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Agreement with Russia Concerns Turkish Industry

by 5m Editor
26 March 2010, at 9:42a.m.

TURKEY - An agreement to supply Russia with poultry meat to fill the gap left by the present ban on US imports is causing concerns in Turkey. Domestic shortages of poultry meat and higher prices are predicted.

Russia's request for 500,000 tons of white meat from Turkey has caused disagreements among many in the sector, according to Hürriyet Daily News. While the government expects the move will further develop the country's agriculture, many sector players argue demand will far outstrip Turkish producers' ability to supply the meat and say such exports would increase domestic prices.

As Brazil and the United States, two main suppliers of poultry to Russia, face the possibility of losing the market due to 'excessive chlorine usage' in their products, Russia has begun turning to Turkey to satisfy its needs.

After coming to Turkey to prepare feasibility reports following inspections of poultry production facilities, committees from Russia have signed six contracts with Turkish producers over the last few months, with 11 more deals likely in the near future.

Negotiations for the imports began with a recent official visit by Turkish Prime Minister, Recep Tayyip Erdogan and State Minister, Zafer Çaglayan to Russia, along with the end of a Russian ban on poultry imports from Turkey on 1 February.

The new export prospects, however, have elicited varying reactions from Turkish authorities on the matter.

Russia's demand for an annual 500,000 tons is far beyond the current potential of poultry producers in Turkey, Ramazan Altintas, who is responsible for exports at poultry producer Seker Piliç, told the Hürriyet Daily News & Economic Review in an interview last week.

He said: "It does not seem possible to exceed 120,000 tons at the facilities in hand today."

Expecting a rise in white meat prices following the beginning of exports to Russia, Mr Altintas also said prices already increase in summer months; now, however, the prices could double because the exports would begin during these peak months.

Mehmet Sönmez, a local producer in the southern province of Antalya, said the diplomatic agreements with Russia have been made without an initial feasibility plan on the Turkish side to determine the strengths and weaknesses of the sector.

He said: "Let alone 500,000 tons, even 200,000 tons of poultry export will shake the domestic supply-demand balance in Turkey. There will be a substantial increase in the prices resulting from the decrease in the domestic supply with the start of the exportation."

When contacted, managers at Keskinoglu Tavukçuluk, one of the Turkish producers with whom Russia has signed a contract, were hesitant to address the concerns surrounding supply.

US exporters are reported to be anxious about Turkey. US producers have supplied up to 80 per cent of Russia's poultry imports in the past but this trade was slowed down because of reported chlorine usage. Now, however, US exporters, who are worried about ceding their market share to Turkish producers, have sought to emphasize that they have now halted chlorine usage.

Zuhal Dasdan, chairwoman of the White Meat Industrialists' Union, or BESD-BIR, however, said the reopening of the Russian market to US white meat exporters would not be an obstacle for Turkish exports to its northern neighbor.

Ms Dasdan, on the other hand, said it would be difficult to reach the volume of 500,000 tons even within 10 years.

Said Koca, managing director of Beypiliç, said the sustainability of trading relations with Russia was more important than the volume of the exports.

This year's projected export volume to Russia will be limited to 60,000 tons but the volume will be increased to 120,000 tons in coming years, according to a statement from government authorities that has temporarily relaxed concerns.

Further to price concerns, Turkish Agriculture Minister, Mehdi Eker, said in a recent speech that poultry exports to Russia would not affect domestic prices under any circumstances.

There was a clear difference between production for export and the supply for the domestic market, Minister Eker said, adding that modern facilities in Turkey have enough potential to meet the rising demand without disrupting the supply-demand balance.

Meanwhile, Hürriyet Daily News reports that maize growers are pleased that the negotiations with Russia have already led to a substantial rise in maize prices even before the beginning of any exports. An explosion in maize cultivation is very likely this year, according to sources within the sector.