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“We put off our goals for the feed industry to the next year”

13 January 20229 min reading

We gained an admirable seat in the market for wheat bran. In addition, we shine out in the domestic corn trade, too. However, we have not achieved the level we desire in the oilseed and feed raw materials market yet. We postponed our goals to the next year due to the price increases in this period and the volatility of the related sectors.

Hasan Hacıhaliloğlu 
CEO
Taban Gıda

Wheat, for which the whole world has kept its eyes peeled particularly after the pandemic, is almost rattling the economies. The product, of which price increases rapidly due to drought and governments' panic buying, is one of the factors that enhances the global food inflation. The future of wheat, which is the raw material of bread, pasta, biscuits, and other bakery products, is one of the most curious subjects. We discussed the state of wheat with Hasan Hacıhaliloğlu, the CEO of Taban Gıda, the leader of the Turkish wheat supply market with a 20% market share.

We listened to the future targets of Taban Gıda, the shining star of the industry which was established in 2016 and managed to rank in the top 200 companies of Turkey, and his recommendations for solving the current problems in the market.

The answers of Mr. Hacıhaliloğlu, CEO of Taban Gıda, which plans to become an important link in the chain with its investment plans in wheat production and supply, are as follows:

Mr. Hacıhaliloğlu, first of all, thank you very much for taking your time for this interview. Can you give us information about the activities of Taban Gıda, one of the leading wheat supply companies in Turkey?

We supply grain, particularly wheat, feed ingredients, and oilseeds, from many markets of the world. Since 2016, we have been growing in the right markets with the right product, right price policy, and service quality. We carry out demand- and need-oriented transit trade to many countries of the world with many product groups. We are the private sector leader in the imported wheat supply market with a market share of 20 percent in Turkey, and we are among the top 200 in the "500 Largest Companies of Turkey" rankings.

Could you express your thoughts on the increased raw material prices due to the pandemic and exchange rates? How do you tackle these prices?

As in the rest of the world, agricultural commodity prices in Turkey are at the highest levels of recent years. Besides, the depreciation of the Turkish lira causes the sector stakeholders in our country to be even more affected by this situation. TMO is taking various steps to prevent further increases in the prices of bread, pasta, and feed. The most important of the measures it has taken is the raw material sales, which it offers to the market at almost half the market prices. However, various commitments stipulated by the institution causes confusion in the market. For example, TMO's demand for a very low-priced sales commitment for the entire factory capacity instead of asking for the amount that can be produced with the tonnage it supports has caused many manufacturers to not be able to use this support. This situation caused a further increase in the sales prices of raw materials in the market. Such low-priced raw material sales intimidate farmers who intend to plant and this causes a decrease in planting amounts. Instead of selling low-priced raw materials, it would be much more beneficial in every respect to support the end products offered by the producers to the market under strict controls.


We try to make our sales in cash to the extent possible. In this way, we are minimally affected by the exchange rate. Because as the exchange rate increases, the domestic market prices also increase.

WHEAT PRICES WILL SOON EXCEED 400 DOLLARS 

Wheat exporting countries have imposed bans, restrictions and additional taxes. Taking into consideration also the loss of yield caused by the drought, more wheat imports loom on the horizon. All these cause price hikes. How further do you think prices will increase?

At the Global Grain conference held in Geneva, Switzerland, we saw that international sector representatives shared these concerns. As a general view, it seems that the increase in agricultural commodity prices, especially wheat, will continue in the coming days. The quota to be imposed by Russia, the world's largest wheat exporter, by the start of the New Year, seems to support the price increases. We estimate that wheat prices will exceed 400 USD/metric ton within a short period.

TMO'S LOW PRICE WHEAT SALES REPULSE FARMERS FROM PRODUCTION

What are the precautions to be taken for the grain industry, which is experiencing a challenging process?

Exchange rate fluctuations and price increases in global commodities left the sector in a tight spot. Weekly, even daily, price increases make the lives of the private sector players very difficult. Although there are many companies that can handle these fluctuations in the sector, there will be others who cannot maintain their commercial activities for sure. In particular, suppressing bread prices makes life difficult for bakers. In addition, the low-price sales made by TMO in an attempt to keep prices of some raw material under a certain level make the farmers drawback from these products for the next seed-time. The confidence that will enable the farmers to plant these crops must be given to them in some way or another. I hope that the sector's problems can be resolved by taking more long-term and planned steps as soon as possible. It should not be forgotten that the solution lies in self-sufficiency. All support and planning studies that will ensure the sufficient production of such strategic product groups must be put into practice as soon as possible. 

Sustainable agriculture and combating climate change are quite important topics. Could you share with us your company's perspective on this matter?

Drought causes substantial losses all over the world. As a sector, we must first strive for sustainable agriculture and climate change. At Taban Gıda, we are always ready to do our part in all studies and projects in an attempt to support agriculture and farmers.


In addition to wheat, Taban Gıda is also active in the oilseed and feed market. How is this part going?

We gained an admirable seat in the market for wheat bran. In addition, we shine out in the domestic corn trade, too. However, we have not achieved the level we desire in the oilseed and feed raw materials market yet. We postponed our goals to the next year due to the price increases in this period and the volatility of the related sectors. 

PREPARATIONS FOR A 1000 TON/DAY FLOUR FACTORY

Can you tell us about your short- and long-term investment goals?

With production and logistics investments that will bolster the supply chain in the forthcoming 3 years, we aim to increase our market share in the product group that includes a variety of feed ingredients such as soybean and sunflower meal, barley, corn, wheat bran, in addition to wheat. We started feasibility studies for a flour factory investment with a capacity of 1000 tons/day in Turkey or abroad. We are currently renting high storage capacities in many ports of Turkey. We aim to establish our own silos with a storage capacity of up to 100 thousand tons in 2 years.

You are a company that trades with many countries of the world. Many industries are having difficult times due to high energy costs and the broken supply chain. As a company, you entered the freight market with 3 dry cargo vessels purchased by your umbrella company, Vivalon AG. What would you like to say about the purpose of this investment and your target there?

We added 3 dry cargo vessels to our fleet with a total investment of 25 million dollars provided by our umbrella company, Vivalon AG. We made these investments in order to have a say in the transit trade market, which is crucial to take transportation costs under control. We plan to control the freight market as an expense item, turn it into an income item instead and balance the trade. Even in case the freight markets change course, we have the luxury of tolerating this situation as we have our own loads due to our field of activity. We aim to reach our strategy of increasing our volume at shorter notice. 

Could you give information about the countries you do business with?

I can roughly list them as Germany, Argentina, Brazil, Bulgaria, Georgia, India, Iraq, Israel, Italy, Kazakhstan, Latvia, Lithuania, Lebanon, Mexico, Egypt, Poland, Russia, Romania, and Ukraine. 

WE MUSTN'T LOSE FLOUR AND  PASTA EXPORT MARKETS

As a company, you have a great contribution to the flour and pasta export of Turkey. Can you give us information about the effects of Climate Change and the Global Pandemic on the sector?

Turkey ranks first in the world in flour export and second in pasta export. This means a large industry and sector. We, as Taban Gıda, support almost all middle and higher scale producers by supplying them with wheat. We can say that we supply products for export. Wheat policies have to be managed correctly in order not to lose this power and to develop and support exports. For sustainable agriculture, substantial projects must be made all over the world and emergency action plans must be brought into action. It is said that the global temperature will increase by 1.5 degrees. For this reason, drought-tolerant smart seeds must be produced. The global pandemic mostly causes changes in consumption habits and extraordinary trade volumes due to different problems (such as sea and land transportation). From time to time, this situation puts the sector players in a difficult situation.