The government announced it will auction off and privatize six sugar production factories owned by Türkiye Şeker Fabrikaları, or Türkşeker, on Thursday, Nov. 19, which generated a bustle of activity and controversy in the sugar industry.
A favourable mix of climatic and topographical conditions has largely contributed to Turkey´s rise as one of the world´s prominent agricultural economies by enabling a diverse range of produce to be cultivated.
Despite a declining contribution to GDP, the sector still accounts for a substantial 35% of Turkey´s employed population. In the Turkey Agriculture Report Q209 we look at the changes
within the industry as EU accession draws ever closer. We also introduce our new Business Environment section as a concise yet comprehensive overview of industry dynamics.
The local government has steadfastly reformed the face of the agricultural industry in line with the objectives needed to standardise production and enhance productivity before EU accession, which Turkey hopes to achieve by 2010. The reforms - aimed at engendering a greater degree of private sector agricultural participation - have began to attract substantial interest, particularly from nations keen to use Turkey´s farming prowess in order to ease domestic food insecurities.
In late 2008, a three pronged Gulf investment fund promised to pump US$150mn into Turkey´s economy with the intention of building agricultural infrastructure before setting about improving productivity. This is just one such example of the changing face of the domestic industry as the highly fractionalised nature of production is slowly replaced by a more consolidated dynamic. As more investment spills forth during the projection period, BMI expects to see considerable year-on-year growth in most agricultural subsectors.
Grains production has a particularly positive outlook with wheat, corn and rice forecast for strong output gains of 18.94%, 22.76% and 18.41% respectively between 2009 and 2013 to reflect investment in irrigation and storage capacities. The outlook for the sugar industry is not so good. Despite the privatisation of SEKER - the national sugar board - the downward trajectory witnessed in production for the preceding outlook period is expected to steepen to a 31.7% contraction throughout the five-year forecast. Even the traditionally robust domestic consumption of sugar is predicted to contract slightly to further worsen the supply and demand fundamentals.
A major caveat to the increased deregulation of the local industry is the potential for social unrest and economic instability associated with the disappearance of the majority of small owned family enterprises, which were the mainstay of the farming community. In light of the country´s burgeoning external debt, foreign investment in the form of slick multinational corporations and investment houses is likely to comprise the bulk of new capital, meaning that small locally owned farms are at risk of being either forced out of the market or taken over. While productivity may improve, unemployment and unrest could provide a more pertinent threat over subsequent outlooks. However, with production figures across most of the main commodities expected to increase, it is clear that government investments are paying off.
Source: pr-inside
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