TURKISH AGRICULTURE SECTOR - epyas.com 1. PREAMBLE Egeli & Co., devoted itself to generating values for its investors since 2002 - its incorporation -, and being an independent and

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TURKISH AGRICULTURE SECTOR

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SEPTEMBER 2010

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SEPTEMBER 2010

2010, Egeli & Co. ©

All rights are reserved. The document and content may not be

reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior written permission of

Egeli & Co. Finansal Yatırımlar A.S.

Authors Atilla Yesilada, Murat Ucer, İbrahim Aksoy

Referee Report

Prof. Erol H. Cakmak

Contributors

Tan Egeli, Murat Cilingir, Elif Pehlivanli

Abdi Ipekci Cad. No. 40/10 Nisantasi 34367, Istanbul

Tel: +90 212 343 06 26 Fax: +90 212 343 06 27 www.egelico.com

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1. PREAMBLE............................................................................................................................................. 6

2. BIOGRAPHIES ....................................................................................................................................... 8

3. EXECUTIVE SUMMARY ......................................................................................................................... 12

A. MACRO-REVIEW .................................................................................................................................. 17

A.1. SHARE OF AGRICULTURE IN PRODUCTION: RECENT UPDATES AND TRENDS..............................................17 A.2. PRODUCTIVITY IN AGRICULTURE.........................................................................................................18 A.3. LABOR FORCE AND LAND USED FOR AGRICULTURE ................................................................................19 A.4. AGRICULTURAL MAP OF TURKEY: PRODUCTS ON REGIONAL BASIS ..........................................................21 A.5. IMPORT AND EXPORT .........................................................................................................................23

B. STRUCTURAL COMPOUNDS OF THE TURKISH AGRICULTURE ............................................................... 27

B.1. DISTRIBUTION OF LANDS ...................................................................................................................27 B.2. USE OF TECHNOLOGY, MECHANIZATION AND INFORMATION...................................................................28 B.3. ARABLE LANDS..................................................................................................................................30 B.4. INTEGRATION OF AGRICULTURAL LANDS..............................................................................................30 B.5. DRY AND IRRIGATED FARMING............................................................................................................31 B.6. LIVESTOCK AND FISHERIES ................................................................................................................32 B.7. AGRICULTURAL SUPPORT SYSTEM .......................................................................................................34

C. MAJOR PRODUCTS............................................................................................................................... 41

C.1. VEGETABLE PRODUCTION...................................................................................................................41 C.1.1. Grains and Other Vegetable Products..............................................................................................41 C.1.2. Industrial Crops ...........................................................................................................................44 C.1.3. Vegetables and Fruits ...................................................................................................................45

C.2. SMALL AND GREAT CATTLE BREEDING, POULTRY SECTORS.....................................................................47 C.3. FISHERIES........................................................................................................................................51

D. SPECIAL FILES: RELATIONS WITH FOOD INDUSTRY, GAP, EU AND WTO ............................................ 55

D.1. FOOD INDUSTRY ...............................................................................................................................55 D.1.1. General Assessment .....................................................................................................................55 D.1.2. Demand Analysis .........................................................................................................................56 D.1.3. Supply Analysis............................................................................................................................57 D.1.4. Risks ..........................................................................................................................................57 D.1.5. Business Branches in the Ascendant in Food Industry .......................................................................58

D.2. GAP (SOUTHEAST ANATOLIA PROJECT): ONE-LEG GIANT .......................................................................59 D.2.1. Benefits of GAP in Agriculture ........................................................................................................61 D.2.2. Agricultural Potential of GAP ..........................................................................................................61 D.2.3. Industrial Products in GAP .............................................................................................................62

D.3. TURKEY AND EU’S COMMON AGRICULTURAL POLICY...............................................................................63 D.3.1. Brief History ................................................................................................................................63 D.3.2. Today of CAP...............................................................................................................................64 D.3.3. Future of CAP ..............................................................................................................................66 D.3.4. Turkish Agricultural Policy and CAP: Harmonization and Conflicts ......................................................66 D.3.5. Cost Analysis, Winners and Losers..................................................................................................69

D.4. TURKEY AND WORLD TRADE ORGANIZATION ........................................................................................72 D.4.1. GATT and WTO ............................................................................................................................73 D.4.2. Political Position of Turkey before WTO ...........................................................................................73 D.4.3. Uruguay and Doha Rounds ............................................................................................................74

E. FINANCING OF AGRICULTURAL INVESTMENTS: EXPERIENCE OF TURKEY AND WORLD....................... 77

E.1. POSITION IN TURKEY .........................................................................................................................77 E.2. MICRO-CREDIT REVOLUTION IN THE WORLD ........................................................................................78 E.3. COMMODITIES FUTURES AND AGRICULTURAL REAL ESTATE INVESTMENT TRUSTS ....................................80 E.4. AGRICULTURAL INVESTMENT FUNDS: HISTORY AND FEATURES..............................................................81 E.5. CASE ANALYSIS ON AGRICULTURAL INVESTMENT FUNDS .......................................................................83

E.5.1. First Case Analysis: SEAF ..............................................................................................................83 E.5.2. Second Case Analysis: Agricultural Investment Funds in the USA .......................................................84 E.5.3. E.5.3 Third Case Analysis: Actis AAAF-owned by CDD Group plc.........................................................85

E.6. TURKEY AND AGRICULTURAL INVESTMENT FUNDS.................................................................................85

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1. PREAMBLE Egeli & Co., devoted itself to generating values for its investors since 2002 - its incorporation -, and being an independent and boutique investment and portfolio management group, offers portfolio management, investment management, risk management and investment consulting services to domestic and foreign institutional investors, family corporations and private individual portfolios by means of creative financial products, investment themes and platforms, which it has developed in the country and abroad.

Our group, still serving in the field of investment under the portfolio management, share certificates and fixed income securities, decided to focus on the themes of real property, energy, infrastructure and special case investment, particularly agriculture so as to create value in the long run for its investors and to provide continuous positive income.

Egeli & Co. Portfoy Yonetimi A.S., an affiliate of Egeli & Co. group, obtained permission for incorporation from the Capital Market Board of the Prime Ministry of the Republic of Turkey, would become the first and the only portfolio management company focused on “real asset” investments, after it obtains Portfolio Management and Investment Consulting Certificates.

Egeli &Co., made up the principle of contributing to the development in our country of the agricultural sector, of top priority among the global real asset portfolios, with its approach of “Sustainable Responsible Investments” (“SRI”) while making its investments, targets to pioneer in the studies for increase of the agricultural added value and institutionalization in the agriculture.

In this respect;

• shifting the institutional and individual investments to the agricultural sector to form a sustainable and highly competitive agricultural sector;

• development of domestic development capacity and increase of the business opportunities by agricultural activities being of crucial importance for our national economy;

• optimization of the rural environmental conditions;

• implementation of mechanisms - including risk management –, which enable effective utilization of the sources;

• training the labor force required for continuity of quality in the agriculture;

• carrying out agricultural production, effectively using the scientific approach and the technology

are the primary objectives of the group.

Our Report “Agricultural Sector in Turkey”, which we led with the aforesaid understanding and approach, is offered as a product of best efforts of our investment team as well as Istanbul analytics team consisting of Atilla Yesilada, Murat Ucer and Ibrahim Aksoy for evaluation by our business world and representatives of the sector.

Egeli & Co., starting with a vision to become a leader in all the subjects of activity, would increasingly and continuously support the studies for development of agriculture of our country and increase its share in the economy.

We kindly extend our sincere thanks to, particularly, Istanbulanalytics team; distinguished Prof. Erol Cakmak for his referee report and his valuable comments on this report; and everybody who contributed to preparation of this valuable study, which we believe to be a guide for the activities for development of our country’s agriculture and to you to give us feedbacks directing our future studies.

September 2010, Istanbul

TAN EGELİ

Chairman of the Board of Directors

Egeli & Co. Finansal Yatırımlar A.S.

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2. BIOGRAPHIES AUTHORS Atilla Yesilada Born in Istanbul in 1961. Completed his secondary education in Austrian High School. Studied economy and business

administration in Eastern Illinois University in Illinois State of the United States. Completed his master degree on

economy in Santa Barbara Campus of California University. Attended Ph.D. studies on financial economy in Rennsselear

Polytechnic Institute in New York State. Served as a research associate in Jerome Levy Economics for one year and

published its articles in various scientific periodicals.

Returned to Turkey in 1990 and started his career as research manager in Global Menkul Kiymetler A.S. Served as

research manager in Global, Eczacibasi Menkul Degerler and Ege Yatirim brokerage companies. Within this period, won

more than 20 international research awards together with his team. Served as announcer in the morning programs in

CNBC-E television channel. Yesilada, subsequently presented various programs in Haberturk and Business Channel, is

still hosting a morning program “Coffee Smell” in Cem TV.

At the same time, Atilla Yesilada is still writing economy and finance articles in the periodicals Referans, Radikal, Para

and ARENA. The author, being consultant of GlobalSource in Turkey and having its principal place of business in New

York City, serves as consultant for about 90 foreign corporate customers. Furthermore, acts as an editor for English

website www.istanbulanalytics.com and Turkish finance web site www.bilgeekonomist.com. Married with one child.

Murat Ucer Served as an economist in many international institutions such as in Institute of International Finance, Credit Suisse

and IMF and as consultant for Central Bank and Undersecretariat of Treasury in Turkey. Besides his many published

articles, he wrote a book on Turkey’s 2001 Crisis. Completed his B.A. and Ph.D. programs successively in Bosphorus

University and Boston College.

Works as an academic member in Koc University and additionally served as academic member in the past years in

Suffolk University in Boston and Bosphorus University in Istanbul.

Ucer, now working as consultant of GlobalSource in Turkey, is at the same time the founding partner of Ucer-Mizrahi

Bilgi Hizmetleri Ltd. Sti., which developed Turkey Data Monitor.

İbrahim Aksoy İbrahim Aksoy, completed his B.A. in Economy and Sociology Departments (double major) in Bosphorus University,

served as an economist in GlobalSource Turkey.

İbrahim Aksoy, carrying out studies on agriculture and energy besides macro economy and markets, has been serving

as an economist in Ata Yatırım Menkul Kıymetler A.S since July 2010.

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REFEREE REPORT

Prof. Erol Cakmak Born in Safranbolu in 1955. Completed his secondary education in Galatasaray High School and subsequently completed

his B.A Degree and master degree in the Department of Economy and Statistics in Middle East Technical University,

successively in 1979 and 1981. Completed his Ph.D degree in Stanford University.

Prof. Cakmak, still serving in the Department of Economy of Middle East Technical University, worked as Head of the

Department and Co-Head of the Department in the same university. Prof Cakmak, giving lectures of Micro Economy,

Research Methods, Mathematical Economy, Agricultural Economy and Industrial Economy, additionally gives lectures of

sector modeling and policy analysis as guest academic member in CIHEAM/IAMM (Mediterranean Countries Agricultural

Researches Institute) in France each year.

In recent years, researches of Prof. Cakmak, conducting two studies within the framework of the Frame Research

Program of EU Commission, focus on agricultural policy analysis, water policy and management, agriculture, activity,

agricultural sector and general balance models in EU and WTO.

CONTRIBUTORS Tan Egeli Received his B.A degree from Business Administration in Delaware University and master degree from Carnigie Mellon

University Tepper Business School. Egeli, started his professional career in Citibank, served in Interbank and

Bayındırbank as responsible for Capital Markets, particularly, International Capital Markets and Asset Management.

Served actively in the top management of successively Citicorp Menkul, Inter Yatırım Menkul and BSI Bayındır Menkul.

After leaving BSI Bayındır Menkul Degerler where he served as a member of the Board of Directors and Chief Executive

Officer, he incorporated Egeli Danısmanlik in 2002 and accordingly laid the foundations of Egeli & Co. Group, currently

active in the financial markets.

Egeli & Co. Group continues to grow with participation of Egeli & Co. Investment Management SA - incorporated in 2003

to offer Turkey-focused fund management services to the corporate investors resident abroad; in 2004, Egeli & Co.

Yatirim Ortakligi A.S, operating portfolio focused on Share Certificate Investments; in 2006, Varlik Yatirim Ortakligi A.S

making Bonds and Notes investments; in 2008 Simya Tarim Yatirimlari A.S; and in 2010 Egeli & Co. Portfoy Yonetimi

A.S, acting in the fields of portfolio management and investment consulting in both domestic markets and global

markets and being the first and the only “real asset” management company.

Tan Egeli currently serves as the Chairman of the Board of Directors of Egeli & Co. companies and as the Chief

Executive Officer in Egeli & Co. Portfoy Yonetimi A.S

Tan Egeli, being an active member of the Board of Directors in the Corporate Governance Association of Turkey and of

Endavour Association Consulting Committee, is at the same time a member of Istanbul Young Entrepreneurs

Association and Bugday Ecological Life Protection Association. Egeli, married with two children, is fluent in Germany and

English.

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Murat Cilingir Murat Cilingir, being a senior portfolio manager, serves as Investment Committee member of Egeli & Co. and Board of

Directors member and Chief Executive Officer in Egeli & Co. affiliates. Murat Cilingir, graduated from Electrical

Engineering Department of Istanbul Technical University and studied and completed Business Administration

Specialization Program in Istanbul University, has an advance certificate of Capital Market Board. Cilingir supervises and

directs “Real Assets” investments in the group. Based on its management experiences on infrastructure projects, he

mostly focuses on infrastructure, agriculture and energy investments.

Elif Pehlivanli Elif Pehlivanli, born in Ankara, graduated from Department of Business Administration in Bilkent University. After

completing “Strategic Management and Planning” Certificate Program jointly organized by Marmara University and

Michigan State University, she received her master degree on Business Administration in Yeditepe University. She

attended “Real Properties Valuation Specialization” Certificate Program organized by Istanbul University.

She started her career in 1994 in Deloitte Touche Tohmatsu International, an international auditing company. After

receiving Sworn Public Accountant Certificate, she worked on Strategic Planning in Bayindir Holding and subsequently

on Corporate Financing and Mergers of Companies in Bayindir Menkul. Pehlivanli, conducting her studies on marketing,

served as Strategic Planning Director in the agency and worked as manager responsible for marketing in the leading

real property companies. Pehlivanli, serving as Marketing and Business Development Director in Egeli&Co., has one

daughter.

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3. EXECUTIVE SUMMARY This study aims at offering a very comprehensive overview to the sector for the purpose of forming a reference for

searching investment opportunities in the agricultural sector in Turkey.

This study consists of four main chapters: “Macro-agriculture, structural parameters of the Turkish agriculture and

product range and special files closely related to the Turkish agriculture (such as food industry, Southeast Anatolia

Project (GAP), Relations with EU). In the last chapter of this study, after a brief outlook to the agricultural financing,

global experiences and possible role of investment funds in Turkey are discussed.

Share in nominal Gross Domestic Product (GDP) of the agricultural sector, procuring approximately 25% of the Turkey’s

employment, the GDP share, which was 8% in 2009, is currently quite lower compared to the employment rate. We

hereby witness that this reality, arisen as an apparent productivity problem, has not changed so much within the period

1998-2009.

Besides, in consistence with the general trend of urbanization, an important decrease is noticed in agricultural

employment; however, seasonal agricultural employment increased in the crisis years. However, we are of the opinion

that this is not “voluntary” but “obligatory” employment and this obligatory employment not only failed to contribute to

the productivity in agriculture but also caused more corruption in income distribution. Nevertheless, the facts that the

agricultural labor force is in the form of “unpaid family workmanship” and that the education level is very low support

our aforesaid opinion.

The share of the agricultural sector in the foreign trade of Turkey is at lower levels as well. Whereas the share of the

agricultural exportation was 4.4-4.5% in the total foreign trade as of 2009, the share of importation was 3.3% with the

volume of 4.6 billion dollars. On the other hand, when we include in this analysis food and beverages, tobacco and

tobacco products and animal and vegetable oils produced in the production industry, it becomes apparent that

particularly this second group contributed to the exportation considerably. However, upon consideration that the Brazil’s

agriculture and food export generated 72 billion dollars and Poland’s export generated about 16 billion dollars in 2008,

the question “Can’t Turkey do it better?” should be asked; and it should be stated that there might be an unrealized

important potential in this sector.

As for the arable lands, there is also a decrease in Turkey in recent years; although we did not encounter a concrete

reason for such decrease, we think that migration from rural areas to urban in the fast-growth period would have an

important role.

Even if Turkey is a rich country in respect of agricultural lands, the fragmentation of the lands into small pieces of land

ownership makes difficult to benefit from the economy of scale in particularly annual arable crops and livestock. In

Turkey, cultivated agricultural land (including long life plants such as fruit trees) of 24.5 million hectares existed in

2008. Arable lands - on which grains and vegetables, excluding long-life plants are cultivated - constitute 21.5 million

hectares of the total cultivated agricultural lands. It is observed that the number of the cultivated agricultural land

considerably recessed particularly in 2004-2008.

In Turkey, in accordance with the legal situation, 3,076,650 farms cover total land of 184.3 million decares. Average

size of the land for these farms is 59.9 decares and this size is below the average farm sizes of Europe and USA, being

successively 174 and 180 decares. However, it should be emphasized that the land sizes also visibly differ from each

other in EU. The farms, the sizes of which are below 100 decares, correspond to 85% of the total number of farms. One

of the most important problems in transition from extensive agriculture to the intensive agriculture is the ownership of

the fragmented small pieces of land.

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In order to cope with this obstacle hindering the productivity in agriculture, many legal arrangements have been made

since the establishment of the Republic of Turkey. As far as can be seen, one of the most effective factors, resulting in

fragmentation into small pieces of land, is the Heritage Act. Accordingly, upon enforcement of the draft law being

evaluated at the Prime Ministry during the preparation of our report and aiming at preventing the land division for

heritage, it becomes possible that the average size of farms increase. Another development in this respect is the

commencement of preparations for a new structuring under the title of “Agricultural Land Acquisition Office” affiliated to

the Ministry of Agriculture and Rural Affairs. This study aims at gathering the agricultural lands by acquisition, sale and

lease of the agricultural lands by the way of tender. However, it is of great importance that these attempts be handled

by an integral approach observing the other structural problems (such as acceleration of the cadaster studies,

strengthening the access by the farmer to the credit etc.)

Although use of technologies and know-how increases in number in the farms, that facts the average size of farms is

limited; that the breeders are hybridized in cattle breeding; and that the cattle races could not be protected are

considered as the factors slowing down the transition to the intensive agriculture. There are exemptions on this matter

in several sectors. For instance, the poultry sector heads the sectors, closely following up the developments and the

applicable techniques in Europe and USA.

Like the dominance of the small-size farms preventing vegetable-agricultural productivity, that the number of the cattle

and sheep is lower in the livestock farms is a factor hindering increase of the productivity. According to 2001

agricultural count; while 59.7% of the farms of cattle breeding has cattle less than 5, the rate of the farms owning

cattle less than 20 is 93.8%, being quite high.

According to the data of the Food and Agriculture Organization (FAO) of the United Nations, whereas cow milk of 3

billion dollars value has become the first in monetary value in the Turkey’s agricultural production listing as of 2007,

this is successively followed by wheat of 2.3 billion dollars value, tomato of 2 billion dollars value, grape of 1.7 billion

dollars value and cotton of 1.4 billion dollars value. Additionally, Turkey is on the top lines in the listing of numerous

agricultural products in the world.

The agricultural supports policy seems a field where the reform is apparently required. In time, an unchanged structure

and an unchanged cost are noticed; return from Direct Income Supports policy - initiated in 2001 however officially

ceased in 2009 – to the former structure is considered as “a step backwards” by the specialists, for instance by the

OECD. That the protectionism is so high to interrupt the relations with the outer world is one of the fundamental

reasons increasing the price support.

Grain production has an important role in agriculture of Turkey in terms of product range. As of 2008, 76.4% of the

cultivated agricultural land of 21,555 million, excluding long-life plants, is reserved for grains and other cultivated

vegetable products. Wheat is cultivated on 67% of the land on which grain is cultivated. Although there is higher

domestic consumption potential in oily seeds, the production is inadequate; the most cultivated plant in oily seeds is the

sun flower. Turkey has an important position relating to a great number of fruits and vegetables; however, production

corresponds only 4% of the cultivated agricultural lands. In this report, production/consumption tables on product basis

are presented.

As it is in several sectors relating to the vegetable production, the livestock sector has various problems despite its

higher potential. The most important indicator is that the number of great cattle being 10.9 million and small cattle

being 51.2 million as of 2008 generally decrease within long years. It is apparent that this problem of long term supply

problem as well as excessive protectionism lie behind the meat crisis lastly arisen. It should be emphasized that the

poultry sector constitutes an exemption within this frame and according to the specialists, the level achieved in either

egg production or chicken meat production in this sector is not below the level of the developed countries.

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Upon an analysis of demand and supply as follows and as detailed with reference some developing businesses, the

future of the food industry seems more brilliant. As far as we determined, some of the business branches, which have

higher potential for the food industry, and are even on the rise in several aspects are as follows: Domestic and foreign

franchising, exportation to Syria, Iraq and Middle East Countries, organic food production and exportation (see. Box –

Turkey’s Organic Agricultural Profile); and brandization in production and distribution of take-home and frozen gourmet

food and large-scaled processed raw (mince, small pieces of meat, etc.) and done/salted red meat.

Southeast Anatolia Project (GAP), launched in 1980s, is the greatest public investment and regional development

project of the Republic history. When evaluated GAP in respect of energy generation being its primary target, its

considerable vonstributions are apparent. Total value of the energy generated by GAP exceeded 17 billion dollars; 9

hydro-electric power plants were completed as of the end of 2008; 5% of the energy need is started to be used from

these sources. Although important progresses were made also in investments such as transportation, organized

industrial zone construction etc., the two other targets of the projects; completion of the irrigation network and

conscious agriculture/industrialization could not be achieved effectively.

It is possible to summarize the benefits, types and other advantages in case of completion of GAP according to the most

reasonable scenario as follows: Upon completion of the irrigation network even partially, increase of annual production

amount in many products; and radical change of the interregional cultivation tissue; opening new markets in the

regions already abundantly exporting the Turkish agricultural products such as Iraq, Iran and Mersin Port as well as

Middle East or procurement of increases in shares in the existing markets; transformation of traditional pastures/small

livestock farming into large-scaled commercial enterprises and accordingly notable contribution to meat and milk

production; the possibility of use of almost all the lakes for fish farms and tourism; and the majority lands’ being

appropriate for organic agriculture.

The external factor, which would mostly be effective on the trade, production and rural development in the Turkish

agriculture, would be the Common Agricultural Policy (CAP) of the EU, as we assumed in the scenario of acceptance of

our EU membership. In the report, we firstly examined brief history, structure and the future form of the CAP.

Secondly, we summarized major conflict issues between Turkish agricultural policies and CAP. Lastly, while scanning

empirically the possible share to be set aside from the CAP budget, resulting in arise of one of the most important

economic anxieties within the context of Turkey’s EU membership, we searched for losses and possible benefits of

Turkey.

As a result, the full integration of Turkey with CAP would be painful; however, it would cause changes in agriculture,

which might be considered as radical. It is possible to compete domestically for the products which we fall far behind EU

in average productivity. From this perspective, social damage of harmonization with the CAP is ambiguous and the

opportunities to arise are missed.

In the report, we also touched on the issue of the World Trade Organization-Turkey. Even though it was hard to make

our determinations based on definite findings, we should state that as long as the Turkish agriculture keeps its

fragmented and less productive structure, it seems that our country might be damaged in various degrees by any and

all agricultural liberalization agreements particularly Doha. The livestock and milk products would lose market share on

a large scale; and oily seeds and other nutritional products would lose their market share at low-to-moderate intensity;

however, the competition and export possibilities would increase in the fruits, vegetables and the products special to

Turkey (such as dried grape, hazelnut etc.).

Naturally, in a scenario where reform efforts, not considered herein, gain speed, the losses might be prevented. For

instance, in our examinations, the contribution of the increased irrigation and enhancement projects- even if they are in

a slow progress - is not involved in the contribution projections. Even if Doha is signed today, the members will try to

achieve harmonization with the new regime within at least transition periods, each of which is 5 years. Within this

period of time, the minimum contribution of GAP, which we estimated, would alleviate the possible losses. Similarly,

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reforms, training, land consolidation maintained by the Ministry of Agriculture and Rural Affairs as well as title deed-

cadaster operations run by other public organs as well as the productivity jump we supposed to arise in the Turkish

agriculture are not involved in the current study.

There seems a close relation between the lower added value procured by the agriculture and limited financing

opportunities - including foreign investment - provided to the agriculture. Though it is not correct to construe this

relation as a cause-consequence relation, we are of the opinion that the subject is somewhat parallel with the larger

macro-scaled researches establishing close statistical relation between financial development and economic growth.

From this perspective, the final chapter of our study is reserved for agricultural financing methods.

We hereby notice that the trend of financial investment in agriculture visibly increased in the long time; however, it

failed to considerably affect the volume of the agricultural production. Secondly, it is apparent that many agricultural

financing methods, rapidly multiplied in 2000’s, have not been applied in our country yet or the institutions applying

these methods have not made any investment. We introduced these new financing methods to the readers in our

report. Subsequently, we examined, by a few case analysis, contribution of these agricultural production and wealth in

the developing countries like us. Finally, we listed our suggestions for application of these methods to Turkey.

We are of the opinion that initiation and dissemination of Agricultural Investment Funds in Turkey is one of the ideal

instruments to attract both domestic and international investment in the agriculture, know-how and information

accumulation. We listed our rationales on this subject in the report. There are still many gaps (intersections), which the

State, financial system, micro-credit mechanisms and supranational institutions’ project credits could not reach.

However, it is required to eliminate several deficiencies and obstacles (particular definition of these types of funds in the

Capital Market Laws and Regulations, cadaster works still maintained and rapid completion of title deed renewal attempt

etc.) before the establishment and successful operation of the Agricultural Investment.

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A. Macro Review

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A. MACRO-REVIEW

A.1. SHARE OF AGRICULTURE IN PRODUCTION: RECENT UPDATES AND TRENDS

Share of agricultural sector, which constitutes approximately 25% of the Turkey’s employment, in nominal Gross

Domestic Product (GDP) being around 8% in 2009, remains quite lower than the employment rate.1 Under the light of

the recent GDP Data, it is noticed that the share of agricultural sector in total production did not rise up other than crisis

periods and unlike that it fell down2. Sharp falls particularly encountered in industrial sectors during crisis result in

temporary increase of the share of agriculture in total production. The share of agriculture, being 12.5% in nominal GDP

in 1998, recessed to 9.5% in 2004 and 8.2% in 2009. Rapid growth rates of the service sector and rapid increase in

price deflectors in recent years have become important developments limiting the share of agriculture in total

production.

Reference: Turkish Statistics Institute

It is noticed that real production growth in agricultural sector remained quite lower than the growth rates of GDP,

industry and service sectors other than the crisis periods. Whereas the agricultural sector has grown up at an annual

average rate of 1.8% in 5 years duration in 2000-2004 and 1.9% in 2005-2009, GDP has grown up at an annual

average rate of 4.4% in the first period and 3.2% in the second period. As for the industry, it has grown up at an

annual average rate of 4.2% in the first period and 3.2% in the second period. Even though the decrease of share of

agriculture in total GDP is often encountered during the development of the countries in the long term, it would not be

incorrect that the slight growth of the agricultural production in real terms constitutes a problem for the agricultural

sector itself. One of the reasons is that the productivity in agriculture is considered quite lower as to be mentioned in

the following sections.

1 Although the share of agricultural sector of Turkey in the total production seems lower compared to the number of employees covered by this sector, it has quite a higher rate than that of the European Union, the agricultural share of which is 2% in total production. 2 Even though it is not possible to compare the recent and previous national income statistics, we see that the agriculture’s share is around 17-18% compared to the national income at the end of 1980s given the previous (dated back to 1987) GDP statistics.

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Agriculture Industry Services

Shares of Sectors in Nominal Gross Domestic Product (GDP) (%)

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Nevertheless, the other reasons may include inadequacy of agricultural support program, failure in adaptation to the

changing global circumstances and quite lower investments in the agriculture.


A.2. PRODUCTIVITY IN AGRICULTURE Structural problems of Turkey’s agriculture result in lower rates of productivity in agriculture. Upon consideration that

the productivity is the production per capita working in the relevant sector, it is reported that the agricultural sector is

relatively larger, given either the total economy or the industry and services. It is reported that a person working in the

agricultural sector in 2009 generated TRL 1,860 (in 1998 prices) and this figure is TRL 4,563 for GDP and TRL 6,133 for

industry.

Source: Turkish Statistics Institute, our calculations.

When we overlook the matter under the light of the data - we acquired - in a longer perspective, we see there is no

change within the elapsing years. Similarly, as it was in 2009, the production per capita in agriculture considerably

1,0001,2501,5001,7502,0002,2502,5002,7503,0003,2503,5003,7504,0004,2504,5004,7505,0005,2505,5005,7506,0006,2506,5006,7507,000

2004 2005 2006 2007 2008 2009

Agriculture Industry ServicesGDP

Production per capita (TRL; inc. 1998 prices)

-9 -8 -7 -6 -5 -4 -3 -2 -1 0123456789

101112131415

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

GDP Agriculture Industry Services

Growth Rates (%; annual)

19

remains below the GDP per capita (on the fixed rate of USD) in 1998; therefore, we noticed it causes the GDP to fall

down.3

Reference: Turkish Statistics Institute, our calculations.

A.3. LABOR FORCE AND LAND USED FOR AGRICULTURE Turkey’s economy uses an important source in terms of labor force in agriculture. With 5.254 million persons, the

agricultural sector covers 24.7% of the total employment as of 2009. The steady decrease in the employees of the

agricultural sector, as of 1923, is directly related to the increasing mechanization in the sector and decreasing average

land sizes. However, in Turkey, there are other reasons for migration from rural areas to the urban, one of the most

important pushing factors of the social demography. Comparisons made with the western countries put forth that

Turkey has still a crowded population in the rural areas and the migrations to urban would continue in the following

years. Even if the rural population is held down by social measures, the dynamics of the growth would progress towards

the cities. In this perspective, it would be correct that the one of the most important problems in our economy is on-site

employment of the rural population efficiently.

However, the combined data which we formed by using the new and former employment series published by the

Turkish Statistics Institute (“TUİK”) indicate a significant fall in the agricultural employment after 2001. As for 2008-

2009, the crisis years, it was noticed that the agricultural employment increased. Since we could not notice in our data

any attempt for opening the lands to agriculture, any investment run-up or any technical revolution, we are of the

opinion that this increase, arisen in each crisis period, is not a voluntary but an “obligatory” employment and that this

increase is not useful for agricultural productivity and would possibly cause more corruption in income distribution

either.

3 We should state that continuous revision of the employment series prevent us to form a long term sound perspective.

0

5000

10000

15000

20000

25000

30000

Agriculture Industry Services GDP

19982009

Sectoral Productivity: Production per Employment (1998 in USD)

20


Even if Turkey is a rich country in respect of agricultural areas, the constitution of the majority of the lands from small

sections in terms of property ownership makes it difficult to benefit from the economy of scale particularly in annual

arable crops and livestock. In Turkey, there existed cultivated agricultural land (including long life crops such as fruit

trees) of 24.5 million hectares as of 20084. 21.5 million hectares of these cultivated lands consist of the agricultural

lands where grains, vegetables are cultivated excluding long-life crops. It is reported that the size of the cultivated

agricultural lands recessed particularly in 2006-2008. In addition to migration from rural areas to the urban, increasing

in the rapid growth period, we are of the opinion that the drought, erosion and other climatic conditions have effective

role on this recession.


4 Several land measures we used in our report are as follows: 1 decare = 1000 m2; 1 hectare = 10 decares = 10,000 m2; 100 hectares = 1 km2.

24,000

24,500

25,000

25,500

26,000

26,500

27,000

27,500

28,000

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Total Cultivated Land (in thousands hectares)

4,5004,6004,7004,8004,9005,0005,1005,2005,3005,4005,5005,6005,7005,8005,9006,0006,1006,2006,300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Number of persons employed in agriculture (thousand; combined data)

21

Whereas the share of the cultivated lands in the total agricultural lands was about 70% in 1990s, this rate decreased

down to 63% in 2008.

Source: Turkish Statistics Institute

A.4. AGRICULTURAL MAP OF TURKEY: PRODUCTS ON REGIONAL BASIS5 According to the data of Food and Agriculture Organization (FAO) of the United Nations, whereas cow milk of 3 billion

dollars value has become the first in monetary value in the Turkey’s agricultural production listing as of 2007, this is

successively followed by wheat of 2.3 billion dollars value, tomato of 2 billion dollars value, grape of 1.7 billion dollars

value and cotton of 1.4 billion dollars value.

Reference: FAO

5 The products would be examined in details as follows (see Section C); in this section, only some of the important information is tried to be given.

0200400600800

1,0001,2001,4001,6001,8002,0002,2002,4002,6002,8003,000

Milk Whe. Toma. Grape Cott. App Egg Pota. Pepp. Sug. beet

Oli Hazelnut

Leading Agricultural Products of Turkey (2007; million $)

505152535455565758596061626364656667686970

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Share of the cultivated lands in the total agricultural lands (%)

22

Turkey is in the top lines in numerous agricultural product listings in the world. As of 2007, Turkey takes place as the

first country in the world listing of hazelnut, apricot, cherry and fig productions in terms of monetary value. In terms of

monetary value, the world listing of the agricultural products cultivated in Turkey is given below:

The agricultural products, cultivated in Turkey, are shown on regional basis in the following map prepared by the

Ministry of Agriculture and Rural Affairs

Source: Ministry of Agriculture and Rural Affairs

1. 2. 3. 4. 5. 6. Hazelnutt Melon Pepper Apple Green onion Peach and Nectarine Apricot Leek Strawberry Spinach Tea Grape Cherry Cherry Chestnut Triticale Dry Onion Sugar beef Fig Chickpea Tomato Mandarin

Crown vetch Olive Rye Lentil Eggplant

Pistachio Walnut

Bean Spices

Milk Cucember Watermelon

Organic honey

Turkey’s place in the global listing of several agricultural products (2007; on monetary value basis)

Source: FAO

23

A.5. IMPORT AND EXPORT While the agricultural sector generates production at lower rates compared to the number of the employees employed

in this sector, its share in the Turkey’s foreign trade is at lower rates as well. According to the classification of

operations of the foreign trade, whereas the share of the agricultural export in the total production is 4.4 – 4.5 billion

dollars as of 2009, the share of importation is 3.3% with 4.6 billion dollars. While the rate of the agricultural export to

meet the import is fluctuated, agricultural export and import interact in a balanced manner in 2009. When the years

2001 and 2009 are compared, it is reported that the rate of export of the agricultural products in the total exportation

recessed considerably (from 6.4% down to 4.4%); however, there is no significant change in importation.

Annual increase rates of agricultural import and export are similar. In both items, annual average rate of increase is

1.1% in 2005-2009.

On the other hand, when we include in this analysis the food and beverage, tobacco and tobacco products and animal

fats and vegetable oils produced in the production industry, it is noticed that this second group contributed to the

exportation considerably. Upon examination by the way so, it is reported that the share of agriculture/food industry

export in total exportation was 10.3% and in importation was 3.7% as of 2009. These figures may be enough to

maintain the opinion that Turkey is one of the few self-supporting countries; however, given that Brazil realized

exportation of 72 billion dollars and Poland realized exportation of 16 billion dollars in 2008, it should be asked whether

Turkey could achieve a better performance and it should be stated that there exists an important unrealized potential in

exportation.

24

Even though both the export and import generate higher sales on annual basis, the increase of the weight of the other

sectors on import and export results in recession (from 12.7% down to 10.3%) of the weight of the agriculture/food in

import and export compared to the year 2000, whereas the weight in import has no considerable change (from 3.5% up

to 3.7%). In 2009, Turkey realized agriculture/food export of 2 dollars value; however realized import of

agriculture/food of 1 dollar.

On product basis, Turkey exports hazelnut, dried fig, seedless dried grapes, pistachio, dried apricot, tobacco, olive oil,

cotton, leguminous seeds and fresh vegetables-fruits to many countries particularly the European Union countries,

Russian Federation and the USA. The imported agricultural products are particularly wheat, corn, rice, oily seeds and

cotton. (The Ministry of Agriculture and Rural Affairs, 2005).

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Total export 27,775 31,334 36,059 47,253 63,167 73,476 85,535 107,272 132,027 102,129 Total agriculture and food industry export 3,520 3,967 3,642 4,688 5,840 7,653 7,853 8,917 10,616 10,486 Livestock and food substances 2,891 3,316 3,118 3,944 5,044 6,512 6,595 7,822 9,155 9,126 Livestock 2 44 31 8 7 5 9 7 13 24 Meat and meat products 13 19 17 23 27 41 36 54 103 174 Milk, milk products and eggs 22 42 35 49 54 81 107 179 255 268 Fish and other seafood 89 73 121 152 212 243 259 303 408 339 Grains and grain products 406 327 299 409 520 892 876 1,037 1,385 1,482 Fruits and Vegetables 1,817 2,142 2,062 2,568 3,406 4,374 4,261 4,902 5,308 5,353 Sugar, sugar products and honey . 239 343 183 226 237 211 283 304 352 301 Coffee, tea, cacao, spices and products 140 149 172 243 297 309 345 463 500 472 Food for animals 10 25 13 14 12 18 10 12 68 75 Various eatable products 153 152 185 251 274 338 409 561 763 638 Beverages and tobacco 529 471 426 489 591 736 820 805 891 933 Beverages 37 36 41 70 113 146 135 161 186 176 Tobacco and tobacco products 491 435 385 419 478 590 685 644 705 757 Animal,vegetable fats and oils, waxes 100 180 98 255 205 405 438 290 570 427 Animal liquid oils and solid fats 2 - 3 5 1 - - - 26 3 Prepared vegetable oil and solid fat 72 165 76 226 175 359 308 206 269 240 Processed liquid oils, solid fats; waxes 26 15 19 24 30 46 130 84 274 184 Total Import 54,503 41,399 51,554 69,340 97,540 116,774 139,576 170,063 201,964 140,926 Total agriculture and food industry import 1,899 1,353 1,689 2,366 2,620 2,660 2,959 4,266 7,182 5,192 Livestock and food substances 1,159 736 1,056 1,604 1,818 1,616 1,730 3,084 5,024 3,591 Livestock 33 23 16 12 10 14 16 24 41 34 Meat and meat products 2 1 - 1 1 1 1 1 4 2 Milk, milk products and eggs 37 24 39 53 71 78 85 119 133 120 Fish and Seafood 37 12 19 33 55 69 85 97 119 108 Grains, grain products 408 193 392 722 558 226 212 1,024 2,208 1,285 Fruits and vegetables 193 118 142 132 162 284 348 456 860 673 Sugar, sugar products and honey 16 12 20 36 39 46 40 57 92 57 Coffee, tea, cacao, spices and products 124 122 156 255 291 275 297 374 391 389 Food substances for animals 207 136 144 200 401 341 317 550 773 556 Various eatable products 102 95 127 163 231 280 331 381 403 367 Drinks and Tobacco 365 296 218 250 270 299 296 353 456 479 Drinks 15 13 10 15 31 23 40 51 65 79 Tobacco and tobacco products 351 283 208 235 239 276 256 302 392 400 Animal, vegetable liquid oils and solid fat; wax375 321 415 512 532 745 933 829 1,702 1,122 Animal liquid oil and solid fat 51 33 49 64 61 73 84 110 154 106 Prepared vegetable liquid oil and solid fat 292 269 337 409 425 626 792 641 1,446 930 Processed liquid oil, solid fat; waxes 33 19 29 39 46 46 57 78 102 87

Source:Turkish Statistics Institute

Turkey’s Agricultural Products and Finished Products Foreign Trade (Million Dollars))

25

26

B. Structural Compounds of the Turkish Agriculture

27

B. STRUCTURAL COMPOUNDS OF THE TURKISH AGRICULTURE

B.1. DISTRIBUTION OF LANDS One of the most important problems encountered in transition from extensive agriculture in vegetable production to

intensive agriculture by which highly efficient production is made as a result of use of intensive technology and input is

fragmentary and piecemeal nature of the land ownerships.

According to the legal status in Turkey, 3,076,650 farms hold total area of 184.3 million decares. Average land size for

these farms is 59.9 decares; this size is quite lower than the average farm size of Europe and USA, being successively

174 and 180 decares.6 Besides, whereas the number of the farms holding lands of below 100 decares constitutes 83.7%

of total number of farms, the share of the lands held by these farms is 42%. While the share of number of farms

holding lands larger than 500 decares in total number of farms is 0.7%, these farms hold 11.3% of the total area7.

Reference: Turkish Statistics Institute, Agricultural Count 2001

Legal arrangements have been maintained since the date of establishment of the Republic of Turkey to overcome such

hindrance to the productivity in agriculture. In this road, Land Reform Acts were enforced several times; however, these

could not help optimization of the status of the landless villagers. Upon enforcement of the draft law being evaluated at

the Prime Ministry during preparation of our report and aiming at preventing the land division for heritage, it becomes

possible that the average size of farm increases. Another development in this respect is the commencement of

preparations for a new structuring under the title of “Agricultural Land Acquisition Office” of the Ministry of Agriculture

and Rural Affairs. This study aims at gathering the agricultural lands by acquisition, sale and lease of the same by the

way of tender (For more detailed information, see. Section B.4).

6 The point to be paid attention when comparing with EU is that the land sizes may also significantly vary among the countries in EU. Eurostat data indicates that average land sizes of the EU Countries and Turkey are extremely similar. 7 The data was gathered from the results of 2001 Households in Agricultural Counting and Farms of the Turkish Statistics Institute.

232 529

290 461

539 816

950 840

560 049

327 363

153 685

17 429 4 199 222 57

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

1 000 000

-5 5-9

10-19

20-49

50-99

100-199

200-499

500-999

1000-2499

2500-4999

5000+

Number of Agricultural Farms according to Size of the Farms

* Horizantal axis indicates the land size of the farms in decares.

.

28

B.2. USE OF TECHNOLOGY, MECHANIZATION AND INFORMATION Outdated technology is used in majority of the farms in Turkey. Although use of technologies and know-how increases

in number in the farms, that the average size of farm is limited; that the breeders are hybridized in cattle breeding; and

that the cattle races could not be maintained are considered the factors slowing down the transition to the intensive

agriculture. There are exemptions of this matter in several sectors. For instance, the poultry sector heads the sectors,

closely following up the developments and the applicable techniques used in Europe and the USA.

In Turkey, there are 1,070,746 tractors and 13,804 harvesters as of 2008. Whereas the number of tractors regularly

increased by 1% each year as of 1989, the number of harvesters increased by 2.2% in a five years period in 2004-

2008. Even though the increase in the number of harvesters is positive, 58.5% of these harvesters being over the age

of 10 as of 2008 is considered a disadvantage. Furthermore, use of 25% plows - used to plough the lands by benefiting

from animal power - indicates that the use of technology has still not been widespread adequately in small-sized farms

(Ministry of Agriculture and Rural Affairs, 2007)8.


8 Statistics relating to other agricultural tools and machineries used in agriculture in Turkey are given in Additional Tables at the end of the report.

650670690710730750770790810830850870890910930950970990

1,0101,0301,0501,0701,090

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

' Change in Use of Tractors in Turkey in time (thousands)

0 - 5 6 - 10 11- 20 20+

2002 11 539 1 213 2 125 3 526 4 675

2003 11 721 1 352 2 214 3 545 4 610

2004 11 519 1 430 2 298 3 489 4 302

2005 11 811 1 659 2 405 3 551 4 196

2006 12 359 2 036 2 598 3 596 4 129

2007 12 775 2 338 2 739 3 652 4 046

2008 13 084 2 558 2 873 3 657 3 996

Reference: Turkish Statistics InstituteAgriculture Statistics Summary

Age Group

Number of Harvesters

29

Although we do not consider a perfect indicator for making a comparison of productivity, we are of the opinion that it

would be useful to make an international comparison on the number of harvesters. Whereas Turkey is one jump ahead

of the world average and USA in respect of number of tractor per arable land of 1000 hectares, its rate is quite lower

than the EU average. However, we are of the opinion that this higher number is not an indicator for increasing the

productivity by using tractors. Upon consideration that the average size of the farms is 60 decares in Turkey and 180

decares in the USA, it is a fact that the abundance of the small-sized landed farms prevents efficient use of the tractors

owned. Though the grain production has a major role in Turkey, it is noticed that the number of harvester per 1000

hectares remains below the average of USA, EU and the World.

Besides use of machineries, use of fertilizers, resulting in high rate increases in productivity of vegetable production, is

fluctuating in Turkey. Particularly during crisis, use of chemical fertilizers recesses significantly; and another reason why

the use of fertilizers fails to reach the desired levels is dependency of the higher fertilizer prices on the energy prices.

Though it is difficult to access in updated data on use of chemicals, according to data of Directorate General of

Production Development (TUGEM), physical fertilizer consumption was 5,276 thousand tons by an increase of

approximately 28% in 2009. The relevant consumption was 4,129 thousand tons in 2008 after a recession by

approximately 20% compared to the previous year. On the other hand, in 2004-2008, it was reported that share of

phosphoric fertilizers in the total consumption, being 32% before, recessed down to 4.7% and share of nitrogenous

fertilizers, being 66% before, increased up to 93.4% in 2009.

Given the equivalent total, it is noticed that annual average consumption, being 10.1 million tons in 2003-2007, was 7.5

million tons in 2008 and 7.2 million tons in 2009. We have detected that sharp decrease of the share of phosphoric

fertilizers has a deep impact on this decrease occurred in recent years. (We are of the opinion that the assessment of

fertilizer consumption in equivalent total would enable better and sounder results in agricultural productivity.)

According to IPARD 2007-2013 Report, the consumption amount of fertilizer per hectare in agricultural lands in Turkey

as of 1999 is 67.8 kg Nitrogen, 28.9 kg Phosphor (P2O5) and 3.7 kg. Potassium (K2O). In Turkey, below the world

average in consumption of fertilizer per hectare; use of alternative fertilizers as a reaction to the increasing prices and

several farmers’ tending to crops not requiring fertilizers caused a noteworthy decrease in fertilizer consumption.

Besides the lower fertilizer consumption, unconscious use of fertilizers by the farmers constitutes an important obstacle

for achievement of the desired productivity. Thanks to meeting and discussing with several fertilizer producers, we have

determined that the farmers do not have adequate information and background on the soil-product types and use of

correct amount and timing for the fertilizers and apply the same according to the advises from hearsay instead of

scientific methods. We would also like to remind you that incorrect or excessive use of fertilizers might cause decrease

of the productivity as much as the inadequate use caused.

Tractors Harvesters

Turkey 48.2 0.6

USA 25.8 2.0

European Union 85.1 6.3

Underdeveloped Countries 1.2 0.1

World 0.0 18.9

Source: FAO, our calculations

Number of Tractors and Harvesters per One Thousand Hectares

30

Whereas the total use of chemicals gradually increases year by year in Turkey, the use per hectare is still quite below

the rates of the European countries.

B.3. ARABLE LANDS We have not encountered a concrete reason for the decrease occurred in the cultivated lands in Turkey. That the

farmers, cultivating in small parcels, left the lands uncultivated and migrated to urban due to failure to earn living and

that the farmers, having alternative means of living, left the marginal productive lands uncultivated since these lands

are no longer productive due to input costs higher than the rates of Wholesale Price Index (TUFE) and Wholesale

Consumer Prices (TEFE) might have effective roles on this trend, even though we do not have related concrete data.

Prevention of erosion arising out of water and wind, which also have important effects on diminution of the size of the

arable land and decrease of the soil quality, would help protection of the size of the agricultural land. In Turkey, while

the land, exposed to water erosion, is about to be 67 million hectares (85% of the total lands), the land, exposed to

wind erosion, is only 0.3 million hectares. 36.4% of the total lands is exposed to serious erosion (abrasion of 25% of

the surface and soffit of the land) and 22.3% of the total lands is exposed to severe erosion with the abrasion of 22.3%

of the surface of the land and %25-75 of the soffit of the land.

Rough and hilly nature of Turkish lands, irregular and fluctuated rainfalls and intensity of the rainfalls, superficial soil

profile depth, lower rate of organic substances in the soil and natural disasters such as forest fires are the major

reasons of the erosion in Turkey. On the other hand, misuse of the lands also causes problems. These are unconscious

annihilation of the forests, excessive pasturage and mismanagement of the arable lands (such as incorrect plough of the

land) (Ministry of Agriculture and Rural Affairs, 2007).

That the water resources in several lands become unusable any longer due to instability of the rainfalls appears as a

factor, which may cause drought and adversely affect the arable nature of the land by the way so. With the effects of

the global warming, this situation particularly turned out to be a more severe threat.

B.4. INTEGRATION OF AGRICULTURAL LANDS One of the factors causing the size of the farms to be as such limited is the Heritage Act. Sharing the inherited lands

between inheritors results in fragmentation of the lands and constitutes one of the obstacles for transition to the

intensive agriculture enabling higher productivity. Access in only 85% of the lands by cadastral works, limited coverage

during the title deed renewal process (Source: http://www.tarim.gov.tr/Files/sanal_kutuphane/UlusalPr/486.html)

creates significant ambiguities on land ownership. This deficiency might - perhaps - become a factor deferring arise of

large-scaled farms created by free market mechanisms in time besides prevention of effective operation of the

agricultural land market. Ownership problem causes use of the agricultural lands as guarantee and makes it difficult to

access in the credit market and keeps many agricultural fixed capital investments below the optimal level.

As mentioned above, a draft law, which may possibly alleviate the land size problem in vegetable production if applied

effectively, is nowadays awaited at the Prime Ministry. The draft issued by the Ministry of Agriculture stipulates transfer

of the farm or land, subject matter of the heritage, to family assets partnership or company to be established by

agreement of the inheritors. It is planned that in case of failure by the inheritors to reach an agreement, the judge

would transfer the land to the inheritor specialized on agriculture at a fair value and without dividing; however, in case

of inheritors more than one - specialized on agriculture -, the judge would decide according to the offers made by the

inheritors. The draft law also enables the inheritor, acquiring the inherited land, to use easier credit from the State in

case of failure to pay the shares of the other inheritors (NTVMSNBC.com, 09.03.2010).

Article 17 of Land Protection and Utilization Act, entered into force in 2005, establishes principles of land consolidation

and distribution. According to the relevant article;

31

“For the purpose of determining parcel sizes in optimum measures in order to ensure rational use of the land,

upon the consent of the owners of more than the half of the lands and more than half of the owners of the

land, upon request; and upon the request of the Ministry or its committee, by observing the public benefit, on

non-discretionary basis; a land consolidation project field is determined and applied upon the Council of

Ministers’ Decree. This Council of Ministers’ Decree is considered a decree for the public benefit in respect of

consolidation and other transactions. As a result of this decree, upon request or without the agreement of the

owners, land consolidation on project basis, village development and land development services and rural

arrangements are carried out by the Ministry or caused by the Ministry to be carried out by the others.”

We are of the opinion that efficient application of the Agricultural Land Acquisition Office Project of Ministry of

Agriculture and Rural Affairs would be an important step for increasing the sizes of the farms. Aims of the aforesaid

Office are as follows: (Referans Newspaper, 30.03.2010):

• To regulate acquisition, sale, sharecropping, partnership, leasing transactions of the agricultural lands.

• To inform buyers, sellers, lessees, partners, sharecroppers and associate the parties with each other.

• To evaluate treasury lands, left and unused agricultural lands.

• To consolidate the undersize farms under appropriate organizations and to ensure arise of larger consolidated sizes.

• To work as “Real Properties Exchange, as limited to these kinds of agricultural lands.

• To sell lands, when necessary.

• To lease agricultural lands of the real persons and legal entities for and on behalf of the same; to ensure operation

of the same by the sharecroppers and sell the same.

B.5. DRY AND IRRIGATED FARMING In Turkey, as of 2007, 5.2 million hectares (24%) of 21.9 million hectares arable lands are irrigated agricultural lands.

According to the data of the Turkish Statistics Institute, while this rate is 72.7% for vegetable and flower growing, the

rate for the fruits and other long life plants is 25.8%.

Irrigated and Non-irrigated Land Sizes according to Use of the Land (%)

Total Irrigated Land Non-irrigated Land

100 24 76

100 28 72

100 73 27

100 26 74

100 58 42

100 7 93

100 35 65

100 - 100

*Other lands include fallows, pasturages, grove woods and inappropriate land.s


Other Lands*

Lands, appropriate for agriculture but unused

Permanent pasture lands

Total lands

Fruits and other long-life plants and beverages and spices Lands (inc. seedbeeds and greenhouse plants)

Cultivated agricultural lands

Vegetable and flower gardens (inc seedbeds and greenhouse)

Poplar groves-Willow groves

Use of the Lands

32

Availability and stability of water resources in the agricultural lands gain importance in respect of selection of products

and irrigation methods applicable in the agriculture. In Turkey, in 1995-2005, higher increase of use of underground

and aboveground waters at 33% indicates that in the following years, problem of satisfaction of the water demand

would arise together with the population increase. Diminishing of water resources in several regions due to global

climate changes and intensification of the water utilization in agriculture are considered other factors increasing the

pressures on the water resources. In Turkey, the land that can economically be irrigated is 8.5 million hectares. The

irrigated lands were expanded up to 4.9 million hectares as of January 2005; 762 thousand hectares of which could not

be irrigated adequately. According to IPARD 2007-2013 report, whereas there is no definite data regarding water

consumption per product and for total irrigation, given that the average consumption is 5000 m3/ha, it is estimated

that annual water consumption is roughly 24.5 billion m3.

Konya is on the top of the list with its irrigated lands of more than 400 thousand hectares in Turkey. Adana and

Sanlıurfa follow Konya with their irrigated lands of larger than 200 thousand hectares. Bingol (67.3%), Igdr (59%),

Hatay (53.5%), Osmaniye (51.6%) and Hakkari (50.7%) are on the top of the list in respect of the rate of irrigated

lands in the total agricultural lands (Ministry of Agriculture and Rural Affairs, 2007).

Use of methods such as drip irrigation and sprinkling would increase the size of the irrigated agricultural lands and - by

the way so - enable arise of new opportunities for the lands on which alternative products cannot be cultivated.

Principal advantages of drip irrigation are possibility of irrigation even in case of lower pressures; lack of nutritional

losses in water since it does not cause flow or leakage on the surface; the possibility of irrigation with water the salt

rate of which is higher; prevention of growth of weed; application of fertilization and disinfestations at the same time

(productivity increases, cost decreases), prevention of erosion and soil loss; and easy application in slopped lands

(Referans Newspaper, 05.07.2008). Based on the experiences, modern irrigation systems - particularly drip irrigation

and sprinkling - ensure 50% saving and 20% efficiency increase in agriculture. In Turkey, only 6% of the agricultural

land around 8.5 million hectares, which is able to be irrigated, is irrigated by the dripping system.

By opening a parenthesis in this section, we would like to make a brief summary of the findings on the soil structure. In

Turkey, whereas Leptosol is the most common soil sort, Calcisol, Fluvisol, Cambisol, Vertisol, Kastanozem, Regosol,

Arenosol and Alfisol are the other soil types encountered.

Soil profile depth is a parameter as important as the type of the soil. In Turkey, excluding soilless lands and

waterlogged lands, the lands with profile depth of more than 90 cm constitute 15.2% of the total square measure. This

refers to a land of around 11 million hectares. Whereas the rate of soil lands of medium depth (50-90 cm) is 12.7%, the

rate of soil lands of shallow depth (20-50 cm) and of very shallow depth (0-20 cm) constitute 72.1% of the total lands.

According to land use capacity classification (LUCC) between 1-8 classes, there are three categories in Turkey and the

first category is between 1st and 4th classes. This category is appropriate for cultivation and livestock. The second

category (5thc class– 7th class) is not appropriate for cultivation; however, appropriate for forestry and controlled

sponging. The third category that is the 8th class can in no case be used for agriculture and livestock. LUCC 1 Class,

which enables higher production capacity in Turkey, covers a land of nearly 5 million hectares. The partially productive

land (LUCC 2 and 3) is around 14.1 million hectares. As for LUCC 4, being marginally productive; it is around 7.4 million

hectares (the Ministry of Agriculture and Rural Affairs, 2007).

B.6. LIVESTOCK AND FISHERIES Like the dominance of the small-size farms preventing vegetable-agricultural productivity, that the number of the great

and small cattle is lower in the livestock farms is a factor hindering increase of the productivity. According to 2001

agricultural count; while 59.7% of the farms of great cattle breeding has great cattle less than 5, the rate of the farms

owning great cattle less than 20 is 93.8%, being quite higher.

33


Whereas the situation in the small cattle breeding farms is not different, respective lowness of the small cattle prices

only indicate the figures higher compared to the cattle breeding. Whereas the total rate of farms, owning less than 50

small cattle is 71.81%, the number of the animals owned by these farms constitutes 24.3% of total number of small

cattle.


As of 2008, in comparisons in terms of red meat and milk productivity, serious problems are reported in Turkey. It is a

fact that Turkey falls far behind the USA and EU in respect of beef. The productivity for Turkey is 1816 Hg/An, and the

productivity for USA and EU is successively 3545 Hg/An and 2772 Hg/An. These data are the indicators that there are a

lot of things to do to increase beef productivity in Turkey and in case of achievement of the same, the related sector

would get higher profits. As for the cow milk, the case is similar. The milk productivity in EU (61070 Hg/An) is more

59.67

21.32

12.79

5.45

0.72 0.04 0.010

5

10

15

20

25

30

35

40

45

50

55

60

65

1-4 5-9 10-19 20-49 50-149 150-299 300 +

Distribution of the Farms According to the Number of Cattle (%)

*Horizontal axis indicates the numberof animals owned by the farms. .

18.56

10.79

17.19

25.31

21.06

5.57

1.53

0

5

10

15

20

25

30

35

40

1-4 5-9 10-19 20-49 50-149 150-299 300 +

* Horizontal axis indicates the number of animals owned by the farms.

.

Distribution of the Farms According to the Number of Sheep (%)

34

than 2 times and the milk productivity in the USA (93428 Hg/An) is more than 3 times higher than Turkey (27584

Hg/An). As for the mutton productivity, Turkey (158 Hg/An) being at nearly the same level with EU (148 Hg/An), falls

far behind the USA (313 Hg/An).9

The poultry sector, the importance of which was increased in recent years, secured its position in the livestock sector.

In this sector, besides particularly broiler hen production increased considerably in the last years, the sector seems to

have higher export potential in case it overjumps the quotation obstacles and meets the health/hygiene standards of

the importing countries. One of the most important risks, which the sector encounters, is the risk of epidemic disease.

Avian Influenza epidemic in 2005-2007 had a deep negative impact on the demand and interrupted the growth of the

sector. Nevertheless, poultry is the closest sector to the Western standards in terms of livestock for food productivity.

In concrete figures, poultry sector with 1,760 Gr/An, approaches the USA (1,838 Gr/An) and exceeds EU (1,502 Gr/An)

in terms of chicken productivity.10

As for the egg productivity, Turkey (137.403 100Mg/An) has a better position compared to the world average (97.191

100Mg/An); however, it is quite below EU (144.812 100Mg/An) and the USA (156.145 100Mg/An) average.

We can classify under three categories the fisheries sector, failed to be developed adequately although the water

resources in Turkey are abundant: Fishable seafood and fresh water products and culture fishing. Dependence on the

natural conditions in fishing sea and fresh water products is noticed as a factor preventing considerable increases in

product amount. The culture fishing increases its share in the fisheries sector with higher rates increases in production

year by year. We would handle in more details the food for livestock and fisheries in the further sections of this report.

B.7. AGRICULTURAL SUPPORT SYSTEM Liberalization of industrial goods trade was completed on a large scale in 1990s; however, a similar reform has not

occurred in the agricultural sector and the excessively protective structure largely continued as well11. Although total

support level in Turkey has fluctuated in time, it is apparent that the support of the agriculture is at the highest level

from among OECD/EU countries with the GDP rate.12

9 Productivity/Carcass weight is measured. 10 Productivity/Carcass weight is measured. 11 See Cakmak (2010) for comprehensive and updated evaluation of agricultural policy frame and supports applicable in Turkey 12 We use herein “Total Support Estimate” figures produced for methodology of OECD. These figures consist of three compounds: general services, R&D etc and consumer support. See Agricultural Policies in OECD Countries: Monitoring and Evaluation 2009

0

5

10

15

20

25

30

35

40

45

50

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Total Support Estimate /Total Agricultural Products Consumption (%)

35

Reference: OECD.

As a reflection of that the share of agricultural sector in the national income is higher in Turkey, we notice that

compared to the agricultural production, Turkey approaches OECD average.

In parallel with the OECD countries, the supports provided with the “producers” also constitute the largest share in our

country. However, this distribution in our country is on product basis and supports the market prices. For instance, in

2008, total support is about TRL 22 billion; TRL 21 billion of which is for manufacturers support; and TRL 15 billion of

which is for market price support. The major product, the price of which is supported, is the grain. Amounts of support

and details of products are given in the following two tables. It should be stated that the reason why the market price

support is so high is the intense protectionism, which would not make various sub-sectors feel the foreign competition.13

13 However, the support system and irregularities of the production system arising out of the problems in the east as well as this kind of closeness lie behind the increase in the meat prices recently. Turkey has imposed 225% customs duty to the red meat and prohibited importation of meat since 1994.

0

10

20

30

40

50

60

70

80

Australia USA Mexico Canada

Turkey

OECD EU Japan Iceland Switz. Korea Norway

1986-882006-08

Producers Support Estimate according to Countries(in Proportion with the Gross Revenue Rate)

Reference: OECD

0

1

2

3

4

5

6

7

8

9

10

Korea

Turkey

Swii

Island

Japan

Norway EU OECD Mexico

USA Canada

Austr.New Z.

1986-882006-08

Total Support Estimate Acc. to Countries(compared to the GDP)

Reference: OECD

36

OECD: Agriculture Support Estimations in Turkey

(Million TRL)

1986-88 2006-08 2006 2007 2008p

Total Value of Production (exit from producer) 18 75,265 70,234 75,150 80,410 Market price supported products (%) 57 58 58 58 58 Total Value of Consumption (exit from producer) 15 70,005 58,615 68,012 83,389 Producer Support Estimation (PSE) 3 17,241 15,146 15,348 21,231

Production Amount Basis Support 1/ 2 13,081 11,116 11,116 17,111

Market price support 2 11,242 9,393 9,182 15,152 Production support 0 1,839 1,723 1,834 1,959

Input Basis Support 1 1,302 1,269 1,342 1,296

A/An/R/I basis Payment System (production required) 2/ 0 1,035 71 1,348 1,685 A/An/R/I basis Payment System (production not required) 2/ 0 1,824 2,690 1,642 1,139

General Service Support (GSSE) (research, promotion etc.) 0 1,575 2,552 798 1,134

Consumer Support Estimation (CSE) -2 -10,189 -8,663 -6,851 -15,052

Total Support Estimation (TSE) 3 18,816 17,697 16,146 22,604 Transfer from consumer 2 10,750 9,164 7,362 15,725 Transfer from tax payer 1 7,517 7,639 8,458 6,453 Budget income 0 549 895 327 426

TSE (GDP rate, %) Source: OECD, PSE/CSE database, 2009 1/ Market price basis supported products. These products are: Wheat, corn, other grains, oily seeds, sugar, potato, tomato, grape, apple, cooton, tobacco, milk, meat, chicken and egg. 2/ A (arable land), An(Animal), R (revenue), I (Income)

37

The most important reform trial in the form of agricultural support has been realized within the framework of

Agriculture Reform Application Project supported by IMF/World Bank in 2000-2001; it was tried to start Direct Income

Support Policy. It is noticed that these institutionally positive policies, directly aiming at creating product diversity and

preventing excessive governmental expenses in specific product categories, accordingly preventing the waste, were

started to be left for either political or technical reasons in recent years. However, the Direct Income Support Policy was

officially ended in 2009.14

14 See. Cakmak (2010)

2003 2004 2005 2006 2007 2008 16.132,20 16.320,25 16.763,93 15.145,60 15.348,19 21.230,69 13.335,99 13.377,21 13.825,10 11.116,08 11.015,68 17.110,94 13.027,26 12.883,77 12.746,88 9.393,31 9.181,78 15.151,67

Wheat 2.142,28 1.255,47 1.859,09 1.081,42 1.470,89 4.446,76Corn 303,31 368,42 343,43 509,23 482,24 153,82 Barley 379,06 573,83 721,73 482,87 -71,40 409,43 Sugar 702,49 872,01 807,64 306,70 616,54 773,98 Sun flower 41,41 48,75 76,19 70,74 45,51 55,69Milk 1.214,09 1.673,78 1.326,60 1.213,57 -29,51 -261,80Beef 1.814,78 1.748,55 1.719,11 1.656,82 1.330,27 1.609,06Mutton 168,90 21,90 121,14 279,68 320,99 349,66 Poltry meat 400,95 746,17 763,87 419,33 593,67 673,47 Egg 21,86 359,19 346,67 269,53 103,97 589,24 Apple -17,96 190,30 786,06 786,10 1.044,12 936,61 Cotton -725,10 -1.196,13 -725,25 -1.141,12 -759,32 -678,77Grape 621,70 1.260,07 249,65 1.090,92 1.524,60 505,68 Potato 887,37 1.034,70 1.026,32 1.104,21 1.060,77 1.173,42Tobacco 27,12 9,71 124,38 -48,87 -57,85 -21,78Tomato 198,87 -913,54 -2.048,76 -2.612,15 -2.329,67 -1.892,85 Other MPS 4.846,11 4.830,58 5.249,00 3.924,32 3.835,96 6.330,05

Cotton Premium 174,00 223,80 457,05 565,81 827,90 682,50 Milk Incentive Premium 38,19 64,97 116,03 161,52 177,49 310,25 Beef Incentive Premium 0,00 87,12 56,73 0,09 0,94 1,21 Mutton Incentive Premium 0,00 0,00 0,00 0,00 0,00 0,00 Poultry Incentive Premium 0,00 0,00 0,00 0,00 0,00 0,00 Tea leaf premium 0,00 40,13 69,23 81,92 88,24 102,09 Sunflower premium 71,91 68,85 107,37 165,30 203,11 114,58 Soy bean premium 9,56 5,79 2,42 3,67 8,35 0,00 Colza premium 0,15 0,62 0,38 0,09 1,19 0,00 Corn premium 0,00 0,00 57,32 191,40 209,37 71,41Wheat premium 0,00 0,00 185,17 471,52 300,47 673,14 Barley premium 0,00 0,00 20,90 53,32 0,00 0,00 Rye premium 0,00 0,00 0,21 0,48 0,00 0,00 Oat premium 0,00 0,00 0,21 0,22 0,00 0,00 Rice land premium 0,00 0,00 2,51 27,45 10,00 0,00 Olive oil premium 12,69 0,00 0,00 0,00 6,84 2,78 Angora premium 0,87 0,98 1,26 0,00 0,00 0,00 Bombyx mori 1,24 1,18 1,44 0,00 0,00 1,31 Acrylic Premium 0,13 0,00 0,00 0,00 0,00 0,00 Tobacco premium 0,00 0,00 0,00 0,00 0,00 0,00

Reference: OECD

Producer Support Composition (Million TRL)

Producer Support Estimate (PSE) Support Based on Product Output

A1. Market Price Support (MPS)

A2. Payments based on output

38

Reference: OECD

Consequently, it is apparent that the field where the reform need is quite obvious seems the agricultural supports. Even

though several progresses are made in terms of transparency on the financial side, we have encountered a structure,

not changed so much in time in respect of productivity and general costs. In this sense, return to the former structure

from the Direct Income Support policies is considered negative by the specialists, particularly OECD. Besides, they also

consider that the factors such as economy of scale as well as the agricultural support policies are the basic reasons for

unproductiveness in the agricultural sector in Turkey.

0

2

4

6

8

10

12

14

16

18

20

22

24

26

2002 2003 2004 2005 2006 2007 2008

Direct Income Support/Total Producers Support (%)

39

40

C. Major Products

41

C. MAJOR PRODUCTS

C.1. VEGETABLE PRODUCTION

C.1.1. Grains and Other Vegetable Products

Grain production has an important role in agriculture of Turkey. As of 2008, 76.4% of the cultivated agricultural lands of

21,555 million hectares, excluding long-life plants, is reserved for grains and other cultivated vegetable products.

Approximately 60% of the total land is reserved for only the grains (Cakmak, 2008). Grain production is made in 67%

of the land on which grain is cultivated. While the wheat, the most cultivated grain in Turkey, may be cultivated in

anywhere else in Turkey, the lands on which other grains such as corn, barley and rice as well as wheat constitute 98%

of the total grain in respect of land and distribution.

Whereas the wheat production constitutes 61% of the grain production, the wheat is followed by corn and barley

successively at the rates of 20% and 15%. Given that corn, having 15% share in total production, is cultivated on the

5% of the grain land, it is apparent that the corn is more productive than the wheat and barley. When we measure the

productivity per decare, it is seen that whereas corn productivity has considerably increased, the productivity of wheat

and barley has no considerable change in 1988-2008. It is reported that the productivity of corn is procured by the use

of hybrid seeds (Cakmak, 2008).

854 848 1 475 2 213 2 161 8 206 30.6 38.3 Cannabis ... ... ... ... ... ... ... ... ...Linen ... ... ... ... ... ... ... ... ...Colza 29 28 316 336 329 14 4.7 8.4Cotton 1 321 1 294 36 1 295 1 213 21 29 17.2 99.9 Soybean 31 30 1 465 1 462 946 1 39 13.4 2.1Sugar . 1 708 34 1 746 1 720 . 151 24.4 97.8 Sugar beet . 12 415 15 12 429 . . 0 . 99.9

Reference: Turkish Statistic Institute

Grains and Other Vegetable Products (2007-2008 Market Year)

Product Produ.

(Thou. Tons)

Usable Pro (Thou. Tons)

Import (Tho. Tons)

Domestic Use (Thou.

Ton)

Consum (Thou. Tons)

Use as seed (Thou. Tons)

Export (Thou. Tons)

Per capita cons (kg)

Adequacy Degree (%)

Grain (Total) 28 609 27 110 4 244 28 630 15 734 2 199 2 119 222.9 94.7 Barley 7 307 6 868 199 7 058 69 686 10 1.0 97.3 Wheat (Total) 17 234 16 286 2 512 16 882 14 584 1 458 1 819 206.6 96.5 Wheat (Other) 14 525 13 726 2 479 14 646 12 746 1 214 1 461 180.6 93.7 Wheat (Hard) 2 709 2 560 33 2 236 1 838 244 357 26.0 114.5 Corn 3 535 3 429 1 143 4 211 1 026 14 93 14.5 81.4 Oat 189 188 16 203 90 11 1.3 92.5 Rye 241 237 16 252 43 24 1 0.6 94.1 Other Grains 104 102 2 103 7 1 -1.0 99.0Rice 389 385 236 637 613 11 21 8.7 60.5Potato 4 246 4 174 55 3 992 3 488 384 237 49.4 104.6Legume (Total) 1 265 1 242 149 1 159 1 022 108 232 14.5 107.2 Dry beans 154 153 65 215 199 11 2 2.8 70.9 Red lentils 508 495 44 407 368 29 132 5.2 121.6 Chickpea 505 499 9 412 342 60 95 4.8 121.0 Green Lentils 27 26 27 52 48 3 1 0.7 50.0Sunflower

42


According to OECD-FAO Agricultural Outlook (2009-2018) Report, net important country position of Turkey for the

wheat that is the most cultivated grain in Turkey, would go on and the rate of production’s meeting the domestic

consumption until 2018 would be close to 95%. In 2010-2018, an annual increase of approximate rate of 1% is

estimated. Similarly, any considerable change is not anticipated in consumption per capita. For these reasons,

apparently, there exists no positive potential in wheat production. We are of the opinion that the corn being productive

compared to the wheat has a higher potential upon consideration of its expanded area of use as sweetener.

Reference: OECD-FAO Agricultural Outlook (2009-2018) Report

Other than the grains, legumes as well as the oily seeds might be overviewed under this title. Cultivation of legume

consists of horse bean, pea, chickpea, bean, lentil, cowpea, crown vetch, greek clover and grasspea. Chickpea, lentil

and bean rank among the top tree in the listing of land and production amount as of 2008. Out of the total legume land,

52% is reserved for the chickpea; 33% for lentil; and 10% for the bean. In terms of the product share, these rates of

successively 61%, 15% and 18%.

100125150175200225250275300325350375400425450475500525550575600625650675700725750

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Wheat

Barley

Corn

Productivity in Major Grains

192.0

192.5

193.0

193.5

194.0

194.5

195.0

195.5

196.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20181.75

1.80

1.85

1.90

1.95

2.00

2.05

2.10

2.15

2.20

2.25

Consumption per capita (kg/year; left axis)

Productivity (ton/hectares; right axis)

Wheat Pro. per Capita and Wheat Pro. Productivity Projection

43

Upon examination of these major legume in respect of productivity, while a gradual increase is noticed in bean as of the

mid of 90s, the productivity of the chickpea remains stable. As for the productivity of lentil, a fluctuation is noticed. In

brief, the problem of productivity in agriculture of Turkey is also felt in the legume.


Although there is a higher domestic consumption potential in oily seeds, the production is inadequate. The most

cultivated plant among the oily seeds is the sunflower. As of 2008, the sunflower production covers 86% of the total

cultivated land of oily seeds. The sun flower, cultivated in a land of 5.8 decares as of 2008, might be used for both oil

and appetizer productions. Sunflower production corresponds to 43% of the total oily seed production. Other produced

oily seed products consist of cotton seeds, colza (canola), peanut, soybean, sesame, linseed, semen cannabis, poppy

seed and safflower.

Even though the climate and soil structure of Turkey provide convenient conditions for production of the oily seed

plants, the existing production fails to meet the domestic demand. According to OECD-FAO data, only 49% of the

vegetable oil consumption is satisfied from domestic production as of 2008. According to OECD-FAO projections, it is

anticipated that the consumption per capita, being annual 19.2 liters in 2008, would become 22.1 liters in 2018 (by an

annual average increase rate of 1.4%). These data indicate that in case production is made to the extent that it might

compete with the imported products, the vegetable oil sector would be a remarkable field. However, the projections

indicate and support the fact that the coverage ratio of consumption by production in eatable vegetable oils in 2010-

2018 would remain about 50%. According to the estimations, Turkish economy would increase its net import, estimated

to be 767 thousand tons in 2010, up to 888 thousand tons until 2018. It is expected that the consumption per capita

would increase by an annual average rate of 1.4%.

3035404550556065707580859095

100105110115120125130135140145150155160165170

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

ChickpeaBeanLentil

Productivity in Legume (kg/decares)

44


Another consumption alternative for oily seed plants, commonly used as nutrition and animal feed, is the biodiesel

production. Higher petroleum prices and demand for eatable energy constitute a serious potential for biodiesel

production and accordingly oily seed plants. Though biodiesel consumption projections set forth in the OECD-FAO

Agricultural Outlook (2009-2018) remain quite lower, the average consumption growth of 16.3% in 2010-2014 indicate

that the produced oily seeds might be evaluated in this new field.


C.1.2. Industrial Crops

Raw plants classified as products used in textile are cotton, linen and cannabis. As of 2008, the cotton production

covers nearly 100% of the production in this group; however production of linen and cannabis fibers is extremely rare.

As of 2008, cotton fibers of 673.4 thousand tons were produced in a total land of 4 million 950 thousand decares. An

increase was noticed in the cotton fiber production starting from 1990 until a few years ago.

19.0

19.5

20.0

20.5

21.0

21.5

22.0

22.5

23.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201848

49

50

51

52

53

54

Production per capital

Left axis; kg/year

Rate of coverage of consumption by production

right axis;%

;

Eatable Oil Projection

05

101520253035404550556065707580859095

100105110115

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Biodiesel Consumption Projection (thousand tons)

45


C.1.3. Vegetables and Fruits

Turkey has progressed well in production of various vegetables and fruits. As of 2008, vegetable production is made in

a total land of 836 thousand hectares. This figure corresponds 4% of the total cultivated agricultural lands. The amount

of vegetables produced in Turkey in 2007/2008 market year was 23.7 million tons. Successively, tomato, watermelon,

onion, pepper, cucumber and melon are the most cultivated products in respect of weight. (As of 2007/2008 market

year, tomato corresponds 42% of the total vegetable-fruit amount.) The major vegetable products cultivated in Turkey

other than the afore-listed products are eggplant, carrot, cabbage, green beans, lettuce, marrow, spinach, leek, scallion

and turnips. Additionally, green peas, horse beans, hibiscus, garlic and purslane are the other cultivated products;

however not produced as much as the aforesaid products.

As for vegetable products, Turkey’s production excessively covers the domestic consumption. Degree of adequacy

defined as the proportion of domestic use to the usable production is noticed to be close to 100% for garlic and green

beans and higher than 100% for the other vegetable products. This rate is 111.15% for tomato.

Whereas Turkey has been exporting considerable amounts of vegetable to the European Union, Middle East,

Commonwealth of Independent States and Eastern European Countries, it realizes importation of fewer amounts in

order to satisfy the out-of-session needs and to meet the needs of the food industry.

Primary products in respect of production of fruits, hard-shells and beverage plants are the grapes, apples and oranges.

These products are followed successively by tea, mandarin and lemon. Pistachio, peer, boobs, almond, walnut,

strawberry, berry, plum, hazelnut, grapefruit, fig, apricot, chestnut, cherry, banana, pomegranate, peach, bitter orange

and sour cherry are the other products. The rate of adequacy is higher than 100% for almost all these products. The

rate of adequacy of banana as of the market year 2007-2008 is 43.7%, being a lower rate. This rate is 993% for

hazelnut, 572% for fig, 802% for apricot and 833% for grapefruit. Turkey exports these products at quite higher rates

compared to the domestic consumption.

Turkey ranks among the top one in respect of production of hazelnut, cherry and apricot successively with the rates of

76.1%, 18% and 20.6 %.

859095

100105110115120125130135140145150155160165170

1991 1993 1995 1997 1999 2001 2003 2005 2007

Cotton fiber productivity (kg/decares)

46

Even though the fruit production successively covers the domestic consumption, the increase noticed in the fruit juice

consumption in Turkey in recent years offers attractive possibilities for the fruits used in the related industry. According

to the data of the Fruit Juice Industry Association, in 2008, 771 thousand tons of fruits were used for fruit juice

production in Turkey (2000:433 thousand tons). Turkey ranks in the top with apple production of 43.3%, and peach

with the rate of 15.4% and apricot with the rate of 9.7% and orange with the rate of 8.3% come after the apple. Since

the orange types, produced in Turkey, are not of industrial type, they cannot adequately be used in fruit juice

production. Therefore, the share of orange in fruit juice production is limited when compared to its production.

While the fruit juice consumption per capita in Turkey is 10.8 liters in 2008, this figure is about 25 liters in Europe. That

the consumption, being 5.1 liters in 2003, increased two times in 2008 and is still quite lower than the European

average promises hope for the relevant sector. Achievement by the sector of 20 years average rate in the last 5 years

also increased the fruit production investment. A Brazilian Company namely Cutralle, one of the largest orange juice

producers, launched its large-scaled fruit production investments to produce stone fruit juices under the roof of

Anadolu, Ozgorkey Groups and Anadolu Etap. That the Indian Company, namely Jain, has shifted to Turkey its

investments made in this field in order to compete in the Middle East and European markets, is another indicator of the

important signals of the investments in this field.

While the Fruit Juice Industry Association estimated that the fruit juice sector’s need of 800 thousand tons of fruits

would reach 1.5 million tons in 4 years, the constitution of the existing farms by small parcels, being the general

problem of the agricultural sector, may cause problems in supply of the fruits in the sector. While the support of the

Fruits, Stone Fruits and Beverage Plant Data (2007-2008 Market Year)

Product Production (Tons)

Usable Pro (Ton)

Import (Ton)

Domestic use (Ton)

Consumpt. (Ton)

Export (Ton)

Export-EU 27 (Ton)

Per Capita consump (kg)

Adequacy degree (%)

Pistachio 73 416 71 581 43 67 943 65 225 2 988 2 012 0.92 105.4

Peer 356 281 338 111 2 714 327 885 301 654 12 940 4 857 4.27 103.1

Boob 95 015 89 314 18 84 853 78 064 4 479 3 364 1.11 105.3

Almond 50 573 49 839 10 130 53 316 52 250 6 653 1 134 0.74 93.5

Walnut 172 572 168 430 39 572 205 087 200 165 2 915 871 2.84 82.1

Tea 1 145 321 973 523 17 022 978 526 949 170 12 019 7 765 13.45 99.5

Strawberry 250 316 243 307 183 207 982 191 343 35 508 20 212 2.71 117.0

Berry 61 665 56 732 469 56 373 51 863 828 490 0.73 100.6

Apple 2 457 845 2 330 037 32 430 1 996 745 1 837 005 365 722 298 094 26.02 116.7

Plum 240 874 204 020 724 196 040 180 357 8 704 6 237 2.56 104.1

Hazelnut 530 000 525 230 7 462 52 884 51 297 415 636 328 314 0.73 993.2

Grapefruit 162 621 159 043 6 593 19 103 17 575 146 533 84 153 0.25 832.6

Fig 210 152 205 529 6 489 35 927 33 053 176 035 122 665 0.47 572.1

Apricot 589 732 564 963 3 812 70 432 64 797 513 526 202 774 0.92 802.1

Chestnut 55 100 51 684 726 51 912 50 355 498 236 0.71 99.6

Cherry 398 141 378 632 234 312 602 287 594 66 264 42 280 4.07 121.1

Lemon 651 767 640 687 16 999 405 988 373 509 251 698 68 494 5.29 157.8

Mandarin 744 339 736 151 903 462 475 425 477 274 579 51 446 6.03 159.2

Banana 189 107 183 812 237 235 421 019 387 337 28 - 5.49 43.7

Pomegranate 106 560 104 748 1 939 91 658 84 325 15 029 6 637 1.19 114.3

Orange 1 426 965 1 375 594 146 491 1 265 209 1 163 992 256 876 52 489 16.49 108.7

Peach 539 435 519 476 2 995 501 537 461 414 20 934 5 035 6.54 103.6

Bitter Orange 2 972 2 907 6 508 2 789 2 566 6 626 203 0.04 104.2

Grape 3 612 781 3 508 010 22 826 2 539 592 2 080 280 1 064 596 779 680 29.47 138.1

Sour Cherry 180 917 172 414 - 172 378 158 588 36 36 2.25 100.0


47

Ministry of Agriculture to the sappling investments by 50% accelarates the investments in this field, several fruit juice

companies are trying to provide fruit supply by distributing sapplings to fruit producers.

While the size of fruit juice consumption is stated as TRL 1.2 billion annually, it is expected to reach TRL 3 billion in 5

years.

C.2. SMALL AND GREAT CATTLE BREEDING, POULTRY SECTORS

The importance of the livestock sector was put on the agenda one more time in recent days due to the effect of the

sharp increase particularly in red meat. As it was in several fields of the agricultural production, the livestock sector has

various problems despite the higher potential. However, the poultry sector, which we will examine under the title of

livestock, seems to have got rid of the basic infrastructure problems, experienced by the livestock sector thanks to its

achievements on advanced production techniques (Cakmak, 2008).

In Turkey, in the farms where great cattle breeding activities are handled, the common tendency is to have only a few

animals. Whereas the rate of the farms having 1-4 great cattle is 59.7%, the rate of the farms having more than 50

cattle is only 0.7%. As for the small cattle breeding, the situation is the same.

As of 2008, in Turkey, the great cattle number was detected to be 10.9 million. It is reported that the great cattle

number, being 12.3 million in 1991, gradually decreased until 2003 and recessed down to 9.9 million and gradually

increased again.

Whereas the number of the culture breed cattle increased both in number and in percentage from 1991 until 2008, the

number of the native cattle decreased in both respects. Increase of the share of crossbreed cattle in the total livestock

although it does not increase in number has been detected to be a factor preventing a possible productivity growth.

Bottleneck of animals with breeder certificate is indicated as an obstacle slowing down the speed of the aforesaid

structural mutation. (Cakmak, 2008)

Number of Great Cattle according to Type and Race

Cow (Culture) Cow (Crossbreed) Cow (Domestic) Buffalo

1991 1 253 865 4 033 375 6 685 683 366 150 1992 1 337 410 4 131 507 6 481 990 352 410 1993 1 442 000 4 342 000 6 126 000 316 000 1994 1 512 000 4 543 000 5 846 000 305 000 1995 1 702 000 4 776 000 5 311 000 255 000 1996 1 795 000 4 909 000 5 182 000 235 000 1997 1 715 000 4 690 000 4 780 000 194 000 1998 1 733 000 4 695 000 4 603 000 176 000 1999 1 782 000 4 826 000 4 446 000 165 000 2000 1 806 000 4 738 000 4 217 000 146 000 2001 1 854 000 4 620 000 4 074 000 138 000 2002 1 859 786 4 357 549 3 586 163 121 077 2003 1 940 506 4 284 890 3 562 706 113 356 2004 2 109 393 4 395 090 3 564 863 103 900 2005 2 354 957 4 537 998 3 633 485 104 965 2006 2 771 818 4 694 197 3 405 349 100 516 2007 3 295 678 4 465 350 3 275 725 84 705 2008 3 554 585 4 454 647 2 850 710 86 297

Reference: Turkish Statistics Institute , Livestock Statistics, 2008 ,

48

We would like to handle the projections on meat and milk production on which battles royal are made recently as a

result of increase of the small cattle exportation by opening a parenthesis.

According to the OECD-FAO projections, Turkey’s beef production would grow to 448.2 thousand tons by an annual

average rate of 2.4% in 2010-2018. It is anticipated that while the consumption will remain below the production in the

relevant period, the consumption of beef that is 3.4 kilograms in 2008 would grow to 3.5 kilograms in 2018. During the

period when we prepare our report, while beef prices are considerably increasing, it might be expected that

establishment of freedom of importation, which is to determine the future of the beef market, would have a great

impact on the investment decisions.

Again, in the same projections, it is stated that the milk production, being 12,195 thousand tons in 2008, would grow to

14,337 thousand tons by an annual average increase rate of 2.6% in 2010-2014. It is additionally anticipated that the

milk production per cattle that is 709 kilograms in 2008 would reach 773 kilograms in 2014 and increase up to 823

kilograms in 2018. Whereas the milk productivity in Turkey in 2008 was 709 kg/year per cattle, this figure was 6.2 tons

in EU-27. A considerable change is not expected in this comparison in respect of the milk productivity.

In the last twenty years, a sharp decrease was noticed in native sheep, merino sheep, goat and angora goat breeding.

Due to either decrease of use of the pastures for security problems or decrease of revenues in livestock breeding, the

number of small cattle, being 51.2 million in 1991 gradually decreased and recessed to 29.6 million until 2008.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Production 360.0 366.1 373.0 383.6 394.1 402.5 409.6 420.9 429.6 437.7 448.2Import 2.0 2.1 0.6 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3.0Consumption 366.5 361.3 370.3 379.0 389.8 395.4 401.1 407.7 414.4 419.5 428.7Final stocks 23 21.70 24.38 23.18 24.23 24.88 26.06 25.75 27.17 27.72 27.94Export 0.5 8.1 0.6 8.1 5.7 8.9 9.9 16.2 16.5 20.6 22.2Trade balance -1.5 6.1 0.0 5.8 3.3 6.4 7.4 13.5 13.7 17.7 19.2Production/Consumption (%) 98.2 101.3 100.7 101.2 101.1 101.8 102.1 103.2 103.7 104.4 104.5Per Capita Consumption (kg/year) 3.4 3.3 3.3 3.4 3.4 3.4 3.5 3.5 3.5 3.5 3.5

Reference: OECD-FAO Agricultural Outlook (2009-2018)

Great Cattle Meat Projection (Thou. Tons)

49

While the native sheep constitutes 77.6% of the total number of sheep and goats as of 2008, Merinos sheep, the wool

of which is used for manufacturing high-quality wool fabrics and which is quite efficient in respect of mutton, only

constitutes 3.4%. Although the share of Merinos sheep increases in recent years, it is still considered lower. Merinos

race, which do not like warm and rainy climates, and grow up better in steppe regions and has many types, were first

imported from Spain in 1843, the number of these sheep remained quite lower. Merinos mostly grow up in the western

regions in Turkey (Cakmak, 2008).

Whereas the number of goats decreases in parallel with the number of small cattle, the rate of goats in the total

livestock breeding has not changed compared to 1991. The number of angora goat both decreased and recessed from

2.3% in 1991 to 0.5 in 2008.

As we mentioned in the first section of our report, the sector, the global developments of which follow up closely, is the

poultry sector and according to the specialists, the level achieved by the production of eggs and chicken is not below

the levels of developed countries (Cakmak, 2008).

Unlike either the vegetable production or the great cattle and small cattle breeding; the production in poultry sector

increased at higher rates. In the relevant sector including the hens, turkeys, gooses, and ducks, the number of poultry

increased from 145 million in 1991 up to 249 million in 2008. It is noticed that due to the crisis of 1994, 2001 and the

last global financial crisis, the number of animals in the poultry sector considerably decreased. Whereas the almost the

entire sector consists of hens and broilers, the number of turkey, goose and ducks is below 2% according to 2008 data.

While the share of the hens in the total is gradually decreasing, the share of the broilers is increasing.

Number of Small Cattle acc. to Races and Types

Sheep (Domestic) Sheep (Merinos) Goat (hair) Goat (Angora)

1991 39 590 493 841 847 9 579 256 1 184 942 1992 38 575 828 840 110 9 439 600 1 014 340 1993 36 709 000 832 000 9 192 000 941 000 1994 34 823 000 823 000 8 767 000 797 000 1995 32 985 000 806 000 8 397 000 714 000 1996 32 234 000 838 000 8 242 000 709 000 1997 29 376 000 862 000 7 761 000 615 000 1998 28 560 000 875 000 7 523 000 534 000 1999 29 425 000 831 000 7 284 000 490 000 2000 27 719 000 773 000 6 828 000 373 000 2001 26 213 000 759 000 6 676 000 346 000 2002 24 473 826 699 880 6 519 332 260 762 2003 24 689 169 742 370 6 516 088 255 587 2004 24 438 459 762 696 6 379 900 230 037 2005 24 551 972 752 353 6 284 498 232 966 2006 24 801 481 815 431 6 433 744 209 550 2007 24 491 211 971 082 6 095 292 191 066 2008 22 955 941 1 018 650 5 435 393 158 168

Reference: Turkish Statistics Institute, 2008 ,

50

Poultry Meat Producers and Breeders Association (BESD-BIR) reports that there are 12,650 broilers, 2,800 hencoops in

the sector as of 2007 and added that in spite of these higher figures, major part of the poultry meat is produced by

limited number of farms. In 2006 approximately 90% of the poultry meat was produced by around 40 farms. While the

highest share in the poultry meat production in Turkey belongs to Eastern Marmara, Western Anatolia is one move

ahead in egg production (Cakmak, 2008).

Total poultry meat production increased by annual average rate of 9.8% in 2002-2007; however it reached to 1.1

million tons as of 2007.

Number of Poultry acc. to their Types

Hens Broilers Turkeys Gooses Ducks

1991 50 826 656 88 379 548 3 132 676 1 599 831 1 112 015 1992 52 224 952 100 305 100 3 332 794 1 752 495 1 154 743 1993 58 179 047 120 080 935 3 340 241 1 687 596 1 171 961 1994 57 842 034 125 842 269 3 441 995 1 719 833 1 186 891 1995 57 324 654 71 689 773 3 291 000 1 745 163 1 199 925 1996 53 883 070 99 073 900 3 063 540 1 641 915 1 093 860 1997 61 401 783 104 870 702 5 327 501 1 794 610 1 828 792 1998 69 722 271 167 275 380 3 805 345 1 771 327 1 339 468 1999 71 885 207 167 862 730 3 762 516 1 670 916 1 294 824 2000 64 709 040 193 459 280 3 681 558 1 496 604 1 104 176 2001 55 675 750 161 899 442 3 254 018 1 397 560 913 748 2002 57 139 257 188 637 066 3 092 408 1 400 136 832 091 2003 60 399 520 217 133 076 3 994 093 1 336 775 810 910 2004 58 774 172 238 101 895 3 902 346 1 250 634 770 436 2005 60 275 674 257 221 440 3 697 103 1 066 581 656 409 2006 58 698 485 286 121 360 3 226 941 830 081 525 250 2007 64 286 383 205 082 159 2 675 407 1 022 711 481 829 2008 63 364 818 180 915 558 3 230 318 1 062 887 470 158

Reference: Turkish Statistics Institute, 2008

Poultry M.Prod.

Turkey meat Prod

Chicken and HensAnd

Other Po. Pro.

Total Poultry Meat

Pro. Production Inc. (%)

Exp. - Imp. Diff.

Per capita Cons.

(kg/year)

1990 162.569 0 54.190 216.759 -372 3,82 1991 179.073 0 59.691 238.764 10,15 311 4,13 1992 216.214 0 72.071 288.285 20,74 612 4,90 1993 276.501 0 92.167 368.668 27,88 -937 6,12 1994 233.510 0 77.837 311.347 -15,55 -12.227 4,89 1995 313.154 2.646 101.739 417.539 34,11 -4.875 6,62 1996 415.155 3.223 135.162 553.540 32,57 -4.889 8,64 1997 493.271 2.678 120.640 616.589 11,39 -4.420 9,47 1998 497.720 9.577 114.853 622.150 0,90 -5.450 9,37 1999 557.666 18.27 80.142 656.078 5,45 -2.398 9,77 2000 662.096 23.265 67.021 752.382 14,68 -1.854 11,05 2001 592.567 38.991 41.813 673.371 -10,50 -12.416 9,60 2002 620.581 24.582 60.043 705.206 4,73 -6.909 10,01 2003 768.012 34.078 51.255 853.345 21,01 -9.175 11,94 2004 940.889 46.248 58.295 1.045.432 22,51 -11.711 14,44 2005 978.400 53.530 52.850 1.084.780 3,76 -30.922 14,53 2006 945.779 45.750 40.250 1.031.779 -4,89 -17.832 13,81

2007** 1.012.000 33.000 55.000 1.100.000 6,61 -24.775 15,23

Reference : BESD-BIR

Poultry Meat Production and Consumption Statistics (Tons)

51

Although the poultry meat consumption considerably increased within the last 20 years, it is still below the EU average.

The consumption per capita, being 3.8 kg/year in 1990, increased up to 11 kg in 2000 and 15.2 kg in 2007. In the

European Union, the annual consumption is higher than 20 kg. From this point of view, the demand potential of the

sector seems higher. On the other hand, OECD-FAO reports that the consumption of poultry per capita is 12.5 kg for

2008.

Source: OECD-FAO Agricultural Outlook (2009-2018) Report

Quotation obstacles and failure to cope with the technical conditions are the factors, resulting in decrease of the export

in the poultry sector. As of 2007, Vietnam, Azerbaijan, Tajikistan, Bosnia-Herzegovina have been the most important

countries in terms of export of the poultry sector products. The chicken foot export made to Vietnam alone corresponds

to 18.5 million dollars of total poultry meat and pluck export of 44.5 million dollars realized in 2007 (Source: BESD-

BIR).

C.3. FISHERIES The fisheries sector in Turkey is divided into 3 groups: These are fishable seafood and fresh water products and culture

fishing. Production amounts of fishable seafood and freshwater products are given in the following tables. Even though

the product amounts produced in 2000-2008 are fluctuated in both sectors, dependence on the natural conditions is

deemed to be a factor preventing significant increases in product amounts. Whereas the anchovy has a share of 64% in

total weight of the taken seafood of 396 thousand tons as of 2008, the goat fish (red mullet) follows the anchovy, with

the share of 10%.

12.0

12.5

13.0

13.5

14.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Poultry Meat Consumption Projection (Per capita;kg)

52


Pearl mullet, common carp and sandsmellt rank in the top three in 41 thousand tons of fresh water products taken in

2008 successively with the rates of 29%, 28% and 16%. Detailed tables relating to the caught sea fish and fresh water

products are enclosed:

Upon consideration in more details of the culture fishing the production of which is less related to the natural conditions

in the fisheries sector, it is noticed that this sector shrank in 2001 and 2002 successively at the rates of 14.9% and 9%

and expands in 2003-2008 at an annual average increase rate of 16.7%. Sector production grew to 152.2 thousand

tons by the rate of 8.8% in 2008.

Whereas trout is taken in the entire of the culture fishing in the inland waters, perch and seabream are domineers in

aquaculture made in the sea.

320

360

400

440

480

520

560

2000 2001 2002 2003 2004 2005 2006 2007 2008 40

41

42

43

44

45

46

47

Seafood (left axis)

Fresh water products (right axis)

Taken Seafood and Freshwater Products (Thousand Tons)

2000 2001 2002 2003 2004 2005 2006 2007 2008

Inland waters

Trout 42 572 36 827 33 707 39 674 43 432 48 033 56 026 58 433 65 928

Mirror carp 813 687 590 543 683 571 668 600 629

Sea

Trout 1 961 1 240 846 1 194 1 650 1 249 1 633 2 740 2 721

Seabream 15 460 12 939 11 681 16 735 20 435 27 634 28 463 33 500 31 670

Perch 17 877 15 546 14 339 20 982 26 297 37 290 38 408 41 900 49 270

Mussel 321 5 2 815 1 513 1 500 1 545 1 100 1 772

Shrimp 27 - - - - - - - -

Others - - - - - 2 000 2 200 1 600 196

Total 79 031 67 244 61 165 79 943 94 010 118 277 128 943 139 873 152 186

Reference : : Turkish Statistics Institute

Fish Farm : 2000- 2008 ( Ton s)

53

Turkey is the net exporter in the field of fisheries. In 2009, Turkey carried out export of 189 billion dollars and import of

31 billion dollars. Whereas the foreign trade of the fisheries grew by considerable rates in the last 10 years, the export

of the relevant sector grew by an annual average rate of 22.4% and the import of the relevant sector grew by 60%.


According to fisheries sector report issued by Center of Legislation Harmonization in Fisheries, consumption of fisheries

per capita in Turkey is 8 Kg as of 2007. Consumption of fisheries in Turkey is quite below than the European average.

While the European average per capita is 22.7 Kg as of 2006, this figure is 40.5 Kg in Spain. That the per capita

consumption is quite low the European average indicates that particularly the culture fishing has a great potential due

to its respective independence from the natural conditions.

0102030405060708090

100110120130140150160170180190200210220230240250

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Export

Import

Fisheries Sector Foreign Trade (million $)

54

D.

D. Special Files:

Relations with Food Industry, GAP, EU and WTO

55

D. SPECIAL FILES: RELATIONS WITH FOOD INDUSTRY, GAP, EU AND WTO

D.1. FOOD INDUSTRY

D.1.1. General Assessment

Though fundamental objective of our study is to take a photograph of the agricultural sector in Turkey, such study

would not be considered a consolidated study without examination of food and beverage industry, for which the

majority of the agricultural products are used as input. Therefore, we found appropriate also taking a photo of the food

and beverages sector under the light of the recent data we have, without much more going into the particulars.

Transformation of the input consisting of products of agriculture, livestock and fisheries into human nutrition by using

industrial techniques is called as food industry. As of 2007, the food industry sales of 2 trillion dollars in the world

constitute 15% of the total global revenue. Domestic consumption of the food sector that is 19% of the GDP in Turkey

in 2008 is 120.6 billion dollars and the net foreign sales including 3.2 billion dollars (see Photos from Package – Food

Industry).

Photographs from Food Industry (ISPAT, 2008)

• Share of the food and beverage sector consumption in 2008 GDP is 19%.

• 21.4% of the companies acting the in the sector produces bakery products; 19.8% produces fruits and

vegetables and 14.7% produces milk and milk products.

• In the country total food production capacity reached 127 million tons and the beverage capacity reached 13.3

million liters.

• In the same year, whereas Turkey became 4th tomato/pepper paste exporter, it exported more than half of its

production.

• In 2008, Turkey was on the sixth order in tea production and processing in the world.

• In the same year, the number of the companies directly investing in Turkey increased to 369 by 1.5 times.

• The export of hazelnut, dried grape, fig and apricot reached 2.2 billion dollars.

Traditionally, the food industry is classified into eight main categories as follows: Meat and meat products; milk and

milk products; dairy products; starch products; fruit and vegetable processing; oily seed products; sugar products and

animal feed industries. Basic features of the industry in all over the world are consolidation, brandization and

globalization. Considered from the perspective of these criteria, it is apparent that Turkey participates in the trends but

its share remains quite below the income level and development speed despite its giant potential.

According the last count, it is reported that there are about 25 and 40 thousand food entities in Turkey; only 200 of

these entities are using large scaled state-of-the art technology. Whereas the downstream main distribution channels of

the industry are the retail chains any longer in all over the world, it is noticed that traditional and small-sized entities

such as grocer, greengrocer and butcher are ahead. In our country, despite the attempts on food hygiene, certification

and analysis, a major part of the sector, still using cheap and low-quality inputs due to the lower level of income could

not be entered into records.

Another sign of the development is the brandization. In the industry operating with lower margin rates, one of the

important methods of increasing the added value is to make the customers be accustomed to the trademark. In our

country, excluding Efes Pilsen and Ulker, brandization in the food sector is very rare.

56

The Turkish agriculture has been in a very critical period in respect of either the internal dynamics or the fast revolution

in the global trade regime; unless the necessary structural reforms are started urgently, many traditional products

would be exposed to the threat of losing their competition power. Nevertheless, upon an analysis of demand and supply

as follows and as detailed with reference some developing businesses, the future of the food industry seems to be more

brilliant.

D.1.2. Demand Analysis

Let’s start to remember major factors determining the demand in the food industry: These are increase of population

and income per capita; urbanization; change in the family structure (for instance the rate of bachelorship, immediate

families and the participation of the women in the labor force) and changing consumption models and trends.

In respect of demand, Turkey is almost a perfect potential for development of the food industry. The advantages offered

by the country may be listed as follows:

The food consumption of households have three stages: The income elasticity in lower income levels is around 1; in

other words an increase of 1% in the income results in the same level of increase in the food consumption. In medium

level of income, the total expenses - reserved for the food - increase; however, its share in the budget decreases too.

As for the higher income levels, while the income elasticity of the food is so low, the consumption composition shifts to

the luxurious, exotic and in-fashion products.

Since the population increase rate is still about 1.5%, even if all the other demand elements remain the same, the

industry has long term growth potential.

As 30% of the population in Turkey has lower income, it is expected that the food consumption in this section would

increase fast in parallel with the long term growth rate of the country, expected to be 4-5%. 5-10% in the highest

income level produces increasing demand for wide range of products from aged imported wines, exotic fruits and

convenience food. Avocado, mango, frozen Alaska haddock constitute small but highly definitive examples.

As long as the urbanization increases, the demand shifts from bulk, off-the-record and semi-finished products to

branded and packaged products. In a country where 35% of the population still lives in the rural areas and fast

migration is observed, the demand for packed and branded products would increase more rapidly than the total

demand. In other words, besides the demand increase from routine ways, the organized entities occupy the off-the-

record market share and would gain a second momentum. This transition may easily be noticed in the milk, milk

products and dairy products. Particularly, whereas unpacked and unbranded milk and yoghurt sale is almost down to

zero in our western regions, brandization in the cheese types is also increasing.

Turkey is still a country where its transition from multi-generation extended family to the immediate family has not

been completed; the rate of participation by the women in the labor force is increasing and but is still quite lower than

the western countries; the divorces increases day-by-day; and the age of marriage goes up. All these factors create

very appropriate conditions for increase of convenience food consumption. Take-home ravioli-like dish, peeled and

sliced potato, take-home rotary beef and any and all take-home foods with meat are the examples of the products

penetrated into the market thanks to this social evolution.

The Turks, on one hand, strictly adhered to conservative social opinions and its cultural roots, on the other hand

adapting the consumption models of the West rank in the top among the Developing Countries,. This social attitude

constitutes an excellent infrastructure for importation of many nutritional products from gourmet food to the exotic

plants and subsequently for domestic production. Incredible growth of pizza instead of Turkish pizza, burger instead

meat ball; sushi and Chinese food may be shown as example for this development. Additionally, in our country where a

fast passage from the Mediterranean Diet to Northern Europe Diet and spread of healthy diet fashion in the higher and

57

middle socio-economic classes indicate that important changes would occur in the demand composition of the food

industry. Transition from high alcohol contented and distilled drinks to beers, wines and light fruit cocktails including

liquors is also an example. Low and low-middle class would also shift from grain weighted diet to protein and fat

contented diet.

D.1.3. Supply Analysis

We would like to remind that the major elements determining the supply in the food industry are access in agricultural

input and cost; reasonable labor force; import and export opportunities; and being open to the foreign investment –

technology transfer and capital accumulation –particularly WTO and EU memberships.

In a country, which has one of the rich agricultural product ranges of the world, in respect of supply, there is no

problem in supply of raw materials (exceptions to this observation are listed below). While opening of the agriculture to

foreign trade might bring major difficulties for the producers, the same problem does not exist for the food industry.

The food industry - thanks to its experience acquired since the first years of the Republic, distribution networks and

know-how and passive capacity of 30-40% due to seasonality - would notably benefit from the discounts to occur in the

input prices after liberalization of import of the agricultural products. For instance, the primary inputs in the business

branches using corn, sugar and beef may visibly become cheaper.

The food industry is one of the most intense and effortful branches besides textile and tourism. In this context, the food

industry is also attractive for the population and number of unqualified workers, rural and first generation urban, still

highly familiar with agriculture.

The food industry and demand in the EU, the largest commercial partner in the west, are considered to have been

saturated and this might force our producers to the extent that the importation is set free. However, Russia, Caucasus,

Central Asia and Middle East are the major regions of the world, importing food; and additionally, since we have

similarities with these countries such as palatal delight and traditions (excluding Russia and Armenia), these constitute

charming markets for our export potential.

The sector is furthermore open to the foreign investments; as of 2009, total 787 foreign companies, consisting 367

companies for the agricultural sector and 420 companies for the food industry and production, are active in the

agriculture/food sector (Federation of Food and Beverage Industry Associations of Turkey, 2009).

D.1.4. Risks

However, there are also serious risks and factors adversely affecting the productivity. Particularly the major factor is

that agriculture-supply-industry cooperation is very vulnerable. The concept “Contract agriculture”, widely used by the

global food giants, has not been common even, heard, excluding a few businesses related exportation. Furthermore,

Bulut, Arslan, Barca (2007) reported that the possibility of application of the contracts is lower in the environments

where agricultural prices are arranged in favor of the farmers.

Dependence of the major part of agricultural production in Turkey on the climatic conditions makes indistinct the raw

material prices even supply of raw materials to operate the factory with full capacity.

Despite the giant steps taken on this matter, food hygiene and conformity with the international codex in Turkey

(achievement of conformity certificate) fall far behind the Western Countries. Investigations initiated and provisional

importation prohibitions imposed frequently by EU and Russia adversely and notably affect the profit margins. Despite

all the efforts, the producers and the State failed to have definite achievement to prevent even simple animal diseases

such as foot and mouth disease (aphtae epizooticae). Rise of carcinogenic organics and insecticide-chemical fertilizer

residues over the minimum reference values in the vegetable products also decreases the export potential of the food

58

industry. Within this context, we are of the opinion that immediate adoption of the food hygiene standards of EU,

frequently amended and expanded, would significantly contribute to the exportation.

Alterations often made in the agriculture and food importation and exportation regimes, the rationale of which is not so

obvious and not informed beforehand, radically affect the price and supply in the domestic market and cause ambiguity.

D.1.5. Business Branches in the Ascendant in Food Industry

Some of the business branches, which have higher potential for the food industry, as far as we determined, and are

even on the rise in several aspects, are as follows:

• Domestic and foreign franchising,15

• Exportation to Syria, Iraq and Middle East Countries,16

• Organic Food Production and Exportation (see. Box – Turkey’s Organic Agricultural Profile),17

• Take-home and frozen gourmet food18,

• Large-scaled processed raw (mince, small pieces of meat, etc.) and cooked/salted red meat production and

distribution – to form trademarks19,

• To create new trademarks, symbolizing quality and hygiene, for the poured fruits and vegetables.

TURKEY’S ORGANIC AGRICULTURE PROFILE

IN TURKEY, in recent years, amount of the organic products also started to increase. However, in the world, this

diversity consists of wide range of products such as furniture, cosmetics, shampoo, fisheries and wool.

According to the data of the Ministry of AGRICULTURE, in Turkey 7,364 producers produce dried organic fruit, on a land

of total 22,771 hectares. These products are processed in 829 entities.

98% of the organic products, produced in TURKEY, are exported. In this export, the great export share is to Germany

with a rate of 60%. The USA and other European Countries follow Germany. Annual export income generated in this

field is about 100 million dollars.

On PRODUCT basis, the buyer countries are as follows: Legume (Germany-England), dried fig (Australia, Austria,

Belgium, Switzerland, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway, Sweden, the USA,

England), dried apricot (13 countries), fruit juice (Germany, Greece, Israel, the USA), dried grape (11 countries), frozen

food (Belgium, Brazil, Switzerland, France, Denmark, Germany, Spain, Israel, Sweden).

It is estimated that the size of the world market growth in ORGANIC agriculture is about 16 billion dollars. Now, the

average market increase is 25%. This rate may increase up to 40% for certain countries.

In 120 countries (Australia, Argentine and Italia in the top three) organic agriculture is made on a total land of 17

million hectares. This corresponds to nearly 3% of the agricultural production of the whole world. It is expected that this

rate would increase to 20% in 2010. Organic products are sold in only 1.8 of all the agricultural entities.

Source: http://www.turkticaret.net/business_center/haber.php?pid=52

15 See http://www.frmtr.com/ekonomi-finans-borsa/3250489-cok-kazandiracak-firsatlari.html 16 See http://www.8sutun.com/haberdetay.asp?tarih=13.03.2010&Newsid=65295&Categoryid=6 17Seehttp://docs.google.com/viewer?a=v&q=cache:3XkV4YXQJMEJ:kutuphane.uludag.edu.tr/PDF/ziraat/2008-22(2)/M4.pdf+organik+g%C4%B1da+%C3%BCretimi&hl=tr&gl=tr&pid=bl&srcid=ADGEEShspHwlkaf94EZrRBSLF7K-lAg-q6bTho4XGQizvfRlAwHwh4vXhbEKSyVogCBfssh6n2osbnEVOmXXgib1M5nhuyx5FXC3T95GVn6vW4ieK3H_CX8_JanHPjN5bySydsSOIbEf&sig=AHIEtbQaSSwIvnxjOPUkv_K92eaZSFtBTQ 18 See http://www.cine-tarim.com.tr/dergi/arsiv48/sektorel02.htm 19 See http://referansnoktasi.blogcu.com/sarkuteri-sektoru/4354571

59

D.2. GAP (SOUTHEAST ANATOLIA PROJECT): ONE-LEG GIANT Southeast Anatolia Project (GAP), launched in the period of Turgut Ozal in 1980s is the greatest public investment and

regional development project in the history of the Republic. The results, achieved by GAP up to date, result in design or

entry into effect of similar projects in many regions of our country. The first aim of GAP, consisting of nine provinces, is

to benefit from hydro-electric potential of Euphrates (Fırat)-Tigris (Dicle) rivers and the streams draining to the same.

In time, agricultural irrigation, industrialization and lastly rural development were involved in the development

supporting project.

Upon consideration of GAP, in respect of energy generation being the first target, it is apparent that it changed the faith

of Turkey. Within the scope of GAP, 9 Hydro-electric Power Plants were completed and 5% of energy need of Turkey is

supplied from these resources. (GAP Regional Development Management Organization, 2008).

Total value of the energy generated by GAP exceeded 17 billion dollars. This rate would be increased up to 7.5% of the

energy consumption concurrently with the completion of the remaining dams.

60

Although important steps were taken in the investments such as transportation and organized industrial zone in the

GAP region, it is apparent that the two other objectives of the project, consisting of efforts of completion of the

irrigation network and conscious agriculture/industrialization, failed to produce effective results in respect of public

investment.

• In GAP region as of January 2008, a land of 272,972 hectares was started to be irrigated. In a land of 99,518

hectares, irrigation network construction is still continued. Physical realization rate of GAP irrigation

investments is 15% as of 2006. (According to TUSIAD Report 2008: 14%). For the State Minister, responsible

for GAP, named Mr. Cevdet Yılmaz, the irrigation projects would be completed in 2012 and as of 2013, a land

of 1 million 60 thousand hectares would be started to be irrigated20.

• In Sanlıurfa-Harran Plain where the irrigation has been started since 1995, while the added value per capita

was USD 596 before irrigation of a land of 30,000 hectares, this value increased to USD 859 in 2006.

• The number of farms, employing more than 10 persons in the GAP Region as of the end of 2007, is 1,969. In

these farms, total 87,566 persons are employed.

• The level of export made from GAP also increased; the export amount, being USD 585 million in 2002,

increased up to 3,864 million dollars in 2009. The share of the export from the GAP zone in the total export of

Turkey increased from 2.3% to 3.03% in the same period.

We have accepted the importance of these achievements; however, we would state that these are under the targets we

set forth below. We also remind you that while migration from the region continue, besides the agricultural

achievements, total land of 50,000 hectares, according to some estimates, lost their productivity due to unconscious

irrigation and fertilization. If this estimate is correct, agricultural productivity has been lost in a larger land in Harran

Plain due to incorrect irrigation. This observation indicates that the most important structural aspect that is the

requirement for human training has not been fulfilled as required.

It would not be correct to project management efforts of GAP Regional Development Administration Organization and

other public institutions acting in coordination with the preceding organization. Underlying problems are inadequacy of

the resources set aside for the project, inadequate investment by the private sector and the most important one, failure

to get adequate financial support from supra-institutional financing organizations (such as World Bank) and private

financial institutions. Several Western financing and donation resources are not adequately benefited as a result of

20 A few days before publication of our report, it was officially declared that 2012 irrigation targets would not be able to be achieved in GAP. Prof. Erol Cakmak, acting as arbitrator for our report, stated that any part of the targeted lands to be started to be irrigated would not be so economical due to its topographical structure. As we do not have a detailed topographical map, we have difficulty in determining the area of the lands to be irrigated efficiently. However, we would like to remind you that the estimates given below are extremely conservative and the area of the land to be used for final irrigated agriculture is only one of the factors we take into account.

2006 2007 2008 2009 Jan-Apr 2009 Jan-Apr 2010 % change

Total 2,239 2,842 3,897 3,864 1,216 1,512 24

Fisheries and Animal Products 5 5 8 14 6 13 106

Grain, Legume and Oil Seed Amounts 404 541 927 800 310 235 -24

Dried Fruits and Products 130 181 202 182 57 62 9

Textile and Raw Materials 1,546 2,091 2,446 2,365 711 875 23

Other Sectors 153 224 313 503 131 327 150

Reference: Secretariat General of the Southeast Anatolian Exporters Association

Southeast Anatolian Exporters Associations (million USD)

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successful defense - in the West -of the claim that the Project would damage the historical and environmental values

(Ilısu Dam) and unsuccessful defense our thesis that the water distribution is made fairly between the neighbor

countries and us (Turkey-Syria Water Disputes). Failure to adequately train the farmers of the region is not only a

problem of GAP but also a common problem for the entire of Turkey; and this problem arises out of deficiency of

qualified cadres in the related ministries for financial reasons.

Unless measures to change these conditions in favor of us are taken, the most possible scenario would be completion of

the Project by using limited public resources. The resource anticipated for activation of all the aspects of the Project is

TRL 15 billion currently; however, increase of this amount by two or three times would not be so surprising. Upon

consideration that the one fourth of the unemployment insurance fund is transferred to the budget in 2009-2012 for

completion of GAP investments and this transferred fund is around TRL 1.5 billion for each year, in a scenario where this

fund is fixed, completion of the investments would most probably take 10 years.

However, the utmost care paid to the region by the Government and its efforts to create funds for the Project are

worthy of commendation; therefore even if it will take time, with the assumption that GAP would be completed as fast

as possible, we are of the point that it would be a correct approach to analyze its contribution to Turkish agriculture and

welfare of the region.

D.2.1. Benefits of GAP in Agriculture

In case of completion of GAP; benefits, its aspects and benefits to be driven in the best scenario are summarized as

follows:21.

• Upon completion of the irrigation network, it is definite that annual production amount for many products

increase. Secondly, interregional vegetable cultivation would differentiate radically.

• It is quite possible that the industrial plants based on agriculture – to be established in the region – procure

new markets in the regions already abundantly exporting the Turkish agricultural products such as Iraq, Iran

and Mersin Port as well as Middle East or cause increases in shares in the existing markets22.

• In the region, traditional pastures/small farms, stock farming might transform into large-scaled commercial

corporations and make considerable contributions to the meat and milk production.

• In the region, there is a river of 2,235 km length, a lake of 6,481 hectares and a dam lake of 76,692 hectares.

Almost all of these lakes are appropriate for fish farms and tourism. We have not any reference relating to the

additional revenue to be generated from these lakes and regions.

• Most of the lands, on which dried/extensive agriculture was made before, are appropriate for organic

agriculture and sale to this fast-increasing market promises higher rate of profit margins. (See: Applicability of

Organic Agriculture in GAP zone23). Notable organic agricultural activity is still noticed in the GAP Region, only

in Şanlıurfa and on a limited scale, in Gaziantep; however, there is no such activity in the other provinces.

D.2.2. Agricultural Potential of GAP

In this section of our study, in case of completion of irrigation and farmers training aspects of GAP, the contribution of

GAP to the economy and agriculture is examined. It is upsetting that the official projections on this subject are very

untreated and old. Additionally, the figures given by the GAP Administration and the Ministry of Agriculture and Rural

Affairs are extremely obscure.

21 We found appropriate only to handle the gross product7revenue increase or net positive value concepts. We do not touch on the contributions of the Project in the region in the form of sociological” public property advantages” such as piece in the region, cease of the migration, increase of the education level. 22 We are of the opinion that Turkey-Syria-Lebanon-Jordan economic cooperation agreement, even if the details have not been determined yet, would provide GAP with new trade, service sale and export possibilities. Negotiations, we held with two employer union, put forth that the commercial activity in the region increased within the last one year and tourist influx visibly increased. However, we do not have any data to measure this potential. 23 See http://www.zmo.org.tr/resimler/ekler/42ad93f7491f2a3_ek.pdf

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Even if the estimates, for instance, that when the irrigation aspect is completed, 3.5 million persons would be employed

and agricultural production will be increased by two times are realistic, they cannot constitute basis for investment

decisions since they are not supported by at least statistics.

When we expand our research a little, we notice the opinion that GAP would contribute 50-100 dollars billion to the

agricultural output is frequently repeated in the agrarian environment. We have difficulty in believing this figure; this is

because whereas USD “added value” of total agricultural production, still corresponding to approximately 8% of the

GDP, is around 50 billion dollars according to 2009 figures, total population-land rate of GAP Project corresponds 10%

and 9% of Turkey. Perhaps, this figure is “gross”; in other words it is uttered as amount that is contribution without

deduction of irrigation, fertilizer and other inputs. Or it is considered that food processing and similar agricultural small-

scaled industry would be added to the agricultural production and would contribute to the GDP.

Despite ambiguity of GAP’s agricultural contribution, the increases caused by GAP on product basis are gorgeous.

Products to benefit from the completion of the irrigation networks at the first phase are unshelled rice, cotton and

industrial vegetable products.

Additionally, shift of the products with partially lower added values such as grain, oily seeds and industrial plants from

Aegean, Mediterranean and Konya basins to the GAP region and shift by the relevant regions to fruits, vegetables and

flower etc., the export potentials of which are extremely higher would indirectly increase the total agricultural output of

Turkey. We hereby anticipate that the additional product value, arisen after completion of irrigation network, is annually

3-5 billion dollars. However, in case the farmers are equipped with the necessary information and agricultural

equipment, estimates may much more increase. How much production would be imported as raw materials and how

much would be processed in the region and offered to the domestic and foreign trade would determine the added value

to be derived from the region. Although our methods of estimation are very primitive, we think that the exportation

would increase by two times and the agricultural production would increase by 3-3.5 times (in amount) within five years

after completion of the irrigation network.

D.2.3. Industrial Products in GAP

It is definite that upon completion of irrigation and farmers training in the region, the traditional xylem would radically

change; however, it is difficult to estimate the direction of this change. The first reason is the difficulty in calculation of

the long term effect of huge dams and irrigation channels constructed in GAP on the climate and soil structure. The

second reason is that changes between the product prices and modeling the effect of the same on the demand-supply

exceed he limits of this research. Institutionally, that the climatic changes would decrease a little the productivity of the

products and nevertheless immediate shift of the farmers to the higher added value products as proceeds in hectare/net

TRL are the natural assumptions.

In the near future, it is strongly possible to shift from the grains and legumes to unshelled rice, cotton and particularly

oily seeds in the region.

Production of plant such as Antep pistachio, of international importance, still increases in the region; nonetheless it is

observed that this plant is so sensitive to the climate. Antep pistachio and subsequently peanut may become two of the

most important export products of the region.

Cultivation of tomato, successfully sustained by Tat Konserve, has borne fruit. That 100% or more increase in

production would last for long years is a reasonable assumption. As long as an export demand arises for products such

as eggplant, pepper and cucumber, seeking similar growth conditions, increase of their production as complementary

products is possible.

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The livestock, traditional source of living of the region, was seriously damaged by terrorism and incorrect incentive

policies in recent years. However, upon decrease of the livestock prices due to increase of corn production; the potential

in the extensive livestock seems quite higher in the region. Along with the increase of the great and small cattle flocks,

decreasing in number, increase would arise in red meat production that is the most expensive food in Turkey. In case

large-scaled livestock is performed consciously, it might become one of the most profitable investments in the region.

Another resource, never treated before, is the fish farms in the dam lakes. According to the limited researches we have,

almost all the dam lakes are appropriate for breeding fish. Important earnings might be gained by shifting to the dam

lakes of unsatisfied demand for water products, rapidly increasing due to health in Turkey.

Lastly, GAP is surrounded by 3 regions of the world, the richest of the world but the hungry for food diversity. These are

consecutively Middle East, Central Asia and Russia. Total food trade of these markets is estimated as 200 billion dollars.

D.3. TURKEY AND EU’s COMMON AGRICULTURAL POLICY EU’s Common Agricultural Policy (CAP) would be the most effective external factor over trading, production and rural

development in Turkish agriculture. Even if when and under which circumstances the membership of Turkey would be

initiated and the forms, which the CAP would turn into at that time, are ambiguous, it is definite that integration with

the EU economy is getting deep each passing day. We envisage that Turkey, whether the membership is initiated or

not, would approach to full harmonization with the CAP in a few years but definitely less than a 10 years’ period.

In this scenario, we firstly analyzed the brief history, structure and the form of the CAP. Secondly, we summarized the

major items of inharmoniousness between the Turkish agricultural policies and the CAP. Finally, while performing

empirical reviews about the share to be received from the CAP budget which consist the most important economical

concern in the context of Turkey’s membership to the EU, on the other hand, we researched the loss and possible gains

of Turkey.

D.3.1. Brief History

The CAP, entered into force in 1962, is contemplated based on 3 major principles in its first period. These are; creating

a single market in EU; substituting import through customs walls of the production within the Union; increasing the

depth of EU through jointly financed programs. The main objectives of CAP may be summarized as: To increase

agricultural productivity; to provide a fair subsistence level for the farmers; to maintain stabilization in the market; to

ensure food safety and to keep the prices at reasonable levels.

In order to accomplish these objectives, at the beginning 4 basic instruments are accepted. These are; agricultural

products support programs, direct payments to the farmers, supply management and limitation (customs) precautions.

(See: Economic Development Foundation, EU’s Common Agricultural Policy for the CAP’s objectives, instruments and

contributions to the social welfare.)

CAP has mainly achieved its objectives in the headlines such as food supply, safety and creating a single market,

farmers’ welfare. However, it is observed that CAP has brought along many issues. While the customs barriers have

interrupted the world agricultural trade mostly, the underdeveloped countries, the subventions have created stocks that

are impossible to be disinvested. Whereas the opinion of disinvesting these stocks through export has a second

negative effect on the poor countries, a commercial war with the USA is about to arise. Most importantly, the burden of

CAP over the EU budget is increasing in every passing year. Even if small arrangements under the name of “reform”

have been made till 1990’s, the objectives and instruments of CAP have not changed so much except for imposing

quotes on milk production.

The first reforms (McSharry reforms) in order to adapt the CAP to the new conditions of the world and the EU, has been

executed in 1990’s. On the basis of the reforms, there exist articles which might be considered to be radical and

constitute the core of the future reforms such as decreasing the subventions for the products with surplus supply,

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rendering payments gradually per house or person not amount, non-cultivationof some of the agricultural lands in

consideration for payment (European Union Common Agricultural Policy and Reflections on the Turkish Agriculture, the

Sample of Balıkesir, 2008).

D.3.2. Today of CAP

While enhancement attempts by small arrangements over the system are continuing in 1993 -2000, the second radical

movement was initiated by Agenda 2000. The originating points of Agenda 2000 can be summarized as follows:

• To decrease the pressure of 10 new members over the CAP’s budget,

• To develop policies including the newly generated issues such as security of supply, environmental protection,

rural development and hygiene,

• To comply with the criteria of the WTO (World Trade Organization) that is from now and on closely involved

with the global agricultural trade after the Uruguay round.

The differences between the original vision of the CAP and the design of Agenda 2000 are shown in the table

below:

THE OBJECTIVES OF THE COMMON AGRICULTURAL POLICY

To support the technical progress; to provide rational development of the agricultural production; to increase the

agricultural productivity by optimizing the factors of production especially the labor force,

• To ensure an appropriate standard of living for the agricultural society, especially by increasing the income per capita of the agricultural workers,

• To balance the markets, • To provide accession in supply, • To procure that the supply reaches the consumers at reasonable prices. (Amsterdam Treaty art. 33 (39). THE OBJECTIVES BROUGHT BY AGENDA 2000 • To improve the competitive power through low prices for the agricultural producers to benefit from the positive

developments in the world market in and out of the EU, • To guarantee the consumers the safety and quality of food, • To provide a stable and appropriate standard of living, • Adopting environment-friendly production techniques and to respect the animal rights, • To integrate the instruments of Agricultural policy with the environmental objectives, • To search alternative income and employment possibilities for the farmers and their families, To simplify the legislation of Union (SPO, Agenda 2000 and Turkey. Volume I, Directorate general for European Union Affairs, September 1997, s.5)

Reference: EU-Turkey Chambers Forum, 2009

After the mid-term review of Agenda 2000 (health check), the current period that is the continuous evolution process

threshold by the June 2003 and April 2004 reforms. The reforms, in one sense, have again put into effect the principle

of the member countries’ having more right to comment on the agricultural policies. For example, countries have gained

more autonomy over the distribution of agricultural supports.

There are 4 bases lying under Agenda 2000, these can be summarized as single payment scheme; compulsory cross

compliance; modulation and financial discipline, and enhanced rural development policies. It is useful to analyze the

major elements of this new approach which considers agriculture from an integrated point of view:

Production and income support are separated completely with the last reforms excluding a few exceptions. From now

on, payments at financial dimension named as Single Farm Payment (SFP), would be determined by following the 2000-

2002 harvest levels.

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Compulsory Cross Compliance is the obligation to comply with the conditions of environmental and animal health, food

safety and quality within the framework of EU’s new Directive of Rural Lands are Wealthiness, in order to receive SFP.

Furthermore, the obligation to keep the fallow lands and the lands discontinued from agriculture at the conditions to be

engaged in agriculture has been imposed. However, in order to provide convenience for the countries during transition

period and at a broader perspective, within the light of a new opinion shifting the management of agricultural policies

from the EU to the member countries, the requestor countries may also give joint support to the production and the

product in some regions. In practice, only a few members continue to exercise these supports.

Modulation is a new concept which aims at providing the financing required for the execution of the rural development /

environmental protection priorities from the other items of CAP. The box below explains in detail the concept of

modulation which we consider to have more importance among the CAP payments for the following years. (See. Box –

What is Modulation?)

Box – What is Modulation?

Modulation is, basically, the transfer of subvention payments constituting the Pillar I of CAP to the Second Pillar that is

the rural development expenditures. In other words, with this mechanism, the expenditures are being shifted among

the budgets. Compulsory modulation, excluding the very small-scale farms, in all of the 15-EU members, in 2005, starts

with the rate 3 % and would increase to 5 % in 2012. However, the rate of transition maybe increased as a result of the

health check.

Member countries can increase the modulation by %20 voluntarily. The 20 % of the funds to be saved as a result of

compulsory modulation recourses to the budgets of the member countries; and the remaining is distributed among all

the member countries according to the determined criteria24. However, entire of the savings to be retained from

voluntary modulation remains at the member country.

Financial discipline was anticipated as a solution for the problem of over-budget about which the countries rendering net

payments to CAP complain. In the past, according to that decision taken upon frequently exceeding the CAP budget

limits, if the expenditures seem to possibly exceed the maximum, as a precaution, in the direct aids, a deduction

corresponding to the high band of 300 million Euros of the budget limit would automatically be made. EU Commission

would give the relevant proposal on this issue; the precautions would be approved at the year-end meeting of the

Council (at the Leaders Summit). Besides, annual increases in CAP budget in 2007 – 2013 are limited by 1%.

24 However, as the result of this distribution, it is anticipated that at least 80% of the modulation savings would be retained by the contributing country.

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EU Financial Perspective For the years 2007 – 2013 (in 2004 prices; Million Euros)

2006 2007 2008 2009 2010 2011 2012 2013

Sustainable Growth 47.582 59.675 62.795 65.8 68.235 70.66 73.715 76.785

Natural Resources 56.015 57.18 57.9 58.115 57.98 57.85 57.825 57.805

Total CAP 54.279 55.259 55.908 56.054 55.859 55.666 55.853 55.497

Agricultural Markets 43.735 43.5 43.673 43.354 43.034 42.714 42.506 42.293

Rural Development 10.544 11.759 12.235 12,7 12.825 12.952 13.077 13.205

Others 1.736 1.921 1.992 2.061 2.121 2.184 1.972 2.308

Citizenship 1.381 1,63 2.015 2,33 2.645 2,97 3.295 3,62

EU as Global Partner 11.232 11,4 12.175 12.945 13.72 14.495 15.115 15.74

Management 3.436 3.675 3.815 3,95 4,09 4.225 4.365 4,5

Total Commitments 120.688 133.56 138.7 143.14 146.67 150.2 154.315 158.45

% of CAP in total 44.97 % 41.37 % 40.31 % 39.16 % 38.08 % 37.06 % 36.19 % 35.02 %

Total Payment 114.74 124.6 136.5 127.7 126 132.4 138.4 143.1

Payments as % of GNI 1.09 % 1.15 % 1.23 % 1.12 % 1.08 % 1.11 % 1.14 % 1.15 % Reference: Effects of Adaptations to EU CAP on Turkish Agriculture, Department of Economic and Financial Affairs, 2004. http://dyp.org.tr/Ekonomik ve Mali

Degerlendirme Raporlari/AB Ortak Tarım Politikasina Uyumun Turk Tarimina Etkileri.doc

D.3.3. Future of CAP

We think that the financial dimensions of CAP, still spending 38% of the budget of the Union would gradually decrease

as per the EU GDP (Gross Domestic Product). However, considering that the new 10 members are poorer and have

more rural population compared to the former members, it is obvious that CAP would remain as one of the major focus

points of the policy of the Union in the foreseeable future. According to the final decisions of EU, discussions about the

form of CAP between 2013 -20 when the next budget period would start have recently started informally.

However, we might make some qualitative predictions looking at the global trends and other policies of EU:

• The budget would be constructed in contemplation of providing minimum net aid to the new members and

extending the “transition period”.

• The rate of priorities in the budget, such as environmental protection, struggle with climate change,

conservation of rural structure, would increase.

• In case of increase in the global food prices continues, it is possible to start the support system in some

products from the payments rendered for non-cultivation of the lands.

• In case the Doha Round ends, precautions promoting the increase of agricultural competitiveness would be put

on the agenda.

• If the veto of France is cleared, the budget of CAP might be frozen; at least a decision to decrease the rate in

the total might be taken.

• It is possible that the financial bottleneck in EU would cause radical changes on the CAP. However, since long-

term budget priorities of EU after the crisis are not determined, we abstain from any and all speculations.

D.3.4. Turkish Agricultural Policy and CAP: Harmonization and Conflicts

While examining the effects of CAP on our agriculture, it would be useful to clear some misunderstandings. Even if the

agricultural products fall outside the Customs Union Agreement which regulates our commercial affairs with EU, two

partners have decreased the barriers they imposed upon each other in time with several supplementary agreements.

After 1996, Turkey has been implementing a tax free import regime or import regime with lower tax to the 33% of the

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agricultural import from the EU. EU applies “negative list” to Turkey, according to which the import of products is set

free, excluding 23 products, or is possible with lower taxes compared to the countries out of the Union.

The commitments that Turkey would fulfill during the EU membership process are determined by the Accession

Partnership Documents (APD), frequently amended. The last APD was signed in 2008 and harmonization related to the

short and long term agriculture was widely included in this ADP. According to the APD, Ankara undersigned these

commitments in the chapters (headlines) related to the short term agriculture:25

Chapter 11: Agriculture and Rural Development:

• An IPARD agency, accredited as per the EU requirements, should be established.

• The restrictions on the meat and livestock import should be abolished.

Chapter 12: Food Safety, Plant and Animal Health:

• A framework law regarding the food, feed and veterinary medicine issues as per the EU requirements should

be accepted.

• The operability of the system for determining and registering the great cattle animals and their movements

should be guaranteed and an appropriate system for following the movements of sheep and goats should be

started.

• The necessary precautions should be taken enabling the recognition of Thrace region by the World

Organization for Animal Health as a region, free of vaccination and foot-an-mouth disease.

• A national program - for the classification of all agricultural food premises based on the European Union

Legislation and improvement of these premises - should be prepared.

Chapter 13: Fisheries:

• Especially, by establishing a unit responsible for all fisheries issues, administrative structures should be

strengthened. Special emphasis should be placed on strengthening the control and supervision services of

fisheries.

• Law on Fisheries - revised as per the EU requirements, including the resources and fleet management,

investigation and control - should be accepted.

Medium term harmonization priorities of Turkey are listed as follows:

Chapter 11: Agricultural and Rural Development:

• For transition to the control of the agricultural lands, definition of land and the System of National Registry of

Farmers should be continued.

• In order to ensure application of agricultural-environmental precautions in the future, preparations for the

application of pilot projects related to the environment and rural land should be started.

Chapter 12: Food Safety, Animal and Plant Health Policy:

• Control mechanisms should be developed for animal health; eradication plans for the cases required by the

animal health should be made.

25 Reference: The informal translation of the decision of the Council related to the principles, priorities and terms of the Accession Partnership with Turkey and modifying the decision numbered 2006/35/ec, published in the Official Journal of the European Union dated February 26, 2008.

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• Laboratory and control capacities on the animal and plant health, especially concerning the reference

laboratories, residue tests (including control plans) and sample procedures, should be strengthened.

• Regulation on the Transmissible Spongiform Encephalopathies-TSE and animal side products should be

harmonized and necessary collection and treatment methods should be developed.

Chapter 13: Fisheries:

• In order to submit correct information to sea sources, a trustable stock evaluation system should be

developed.

• The current fleet registers should be adapted according to the EU standards.

Although some steps are taken relating to the harmonization priorities included in APD and National Programme,

according to the TOBB’s (Turkish Union of Chambers and Commodity Exchanges) Report (2009) and web site of Ministry

of Agriculture and Rural Affairs (2010), Turkey has not yet completed the required studies listed below:

In the field of Agricultural and Rural Development;

• Establishment of an IPARD Agency (there are total 8 regulations related to Turkey, 7 of which is in force),

• Improvement of Land Definition and System of National Registry of Farmers (there is 1 regulation related to

Turkey, none of which is in force),

• Preparation of application of the pilot activities related to environmental and rural regions concerning the

future applicability of agricultural environmental precautions (there are total 4 regulations, all related to

Turkey and all in force),

In the fields of Food Safety, Veterinary Medicine and Plant Health;

• Acceptance of a framework law which is harmonized with the EU requirements about the food, feed and

veterinary services issues and which may transfer the EU Acquis , (there are 6 total, 6 current, 6 Turkey

related regulations),

• The start of the operation of an appropriate system for the identification and registration of great cattle

animals and their movements and a system related to following the movements of sheep and goats as per the

EU Acquis, (there are 3 total, 2 current, 3 Turkey related regulations),

• The necessary precautions required for the recognition of Thrace region by the World Organization for Animal

Health as a region free of foot-an-mouth disease (there are total 1, 1 current, 1 Turkey related regulations),

• The preparation of a national program for the classification and improvement of all agricultural food premises

based on the Union Acquis (there are total 2, 2 current, 2 Turkey related regulations)

• The development of eradication plans, control precautions against animal diseases (there are total 30, 24

current, 30 Turkey related regulations),

• The development of the laboratory and control capacities in the fields of food safety, animal and plant health,

primarily the reference laboratories, residue tests and sample taking operations (there are total 4, 4 current, 4

Turkey related regulations),

• The harmonization with the regulation related to the Transmissible Spongiform Encephalopathies (TSE) and

animal side products and the start of establishing necessary collecting and avoidance systems (there are total

2, 2 current, 2 Turkey related regulations),

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There are major differences between the Rural Development Plan pending before TBMM (Turkish Grand National

Assembly) and the CAP and complementary regulation about the agricultural supports.2 For example, while CAP is

progressively quitting support corresponded to product and production, Turkey brings this method back (see. Part B.7)

The Rural Development Plan, as the CAP, also examines the rural population and lands together as framework however,

considering the budget and human resources limitations as well as the deficiencies of the plan, it seems difficult to be

put into effect in short term.

Shortly, Turkey’s complete harmonization with CAP would be difficult and result in changes in agriculture which might

be considered as radical. The fact that Ankara has limited staff and budget opportunities to successfully manage this

process of change and the perception of the society for the reforms as “being done due to the external pressure” can be

seen as a factor increasing the problems and failures.

D.3.5. Cost Analysis, Winners and Losers

In the discussions about Turkey’s membership to EU, one of the mostly used rationales is the opinion that we would

obtain a great share from the CAP due to higher rate of rural population, low level of income and non-productiveness in

agriculture. The EU Commission exercising the first official study on this matter, in its report 2004, in the scenario of

membership/complete transition in 2015, has calculated that Turkey would cost 8.2 billion Euros to the agriculture

budget, 27.6 billion euros to the total budget; however the Commission has not shown any reference.

The most comprehensive study - we have – is related to the year 2006 (Assist. Prof. Emine Bilgili, 2006, Possible Effect

of Turkey’s membership on EU’s Budget). The figures from several references are listed in the following table:

Estimations about the Effects of Turkey's Membership on the EU's Budget

Study Contemplated Year Method Annual Transfer

Flam (2004) Current System (2000)

regression based on voting capacity, level of income and current expenditures Net 12 billion Euros

Togan (2004) Current System (2000)

regression based on voting capacity, level of income and current expenditures Net 14 billion Euros

Huges (2004) Current System between 2015 and 2017

the amounts compared to the income per capita of Bulgaria and Romania and 4% limit of GDP for structural funds

Gross 11 billion Euros in 2015 and 19 billion Euros in 2017

European Commission DG-Agriculture (2004) Current System (2004)

calculations according to the current rules

Gross only agricultural expenditures 8,2 billion Euros

Grethe (2004) Current System and reform scenario in 2014 Model of Simulation

Current situation: in 2014 net 10,9 billion Euros; CAP reform, net 6,8 billion Euros

Zft Current System (2001)

Calculations according to expenditures and payment shares of EU-15 member countries Net 8,2 billion Euros

Dervis, Emerson, Gros, Ulgen (2004) Current System (2001)

CAP-cost value added comparative rate

Net transfer 2015: 18 billion Euros

Among the studies carried out since that date, Grethe’s findings are the most detailed and convincing ones. Grethe, in

his studies, considers both the current system and the foreseen future CAP reforms and the developing structure of

agriculture in our country as much as possible. According to Grethe, the cost of Turkey to CAP is shown in the table in

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different scenario. In the direction of the strategy of limiting the budget of CAP and extending the transition of new

members to the step of complete support, which the EU has adopted in recent years, we find the minimum costs more

realistic. Under these circumstances, we find it difficult to accept the thesis that the share which Turkey would take

from the CAP’s budget and the EU’s budget in general during full membership and afterwards the transition process

would cause very radical problems in the economy of the Continent. Probably, the share that Turkey would take would

even be less than the share of Poland.

The EU's Incomes and Costs resulting from the membership of Turkey to the EU

(The Scenario of Decreasing the Direct Payments) (Billion Euros, in 2004 figures)

2015 2025

Total 25% of DP

Budgetary Expenditures

Common Agricultural Policy(CAP)

Direct payments 3.8 0.9 2.4

Second Round 1.5 1.5 2.0

Other policies 1.0 1.0 1.0

Total CAP 6.3 3.5 5.4

Structural policies 7.7 7.7 till 25.6

Other expenditures 1.6 1.6 1.6

Total expenditures 15.6 12.7 till 32.6

Turkey's contribution to the budget

Basic assumption 5.2 5.1 7.8

Growth making up the difference 6.1 6.0 11.0

Slow growth 4.4 4.3 5.5

Net transfer to Turkey

Total (basic assumption of growth) 10.4 7.6 till 24.8

Resulting from CAP 4.5 1.7 2.9

Total (growth making up the difference) 9.3 6.5 till 31.4


Total (slow growth) 11.3 8.6 till 19.6


Despite this cost, it is upsetting to see that the wide contribution of Turkey to the EU agriculture in several dimensions

such as fruit, vegetable, medicinal herbs and bio-diversity has not been considered in any of the studies. In the sense of

biodiversity of resources and self-sufficiency thesis, which EU embraces more every day, in every field from energy to

agriculture; market prices and social benefits to be brought by Turkey should be decreased from the cost of Turkey to

the CAP.

However, how much would it cost to Turkey to conform to the CAP? We noted that surprisingly few researches were

made on this matter. Almost all of the references that we have are based on the same three researches. These are

made by Akder and Ark. (1990), Ertugrul (1992) and Cakmak and Kasnakoglu (2001). In the studies, the cost of CAP to

the sector of agriculture is assessed with the effect on the consumer welfare. Cakmak (October 2007) who brings

simulation farthest, in his evaluation; has foreseen three scenarios including; status quo would be kept in Turkey – EU

relationships in 2015; and customs union would be widened including the agricultural products and the full membership.

In the scenarios, when we chose the most realistic assumptions and the CAP payments, and eliminate the scenario full

membership, it becomes apparent that increases in welfare remain as limited as to be measured by 2-3%.

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Due to the frequently changing agricultural goods and food prices, EU’s quickly evolving policies and reform applications

which have started to give results in our agriculture and finally the interest which the private sector has started to have

in the agriculture, it is not possible to make a more substantial estimation.

At first sight, in case of full membership to the EU, our considerations about the loss and gains of Turkish agriculture

correspond to our findings related to the results of WTO (World Trade Organization) Doha Round. While having

advantages only in Mediterranean plants except for cotton, fruits and vegetables, Turkey would have to increase the

import of grains, oily seeds and red meat. The productivity table per land in 2003 given below also supports this

qualitative finding.

Productivity of Some Products in Turkey and EU 2001 / 2003 average. (100 kg / ha)

Turkey Turkey EU- 15 EU – 25 Turkey/EU 15

Wheat 20.4 64.2 56.6 31.8

Cotton (unseeded) 35.5 30.5 116.4

Barley 22.4 44.9 41.8 49.9

Corn 43.6 85.8 73.8 50.8

Sunflower 12.1 16.3 16.7 74.2

Sugar beet (ton/ha) 4 8.7 45.8

Potato 259.2 353.9 264.6 73.2 Reference: DIE (State Institute of Statistics), Agricultural Structure (Production, Price; Value), Several Years; European Union

However, all of the analysis that we have are extremely at macro level, and do not consider the possible evolution in

agriculture in the next 10 years, which we foresee as the harmonization process of Turkey with the CAP. Due to their

structure, the models which calculate the loss and gain of Turkey from CAP use macro data. For example, variants such

as wheat harvest per hectare or meat obtained from the average great cattle animal are used. However, Turkish

agriculture shows structurally great variations. We may gather this variability in two dimensions. The first is the farms

engaged in traditional agriculture and modern agriculture (Agro economic policy analysis of the new member states, the

candidate states and the countries of the Western Balkans), the second is factors such as soil productivity and accession

in grazing land.

We think that farms engaged in large scale intensive agriculture may compete with most of the EU countries when the

complete harmonization with CAP is achieved. As most of the farms engaged in traditional agriculture are engaged in

production for their own consumption, they would not suffer much from the freedom of import. In parallel with this

observation but with less confidence, it seems possible that large scaled livestock breeding competes with EU.

The second difference arises from the fact that the productivity of our lands differ greatly from region to region. By

supplying the minimum scale economy in wetland and deep soils, competition with EU in many products seems to be

possible. Possible loss would center upon the marginal soils, their owners would either migrate to urban or shift to much

more productive products.

In conclusion, even for the products that we fall behind of the EU in average productivity, it is possible to compete

locally. From this point of view, we have determined that the estimations related to the social damage of harmonization

with CAP are required to be revised and the potential opportunities are overlooked.

Secondly, the positive effects of many irrigation and improvement projects newly started to be operated, primarily the

GAP (Southeast Anatolia Project) are not taken into consideration. In GAP region where there are lands with larger

72

surface area, it is possible to harvest some of the products five times in two years. With the irrigation projects promised

to be completed in 2012, the amounts of soil with a huge increase in productivity, would quickly rise and also increase

the average of agricultural productivity. In parallel with this observation, it is possible that the projects of combining the

lands and giving land to a landless farmer that the government puts into effect - even if just a bit slowly - also increase

the productivity per unit.

Organic agriculture is a subject, required to be kept completely out of these generalizations. Turkey is the country

which has the largest lands suitable for organic agriculture within the environment of EU. Currently, a very small part of

this potential is being used, the share of organic agricultural products in the total agriculture import is only 0.2%.

Organic agriculture is not a fashion. It is the reflection of the healthy and environmentally- conscious food consumption

in the entire world, increasing for several reasons and may provide great benefits to Turkey in the future. We would

mention the importance of organic agriculture in many aspects, in the investments part.

In fruits, vegetables and Mediterranean products, medium level of gains seems to be possible.

Perhaps, the most necessary point to be considered is that the CAP is a policy which includes not only the price but also

the priorities in many fields such as the environmental protection and the protection of rural structure. It seems

possible that in Turkey, farms which combine these priorities in production gain benefits and proceeds much more

beyond and out of these generalizations, rather than the competition in agricultural product. We think that it is possible

to access in the EU’s rural development funds as well as the current funds on many subjects such as protection of

history and bio-diversity by combining the themes of agriculture, environment, history and alternative tourism. We

would study this opinion in more details in the Investment Themes Chapter.

D.4. TURKEY AND WORLD TRADE ORGANIZATION The two most important external limits on Turkey’s foreign trade of agricultural raw materials and processed products

are European Common Agricultural Policy (CAP) and World Trade Organization regime. These two variants would also

have important effects on our country’s agricultural policies, product composition and consumer prices in the next years

by import. In the previous part we have analyzed the Common Agricultural Policy of EU that we hold negotiations of

membership and its effects. In this part, we analyze the role of Turkey in WTO which we believe to be more

comprehensive in the long term. After definitive chapters, we have researched how the decisions that WTO has taken

and would take after the Uruguay Round and the ongoing Doha Round would affect the foreign trade and the production

in our trade.

The Agricultural Foreign Trade Policies in the world have been discussed by the economists and politicians for 500

years. The most correct agricultural policy and foreign trade regime have been determined neither theoretically nor

empirically. In this discussion, if we eliminate the socio-psychological effects, it is apparent that two different opinions

appear. The first one puts forward that agriculture has a special role in a country’s economic life, therefore is required

to be subject to protection and/or special rules of trade in order to provide a series of priorities such as decreasing rural

poverty, food safety and self-sufficiency. The contrary opinion asserts that agriculture being subject to the similar rules

with the other sectors and to be quickly liberalized / opened to competition according to the classical theory of relative

advantage would increase the social welfare.

In practice, as the power to create soil suitable for agriculture, climate and natural productivity, technology, the balance

of rural-urban population and migration dynamics of countries are different from each other, the appearance of a

universal truth and its adoption by all of the global actors of trade has not been possible. By time, an agricultural trade

regime, according to which the policies of the dominant ideology or the Hegemonic State are imposed to the entire

world, has arisen.

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In the first half of 20th century, due to the ideological grounds and the dominant attitude of the USA, the concept of

protectionism and export subventions have determined the regime of trade. Protectionism is defended by a great

majority of the developing countries for several reasons. It is noticed that a small group of prosperous countries,

notably the Japan, have been acting according to this opinion in order to satisfy the social requirements rather than the

economy. In 1980’s, tensions reaching the dimension of subvention wars have started between the EU and the USA

who have now agricultural productions much more than their own needs. With the Uruguay Round, again with the

leadership of the USA and the EU, the world has quitted these policies and turned towards liberalization trends in

agriculture.

D.4.1. GATT and WTO

One of the most important harmonization institutions after the 2nd World War is GATT or as it is now named, WTO. This

institution, started to operate with a very limited number of members and balanced priorities, is now the UN (United

Nations) of the global trade regime with its approximately 200 members aiming at closely being involved in many fields

such as preventing unfair competition relating to intellectual properties, elimination of the obstacles for the direct

capital investments. Two contrary trends stand in front of finding solutions for all trade problems before WTO and this

institution’s being the sole rule maker in global trade.

Regional trade blocks, which now might be seen all over the Earth named as “clustering” notably the EU and NAFTA

consist the first of these; their primary objective is to protect the interests of the members within the group against

damages that the “external world” would experience.

Since 2000’s, all balances are defined again, as China, Russia, India and Brazil (BRIC) have joined to the world trade.

Among the group of BRIC, especially China and India quickly start to guarantee their long term interests through

bilateral trade agreements. The USA and EU, even more limitedly, continue concessionary trade with their former

colonies or their own political ascendancy fields. The expansion of bilateral agreements to the detriment of WTO, brings

along the concern of setting the global trade trends over mutual preferences rather than the public benefits. However,

all bilateral agreements do not have these characteristics. The agreements which do not offer privileges provided to the

other party with higher trade barriers implemented to the other countries, even sometimes presenting to the entire

Earth on product basis, although they are in minority, facilitate to approach to the Pareto optimal balance.

D.4.2. Political Position of Turkey before WTO

While examining the trade relations of Turkey with the world, it is significant to understand that each step to be taken

in agriculture should be in the direction of harmonization with both the global trade regime (WTO requirements) and the

“clustering” that is the CAP.

Turkey is passive against CAP. That is Turkey has no right to speak on the reforms and applications. Its effectiveness is

limited due to its obligations of both protecting its own interests and acting collectively with the CAP. Therefore, in spite

of being one of the outstanding members of the most popular cluster of developing countries such as G33, it may not

be considered as successful in determining the global trade policy. For example, while the important sections of Turkish

agriculture are still in need of protection, Turkey, compulsorily, has to support the EU’s opinion of mutual liberalization.

In parallel with this observation, the free trade and customs- tariff agreements, which the EU has signed with third

party countries without consulting Turkey, put Turkey in a difficult position.

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D.4.3. Uruguay and Doha Rounds

Until Uruguay Round, GATT / WTO has played the role of a forum of taking co-decisions and bargaining towards the

liberalization of foreign trade in industrial products. In the Uruguay Round, the agricultural products are included within

the scope of bargaining for the first time. Although the decisions taken at this Round are binding, it did not impose

great obligations upon the developing countries. From the point of Turkey, during and after Ozal’s period, which

adopted the freedom of trade in the import substitution model in 1980’s; the economic results of this Round are of

secondary level. However, this Round by adapting the principle of agricultural trade together with the industrial

products, which constitutes the most significant subject of discussion in the 21st century, has ignited the wick of the

ongoing Doha Wars. There exist 3 leading decisions made in the Uruguay Round:

• Rules and institutions are established in order to solve before WTO the trade conflicts arising from agricultural

products.

• By abandoning complex protectionism applications in agriculture, it is decided to shift to customs duties for

the industrial products.

• It is determined that member countries would no longer increase the tariff and non-tariff barriers in

agriculture, even the countries would decrease the aforementioned barriers, but not to be so binding.

Although Turkey has increased customs duties for some of the agricultural products after Uruguay Round, it has not

been suffered from the new rules; because it adopts the strategy of increasing the actual tariffs up to the maximum

limits that are set by Uruguay when it moves down to a lower band (one-down box), by determining very high customs

before Uruguay, as did by many agriculture countries. Turkey has one or two inconsiderable conflicts besides the

conflict with the USA on the rice import; and the effect of these conflicts on agricultural trade is of second degree. In

conclusion, it may not be stated that we suffer from the settlement mechanisms set forth by Uruguay Round.

Doha Round, which started in 2000, has not been concluded yet; and it also seems difficult to be concluded until 2013 –

2014. We find a strong analysis of non-conclusion of Doha Round in Fredrik Ericsson (2008). According to Ericsson,

• Lack of leadership

• Confusion of priorities resulting from the high increase in the number of the members

• The damages of the wide approach stipulating the transition to the discussion of the trade problems of the

entire world from the narrow approach regarding annulment of protectionism only in industrial products.

• The erosion of the doctrine of free trade as a concept prevents conclusion of the Round.

However, the possibility of the conclusion of the Round with failure is quite lower, this is because quitting the

establishment of a global trade regime directed by the rules and returning back to a bilateral – in group world trade on

to the chaotic and globalization trend before II. World War would be a great loss the costs of which may not be covered.

With the assumption that agricultural trade directly affects the welfare of the most of the people in the world, we

determined that abandonment of this chapter constituting one of the three pillars of the Doha Round conflicts is a result

which the world leaders may not risk. Thus, we kept our way assuming that the Round would successfully be concluded

and the current agreed agricultural chapters would be accepted exactly.

Unlike the Uruguay Round, IF Doha would be concluded in the agreed form according to the latest information that we

have, it reveals that Turkey would “suffer” both theoretically and empirically. Before we understand its reasons, we

hereby list three priorities of the Doha Agricultural chapter:

• Arrangement of the conditions to penetrate into the market

• Abolishment of export incentives and credits to a large extent

• Decreasing the agricultural customs barriers and duties to a significant extent.

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Due to the lack of resources, Turkey has considerably decreased the amounts of payments by reducing the export

incentives for approximately 40 products. We consider the damage to be caused by the acceptance of this part as

limited. However, as we look from the point of partial comparative static analysis, shocks may occur in livestock

breeding due to the arrangements of conditions to enter into the market and in most of the fields of agriculture due to

the decrease of customs duties. From the perspective of a more dynamic general balance model, the obligations of the

countries we trade with to implement the same facilities, may create opportunities.

After the scanning that we did among the portals of Agriculture-Farming in order to find out what will change

concretely, we have made the list below;

• Production of grains (wheat, barley, oat, rye, corn, unshelled rice), oily seeds (sunflower, soybean, rape)

forage plants, cotton, sugar beet, tobacco, tea plant, banana would change in favor of import.

• Adverse effects which may be extended to “very radical” are possible in animal products such as red meat,

milk, cheese and honey.

• It is highly possible that products with lower prices would enter into our country due to elimination of quotas,

decrease of the custom duties and increase of the product costs as the premium rates are decreased in some

products (sunflower, soybean, corn, unshelled rice and rape) which we pay premiums.

• However, it is projected that there would be no inconvenience relating to products such as vegetable, fruits

(especially hazelnut, dried figs, grape and apricot) legumes, olive and olive oil, cut flower, fish and white meat

and egg.

In the aforesaid negotiations, developing countries have been trying to keep some of their products within the scope of

support by presenting concepts such as “sensitive product, special product”. Classification of the products into three

boxes in respect of internal supports and discussion according to this box method has been the most preferred method.

As mutual concessions - about the “box issue” which does not exist in the spirit of the discussion but every line of which

has been discussed for days, are valid, our assumption of “chapters accepted till now” may not also be realistic.

However, the chapters accepted on the issue date are valid also in the empiric studies, the results are also related to

these.

According to the most comprehensive qualitative research, in the simulation executed in nine sectors’ details by using

the calculable general balance model, Turkey’s loss and gains are summarized as:

Reference: Dr.Yasemin Cırpıcı, WTO Agricultural Negotiations and Its Effect on Turkey’s Foreign Trade

More concretely, according to the findings of the simulation, in the event that the liberalization criteria set forth by WTO

are adopted, the prices of import products would decrease by 11%, agricultural import would increase by 35%. The

equivalent detail tables for export are presented in the report.

Agriculture Current Regime Doha Simulation

Export 5.327 5.239

Import

4.106 6.291

Net Export

1.221 -1.053

Turkey’s Loss and Gains

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E. Financing of Agricultural Investments;

Experience of Turkey and World

77

E. FINANCING OF AGRICULTURAL INVESTMENTS: EXPERIENCE OF TURKEY AND WORLD

E.1. POSITION IN TURKEY In this part, financial and direct –even if in brief- investments in agriculture are mentioned. According to the findings of

international institutions such as FAO (Food and Agriculture Organization), as an investment of 1 dollar in agriculture

returns to the villager as an investment of 2 dollars, increasing the agricultural investments would decrease the poverty

which is still a structural problem in the countryside. Furthermore, even if we may not state in certain figures, we

estimate that in case of increase of the investments in agriculture, productivity problem in agriculture would be solved,

such increase would contribute to decrease the speed of migration from country to town and Turkey would be able to

take giant steps in the agricultural raw materials and food which are expected to be the most valuable commercial

goods of the 21st century.27 If we examine this prediction in detail, we think that in case the correct and adequate

investments are realized; a significant barrier in front of Turkey for becoming one of the largest food exporter of the

world would be removed.

In our research, we have determined that an agricultural society consisting of premises owning land property most of

which are very small (sufficient enough for self-subsistence) may not make investments in huge amounts. Even though

we do not have certain figures, farms engaged in large-scaled agriculture also makes less investments compared to its

kinds. For example, we describe - as an investment deficiency- failure to reach the EU-USA standards of cattle carcass

even in the large scale premises and to shift to the products which would be more productive when considered the

quality of the soil.

In summary, a very small part of the agriculture sector’s value added rate in GDP is spent on new technology, R&D

(research and development) and product increase investments. In this concept, it is necessary to state that Foreign

Direct Investment (FDI) entries tending towards agriculture sector (including food) till now are very limited. In order to

state in figures, the entries to agriculture and food sector were around 600 -700 million dollars in 2005 and 2006 then,

reached 1.2 billion dollars in 2007. However, if it is considered that FDI was around 20 billion dollars in this process, it

is seen that the rate of entries to the agriculture and food sector remains low. FDI to the sector in 2007 –reached the

level of 8.5 % - the highest in history- but comparatively still very low- with the effect of the fact that FDI decreased to

14 billion dollars from 19 billion dollars one year ago. In 2009, it has regressed to 200 million dollars – 2% - 3% of the

total.

With regard to the role of the State in agricultural financing, the State is not able to make many investments in

agriculture with its limited resources. We do not state this observation as a criticism. While the lower rate of savings in

Turkey in general keeps the public borrowing interests high in real terms, taxes may not be collected in adequate

amounts due to the unrecorded important sections of economy. The limited resource remaining after the daily

management of the State is spent either with the direction of the social pressure groups or to debottlenecking

investments.

In spite of these conditions, we note that public has been making great sacrifices in order to convey major investments

such as road, water, electricity, health and education. Besides, the public has been performing extraordinary efforts in

27 It is difficult to calculate the effect of correct investment on productivity increase with the public investments-agricultural production increase data. Perhaps, anecdotally, the feedbacks of the GAP investments can be the best example. However, while searching this part, we have studied case studies in most of the continents of the world. It seems that the effect of “correct” investments made by both the state and charity organizations or public sector on production and welfare of the farmers has been proved for hundred times.

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order to provide source for giant long term irrigation projects in many regions (where the returns of the capital

investments are too far) primarily the GAP. The governments are open to criticism, as they do not use their resources

in effective ways; however, even under the most optimal circumstances, it is very difficult that public would transfer

much more funds than now to the development of agricultural production from its own resources.

In recent years, with the dampening of inflation and decrease of public borrowing/GDP rate, private banks preferring to

direct the remaining part of their portfolio to credits are also interested more closely in agriculture. However, for

commercial banks, it seems more rational to direct towards quickly growing consumer credits whose risk measurement

cause less problems rather than agricultural credits. That is, we foresee that agricultural credits would grow in time, but

continue to take a very small share in total system assets. As a matter of fact, it is observed that the share of

agricultural credits among all credits is quite lower such as 3%, with the nominal amount of TRL 9 billion as nominal by

the end of 2009, around 12% of the sector’s nominal added value. Furthermore, it is important to state that

approximately 80% of this credit is issued by the Ziraat Bankası (Agriculture Bank); according to the figures of the

Agriculture Bank, approximately 50% of this credit goes to plant production.

Public, together with Bank, EU and other supra-national institutions, produces projects providing support to agriculture.

In the event that project producing - the bottle neck of Turkey in this field - and coordination between institutions are

enhanced, it is probable that our country accordingly our agriculture would have greater shares from this global cake.

Even though it is very limited, the fruit-vegetable trade and attractive opportunities provided by GAP have directed a

few industrial holdings to agricultural investments. Even under the best circumstances, among the 500 biggest

companies of Turkey there are a few companies which plan to grow in agricultural and food industry. The great majority

are interested in more “attractive fields” such as automotive, energy, logistics, and civil air transport.

Micro-credit applications, defined as the greatest innovation of agricultural financing of 2000’s, have been applied in a

very limited but successfully in our country. More substantial evaluations on this subject would be carried out in the

following parts.

As a summary, compared to 1980’s, trend of financial investment in agriculture has considerably increased, however

not reached the quality to make a considerably effect on the dimensions of agricultural production.28 Secondly, we have

determined that many agricultural financing methods quickly increasing in 2000’s haven not been applied yet in our

country, or the institutions which apply these methods have not started investments. In the following parts, firstly these

new financing methods would be introduced, and then the contribution of these methods to agricultural production and

welfare in developing countries like us would be analyzed with chosen case studies. Finally, suggestions for the

application of these methods to Turkey are listed.

E.2. MICRO-CREDIT REVOLUTION IN THE WORLD Since 1990’s a rural micro-credit revolution has been seen in the developing countries. The transformation of this

concept firstly put forward by Ela Bhatt the SEWA leader of Gujarat State of India in 1970’s into global practices is

referred to the founder of Grameen Bank and 2006 Nobel Peace Award winner, Muhammed Yunus.

Guarantee and solvency are not required in the macro-credits which abolish the rules of traditional banking. The only

requirement is that the person has production ability and an idea to turn it into a sales activity.29 Besides, credit is

issued to the person however the social group which the person belongs is held severally liable for the credit. The idea

behind the macro-credit is the opinion of traditional risk evaluation criteria and compensating the increasing risk of

default in repayment by higher interests crates a credit bottleneck in the low income groups working collectively and 28 In other words, there is a close relationship between the low added value that agriculture provides and limited financial opportunities that is provided for agriculture, including foreign investment. Even though it is not right to interpret this relationship as a cause and effect relation, we think this matter shows parallelisms with macro scale researches which set close statistical relation between financial development and economic growth. For a comprehensive study about this subject see. http://www.ecb.int/pub/pdf/scpwps/ecbwp787.pdf. 29 For more detail and applications in Turkey: http://www.anatolianartisans.org/pdf/MicrocreditArticle_Web.pdf.

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living in the third world. In other words, as traditional credit allocation and pricing mechanism do not work in the sub-

cultures whose ethic of debt repayment is very high, there are many unemployed people who may be saved from

poverty with small credits.

The return rates of between 96-98% in most of the countries, where macro credit has been implemented, excluding a

few small exceptions, points out an “entity quality” which embarrasses the largest bank of the world. The current total

macro-credit amount in the world is estimated to be around 38 billion dollars.30

The photograph of micro credit may be briefly reflected as:

• In 2010, investors would put 20 billion dollars of fresh money on the micro-credit funds.

• According to the latest data that we have, the total of micro credits between 2001– 2008 has ascended to 38

billion from 4 billion.

• However, the need for micro credit financing of the people with minimum income is still around 250 billion

dollars.

The micro-credit application in Turkey started with project credit of 500 million dollars from the World Bank and it has

been distributed by the Turkish Foundation for Waste Prevention. 31 Unfortunately, we could not determine WHY this

credit which is reported by the World Bank to have successful performance did not continue.

According to the latest records32 that we have, as of the year 2009, people over 19 thousand in 29 cities of Turkey have

been granted a credit of TRL 23 million. According to the sources we have scanned33, Turkish Grameen Micro-credit

Program is planning to grant a credit of TRL 40 million. The HSBC’s program of granting credit of 5 million dollars in 5

years in this field at the pilot regions has been announced; however, it may be seen that the credit dimension of 500

million dollars received from the World Bank in 2003 would not be able to be reached for a long time.

The Draft Law on Micro Finance, which would formally introduce the micro-credit granting institutions into the financial

system and provide the necessary state guarantees/supervision, is still pending before the agenda of Turkish Grand

National Assembly. 34 We have not still found an answer to the question why this program -resulted in perfect

conclusion not only in the world but also in Turkey - does not have adequate state and international support.

However, it is also not right to think that micro-credit would be a remedy for all of the problems in the agricultural

sector. The basis of micro-credit is to reconstruct a section that is unable to reach traditional and other financing

sources by involving them in the production process. For example: If a female entrepreneur in Turkey, who weaves

carpets by buying a weaving loom with a credit of TRL 700, becomes successful, and wants to set up 10 weaving looms

with a credit of TRL 70 thousand, micro-credit is no longer appropriate for her. It is the time for that entrepreneur to

look for other sources of financing.

But, are there any other ways which agricultural producers or entrepreneurs may apply other than micro-credit or bank

credit? There is not any in Turkey, but the world is progressing quickly in this field.

30 See. www.ruralfinance.org. 31 See. http://www.israf.org/pdf/TURKIYEGRAMEENMIKROKREDIPROJESIBILGINOTU.pdf 32 http://www.pembepano.com/2010/01/17/mikrokredi-nedir-2009-degerlendirmesi-2010-hedefleri/ 33 See. http://www.alomaliye.com/mikro_finans_kanun_taslak.htm 34 See. http://www.alomaliye.com/mikro_finans_kanun_taslak.htm

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E.3. COMMODITIES FUTURES35 AND AGRICULTURAL REAL ESTATE INVESTMENT TRUSTS

The most widespread agricultural financial investment method in the world is the future contracts in commodities. In

many commodities options and forwards are frequently used; however, the instrument which the investors demand

most is the futures. In the middle of 1800’s36, the futures stock, which has started to operate in the USA in an

organized way (In this research we abbreviate as VOB), is the market place where the people who want to guarantee

the future price of a product meet. Let’s explain this definition.

A farmer in Nebraska decides to cultivate wheat instead of corn in winter. But he has not got adequate information

about what farmers in the other states cultivate. If the farmers in the other states focused on corn, the futures price of

corn would be less than the current (spot price). The farmer who wants to guarantee himself against the risk of low

price, buys a contract which gives him the right to sell a certain amount at spot price in due date close to harvest.

Now, let’s look at the producer from Chicago. He may not have adequate information about the export demand even

cake/pasta/pastry demand that would occur as the wheat product enters the market. His risk is not to have enough

stock in case the demand increases suddenly. If he may profit from the current spot price, in order to provide insurance

against the future price increases, he makes a contract to buy a certain amount of wheat at the current spot price at

harvest date. Both the producer and the wholesale consumer by decreasing the future ambiguity, make a contract

increasing the common satisfaction.

Despite futures markets are established mostly with the purpose of “hedging” (insurance) which we have exampled

above, it is quite normal that the ones not related to wheat or floor trade transact in the market to gain speculative

profit. It is considered that these factors reduce the difference and volatility between the purchase-sale prices in the

futures contracts by decreasing the liquidity. Besides, such speculators are mostly the institutions registered to

Derivatives Exchanges until the last quarter of the 20th century and aim to earn money due to the lack of information.

The continuous increase in the agriculture and food prices breaking out in 2000’s, has also directed the funds which

have become the number one store of value, to the Derivatives Exchanges. These funds are institutions which take

position in Derivatives Exchanges in order to benefit from long term trend of decrease in commodities prices. These

institutions - shortly defined as Commodity Derivative Funds - are considered to cause a serious mobility of prices in

commodities futures, the researchers are far from being accurate. However, it is a more accepted opinion that the

Commodity Derivative Funds do not make a considerable contribution to the welfare of a country or the farmers

marketing a product.

Although we support the Derivatives Exchange and this valuable stock exchange’s becoming widespread in commodities

in Turkey, it is difficult for us to consider the funds, which make investments in agricultural futures as instruments,

which decrease the agricultural production and welfare. The reason is that the share of the producers and wholesale

consumers in open positions and total trading volume decrease in favor of the speculators. In other words, in these

products which have a secondary contribution in production in theory, a significant part of the total welfare income goes

to the speculators as profit.

Agriculture Real Estate Investment Trusts are funds established upon the expectation that prices of agricultural

products would increase in the 21st century and whose primary concern is to purchase agricultural land. The number of

the funds in the USA which make investment in Latin America and in Arabian countries, which collect agricultural

properties in the neighboring countries, is increasing quickly.

35 Even though “Futures” is used for futures contract, this term is not adequately definitive. 36 See http://www.fundinguniverse.com/company-histories/Chicago-Board-of-Trade-Company-History.html for history f CBOT, the first Derivatives Exchange in the USA.

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In many countries, it is negatively reacted that the foreign investors purchase land especially with commercial

purposes. It is considered almost as one of the fundamental conditions of union-state that the land belongs to the

people and their representative, the public. However in an economy which adapted the free market mechanism with all

of its sectors and institutions, it is possible that applying a special statute for agriculture may not cause beneficial

results. Therefore, as we do not agree with the opinion “land is private” in this context, we also find it not harmless; but

on contrary a complementary usefulness that purposes, which the State has already been trying to provide directly with

methods such as Agricultural Land Acquisition Office, are realized in favor of the private sector.

On one hand, defending that increasing of Agriculture Real Estate Investment Trusts would accelerate the agricultural

productivity and capital flow to the sector, on the other hand we find it appropriate that alternative collective

investment methods in the financing of agriculture are also implemented quickly.

E.4. AGRICULTURAL INVESTMENT FUNDS: HISTORY AND FEATURES Let’s start by defining the concept of fund in general. Funds are investing a savings pool collected from several investors

to various movables and real estates, with beneficiary purposes, by jurisprudentially organized expert institutions. 37

There are 3 major reasons why individuals make investments through funds but not directly;

• Fund managers have relative superiority in analyzing – accessing the information extremely necessary in

order to obtain much more gain in the investments.

• It is much easier to realize the basic principle of the theory of financing “distribution of risks” or “don’t put all

of your eggs in one basket” through funds.

• Investment and brokerage costs of funds governing over the savings of several individuals are much less than

the individuals.

Behind this very brief definition, there is an incomprehensible variety of purpose, structure and method. There is range

from risk-free Monetary Funds which function as a commercial bank by investing the savings of small investors to bank

deposit certificates to Hedge Fund types which invest the money of the investors with high savings to extremely exotic

instruments such as historical artifacts, stamp even aged wine. Only in the USA, there is an asset of 7 trillion dollars

registered as “fund”.

Agriculture oriented Investment Funds, in fact, are with us till the colonial time of Europe. It may be said that East

Indies Company is the first known Agricultural Investment Fund in history causing a nation-wide financial crisis.

However, there are a few limited examples before; Agricultural Investment Fund is the invention of 2000’s. The

departure points of Agricultural Investment Fund and the funds which make investments in agricultural commodities

through futures are the same38. Prices of agricultural products would increase. We explain how it has been reached to

this common opinion below:

• Population of the world which is still estimated to be around 7-7.2 billion would reach to 9-9.4 billion in 2050.

• With the assumption that growth of individual income which is the major characteristics of the 20th century

would also continue in the 21st century, households’ expenses in food would increase faster than the

population.

• Climate change would make net contributions to agricultural production in the first decades, in medium term,

there would be a great handicap due to reasons such as desertification, pollution and drying up of water

resources and rising of the sea level.

37 For the fundamentals of Funds see: http://www.mutualfundsresource.com/ 38 However, as we will define below, the results they caused in the sector in which they invested, are quite different.

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• Even for the ones who do not believe in the theory of climate change and assumptions, there would be an

essential decrease in the square measure of the land suitable for agriculture due to the factors such as

urbanization, industrialization and erosion.

• Using the agricultural outputs as bio-fuel may cause bottlenecks in food production.

In summary, the Law of Malthus, an English social scientist in the 17th century may eventuate with a short delay of 350

years: Human population enters into a trend of growth faster than agricultural production. It is almost certain that

agricultural prices would increase in long term without denying the existence of short -term strong fluctuations. As for

2010, we see that these predictions are still valid. Although agricultural output prices decreased in the 2008-2009

recession, the trend has been reversed since the first quarter of 2010; as big purchasers such as China, India and

Russia have emerged from recession.

Besides the predictions that we have listed above, we see that there are other reasons why the funds not investing in

the financial products traditionally have started to have a sudden interest in agriculture.

• The basic principle of fund management is “to distribute the risk”, that is, to find out new instruments whose

risks and proceeds do not follow the same evolution/rhythm in the specific period of time. Low covariance of

agricultural assets and several sections in the production chain with securities39, constitutes an ideal field for

reducing the risks of funds.

• It has created a “historical opportunity” for moving towards agricultural investments that the fund industry,

since 1980, has increased know-how of investing in private companies, employed qualified staff in active

management, passive management and saved skills of resource transfer to the formations in smaller scales

even in gestation.

• Fund management industry is a frontier line of business. That is, it is known that high proceeds in long term

are only obtained at “green meadows” where nobody has gone before. In an environment where financial

sector has almost been saturated, agriculture has suddenly revealed as a very attractive and virgin field.

All these developments are strong evidences regarding that Agricultural Investment Funds constitutes a permanent sub-

group (asset class) in this line of business rather than a fashion. However, low global interest as well as credit

redundancy in risky fields, constitute a reason for moving into a field which carries unique challenging risks such as

agriculture. In an environment where the global interest increased again, provided that all long term advantages are

valid, can Agricultural Investment Funds survive? In our opinion, Yes, but the growth rate may decrease quickly.

However, in an environment the fund market is estimated to be at least 10 trillion dollars, and the funds directed

towards agriculture in one way or another to be around 50-70 billion dollars, it seems that Agricultural Investment

Funds would maintain a high speed of growth for a long time.

The major risk for the countries, which promote/give permission for these funds to make investments in the agriculture

of the country, is not that Agricultural Investment Funds are a fashion, but shortening the investment return dues,

increasing the rates of dividend and offering the assets that they have for sale before due date(pro-cyclical).

The funds which make investments in agriculture sector do not have conceptually great differences from the other

funds. Savings of the contributors are collected and placed on specific “investment instruments, and profits, after the

share of the management is deducted, are distributed among the contributors.

However, in practice, there are many differences between the Agricultural Investment funds and the others. These

differences may be summarized as:

39 Nevertheless, the co-variations of commodities futures, transacted on the Derivative Exchanges, with the dollar and petroleum are quite higher; therefore, use of the same in decreasing risk might not be appropriate institutionally.

83

• Supra-national institutions such as GOP Development Agencies, Food and Agriculture Organization (FAO),

Organization for Economic Cooperation and Development (OECD), European Bank for Reconstruction and

Development (ERBD) and charity organizations such as non-governmental organizations which do not seek

profits as contributors play an important role in many Agricultural Investment Funds.

• On contrary to most of the funds, investee goods are agricultural assets, companies or processes not the

securities traded in organized stock exchanges.

• As a natural result of their investments, Agricultural Investment Funds are included in a sub-group which we

name as “venture cap” or “risk capital”, their managers are ACTIVE investors. That is, they have the right to

speak, even to veto the decisions of the company and institution in which they have invested.

• The risks, which Agricultural Investment Funds encounter, are much more different than the funds which make

investments in financial markets. Among these differences, there are issues such as changes in public support

policies, seizure risks, local ethnic/clan conflicts and loss of harvest.

E.5. CASE ANALYSIS ON AGRICULTURAL INVESTMENT FUNDS Agriculture is long chain of cycles extending from the quality of the seeds to be used, transfer of the vegetable harvest

from the plantation to the markets as frozen, or shipment to processing center and production of food to export. It is

not surprising that Agricultural Investment Funds concentrate on the cycles with lowest risks and highest profits of this

chain. Although there are exceptions, it is observed that Agricultural Investment Funds concentrate on food processing,

logistics and export oriented products. For example, recently, the cool stores for the farmers in order to provide higher

market price by keeping the vegetables and fruits longer, have become an investment gaining more and more

importance. In parallel, grain silos and distribution nets have been increasing their popularities.

From the point of fund sharers, in the funds, which supra-national institutions and charity organizations also receive

share, it is observed that the lowest sections of value added chain have been entered, there are long term-low profit

investments extending from settlement of simple infrastructural bottlenecks to the training of farmers.

Well, Do Agricultural Investments Funds contribute to agricultural welfare? According to Agricultural Investment Funds

in Developing Countries (2010), latest sector scanning that we have, has shown that impact analysis has not already

been concluded completely as the funds in this field are very new.

In the scanning that we have realized within the framework of this research, we have determined that almost all of the

long term investing funds that have been operating long enough to issue final balance has “left a remark in the region”.

Furthermore, it is possible to state that as well as providing welfare to the community in which they have made

investments, they are extremely profitable in that manner; otherwise, why would the giant investment banks -

specialized in investments of industry, services and financial products sectors in past such as Deutsche Bank and

Rabobank - be involved in this field?

However, we can support our opinions in this field which is too new to provide aggregate data, only with case analysis:

E.5.1. First Case Analysis: SEAF

The annual report 2007 of SEAF (Small Enterprise Assistance Fund), which is the focus of one of the case analysis

involved in the Agricultural Investment Funds in Developing Countries (2010) report, is very interesting. SEAF which is

a branch of charity organization named CARE, centered in the USA, is still managing an agricultural investment portfolio

of approximately 500 million dollars. According to the findings in the report:

84

• Investee Small and Medium Size Enterprises provide a large number of employment opportunities for unskilled

or low skilled workers.

• Furthermore, it contributes too many actors such as Small and Medium Size Enterprises’ suppliers, customers

and even the competitors through Social Security Institution payments and donations.

• In the report involving Ford Foundation, the Department of International Development, established by England

in order to make investments in Commonwealth Members, and the USA development agency, Agency for

International Development (USAID), it is asserted that every 1 dollar invested in Small and Medium Size

Enterprises create institutional investors consider the agricultural investments as low-risky and high-yielding

and perceived as one of the low priced instruments as a hedge against inflation. The rate of bankruptcy in

agriculture considered to be one of the most an economic activity of 12 dollars.

• In the event that agricultural Small and Medium Size Enterprises are permanent, workers who become

acquainted with labor safety and increasing incomes, make long term investments extending from taking title

for their properties to preventive child health (vaccine) and education.

E.5.2. Second case analysis: Agricultural Investment Funds in the USA

According to the research of the web site named Delta Farm Press, agricultural investments by 1,000 private and public

pension funds’ account for about 5% of the funds’ total investments. Although this rate seems to be low; as total Net

Assets of the mentioned funds is 7.4 trillion dollars, the source invested in agriculture is around 370 billion dollars.

According to the information which the web site has obtained, institutional investors see agricultural investments low-

risky and generating sustainable income and one of the least priced instruments as an insurance against inflation. The

rates of bankruptcy in agriculture which was considered one of the most risky investments of the country 25 years ago,

are still at very low levels according to several criteria.

According to the fund managers holding agriculture portfolio, between 2002 -200640, the farmland has provided a

premium of 50%, income from rents of the farmland has been far above the inflation. The Hancock Agricultural

Investment Group (HAIG), one of the biggest Agricultural Investment Funds of the country, is managing 900 million

dollars. Portfolio is distributed almost equally between the lands where row and crops are cultivated. From the point of

Turkey, it is necessary to note that the two most important investment priorities of HAIG are almond and pistachio.

HAIG, managing funds on behalf of other institutional investors gives priority to investments of at least 40 millions, and

aims to gain a yield on income around 20%, at least during a period of 3 years. Almond and pistachio investments of

HAIG exist in the portfolio as well as the potential of export, with the expectation of an increase of demand in future as

it also helps heart health. The estimation stating that agricultural product exports are projected to reach 95 billion

dollars in the country by 2006, also increases the demand for HAIG.

The low rate of leverage in the sector and increase of demand due to new areas of usage such as bio-fuel are new

reasons of attraction.

The investment areas of Agricultural Investment Funds would be very wide. Besides agricultural products, almond and

pistachio hullers/shellers and vegetable processors/instruments have started to become focus of investment.

Agricultural investors also interest in bio-fuel cycling refineries and wind turbines. The most interesting one is that

Agricultural Investment Funds, expanding their horizons widely, have invested 200 million dollars in grape and wine in

40 The reason why we chose this period is, even if it is not the most typical period in the history of finance, that there has been a few number of Agricultural Investment Funds before and we do not have any information afterwards. The asset bubbles’ profits occurred in 2002-2006 period might be overstated. However our basic scenario is that farmland, agriculture and food prices will increase above the average in the predictable future due to reasons such as climate change an population increase.

85

the last few years. In an environment where producing wine from the first cultivated vineyards takes 10 years, this

endeavor is very glamorous. We want to note that formation of Agricultural Investment Funds to invest in qualified

bottled wine in a country with a high potential of wine and rich vineyards like Turkey, would make great contributions to

the export potential. 41

E.5.3. E.5.3 Third Case Analysis: Actis AAAF-owned by CDD Group plc.

Actis AAFA, managing 4.86 billion dollars as of 2010, providing employment for 88 thousand people through its

investments, generating a profit of 4.3 billion dollars out of an investment of 1.7 billion dollars; is still one of the most

leading Agricultural Investment Funds in the world which maintains support to agriculture and long term investment

projects of developing countries with cooperation of public-private sector. 42

Actis has improved its invested portfolio which started in Africa, to the extend of consumer nondurable goods and even

hotel investment in India, China, and has been continuing to its basic philosophy of maintaining high capital efficiency

while struggling with poverty in developing countries. 43

E.6. TURKEY AND AGRICULTURAL INVESTMENT FUNDS We consider the operation and generalization of Agricultural Investment Funds in Turkey to be the one of the ideal

instruments in order to attract both local and international investment, know-how and information.

We listed some of our reasons regarding this matter above. There are still many inter-sections (spaces), which the

state, micro-credit mechanisms and supra-national institutions project credits cannot reach.

• It is extremely possible in several occasions to increase the productivity with additional investment, to increase

the export opportunities, to move towards planting of more profitable crops as shown by the micro-credit

example in agriculture.

• In our country we already have a developing culture of fund management and investment through funds since

1990’s.

• Turkey, as it has been cooperating with supra-national institutions, which are the primary sponsors of

Agricultural Investment Funds for a long period of time, is country known with the wide range of opportunities

that it provides.

• There are now more than a thousand big funds, intermediary firms and investment banks which make

investments not only in financial markets but also in several fields extending from the direct purchase of small

companies to real estate property. It would not be too difficult that they transfer a part of their investments to

Agricultural Investment Funds.

• Our country with its political and economic stability and Law regulations although not being perfect but

approaching to the EU standards, provides a relatively less risky environment for agricultural investment

compared to the countries such as Africa and Latin America.

• Agricultural Investment Fund is an ideal instrument for attracting the attention of giant Charity Organizations,

which give less support to Turkey compared to the other countries, and to solve the problem of poverty,

primarily the Southern and Eastern Anatolia.

However, the barriers in front of the establishment and successful operation of Agricultural Investment Funds should

also be removed.

41 See http://deltafarmpress.com/mag/farming_pension_fund_investments/ 42 See http://www.act.is/custom/actis-web/res/editor/Misc/Actis%20AR%202010%20screen.pdf. 43 For whole history of Actis see. http://www.act.is/custom/actis-web/res/editor/Misc/Actis%20AR%202010%20screen.pdf

86

• As the first priority, these funds should be defined and the conditions of establishment, supervision and

management should be clarified in Capital Markets Board regulations.

• Rapid conclusion of cadastral works and renewal of titles which have been executed in order to widen the

investment fields of Agricultural Investment Funds is a very significant prerequisite.

• International experiences assert that application of incentives such as tax reductions, land allocation, increases

the contribution. At least by referring to such instruments in Turkish Code of Commerce and Tax which is

expected to be approved by Turkish Grand National Assembly, it is considered to be important that ownership,

decision making, liquidation and tax statuses are clearly stated in order to incentivise the investments.

• As Agricultural Investment Funds may have non-public companies and may sell out these companies; new

arrangements are certainly required in this field.

• In general, Agricultural Investment Funds have accomplished much more successful results in the countries

where all public institutions have voluntarily cooperated with them.

• Public’s giving support to Agricultural Investment Funds through infrastructure investments has considerably

increased the profits.

87

88

F. Appendices

89

ENCLOSED TABLES: Quantity of Agricultural Equipment and Machinery

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Stubble drill(1) - - - - 2 139 2 154 2 140 2 186 637 690 743

Furrow opener plough 46 065 47 608 50 661 52 431 53 157 54 421 56 121 58 076 58 626 60 475 61 198 Atomizer 98 623 101 157 98 924 100 879 101 586 103 812 100 823 100 758 103 125 103 324 103 490

Baling Machine 7 884 7 985 8 423 8 562 8 576 8 999 9 072 9 431 10 185 10 998 11 839

Binder 4 721 4 781 5 108 4 987 4 900 5 072 4 557 4 558 4 950 5 039 6 107

Harvester-thresher 12 564 12 563 12 578 12 053 11 539 11 721 11 519 11 811 12 359 12 775 13 084

Brooder 1 554 1 561 1 612 1 572 1 519 1 511 1 487 1 592 1 695 1 644 1 582

Manure spreading machine 1 620 1 433 1 373 1 308 1 707 1 717 1 671 1 916 1 950 1 938 1 967

Trickle irrigation system(1) - - - - 58 069 124 036 142 350 149 792 160 629 182 991 206 307

Deep-well pump 76 062 80 398 83 852 87 093 93 488 95 604 99 623 103 540 106 627 115 875 122 622

Subsoiler - - - - 15 023 15 993 18 494 19 238 22 205 23 708 24 654

Disc type stubble plough (one way) 35 851 37 528 38 291 39 253 36 442 37 960 38 223 39 210 41 745 41 725 41 964

Disc harrows (Gobble disk array etc.) 174 152 180 614 184 048 188 942 188 604 190 739 191 789 192 700 191 360 198 548 204 665

Disc type tractor plough 57 867 59 476 59 490 58706 62 089 64 076 63 149 64 965 66 801 66 491 66 933

Toothed harrow 348 581 352 817 349 158 348 767 348 544 348 911 350 640 351 327 353 205 355 991 353 128

Threshing sled 78 487 73 152 60 665 56 964 53 517 46 417 39 440 36 452 30 477 28 855 27 582

Hazelnut thresher 5 397 5 484 5 587 5 814 5 684 5 603 5 749 5 851 6 035 5 315 5 409

Trans planter - - - - 10 191 10 727 10 621 12 631 12 852 12 900 12 960

Animal drawn plough 320 425 308 824 282 997 266 874 242 346 233 708 215 322 207 033 196 278 181 974 170 797

Animal or tractor drawn hoe 127 406 131 040 137 753 138 618 138 625 141 315 141 443 141 961 144 308 146 408 146 615

Animal drawn mover 1 829 1 798 2 046 1 769 2 252 2 155 2 128 2 092 2 071 2 048 1 830

Horse drawn seed drill 2 382 2 143 1 955 1 739 1 839 1 619 1 515 1 234 1 197 806 750

Wooden plow 188 505 178 052 152 744 146 768 129 169 152 335 110 486 103 578 91 213 84 304 77 175

Loader (used on farm) (1) - - - - 19 063 21 441 23 433 26 363 29 798 32 314 33 403

Fertilizer broadcaster 278 240 287 503 295 921 297 725 305 587 314 660 320 609 326 599 334 461 339 461 346 471

Harrow combination 25 588 26 782 27 409 28 601 23 762 20 604 22 621 22 169 22 374 24 891 24 984

Combined seed drill 139 212 146 715 151 869 153 613 156 361 162 763 166 897 163 577 164 524 169 695 173 654

Complete beet harvester 2 297 2 549 2 858 3 043 2 869 3 056 3 521 3 928 4 029 3 593 3 716

Combined potato harvester 126 329 312 613 477 515 520 574 591 608 612

Cream separator 300 148 288 949 293 170 279 117 255 170 253 086 246 482 239 836 240 295 234 050 230 138

Stubble plough 21 001 21 492 21 367 21 975 25 824 26 536 26 285 26 871 27 045 28 304 29 411

Mould board type tractor plough 868 821 886 887 903 007 902 524 904 197 930 943 947 416 958 228 983 275 986 291 996 013

Incubator 999 918 955 924 951 978 1 008 962 1 062 1 114 1 025

PTO driven sprayer 202 101 210 300 212 525 219 238 227 963 229 497 239 126 241 753 245 311 255 582 259 475

Cultivator 383 488 395 547 402 145 405 025 415 664 421 455 430 074 430 981 443 776 451 214 457 711

Land roller 57 201 57 533 59 187 61 201 63 493 64 195 66 503 67 322 72 371 75 682 77 445

Fruit harvesting machinery (1) - - - - 89 122 171 190 265 320 510

Corn harvester 5 693 5 767 5 867 5 819 5 888 5 766 5 715 6 262 5 621 5 447 5 433

Maize harvester 450 464 472 468 564 542 506 534 588 677 726

Corn forage harvester 2 317 2 599 3 408 4 068 5 545 6 327 7 416 8 717 9 734 11 998 14 000

Electrical driven pump 136 990 143 560 174 767 151 100 145 023 147 909 155 474 157 873 159 603 167 050 172 022

Engine driven pump 197 514 196 714 196 135 196 682 197 429 197 888 198 407 196 687 197 395 198 735 197 514

Engine driven sprayer 65 760 67 048 68 665 69 122 72 831 72 618 72 868 72 838 73 015 71 015 72 171

Portable motor scythe (1) - - - - 5 261 6 134 7 942 9 974 14 034 17 400 18 785

Reaper 66 260 66 415 60 625 64 337 68 221 64 434 64 489 64 549 64 972 65 977 69 430

Forage harvester 1 348 1 609 1 744 1 830 1 847 1 984 2 017 2 225 2 585 2 853 3 087

Hay rake 67 696 68 601 63 674 64 324 60 476 63 944 64 824 68 132 68 566 70 335 101 958

Cotton picker 15 20 17 19 25 31 56 128 349 500 520

Beet lifter 7 296 7 956 8 529 8 721 9 237 9 606 10 087 10 757 10 400 10 845 12 927

Potato planter 8 170 9 249 10 553 10 534 10 813 11 830 11 875 12 217 12 761 13 183 13 632

Potato digger 12 521 13 859 14 920 15 435 15 631 15 794 15 637 15 974 16 243 16 802 16 932

Pneumatic precision drill (1) - - - - 15 770 15 908 20 668 18 633 19 874 22 048 22 919

Rotary tiller (1) - - - - 6 708 7 187 7 820 8 666 9 097 9 584 9 807

Straw conveyor and unloader (1) - - - - 8 396 9 218 10 021 10 474 11 687 11 520 11 366

Centrifugal pump 84 271 84 910 85 783 895 584 91 403 92 359 92 821 96 572 97 622 98 762 104 141

Stalk cutter 11 712 12 069 11 232 11 468 12 113 12 170 12 876 13 571 13 881 14 933 15 075

Straw machine (1) - - - - 9 532 10 084 11 902 12 563 12 942 12 980 11 966

Thresher 223 550 226 773 228 945 225 339 193 386 193 963 193 930 197 017 196 346 194 847 192 440

Barrow duster and combine sprayer 15 771 16 263 16 917 16 261 16 942 16 821 16 212 16 411 15 828 14 993 15 084

Seed cleaner 3 543 3 665 3 859 3 678 3 893 4 092 4 156 4 310 4 258 4 387 4 390

Ridger (1) - - - - 11308 11 582 12 303 12 957 13 434 14 146 14 095

Knapsack sprayer 555 647 568 160 572 661 577 064 575 154 580 927 580 547 582 618 586 685 587 821 590 590

Water tank (used on farm) 152 290 158 951 158 477 162 410 168 142 171 469 176 576 180 208 184 195 187 727 191 309

Milking plant machine (Stationary) 5 697 5 763 6 093 7 735 5 522 5 618 5 637 5 571 5 763 5 749 6 216

Milking plant machine (Mobile) 74 217 77 911 83 802 89 060 102 616 109 728 121 534 130 087 150 049 164 051 177 630

Trailer 886 972 908 047 920 222 926 494 945 777 966 596 986 313 995 523 1 011 577

1 056 128

1 036 613

Aircraft sprayer and duster 54 49 49 50 55 57 58 62 60 61 49

Stone picker (1) - - - - 276 330 356 373 410 416 422

Winnower 23 975 23 510 22 425 21 337 17 671 16 627 15 910 15 703 14 082 13 634 13 368

90

Hole digger (1) 30 166 - - - 2 066 2 388 2 630 2 894 3 575 4 148 4 340

Rotary cultivator - 31 296 32 497 32 203 32 413 33 413 33 771 34 895 36 601 37 604 38 937

Grader (1) 36 546 - - - 12 690 13 177 14 106 14 843 15 515 16 471 16 502

Duster 902 513 37 604 36 806 35 776 35 085 34 671 30 924 27 729 24 773 24 522 23 694

Tractor 30 686 924 471 941 835 948 416 970 083 997 620 1 009 665 1 022 365 1 037 383 1 056

128 1 070

746

Tractor drawn mover 81 222 32 670 33 504 34 344 38 222 39 682 40684 42 690 46 213 50 669 54 072

Tractor drawn seed drill 78 538 82 909 84 910 87 861 86 457 89 441 901 71 94 588 101 776 101 633 106 533

Universal Drill - 79 975 80 914 81 519 65 994 66 216 63 073 62 982 63 392 62 979 62 892

Dryer (1) - - - - 171 303 392 478 525 587 621

Sarter (except seed cleaner) (1) - - - 709 5 972 6 100 6 396 6 772 7 163 8 059

Sprinkler System 165 697 175 694 178 870 182 307 185 570 188 258 194 055 197 908 200 780 206 014 216 130

Chumer (1) - - - - 210 088 234 950 256 621 257 466 265 131 268 237 265 658

Feed spreading trailer (1) - - - - 267 354 508 545 463 605 849

Feed grinder 16 158 18 175 19 728 20 057 18 070 18 508 18 604 18 753 19 957 21 435 21 419

Groundnut thresher 50 48 48 45 42 174 156 159 161 210 214

Groundnut harvester 132 158 135 166 271 164 179 186 193 206 217

Source: Agricultural Statistics Summary

(1) Involved since 2002

91

Quantity of caught sea fish Tons 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total 441 690 465 180 493 446 416 126 456 752 334 248 409 945 518 201 395 660 Leer fish 320 255 330 262 352 505 606 549 513Greater amberjack 50 35 45 40 30 60 53 57 75Albacore - - - - 27 30 73 852 208Hake-Eurepean hake 18 190 20 810 10 500 7 500 4 380 4 100 3 460 3 337 1 252Red mullet 2 450 2 455 2 395 1 400 1 848 2 825 2 617 2 091 1 925Goldon banded - - - - - - - 299 110Sprat 7 000 1 000 2 050 6 025 5 411 5 500 7 311 11 921 39 303Seabream 830 1 070 700 794 879 1 215 867 759 1 526Common sole 1 000 1 250 585 410 624 1 190 937 851 848John dory 100 130 55 24 24 76 95 101 72Common seabream 70 100 80 64 89 107 168 88 176Angler fish - - - - - - - 204 360Shore rockling 50 35 8 4 8 27 17 23 11Meagre 15 20 5 3 7 11 20 60 56Silverside 500 575 518 664 1 037 1 479 993 999 1 142Anchovy 280 000 320 000 373 000 295 000 340 000 138 569 270 000 385 000 251 675Painted comber 400 410 100 94 127 93 90 103 229Eurepean barracude 150 130 206 250 255 281 234 417 218Black skorpion fish 300 525 270 240 329 353 326 202 362Annular bream 670 280 548 340 264 516 552 336 298Horse mackerel 15 000 15 545 19 500 16 400 18 068 13 540 14 127 22 991 22 134Scad 7 200 10 635 6 982 11 600 9 337 13 978 11 800 9 030 10 043Brown mearge 20 20 39 30 17 26 54 73 41Picarel 1 500 2 250 1 105 1 200 1 020 1 869 1 321 1 044 742Turbot 2 700 2 455 459 300 376 649 807 769 528Two banded bream 750 375 203 235 243 203 185 189 263Gobies 300 335 201 170 210 141 113 136 164Grey mullet 27 000 22 000 12 000 11 000 12 424 10 560 8 915 8 291 3 345Angelshark 60 20 18 25 28 38 51 15 34Sword fish 370 360 370 350 386 425 410 423 386Red gurnard 260 200 271 230 241 313 560 339 362Trigla lineata - - - - - - - 292 24Chup mackerel 9 000 4 500 1 500 1 480 1 402 2 001 2 760 2 263 1 818Topeshark 2 880 1 000 686 400 458 734 668 496 413Bogue 1 500 1 000 1 126 1 540 1 463 3 062 3 601 3 851 2 580

Waker

-

- 292 230 264 295 384 345 313Seabas 1 900 1 200 713 700 628 581 490 421 751Small-Scalled 60 115 26 27 37 44 60 37 35Blue fish 4 250 13 060 25 000 22 000 19 901 18 357 8 399 6 858 4 048Saddled seabream 80 90 130 150 138 142 332 169 128Striped bream 540 320 403 550 551 541 1 021 689 634Whiting 18 000 10 000 8 808 8 000 8 205 8 309 9 112 12 940 12 231European coger - - - - - - - 8 77Conger eel 200 340 300 290 239 233 283 249 349Croaker 45 55 70 77 63 52 29 19 22Dusky grouper 85 80 71 107 97 151 97 95 25Bluefin tuna 1 070 2 100 2 300 3 300 1 075 990 806 918 887Little tunny - - - - 568 507 1 230 785 1 072Piper - - - - - - - 24 14Atlantic bonito 12 000 13 460 6 286 6 000 5 701 70 797 29 690 5 965 6 448

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Large-eye dentex - - - - - - - 97 143Pilchard 16 500 10 000 8 684 12 000 12 883 20 656 15 586 20 941 17 531Mearge 70 50 63 75 62 96 - - -Black sea bream 45 45 40 76 70 109 320 71 30Saupe 200 160 243 230 198 391 599 321 190Dentex 100 60 79 90 106 136 242 106 146Sharpsnout seabream - - - - - - - 20 17Striped red 2 300 1 570 1 450 1 050 961 1 207 1 256 1 732 1 978Twaite shad 720 690 862 1 100 1 172 2 176 1 738 2 252 2 289Frigate mackerel - - - - 284 1 020 1 031 993 836Blue spatled bream 40 35 57 60 74 55 80 82 119Mackerel 900 550 486 350 568 781 783 1 076 516Thornback ray 1 100 555 369 540 532 763 813 974 591Gar fish 300 640 482 450 491 577 375 400 335Saury 250 55 97 160 140 206 289 409 348Other 300 175 280 440 380 600 1 109 754 321 Source: Turkish Statistics Institute

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Quantity of caught fresh-water products (tons)

Tons

Type of fish 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total 42 824 43 323 43 938 44 698 45 585 46 115 44 082 43 321 41 011

Chub 104 91 73 82 93 87 85 82 71

Trout 277 364 352 393 352 376 374 550 630

Bream 200 151 198 221 213 234 259 225 170

GokCe (Alburnus Akili) 11 37 39 43 37 41 49 45 47

Sand smelt 1 583 1 685 1 733 1 826 2 107 5 248 6 677 6 540 6 630

Tarek 15 654 15 848 14 930 14 215 14 259 14 103 11 978 11 623 11 758

Tench 690 778 800 785 1 875 1 792 1 953 1 884 1 632

Catfish 576 520 495 507 487 480 478 486 339

Bighand goby 107 116 85 73 79 105 101 70 57

Mullet 698 710 659 738 820 830 948 927 1 023

Rudd 323 257 240 247 267 281 285 258 261

Frog 77 873 898 792 803 803 833 895 668

Pike perch 1 633 1 644 1 850 1 751 1 852 1 768 1 656 1 586 1 346

Snail 1 592 1 601 1 937 1 850 1 879 1 873 1 462 1 397 1 007

Common Carp 14 137 12 265 12 965 13 820 13 451 13 718 12 116 12 286 11 625

Transcaucasian barb 1 124 1 009 918 1 013 1 027 971 967 985 993

Wels 1 019 813 987 912 897 804 1 245 1 293 1 275

Eel 176 122 147 158 165 176 162 179 171

Pike 224 192 217 237 253 249 279 242 213

Cray fish 1 681 1 634 1 894 2 183 2 317 809 797 816 783

Other 938 2 613 2 521 2 852 2 352 1 367 1 378 952 312

Source: Turkish Statistics Institute

94

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NOTES

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NOTES

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