Marketing year (MY) 2015 oilseeds production in Turkey is expected to be 2.1 million metric tons (MMT), down about eight percent compared to a year ago. No change in production support payments and better returns of other crops adversely affected farmers' planting decisions despite the large domestic use and export of oils seeds products. Despite the efforts of the government to increase oil seed production, Turkey continues to be import-dependent due to a net deficit in oilseeds and products. Although Turkey approved three biotech soybean varieties in January 2011 for feed use, low level detections of unapproved varieties continues to cause major problems for imports. Turkey continues to import large quantities of soybean and meal with combined imports reaching a record 2.3 MMT in MY2013. Total imports of soybean and meal are expected continue to increase and reach 2.7 MMT in MY 2014.

Executive Summary:

Turkey's total production of oilseeds subject to this report (soy, sunflower and cottonseed) in MY 2015 is projected to decline about eight percent and remain about 2.1 MMT. The main decline will be in cotton seed production, which is projected to decrease twelve percent. Soybean production will increase seven percent, but sunflowerseed production will decrease about four percent. Low cotton returns in MY 2014 were disappointing for many farmers and will cause a reduction in planting this year. Abundant precipitation during winter months will provide adequate soil moisture for sunflower seed crop, and crop rotation will prevent further declines in production. The Government of Turkey's (GOT) continuing production premiums for oilseeds and support of quasi-governmental producer co-ops had limited success to persuade farmers to plant more oilseeds. Despite the projected moderate increase in soybean production, domestic crop remains only a fraction of domestic consumption, which will be about 2 MMT in MY 2014 and about 2.1 MMT in 2015. Over the years, the GOT has supported local production of oilseeds with higher production bonuses, but this year there was no increase for 2014 crops which will have an adverse effect on planting of oilseeds for next season.

Production

MY 2014 sunflowerseed area and production declined from 690,000 hectares to 530,000 hectares and from 1.4 MMT to 1.2MMT due to farmer dissatisfaction with the returns on the record crop in MY 2013. A minor decline is also foreseen in MY 2015 to 510,000 hectares and 1.15 MMT. Some of the fields in the Thrace region that planted wheat in the crop rotation need to be replanted with sunflowerseed due to floods and excessive rains during the winter months. However, the decline in planting in the Central Anatolian region can't be offset by the anticipated increase in the Thrace region. Better returns on other crops such as corn, sugar beet and potatoes in the Central Anatolian region will cause sunflowerseed planting to drop. Despite the abundant country-wide precipitation during the winter causing higher sub soil moisture, the yields for winter and summer crops in Turkey are also dependent on spring and summer rains.

Lower returns on cotton will cause a small increase in soy planting in the Çukurova region. Overall soybean planting and production is expected to increase to 40,000 hectares and 145,000 MT.

Cottonseed production is expected to decline in MY 2015 due to lower returns following a large crop in MY 2014. Total planting area is projected about 380,000 hectares and production 880,000 MT compared to 430,000 hectares and 1.03 MMT of last year.

Canola production is continuing to increase due to the increasing demand for oilseeds and a new government production bonus. Planting is increasing with new regions are added to Thrace, the largest producing region. Planting in 2014 was about 38,000 hectares up about ten percent and production is expected to be about 85,000 MT. The increase in domestic crushing capacity and need for oils and meals for domestic and export markets fueled Turkey's canola imports, which jumped to 432,000 MT in CY 2014 from 134,000 MT a year ago. The neighboring Black Sea countries were the leading suppliers. Turkey also imported 47,000 MT of canola meals from the Black Sea countries during the year.

The GOT has cancelled the bio-diesel portion of the controversial bio-fuels program which mandated a minimum percent of biodiesel blending. The program would have increased the required one percent blend ratio to three percent in 2014. The aim of the government was to meet some of the demand for imported fuels with locally produced bio-ethanol and bio-diesel products. This would eventually increase the demand and prices of raw materials, hence encourage the planting of oilseeds and supporting the income of farmers. An additional 180,000 MT of vegetable oil was needed to meet the demand for bio-diesel. The vegetable oil industry pointed out that Turkey is already in deficit of oil seeds, fats, and oils, and therefore the move would increase the demand and cost of these products and also import dependence. The industry proposed that a larger amount of used vegetable oil should be collected from households and utilized as fuel. Later the government changed the regulations and required that bio-diesel produced from locally produced oil seeds can be used up to two percent in bio-diesel, but the incentive to use bio-diesel was limited to a two percent discount on the consumption tax. Turkey's total registered bio-diesel production remained at only about 32,000 MT in 2014 due to a regulatory change that eliminated the compulsory blend ratio, and to issues related with used oils and tax incentives that have not attracted producers.

Meal and feed

Total meal production in Turkey is projected to increase about twenty percent in MY 2014 due to the significant increases in cottonseed meal and soymeal production. While cottonseed meal will be up due to a large domestic crop, soybean meal production will also rise as increased industrial use of soy oil improve margins. MY 2015 total meal production is expected to decrease marginally, as the decline in cotton meal will be compensated only partially by the increase in sun meal and soymeal production.

Domestic compound feed production and consumption continued to grow at a healthy clip during 2014. Total production grew about seven percent, reaching 20 MMT, due to increases in all categories and with the addition of on-farm feed production. While poultry and layer feed products increased, about two percent livestock feed and aquaculture feed production went up ten percent. Some of the livestock feed increase is attributed to the addition of some feed operations entering the registered economy. Total production is expected to continue to increase about seven percent in 2015 due to increases in all categories; poultry (broiler and layer), livestock (dairy and beef), and aqua-culture.

Poultry & Livestock industry

Broiler and egg production had increased with an average of seven percent annually during the last ten years as a result of increasing domestic consumption and exports to neighboring countries. The GOT, in an effort to lower high local red meat prices, had been offering support programs to maintain and increase domestic livestock production as well.

The Turkish poultry industry, which ranks among the world's top ten producers, is the country's largest consumer of protein meal and its demand is projected to continue to grow. The growth in 2014 was about two percent and total broiler meat production is estimated at 1.95 MMT. The industry also projects to grow about two percent in 2015. The negative publicity about biotech poultry feed and unscientific accusations of antibiotic use had prevented the industry from growing faster, and slowed the increase in domestic consumption. However, the increase in exports helped the industry to maintain growth. As a result of increasing production, per capita consumption of total poultry meat (including broilers, village stocks, slaughtered layers and turkey meat) reached 22 kilogram in 2014. The industry aims to reach per capita consumption of 26.5 kilogram by 2023. While growth of domestic consumption is moderate, the industry is dependent on export growth to meet target growth rates.

The layer industry has grown about fifty percent between 2008 and 2012 as a result of both domestic consumption and increases in exports. The industry grew about seven percent in 2013, about six percent in 2014, and total production reached 17.5 billion eggs. Turkey is ranked as one of the top ten largest egg producers in the world. Turkey continues to export about twenty-five percent of its egg production, mostly to neighboring countries.

Domestic consumption of eggs is also increasing, reaching 180 eggs per person. But industry members are continuing to promote programs to reach the European average consumption of 250 eggs.

Both industries have the potential for even higher growth, but are constrained by high feed material prices due to the higher commodity prices and problems caused by the 2010Biosafety Law, which limits the availability of imported feed ingredients.

Although the poultry industry has been growing steadily, the Turkish livestock sector has been up and down over the last several years, along with local milk and meat prices fluctuations. Since 2010, the Turkish government has introduced a number of incentive programs to increase domestic livestock production and lower local red meat prices. In 2014, both red meat and milk production increased marginally, despite a red meat production increase of about 1.5 percent and milk production of about one percent.

Vegetable oil production and trade

MY 2014 total vegetable oil production is estimated to increase about seven percent to 1.16 MMT. A large increase in soy oil and cotton seed oil compensated for the decline of sunflower seed oil. Total MY 2015 oil production is projected to be about the same as the MY 2014 decline in cottonseed oil will be compensated by the increases in soy and sun oil.

Turkey has a large crushing and refining capacity, and the industry is continuing to invest in new and modern facilities with large capacities to meet the increasing domestic and export demand. Accordingly, the total crushing capacity in 2014 reached 7 MMT and refining capacity 4 MMT.

Domestic consumption of corn oil has declined over the last few years as a result of negative press on biotechnology. Accordingly, calendar year (CY) 2014 corn oil consumption was about 55,000 MT compared 110,000 MT in 2010. Total Turkish corn oil imports in CY 2014 went decreased to 23,000 MT from 38,000 MT last year. The U.S., which used to supply the majority of corn oil imports, supplied only 6,000 MT in 2014. Consumption is expected to recover gradually in coming years if fears surrounding biotech products fade.

Turkish market for U.S. exports of corn-based feed ingredients such as distillers dried grains and solubles (DDGS) and corn gluten feed pellets (CGFP) continued to be significant in 2014, despite market access problems during the second half of the year. Turkey's Biosafety Law bans the import of commodities with unapproved events. Due to severe terms in the legislation, concerned parties are unwilling to register new events, and Turkey has currently approved only 3 varieties of soy and 14 varieties of genetically engineered corn. During the summer of 2014, Turkish poultry operations that wanted to take advantage of lower world prices placed large orders of DDGS from the United States. However, tests detected unapproved traits and the shipments were rejected. As a result, a large number of orders were cancelled. Total DDGS imports in 2014 were 427,000 MT, compared to 490,000 MT a year ago. The U.S. was still the leading supplier with 227,000 MT, but compared to 340,000 MT last year. Other leading suppliers were Russia (77,000 MT), Bulgaria (35,000 MT) and Hungry (34,000 MT).

CGFP imports however increased to 299,000 MT, of which 116,000 MT were from the United States. Ukraine (62,000 MT), Bulgaria (49,000 MT) and Russia (28,000 MT) were the other leading sources. As of now, importers are unwilling to take a chance on the import of DDGS or CGFP from the US and have returned to using higher priced local alternatives, such as sunflower meal, feed wheat, and sugar beet.

Turkey's increase in demand and high domestic feed ingredient prices will continue to encourage demand for these relatively low-cost DDGS and CGFP in the coming years, but imports will be dependent on developments in Turkey's implementation of the Biosafety Law.

Biotech policies

Starting in October 2009, when an initial biotech regulation was adopted in Turkey, and continuing today under a Biosafety Law that was adopted in October 2010, trade in biotech commodities and products containing biotech ingredients have faced periodic bans and continuous uncertainty and risk for importers. Products that do not utilize biotech commodities have also been caught up in Turkey's testing regime that includes a zero tolerance policy. Increasingly, uncertainty and liability are taking their toll on the Turkish market.

Turkey's Biosafety Board approved the first biotech applications in January 2011, allowing the import of three biotech soybean varieties for feed use only. Under the regulations, soy oil produced from the imported biotech soybeans could only be used for feed and limited industrial use, disrupting their use for food.

Despite the approvals, soybean importers are very cautious and have found soybean imports risky as MinFAL decided to apply an unrealistic zero tolerance for any level of unapproved biotech varieties.

The Feed Millers Association that applied and received approval for GM soybeans for feed use has also applied for all EU approved corn events for feed use. The Biosafety Board approved sixteen corn events and rejected six more. A court ruled in December 2013 to repeal the approval of two corn events, bringing the total count to 14.

The Biosafety Law and government statements against biotechnology have generated a fair amount of negative press, contributing to public confusion over the safety and use of agricultural biotechnology. Public hostility to the technology is one of the leading barriers to normalizing trade in biotech commodities, and removing business risks for everyone in the food sector.