Turkish flour industrialists gathered in the ancient city of Mardin for the first time in almost two years to discuss the problems of the industry. At the meeting, the risks regarding flour export and the problems in the domestic wheat market were discussed by producers, experts and sector representatives.
Our planet is in the grip of natural disasters. On the one hand, there is a worldwide drought and the consequent loss of crops. On the other hand, fire and flood disasters in many parts of the world, mainly in China and Germany, cost the lives of hundreds of people and animals, while devastating cultivated lands and cities.
While countries have been struggling with COVID-19 for the last two years, global warming and the natural disasters that come with it, unfortunately, continue to be effective also in Turkey. While one side of the country is getting slammed by drought, the other side is affected by floods. Due to severe drought in many parts of Anatolia, there has been a substantial fall in yield, especially in wheat and barley production.
In the Black Sea Region, while there is loss of life and property due to the flood disaster in provinces such as Rize, Artvin, and Giresun, this disaster caused great destruction. Floods brought bigger destruction in Europe, especially in Germany, and Belgium, and also in China. These natural disasters that our planet is exposed to are not caused by a single country, but due to climate change, which is the most important problem of the whole world.
In this period, when the negative effects of the pandemic and drought prevailed, a large organization was hosted by Mardin, the ancient city of Mesopotamia, after 1.5 years, to note and underline the problems of the industry.
The meeting themed "21/22 Harvest Year and Afterwards" organized by DUNSAD and GUSAD in Mardin, which got the attention of hundreds of participants who were bored of online meetings after a long break under the shadow of pandemic restrictions, took place with a very keen participation. At the meeting, the risks regarding flour export, problems in the domestic market, wheat production, drought and its effects were discussed by producers, experts and sector representatives and solutions were sought.
Flour industrialists had the opportunity to express their problems before the decision makers thanks to the meeting organized by the major associations of two regions, where the drought caused great yield losses. The problems were presented by flour industrialists to Ahmet Güldal, General Manager of Turkish Grain Board (TMO), with a final statement, at the meeting, which was especially closed to the press. Güldal, representing Turkish Grain Board, promised to take steps to relieve the flour industrialists.
As a result of my two-day impressions, every business person we talked to said that the biggest problems of the regional industrialists are drought, raw material supply and increasing prices. In fact, the purpose of the meeting was to cooperate with the public sector regarding the supply of raw materials and to eliminate this process without causing much damage in both the domestic and foreign markets.
At the meeting; public representatives, industrialists, wheat traders, farmers, shortly, all stakeholders of the sector came together with great interest and tried to find solutions to the problems. “By looking at by the atmosphere and the messages given at the meeting, we will try to get through these difficult times unscathed by joining forces with the state while achieving our goal within the framework of the law,” said Mesut Çakmak, President of the Southeast Anatolian Flour Industrialists' Association. Çakmak, who pointed out that the main problem in agriculture is the slivered structure of lands and the scarcity of wetlands, says that a countrywide land reform is a must.
I can say that with the Mardin meeting that took place in challenging times, the regional industrialists and producers have felt the support of the government. Turkish Exporters Assembly (TİM) President İsmail Gülle, TMO President Ahmet Güldal, General Directorate officials at TMO, TİM and Export Office, association members and prominent pasta and flour industrialists of the region have attended the meeting. While it was emphasized in the panel that the yield loss was around 30% in general, it was reminded that the decrease in wheat planting caused severe problems and adequacy problems broke out.
NEW PRODUCTION MODELS ARE NEEDED
GUSAD Honorary President Erhan Özmen said that Turkey's wheat need is 18 million tons, wheat cultivation area is 7.2 million hectares and wheat production was 17 million tons in the 20/21 harvest period. Stating that the total flour, pasta and bulgur exports were 6.6 million tons in 2020, and the wheat import was 9.75 million tons, Özmen noted that in order to increase wheat production, initiatives should be taken to direct the farmer to plant wheat again. He warned that otherwise, the cultivation areas may shrink even more. He also emphasized that 2 million hectares of uncultivated lands should be brought into production in order to increase wheat cultivation and production, that new production models are needed for rural areas and irrigation investments should be completed in regions threatened by climate change.
“It is a small world. We are competitors of each other now. There is no point in being the flour export champion by selling the cheapest flour in the world. The period of selling monotone flour is over. We can serve the country better by selling branded and value-added products. Flour industrialists should get united and Flour and Bakery Products Promotion Group should be established within TİM” said Erhan Özmen and had a big hand from the audience. This reaction was interpreted as the industry's acute need for promotion in foreign markets.
SCARY FACTS FROM DOYEN INDUSTRIALIST
Stating that many countries where they, as flour exporters, sell products have established and continue to establish their own flour production facilities, Erhan Özmen shared the following anecdotes:
A wheat producing Turkey has always supported its industrialists. However, in the current process, there is a rapid shift away from wheat planting.
When we look at the average of long years in our country, while the cultivation areas are shrinking, we have tried to support our farmers with prices that are above the world. Turkey's wheat prices average for long years is 320 dollars. However, later on, this practice was abandoned due to the effect of bread on inflation. The years 2017 and 2018 have been the period when the farmer got angry to wheat production and withdrew from the field. In this period, the prices given to wheat remained below the exchange rate increase and inflation.
We need to draw the farmers to the field again. A country with such a fertile and abundant cultivation area should not become a wheat importer. Wheat is indispensable for us. We produce many bakery products from bread to baklava, pasta, biscuits, pita and pastry. When entering the harvest period, TMO should have at least 2-3 million tons of wheat in its stock.
If the price of everything goes up, the price of bread should go up, too. If this price is being kept under pressure for inflation concerns, another formula can be found for this.
FLOUR EXPORTERS SEEK CONVENIENT CREDIT FROM EXIMBANK
Another remarkable subject of the meeting was GUSAD President Mesut Çakmak's request for the solution of the financial problems experienced by the flour exporters. Çakmak stated that the flour exporters had problems in accessing Eximbank loans and wanted to pave the way for access to loans. Explaining that especially small-scale exporters have financial difficulties in exports, Çakmak said, “Strong companies can easily access Eximbank loans. Small-scale companies can access Eximbank loans with letters of guarantee. If small-scale companies are supported by the Credit Guarantee Fund, the way will be cleared for us. We ask TİM President Mr. İsmail Gülle to convey our voice to our ministers and the President," and asked that their demands be conveyed to Ankara.
Pointing out that the Iraqi market is no longer sufficient for flour exports, the veteran industrialist made the following warning: “One day this will not work only with Iraq. Although things seem fine for now, we do not think that this is sustainable. Our salvation lies only in opening up to overseas countries.”
TİM President İsmail Gülle said that they are working to change the structure of Eximbank, which he is in the management of, as they admit that there is fallacy in the way Eximbank is working. He stated that a package has been prepared for the granting of Eximbank loans to projects and making them reach wider segments. Reminding that 1.3-billion-dollars of flour was exported in 2020, İsmail Gülle informed that there was a 15 percent increase in the first 6 months of this year compared to the same period of the previous year.
The person whose speech was eagerly awaited at the meeting was TMO General Manager Ahmet Güldal, for sure. Expressing that he was there to solve the problems mentioned at the meeting, Güldal noted that they will try to support the industry more in this period when the negative effects of the pandemic and drought reign over.
Expressing that they are getting prepared for all scenarios, TMO President said that this is a difficult year for the industry and that they will not allow wheat prices to exceed 3 thousand liras per ton. Noting that they are representing the public side of the industry and that they have grabbed the bull by the horns, Güldal emphasized that the industrialists of this sector have assumed even more responsibility than this.
According to the information given by TMO General Manager Güldal, the Board will continue its interventions and regulation duty until the beginning of the next year's harvest in order to ensure balance and stability in the market. It plans to continue the contracted system it implemented last year in order to keep flour prices in balance this year as well. Yet, it does not want the products it sells to be resold.
The hospitality of the industrialists from Mardin who hosted the meeting was admirable. The pudency of the people of the region while explaining their problems and seeing how much they trust the promises made for a solution gives hope for the future.
Veysi Duyan, President of Dicle Flour Industrialists' Association (DUNSAD), sets a very good example for what we are talking about. He noted that TMO was unloading the products it imports to certain ports and I witnessed how kind and shy he was when saying that he demanded the imported wheat to be sold also at the regional offices of TMO rather than only at the ports. Stating that the purchase of imported wheat from the ports affects the competition negatively, Duyan said, “We were left orphans this year due to the drought. Do not ignore us. Instead of unloading goods to Mersin and Iskenderun ports, ship them to Ceyhan and closer ports. In addition, why doesn't TMO sell the imported wheat to us at the Regional warehouses of the body, outside the ports in order to prevent regional price differences arising from freight costs?" TMO General Manager Güldal stated that this request of DUNSAD President Veysi Duyan will be taken into account.
I hope the "21/22 Harvest Year and Afterwards" Mardin meeting held in a challenging time will contribute to the solution of many problems.