Turkey Raises Grain Import Tariffs to 130%
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In Turkey, the Wheat area harvested for MY 2023/24 is projected to increase year-to-year by 350,000 hectares (HA) to 7.15 million HA. This prediction is based on the expectation that relatively stronger domestic Wheat prices will prompt farmers to plant more Wheat instead of cotton and sunflowers.
However, even with the sizeable increase in area harvested, Wheat production in MY 2023/24 is forecast to remain even with the previous year at 17.25 million metric tons (MMT), of which 3.0 MMT is expected to be durum Wheat. This phenomenon – a reduction in production volumes and an expansion in area harvested – is attributed to lower yields resulting from the lack of rain from last October to February. For the rest of the growing season (March-June), Post is assuming sufficient springtime rainfall and favorable weather conditions.
If drought conditions persist, overall production levels will slide lower. With 80 percent of the country’s Wheat and Barley grown under dryland farming, adequate and timely rains are critical to production. Irrigation is limited in much of the Wheat-growing parts of the country, and farmers with access to irrigation generally prefer to plant crops with higher yields, such as Corn and vegetables. The major Wheat production areas in Central Anatolia, Southeastern Anatolia, Thrace, Marmara, and the Cukurova region are spread throughout the country.
Last summer, the Turkish Grain Board (TMO) revised its MY 2022/23 purchase price for domestic Wheat to align it with international Wheat prices. TMO’s purchase price has remained the same at 6,450 TL/MT ($391/MT) for Anatolian Hard Red Milling Wheat (AKS), the domestic benchmark for milling Wheat and comparable to U.S. Hard Red Winter Wheat. For comparison, the current market price for AKS is about 8,000 TL/MT ($410/MT).
Grain Import Protection Policy in Turkey
According to an April 24 Presidential Decree, Turkey raised its import tariffs on Wheat, rye, oat, Barley, and Corn from zero to 130 percent starting May 1. This is the highest tariff on imported Grain have been since mid-2017; this new rate is the maximum MFN applied duty rate. Turkey has cut or eliminated tariffs on imported Grain for the last several years to fight food inflation. The new duties for Wheat, Barley, and Corn are more than the Government previously announced last December. According to industry contacts, these higher-than-expected Grain tariffs have created confusion amongst Turkish Grain traders.
Post suspects that the reason for the increase in tariffs is to protect local farmers from the prospects of cheaper imports. The current price of Black Sea milling Wheat has dropped to about $285/MT CIF, compared to $400/MT a year ago. By contrast, domestic milling Wheat trades at around $315/MT. This price gap will likely widen further since the Turkish Grain Board (TMO) is expected to soon raise its purchase price for domestic Wheat, possibly above $400/MT, to compensate farmers for rising input costs. From a policy perspective, this widening price spread calls into question the competitiveness of Turkey’s Wheat sector
These higher duties will put downward pressure on Grain imports (excluding transshipments) in MY 2023/24. Demand for imports will also likely slacken because of large carryover stocks purchased from January-April of the current marketing year when the import tariff was zero. According to the AgFlow data, Turkey imported 3.9 million tons of Wheat in Q1 2023. In March, the key suppliers were Russia (1.0 million tons), Ukraine (0.5 million tons), Romania (55,045 tons), and Australia (32,743 tons). Meantime, favorable spring rainfall in March and April has helped alleviate some of the effects of drought on domestic Grain production.
Other sources: USDA
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