“To be permanent on the top is harder than getting to the top”
07 November 20137 min reading
Günhan Ulusoy: “When we look at the place of our country among other flour exporter countries in the world, the view is pretty nice. However; as it is known that it is harder to be permanent on the top than be permanent on the top. When we take this situation into consideration; the most important element we should take into account is to keep up with the times on all equipment necessary for export, grasp the theories of global trade in the best way and follow new trends closely.”
Having a significant progress on world flour trade in the last ten years and becoming world’s largest flour exporter of the world, Turkish flour industry is in a serious competition in itself as there is an idle capacity around 20 million tons in Turkish flour industry. Thus, this situation forces companies into an aggressive competition. Chairman of Black Sea Flour Industrialists' Association and CEO of Ulusoy Un Günhan Ulusoy states that international trade will relieve this idle capacity problem to some extent but the real solution for that is consolidation and the legal restraints to be made about opening new facilities.
Answering our questions on the problem of idle capacity in Turkish flour industry and international flour trade, Ulusoy expresses that Turkey ranks first in world flour trade but it is more important to form the structure that succeeds to remain at this point.
Mr. Ulusoy, could you give us some information about the flour production capacity and consumption amounts in Turkey firstly?
Total production capacity of flour, which is the raw material of bread that is a sine qua non for Turkish family table today, is approximately 40 million tons. Whereas; annual flour consumption amount in Turkey is 15 million tons and our flour export amount on which we are at the top in the world is 2 million tons. In other words, the difference between our production capacity and consumption amount is 23 million tons.
As you also pointed out, there is an important idle capacity in the flour industry in Turkey. What can you say about the reasons and results of this idle capacity?
As we all know; as the industrial organizations operating in the flour production sector of our country, we are in a big competition. Besides the fact that there are already more flour mills than the necessary amount; today anyone can establish a flour mill wherever they want. This situation makes the competition conditions more difficult for the existing industrialists that have problems on finding a buyer with the proper price for the flour they produce and make them face a situation that is a complete mess. If we consider that the production volumes of the current flour mills and take into account that the flour amount which is consumed and exported is maximum 20 million tons; we can see that the amount of idle capacity is as much as the used capacity, in other words it is 20 million tons.
How can the idle capacity problem in Turkey’s flour industry be solved? What are your studies and advices on this subject?
Obviously, no one can say “close this place” to any already existing operator who operates in one way or another. The reason for it is that the mill was allowed to be established without being subjected to any obstacle or quota. Actually, this theory relies on the basis of this idle capacity problem. Operating permission can be given without determining an area or considering the distance between two different mills. If we bring a restriction to that, I think that we can stop the idle capacity problem, which is our common problem, to some extent.
How much international trade (export) can contribute to the solution of this problem?
Turkey is a country that has progressed so much in flour export in the last 10 years. While it ranked 11th in the list of flour exporter countries, today it is the number one in the world in this field. Besides contributing to the country economy; increasing our export can also decrease our idle capacity problem noticeably. This is a positive situation both for us as the flour industrialists and our citizens living in this country. However; export is not sufficient alone for the solution idle capacity problem as the flour trade in the world is around 13 million tons. Even if we produce that entire amount as Turkey, we cannot fill our capacity completely. Consolidation is a must for the elimination of idle capacity.
How do you evaluate the international marketing activities and export amounts of the companies in Turkish flour industry? What are the deficiencies and mistakes of the companies in the international market? What should the flour producers take into consideration in exporting or searching for new markets for export?
Actually; when we look at the place of our country among other flour exporter countries in the world, the view is pretty nice. However; as it is known that it is harder to be permanent on the top than be permanent on the top. When we take this situation into consideration; the most important element we should take into account is to keep up with the times on all equipment necessary for export, grasp the theories of global trade in the best way and follow new trends closely.
Knowing the product that you will market well, determining the needs of the country to which you will export in the best way and having always a B plan in order to reach your goals are the main elements that help us as the exporters.
How the new regulations in the Asian countries and political issues in Middle East countries have affected Turkish flour producers and exporters? How the losses in those markets can be recovered?
As you appreciate that South and South-East Asian countries to which we export flour are really important markets for us. Any changes in the import rules and conditions of these countries affect us directly. Quota or taxes on import, civil unrest that can affect trade or the problems between two trading countries can constitute an impediment for the buyer and the seller naturally. The tax applied in Indonesia, the uncertainty of the situation in Syria affected our exports to these countries a lot. Our negotiations for eliminating the negations caused by this situation still continue. Our export units are struggling with heart and soul for the elimination of the obstacles in those problematic countries in cooperation with our government. As Flour Industrialists' Federation, we support these efforts. We try to compensate our losses to some extent by making new market researches and making new contacts in the existing markets.
What can be done in order to increase the competition power of Turkish flour industry in the international market?
As I mentioned before, it is hard to stay at the top. Export comprises of several key elements. You buy, process and sell the raw material. However, it is not that easy. For instance; you will export flour to Far East. Naturally the customer gives importance on price as well as quality. But the place where you will send the product is at the other end of the world and there is Australia just on the south. The freight is relatively cheaper. However, we have an advantage of quality. In this situation; the important thing is to get appropriate freight and provide service in accordance with the needs of the buyer. Our government has also some efforts to increase the country export rate and we need those efforts. Turkey will always be on the top in flour export, we have complete belief in that.
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