Alp ESKİYAPAN, AUSD: “China and African countries are the emerging markets for Turkey”

13 January 201610 min reading
Turkey is a country which has become one of the leaders in global flour trade and has continued its place by strengthening it in the recent years. The industry representatives exporting flour to many areas in the world come together under 8 associations and 1 federation. One of the most important of these associations is Anatolian Flour Industrialists’ Association. The President of the association Alp ESKİYAPAN is our guest in the first issue of 2016. With Eskiyapan, we discussed many issues like the place of Turkish flour industry in global market, export amount, changes in import markets, inactive capacity in the industry and the other problems. 73_aras Mr. Eskiyapan, first of all could you please introduce yourself and your association Anatolia Flour Industrialists’ Association (AUSD)? I have been working as the managing director and the partner of Katmer Un ve İrmik San. Tic. AŞ, which was founded in Ankara, since 1996. I have also taken charge in various positions in board of directors of our association for years. Finally, I have been working as managing director. Our association was founded with the name of Millers’ Association of Ankara Region in 1985 and it was named as Flour Industrialists’ Association. The association which took the name of Anatolia Flour Industrialists’ Association during the general meeting on 13 April 2006 continues registering new members and its activities throughout the country. My father was also among the founders. Taking over this work from them, today, we are struggling to hand down this work with successful activities. Our targets are to guide its members professionally, technically and economically, to help the production develop in an appropriate and beneficial way for our country by meeting its requirements, to defend the rights of member institutions against private and official institutions, to provide a close relationship among its members. The members consist of representatives of flour-semolina plants from all over Turkey and the representatives of the companies which supply raw material, produce machinery equipment, and implement technical and scientific applications for them. Our association has 102 members; and consists of 11 board members and Professional representatives. Among the 8 associations in Turkey, our association is the one with most members. AUSD is one of the 8 associations which represent the Turkish flour industry. How many companies are there in Turkish flour industry in general and what is the milling capacity? What is the share of AUSD in this? Presumably, there are about 1000 flour plants in Turkey and these plants have the capacity of 30 million tons per annum in total. The actual production is half of this. Available production capacity doubles the total flour consumption in Turkey. In addition, flour production capacity of Turkey is capable of meeting the flour consumption in the whole world. 50 percent of our members are flour plants. Our members also include factories which make production both at home and abroad. Central Anatolia Region which has the most flour plants also has the most of our members. However, we have members from other regions too. Could you tell us about the flour export amount of Turkey which is one of the biggest flour exporters in the world and also the share of your region in this export amount? As it is known, Turkey is among the leading countries in terms of flour export. Increasing export amount help our country become one of the leading flour exporters rapidly. In our industry, flour export amount in 2014 was recorded as 2.2 million tons and it held its place in global flour trade with 932 million dollar foreign currency inflow. Considering export amount for January-September in 2015, we can say that it is above 2.1 million tons and our success continues with 809 million dollar foreign currency inflow. How did some decisions on country basis (for instance taxes in Indonesia increased), political developments with neighboring countries and the war environment affect flour export mount of Turkey, exporter countries and your members? The developments with the neighboring countries and the war environment affected flour plants in Turkey negatively. Especially the problems encountered or to be encountered during the transportation can be counted among the negative reasons which affect the exportation to these countries. Instability in Iraq and Syria caused many flour companies to fail in collecting debts. The trade which used to be derivative nearly turned into cash system. Financial allocation became more important than selling. Turkey mostly exports to Iraq and Syria. Instability in these regions makes us really uncomfortable. Indonesia was also one of the primary countries that our industry made flour exportation to. Considering the flour exports in 2010 and 2011, while flour export amount seems above 130 million dollars it is observed that this amount decreased to 19 million dollars in 2014 and to 7 million dollars in January-September 2015. Protection rules that the countries applied seriously affected our competitiveness in free market. It is seen that certain countries which were among the significant flour markets for Turkey in the past now remained behind. What are the countries or regions as emerging markets for Turkey’s flour export? What is your advice as an association to the flour exporters in terms of new markets, or is there any work that you realize for the industry to overcome the problems about exports? Our country is one of the significant countries which export flour to many other countries in the world. As I mentioned above, reasons such as economic matters in certain countries, war environment or increasing tax rates cause changes in annual export amounts. For instance, industry starts to search for new markets as a result of decreasing flour export to a country due to rise in tax rates in that country. Another example; considering the last five years, while the amount of exportation to Indonesia decreased, the exportation to china exceeded 4,5 million dollar in 2015 although there was any record with china in the past. This indicates that china is a new and emerging market for Turkish flour industry. Africa also continues to be an interesting market for our industry. It is frequently mentioned that the inactive capacity of Turkey is in a serious level. What is the size of this problem in your region? What can be the solution for this problem? Of course there are some problems caused by the inactive capacity in flour industry. First of all, when compares to USA and European countries, the number of operating companies in Turkish flour industry is very high. Therefore, many factories have to run with low capacity. The rate of capacity usage is around 90 percent in USA. It is nearly 100 percent in England. The World average is around 60-65 percent. This rate is hardly 40-45 percent in Turkey. Mentioning certain problems in the industry; The fact that most of the companies in flour industry are small or medium scale companies and they work with low capacity prevent they benefit from the advantages of scale economy. The producers reduce the profit margin due to increasing competition. Workmanship, energy prices, transportation and marketing costs are gradually increasing. Deferred payments extending to 150 days harden the financial allocation, risks increase. If the minimum wage was 1,300 TL workmanship costs will increase. In case the companies that we sell flour collapse we do not have any legal sanction power. There are many companies which are collapsing. Reducing profit margins and increasing costs cause flour industrialists to compete with each other unfairly. Producers are forced to sell flour with prices below costs, compete unfairly in others’ markets or compromise on quality. We should look for common benefits as an industry not as individually in order to overcome these problems. The most significant way to realize this is sharing and uniting. Besides, I think that we can prevent unfair competition by searching for new ways and markets to increase export amount; and carrying out new precautions and works with the governments such as increasing the market share of Turkish flour industrialists in foreign markets. Mr. Eskiyapan, the most basic requirement of the producers is raw material, namely wheat... this year’s yield is very high although Turkey had some yield loss due to drought last year. However, only the high production amount is not enough; wheat is quality is also important. What do you think about the quality wheat requirement of Turkey? How much of this requirement does Turkey meet? Good bread comes from good wheat. There are many additives both in flour and bread. These materials are very expensive and they are imported. If we cultivate quality wheat more in our country the use of additives would decrease seriously. In order for the farmers to continue producing they should earn from the products. If they do, their wheat is of good quality, yield is high they earn money and they continue to live in their villages. They do not migrate to the cities. The profession of the future is farmer and production. We always support the use of quality wheat. Like a man needs oxygen to survive, a flour plant needs tons of wheat in order to operate. If we do not produce sufficient amount of quality wheat it would be difficult for flour industry to survive although the number of export markets is enough. The total wheat production amount in our country is capable of meeting the domestic demand. However some of the produced wheat is in quality of feed and this directs the flour producers to wheat import to supply raw material. In order to exceed these problems, production of quality wheat should be supported. TMO may apply protein based purchase in wheat purchase scales in order to enable this. With this way, the producer may need to produce more quality wheat to have higher income. As a result, both the producer win and the flour industrialist will buy more quality wheat at home not from abroad. As an association, do you have any project which is being realized now or to be realized in the future? As an association, we inform our members with the bulletins which are about the developments and innovations in the industry and also international markets. Apart from that, we share information about the latest and future situation of the industry through the meetings that we make in certain years and seasons. In these meetings, we introduce the new technological equipment which is related with our industry. Our members exhibit their products without any charges in our booths during these organizations and present their new technologies to the flour factories. In addition, unity and solidarity is highly important for us. We make organizations to come together, share information and unit every year. We have visited Chicago and Kansas in USA. We have observed the technologies there. We pay attention to organize consultation and bonding meetings at home too. We invite the officials from the ministry, undersecretary and TMO (Turkish Grain Board). Finally, what would you like to add about your association and flour milling industry in Turkey? We are a non-profit association. Our members are in a fierce competition but when they meet during the meetings of the association they hug and kiss each other. I think this is important. We look for the benefits for our industry. Every week, we inform our members about flour tenders, the results of them, and the developments about wheat in Turkey and in the world, wheat commodity exchange prices, and by-product prices through the bulletins.
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