The Turkish Mercantile Exchange (TMEX) is leading the transformation of Turkey's agricultural sector, marked by a remarkable threefold increase in licensed warehouse capacity over five years and the upcoming launch of a futures market by 2025. In this exclusive interview, Ali Kırali, CEO of TMEX, reveals strategic initiatives aimed at ensuring food supply security, enhancing market transparency, and establishing Turkey as a global leader in agricultural innovation.

Ali Kırali
CEO of the Turkish Mercantile Exchange (TMEX)

Ali Kırali, CEO of the Turkish Mercantile Exchange (TMEX), reflects on the organization’s significant progress and future ambitions in an exclusive interview for Miller Magazine’s September issue. As TMEX celebrates its 5th anniversary, Kırali discusses how the exchange has become a cornerstone of Turkey’s agricultural sector and grain markets, with its licensed warehouse storage capacity increasing from 4 million tons to nearly 12 million tons and its product range expanding.

Kırali underscores the crucial role of licensed warehousing in ensuring food supply security. “Our licensed warehouses are crucial for ensuring food supply security and addressing the gap between harvest and consumption,” he states. He also notes a dramatic eightfold increase in the number of registered investors in TMEX’s Electronic Warehouse Receipt (EWR) Market, reflecting growing trust and engagement with TMEX’s platform.

Looking ahead, Kırali highlights the upcoming introduction of the Commodity Market Intermediary Institutions (CMII) system, which is set to enhance market efficiency. “The CMIIs will bring user-friendly interfaces, broaden access, and enhance market efficiency,” Kırali explains. This new system is anticipated to significantly boost trading volume and market liquidity.

Additionally, TMEX’s commitment to innovation is evident through projects like the AI-Supported Market Surveillance Project and the forthcoming launch of a futures market for agricultural products by 2025. “Our goal is to provide farmers with a more predictable financial environment and to enhance market efficiency,” Kırali adds.

With a focus on technological advancements and expanding regional collaborations, TMEX is set to further its impact on Turkey’s agricultural markets and beyond. Kırali emphasizes, “Every step we take is aimed at supporting the stable growth of the agricultural sector and contributing to our national economy.”

Mr. Kırali, could you please give us a brief overview of the core functions of the Turkish Mercantile Exchange (TMEX)?

TMEX was established on June 8, 2018, under Article 53 of Law No. 5174 on the Union of Chambers and Commodity Exchanges of Turkey. Its mission is to support the stable growth of the agricultural sector and economy by bringing agricultural stakeholders together on a centralized platform to ensure transactions at healthy, appropriate, and realistic prices. Within this scope, TMEX launched the Electronic Warehouse Receipt (EWR) Market on July 26, 2019.

Our exchange operates within the framework of Law No. 5300 on Licensed Warehousing of Agricultural Products and related regulations, facilitating the trade of EWRs and futures contracts based on these receipts issued by licensed warehouse operators.

This activity provides a transparent environment where agricultural producers and consumers meet in a centralized platform, and the prices formed by buyers and sellers are published, ensuring that information is simultaneously conveyed to all stakeholders.

A FIVE-YEAR SUCCESS STORY

TMEX is celebrating its 5th anniversary this year. Could you highlight the key achievements and successes TMEX has experienced over this period?

The backbone of the mercantile exchange ecosystem is our farmers and the licensed warehouses where their products are stored. In its fifth year of operation, the storage capacity of licensed warehouses increased approximately threefold to nearly 12 million tons. The number of licensed warehouse operators has risen to 219, providing services in 297 different locations across 48 provinces and 145 districts. In the medium term, it is expected that the storage capacity will increase to 16 million tons, enabling the safe and healthy storage of approximately 40% of the country’s grain harvest, which ranges between 36-41 million tons.

In the fifth year of operation, the number of registered investors in the EWR Market increased eightfold, with 236,000 investors registered to trade on TMEX. Registrations were carried out through our agents via Commodity Exchanges. Among the investors, 3% are legal entities, and 97% are primarily farmers. During the period when the commodity market intermediary institutions (CMII) are still not operational, buyers and sellers send orders directly to TMEX. We expect a significant increase in the number of investors once the CMIIs become operational.

TMEX’s total trading volume reached 227 billion TRY, with a trading amount exceeding 45,2 million tons and over 1,2 million transactions. Transactions were conducted in all EWR representing 17 products, including wheat, corn, barley, and sunflower seeds, which are open for trading on TMEX. The product range of licensed warehousing has expanded to 19 products with the recent additions of canola and white cheese, from which we expect the first EWR issuances.

To address the industry’s need for agricultural commodity market indicators, TMEX started publishing the TMEX Agricultural Commodity Indices in 2021, which is a significant achievement for the sector. These indices serve as market indicators and provide a basis for securities issued in the agricultural market. Through these indices, innovative financial products have been introduced in the financial sector, such as Turkey’s first TMEX Wheat-Indexed Lease Certificate (Sukuk) and Asset-Backed Securities (ABS). The system and method for determining our indices were patented by Turkish Patent Institution on January 21, 2022.

Since its establishment, our exchange has been approved as an R&D Center by the Ministry of Industry and Technology of the Republic of Turkey in less than 1,5 years. Our R&D Center, which was approved on March 23, 2021, has implemented projects that have significantly contributed to the agricultural ecosystem both before and after the approval, and we have crowned these achievements with awards. For example, we won first place in the “Future of the Industrial Ecosystem” category at IDC DX 2021 with the TMEX Agricultural Commodity Indices, which is the “Pulse of Agriculture and the Compass of Farmers and Investors”. In addition, we won third place in the “Digital Transformation” category at IDC DX 2020 with the Contract Farming FINTECH Solution, and third place in the “IT Cost Efficiency” category at the IDC CIO Summit 2020 with the TMEX EWR Trading Platform.

Since 2021, within the scope of offering digital transformation and fintech solutions to the agricultural ecosystem, our focus at the TMEX R&D Center has been on transitioning the EWR Market to an intermediary system and developing the infrastructure for a futures market through the TMEX Technological Transformation Project “TMEX-TP.” We have also been working on the AI-Supported Market Surveillance Project, and on data business to enhance market transparency and meet the demand for data through the development of new indicators and the dissemination of market data via data vending companies.