Haluk Tezcan, Chairman of the Board of the Turkish Flour Industrialists’ Federation (TFIF), pointed out that wheat purchases in the sector are primarily made by the Turkish Grain Board (TMO), stating, “If products are sourced at world prices and TMO acts in this direction, we will face no obstacles. Otherwise, the sector will encounter difficulties.”

In a press conference held after the 19th International Congress and Exhibition organized by TFIF in Antalya under the theme “Sustainable Future: Climate, Water, Agriculture,” TFIF President Haluk Tezcan answered our questions and mentioned that Türkiye has written a success story in wheat and flour.

Tezcan stated that Türkiye continues to be one of the leading countries in world flour trade and that Türkiye, which has been the world leader in flour exports for years, has increased its importance in global markets thanks to its production capacity, quality standards, and strategic geographic location. Tezcan emphasized that Türkiye’s flour industry plays a critical role not only in terms of economics but also in ensuring global food security. He also mentioned that Türkiye is an important supplier for low-income countries seeking reliable and affordable flour. This success, according to Tezcan, is made possible through sustainable production models and strong sector collaborations.

Key highlights from TFIF President Haluk Tezcan’s press conference:

These congresses are extremely valuable for our industry. This year, the main theme of our congress was sustainability. As a subtopic, we addressed climate and agriculture. While the concept of sustainability is frequently discussed today, I don’t think society fully grasps its importance as a whole yet. For this reason, our Board of Directors decided to prioritize sustainability this year. Our goal is to raise awareness not only within our sector but also among other stakeholders.

In recent years, we have felt the effects of climate change closely. The drought in 2021 caused significant challenges for Türkiye’s access to wheat. In 2022, with increased productivity, excess production came to the agenda, and solutions were developed on how to manage this surplus production. Production returned to normal in 2024, but we have concerns for 2025. We are currently feeling the effects of drought very deeply. If sufficient rainfall does not occur in March and April, we cannot even predict the production challenges Türkiye may face. Therefore, we need to focus on sustainable agricultural practices.

We especially want to draw attention to water management. In line with the new regulations of the Ministry of Agriculture, a shift to a water-centered production model is underway. As a sector, we support this transformation. In addition, we see that agriculture is now shaped by innovation, technology, and artificial intelligence. If we do not closely follow these innovations, we risk losing our productivity and competitiveness. With the help of artificial intelligence and robotics technologies, we aim to both increase productivity in agricultural production and facilitate access to raw materials.

Climate change is teaching us important lessons. Issues such as reducing the carbon footprint, increasing energy efficiency, and using water effectively are crucial to our responsibility toward nature. We believe that our businesses need to focus on these issues. Therefore, the theme of this year’s congress was particularly exciting for us.

WE EXPECT WHEAT PRODUCTION TO REACH 20-21 MILLION TONS THIS YEAR

I would like to touch on our production estimates for this year. We do not yet know the situation of the March and April rains, so it is too early to say anything definitive. However, as a sector, we are observing that the planting areas have increased compared to last year. If the May rains continue as usual, we expect wheat production to reach 20 to 21 million tons.

Wheat prices and our sector are managed with a limited annual increase of less than 20%. In January, there was a 1% increase, and in February, it was 2%. We are purchasing wheat at prices set by the Turkish Grain Board (TMO), and our sector continues with this system.

Regarding whether wheat prices will increase during Ramadan, we do not foresee such an increase. This is because our raw material, wheat, is being sourced by TMO in a highly controlled manner, and prices are being managed without increases. Within the free market economy, wheat stocks are nearly depleted, and the majority of existing stocks are held by TMO. Therefore, TMO has become the main actor guiding the market.

There is a problem in finding quality wheat in the sector. Especially in high-quality wheat, price increases vary according to supply-demand balance. This situation can create a cost difference for companies engaged in specialized production. However, we do not expect a significant price increase in basic food production.

CHALLENGES EXPECTED IN 2025

The year 2025 started with challenges for our sector. Like many other sectors, we are affected by this process. Our sector is labor-intensive, but there are significant differences between domestic market companies and those involved in export in terms of mechanization and production.

Factories close to ports gain a cost advantage by increasing production when they focus on exports. However, the situation is different for medium-sized industrialists. Due to low production quantities, labor costs remain high, making it harder for them to compete.

In addition, we are experiencing significant increases in logistics costs. Both general transportation costs and import transportation costs have risen. Factories near ports are in an advantageous position because they can bring imported raw materials by ship, while producers in inland areas face difficulties due to transportation costs. Particularly in transportation through cooperatives, the demand for costs above market prices adds an additional burden to our sector.

One of the most important problems is the difficulty in accessing financing. Today, financing costs have reached very high levels. In an environment where money is raised with a 50% interest rate, there are companies in our sector that have to borrow at 60% interest rates. Under these conditions, doing business and keeping companies afloat has become nearly impossible.

The rising cost of stockholding has also caused companies in the sector to change their working methods. Our industrialists, who need to maintain a certain amount of stock to preserve quality, keep their stock levels to a minimum due to financial burdens. This has become another factor that makes competition more difficult.

WE WISH TO GET THROUGH THIS PROCESS WITH MINIMAL DAMAGE

Whether we can continue to lead in exports is another important issue. It is crucial to diversify markets and reduce dependence on a few countries. Currently, our export structure depends on a few countries, and strategic steps need to be taken to diversify this.

Our sector faced significant economic and logistical challenges in 2024, and these problems persist. Our hope is that the number of factories closing during the year will be kept to a minimum and that our sector will emerge from this process with minimal damage. We hope no company goes bankrupt. However, there are economic difficulties in the sector. We recently learned that Pakun entered into a concordat process. We pray that there will be no further cases, but looking at market conditions, we see that this risk continues. The slow processing of the Inward Processing Regime (DİR) also negatively affects this process. Currently, DİR is operating at a 75% to 25% ratio, but it has almost come to a halt as of October 15. This situation presents a serious obstacle for our sector.

In order to support our sector, it is of great importance to facilitate access to financing and take steps that will open up commercial regulations. If these conditions are met, Turkish agricultural products and the flour-based product sector will continue to strengthen their position in international markets. We are working to continue our journey by optimizing costs while maintaining our export power.

Türkiye holds an important position in flour exports. Although we mainly export to 4-5 countries, we export flour to a total of 192 countries. However, the trend of countries we export to establishing their own flour mills poses a significant challenge for us. We are making great efforts to enter these markets. We experienced this firsthand in Indonesia and the Philippines. Turkish flour had become a major brand in Indonesia and had taken its place on the dining tables. However, the Indonesian government took steps to protect its domestic producers by providing special support to wheat flour mills. By increasing customs duties, it made it more difficult for Turkish flour to remain in the market. Some of our investors tried to maintain their presence by establishing factories there, but many of our industrialists, due to the market structure, were forced to withdraw from Indonesia after making individual efforts.

WE WON UNFAIR COMPETITION CASES

A similar situation occurred in the Philippines as well. Especially due to initiatives from the United States, unfair competition cases were filed against Türkiye at the World Trade Organization. However, Turkish industrialists won these cases, proving that we were not engaging in unfair competition. As a result, we gained the opportunity to export flour to the Philippines with zero customs duties. However, this time, new factories were established with external support, narrowing the market and making our exports more challenging.

We are experiencing similar difficulties in Africa, particularly in Angola. While countries like Sudan are important markets for our flour exports, they view this product as strategic due to its status as a basic food item. Governments believe that they should produce this product themselves, which leads to significant reductions in our export markets.

The 4 million tons of flour export target we set as an industry last year was actually an achievable goal. However, our government decided that, between June 15 and October 15, flour exports can only be made using domestically produced wheat. We informed the authorities that this would not be feasible without competitive prices. This decision continued to be enforced, and our sector could not realize approximately 1 million tons of flour exports. When you look at the rise in January 2024, you can mathematically see that this is not sustainable. Of course, we have the utmost respect for the decisions made by our government.

WE MUST EVALUATE OPPORTUNITIES CORRECTLY

At the GulFood Fair held in Dubai, the flour industry is one of the largest participating sectors. Türkiye has now become a strong player in the global flour market. Today, when the world thinks of flour needs, Türkiye is one of the first countries that comes to mind. This success was achieved thanks to our industrialists’ production capacity, their ability to develop flour varieties suitable for climate conditions, and their capacity to create solutions tailored to market needs.

A similar situation is also evident in Iraq. Despite Iraq establishing its own flour mills and raising customs tariffs, it continues to import flour from Türkiye due to the high-quality production of the Turkish flour industry. However, market dynamics are constantly changing. Angola, which used to hold the top position, has now been replaced by Djibouti. This situation may not last forever. However, if we manage our logistical advantage correctly and take advantage of wheat production opportunities in Russia and Ukraine, Türkiye’s leadership in flour exports can continue.

Today, there are industrialists exporting special-purpose flour to the European Union. Some say, “No one can produce flour as high quality as we do for the EU.” However, the issue is not just quality. Pricing, logistics, and service are also part of the equation. For example, Russia produces wheat but cannot export as much as we do. We are family-run businesses working with low profit margins, and we hold a strong position in the global market with competitive prices. Other countries prefer not to be as competitive as we are, and this gives us an advantage.

WE EXPECT FROM THE GOVERNMENT NOT TO INTERFERE IN OUR WORK

We do not have any special requests from the government. Our only wish is that we are not interfered with in our work. We do not cause any harm to our country; we bring our raw materials ourselves, process them, and export them. Our only expectation is to be supported in market regulations and for nothing to hinder our path. This way, we can continue without interruption.

We acknowledge that we do not produce value-added products, but basic foodstuffs like flour are strategic products. However, our sector also positively impacts other areas. For instance, our export of baked goods has been increasing every day. Thanks to the trust in Türkiye, other sectors can also enter markets along with us. For example, as a result of our successful efforts in Djibouti, the cement, ceramics, and iron sectors have also expanded into the region.

Our exports in January are 30% behind the same period last year. We know that the TMO has a stock of 5 billion dollars, half of which has been consumed, but the remaining half is still sitting idle.

Despite this, we believe that if the necessary steps are taken, we can regain our former success. If products are sourced at global prices and the Turkish Grain Board (TMO) moves in this direction, we will have no obstacles. However, if imports are blocked like last year and products in the domestic market are not offered at appropriate prices, the difficulties compounded by financing costs will push the sector into even more trouble. World markets are changing daily, and Russia, in particular, is taking serious steps in this area. We must closely follow these developments and quickly take steps to protect our sector.

By May 31st, we should not face the same uncertainties. The end of the war would be a huge advantage for us. Ukraine is an important raw material supplier for us. If the war ends, our dependency on Russia will decrease, and we will have the possibility to source products from more countries.

As TFIF, we are considering launching a project to designate pilot regions for growing higher quality wheat. We will continue to collaborate with all stakeholders to strengthen our sector and establish a sustainable production model. The contract production model is very important for our sector, as wheat diversity is invaluable to us. While wheat is generally associated with flour and bread, it is actually used in many different products, such as flatbread, wafers, and biscuits. There are significant changes happening in the frozen food sector today, and every frozen food producer has a different recipe.

Wheat flour is an indispensable product in nutrition. It is necessary for human health and development. However, balanced consumption is crucial. Insufficient consumption can lead to health problems, while excessive consumption can increase the risk of obesity. At this point, we continue to emphasize the importance of bread and flour in nutrition, in collaboration with dietitians and nutritionists who hold different views.

THE SECTOR CLOSELY FOLLOWS TECHNOLOGY

According to the data we have, our companies are closely following artificial intelligence and emerging robotics technologies. We are going through a period where major companies in our sector are looking for ways to increase productivity. Many innovations are taking place in the packaging area. Our industrial colleagues are developing new technologies. For example, unmanned bagging machines automatically take, attach, and sew the material. There are industrialists making such investments. While new factory investments have slowed down, existing factories continue to make investments that allow them to renew themselves technologically. Especially in the packaging side, we have industrialists producing significant level of technology.