Opinion

Turkish Grains and Cereal Import Tariffs Brought Down to Zero

Turkiye
Regulation & Compliances
Market & Price Trends
In efforts to avoid massive inflation in staple food prices, custom duties on cereals and grains have been brought down to zero until the end of this year. The decrease in duties is expected to bring an even steadier supply of imports to the country, where grain imports have already been climbing to a ten-year high in 2019/20.

In efforts to avoid massive inflation in staple food prices, customs duties on cereals and grains have been brought down to zero until the end of this year. This had been one of several implementations by the government this year, in which a quota of grains was allowed to be imported duty-free in April. Previously, wheat, barley, and corn imports held duties of 45 percent, 35 percent, and 25 percent respectively. The elimination of duties is expected to bring an even steadier supply of imports to the country, where grain imports have already been climbing to a ten-year high in 2019/20.

Depreciation, Increased Imports from China cause Price Woes

The Turkish economy has been limping, as evident in the lira’s depreciation against the dollar and the contraction of per capita income (PCI). Consumers have been more reliant on cheaper sources of protein like wheat instead of meat, where imports for grains have increased by 85% from 2018/19 to 2019/20 at 12.6 million tons, according to the International Grains Council (IGC). In addition, producers have been struggling with the increased costs for production prices for compound fertilizers doubled from 2018 to 2020 (USDA).

In order to maintain an adequate price level for producers in the midst of the currency depreciation, the Turkish Grain Board implemented price interventions in May, which had common wheat prices to increase from TRY 1,350 to TRY 1,650 per MT, durum wheat from TRY 1,450 to TRY 1,800 per MT, and barley from TRY 1,100 to TRY 1,275 per MT. The Chinese market has also affected global prices, as China has been on an import spree for grains and cereals in order to support its livestock, which has in turn caused Turkish grain prices to spike even higher.

Outlook for Turkish Cereals and Grains

Due to Turkey’s increase in imports as well as a good harvest expected for the 2020/21 season, imports for cereals will be at approximately 11.5 million MT, which is a decrease of 15% from the previous year. The decrease is even starker compared to the 2019/20 season which had unusually high amounts of imports, but imports for the upcoming season will still be 25% higher than average, according to the USDA.

Graph 1. Opening stock, ending stock, and imports for wheat, maize, and barley.

Source: IGC

The opening stock for 2020/21 will be at the highest in the last decade, and consequently, imports for wheat and maize for 2020/21 will be less than the previous season. Wheat imports, which will be approximately 500K MT more in 2020/21, will decrease due to better domestic production in the current harvest and a stall in exports. Barley, on the other hand, is set to increase in imports by more than 50% from the last season, from 0.2 million MT to 0.7 million MT, according to the IGC. Maize imports will only be slightly down from 2019/20, as it is used mostly for the feed sector and imports for the upcoming season will be necessary in order to keep domestic corn prices down.

Sources

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