Turkey Agribusiness Report Q1 2013

BMI View:

We are below consensus for grains production, as we believe the country will be affected by droughts during plantings. Therefore, we expect Turkey’s export capacity for wheat flour to be limited in the coming months. More investment in the poultry sector confirms our view for the sub-sector to have the most growth potential over the medium term. We are still cautious about the country’s sugar sector, as we believe production quotas and high prices are affecting the industry’s efficiency. Only changes to these factors could make it easier for confectionery manufacturers to operate in their domestic market.

Key Forecasts:

- Wheat production growth to 2016/17: -8.1% to 20.0mn tonnes. The decline over the 2011/12 to 2016/17 period is owing to base effects. Growth between 2012/13 and 2016/17 will be driven by farmers’ preference for wheat due to its good profitability and high domestic demand. Also,
the development of the wheat flour milling industry will boost production growth.

- Poultry consumption growth to 2016/17: 11.3% to 1.5mn tonnes. This strong demand growth will be driven by increasing disposable incomes and the rise of fast-food chains and higher-end eateries providing poultry dishes.

- Sugar production growth to 2016/17: 16.6% to 2.7mn tonnes. Growth will be supported by slight improvements in industry efficiency, as reform efforts filter through and risk appetite returns to private investors, leading to improved equipment and production methods. However,
we caution that this growth outlook could change if sector reforms are not aggressively pursued.

- 2013 real GDP growth: 4.7%, up from 3.0% in 2012.

- Consumer price inflation: 6.6% on average in 2013, down from 8.8% on average in 2012.

- BMI universe agribusiness market value: 7.6% year-on-year (y-o-y) decrease to US$20.4bn in 2012/13, forecast to increase by an annual average of 2.1% between 2010/11 and 2015/16.

Key Developments:

We are below consensus for grains production in Turkey in 2012/13, as we believe official figures from the Turkish Statistical Institute underestimate weather problems during plantings. For wheat, we have revised down our forecast to 17.0mn tonnes, which represents a 22.1% y-o-y decline. For barley, we forecast production to decrease 21.1% y-o-y to 5.6mn tonnes in 2012/13 owing to dry weather conditions in spring and the long duration of cold temperatures in winter. We forecast corn production to increase by 14.3% y-o-y to 4.8mn tonnes in 2012/13 because of a more significant increase in plantings and less severe droughts during plantings.

Aviagen-owned poultry firm Ross Breeders Anadolu announced it will step up production capacity in Turkey with the commissioning of a new hatchery. The new hatchery, located in Elmadag, will include setters, hatchers and a hatchery information system, which are aimed at improving productivity at the company’s hatchery. The company is expected to more than double annual day-old breeder chick production for its domestic market, taking total capacity to 13mn per year.

Turkey’s biggest candy maker, Ulker Biskuvi Sanayi, whose parent company Yildiz Holding purchased parts of Godiva from Campbell Soup in 2007, has established a US$200mn loan from Bank of America Merrill Lynch to finance its business. The company said it would offer a 340-basis-point margin over international benchmarks for the two-year loans. SHOW LESS READ MORE >

Executive Summary 5

SWOT Analysis 7

Turkey Agricultural SWOT 7

Turkey Business Environment SWOT 8

Supply & Demand Analysis 9

Turkey Grains Outlook 9
Table: Turkey Wheat Production & Consumption, 2012-2017 10
Table: Turkey Corn Production & Consumption, 2012-2017 10
Table: Turkey Barley Production & Consumption, 2012-2017 10
Table: Turkey Wheat Production & Consumption, 2008-2012 14
Table: Turkey Corn Production & Consumption, 2008-2012 14
Table: Turkey Barley Production & Consumption, 2008-2012 14

Turkey Livestock Outlook 15
Table: Turkey Poultry Production & Consumption, 2012-2017 16
Table: Turkey Beef & Veal Production & Consumption, 2012-2017 16
Table: Turkey Poultry Production & Consumption, 2008-2012 17
Table: Turkey Beef & Veal Production & Consumption, 2008-2012 18

Turkey Rice Outlook 18
Table: Turkey Rice Production & Consumption, 2012-2017 19
Table: Turkey Rice Production & Consumption, 2008-2012 20

Turkey Sugar Outlook 21
Table: Turkey Sugar Production & Consumption, 2012-2017 21
Table: Turkey Sugar Production & Consumption, 2008-2012 23

Commodity Price Analysis 25

Monthly Softs Update 25

Cocoa: Sufficient Supply 25

Coffee: Temporary Rally 27

Cotton: Against Resistance 29

Palm Oil: Outperforming The Oilseeds Complex 30

Sugar: Surging Supply 32
Table: Select Commodities: Performance & Forecasts 34

Monthly Grains Update 35

Wheat: Resilience On Borrowed Time 36

Corn: Looking The Weakest 38

Soybean: Little Relief Ahead 39

Rice: A Strong Performer 41
Table: Select Commodities – Performance & BMI Forecasts 42

Upstream Analysis 43

Europe Fertiliser Outlook 43

Europe GM Outlook 48

Europe Machinery Outlook 52

Downstream Analysis 56

Food 56

Food Consumption 56
Table: Food Consumption Indicators – Historical Data & Forecasts, 2008-2016 57

Confectionery 57
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, 2009-2016 58

Canned Food 59
Table: Canned Food Value/Volume Sales – Historical Data & Forecasts, 2009-2016 60

Processed Foods 61
Table: Pasta , 2009-2016 62
Table: Fish, 2009-2016 63
Table: Bread Products & Jams/Jellies, 2009-2016 64

Drink 66

Alcoholic Drinks 66
Table: Alcoholic Drinks Volume/Value Sales – Historical Data & Forecasts, 2009-2016 67

Soft Drinks 68
Table: Soft Drinks Value/Volume Sales – Historical Data & Forecats, 2009-2016 70

Hot Drinks 71
Table: Hot Drinks Value/Volume Sales – Historical Data & Forecasts, 2009-2016 73

Mass Grocery Retail 73
Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts, 2009-2016 75
Table: Grocery Retail Sales By Format 75

Trade 76
Table: Trade Indicators – Historical Data & Forecasts, 2009-2015 77

Country Snapshot 78
Table: Turkey’s Population By Age Group, 1990-2020 (‘000) 79
Table: Turkey’s Population By Age Group, 1990-2020 (% of population) 80
Table: Turkey’s Key Population Ratios, 1990-2020 81
Table: Turkey’s Rural And Urban Population, 1990-2020 81

Our Forecast Modelling

82

How We Generate Our Industry Forecasts 82