Istanbul- Last week, the Turkish Ministry of Agriculture and Forestry announced the suspension of wheat imports from June 21 until October 15, 2024, with the possibility of extending the ban based on market conditions at that time in order to protect local producers.
The announcement indicated that some measures have been taken for foreign trade to prevent a decline in prices resulting from increased supply during the harvest period and to ensure that local needs are met by local production.
According to the decision, Turkey lifted the ban that had been imposed since September 2018 on the export of flour made from locally produced wheat, and also liberalized the export of wheat intended for bread, pasta, barley and its derivatives, on the condition of obtaining prior approval.
The most prominent repercussions
Turkey is considered the fifth largest wheat importer in the world in terms of mass (fourth in value), as it imports approximately 10 million tons of wheat annually, and its imports depend mainly on Russian wheat.
According to the Turkish Statistical Institute, in the first seven months of the 2023/2024 season, which extends from June 2023 to January 2024, Turkey imported about 6.45 million tons of wheat.
The largest share of these imports came from Russia, where the quantity imported amounted to 5.33 million tons, representing 83% of the total imports, while 890 thousand tons, equivalent to 14% of the total imports, came from Ukraine.
The global wheat market was greatly affected by the Turkish decision due to the pivotal role played by Turkey as a major importer, as it led to increased competition between Russian and Ukrainian wheat in the traditional export markets of the European Union, which affected the dynamics of supply and demand in these markets.
Wheat prices fell in Europe yesterday, Tuesday, due to fears that the Turkish embargo would lead to a decline in global demand, but the decline in the euro limited the losses.
A decline in the currency in which the commodity is denominated stimulates its trading, as it becomes cheaper for holders of other currencies.
Flour wheat contracts for delivery next September on the Paris-based Euronext Stock Exchange fell 1% to 241.25 euros ($259.08) per ton.
In its first response to the decision, the Russian Ministry of Agriculture explained that the Turkish ban had no effect at this stage, adding that “Russian exporters are studying how to send production quantities to other destinations.”
Reasons for the decision
Bilal Baghaish, an economic researcher at the SITA Research Center, told Al Jazeera Net that the Turkish government aims to:
- Protecting local producers, as managing the imbalance between supply and demand in the market may require taking certain measures.
- Assisting in providing the necessary raw materials for export-oriented production of local grain production and ensuring price stability for the benefit of producers.
Winners and losers
Baghaish expected that Russian producers would be forced to search for alternative markets and sell their products at lower prices in distant markets, which would benefit importers in the Middle East, Africa and Asia, countries that were negatively affected by the rise in food prices in the first months of the war in Ukraine.
On the other hand, Baghaish warned that Turkey is an important country in exporting flour and wheat-based food products, and that banning its import may lead to a decline in exports of food products such as flour and pasta, which may increase Turkey’s trade deficit.
Wheat market in Türkiye
Turkey is one of the few countries in the world capable of meeting its domestic consumption of wheat. In the 2023/2024 season, wheat production in the country reached 22 million tons, recording a noticeable increase compared to the 2022/2023 season, in which production reached 19.7 million tons. Turkey is looking forward to increasing Its production will reach between 22 and 23 million tons in 2024.
Turkey ranked first in the world in exporting flour, exporting about 3.7 million tons of this commodity during that period, which strengthens its position as a major force in the global flour market.
Türkiye overtook Canada in the 2023 harvest season to become the first country in the world in producing wheat for pasta
For his part, the Director General of the Agricultural Crops Office stated that Turkey became last year the largest global producer of wheat intended for pasta, and its production reached a record high of 4.3 million tons, the highest level in 18 years, which led to a significant increase in Turkish wheat exports, exceeding 1.4 million tons. One million tons worth $600 million to countries, including Algeria, Italy, the Emirates, and Canada.
He added that Turkey surpassed Canada in the 2023 harvest season to become the first country in the world in producing wheat for pasta, which strengthened Turkey’s position in global markets.
According to World Bank data, Turkey maintained first place in wheat flour exports continuously during the period from 2013 to 2022.
In 2013, Turkey’s exports of wheat flour reached 2.1 million tons, and continued to rise until they reached 3.5 million tons in 2016.
Despite the decline in exports between 2017 and 2021, Turkey maintained its leading position in global exports.
In 2022, its exports recorded 3.1 million tons, making it the top global exporter of wheat flour for a full decade, as exports increased by 43.8% during this period.
In 2023, Turkey achieved a record number of flour exports with a quantity of 3.66 million tons, recording revenues of approximately 1.5 billion dollars, and it seeks to reach its exports to about 4 million tons of flour this year.
The head of the Turkish Flour Mills Union, Eren Ulusoy, explained that the average annual wheat consumption in Turkey is 19 million tons, with an average annual per capita consumption of 160 kilograms.
He said that this reflects the importance of wheat and flour in the Turkish diet and the national economy, as exports of this commodity play a vital role in the country’s foreign trade.
He added, “Our sector exports flour to 164 countries, which means that the world depends on Turkish flour, as about 90% of the world’s population consumes Turkish flour.”
