October 2, 2003


Turkey Increases Corn Import Duty Again 2003


Report Highlights:
The GOT has raised the import duty on corn for the second time in two months. The duty was increased from 45 percent to 70 percent.  Thus far, TMO has procured about 60,000 MT of corn from domestic producers and is expected to purchase as much as 300,000 MT of corn this year. Traders believe that it will be difficult for TMO sell its stocks even with the 70 percent duty.

The Government of Turkey increased the import duty on corn for the second time in 2003 from 45 percent to 70 percent. In August, the GOT raised the duty from 20 percent to 45 percent.  It would appear that the Turkish Grain Board (TMO) is attempting to keep corn prices high while at the same time protecting domestic producers.


In June, TMO announced its procurement price for corn and began its initial purchases a few weeks ago. The exchange rate at the time of the June announcement, would have translated into a price of $218 per ton.  However, due to the subsequent devaluation of the dollar, the TMO purchase price is approximately $230 per ton.  Prior to the most recent import duty increase, the market price for corn was approximately $200 per ton.


Since the beginning of September, TMO has purchased approximately 60,000 tons of corn. Since it did not procure much wheat or barley this year, it has funds to procure as much as 300,000 tons of corn.


TMO also announced a selling price of $300 per ton for corn for December 2003. (Based on the current exchange rate.)  If the Turkish Lira appreciates 12 percent by December, the selling price will only be $256 per ton. Even with the new duty applied, imported corn in December will only be $235 per ton. Thus, TMO will have difficulty selling corn.   Under its WTO commitments, Turkey has the ability to increase the tariff as high as 180 percent.  However, the increased feed costs could have serious consequences for its poultry sector.


The GOT has historically changed import duties on corn from time to time. In 2002, the duty was raised from 20 percent to 35 percent in June and then decreased in April to 20 percent.


Five Turkish facilities are currently being inspected by the EU veterinarians for approval to export poultry meat to the European Union. Turkish officials estimate that, during the first year, exports for the five plants could total up to 10,000 tons. An additional 4 plants will be inspected by next March. Turkish officials are hoping that this could eventually lead to additional exports to other markets including Russia and the Middle East.  While the Turkish exports could compete with U.S. poultry in other markets, Turkey's need for U.S. soybeans and corn could also increase.


EU Begins Inspections
In March, Turkish officials indicated that the EU would begin inspection of several poultry facilities for approval to export poultry meat to the European Union. According to Turkish poultry representatives, EU veterinarians are currently in Turkey inspecting 5 facilities. An additional 4 facilities applied to the Ministry of Agriculture and Rural Affairs but have been asked to wait until March 2004.   The 5 facilities now being inspected are some of the largest and most modern facilities in Turkey.


The Ministry of Agriculture and Rural Affairs (MARA) has agreed to allocate and assign 35 veterinarians to the facilities. The veterinarians who will be located on the premises will be responsible for overall quality control and record keeping as required by the European Union.


One Million Ton Capacity
Poultry officials estimate that during the first year 10,000 tons of poultry meat could be sold to Europe. This amount could climb much higher in future years. Turkey produces approximately 680 TMT of poultry meat a year but has the capacity to produce 1 million tons.


Turkish business representatives believe that EU approval could raise the image of Turkish poultry products and encourage other countries to buy from Turkey. Turkey exports some products to both Russia and the Middle East but believe they could expand these markets considerably. The expanded export market could also serve as a safety  valve for the Turkish poultry sector. In the 1990s, poultry production increased considerably, which in turn led to overproduction, falling prices and many bankruptcies. A larger export market could alleviate this cycle.


Turkish Advantage
Turkish facilities are very modern and the cost of shipments would be much lower than their competitors. For the United States, poultry producers could face stiffer competition in other markets. However, Turkey currently cannot produce enough feed ingredients (soy and corn) to supply its poultry sector. This year Turkey imported approximately 1 million tons of corn and a similar quantity of soybeans and meal to meet the needs of its feed sector. The United States supplied over half of both Turkey's soy and corn. As a result, production increases could result in much higher U.S. sales of both those products to Turkey.


Source: USDA