Turkey Agribusiness Report Q3 2016 - New Market Study Published

We continue to favour the sugar sector in Turkey because of the strong growth potential of the country's confectionery industry and our belief that large changes to the country's sugar production quotas are likely to occur in the coming years. We forecast 2016 to be a turnaround key for the grains sector, with corn, wheat, and barley recovering from contraction s following the drought in 2014. What is more, we expect growth in grains production and consumption to continue uninterrupted through to the end of our forecast period in 2020. Meanwhile, w e continue to see resilient growth in the livestock sector on the back o f continued government support.

Key Forecasts

Wheat production growth 2015/16 to 2019/20: 6.9 % to 19.3mn tonnes. We expect the country to remain an importer of wheat (except for in 2016/17, when it will post a small surplus), despite reasonably strong domestic production growth following the drought-hit harvest of 2014/15.
Sugar consumption growth 2014 /1 5 to 2019/20: 2.4 % to 2.4mn tonnes. This growth outlook will improve on the effective implementation of sugar reforms and efficiency gains, but for now we expect sugar consumption to remain almost flat.
2016 real GDP growth: 2.9%, down from 4.0% in 2015.
Consumer price inflation: 8.5% average in 2016 (revised up from 8.0% previously), down from 7.7% average in 2015.
BMI universe agribusiness market value: 6.9% increase to USD67.1 bn in 2015/16, forecast to increase by an annual average of 4.9% between 2015/16 and 2019/20.

Full Report Details at
- http://www.fastmr.com/prod/1170572_turkey_agribusiness_report_q3.aspx?afid=301

Key Developments

Turkish sugar production will recover from last year's drought due to higher yields owing to favourable weather over recent months. Sugar consumption will remain subdued as most sugar beets are processed to make ethanol, a trend that will remain in place. Out to 2020, we see strong growth in the sugar sector provided the pending reforms are effectively implemented. Meanwhile, it was announced in April 2016 that Turkey will allow the import of 80,000 tonnes of sugar from the EU this year without charging customs duty in order to compensate for reduced domestic production due to bad weather. The duty was previously set at 50%. The decision, made by the Economy Ministry, was published in the government's Official Gazette.

Increased acreage and sufficient rainfall will help Turkish rice production recover from last year's drought. Consumption growth will be determined by population increases, while Turkey remains dependent on the US and Russia for rice imports.

We have revised up our forecasts from our last quarterly update and now see grains recovering most of last year's losses. However, ample rainfall before and during harvest deteriorated the quality of most grains production. Out to 2019/20, we forecast sustained growth in grains production as strong demand for human consumption and from the livestock sector will maintain production incentives.

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