Will the declared buying price for grains in Turkey increase wheat cultivation areas?

11 June 20195 min reading

Anatolian farmers have been shying away from wheat cultivation. High input costs which are also affected by the depreciation in Turkish Lira, make it impossible for farmers to make profits. So they substitute products with lower costs for the wheat. This tendency also worries consumers, industrialists and traders.

Keeping away from the wheat production has been high on the agenda of relevant sectors in Turkey in recent years and now it is a highly worrisome development. All stakeholders in the sector ranging from farmers, industrialist and seed growers to traders highlighted their concerns at Grain Suppliers Association’s (HUBUDER) conference titled “Towards 2019/2020 Grain Harvest in Turkey and the World” which was held on the 16th of May in Ankara.

Conference speakers mentioned that Turkey’s wheat cultivation areas were 9.2 million hectares in early 2000s but this area shrunk to 7.85 million hectares in 2015, 7.67 million in 2017 and 7.2 million in 2018. Despite the shrinkage, the output has not decreased that much thanks to the increased rate of yield. But the ongoing shrinkage and effects of the climate change create pressure on the amount of production.

The main reason of this phenomenon is the disadvantage of the wheat against alternative products in terms of profits for farmers. In Central Anatolian region, farmers choose to grow barley or chickpea which have higher yield and profits. As a result, barley cultivation areas have been increased by 10 percent in Turkey.

As farmers cannot make profit with wheat business, they tend to grow corn or cotton in Aegean or Cukurova regions where irrigated farming is widely available. On the other hand, Thracian farmers also give up wheat production and turn towards oil seeds like canola. In many of the plains in the Southeastern Anatolia Project (GAP), we now see corn rather than wheat ears.

These were concerns of stakeholders who had the chance to know about measures of policy makers. Ahmet Güldal, the General Manager of the Turkish Grain Board (TMO), stressed that they are going to declare buying prices for products like grain before the harvest season begins. He also added that they are going to prepare price scenarios for all types of products and they will take into consideration the domestic and international prices, inflation rate and size of the harvest for each product in order to encourage farmers to grow their products and also protect consumers against skyrocketing prices. “We are fully ready to buy all products that come to us. We will put a price that enables sustainable production to guarantee the amount of the grain crop for next year. We aim to see a grain harvest of over 20 million tons for 2020-2021 production year. We definitely do not want to see high prices that would affect consumers in a negative way.” he added. “ALSO DECLARE SELLING PRICES” Grain Suppliers Association’s (HUBUDER) Chairwoman of the Board Gülfem Eren applauded the decision for announcement of grain prices before the harvest. She also urged the policy makers to declare selling prices as soon as possible. “Diesel fuel, pesticide and seed costs are correlated with the foreign currencies”, she reminded. “To increase grain cultivation, well-calculated buying prices should be put into action, a careful production planning should be in force. Those measures will also decrease the inflation rate in the long term as a substantial solution. We foresee a more balanced market thanks to a substantial amount of purchasing by the Turkish Grain Board in many regions excluding South Eastern Anatolia and Cukurova. We wish to see that grain selling prices would also be declared as soon as possible and a gradual increase in prices,” Gülfem Eren added.

INDUSTRIALISTS NEED TO KNOW THE SALE PRICE BEFORE OCTOBER Turkish Flour Industrialists (TUSAF) Chairman Eren Günhan Ulusoy also highlighted his concerns about shrinking cultivation areas for the wheat and supported the idea to declare the buying prices before farmers plant the seeds. Ulusoy also stressed that the climate change affects production in a negative way and makes farmers to decide not to produce wheat. As a result, costs are increased for flour industrialist. Eren Günhan Ulusoy added: “Wheat cultivation areas had shrunk by 23% to 7.2 million hectares from 2000 to 2018. The yearly shrinkage had been between 1 and 1.5 percent in the last 18 years but this rate has increase to 5% in the recent year. The alarm bells ringing and something must be done to prevent the worst scenarios. We think, the 5% loss can be offset thanks to the positive weather conditions and we expect a harvest of at least 20 million tons for the wheat. But in order to have a sustainable wheat production, we have to compensate the costs of our farmers. And it will be much better if farmers knew the buying prices before planting the seed in October or November. They will be more comfortable if uncertainties are prevented.

GLOBAL WHEAT CONSUMPTION IS SET TO DECREASE BY 10 MILLION TONS The Director of Moscow-based Institute of Agricultural Market Studies (IKAR) Dr. Dmitri Rylko, highlighted the dominant position of Russia and the Ukraine in the wheat market. Iran also has become a more important market for Russia in recent years.

President of Tallage, France-based agricultural-economic research and analysis bureau and consultancy and Strategie Grains Chief Editor Andrée Defois said that the global wheat consumption is expected to increase by 10 million tons this year. He also underlined that Russian wheat has a price advantage over all suppliers and this situation will continue until the new harvest season in November or December.

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