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Turkey fails to seize opportunities in Russia
As Russia seeks new food suppliers after imposing an embargo on Western food imports, Turkey seems to be missing the opportunity to increase agricultural exports to its northern neighbor, according to HortiBiz.
The Turkish Exporters Assembly (TİM) announced on Monday that the country's exports to Russia fell to $5.6 billion in the first 11 months of this year, while the figure for the previous year was $6.5 billion. Agricultural exports are Turkey's main export to Russia, comprising 25 percent of the products it sells to Russia.
Russia imposed a ban on food imports from the US and the EU in August in retaliation for sanctions imposed on Moscow due to its annexation of Crimea. Countries such as Turkey that are not abiding by the sanctions of Western countries against Russia are now competing to become Russia's new food supplier.
Süleyman Yaşar, an economist and former vice president of the Prime Ministry's Privatization Administration (ÖİB) told Sunday's Zaman that there are major obstacles to increasing Turkish exports to Russia and filling the vacuum left after the West's exodus from the Russian market.
Yaşar said that the 40 percent slide of the ruble due to Western sanctions led to a surge in import prices in Russia. As a result, Russians began to find Turkish products expensive and instead prefer cheaper products from other countries, Yaşar continued.
Yaşar added that there is also an abnormal increase in the price of food in Turkey which puts Turkish exporters at a disadvantage when competing with Iran, China, Africa or Latin America.
“Under these circumstances, Russian food importers prefer the products of countries in Africa or Latin America rather than Turkey,” Yaşar noted.
According to figures from the Food and Agriculture Organization (FAO) of the United Nations (UN), overall food inflation stood at 3.2 percent in October, while this figure was 12.5 percent for Turkey.
Yaşar also highlighted that another impediment to increasing Turkish exports to Russia is the limitation on the number of trucks going from Turkey to Russia to 9,000.
He urged Turkey to utilize the platform of the Organization of the Black Sea Economic Cooperation (BSEC) to boost commerce with Russia. The BSEC is a regional economic organization formed in 1992 by 11 countries from the Balkan and Caucasia regions, including Turkey and Russia.
Yaşar stressed that unlike then-President Turgut Özal, who was in office when the BSEC was founded, the ruling Justice and Development Party (AK Party) is not aware of the potential of the organization in terms of stimulating commerce not only with Russia, but also with the other countries in the Balkan and Caucasia regions.
Yaşar added that Turkey faces a dilemma in deciding whether to increase the export of agricultural products: “When Turkey decides to export its already limited agricultural products it faces a shortage of those products in the internal market, eventually leading to food price inflation in Turkey.”
Yaşar criticized the government for not allocating the completion of the Southeastern Anatolia Project (GAP) project in its budget. According to him, this would help Turkey increase arable land, enabling the country to raise its agricultural production by 300 percent.
“The GAP project is overlooked by the government, which preferred instead to build a luxurious presidential palace and buy an expensive presidential jet,” Yaşar said.
Initiated in 1970, GAP is the largest water and hydroelectric project in the history of the Turkish republic and aims to increase arable land in the southeastern region.
Ali Kavak, the President of the Mediterranean Fresh Fruit and Vegetable Exporters' Union (AKİB), told Sunday's Zaman that the decline in food prices in Russia resulted in a financial loss to Turkish exporters of agricultural products.
“There was an overflow of fruits and vegetables to the Russian market from Turkey which led to a sharp decline in their prices in Russia. As a result, Turkish exporters who had to sell their products at low prices suffered financial loss,” said Kavak.
Kavak added that the overflow of farm products from Turkey to Russia had the opposite effect in Turkey, a 60 percent increase in inflation.
“Turkish food producers should not have channeled all their products to Russia. In the end, Turkey ends up with high inflation,” Kavak added.
Kavak said that Turkey exported fresh fruits and vegetables worth $1.7 billion in first 10 months of 2014, and 44 percent of these exports were by members of the AKİB.