The obstacle of the feed industry: “IMPORT OF RAW MATERIAL”
11 October 201313 min reading
TÜRKİYEM-BİR, M. Ülkü KARAKUS: “Increase in the prices of imported raw material increases the prices of feed as well. We lose our competitiveness in foreign markets due to the high prices of imported feed. In order to prevent this, it is necessary to boost the domestic production of grains and other herbal products especially that of oily seeds according to our stockbreeding while taking our export share into consideration.”
The feed industry in Turkey which has a developed structure in terms of technological equipment, quality and production capacity encounters problems in both domestic and foreign markets as Turkey depends on imports in terms of feed raw materials. Stating that the feed industry in Turkey can currently import 300 thousand tons of mixed feed, M. Ülkü KARAKUS, the Chairman of Turkey Feed Industrialists Association (TURKIYEM-BIR) emphasizes the fact that this amount is well below the industry’s capacity.
Pointing out that the feed industry produced 14.5 million tons of mixed feed in 2012, KARAKUS says that the total capacity is 15.3 million tons in just one shift. Emphasizing that the feed industry in Turkey becoming more active in the international market depends on the increase of the production of feed raw materials especially the oily seeds, Ülkü KARAKUS has their own forecasts about the future. Foreseeing that the feed factories in Turkey will be converted into high capacity developed factories in the coming years but that the number of the currently active factories which is 471 will be lower, KARAKUS answers our questions about the feed industry.
Mr Karakus, could you give us information on the mean number of feed facilities, their technological infrastructure and the production capacities of these facilities?
There are 471 active feed factories in our country. 60% of these factories are factories with capacities lower than 10 tons/hour. However, we can say that factories with larger capacities have been established in the recent years rather than small factories. 75% of the mixed feed production in Turkey is achieved by the top 100 companies.
There is 15.3 million tons of mixed feed production capacity per shift in our country. 14.5 million tons of mixed feed was produced in 2012. When we calculate based on single shift, the rate of used capacity is 95% which is 50% when we calculate based on double-shift.
Majority of the produced feeds are produced in facilities that are operated in accordance with the EU standards. Technological infrastructure and know-how in our industry is well developed and we keep a close eye on new technologies. Technologies such as pelletizing, extrusion and expander are applied to improve the usefulness and digestion of the nutrients in the feed for the animals. Fish feed production can be listed at the top of the branches where the most advanced technologies are used in mixed feed industry.
What can you say on the current general growth and development of the feed industry in Turkey?
The feed industry in Turkey grows about 5-10% annually. Mixed feed sector grew by 10% in 2012 compared to 2011 and achieved 14.5 tons of mixed feed production. Bird feed grew by 7% in 2012 compared to 2011 and achieved 6 million tons of production and livestock feed grew by 11% and achieved 8 million tons of feed production. In 2012, 300 thousand tons of fish feed and 200 thousand tons of feed for cat, dog, horse and other animals were produced. Our sector increased its revenue which was 4.6 billion dollars in 2008 to 6.9 billion dollars in 2012. We anticipate this amount to rise by 8% by the end of 2013 and reach 7.5 billion dollars.
The most pressing matter for feed producers is the supply of raw materials. Well, how does Turkey stand in terms of feed raw material production? Can you provide information on the production amount of feed raw materials?
In our country, there is in-farm feed production of about 5.5 million tons actualized by those who produce their own feed in addition to the production of 14.5 million tons of mixed feed. When we add this production to the equation, we can say that 20 million tons of feed is produced. Grains such as barley, corn and wheat, oily seeds such as soy, sunflower, canola and cotton and their pulps, milling products such as bran, razmol and bonkalit and corn side-products are mostly used for feed.
3.7 million tons of the corn produced in our country and imported is consumed as feed. Furthermore, 780 thousand tons are consumed in starch industry, 300 thousand tons are consumed locally and 100 thousand tons are consumed industrially. In addition to the corn production in our country which was 4.6 million tons according to 2012 figures, about 800 thousand tons were imported. Production of corn has increased in recent years; however, its use in the production of feed, oil and sweetening industries and biofuel-bioethanol has increased as well. With the premium and purchase policies established to increase corn production, our corn production has increased; however, the price of the corn sold domestically has become 30% more expensive than the foreign corn prices. This limits our chance of exporting animal products and feed abroad; however, this situation is partially remedied via duty-free imports carried out under “Inward Processing Regime.”
Reasons such as drought and shifting to other products in production sites cause problems in supply of corn in some periods. In this situation, our industry shift towards wheat as a substitute for corn. We guess that about 500 thousand tons of wheat is used in our industry annually. In periods when our corn production is now enough, the use of feed wheat reached 2 million tons. In our country, especially the issues related to the supply of oily seed herbs adversely affect our feed industry. Oily seed pulps such as soy, sunflower, canola and safflower which we must use as a protein source are not produced enough for our feed industry’s demands. While at least 2 million tons of soy production is required to meet the demands of the feed industry, only 120 thousand tons of soy is produced in our country. And in order to meet the sunflower pulp demand of the feed industry, our sunflower production which is 1.4 million tons needs to be increased to 3.5 million tons. If there production amounts are achieved, our dependency on foreign production will be solved.
Incentive premiums on oily seeds have been increased over the years; however, our production has not achieved the desired level. With the increase in the global population and the demand for animal products, the prices of these products increase in the global market as well. This situation has made it hard for our feed industry which pays more for the oily seeds most of which is imported to keep feed prices balanced.
As you previously mentioned, the feed industry in Turkey highly depend on imports for raw materials. Can you comment on the import amount of the raw material carried out by the feed industry in Turkey and the effect of such imports on the industry?
Our feed industry imports mainly oily seeds and pulps especially soy, soy pulp and sunflower seed pulp, corn, corn derivatives, DDGS, brans, syrup, fish flour and feed additives such as vitamins and minerals. 5.5 tons were imported from just these products in 2012 and approximately 2.7 billion dollars was paid for these imports. 5 years ago, 4.8 tons of the same raw materials were imported and 2 billion dollars were paid. In other words, over the last 5 years, our import amount has increased by 15% while the value paid for the imports have increased by 35%. As the years go by, this negative situation directly affects our feed industry which imports the same products more and for a higher price, and hence our livestock breeding industry.
Increase in the prices of imported raw material increases the prices of feed as well. And in this situation, we encounter problems in terms of the demand for feed and the turn back of payments after the feed has been purchased. We lose our competitiveness in foreign markets in addition to the domestic demand due to the high prices of imported feed. In order to prevent this, it is necessary to boost the domestic production of grains and other herbal products especially that of oily seeds according to our stockbreeding while taking our export share into consideration.
What are the grains and legumes based feed sources? Which of these products are directly or indirectly used in the feed industry? How can the waste generated during the processing of these products be used for feed production?
Of the grains, mostly corn and barley are used in our industry and grains such as oat, rye, sorghum and triticale are used as feed as well. In periods where corn supply in insufficient or if the price is suitable, feed wheat is used for feed as a substitute as well. Not only can these products be directly used after being cracked in feed mills, by-products of the starch and flour industry such as corn bran, razmol, bonkalit and bran are used in feed as well. Other than grains and by-products, legumes are used on their own or after being processed (such as dry heated beans, bean protein concentrate, lentil shells, and lupine razmol) in feed as well.
The rate at which grains, legumes and their by-products and other feed raw materials are added to the feed are detected by the needs of the animal such as energy and protein and the nutrition values and prices of the feed raw material to be used. Our industry is capable of evaluating of each feed raw material with an animal nutrition value based on its security, quality criteria and price advantage.
In feed production, what alternative products could be used instead of grains deemed to be human food? Where does Turkey stand on alternative feed sources?
Grains used to meet the energy needs required for the life and efficiency share of the animal are included in the ration based on the animals’ potential to digest and use the feed and the availability of the said feed in addition to its nutritious values. Grains are included in rations especially as an energy source and at least one of the grains such as barley, corn or wheat is used in the feed ration. Especially in bird feed rations, use of corn makes up a major rate like 50-60%. Meaning, 50-60kg of 100kg feed is corn. For livestock feed; however, barley oriented feed rations are generated (20-50%).
Grains must be included in the feed ration at a specific rate in order to provide the animal’s energy need in both bird feeds and ruminant feeds. However, as ruminant animals consume raw feeds in addition to mixed feed and achieve the desired level of performance, we can say that, if the high quality raw feed source is enough, they can consume less mixed feed and therefore decrease the consumption of grains. But, as there is a serious issue with the supply of high quality raw feed, the use of mixed feed, and therefore the use of grains, keeps increasing in ruminant feed as well.
What is the result when we compare Turkish feed sector with countries where animal breeding in particular and feed sector are developing? What are the cons and pros of Turkish feed sector when it is compared with the precedent countries?
It is a well-known fact that our country is way behind the developed countries in terms of animal product consumption per capita. While annual meat consumption per capita in Turkey is 40 kg, this figure is 80 kg in EU and 108 kg in U.S.A. Similarly; milk and egg consumptions in Turkey are way behind the developed countries either. This case alerts us on the fact that our animal breeding has a long way to go. Increase in our number of animals in recent years is satisfying but sustainable feed production is definitely required for a sustainable animal breeding. Our sector adopted providing support the animal breeding as a principle by playing a key role at this point and contributing into the development of our animal breeding.
Our feed sector is able compete with the countries, where animal breeding is developed, thanks to its technology, knowledge, infrastructure and capacity The number of feed factories in our country is a bit more than the number of feed factories in the countries which are developed in terms of animal breeding.
While 14.5 million tons of feed can be produced via 461 active feed factories in Turkey; these productions can be obtained via less feed factories in countries such as Germany, France and Netherlands. For example; 14.3 million tons of feed production of Netherlands is provided by solely 100 factories; Germany’s 23 million tons of feed production is provided via 319 factories. The capacity of a great majority (60%) of the feed factories in our country is lower than 10 Tons/Hour. Nevertheless; 80% of our mixed feed production is produced by the first 150 factories. Thus; the sector is dominated by the factories with high capacity. We predict that the factories with small capacity will be replaced by the high capacity factories as it has already started and that our factory number will decrease while our mixed feed production will increase within the oncoming years.
The problems in feed payments and prolongation of due dates based on the intense competition in our feed sector, the status of our animal breeding and the inconveniences it has experienced attract attention. This case causes our sector to be disadvantageous in competitive compared to the feed sectors in other countries.
What are the factors for Turkey to have a say in the world feed market? What should be carried out for the development of Turkish feed sector?
Problems such as raw material supply primarily should be resolved for our country’s feed industry to have a say in the world feed market. Accordingly; our herbal production, primarily oilseed and grains, should definitely be increased. The regular supply of raw materials into our sector in convenient prices can only be provided by this method and thus it would be possible for us to have a say in the world feed markets.
Our country has the advantage of marketing feed to Middle East and Turkic Republics thanks to its location. Nevertheless; the fact that domestic raw material prices have a course which is way above the world prices leads us to keep this advantage. In this case; provision of conveniences to our sector like the inward processing regime and implementation of these factors are required for the import of raw materials which are not sufficient for our domestic production necessity.
Furthermore; if our infrastructure deficits at ports are eliminated and required arrangements are carried out within the scope of IPR, our country would reach a net mixed feed exporter status. Technologic knowledge and established capacity of our sector is suitable for the export of 1-2 million tons of concentrated feed annually. Nevertheless; approximately 300.000 tons of mixed feed export can be carried out which is way below that that could be carried out indeed.
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