POINTERS: Palm Oil Market Opportunities in Turkey

By: Mr. Faik Genç

Faik Genç has been in the commodities business for 32 years. He began his career at Turkey’s top industrial company, Sabancı Group’s London based trading company in 1985, with a degree in Mechanical Engineering from Middle East Technical University. He left the company as Commercial Director in 1996, moving to Turkey and joined crusher/refiner Doysan A.Ş. as Commercial Director. He was appointed General Manager in 1999. He took an active role in establishment of joint-venture with ADM in 2000 and he was appointed Chief Operating Officer of ADM/Turkey following ADM’s total acquisition of the company. After leaving ADM, he set up AgriPro in the beginning of 2008. AgriPro provides transparent brokerage and consultancy to the fats & oils industry, publishing regular reports which are sold to over 60 Turkish companies. AgriPro published the first ever detailed “Turkish Fats & Oils Industry Report" in January 2012 and released updates in 2014 and 2017. In 2009 AgiPro took up events organising and organised “Corn Oil Istanbul” international conference in 2009 and “Fats & Oils Istanbul” events in the same year until 2017. “Fats & Oils Belgrade - 2018” has been the 10th international event AgriPro has organised. Faik Genç is a former Vice Chairman of Turkish Vegetable Oils Industrialists Association. He is a sought after speaker, especially on sunflower complex, as well as Turkish fats & oils industry and regularly appears as a speaker at international events in countries such as Bulgaria, Malaysia, Russia, Turkey and Ukraine.

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Turkish vegoil market is one of the fastest growing in the world. Turkey is the world’s 5th or 6th largest importer country of oils and oilseeds, after China, India, Pakistan, Mexico and Japan and assumes a very central role in the flow of trade. Turkish imports come from the Black Sea countries, Southeast Asia and Americas. Turkey also holds a strong export market in the Middle East. Being a country largely depending on imports of raw material, the vegoil sector is less likely to be adversely influenced by government interventions, unlike say the flour milling Industry.

Vegetable oil consumption in Turkey is growing rapidly after the stagnation of 2016 and 2017 amidst jeopolitical difficulties concerning Syria, Turco-Russian jetdowning crisis of 2015 and July 2016’s failed military coup attempt. Young and increasingly urban population together with country’s recent high growth represent a significant growth potential for the industry. For decades, Turkey has been a major vegoil importing country as the increase in consumption always outpacing domestic oilseed production. Turkish vegoils industry is therefore well experienced in import procedures and familiar with obligations of international trade and is much more sophisticated than other agricultural sectors in the country.

Total vegoils consumption in Turkey will reach 2.4 million tonnes, or 29.5 kg of per capita in 2018/19 season. Out of home usage increased sharply in the last season following 2 stagnation years.

Turkey’s total vegetable oils imports for 2018/19 season will reach 1.73 million tonnes with palm oils accounting to 750,000 tonnes of it. Exports in 2018/16 season will have reached 900,000 tonnes. Although new refineries built in Iraq will hamper Turkey’s liquid oil exports Syria, after 6 years of civil war, will soon become the main export market for Turkish fats and oils exports.

Domestically fats and oils market is predominantly based in Istanbul and surrounding industrial areas. Istanbul accounts for about 20% of all Turkish population and definitely is the main consumption location for almost anything. Other major active areas are the Aegean, country’s 3rd largest city Izmir and surrounding cities and tourism resorts, southern large city of Adana and its surroundings, emerging megacities of Bursa, Konya, Gaziantep, Kayseri and Samsun.

Out of Home and use of palm based industrial fats has become the new growth area for the Turkish fats & oils industry since 2010. Growing tourism income surpassing 35 billion dollars in 2018: and increasing number of shopping mall food halls in the megacities supports consumption of palm based fats and oils consumption.

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Questions & Answers (3) :

Akmal

5 years ago

Under the FTA arrangement, Turkey has imported a lot from Malaysia. Products like RBD palm olein got the most benefit under the FTA agreement However, they are selling at cut throat prices. Margin is too small for the smaller players to export. Would you be able to suggest some high margin palm products imported by your country especially for the smaller players to explore.

Faik Genç:
Dear Akmal, you did receive my answer, did you not? it has seemed to have disappeared from here.
5 years ago

Faik Genç:
“Unfortunately there is only 1 big supplier which supplies the whole of the Turkish market. Other big companies tried but failed over the last 10 years. The very small buyers buy from the single suppliers stocks in bonded tanks, other small buyers buy on ex-bonded tank basis before the shipment from Malaysia. The main supplier offer buyers not really “cut throat” prices but favourable terms such as offering unpriced contracts with conversion premium which allows the buyer to price it until vessel actually arrives.The agreement between Malaysia and Turkey is not a free trade agreement butone which allows a lower import duty to Malaysian origin palm oils. Currently the duty for Malaysia is at $21.8% and other countries at 31.2%.”
5 years ago

Dr. Ahmad Mustafa

5 years ago

Dear Mr. Faik Thank you for your informative presentation slides. As total vegoils consumption in Turkey is about 2.4 million tonnes, is their any ongoing planning strategies to expand in the agricultural land with sunflower and cotton seeds as a step toward oils self-sufficiency?

Faik Genç:
Yes, there is good effort by the government to increase oilseed production. They grant the farmers around 100 USD per tonne extra for sunseeds. However Turkey is very much is a grain farming country and habits take long to change.However, sunflower cultivation began in southern region of Çukurova 10 years ago and now around 150K mt is produced there. Central Anatolia also took up sunflower cultivation about 7 years ago and now produce around 300K mt per year. Main sunseed area has traditionally been the "Thrace", the European portion of the country, west of Istanbul.
5 years ago

Amirah binti Ahmad

5 years ago

Dear Mr Mr. Faik Genç, Could you please share your thoughts/insight on animal feed raw material (such as palm kernel cake) demand in Turkey?

Faik Genç:
Turkish crush industry is of very big size and there are a lot of idle crushing plants. Capacity usage at the moment is around 55%. Turkey imports 2.6 million tonnes of soybeans half of which is crushed for feed raw material. (the other half is used to produce full-fat). Palm kernel meal/cake has been imported in the past by major feed millers in large vessels however the logistic difficulties in Malaysia in collecting the stuff and price makes it difficult to utilise this product. It is much easier for feed producers to impor the soybeans and either crush it as full-fat and/or crush for soymeal.
5 years ago

Amirah binti Ahmad:
Dear Mr. Faik Genç, Thank you for your reply and compact information.
5 years ago

Faik Genç:
Thank you. By the way it is not a free trade agreement but lower import duty for Malaysia at 21,8% where other supplier countries are subject to 31.2%.
5 years ago