Commenting on the Turkish Grain Board’s (TMO) recent decision to set identical prices for bread and durum wheat, Gürsel Erbap, President of the Grain Suppliers Association (HUBUDER), emphasized that this policy must be managed carefully. “Equal pricing may encourage increased use of durum wheat. If prices remain this way, farmers might shift toward bread wheat, potentially reducing durum wheat production,” he warned.

To ensure the sustainability of Turkey’s wheat sector, pricing policies, agricultural subsidies, access to finance, export strategies, and structural reforms are all of vital importance. In the field-to-fork supply chain, coordinated efforts among producers, industry players, and exporters are crucial to fully realize Turkey’s potential in this sector.

With TMO’s announcement of new wheat purchase prices, developments in the Turkish wheat market—among producers, suppliers, and processors—have begun to draw closer attention. Gürsel Erbap shared insights on the current state of the wheat market, pricing strategies, stock levels, export outlook, and the challenges the industry faces, from the perspective of processors and suppliers.

Prices Satisfy Farmers, But the Timing of Subsidies Is Critical

Erbap noted that the TMO’s purchase price of 13.5 TL/kg, when combined with base subsidies and certified seed support, effectively amounts to around 16 TL/kg—an encouraging level under current conditions. “Production costs vary by region and yield, but average around 11–12 TL/kg. Based on a yield of 300 kg/hectare, farmers are likely to see returns above this threshold, which serves as a strong incentive,” he said.

However, Erbap pointed out that spreading out subsidy payments throughout the year might not be sufficient to relieve the financial pressure on farmers. He argued that part of the support should not be reflected directly in the purchase price. “When logistics and financing costs are added to the price paid by the processor, the product becomes more expensive—this increases inflationary pressure on end consumers,” he explained.

Processors and Suppliers Opt for Short-Term Positions

As the harvest reaches 5-6% completion and expands nationwide from its start in the southeast, Erbap noted that processors are currently reluctant to build long-term stocks. “Feedback from our members shows that, due to high interest rates, even purchases with two- to three-month payment terms are considered risky. The cost of financing eliminates any benefit of storing wheat,” he said.

He added that public stocks of wheat are estimated at around 3 million tons, while the private sector holds shorter-term inventories. As the harvest continues, they expect TMO to receive between 5 and 6 million tons of wheat.

Yield Estimates Around 17.5 Million Tons

Erbap stated that the Turkish Statistical Institute’s (TÜİK) initial wheat production estimate of 19.6 million tons does not align with field data, which suggests production will likely fall within the 17–18 million ton range. “Favorable weather conditions over the past 10–20 days supported yields. Overall, we expect around 17.5 million tons of production. Turkey’s annual consumption, including seed and feed use, is about 20 million tons. Combined with existing stocks, we do not foresee an issue in domestic market balance,” he said.

Equal Pricing of Bread and Durum Wheat: Must Be Carefully Managed

Erbap stressed the importance of closely managing TMO’s decision to equalize bread and durum wheat prices this year. “Turkey produces high-quality durum wheat on a global scale, and currently there is a surplus. However, bread wheat stocks are not as ample. Bread wheat is also used in the feed industry. Equal pricing could lead to increased use of durum wheat, which must be carefully monitored. Turkey grows the world’s best quality durum wheat. If this price alignment persists, farmers may shift to bread wheat, reducing durum wheat output. Sensitivity is required on this issue,” he said.

Slow Start in Exports, but Strong Potential

Reviewing the export performance in the first four months of 2024, Erbap noted a roughly 40% decline compared to the previous year: exports dropped from 1.3 million tons in 2023 to around 770,000 tons this year. He attributed this to last year’s import restrictions and challenges in exchange rate and price competitiveness.

“Since March, import restrictions have been lifted and conditions have begun to normalize. Under the Inward Processing Regime (IPR), exports are made first, followed by imports—this supports exports without disturbing the domestic supply balance. Turkey is a strong player, exporting to over 150 countries. Although reaching the 4 million ton level of 2023 will take time, we expect a recovery in exports over the next 3–4 months,” he stated.

A New Global Competitor Emerges: Egypt

While Russia has traditionally been Turkey’s main rival in flour and pasta exports, Erbap highlighted Egypt’s emergence as a rising competitor. With low labor costs and growing investments in agriculture, Egypt is enhancing its competitiveness. “Egypt is not only re-exporting processed imported wheat but is also strengthening its agricultural infrastructure. For Turkey to achieve agricultural sustainability, it must integrate human capital, technology, and economies of scale. We have the potential to increase yield by 30% on the same land area,” he said.

New Targets: Value-Added Products and Frozen Food Exports

Erbap emphasized the need for the grain industry to shift its focus from merely exporting flour to producing value-added products. “We’ve entered an era of producing specialty flours for items like hamburger buns and pizza dough—not just plain flour. Through frozen product exports, we can establish a strong presence in European and American markets. We have the raw materials, and we have the knowledge. It’s time to talk about advanced-stage exports,” he said.

Contract Farming Below 2%

Erbap pointed out that contract farming in grain production currently accounts for less than 2% and should be increased to 15–20%. “Contract farming protects both the producer and the processor. Knowing how much, to whom, and at what price the product will be sold improves predictability and planning. The Ministry of Agriculture has built a solid contract framework—this needs to be supported for widespread implementation,” he concluded.