INTERVIEW: Namık Kemal Parlak

Erser Group, one of Turkey’s leading brands in the grain industry, is making strategic moves to gain an active role in the global market. Erser Group, which acquired Ankara Flour, one of the well-established companies in the milling sector, aims to increase its competitive power in the global arena with new investments and innovative solutions. Erdal Genç, Chairman of the Board of Directors of Erser Group Agricultural Products Trade and Industry Inc., shared with Miller Magazine the group’s projects and vision, encompassing grain trade, flour production, technological advancements, and the exploration of new markets.

As we kick off the first issue of the new year, we are pleased to feature Erdal Genç, Chairman of the Board of Directors of Erser Group Agricultural Products Trade and Industry Inc., one of Turkey’s prominent companies in the trade of grains, pulses, and oilseeds. With nearly 40 years of experience supplying raw materials to the grain industry, Erser Group recently took a bold step in its growth journey. The group made a significant entry into the milling industry by acquiring Ankara Flour, a company founded by the late İlhan Cavcav and known for its strong legacy. Mr. Genç describes this acquisition as ‘a strategic move to preserve and carry forward the brand’s rich heritage while distinguishing ourselves in the sector.’ He adds, ‘With Ankara Flour, our goal is not only to expand our market share but also to bring innovation and a fresh perspective to flour production.’

Erser Group is steadily advancing its mission to enhance its influence and solidify its position as a strong player in the global grain trade, extending far beyond Turkey’s borders. Highlighting key strategies such as boosting export capacity, exploring new markets, and investing in cutting-edge technology, Erdal Genç articulates their vision with clarity: ‘We aim to become a more impactful player in global markets by adhering to international standards, prioritizing quality, and embracing environmentally friendly practices.’ To achieve this, the group places a strong emphasis on sustainability and quality, positioning itself as a preferred brand in international markets. He also reveals that they are in negotiations with international companies to establish strategic partnerships, aiming to strengthen their role within global supply chains.”*

Erser Group is also a leading company in modern packaging solutions, licensed warehousing and logistics. Mr. Genç emphasises that this multi-dimensional structure of Erser Group provides resilience against risks and supports sustainable growth.

In an exclusive interview with Miller Magazine, Erdal Genç shared insights into the group’s diverse activities, its forward-looking vision, and its projections for the global grain trade.

Erser Group operates in various fields such as agriculture, logistics and packaging. Could you give general information about the company’s main business areas and current operational capacities?  How do you evaluate the current position of the company in these sectors?

Erser Group is one of the leading companies in Turkey and the region with its expertise in agriculture, logistics, packaging, construction and flour industries. Thanks to its sectoral diversity, Erser Group has a structure that is resilient to risks, open to growth and innovation.

We trade agricultural and grain products with our company Erser Group Agricultural Products Trade and Industry Inc., which is engaged in the import, export and origination of grains, pulses and oilseeds. Our company has become the largest company in Anatolia in the field of agriculture as of 2023 data.

We produce environmentally friendly packaging solutions in accordance with food safety standards with GNC Packaging Industry Inc., which has one of the most modern machinery infrastructures in the world, with a monthly production capacity of 1,000 tons of printed film and 500 tons of PE Film with its 4-line printing machine park located on a total area of 42,000 m2, in the fields of snacks, pet food, detergent, frozen food, beverages, pasta. 

Kainat Licensed Warehousing, another investment of our Group, leads the sector with its storage facilities located in various regions of Turkey. With a total storage capacity of 515,850 tons, Kainat Licensed Warehousing makes significant contributions to the sector through its investments, including 34,500 tons in Çanakkale Gelibolu, 102,750 tons in Tekirdağ Ergene, 87,000 tons in Kırklareli Pınarhisar, 70,000 tons in Konya Center, 29,500 tons in Konya Kulu Acıkuyu, 54,500 tons in Sivas Kangal, 93,100 tons in Karaman, and 44,500 tons in Yozgat.

We offer logistics services through our company, Ali Çavuşoğulları Logistics, which specializes in logistics process management, grain transport, and storage. With a fleet of 150 vehicles and a commitment to smooth transportation, it plays a leading role in logistics processes.

Another partner company of the Group is in the field of construction and has made a rapid entry into the construction business with two leading companies in the sector and is about to complete the construction of Konya’s largest industrial site with approximately 800 independent units and 410.000 m² construction area.

ERSER GROUP’S STRATEGIC ACQUISITION OF ANKARA FLOUR

Finally, as you may know, a few months ago we acquired Ankara Flour, one of Turkey’s well-established flour milling companies. Ankara Flour is a brand that carries a deep-rooted heritage to the future in Ankara, in the heart of Turkey. We offer flavours to all four corners of our country and the world with our production capacity of 1000 tons per day in our factory in Ankara Sincan Organised Industrial Zone. The incorporation of Ankara Flour into our group is an important step for us to achieve a stronger position in Turkey’s flour industry. With this co-operation, we will support Ankara Flour for new achievements with our technological infrastructure and innovative approach while expanding our activities in the sector. We will endeavour to play a more effective role in domestic and foreign markets by maintaining our country’s leading position in flour production. Erser Group and Ankara Flour Industry will continue to pursue its mission of contributing to Turkey’s food security and economic growth with determination.

STRONG GROWTH TARGET IN GLOBAL GRAIN TRADE

What are Erser Group’s targets in the grain trade both in Turkey and in the international market over the coming years?

As Erser Group, we have many targets both in Turkey and in the international market in the grain trade in the coming years. One of them is to increase export capacity. In line with the growth targets in Turkey’s agricultural production, we are working to increase Erser Group’s export capacity and take a more active role in international markets.

One of our key goals is to explore new markets. Given the contraction and increasing competition in the global grain trade, it is essential to target new markets across different geographical regions and develop effective entry strategies. In line with this, we have completed our efforts to expand into these markets.

A further key objective is to invest in technology and innovation. Keeping up with technological advancements in the agricultural sector is crucial for boosting productivity and maintaining a competitive edge. To this end, we are actively working on modernizing Erser Group’s production processes through strategic technology investments.

Another goal I can mention, though not the least, is strategic partnerships and collaborations. By establishing partnerships with international companies, we are also negotiating to secure a stronger position in global supply chains.

In order to realise all these targets, we attach great importance to focusing on sustainability and quality. We aim to increase our preference in global markets by adopting international standards of quality and by focusing on environmentally friendly and sustainable agricultural practices. We believe that Erser Group, acting in line with these objectives, will be able to strengthen its position both in Turkey and in the international grain trade and consolidate its leadership in the sector.

A STRONG STEP INTO THE FLOUR INDUSTRY WITH ANKARA FLOUR

You stepped into the milling sector by acquiring Ankara Flour, one of the strong brands of the flour industry. What is the motivation behind this strategic investment and how do you think this step will contribute to the company’s long-term goals?

Ankara Flour’s brand recognition, its location, our expertise in raw materials and our operational capability are the most important motivation sources for our growing group, especially among our long-term goals. It will also be an important investment area for the young 2nd generation that grows up in this motivation.

Having a strong brand like Ankara Flour within our portfolio is particularly important as we develop new investment plans related to the flour industry and our area of expertise. Our goal is to elevate Ankara Flour, our second factory in the production sector, to surpass the market share levels of the previous period. To achieve this, we are actively working on the necessary infrastructure and new investment plans.

The milling sector is a highly competitive market. How does Ankara Flour plan to differentiate itself in this market?

Our goal is to become a significant player in the market by leveraging the strength of our brand, our expertise in raw materials, and our experienced team, thereby distinguishing ourselves through stable sustainability. In addition, we aim to stand out by producing specialized flours to meet the emerging needs of the sector, along with making investments that will support the new areas of activity we plan to pursue.

There has been speculation regarding the consolidation process in the flour industry, particularly after the wheat import ban. Do you have any upcoming acquisition or collaboration plans in this industry, especially considering your entry with Ankara Flour?

We have plans for new investments and the expansion of existing ones to align with our growth targets. If opportunities arise during the execution of these plans, we are open to considering partnerships or new acquisitions.

HOW HAS THE GEOPOLITICAL CRISIS IMPACTED THE GRAIN TRADE?

What are the implications of geopolitical developments such as the Russia-Ukraine war, tensions in the Red Sea and conflicts in the Middle East for grain supply and logistics? How have these conflicts affected Erser Group’s operations and grain supply capability? How have you adapted to these challenges?

The Russia-Ukraine war, tensions in the Red Sea, and conflicts in the Middle East have significantly disrupted global grain supplies, particularly in terms of trade and logistics. Russia and Ukraine together account for around 30% of global wheat and grain exports. The war has severely disrupted exports from these regions, causing rapid price increases. Restrictions on Ukraine’s ports in the Black Sea and the uncertainty surrounding the grain corridor agreement have further strained grain supplies. Additionally, the war has created logistical challenges, including increased insurance costs and altered shipping routes for grain transport in the Black Sea. Tensions in the Red Sea and the Middle East have also caused delays and heightened risks at key transit points, such as the Suez Canal. Ultimately, these disruptions have led to higher prices for staple crops like wheat, barley, and maize, posing a threat to food security, especially in low-income countries.

As Erser Group, we have deeply felt and continue to feel the effects of this war. In this process, due to cost increases in logistics, changes in transport routes and increased insurance costs have increased operational expenses. Problems in the regions where grain is supplied due to the war caused the company to turn to alternative sources.

Our company has improved its storage capacities to increase grain stocks during critical periods. In addition, the company took precautions against possible delays at ports by strengthening its local logistics network. In this period, we took care to minimise risks in the supply chain by increasing cooperation with international trade companies. We adopted financial risk management strategies against fluctuations in exchange rates and price increases and endeavoured to overcome the process with less damage. 

KEY FACTORS IN GRAIN MARKETS IN THE NEW YEAR

What are your projections for global grain markets in the new year? Which factors will play an effective role on grain markets? 

This topic is complex and could be discussed at length. First and foremost, geopolitical developments play a crucial role. The outcome of the Russia-Ukraine war will determine whether the grain corridors remain open, which will directly impact grain exports, especially through the Black Sea. Additionally, food security concerns in the Middle East and Africa could increase import demand, while simultaneously driving up grain prices. Another key factor influencing grain markets is climate change and weather conditions. Extreme weather events such as droughts, floods, and heatwaves will cause fluctuations in grain production. The harvests of major producers like the USA, Brazil, Australia, and India will be critical to market balances. Furthermore, the global economic situation is a major factor. The global recession risk and slowing economic growth could dampen demand for agricultural products. Additionally, fluctuations in currency exchange rates, energy prices, and a stronger dollar could drive up the costs of grain production and transportation.

Another important factor influencing global markets is supply chain disruptions. Logistical challenges such as port congestion, high freight costs, and limited container availability will continue to impact markets. Risks in key regions, including the Black Sea and the Suez Canal, will play a pivotal role in this. Additionally, policies and trade agreements will affect the markets. Issues related to global food security and export restrictions, such as India’s wheat export bans, can lead to market volatility. The EU’s sustainable agricultural policies and regulations, such as carbon taxes, could also influence international trade. Lastly, I believe that demand and consumption trends will have a significant impact. The rising global population will increase food demand, while the growing need for grain in biofuel production will further drive the market. Higher prices may also prompt shifts in consumption, with people turning to more affordable alternatives to grain.

CHANGING DYNAMICS IN THE GRAIN INDUSTRY

You have been in the grain trade for years. What changes do you observe in grain production, trade and consumption in Turkey and globally? Which main trends do you foresee?

We observe changes in production due to drought and climate. Grain production in Turkey fluctuates mainly due to drought and irregular rainfall. Productivity in crops such as wheat, barley and maize can decline due to lack of irrigation infrastructure and extreme weather events. We also observe changes in modern agricultural techniques. There is an increase in the use of mechanisation and digital technologies in agriculture, but their spread is still limited.

Another change we observe in trade is import dependency. To explain this, Turkey is an import-dependent country, especially in grains such as wheat and corn. Imports from Ukraine and Russia have been disrupted by the war. Raw material supply continues to be an important issue for local mills and pasta producers.

In terms of consumption trends, increasing population and urbanisation ensure the continuation of a grain-based diet in food consumption. However, grain consumption per capita may vary depending on economic conditions.

Sustainability has become a central focus globally. How do you see the grain industry developing in terms of environmental practices and sustainability? Can you tell us about Erser Group’s initiatives and vision in this regard? 

Sustainability is becoming a key focus in the global grain industry. While it’s a popular topic, I believe some discussions around it are superficial and driven by trends. However, significant changes are happening in the industry to reduce environmental impacts, protect natural resources, and ensure a healthy environment for future generations. I believe the grain industry can achieve sustainability by adopting more efficient agricultural practices. Precision farming technologies like GPS, drones, and data analytics help optimize the use of resources like water, fertilizer, and energy. Drought-resistant seeds also play a crucial role in sustainability, as they are being developed to withstand climate change. Another important aspect is the protection of soil and water resources. The use of organic fertilizers, as alternatives to chemical ones, is becoming more common, and sustainable irrigation methods, such as drip irrigation and sprinkling, are helping to minimize water usage.

At Erser Group, we are committed to supporting sustainability in agriculture by working with local suppliers and optimizing logistics routes to reduce the carbon footprint associated with imports and exports. We focus on energy efficiency and aim to minimize environmental impact by using modern equipment that lowers energy consumption in our grain storage and processing facilities. As part of this commitment, we produce our own renewable energy. Additionally, Erser Group promotes organic grain production and sustainable farming practices, offering support and training to farmers. This helps reduce environmental impacts over the long term. By collaborating with local producers, we also contribute to regional development.

Licensed warehousing in Turkey is a sector with significant growth potential. Will your investments in this area continue?

Our subsidiary, Kainat Licensed Warehousing, is a leading player in the sector with warehousing investments across various regions of Turkey. With a total capacity of 515,850 tons, it is the largest licensed warehousing brand in the country. Kainat Licensed Warehousing operates 8 facilities in different regions, making it a key force in grain storage. The company aims to gain a strong logistical advantage by strategically investing in licensed warehouses close to ports. We will continue to expand its capacity in the coming years.

SMART SOLUTIONS FOR GROWTH

How are artificial intelligence and rapidly advancing technologies reflected in your company? What can you tell us about your company’s work in R&D and innovation?

Artificial intelligence and rapidly evolving technologies are transforming not only many sectors but also the areas in which Erser Group operates. These technologies offer significant opportunities for improving operational efficiency and developing innovative business models, enabling us to envision a different future. We already use AI-powered route optimization in our logistics processes, helping us reduce transportation costs and shorten delivery times. Additionally, in warehouse management, AI-based systems automate stock tracking and inventory management, minimizing operational errors.

In the sector, productivity levels in the fields are monitored through satellite imaging, drone use, and sensor technology, leading to more efficient planting and harvesting processes. In grain processing and storage, artificial intelligence-based image processing technologies will be used for product quality control, enhancing product standardization and customer satisfaction. Additionally, smart systems that optimize energy consumption and software that track our carbon footprint will offer cost advantages while reducing environmental impact. We plan to implement these innovations across all our companies as soon as possible.

We have an R&D team dedicated to developing innovative solutions for the agriculture and logistics sectors. Our R&D efforts focus on increasing efficiency, supporting sustainability, and delivering better service to our customers.

To summarize, Erser Group aims to gain a competitive edge by integrating the changes brought by artificial intelligence and digital technologies into our business models. R&D and innovation play a central role in the company’s growth strategies. We view technology not just as a tool, but as a driving force that transforms our industry. With this perspective, we are committed to developing innovative approaches to enhance the service we provide to our customers and business partners.

The importance of packaging, particularly in the food sector, has grown significantly since the pandemic. Consumers are now more conscious of packaging when purchasing products. What do you focus on in packaging production?

At Erser Group, our commitment to quality has been shaped by our experienced team and strong production infrastructure. This foundation has led to the establishment of GNC Packaging, one of the group’s recent and notable investments. GNC Packaging stands out in its sector by providing innovative and robust packaging solutions. The company has built a reputation by delivering high-quality products, utilizing the latest technology and machinery, and offering timely delivery that meets customer specifications. With one of the most advanced machinery setups in the world, our brand is dedicated to continuous development and growth.

What is your view on public offerings, which bring financial relief and transparency to companies? Is your company considering a public offering?

Public offerings are a significant strategic move for companies as they provide financial resources and enhance corporate transparency. However, the approach to an IPO varies based on factors such as the industry, growth objectives, financial structure, and company culture. An IPO can be a valuable strategy for growth, increasing financial transparency, and strengthening brand value. However, it requires thorough analysis and careful preparation. At Erser Group, we are working on developing a roadmap, considering both our internal dynamics and industry trends, to explore this option in the future. We are committed to maintaining the same level of diligence and attention to detail in this process as we have in all our previous efforts.

Is there anything else you would like to add?

Thank you for giving me this valuable opportunity to share our vision through your questions. I believe we had an insightful discussion on the topics at hand. I don’t have anything further to add at the moment, but we would be happy to reconnect in the future to share updates on our projects and goals. Thank you!