Agriculture sector also profits from trade mission

ISTANBUL – Conducting trade with Turkey often also involves politics. And that counts even more for agricultural trade, as became apparent during the trade mission to Turkey of the Dutch Prime Minister Rutte this week. For the agricultural businessmen who were travelling with the mission, import taxes are still a problem to overcome.

It is busy at the Dutch consulate in Istanbul. Prime Minister Rutte and the new Minister for Foreign Trade and Development Aid, Lilianne Ploumen, are visiting, and along with them some sixty Dutch business men and women. Besides business representatives from the branches of medical technology, traffic safety and clean technology, agricultural companies also played an important role in the mission. One of the participants is a huge veal meat producer, the Van Drie Group.

During the meeting at the consulate several business deals are signed, closely observed by PM Rutte and Minister Ploumen. During those ceremonies Henny Swinkels, Director Corporate Affairs of Van Drie Group, has time for an interview. He is not signing any contracts on this trip, nor did he intend to. He is there purely to establish contact and to lobby for a more free meat trade between Turkey and the Netherlands. Swinkels: ‘I often join such missions, because I see it as an important investment in the future of Van Drie Group.’

Protect own production

Swinkels would love to conquer the Turkish market with his veal meat, but for now the circumstances don’t allow it. Swinkels: ‘The import tax on veal meat is 100%. That’s clear, isn’t it? But we would love to export to Turkey, a country where veal meat is considered a delicacy that is served on special occasions. There are 75 million people in this country, 75 million meat eaters; of course that’s an interesting market.’

Veal meat in an early stage

How big the demand in Turkey is for veal meat of high quality, he experienced when he ordered a veal schnitzel during one of the dinners this week. The quality was nothing special to write home about.  Swinkels: ‘It would be great if this 100% tax could be abolished, or at least lowered. We talked about that during a meeting with Deputy MP Babacan. He said he is proud that a company like ours wants to enter the Turkish market, but that he also has to protect Turkey’s own production. Understandable, but on the other hand: Turkey doesn’t produce enough so they eventually will have to get the meat elsewhere to meet the demand.’

That’s clearly a political matter, in which the company cannot directly get involved. That’s why, says Swinkels, it is so important that during this trade mission the government and the businesses cooperate. ‘Of course, the government doesn’t do business, but it does have the job of facilitating trade as well as possible. And that’s exactly what’s being done during this trip. In the meantime, the businesses can do their networking.’

Despite the obstacles on several points, agricultural trade between the Netherlands and Turkey is growing. According to figures from the Dutch Agriculture Ministry, in 2011 the Netherlands exported meat and meat by-products worth €8.415.000 to Turkey, up from €914.000 in 2009. In other fields of agriculture too there is growth: dairy exports rose in the same period from €8.879.000 to €1.4766.000.  Total exports in agriculture rose between 2009 and 2011 from €258.161.000 to 375.369.000. Imports from Turkey shouldn’t be disregarded either: they grew in the same period from €285.059.000 to €325.654.000, mainly in the trade in fruits, nuts and sugar.

Trade and aid

During the press conference Minister of Foreign Trade Lilianne Ploumen pointed out that there are also possibilities for Dutch companies in the field of high technology agriculture. ‘There is work being done to start great cooperative ventures that can make production go up’, she said. Asked for concrete results, Ploumen said it’s not the first aim of such a mission to sign as many business deals as possible: ‘As a Minister of Foreign Trade I have to be abroad more than I am in the Netherlands, and represent the Netherlands as well as possible for Dutch companies. A mission like this is part of that. Besides which, the new approach of the Ministry will be: combine aid and trade. Yes, even when it comes to Turkey. Turkey exports hazelnuts to the Netherlands, but there is still a lot of child labour in that industry. We want to halt that in cooperation with the Turkish government and the international union, the ILO.’

Whether the import taxes will be abolished or not, it’s too early to say. But Henny Swinkels of Van Drie Group is optimistic, and after a bit of pressure he dares to predict that he can start conquering the Turkish market in 2013. Swinkels: ‘No promises have been made, but I sense it in every meeting we have had. The demand is enormous, the Turkish government can’t deny that much longer. Besides, they are looking for foreign investors.’

Who knows, during the next trade mission he might be the one signing a contract and getting overwhelming applause from those present in Istanbul.

Turkey follows own course in agricultural policy

ISTANBUL – Within a few weeks, when the Islamic Feast of Sacrifice approaches, they will be shipped into Turkish harbours again: thousands of cows and sheep. Production in Turkey isn’t enough to meet the high demand during the Feast of Sacrifice. For those few weeks, Turkey gets closer to Europe, which demands that import restrictions that Turkey has for cattle be abolished.

The temporary easing of import restrictions on meat have nothing to do with demands of the European Union. That’s why they will most probably be re-imposed again some time after the Feast. Professor Erol Cakmak of TED University in the Turkish capital Ankara, an expert on Turkey’s agricultural policy, understands that perfectly: ‘The agricultural chapter in the accession talks between Turkey and the EU hasn’t been opened yet because of the disagreement about Cyprus. Nobody can say when the Cyprusissue will be solved, so it’s also unclear when the agricultural chapter will be opened. So why should Turkey now harmonize its policy with the EU, while its policy works for the domestic market?’

Two years ago, Turkey levied a 135% tax on imported cattle. That was reduced to 40% and is by now down to 30%. Bovine animals are mainly imported from SouthAmerica and countries close to Turkey, like Bulgaria. Sheep are mainly shipped in from Australia and NewZealand. The trade is intended to meet demand and to keep meat prices at reasonable levels.
They are much higher than the average European price: last year more than €12.50 per kilo for beef, almost €26 for a kilo of lamb. During the previous Feast of Sacrifice, last November, Turks used to joke about the high meat prices: ‘This year, we won’t slaughter animals but tomatoes’.

Good profits

Turkey’s economy is growing, despite the worldwide crisis, and in agriculture too things are going well, says professor Cakmak: ‘It’s even going so well that the sector is attracting private investors, including from abroad. That didn’t exist before, but nowadays it can make good profits.’
Also in the animal breeding sector foreign investors are no longer an exception. Especially in the West and the South of the country, for example, Argentinean companies are moving in seeking to profit from the 72 million Turkish meat eaters. ‘They settle here despite the insecurities that come with the Turkish policies’, says Professor Cakmak. ‘Meat will be imported for as long as the domestic market can’t meet the demand, nothing more. Turkey tries to manage the prices as much as possible. The idea is that the domestic prices shouldn’t be influenced too much by the prices on the international market.’

And that is against EU policy, which has tried to have the prices set as much as possible by market mechanisms. ‘Yes, in that respect, Turkey is drifting away from Europe’, says Cakmak. ‘But Turkey has that freedom. Don’t forget, the country went through a deep economic crisis more than ten years ago and recovered from that with help from the World Bank and by all sorts of reforms, including in agriculture.’ Since 2009 the interference of the World Bank is over and Turkey maps out its own plan. That includes agricultural subsidies: as much as 75% to 80% of production receives tariff support, a percentage that is contrarily decreasing in the EU.

No problem, says Cakmak: ‘It is not so difficult to adjust the agricultural policy when the time is right’, referring to a realistic prospect on EU accession, including an accession date. ‘The EU tends to solve these things with new members. Just like the EU did with earlier new members whose agricultural policy was very different from the EU’s, like Poland and Romania. So I’m confident the same can be done with Turkey.’

Model country

He remarks how Turkey has over the last year been seen as a model country, ever since the start of the Arab Spring. What has that to do with agriculture policies? ‘Not too much, you would say’, he laughs. ‘But really, it’s amazing how many requests I get to speak about Turkey’s agricultural policy. I travel a lot to NorthAfrica and the Middle East. Turkey matters in the region, apparently they want to know how Turkey outlines its policies, including on agriculture.’

And that is: on its own. Just like the foreign policy of the country, which doesn’t spinelessly bow to EU wishes or the interests of its good friend the United States. Cakmak points out that it’s also no sure bet to adjust to the EU when it comes to agriculture. He smiles and says: ‘Do you know how unstable European agricultural policy is? How can Turkey adjust to rules that are being changed constantly? That’s like aiming at a moving target.’