENGE: SPIRALING COSTS AND PRODUCTION CONSTRAINTS
The cornerstone of Turkey’s livestock concerns is the surging production costs, primarily driven by feed, which constitutes approximately 80% of total farm expenditures. The USDA data reveals a shocking trend: the price of animal feed more than doubled within a year. This dramatic rise can be attributed to two main factors: the depreciating Turkish Lira against the U.S. dollar and Turkey’s reliance on imported feed. With half of the 27 million metric tons of compound feed produced in Turkey in 2022 being from imported ingredients, it is clear how external economic pressures are deeply influencing the sector.
The challenge extends beyond just compound feeds. The USDA report also mentions that the forage production in Turkey faces its own set of challenges. Despite the obvious demand-supply gap, attempts to expand forage production are thwarted by competition with food crops, dry weather conditions, and poor pastureland management.
Turkey’s government has been active in trying to stabilize the livestock sector, but its efforts often yield limited results. A prime example, as highlighted by the USDA, is the government’s intervention in feed pricing through the Turkish Grain Board (TMO), a government-affiliated entity. Although the provision of subsidized feed ingredients, especially imported barley, is commendable, feedback from the livestock sector indicates that these prices, though discounted, remain challenging for consistent profit margins.
Similarly, while the National Milk Council’s decision to raise the raw milk reference price by 35% in July 2023 was a positive step, farmers argue it’s still not enough to cover the costs, with the production cost of one liter of milk at 12 TL.
LOOKING AHEAD: CHALLENGES AND OPPORTUNITIES
The USDA report points towards a cautious optimism for the future, with cattle imports in 2024 forecasted to remain steady, compensating for the shrinking domestic cattle numbers. The increased demand for U.S. dairy cattle suggests an underlying trust in quality, and with modifications in Turkey’s strict import requirements, this could herald a new chapter in Turkey-US livestock trade relations.
However, the challenges cannot be overlooked. From the sporadic outbreaks of foot and mouth disease to devastating earthquakes in the southeastern regions, external factors continue to threaten Turkey’s livestock sector. With poor livestock health conditions leading to significant annual losses, improving cattle health becomes paramount.
In conclusion, the USDA’s insights into Turkey’s livestock sector present a mixed bag of challenges and opportunities. As Turkey grapples with internal economic challenges and external market pressures, decisive actions and reforms, combined with international collaborations, will determine the trajectory of its livestock industry.