“Turkish flour industry is in a position to fulfill all the demands of buyers across the world. Currently, Turkey is the country that serves to maximum points around the world. What is important for us is to end the low value-added trade due to the competition. Besides, due to our logistic advantage in the wheat trade at the Black Sea Basin, we can offer competitive price compared to the price around the world.”
Ali İhsan ÖZKAŞIKÇI - Anatolian Flour Industrialists’ Association (AUSD) President
Recently, because of the disinformation in the domestic market, per capita bakery product in the domestic market has experienced shrinkage in consumption. We talked with Ali İhsan Özkaşıkçı, the president of the Anatolian Flour Industrialists’ Association (AUSD) that has a great role in making Turkey a leader in the global flour export, about developments and problems of the sector. He said that the association should play an active role against the smear campaign for the future of the sector.
The following is the interview with Mr. Özkaşıkçı:
Can you tell us about the association’s structure, mission, and its members?
Originally, the association was founded in 1985 as Ankara Region Miller Association, and later it is named as Flour Industrialists. On 13 April 2006, it is named as Anatolian Flour Industrialists’ Association; and it began to accept members and its activities. Our members are the representatives of flour and semolina factories and those who provide raw material, manufacture equipment and apply technical and scientific applications. There are 95 members. In order to increase the professional solidarity, the most important job for us to bring members together and inform them. We gather information on wheat and flour, and we transmit this information to our members through email or fax.
Can you tell us about your members’ total production capacity and export figures?
Our members have a breaking capacity of about 14,000 tons per day. Turkey’s flour industry is technologically advanced. The performance of domestically produced machinery and equipment is at the highest level according to the world standards. This provides a significant contribution to the productivity of our industrialists. Besides, due to our logistical advantage in the wheat trade at the Black Sea Basin, we can offer competitive price compared to the price around the world. Finally, the formation of more direct container lines from Turkish ports makes us distinguished in terms of price.
What are the problems you face in export as a flour industrialist?
The biggest problem is idle capacity. Also, since Turkish exporters are at rivals with each other, they are forced to carry out the low value-added trade. We don’t have any problem with raw materials.
Turkey uses only the half of its flour grinding capacity of 31 million tons. What can be done in order to mobilize this idle capacity? Do you expect any merger or acquisition in the sector?
Wheat consumption per capita in Turkey is higher than the world’s average, and Turkey is a leader in the export of flour. If we consider that the consumption will not increase in the coming periods, it is only export that has room for increase (15-20 percent). Consolidation (mergers or acquisitions in the sector) process that began after the 1950s in the developed economies still continues today. Idle capacity and diminishing profitability force the companies to act in this way. We predict that this kind of structuring will increase in the forthcoming 20-30 years in Turkey.
There has been a convergence between Iran, Iraq, and Russia. How will this convergence affect Turkey that holds the 40 percent of Iraqi flour market?
Turkey’s flour industrialists will continue to be competitive due to their advanced technological level. The problem we faced in Iraq is partly due to the logistical problem and due to taxes against import. On equal terms, there are no producers that can challenge Turkey’s flour industrialists. If railway trade instead of land trade is developed between Turkey and Iraq, it could further increase our competitive power substantially. The real threat would be efforts between Russia and Ukraine to develop flour trade instead of wheat. That is because the cheapest wheat is produced in these countries.
What kind of activities are you engaging in for finding new markets?
Turkish flour industry is in a position to fulfill all the demands of buyers across the world. Currently, Turkey is the country that serves to maximum points in the world. What is important for us is to end the low value-added trade due to the competition.
What are your expectations and aims in 2018?
Our Federation needs to start its work as soon as possible to avoid the decrease in per capita consumption in the domestic market and should play an active role against the smear campaign and disinformation. Besides, in order to support sales and merger in the sector, it should talk with the public authorities to pave the way for incentives. That will be an important step.