Report Highlights: 

Turkey experienced adverse weather in 2014 that resulted in lower tree nut production. Marketing year 2014 is an “on year” in the biennial cycle for pistachios and producers and traders were expecting production of 120,000 metric tons (MT). However, frost in March/April, and a significant drought hurt production and Post forecasts pistachio production at 85,000 MT in marketing year MY 2014, up from 50,000 last year. Both almond and walnut production were also affected by the bad weather conditions and Post forecasts a reduction in almond production of 30 percent to 12,600 MT, and a reduction to walnut production of 60 percent to 30,000 MT in MY 2014.

Executive Summary: 

Since the MY 2013 was an “off-year” in the pistachio production cycle, pistachio production returned to 50,000 MT, mostly due to the natural production cycle and bad weather conditions, especially in April and May 2013. MY 2014 is an “on-year” in the pistachio production cycle. However, because of the bad weather conditions, especially frost in late March and early April 2014 and the abnormal drought throughout the country, Post forecasts pistachio production at 85,000 MT. This amount is considerably less than farmers’ and traders’ expectations for an “on-year”. 

Almond production was also affected by the frost in late March and early April, which is the blossoming period for the almond trees, and the abnormal drought that affected much of the country in MY 2014. Post forecasts that almond production is decreased by around 30 percent and reduced to 12,600 MT in MY 2014. Post forecasts that almond imports will increase due to less production and reaches to 24,000 MT in MY 2014. 

Walnut production was also severely affected due to bad weather conditions; therefore, Post forecasts the walnut production will be down 60 percent to 30,000 MT in MY 2014. Due to very high pistachio prices, the food industry (and especially baklava producers) temporarily tends to use walnut instead of pistachio. Therefore walnut demand will increase. Post forecasts that imports will reach to 70,000 MT in MY 2014. 

PISTACHIO 

Production 

Pistachio production is highly cyclical and yields vary quite differently from year to year and between regions and orchards. Farmers and traders expected pistachio production to be 120,000 MT in MY 2014 (a significant increase from the MY 2013 production of 50,000 MT)as this is an “on year” in the natural production cycle. However, because of the frost in late March and early April in 2014, and an abnormal drought in the main pistachio production areas such as Gaziantep, Sanliurfa and Siirt during the winter and the spring of 2014, Post forecasts pistachio production at 85,000 MT for MY 2014. 

Although pistachios are grown in more than 44 provinces in Turkey, it is a traditional product of the Southeastern Anatolia Region. The cities Gaziantep, Sanliurfa, Siirt, Kilis, Adiyaman, Mardin and Diyarbakir are the most significant locations for commercial pistachio production and 90 percent of the total production comes from these provinces.

Gaziantep and Sanliurfa pistachio varieties are similar, but Siirt has a distinct pistachio variety. In an "on-year", the Gaziantep region produces 40,000-45,000 MT, the Sanliurfa region produces 35,000-45,000 MT, and Siirt region produces 10,000-15,000 MT. 

Most Turkish pistachios are the Gaziantep variety - thinner and smaller than the Iranian variety. Siirt pistachios, which account for about 15 percent of the total production, are somewhere between Gaziantep and Iranian pistachios. The Siirt type yields are not only higher, but fluctuate less than the Gaziantep type. In Turkey, quality is directly related to size: 90 nuts or fewer per 100 grams is considered first quality, 90-100 nuts are second quality, 100-120 nuts are third quality, and more than 120 nuts are fourth quality. 

With the increasing number of new saplings planted in the Sanliurfa and Siirt regions, the production of high quality pistachios is predicted to increase in the future since pistachios are replacing olive trees in the rain-fed areas. Currently, Sanliurfa province has more trees than its neighboring province Gaziantep. Producers and researchers predict that, as a result of better variety selection, the problem of “cycling” will not be seen in the future. Currently, the average pistachio yield is around 4 kilograms (kg)/tree. 

Consumption 

Most of the Turkey's crop is consumed domestically and consumption varies from year to year, according to availability of pistachio on the market. Traditionally, the Turkish people consume 35 percent of total production as a snack food and the rest are used in the production of confectionery, chocolate products, especially in desserts and bakery products. 

Packaging of tree nuts, including pistachios, has doubled over the last few years throughout the country, especially in the coastal regions (Aegean, Mediterranean and Marmara). Packaging mitigates food safety and quality concerns related to high humidity in these regions. Currently, 35 percent of total tree nuts are being packaged, while it was 15 percent few years ago. Post forecasts that the packaging of tree nuts, including pistachios, will increase consumption. Current per capita consumption is 0.6 kg/year in Turkey. However, higher prices in the last two years have slowed the increase in consumption. 

Pistachio production, trade and stock amounts are not registered by the government of Turkey (GOT) or related associations or unions in Turkey. For this reason, traders do not have reliable stock information. This situation creates price fluctuations which results in a rise in pistachio prices. This causes less consumption. As a result of low production and a sizeable rise in pistachio prices in MY 2013, consumption of pistachio reduced. 

Some baklava and chocolate producers tend to use walnut, almond or hazelnut temporarily when pistachio prices reach 70-80 Turkish Lira (TL)/kilogram (kg), or US$30–35 at 2.3 TL to US$1 in October, 2014. Current prices of pistachio are high on the Turkish market since the products of MY 2014 and the stocks have been released partially to market. Currently, the wholesale price for pistachios, which are used in baklava production, is 75 TL/kg (US$0.33). Retail prices in bulk for snack food use in Ankara are 50-55 TL/kg (US$22-24), and 45-50 TL/kg (US$20-22) for Antep and Siirt Pistachios. Post forecasts that higher production in MY 2014 will increase consumption.

Trade 

Turkey is self-sufficient in pistachios and a minor amount of total production goes to exports. Although there is no legal barrier to pistachio imports, there are always fewer imports than the market requires, especially during “off year” production periods. Because MY 2013 as an “off year” and prices were high, imports doubled in MY 2013 to 13,000 MT. Exports in MY 2013 were considerably less than the previous year. Italy is still the primary export market for Turkish pistachios. Other significant markets include Israel, Saudi Arabia, Hong Kong and North African countries such as Egypt and Libya. Turkish exports benefit from the promotion activities of the Pistachio Promotion Council. According to contacts, Iranian pistachios enter Turkey illegally and are exported as a Turkish product. 

Post forecasts 5,000 MT in pistachio imports and 3,500 MT in pistachio exports in MY 2014 due to the production associated with an “on-year” and stocks. 

Stocks 

Pistachio stocks vary considerably from year to year in line with cyclical production. Moreover, pistachio production, trade and stock amounts are not registered neither by the GOT or related associations or unions in the sector. For this reason traders do not have reliable stock information. Since MY 2013 was the “off year” for pistachios, it is estimated that there are around 17,000 MT of stocks at the beginning of MY 2014. 

Policy 

The GOT stopped providing direct supports to pistachio farmers several years ago, and since 2004, GUNEYDOGUBIRLIK has not announced any procurement prices for pistachios. 

The GOT does provide supports of 100 TL/decar (da) (US$43.50/da) and 250 TL/da (US$108.70/da) for the establishment of new pistachio orchards that are planted with standard seedlings and certified seedlings respectively. There are other supports that apply to tree nut production, such as 70 TL/da (US$30.50/da) for organic agriculture and 50 TL/da (US$22/da) for Good Agricultural Practices. 

There are no subsidies, taxes or other restrictions on pistachio exports. There is no legal barrier to pistachio imports, but there are always minor imports throughout years. 

Marketing 

The Antep Pistachio Promotion Group was established in January 2006. The Aegean, Southeast Anatolian and Istanbul Exporters Unions each have two members on the Board of Directors. Also, the Ministry of Economy names one member. The goal of the group is to organize and manage research and marketing activities to increase the consumption and exportation of Antep pistachios. 

GUNEYDOGUBIRLIK, which is located in Gaziantep Province, is the only sales cooperative union for pistachios. This sales cooperative follows domestic and foreign trade issues, provides information, conducts market research, and sponsors promotional events. 

Pistachio production, trade and stock amounts are not registered by the GOT or related associations or unions in Turkey. For this reason, traders do not have reliable production, trade and stock information. This situation creates artificial price fluctuations which result in price increases. These fluctuations have a negative impact on consumption and especially the food sector. The Gaziantep Pistachio Industry Association was established in 2014. The principle objective of this association is to establish a system for the registration of pistachio production and stocks. 

ALMOND 

Production 

Almond production was also affected by the frost in late March and early April, which is the blossoming period for the almond trees in Turkey. An abnormal drought throughout much of the country was another reason for the 30 percent loss of almond production in MY 2014. Post forecasts almond production at 12,600 MT in MY 2014. 

Although almonds are grown in most parts of the country, commercial production is concentrated in the Aegean, West Marmara, Southeastern Anatolia and Mediterranean Regions. Most of the almond production is from unstandardized seed, which results in inconsistent yields and qualities. The current the average yield for almonds is 17 kg/tree (US$7.30/tree). 

Almonds were considered a minor crop and were not cultivated commercially in Turkey until recent years. Turkey is, currently, a net importer of almonds. Since the import and the prices rise continuously, the GOT has taken action to decrease imports and increase domestic production. As a result, the “Almond Action Plan” (Plan) was prepared by the Ministry of Forestry and Water Affairs (MINFWA) for the period 2013-2017. 

In the scope of this Plan, 8 million almond seedlings are planned to be planted within 5 years. MINFWA’s implementation of the Almond Plan focuses on increasing forest area rather than agricultural production. The areas selected for these seedlings have some deficiencies such as high soil PH, shallow soil depth, and increased risk of root disease. Therefore, Post forecasts that the increased number of trees will not contribute to almond production significantly. The Action Plan itself has not been implemented successfully because of the bad weather conditions in MY 2013. 

The GOT also encourages producers to establish new orchards by allocating free land for 49 years and some interest-free financial support. As a result of these incentives the establishment of almond orchards has become popular in Turkey and the private sector has concentrated on establishing new almond orchards, especially in Izmir, Manisa, Mugla, Denizli, Urfa, and Adiyaman Provinces. It is believed that these incentives will increase the production of almonds in the future. 

Consumption 

Almonds are mainly consumed as snack food and limited amounts are used in the confectionary and cosmetics industries in Turkey. Per capita almond consumption is around 0.9 kg/year. Consumption of almonds, especially as a snack, has been affected negatively by the rise in market prices. Retail prices of almond in Ankara are 45-50 TL/kg (US$19-22/kg) for shelled roasted almond and 50-60 TL/kg (US$22-26/kg) for the Datca variety.

The packaging of tree nuts, including almonds, has doubled over the last 3 years throughout the country - especially in the coastal regions (Aegean, Mediterranean and Marmara). Packaging mitigates food safety and quality concerns related to high humidity in these regions. Currently, 35 percent of total tree nuts are being packaged, while it was 15 percent years ago. Post forecasts that the packaging and perceived health benefits of tree nuts, including almonds, will increase consumption. 

Trade 

Turkey is a net importer of almonds and the United States is the major almond supplier. Due to the quality, around 96 percent of almonds have been imported from the United States. Iran, Chile and Israel are the other suppliers of almonds. The rise in import prices and the high exchange rate of the USD against the TL resulted in a 35-40 percent increase in the market price of almonds and this increase resulted in a decrease in almond imports in MY 2012. Although prices continued to be high in MY 2013, almond consumption increased due to the perceived health benefits and packaging of tree nuts, including almond. Because of the very high prices of pistachios, the food sector temporarily utilizes other tree nuts, including almonds. Almond imports increased in MY 2013. Post forecast that almond imports will continue to rise to 24,000 MT in MY 2014, especially due to reduced production. 

Importers pay 43.2 percent tax per ton on the cost, insurance and freight (CIF) value of the shipment. If the per ton CIF invoice value is at or below $3,000 the tariff will be applied at $3,000 per ton. If the per ton CIF invoice value is greater than $3,000 the tariff will applied at the actual CIF invoice value. The tariff for shelled almonds is based on a minimum CIF per ton value of $6,500, or greater. Traders prefer to import in-shell almonds as the reference value is less than half that of shelled almonds.

Traders import in-shell almonds mainly from the U.S., process and export them as shelled to North African and Middle East countries. It is claimed that there is illegal almond and walnut trade over Turkey’s eastern border. According to contacts, Iranian almonds and walnuts enter Turkey illegally and are registered in the country as produced domestically and then exported with labels indicating Turkish origin. At the moment it is very difficult to guess the amount of illegal tree nuts entering Turkey. 

U.S. exporters should consider Turkey’s inward processing regime and re-export opportunities to the Middle East and North Africa when marketing to Turkey. 

Policy 

Turkey is currently a net importer of almonds. Since the import volumes and prices of almonds rise continuously, the GOT has taken action to increase domestic production. The “Almond Action Plan” (Plan) was prepared by the Ministry of Forestry and Water Affairs for the period 2013-2017. In the scope of this Plan, 8 million almond seedlings are foreseen to be planted during a 5 year period. The Action Plan has not been implemented successfully because of the bad weather conditions in MY 2013.

Also, the GOT encourages producers to establish new orchards by allocating them the land for free for 49 years and some interest-free financial support. There are also government supports of 150 TL/da (US$65/da) and 300 TL/da (US$130/da) for the establishment of new almond orchards that are planted with standard seedlings and certified seedlings respectively. There are other supports that apply to tree nut production, such as 70 TL/da (US$30/da) for organic agriculture and 50 TL/da (US$22/da) for Good Agricultural Practices. 

Marketing 

There is no specific organization to promote Turkish almonds. TUKSIAD (Turkey Dried Fruits and Nuts Traders and Businessman Association) actively promotes the establishment of almond orchards and the consumption of almonds in Turkey. TUKSIAD has established demonstration orchards in Denizli province as well. 

WALNUT 

Production 

Walnut production was slightly reduced due to bad weather conditions in MY 2013. Post estimated walnut production at 75,000 MT in MY 2013. The production was severely affected due to frost in late March and April 2014 and an abnormal drought throughout Turkey in MY 2014; therefore, Post forecasts the walnut production at 30,000 MT in MY 2014. 

Although walnuts are grown throughout the country, Turkey is currently a net importer of walnuts. Increased demand and high prices have encouraged walnut cultivation in recent years. Around 60 percent of total consumption is supplied through imports. Since the imports and the prices rise continuously, the GOT has taken action to decrease imports and increase domestic production. As a result, the “Walnut Action Plan” (Plan) was prepared by the Ministry of Forestry and Water Affairs for the period 2012-2016. 

In the scope of this Plan, 5 million walnut seedlings are planned to be planted during this 5 year period. As with the Almond Plan, MINFWA’s implementation of the Walnut Plan focused on increasing forest area rather than agricultural production. The areas selected for these seedlings have the same deficiencies as the land dedicated to almonds, such as high soil PH, shallow soil depth, and increased risk of root disease. Therefore, Post forecasts that the increased number of trees will not contribute to walnut production significantly either. The Action Plan has not been implemented successfully because of the bad weather conditions In MY 2013. 

Until 1970, walnuts had been propagated only by seeds and therefore, until the last decade, it was very difficult to find established orchards of standard cultivars. However, the importance of propagation by grafting and budding is now understood and as a result orchards established of standard cultivars are becoming increasingly widespread. Currently, major producing provinces are Karaman, Kastamonu, Hakkari, Bursa and Tokat.

As a result of the GOT incentives, such as allocating free land for 49 years and some interest-free financial support, the private sector has established new walnut orchards in Tekirdag, Denizli, Bitlis, Kirsehir, Canakkale, Gumushane and Bingol provinces. Chandler is becoming the most popular variety. It is believed that these incentives will increase walnut production in the future. But currently, the major problem for walnut producers in Turkey is low yields. The average yield is around 34 kg/tree. There is great need for improved varieties. Yalova Horticulture Research Institute, which is located in Yalova in the Marmara Region, is Turkey’s leading walnut research facility and the developer of new varieties. Commercial production of the improved varieties developed by the institute has begun in Balikesir, Denizli, Bursa and Kahramanmaras provinces. 

Consumption 

Walnuts are commonly used in desserts. For example, Turkish desserts such as pestil and köme are made by combining walnuts with mulberries and grapes. Walnuts are also used in baklava, ice cream and halva production and in the dried fruit industry as well. The leaves and green shells are used as a pigment in Turkey. 

Walnut consumption has increased significantly in recent years due to perceived health benefits and the packaging of tree nuts, including walnuts. Per capita consumption, which was estimated earlier as 2 kg/year, is now estimated to be almost 3 kg/year. However, the rise in market prices recently caused slight decrease in consumption of walnuts, especially as a snack. Therefore, Post estimated a slight decrease in walnut consumption in MY 2013. Despite the walnut use of baklava producers instead of pistachio, high prices and the severely low production of MY 2014 will cause a slight decrease in consumption in MY 2014 too. Currently, retail prices in Ankara are 55-60 TL/kg (US$24-26/kg) for shelled walnuts, 80 TL/kg (US$35/kg) for first quality local shelled walnuts and 20-25TL/kg (US$8.7-10.9/kg) for in-shell walnuts. 

Trade 

Due to very high pistachio prices, the food industry and especially baklava producers temporarily tend to use walnut instead of pistachio. Also, severely low production of MY 2014 will increase the demand for walnut. So, Post forecasts that imports will reach 70,000 MT in MY 2014. 

Turkey is a net importer of walnuts and the United States is the major in-shell walnut supplier to the Turkish market. After the U.S, Chile, Uzbekistan, Ukraine, Iran, Kyrgyzstan, Turkmenistan, Uzbekistan and Moldova are the main walnut suppliers, largely due to price considerations. There is strong demand for high quality walnut imports. However, the rise in import prices recently and the high exchange rate of the U.S. dollar (USD) against the Turkish Lira has resulted in a 35-40 percent increase in the market price of walnuts, resulting in a decrease in walnut imports in MY 2013. Despite the high prices, imports increased slightly because of the strong demand in the Turkish market in MY 2013. 

Importers pay a 43.2 percent duty on CIF value for walnuts for all countries except Ukraine. The GOT has increased the tax on Ukrainian walnuts to 66.2 percent. The GOT decreased the tax on Ukrainian walnut to 58.4 in April 2014 and will continue to decrease to 50.8 in April 2015. Also, according to a GOT decision, Importers do not pay any tax for the walnut coming from Bosnia Herzegovina. Because of the high prices, traders tend to prefer imports from less expensive sources such as Chile, Uzbekistan, Kyrgyzstan, Turkmenistan, Moldova, Bulgaria and Romania.

Importers pay 43.2 percent tax on per ton CIF value of the shipment. If the per ton CIF invoice value for in-shell walnuts is at or below $1,800 the tariff will be applied to $1,800 per ton. If the per ton CIF invoice value is greater than $1,800 the tariff will applied to the actual CIF invoice value per ton. The tariff for shelled walnuts is based on a minimum CIF per ton value of $5,400, or greater. Traders prefer to import in-shell walnuts as the reference value as it is significantly less than that of shelled walnuts.

Turkey’s processing industry has grown in recent years. Imports of both in-shell and shelled walnuts, and exports of shelled walnuts have increased substantially. However, Turkey remains a net importer of walnuts. There are many claims of illegal almond shipments entering across Turkey’s eastern border. At the moment it is very difficult to guess the amount of illegal tree nuts entering Turkey. 

Policy 

Turkey is, currently, a net importer for walnuts. Since the import and the prices rise continuously, the GOT has taken action to increase domestic production. As a result, the “Walnut Action Plan” (Plan) was prepared by the Ministry of Forestry and Water Affairs for the period 2012-2016. In the scope of this Plan, 5 million walnut seedlings are foreseen to be planted during a 5 year period. The Action Plan has not been implemented successfully because of the bad weather conditions in MY 2013. 

Also, the GOT encourages the producers to establish new orchards by allocating them the land for free for 49 years and some interest-free financial support. There are also government supports of 150 TL/da (US$65/da) and 300 TL/da (US$130/da) for the establishment of new almond orchards that are planted with standard seedlings and certified seedlings respectively. There are other supports that apply to tree nut production, such as 70 TL/da (US$30/da) for organic agriculture and 50 TL/da (US$22/da) for Good Agricultural Practices. 

HAZELNUT 

Turkey accounts for 75 percent of world production of hazelnuts and 70-75 percent of world exports. However, frost in late March and early April and an abnormal drought resulted in a roughly 35 percent drop in production in 2014. Hazelnut prices have increased dramatically this year due to the drop in production. 

Although hazelnuts are grown in more than 48 provinces around Turkey, production is primarily concentrated along Turkey’s Black Sea coast. Hazelnut orchards are typically located within 30 km of the coast, and inland. In the western Black Sea area, the growing region starts from Zonguldak (east of Istanbul) and extends east along the entire Black Sea and the mountains until close to the Georgian border. There are approximately 4,000,000 people directly or indirectly employed by hazelnut production in Turkey, on an area of 600,000-650,000 hectares. 

The Black Sea region is divided into three distinct growing areas: 

(1) The hilly region from Ordu to Trabzon, centered around Giresun, which in a normal year produces about 55 percent of the crop, 

(2) The flatter, mixed farming region west of Ordu to Samsun, which produces about 15 percent of the crop, and 

(3) The area west of Samsun, which produces the remaining 30 percent. 

Hazelnuts require relatively little effort to cultivate and inputs are low. Turkish hazelnuts usually ripen between early and late August depending on the altitude of the orchard and climatic conditions. Hazelnuts are hand-picked from the trees and dried in the sun. Harvesting takes place during several weeks in August and September. 

Turkey produces around 650,000 MT of hazelnuts under normal climate conditions. Hazelnut production was also affected by the frost in late March and early April 2014. An abnormal drought throughout much of the country was another reason for the roughly 35 percent loss in hazelnut production in MY 2014. MY 2014 production estimates vary considerably, but all indicate a significant drop. Black Sea Hazelnut and Products Exporter Union estimate the hazelnut production at around 500,000MT, Hazelnut Sales Cooperatives Union estimates at 430,000 MT, and the Ministry of Food, Agriculture, and Livestock estimates production at 410,000 MT. 

In July 2014, Italian leading chocolate producer “Ferrero Group” purchased “Oltan Gida”, which was the largest hazelnut exporter company in Turkey. Oltan Gida accounts for about one-third of Turkey’s total hazelnut exports, and nearly 80 percent of Oltan Gida’s exports go to Ferrero Rocher. The Turkish hazelnut industry is concerned that Ferrero Rocher will now be the price setter in the market