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Importance of licensed warehousing

10 August 20207 min reading

Hikmet Özkan Founder Tokay Danışmanlık Ltd.Şti

The licensed warehousing system will continue to be an indispensable system for the sector, considering the issues such as contributing to the sustainability of the production of agricultural products of strategic importance for our country, facilitating trade, offering modern storage and the financial opportunities.

According to the data of 2019, around 34 million tons of grain was produced in our country. Barley, 21% of this total with 7.2 million tons of this production, corn, 18% with 6 million tons, feed wheat, 6% with 6 million tons, and rye, oats and triticale, 2% with 790 thousand tons, are used directly in the feed industry. In other words, 47% of total grain production is used directly in the feed industry.

Feed production in Turkey has made significant progress and has reached 25 million tons in recent years. Increasing this level further depends on easy access for the feed industry in terms of quantity and quality, and this depends on the possibility of storage and financing as well as sustainable production.

In this respect, the licensed warehousing system provides great advantages for the feed industry in terms of both protecting the quantity and quality of the product and financing opportunities.

In order to ensure the sustainability of production in agricultural products of strategic importance and to prevent loss of quantity and quality after production, the licensed warehousing system has started to gain importance in Turkey as well as in developed countries.

Licensed warehousing a system that facilitates and develops the trade of agricultural products through Electronic Warehouse Receipts (ELÜS) which facilitates the trade of agricultural products, ensures warehouse construction at a high standard and capacity, ensures the safety of the product and maintains its quality, ensures the class and degrees of the products to be determined by independent authorized classifier laboratories, represents the ownership of the products, and provides financing, sales and delivery.

The establishment and licensing procedures of the licensed warehousing company are carried out by the Ministry of Trade.

As of today, licensed warehousing is available in cereals, legumes and oil seeds, cotton, hazelnut, olive, olive oil, dried apricot, raisin, pistachio and dairy products.

In order to carry out licensed warehousing activities in accordance with the criteria specified in the relevant communiqué, 20,000 tons of cereals, 10,000 tons of cotton, 10,000 tons of nuts, 5,000 tons of table olives, 4,000 tons of olive oil, 5,000 tons of dried apricots, 2,000 tons of pistachio, 5,000 tons of raisin, 10,000 tons of milk powder and whey powder, 7,000 tons of butter and cheddar cheese have to be available.

In order to obtain a license for storage facilities, the facilities and the product to be stocked must be insured against all risks, and a guarantee of 15% of the warehouse capacity will be provided at the market price of the product.

The licensee business starts accepting products at the warehouse rental fee determined by the Ministry of Commerce. It is mandatory that the accepted product is delivered to the depositor by the licensed warehouse enterprise in the same quantity and quality. The storage period varies according to the product group and is at most 2 years.

The product brought to the licensed warehouse is stored after the analysis and classification by the Authorized Classifier laboratory authorized by the Ministry of Commerce and an Electronic Warehouse Receipts (ELÜS) is issued by the licensed warehouse company. The depositor holding electronic warehouse receipts can get his products from the warehouse on demand and sell at the Commodity Exchange of Turkey (TÜRİB) platform in the electronic environment, national or international market or to the Turkish Grain Board (TMO).

Electronic warehouse receipts issued against the products stocked by producers, traders, and industrialists can be pledged to obtain credit from financial institutions.

The government provides various support and incentives to businesses that will invest in this field, to the depositors who deliver products to licensed warehouses and to traders and industrialists who buy and sell products from licensed warehouses.

In this context, licensed warehouse businesses that will invest in licensed warehousing are provided with a 50% interest discount for up to 50 million TL for their investment periods.

In addition, licensed warehouse investments are included among the investment subjects that will benefit from regional supports. All licensed warehouse businesses to be established in regions 1-2-3-4-5 shall be considered in the 5th region and licensed warehouse enterprises to be established in the 6th region shall be considered in its own region. In this context; VAT exemption, tax deduction, insurance premium employer's share support, income tax withholding support, insurance premium support and interest support will be provided.

For depositors who deliver products to licensed warehouses; in case they store their products in licensed warehouses, 25 TL per ton shipping support for each product group and 25 TL analysis fee per lot for the analyzes to be made by authorized classifiers is being given to the farmers registered in the Turkish National Registry of Farmers (ÇKS) up to an upper limit of TL 750. In case they use credits in exchange for Electronic Warehouse Receipts (ELÜS) a 100% interest support up to 75% of the bill amount with a maximum term of 9 months is being given. Additional rent support of 6 TL for wheat, barley, rye, oats, corn, paddy, rice, lentils, chickpeas, beans, peas, sunflower, 14 TL for cotton, 20 TL for olive, olive oil, hazelnuts, dried apricots, raisins, pistachios lease support is being given for a maximum period of 6 months. Besides, if they sell their products in licensed warehouses through electronic warehouse receipts, an exemption for agricultural withholding tax of 2% is being provided.

For real and legal persons (trader-industrialists) who deliver products to licensed warehouses or receive the delivered product via Electronic Warehouse Receipts, a warehouse rental support of 3 TL per ton for wheat, barley, rye, oats, corn, paddy, rice, lentils, chickpeas, beans, peas, 7 TL for cotton, 10 TL for hazelnuts, olives, olive oil, dried apricots, pistachios, raisins, dried figs will be given and besides, income/ corporate tax exemption for profit from trading with electronic warehouse receipts is being provided and VAT is not being charged.

Thanks to the support and incentives provided by the Turkish state, the interest in licensed warehousing has increased. As of today, 213 licensed warehouse establishments with an installed capacity of 16,950,292 tons have been established and their number is gradually increasing. 96 of the licensed warehouse enterprises in question have obtained licenses for 5,053,182 tons and the licensing process of other companies continues.

92 of the companies that have obtained a license so far constitute the grain, legumes and oil seeds group that appeals to the feed sector with 4,990,532 tons.

With the licensed warehousing system, the feed industry has become easier and faster to receive the necessary raw materials in the electronic environment, as in the entire industry that uses raw materials. In addition, the sector has the advantage that it can deliver products to all licensed warehouses without the need to invest in the storage facility, or to purchase and deliver credits from the financial institutions for the products purchased. On the other hand, the fact that the quantity and quality are guaranteed until you withdraw the purchased product from the licensed warehouse to use electronically increases the sector's interest in licensed warehousing.

As a result, the licensed warehousing system will continue to be an indispensable system for the sector, considering the issues such as contributing to the sustainability of the production of agricultural products of strategic importance for our country, facilitating trade, offering modern storage and the financial opportunities.

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