CURRENT SITUATION IN FOOD PROCESSING INDUSTRY

AND PERSPECTIVES FOR FURTHER INCENTIVES FOR PROMOTION OF AGRIBUSINESS SECTOR IN THE

COUNTRY

MELEK USSECRETARY GENERAL

14 EKİM 2010- İSTANBUL

Turkey is one of the most sufficient countries in the world in agriculture because of geographic and climatic conditions. As being a bridge between Europe and Asia continents Turkey has a strategic geographic position.

This geographic position is one of the most important things for our country to be competitive in EU markets.

Food sector is one of the first established sectors in Turkey’s economy because of having rich agricultural sources and ecologic conditions. In 2009, there were 17391 food enterprices in Turkey according to TOBB datas.

Unfortunately Turkey couldn’t reach desired efficiency and quality in agricultural production.

Inspite of the problems in agriculture, Turkey’s food industry became one of the most competitive sectors in international area by the growth in food technology and export oriented productions. Unfortunately this statement does not cover dairy and meat sectors.

Turkey’s Food Sector Companies can be competitive in EU Market

1. Turkey’s strategical geographic condition and closeness to various international net importers,

2. Diversity of ecologic conditions, rich agricultural sources,

3. Developed Technologic infrastucture4. Adequate build in capacity for domestic and

possible export demand,5. Finance resources 6. Powerful industry, equipment pool and knowledge,7. Increasing product variety depending on the

changes in consumption demands

11. Young, dynamic and innovative labour force

12. Continuously improving sector,

13. Companies’ efforts of improving market shares,

14. Improving income per capita

The technology used in production is an important factor. In Turkey, the number of big enterprises using modern technology is nearly 2000.

In food production industry total capasity is enough and nearly %70 of it is used.

According to 2009 December datas, meat sector has the biggest capacity as having %77,9 used capacity.

Seasonality in production and problems in obtaining high quality, continuous and adequate raw material,

Lack of efficient inspection systems, Unregistered production, Registered, but uninspected production, The problems in food safety and food quality, Consumption patterns, Brand power, Difficulties in entering monopolised market

structures, Regulation System-There isn’t enough

infrastructure to apply regulations compatible with EU regulation,

Inadequate statistical datas, High energy costs,

Reasons behind the Uncompatitive Nature of the Industry

Turkey cannot show presence in world markets. These sectors depend on mostly local demands. International trade is very low. Meat sector has recently been

opened to foreign trade but its effects haven’t been seen in international trade datas.

Costs and prices are higher than world averages. In plant and animal raw material production efficiency is low

and cost is high. Animal diseases, inspections, unrecorded production, high cost

of raw materials and products, small production plants, subsidy policies favouring small units, untimely and usualy late support policies effects sectors improvement negatively.

dairy and meat sectors:

In order to be competitive in meat and dairy sector:

Enough and continuous raw material in world prices and internationally accepted standards,

Energy in world prices,

is essential.

In Turkey’s food sector, there is no lack of finance and qualified labour force.

Raw material

Quality, Suitable price, Sustainability,

Finished product

•Continous, high quality, raw material at world prices, •Energy at world prices,•Finance,•Labour force,

Required Elements In Dairy and Meat Sectors;

In dairy and meat sectors the biggest problems are inadequacy of inspections and shortness of enforcements.

Although there are modern and improved technologies, there are also unregistered production.

The lack of adequate inspections encourage unregestered production and creates unfair competition for the registered production.

In our country there are enterprises that have production licence but produce for the unregistered market.

The inspections should cover not only the permission phase, but also the production phase. Unfair competition should be prevented for the growth of the sector.

Unregistered production is the main source of the problems of food safety and quality. Even though the aim of the food inspection is “from farm to fork”, there seems to be a long way to achive that aim.

In our country all the food regulations are arranged according to EU food regulations.

But these arrangements are inadequate because of the lack of infrastructure. Besides this, in order to protect our local and traditional foods and because of thinking our country’s conditions, there are difficulties to correspond everything with EU.

Imitation and adulteration prevents innovations in sector. In order to apply regulation the same as EU regulation firstly

the infrastructure in our country should be established. The regulation differences between Turkey and EU effects dairy and meat sectors’ international trade negatively.

Due to unregistered production, statistical data available is not healty.

Besides these, formalities in export supports and bureaucracy, negatively effects all the food sector including meat and dairy sector.

The Thrace Region in Turkey is given the status of “free from food and mouth disease with vaccination status” . Even though this is a very promising development it is far from achiving the desired status for the whole country.

The geographicial advantage of Turkey acts as a disadvantage in this situation due to large and numerous border controls.

For the time being, animal diseases are the main obstacle for Turkish export of dairy and meat products to EU.

Small sized, scattered production units for raw milk and raw meat production

Hygenic problems because of inadequate training of small dairy and breeding farmers,

Uncontrolled animal movements, Illegal live animal export and imports

Are the main problems to be encountered for entering the EU market.

In our country there are too many problems in collecting and distributing raw milk.

The dairy industry has big farm investments, and establish milk collecting centers. But these have big cost and are not sufficient.

According to FVO reports, there are dairy enterprices in Turkey which are in EU standarts but have raw material problems. Raw milk is not in EU standards.

In dairy sector big farms are improving but in meat sector the improvement of big farms is limited.

Meat sector improvement is directly bounded to the improvements in the dairy sector.

Big price differences make illegal animal imports attactive. Sheep and goat farming became smaller in time. It needs

special subsidies.

Scale Economy in Dairy and Meat Sector

In primary and industrial productions there is need of big, competible and optimum sized plants instead of small plants.

Small enterprises could be suitable for producing traditional products and boutique production. In order to lower the costs and to improve the sector, and have a market share in world markets, the size of the majority of the plants for both raw material and processed goods should be optimized.

Need for Specialisation

In meat and milk sector, the industrialists make the inspection of raw material by themselves. Because of the supplying problems in raw materials instead of specialising in products, industrialists choose entegrated productions.

In meat sector, the enterprises which are producing meat products, also invest in feed producing, animal farming, slaughterhouse, transport, storage, laboratuary analysis.

In milk sector, raw milk analysis are made by the industry.

But in EU countries, the industry buys the raw milk and raw meat already analysed. Continuous, high quality raw material supply is an important problem in Turkey.

Besides these, it is difficult to market the products easily.

Uninspected, unregistered, registered but not adequately inspected production, unfair competition from government enterprises like EBK,lack of adequate legislation for special products in the trade law could be listed as problems for the development of the sector.

In this context, to bring enterprises to EU standarts is a must for Turkey. The question still stands for the already existing enterprises which are at world standarts. The challenge for Turkey would be to get a market share for already existing high quality enterprises and eliminate the obstacles for their fair trade. On the other hand creating a hospitable investment environment for new investments is a challenge ahead for Turkey.

THANK YOU FOR YOUR ATTENTION

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