Turkey is officially known as the Republic of Turkey is a Eurasian country located in Western Asia mostly in the Anatolian peninsula and in East Thrace in South-eastern Europe. Turkey’s location at the crossroads of Europe and Asia makes it a country of significant geostrategic importance.
In addition to its strategic location, Turkey’s growing economy and diplomatic initiatives have led to its recognition as a regional power in the Middle East.
According to the Organisation for Economic Co-operation and Development (OECD) , Turkey is expected to be the fastest growing economy among OECD members between 2011 and 2017, with an annual average growth rate of 6.7 percent. Although immigration from rural to urban areas since 1990 has been high, 24.5% of the population still lives in rural areas. The major cities and their populations are: Istanbul, the trade and finance centre, 12.9 million; Ankara, the capital, 4.7 million; Izmir a major player in the dairy, greenhouse and tourism sector, 3.9 million; Bursa, the centre of automotive manufacturing and food processing, 2.6 million; Adana, the centre of agricultural production,2.1 million; Konya, the canter of grain production, 2.0 million; and Antalya, the centre of vegetable production and tourism sector, 1.9 million. The population of Turkey is expected to reach 75.8 in 2013 and 77.6 million in 2015. Seventy-two percent of the population is under the age of 35 and 26% is under the age of 15.
Parameter Value in Year 2010 : Population 74 million, Labour Force (Population) 25.9 million
Median Age 29.2, GDP USD 736 billion, GDP Per Capita USD 10,079, Exports Value USD 120.9 billion, Imports Value USD 185 billion, Tourism Revenue USD 20.8 billion, Tourist Number 28.5 million people, Foreign Direct Investment USD 9.1 billion, Number of Companies with Foreign Capital 25,500, Inflation Rate 6.4%.
Turkey’s largely free-market economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 25% of employment. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging cadre of middle-class entrepreneurs is adding dynamism to the economy and expanding production beyond the traditional textiles and clothing sectors. The automotive, construction, and electronics industries, are rising in importance and have surpassed textiles within Turkey’s export mix. Oil began to flow through the Baku-Tbilisi-Ceyhan pipeline, marking a major milestone that will bring up to 1 million barrels per day from the Caspian to market. Several gas pipelines projects also are moving forward to help transport Central Asian gas to Europe through Turkey, which over the long term will help address Turkey’s dependence on imported oil and gas to meet 97% of its energy needs. After Turkey experienced a severe financial crisis, Ankara adopted financial and fiscal reforms as part of an IMF program. Turkey’s public sector debt to GDP ratio has fallen to roughly 40%. Continued strong growth has pushed inflation to the 8% level, however, and worsened an already high current account deficit. Turkey remains dependent on often volatile, short-term investment to finance its large trade deficit. The stock value of FDI stood at $99 billion at year-end 2011. Inflows have slowed considerably in light of continuing economic turmoil in Europe, the source of much of Turkey’s FDI. Further economic and judicial reforms and prospective EU membership are expected to boost Turkey’s attractiveness to foreign investors. However, Turkey’s relatively high current account deficit, uncertainty related to monetary policy-making, and political turmoil within Turkey’s neighbourhood leave the economy vulnerable to destabilizing shifts in investor confidence.
Overall, Turkey has a relatively free market for trade in goods and services as a result of
liberalization measures introduced over the past two decades. Turkey follows basic WTO rules to regulate imports and tariff structures and has adopted the European Union (EU)’s common customs tariff for imports from third countries. Turkey signed a customs union with the EU in 1996, eliminating all duties and charges on goods imported from EU member countries, excluding services, public procurement and unprocessed agricultural products. Turkey has signed free trade agreements with various countries and extends preferential treatment for least developed countries and some developing countries.
TARIFFS AND CLASSIFCATION OF GOODS
Turkey’s tariff schedule is based on both the Harmonized Coding System (HS) and the Combined Nomenclature (CN) of the European Union within the framework of the Customs Union. Import duties are calculated on cost, insurance and freight (CIF) prices and are levied as a percentage on the landed value of the good. The importer is responsible for payment of the Turkish value-added tax (VAT), which is set at 18% for the majority of imports or 26% for luxury goods. Goods on which duty was paid on entry to an EU country can be admitted duty-free to Turkey and vice versa (with exceptions for agricultural goods and some industrial products). Clearance time is usually one to three days, depending on the type of freight. In the event of a classification dispute, the higher duty can be paid with the intent to seek reimbursement at a later date
The Turkish Standards Institute (TSE) is responsible for setting standards in Turkey. TSE approval is required to import any product covered under these standards. Many categories of products are subject to restrictions and special requirements such as narcotics (prohibited) and weapons (subject to strict license control). Items such as live animals, medicines and pharmaceuticals, food and plant products, organic chemicals, telecommunications equipment, ozone-depleting substances, explosives, banknotes and commercial paper, radioactive materials and temporary import of goods for exhibition may require additional permissions and certificates from government agencies.
FOREIGN INVESTMENT IN TURKEY
Foreign direct investment plays an important role in the Turkish economy. The Government has introduced reforms to improve the investment environment in Turkey, such as simplified procedures, new legislation and tax incentives to attract foreign investors. Under Turkey’s programme to privatize state enterprises, foreign investors benefit from the same rights and incentives as local investors.
FREE TRADE ZONES IN TURKEY
Turkey has numerous free trade zones, considered to be outside the jurisdiction of Turkish customs authorities. Goods can be imported duty-free, assembled, manufactured, stored, repackaged and re-exported without paying tariffs. Unlike many free zones around the world, Turkish free zones allow sales into the Turkish market, subject to a fee.
TRANSIT – 1
Increased concern on the transit of dual-use items within Turkey as well as within the international community.
Relevant Turkish legislation – 1
The related provisions of the under secretariat of Foreign Trade Communiqué 2003/12 on the Control of Exports of Dual-Use and Sensitive Items.
The related provisions of the Customs Law no. 4458 dated 5 February 2000 which conforms with EU Customs Code (Council Regulation 2913/92).
TRANSIT – 2
Relevant Turkish legislation – 2
Anti Smuggling Law no. 5607.
Within this legislative framework, transits of items that are subject to export controls are treated on a case-by-case basis within the scope of interagency cooperation.
Located in a sensitive geography where transit-trade and transit-shipment is common, customs enforcement and ground interdiction in general is of prime importance to Turkey.
Customs authorities use an extensive database for enforcement purposes.
New security systems have also been developed and established to prevent illegal trafficking of goods.
“Intelligence and Land Border Gates Vehicle Pursuit Program” has been developed.
System currently operates at strategically important land border gates and seaports.
All alerts and intelligence information about suspected vehicles, goods, firms, brokers and other actors are introduced into this program and forwarded to all regional units.
Fixed and mobile vehicle and container scanning systems
Fixed, mobile and handheld radiation detection units
Transit Vehicle Traction System / Monitoring of movements at the Control Centre in Ankara. System alerts enforcement officers when
The vehicle leaves its specified route within Turkey, or
The vehicle remains outside the path already specified,
The mobile tracking unit is removed.
EXPORT CONTROLS: COOPERATION ON THE GROUND
We receive intelligence (either through own Intel channels or through international cooperation.
Immediate action by MFA: call on board interagency task force.
Depending on the intelligence: relevant export control authority + intelligence insight sought + if necessary military advice (including naval/air).
Ability to confirm proper licensing/customs info.
Intelligence needs to be on time and accurate.
A CHALLENGE IN EXPORT CONTROLS-FREE ZONES-1
Constitutes a loophole within control systems.
Can be exploited by proliferators.
The transfer of sensitive items to other destinations is difficult to trace.
The burden of the exporter country is increased
In Turkey: transfer of dual-use items into free zones in Turkey are subject to licensing according to the export legislation.
A CHALLENGE IN EXPORT CONTROLS-FREE ZONES-2
The items transferred into the free zones cannot be transferred out of the free zone without the permission of the under secretariat of Foreign Trade (UFT). “Import Certificate” and “End-user Certificate” is required for the transfer.
If and when necessary, UFT consults other relevant institutions before granting permission.
The UFT has the authority to deny or postpone the transfer.
RECENTLY CHANGED REGULATIONS
In December 2011 several amendments were made in the regulations which include : Official import controls of plant origin food and feed , Measurements to monitor certain substances and their residue on live animals and animal products, Food Hygiene , Food premises registration and approval , Food and Feed official control ,Pre-notification and veterinary checks of animal and animal products entering to the country, Specific rules for animal products official inspections, Veterinary checks on products entering to the country, Veterinary checks on live animals entering to the country, Domestic animal and animal products movements, Animal Hospital regulation , Veterinary checks on animal and animal products entering to the country, Animal welfare regulations, Protection and combating measurements against cattle leucosis, Protection and combating measurements against cattle anthrax, Surveillance of zoonose and zoonotic agents, related antimicrobial resistance and food borne outbreak, Criteria of livestock markets registration and inspections, Animal welfare during animal transportation, Animal by products that are not intended to use for human consumption, Sperm, Ovum and Embryo production centre establishment, Special hygiene regulation for animal products, Feed hygiene, placing on the market and use of feed, methods of sampling and analysis for the official control of feed, Turkish food codex, Maximum residue limits of pesticides, Flavorings and certain food ingredients with flavoring properties, Food additives, Microbiological criteria for foodstuff, labelling, Contamination, Materials and articles intended to come into contact with food, Import inspection regulating,
In December 2012 amendments were made in the regulations which include :
Bread and varieties of Bread, methods of sampling for chemical analysis for the monitoring of preserved milk, composition and labelling of foodstuffs suitable for people intolerant to gluten, sampling, testing method for dioxin and similar products, methods of sampling for chemical analysis of edible caseins and caseinates, indications or marks identifying the lot to which a foodstuff belongs
$133 billion (2011)
$120.9 billion (2010)
Apparel, Foodstuffs, Textiles, Metal Manufactures, Transport Equipment
Germany 10.1%, UK 6.4%, Italy 5.7%, France 5.3%, Iraq 5.3%, Russia 4.1% (2010)
TURKEY EXPORTS BY PRODUCT in 2010 (In US DOLLORS ($))
Food and Live Animals – 6,512,339,000
Beverages and Tobacco – 736,445,000
Crude materials ,Inedible, Except fuels – 1,334,833,000
Mineral Fuels ,Lubricants and Related Material – 2,641,023,000
Animal and Vegetable Oils, Fats and Waxes – 405,300,000
Chemicals and Related Products – 2,801,266,000
Manufactured Goods classified chiefly by Material – 20,408,933,000
Machinery and Transport Equipment – 21,005,357,000
Miscellaneous Manufactured Articles – 15,947,496,000
Commodities and Transact-ions not classified elsewhere in the SITC – 1,106,838,000
ELECTRICITY EXPORTS (million kWh) – IN 2012 -1550
OIL EXPORTS – 68,450 bbl/day (2011)
NATURAL GAS-EXPORTS – 649 million cu m (2011)
$212.2 billion (2011)
$185 billion (2010)
Machinery, Chemicals, Semi-Finished Goods, Fuels, Transport Equipment
Russia 11.6%, Germany 9.5%, China 9.3%, US 6.6%, Italy 5.5%, France 4.4%, Iran 4.1% (2010)
TURKEY IMPORTS BY PRODUCT SECTION YEAR 2010 (In US DOLLORS ($))
Food and Live Animals -1,615,878,000
Beverages and Tobacco -298,876,000
Crude materials, inedible ,except fuels – 7,660,516,000
Mineral Fuels, Lubricants and Related Materials – 15,764,234,000
Animal and Vegetable Oils, Fats and Waxes – 744,731,000
Chemicals and Related Products – 16,166,494,000
Manufactured Goods classified chiefly by Material – 19,989,660,000
Machinery and Transport Equipment – 37,808,892,000
Miscellaneous Manufactured Articles – 6,615,182,000
Commodities and Transactions not classified elsewhere in the SITC – 10,109,685,000
OIL IMPORTS – 581,000 bbl/day (2011)
NATURAL GAS-IMPORTS – 38.04 billion cu m (2011)
GROSS DOMESTIC PRODUCT (GDP)
This entry gives the gross domestic product (GDP) or value of all final goods and services produced within a nation in a given year. A nation’s GDP at purchasing power parity (PPP) exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States.
GDP (PURCHASING POWER PARITY)
$1.026 trillion (2011)
$981.2 billion (2010)
$906.9 billion (2009)
Note: data are in 2011 US dollars
Source: International Monetary Fund – 2011 World Economic Outlook
GDP – REAL GROWTH RATE
8.2% (2010) –
Variable: Gross domestic product, constant prices
Units: Percent change
Country-specific Note: See notes for: Gross domestic product, constant prices (National
Source: International Monetary Fund – 2011 World Economic Outlook
Year Gross domestic product, constant prices
GDP – PER CAPITA (PPP)
Note: data are in 2011 US dollars
Gross domestic product based on purchasing-power-parity (PPP) per capita GDP
GDP – COMPOSITION BY SECTOR
Services: 62.6% (2011)
Agriculture has always been one of the most promising sectors for Turkey, both for the domestic economy and in terms of international trade.
Around 40 percent of Turkey’s land area is arable and offers a large range of products such as grains, pulses, oil seeds, fruits and vegetables, cut flowers, poultry, dairy products, seafood, honey and tobacco.
Grain production, livestock and fisheries/forestry account for 67 percent, 26 percent and 7 percent of the total agricultural production, respectively. Turkey’s agricultural imports in 2010 and 2011, excluding processed food, reached USD 6.49 billion (3.49 percent of the total imports) and USD 8.94 (3.7 percent of the total imports), respectively. Export were USD 5.09 billion (4 percent of total exports) in 2010 and USD 5.35 (3.9 percent of total exports) in 2011. The top Turkish exports are dried figs, dried apricots, sultana raisins, hazelnuts and hazelnut products. Turkey’s top imports are cotton, soybeans, hides and skins, feed ingredients, live animals and paddy rice.
FOOD PURCHASING BEHAVIOUR
The Turkish food sector is becoming more advanced due to retailer demands for higher standards and investments by food manufactures. Through the widespread presence of modern international and domestic grocery retail outlets such as Metro, Carrefour, Tesco and Migros as well as rising incomes, the consumption patterns of Turkish consumers have shifted away from bulk and raw foods towards packaged and processed foods, including ready-to-eat meals and frozen foods. An increase in the number of females working full-time and higher levels of disposable income has supported this trend. This is particularly the case in urban centres’. The major food consumption patterns have not changed as much in the rural areas and are still based on wheat and grain products and a variety of meat products. Consumers in the south east of Turkey mainly consume lamb, but in Central Anatolia and the West more consumers prefer beef. Milk consumption has not increased as quickly as milk production, which increased from 8 million MT in 2002 to 12.5 million MT in 2011, but the variety of milk products such as yogurt and cheese increased. There are still a lot of
opportunities for investments in the dairy products sector but products should be adjusted to local tastes.
Turkey should be considered a door to Middle Eastern market. Due to shared history and religion as well as common cultures, Turkish agriculture and food export to the Middle East increased dramatically in the past decade. The Halal and organic food subsectors are areas which could be ready for investments or partnerships in the region.
Production in the food and beverage sector reached TRY 8,852 million in 2009, which constitutes 18-20 percent of the country’s production as a whole.
The proportion of Turkish household expenditure allocated to food and beverages, which was around 23 percent and declined to about 21.9 percent in 2009, remains high compared with Western standards, which range between 15-20 percent. But Alcoholic beverages and tobacco expenditures increased from 4.1 percent to 4.5 percent in 2009-10. Total consumer spending on food, beverages and tobacco was estimated at around USD 145 billion in 2010.
The Turkish economy grew 15.7 fold between 1980 and 2010 from TRY 70 billion to 1,105 billion whereas the food sector grew 14.8 fold from TRY 15 billion to 222 billion in the same period. Accordingly, the share of the food sector in Turkey’s GDP dropped to 20.1% in 2010 from 21.4% in 1998.
The Turkish diet contains a large share of baked goods. Hence, the bakery subsector forms the majority (65 percent) of the total number of food and beverage companies in Turkey. In 2011 Turkey consumed 11,486,000 MT of bread and only 33,600 MT of packaged bread. Turkish consumers tend to buy bread from small bakeries when it is hot and generally don’t buy packaged sliced bread. Another important bakery product is the Simit (type of bagel) as well as salty cookie-like products. Modern bakery shops have begun to open, especially in Istanbul, but that is not widespread throughout Turkey. Moreover, due to the low quality of flour available in Turkey, pita style bread is popular in East and South East Anatolia. Therefore, the bakery sector in general offers a lot of opportunities for growth and development.
FINDING BUSINESS PARTNERS IN TURKEY
There are 467 foreign companies actively operating in the Turkish food sector. Cargill, Bunge, Nestle, Unilever, Coca-Cola, and Pepsi-Co are some of the most prominent ones. Restaurant franchises are one way of introducing new products. An increasing number of restaurant chains are opening in Turkey, especially in Istanbul. These include casual dining, fast food and cafes. While most of these companies’ source food ingredients produced in Turkey, some require specialized ingredients or imports of certain items that are not readily available. Exporters should check with importers to see if they are approved suppliers for franchises. Additionally, Turkey’s hotel sector has traditionally represented an important niche market for certain high-value food products that cannot be readily found throughout Turkey. Turkey attracts 30 million tourists every year, especially in Istanbul and Antalya. There are 336 five star and 543 four star hotels in Turkey and most of them are located in Antalya and Istanbul. Global hotel chains including the Marriot, Hilton and Sheraton have a strong presence in Turkey. Turkey is a major tourism destination for Germans, Russians, British and Scandinavian travellers. Five star hotels would like to offer more high-quality products to their customers. Fresh fruits and vegetables are readily available in Turkey but high quality meat (especially steak) and fishery products (especially shrimp and crab) can be extremely difficult to source.
Trader associations are also very important contacts for those seeking to enter the market. The Feed Millers Association, Turkish Food and Drink Industry Association Federation, and Poultry Meat Producers and Breeders Association are examples of important trader’s organizations. (See Annex A for more details).
A visit to Turkey to gain a first-hand information about the Turkish market, preferably coinciding with a major trade show such as FOODÄ°ST (See Annex C for more details), is a good way to get started before entering the Turkish market and meeting prospective importers. Similarly, international food shows such as ANUGA, SIAL and Gulfood area attracting more and more Turkish importers, and may also be a way to meet prospective customers.
The major barrier to selling agricultural products to Turkey is high tariff rates. The tariff for beef cuts is bound at 225%, for milk is 150%, for white cheese is 80%, and for wheat and corn is normally 130% (depending on demand, the government can temporarily lower tariffs).Turkey and the United States signed an import protocol allowing imports of live dairy breeding cattle and for fattening cattle. However, neither a protocol for slaughter cattle, nor for cut beef has been negotiated.
Another major barrier is a new Bio safety Law which has been enforced in Turkey since September 26, 2010. The law banned importation of any GMO products until the genes contained within go through a lengthy approval process. On January 26, 2011, Turkey’s Bio safety Board approved the three biotech traits for soybeans (A2704-12, MON89788,MON40-3-2) for feed use that were approved in the European Union at the time, allowing U.S. soybeans to enter Turkey for feed use only. Then on December 24, 2011, The Bio safety Board approved 13 corn (see annex D for more information) events for feed use. The remaining 9 events have been reviewed, but due to a negative recommendation by the committees, approval will be difficult.
New import regulations were published in the Official Gazette dated December 30, 2011. Changes in these regulations reflected that fact that the Ministry of Food Agriculture and Livestock (previously known as the Ministry of Agriculture and Rural Affairs) was reorganized in 2011 and divided oversight of plant and animal products. According to the new import regime, plant and plant products no longer require control certificate (Find more details in Annex F) however the importer must pre-notify imports of material according to the information provided below. Some animal and animal products now require control certificates. A list of products which require control certificates is given in Annex E Most Turkish agriculture-related regulations, laws, communiqués, directives, and notifications are available on the website of the General Directorate of Food Control (GDFC)
of the Ministry of Food, Agriculture and Livestock (MINFAL): www.gkgm.gov.tr. Some of the regulations have an English translation available on the same website.
The legal infrastructure of agriculture is mainly based on communiqués rather than on laws. The reason for this is that the Turkish constitutional system does not allow laws to be adopted, amended
or abolished easily. Therefore governments have traditionally preferred to publish communiqués or regulations in order to maintain flexibility. As you will see from table below, currently the main policy goal of Turkish food and agriculture officials is to harmonize the related laws and regulations with the EU Acquis Communitarians. Sometimes it appears that this concern overwhelms other concerns such as national interest and farmer interests.
High tariffs on the majority of food items continue to hinder the growth of food imports from the United States (see Annex G for tariff rates of important products). Import tariffs on consumer food products range from zero to 225 percent, but most products face tariffs in the range of 40-50 percent.
Turkey has considerable flexibility in raising or lowering tariffs. Consequently, tariffs are subject to review and change, especially on December 30. Tariffs can vary and often depend on whether there is a need to import or not. Turkey normally applies the highest/bound rates for some products such as meat cuts at 225%. Some products, however, like cereals, have high tariff rates at 130% although still below the bound rate of 180%. Due to high meat prices last year, allowed imports of carcass meat (but not cuts) and lowered the customs tax from 225% to 30% at first, then slowly raised the tariff back to 75% when meat prices dropped slowly. Where there is strong demand but a lack of domestic supply, the applied tariff can be very low such 8% for soybeans, and DDGS at 4.3%. Turkish corn producers and soy millers are calling on the government to raise the bound rate on DDGS but, since it is bound, they use non-tariff barriers such as standards that are difficult to meet.
Two important government agencies receive special tariff quotas when acting as importer get special tariff quotas. The Turkish Grain Board (TMO) (www.tmo.gov.tr) usually procures grain from the domestic market but when there is a need to import the government allocates a special zero tariff rate import quota for TMO. The other institute is The Meat and Fish Institute (www.ebk.gov.tr), which acts to control domestic meat prices and also receives reduced tariff meat import quotas from the government when there is a need.
CUSTOMS INSPECTION AND DOCUMENTATION
Upon entry of the product at Customs, the importer should be prepared to present the approved control certificate if required as well as other normal import documentation such as the bill of lading, original invoice and certificate of origin. In addition, the importer should be prepared to present Customs with the exporting company’s analysis report for physical, chemical, microbiological and heavy metal content, and a certificate from the official food inspection agency of the country of origin stating that the product meets the quarantine requirements of the importing country.
Turkish Ministry of Agriculture, Food and Livestock (MINFAL) officials take samples of the imported product to government laboratories for physical, chemical and microbiological analysis and confirm it matches the information supplied from the exporting country. Import of the foodstuff is allowed if the results of the analysis are found to be acceptable and consistent with Turkish regulations, and the imports have been approved by MINFAL. Results of the analysis are normally received within a few working days. If the inspection results do not match with Turkish requirements, the importer may request secondary sample tests. In the case that the secondary test results are also against the Turkish import requirements then the shipment is rejected by MINFAL authorities or they allow special treatments under specific circumstances.