Required Report - public distribution

**Date:** 9/14/2006

**GAIN Report Number:** TU6038

TU6038

**Turkey**

**Livestock and Products**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Ralph Gifford, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Unal Sarigedik, Agricultural Specialist

**Report Highlights:**

Despite the government programs to assist producers, the Turkish
livestock sector continues to struggle. The restrictive import regime
and the high production costs, which are primarily due to high feed
costs, create obstacles for development of the sector. Although various
types of support programs have been announced in recent years, most of
these have been social rather than economic programs. Turkey maintains a
restrictive import policy allowing only imports of dairy and beef
breeding cattle from non-BSE countries. Therefore, Turkey allows imports
of breeding cattle from only three countries. Despite the demand for
high quality beef in Turkey, the GOVERNMENT does not permit imports of
beef or veal in order to protect its domestic industry.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Ankara \[TU1\]

\[TU\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Cattle Production 4](#cattle-production)

[PSD Table for Cattle 5](#psd-table-for-cattle)

[Cattle Production Policy 5](#cattle-production-policy)

[Cattle Trade 7](#cattle-trade)

[Cattle Marketing 7](#cattle-marketing)

[Cattle Tariff Quotas 7](#cattle-tariff-quotas)

[Cattle Stocks 8](#cattle-stocks)

[Beef and Veal Production 8](#beef-and-veal-production)

[Beef and Veal Production Policy 8](#beef-and-veal-production-policy)

[Beef and Veal Consumption 8](#beef-and-veal-consumption)

[PSD Table for Beef and Veal 9](#psd-table-for-beef-and-veal)

[The Effect of Avian Influenza on Beef Prices
9](#the-effect-of-avian-influenza-on-beef-prices)

[Beef and Veal Trade 10](#beef-and-veal-trade)

[Beef Tariff Quota 10](#beef-tariff-quota)

[Beef and Veal Stocks 10](#beef-and-veal-stocks)

[Livestock Genetics 10](#livestock-genetics)

[Tallow 11](#tallow)

[Turkey's Tallow Imports 12](#turkeys-tallow-imports)

# Executive Summary

Despite government programs to assist producers, the Turkish livestock
sector continues to struggle from declining cattle inventories and a
restrictive import regime that limits access to breeding cattle. At the
same time, high feed costs increase the cost of production. Each new
Turkish government has announced some type of support program although
most were social rather than economic programs. Due to a stable increase
in population, consumption of beef remains rather steady despite price
increases. Turkey maintains a very restrictive import policy allowing
only imports of dairy and beef breeding stock. As way of protecting its
domestic industry, the government does not permit the importation of
beef or veal despite demand for high quality beef, particularly from the
tourism industry.

The most significant problem of the livestock sector in Turkey is animal
nutrition, which makes cattle more susceptible to diseases. Rations are
often inadequate and expensive. Most livestock generally are grazed on
public lands on a first-come first-serve basis and are provided with
little or no additional supplements. Efforts to support crop production
have resulted in domestic grain prices that are considerably above the
world market prices.

Declining meat supplies have significantly increased meat prices in
recent years. Higher profits have attracted investments in the sector.
Large private sector entities have tried to establish commercial farms
primarily for dairy production along with some feedlots in the western
parts of the country. These investments have increased interest in U.S.
livestock genetics in recent years.

Turkey maintains very restrictive import regulations for live animals,
allowing imports of dairy and beef breeding cattle from only three
countries, Uruguay, Australia and New Zealand. U.S. exports to Turkey
were banned in December 2003 due to the BSE incident in the State of
Washington. USDA and the veterinary authorities of the Turkish Ministry
of Agriculture agreed on a health certificate that imports of breeding
cattle would be possible from those states that were free from BSE.
However, Turkish authorities did not remove the ban after the EU grouped
the United States as a Category 3 country since Turkey has begun
adopting the EU regulations.

Since imports of live animals from the EU countries are also banned due
to BSE, Turkey is having difficulty finding high-quality breeding cattle
to import. In order to import breeding cattle from Uruguay, Turkish
officials had to change its requirements. Turkey imported 955 pregnant
heifers in 2005 and an additional 412 pregnant heifers in January and
February 2006 from Uruguay. Turkey stopped breeding cattle imports from
Sweden on March 7, 2006 due to a BSE incident in this country. Importers
can import breeding cattle only from Australia and New Zealand in
addition to Uruguay now. The government allows the imports of breeding
cattle and livestock genetics with zero import duty.

Turkey imports significant quantities of tallow primarily for soap
production. The United States has been a major supplier of tallow
providing more than 90 percent of demand.

# Cattle Production

Turkey's cattle inventories are projected to continue to decrease in MY
2007 even though the GOVERNMENT is providing support programs to the
sector. However, the programs are encouraging individual farmers,
especially larger companies to invest in the sector in order to improve
yields.

Turkey has a rather large number of cattle; however, the majority of
cattle in Turkey are low yielding local breeds, which are grazed on
pastures and meadows. The average farm size (about 6 Ha) and herd size
(about 5 cows) have limited improvements. Turkey's growing human
population and improvement in the economic sector, especially in the
tourism industry, have increased the demand for meat and milk. This has
encouraged investment in modern dairy farms and feedlots. Larger
investors have established larger commercial farms mostly in the western
and central regions. Most dairy and beef production (estimated to be
about 75 percent) is still done on small farms. Per capita consumption
of milk and milk products is estimated around 150 liters and beef
consumption is estimated about nine kilograms in Turkey.

Recent Turkish governments have encouraged owners of larger farms to
import breeding cattle. However, only those farmers who have at least
100 head can receive permission to import. Data on herd size is not
published, but probably no more than 10 percent of producers meet this
criterion. Milk and meat yields on these farms are generally higher than
the norm since they can provide better management and health care.
Nationwide average milk yield is estimated about 2,000 MT per cow and
carcass beef yield is estimated nearly 170 kilograms per cattle in
Turkey. Milk yields are estimated around 4 MT and carcass beef yield is
estimated around 300 kilograms on more modern farms.

Investments in the dairy sector have increased in recent years due to
higher milk prices. The prices producers receive vary a lot depending
upon the quality and amount supplied. Milk prices also vary a lot
throughout the year. They are relatively low in the spring and summer
but high in the fall and winter. Smaller farmers receive lower prices
due to the lower milk quality on their farms. Smaller farmers usually
sell mostly to local yogurt and cheese processors since larger
processors are not interested in collecting milk from these farms. Milk
prices currently are between YTL 0.45 and YTL 0.53 per liter depending
upon the quantity, quality, and availability of the cooling tanks. Small
producers are currently receiving about YTL 0.45 (USD 0.30) per liter
while large commercial farms are receiving about YTL 0.53 (USD 0.35) per
liter because they can produce high quality milk cooled in cooling tanks
with steadily larger quantities. These prices are higher than they were
a year ago (YTL 0.35 and YTL 0.45 per liter, respectively) even though
they have not been changed since last January 2006.

The government is also providing premiums to milk producers. Milk
producers receive YTL 0.055 premium per liter if they sell their milk to
modern processing facilities and if they are members of official
producers organizations and only YTL 0.03 per liter if they are not
members. Milk producers also receive YTL 0.015 per liter additional
premium if they have registered cattle.

Turkey's beef sector has not developed as well as its dairy sector.
Specialized beef breeds are not yet popular in Turkey. Although Angus,
Hereford and Simmental breeds were imported under USDA's Quality Sample
Program several years ago, they have not gained in popularity.
Dual-purpose animals, such as Brown Swiss, are very common. Beef quality
is not considered high and supplies are inadequate particularly for
Turkey's five star hotels and its growing tourism sector.

Turkey vaccinates for Foot and Mouth disease in all parts of the country
except the Thrace region, which has been declared free of Brucellosis
and Tuberculosis and which receives support from the government to
maintain that status. Turkey's geographic locations, and uncontrolled
animal movement particularly in the East and Southeastern borders and
especially during the religious holidays, are the primary reasons for
the spread of diseases among livestock in Turkey.

## PSD Table for Cattle

+--------------+------+-------+-------+-------+-------+-------+-------+
| Turkey       |      |       |       |       |       |       |       |
|              |      |       |       |       |       |       |       |
| Animal       |      |       |       |       |       |       |       |
| Numbers,     |      |       |       |       |       |       |       |
| Cattle       |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
|              | **20 | *     | **2   | **    | **2   | **    | **    |
|              | 05** | *Revi | 006** | Estim | 007** | Forec | UOM** |
|              |      | sed** |       | ate** |       | ast** |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
|              | **   | *     | *     | *     | *     | *     |       |
|              | USDA | *Post | *USDA | *Post | *USDA | *Post |       |
|              | Of   | Estim | Offic | Estim | Offic | Estim |       |
|              | fici | ate** | ial** | ate** | ial** | ate** |       |
|              | al** |       |       |       |       |       |       |
|              |      | *     | *     | *     | *     | *     |       |
|              | **\  | *\[Ne | *\[Ol | *\[Ne | *\[Ol | *\[Ne |       |
|              | [Old | w\]** | d\]** | w\]** | d\]** | w\]** |       |
|              | \]** |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
| ###### Marke |      | 01    |       | 01    |       | 01    | MM    |
| t Year Begin |      | /2005 |       | /2006 |       | /2007 | /YYYY |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Total      | 1    | 10500 | 10300 | 10300 | 10100 | 10100 | 1000  |
| Cattle Beg.  | 0500 |       |       |       |       |       | HEAD  |
| Stks**       |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Dairy Cows | 3850 | 3850  | 3750  | 3750  | 0     | 3700  | 1000  |
| Beg. Stks**  |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Beef Cows  | 2900 | 2900  | 2850  | 2850  | 0     | 2800  | 1000  |
| Beg.         |      |       |       |       |       |       | HEAD  |
| Stocks**     |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Production | 3800 | 3800  | 3700  | 3700  | 0     | 3650  | 1000  |
| (Calf        |      |       |       |       |       |       | HEAD  |
| Crop)**      |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Intra EC   | 0    | 0     | 0     | 0     | 0     | 0     | 1000  |
| Imports**    |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Total      | 2    | 2     | 0     | 2     | 0     | 0     | 1000  |
| Imports**    |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **TOTAL      | 2    | 2     | 0     | 2     | 0     | 0     | 1000  |
| Imports**    |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **TOTAL      | 1    | 14302 | 14000 | 14002 | 10100 | 13750 | 1000  |
| SUPPLY**     | 4302 |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Intra EC   | 0    | 0     | 0     | 0     | 0     | 0     | 1000  |
| Exports**    |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Total      | 0    | 0     | 0     | 0     | 0     | 0     | 1000  |
| Exports**    |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **TOTAL      | 0    | 0     | 0     | 0     | 0     | 0     | 1000  |
| Exports**    |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Cow        | 0    | 0     | 0     | 0     | 0     | 0     | 1000  |
| Slaughter**  |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Calf       | 1950 | 1950  | 1900  | 1900  | 0     | 1850  | 1000  |
| Slaughter**  |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Other      | 1900 | 1900  | 1850  | 1850  | 0     | 1800  | 1000  |
| Slaughter**  |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Total      | 3850 | 3850  | 3750  | 3750  | 0     | 3650  | 1000  |
| Slaughter**  |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Loss**     | 152  | 152   | 150   | 152   | 0     | 100   | 1000  |
|              |      |       |       |       |       |       | HEAD  |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Ending     | 1    | 10300 | 10100 | 10100 | 0     | 10000 | 1000  |
| I            | 0300 |       |       |       |       |       | HEAD  |
| nventories** |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **TOTAL      | 1    | 14302 | 14000 | 14002 | 0     | 13750 | 1000  |
| DI           | 4302 |       |       |       |       |       | HEAD  |
| STRIBUTION** |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Calendar   | 0    | 0     | 0     | 0     | 0     | 0     | 1000  |
| Yr. Imp.     |      |       |       |       |       |       | HEAD  |
| from U.S.**  |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+
| **Calendar   | 0    | 0     | 0     | 0     | 0     | 0     | 1000  |
| Yr. Exp. to  |      |       |       |       |       |       | HEAD  |
| U.S.**       |      |       |       |       |       |       |       |
+--------------+------+-------+-------+-------+-------+-------+-------+

# Cattle Production Policy

The Turkish government issued another decree (2006/9922) on January 17,
2006 to make some minor amendments to the previous decree (2005/8503
issued in the Official Gazette on February 21, 2005) to support its
livestock sector. The main objective of the decree was the same as
before only some clarifications were amended to the new decree. The
primary objective of the previous decree was to increase inventories, to
create jobs and income for producers, and to increase the availability
of quality meat at reasonable prices for consumers. The original decree
issued in February 2005 can be obtained in the 2005 Livestock and
Products Annual Report (TU5034).

Table 1 summarizes the support and premiums provided by the GOVERNMENT
to livestock and products producers in 2006.

## Table 1. The Amount of Support by Activity in 2006

+---+-------------------+------------------------------+---------------+
|   | Type of Support   | Beneficiary                  | Amount        |
|   |                   |                              | (YTL)/Unit    |
+---+-------------------+------------------------------+---------------+
| 1 | Fodder crop       | Alfalfa                      | 1300/hectare  |
|   | production 1/     |                              |               |
|   |                   | Sainfoin                     | 800/hectare   |
|   |                   |                              |               |
|   |                   | One year crops               | 500/hectare   |
|   |                   |                              |               |
|   |                   | One year crops for silage    | 550/hectare   |
|   |                   |                              |               |
|   |                   | Corn for Silage              | 600/hectare   |
|   |                   |                              |               |
|   |                   | Pasture and meadow           | 1000/hectare  |
+---+-------------------+------------------------------+---------------+
| 2 | Certified fodder  | Alfalfa                      | 1.50/Kg.      |
|   | crop seed         |                              |               |
|   | production        | Sainfoin, vetch-Hungarian    | 0.50/Kg.      |
|   |                   | vetch, fodder beets & fodder |               |
|   |                   | turnip                       | 0.25/Kg.      |
|   |                   |                              |               |
|   |                   | Others                       |               |
+---+-------------------+------------------------------+---------------+
| 3 | Breeding heifers  | Registered                   | 550/Head      |
|   |                   |                              |               |
|   |                   | Certified                    | 275/Head      |
+---+-------------------+------------------------------+---------------+
| 4 | Artificial        | Less developed regions       | 36/Head       |
|   | Insemination      |                              |               |
|   |                   | Others                       | 26/Head       |
+---+-------------------+------------------------------+---------------+
| 5 | Milk incentive    | Producer association members | 0.055/Liter   |
|   | premium 2/        |                              |               |
|   |                   | Others                       | 0.03/Liter    |
+---+-------------------+------------------------------+---------------+
| 6 | Calves were born  | Registered                   | 140/Head      |
|   |                   |                              |               |
|   | through A. I.     | Pre registered               | 80/Head       |
+---+-------------------+------------------------------+---------------+
| 7 | Disease Free      | Disease free cattle          | 50/Head       |
|   | Producers         |                              |               |
+---+-------------------+------------------------------+---------------+
| 8 | Vaccination       | Firms that vaccinate cattle  | 0.75/Head     |
|   | Support           | against Foot & Mouth at      |               |
|   |                   | least 80 % of the village    | 0.50/Head     |
|   |                   | level                        |               |
|   |                   |                              | 1.00/Head     |
|   |                   | Firms that vaccinate cattle  |               |
|   |                   | against Foot & Mouth less    | 0.25/Head     |
|   |                   | than 80 % of the village     |               |
|   |                   | level                        |               |
|   |                   |                              |               |
|   |                   | Cattle Brucellosis           |               |
|   |                   |                              |               |
|   |                   | Anthrax                      |               |
+---+-------------------+------------------------------+---------------+
| 9 | Milking hygiene   | Milking parlor and cooling   | 40 %/farm     |
|   | and milk quality  | tank                         |               |
|   | 3/                |                              | 40 %/farm     |
|   |                   | Manure ditch                 |               |
+---+-------------------+------------------------------+---------------+
| 1 | Protection of     | Large ruminants              | 325/Head      |
| 0 | Livestock Gene    |                              |               |
|   | Sources           |                              |               |
+---+-------------------+------------------------------+---------------+
| 1 | Livestock         | Registration and ear tag     | 2/Head        |
| 1 | Identification    |                              |               |
|   | System            |                              |               |
+---+-------------------+------------------------------+---------------+

1/ Additional 5 % premium for producers use certified and 10 percent
additional premium in less developed regions

2/ Members of producer association receive additional YTL 0.015 premium
if their cattle are registered

3/ The upper limits are YTL 200,000 (value of the receipt) for milking
parlor and YTL 100,000 for the manure ditch (total investment)

\[USD 1.00 is currently about YTL 1.45.\]

The government decreased the support for the livestock sector in 2006,
which was announced as YTL 550 million (about USD 365 million) compared
to YTL 622 million (about USD 500 million) in 2005. This amount has not
yet been divided into the categories that will be used. The Ministry of
Agriculture (MARA) can use this amount as it becomes necessary. MARA
officials are stating that this amount is not sufficient and have
requested an additional allowance yet it is not yet clear this request
will be honored.

# Cattle Trade

The Turkish Ministry of Agriculture permits only imports of breeding
dairy or beef cattle as well as animal genetics. Only farmers, who have
an established farm and need at least 100 head of breeding cattle, can
receive permission to import. Turkey imported 967 pregnant heifers from
Uruguay in 2005. Imports from Uruguay stopped due to some other health
problems after these imports. A group of vets visited Uruguay this
spring and had an agreement on new health conditions, thus, breeding
cattle imports from Uruguay is again possible now. A total of 1,922
breeding cattle were imported in 2005 from two countries. Of this total,
967 were from Uruguay and 955 were from Sweden. An additional 412 were
imported from Sweden last January and February before the BSE incidence,
which happened on March 7, 2006, and Turkey stopped breeding cattle
imports from Sweden soon after that date.

There are rumors that at least two companies are interested in importing
a minimum of 8,000 head of breeding cattle from Uruguay. Even though
they are not fully satisfied with the quality of the animals, these
companies plan to do so since Uruguay is one of the three countries in
the world that Turkey allows imports of live cattle. The other two
countries are Australia and New Zealand. The price of pregnant heifers
are expected to be significantly lower, somewhere between USD 1,600 CIF
-- USD 1,900 CIF, which is another reason importers prefer to import
from Uruguay. The price of better quality Australian cattle is cited as
being about USD 2,900 CIF.

From time to time, Turkish press reports indicate that the government is
studying ways to remove the ban on breeding cattle imports from the EU
countries; however, there has not yet been any official decision made on
this.

Exports of livestock are also generally prohibited. Only slaughtered
male or infertile female cattle (weighing at least 225 kilograms for
local breeds and 300 kilograms for crossbreeds) may be exported with a
license from the Ministry of Agriculture.

# Cattle Marketing

There are no specialized beef breeds in Turkey despite an increasing
demand for high quality beef. U.S. beef breeds were introduced to Turkey
under a Quality Samples Program (QSP) six years ago. Most Turks are
familiar with the genetic superiority of the U.S. cattle and growing
number of producers are interested in U.S. livestock and genetics. U.S.
cattle exporters have been active in promoting sales of U.S. cattle to
Turkey in the past. The U.S. Grains Council, the American Soybean
Association, and the National Renderers' Association have visited Turkey
and organized seminars and training programs to assist the livestock
sector.

# Cattle Tariff Quotas

The EU and Turkey signed a bilateral agreement in May 1998, under which
Turkey would provide the EU access for cattle, beef, and dairy products.
The Ministry of Agriculture has continued to refuse to issue import
permits for beef for various reasons, including the BSE outbreak in
Europe. The EU has retaliated by not honoring its TRQ with Turkey for
some products and has created obstacles on other agricultural imports.
This issue remains, as one of the problems that need to be solved before
Turkey can progress in the EU membership negotiations.

The official import duties for breeding, feeder, and slaughter cattle,
as announced in the 2006 Import Regime, which was the same in the 2005
Import Regime, are as follows:

  ----------------- ----------------- ----------------- -----------------
  Tariff Number     Description       Import Duty       Other Information

  0102.10           Breeding cattle   0                 For all origins

  0102.90 (\*)      Feeder and        135 percent of    For all origins
                    slaughter cattle  the CIF value     
  ----------------- ----------------- ----------------- -----------------

(\*) However, no permits are issued since feeder and slaughter cattle
imports are banned.

# Cattle Stocks

The number of cattle, which has been declining in recent decades, is
also projected to continue to decline in 2007, but at a slower pace, due
to higher consumption compared to production.

# Beef and Veal Production

Beef production in 2007 is expected to be about the same as it was in
2006, even though there is a slight decline in the number of cattle
slaughtered parallel to the reduced cattle inventories. This is the
result of the expected improvement in carcass yields. The beef industry
traditionally uses dual-purpose cattle, such as Brown Swiss, most of
which are grass fed. Feedlots have not been traditionally utilized in
Turkey since most herds are small. However, the number of feedlots has
been increasing because high beef prices are attracting investments by
particularly large private companies in recent years. Since imports of
feeder and slaughter cattle are not allowed, investors must meet their
needs with low-quality feeder cattle from the domestic market. It is
expected that the demand for higher quality beef breeds will increase
given the growth in incomes and tourism.

Nearly all of Turkey's commercial slaughterhouses and packing plants,
except one, are either owned privately or by the municipalities. The
only public organization is the Meat and Fish Corporation (EBK), which
was a major player in the market in the past but now handles less than
three percent of production.

# Beef and Veal Production Policy

The government announced a support program for meat producers in 2004.
Male animals with a minimum 190-kilogram of carcass weight were eligible
for the support. The amount of support was first announced as YTL 1 per
kilogram of carcass weight, but later this amount was reduced to YTL .5
per kilogram. This support has stopped because the government has not
announced any premium since then even though it was announced earlier
that support for meat production would continue in between 2005 and
2010.

# Beef and Veal Consumption

There is a high rate of migration from rural to the urban areas in
Turkey and about two thirds of the population lives in the urban areas
now. As a result, meat consumption has shifted from lamb, mutton, and
goat to beef, veal and poultry due to changing tastes and costs.
Domestic beef consumption decreased in recent years due to reduced
animal supply, high rate of inflation, increased beef prices, reduced
incomes due to the economic crisis in the near past, and the BSE
outbreak in the world. Beef consumption is estimated at nearly 9
kilograms per capita in Turkey.

Total beef consumption is projected to stabilize in 2007, parallel to
the production. Since the population is increasing, this implies that
there will be further increases in beef prices. The retail prices of
deboned beef are about YTL 15.00 (about USD 10.00) a kilogram, chopped
beef are about YTL 17.00 (about USD 11.30) per kilogram, and tender loin
and higher grades are YTL 24.00 (about USD 16.00) per kilogram. A year
ago, these prices were around YTL 13.00, YTL 16.00, and YTL 22.00,
respectively.

The tourism industry is the fastest growing sector in Turkey.
Expectations for 2007 and afterwards are even more promising. The
economy is also showing signs of growth. As a result, meat prices are
expected to continue to increase. Smuggled cattle, which were meeting
part of the increased demand, have been taken under control in recent
months. However, it is difficult to keep a tight control on this for a
long term due to the geographical and political nature on the borders in
the east and southeast.

## PSD Table for Beef and Veal

+-------------+-------+-------+-------+-------+-------+-----+---------+
| Turkey      |       |       |       |       |       |     |         |
|             |       |       |       |       |       |     |         |
| Meat, Beef  |       |       |       |       |       |     |         |
| and Veal    |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
|             | **2   | *     | **2   | **    | **2   | **F | ####    |
|             | 005** | *Revi | 006** | Estim | 007** | ore | ### UOM |
|             |       | sed** |       | ate** |       | cas |         |
|             |       |       |       |       |       | t** |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
|             | **U   | **P   | *     | **P   | **U   | **  |         |
|             | SDA** | ost** | *USDA | ost** | SDA** | Pos |         |
|             |       |       | Offic |       |       | t** |         |
|             | **    | **    | ial** | **    | **    |     |         |
|             | Offic | Estim |       | Estim | Offic | **E |         |
|             | ial** | ate** | *     | ate** | ial** | sti |         |
|             |       |       | *\[Ol |       |       | mat |         |
|             | *     | *     | d\]** | *     | *     | e** |         |
|             | *\[Ol | *\[Ne |       | *\[Ne | *\[Ol |     |         |
|             | d\]** | w\]** |       | w\]** | d\]** | **  |         |
|             |       |       |       |       |       | \[N |         |
|             |       |       |       |       |       | ew\ |         |
|             |       |       |       |       |       | ]** |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| ##          |       | 01    |       | 01    |       | 0   | MM/YYYY |
| #### Market |       | /2005 |       | /2006 |       | 1/2 |         |
|  Year Begin |       |       |       |       |       | 007 |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Slaughter | 3850  | 3850  | 3750  | 3750  | 0     | 0   | 1000    |
| (R          |       |       |       |       |       |     | HEAD    |
| eference)** |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Beginning | 38    | 38    | 33    | 33    | 28    | 28  | 1000 MT |
| Stocks**    |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **P         | 620   | 620   | 615   | 615   | 0     | 615 | 1000 MT |
| roduction** |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Intra EC  | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Imports**   |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Total     | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Imports**   |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **TOTAL     | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Imports**   |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **TOTAL     | 658   | 658   | 648   | 648   | 28    | 643 | 1000 MT |
| SUPPLY**    |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Intra EC  | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Exports**   |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Total     | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Exports**   |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **TOTAL     | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Exports**   |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Human     | 625   | 625   | 620   | 620   | 0     | 620 | 1000 MT |
| Dom.        |       |       |       |       |       |     | CWE     |
| Co          |       |       |       |       |       |     |         |
| nsumption** |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Other     | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Use,        |       |       |       |       |       |     | CWE     |
| Losses**    |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **TOTAL     | 625   | 625   | 620   | 620   | 0     | 620 | 1000 MT |
| Dom.        |       |       |       |       |       |     | CWE     |
| Co          |       |       |       |       |       |     |         |
| nsumption** |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Ending    | 33    | 33    | 28    | 28    | 0     | 23  | 1000 MT |
| Stocks**    |       |       |       |       |       |     | CWE     |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **TOTAL     | 658   | 658   | 648   | 648   | 0     | 643 | 1000 MT |
| DIS         |       |       |       |       |       |     | CWE     |
| TRIBUTION** |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Calendar  | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Yr. Imp.    |       |       |       |       |       |     | CWE     |
| from U.S.** |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+
| **Calendar  | 0     | 0     | 0     | 0     | 0     | 0   | 1000 MT |
| Yr. Exp. to |       |       |       |       |       |     | CWE     |
| U.S.**      |       |       |       |       |       |     |         |
+-------------+-------+-------+-------+-------+-------+-----+---------+

# The Effect of Avian Influenza on Beef Prices

Turkey had to fight against AI outbreak since last October. The AI
outbreak first occurred in the south of the Marmara region. Only one
turkey farm was affected. The Ministry of Agriculture and the private
poultry sector were well prepared in advance because major poultry
producers were in or around this region. As a result this outbreak did
not affect poultry consumption and beef prices significantly.

Turkey had another and much bigger AI outbreak around the New Year. It
was spread in many parts of the country this time and lasted longer.
Many people stopped consuming poultry, and as a result, poultry
consumption dropped immediately by about 90 percent. Some people tried
to switch to red meat but most people switched to fish. Red meat prices
were increased by about 20 percent during the first month after the
outbreak. Increase in the meat prices discouraged consumers and, thus,
red meat consumption was decreased back again. During the first three
months after the outbreak, starting in mid January, Turkey had an
extremely high sea fish production. Farm fish production and this high
sea fish production assisted Turkish consumers to obtain their protein
needs and kept the red meat prices within logical levels. Turkish people
are very fond of picnics and poultry is the most favored food on the
picnics. Poultry consumption bounced back with the spring and both
poultry and red meat consumption turned totally back to normal levels.
Poultry prices, which dropped by about 50 percent during the crisis,
also helped red meat prices to not increase any further. As a result,
red meat prices are back to normal levels, which are still higher than
the prices in the U.S. and EU countries.

# Beef and Veal Trade

The government protects its meat and dairy sectors by maintaining
non-tariff barriers and very high import duties on meat and dairy
products. Turkey has had a ban on imports of meat and meat products
since 1996. As a result, no regulation exists on meat and meat products
imports. Turkey does not issue import licenses (control certificates)
for these products. The Trade Matrix was not provided since there was no
beef and veal trade in MY 2005 and during the first five months in 2006.

# Beef Tariff Quota

The EU and Turkey implemented a bilateral agreement in May 1998, under
which Turkey would provide the EU access for beef, and dairy products.
Under the agreement, Turkey granted the European Union a 19,000 MT beef
tariff rate quota at an eventual duty of 42 percent, and small tariff
rate quotas for various dairy products. However, the Ministry of
Agriculture has refused to issue import permits for various reasons,
including the BSE outbreak in Europe. The EU has retaliated by not
honoring its TRQ with Turkey for tomato paste and has created obstacles
on other agricultural imports. This issue is one of the many that will
need to be resolved before EU membership negotiations progress.

The official import duties for fresh, chilled, or frozen beef, as
announced in the 2005 Import Regime, which was the same in the 2005
Import Regime, follow:

  ----------------- --------------- ------------------- -----------------
  Tariff Number     Description     Import Duty         Other Information

  0201 & 0202 (\*)  Fresh, chilled, 225 % of the CIF    For all origins
                    or frozen       value               
                    bovine meat                         
  ----------------- --------------- ------------------- -----------------

(\*) However, no permits are issued since all meat imports are banned.

# Beef and Veal Stocks

Official beef and veal stock data are not available. Beef and veal stock
levels are limited because of Turkish preference for fresh meat.

# Livestock Genetics

Turkish livestock sector has been depressed and, as a result,
inventories have decreased significantly in Turkey in recent decades.
Turkey has been unable to upgrade its inventories due to its economic
crisis and the BSE problems in Europe. These developments underlined the
importance of livestock genetics for Turkey in recent years.

The government is now trying to support the livestock sector by
providing financial assistance. Turkey's livestock genetics imports
increased significantly due to the ban on imports of live animals and
the growing needs and intentions to invest in the livestock sector.
American exporters hold about 25 percent of the market share since
Turkish breeders are aware of the high quality of the American bovine
semen. EU exporters are more aggressive and their prices and locations
are more acceptable.

Exporting genetics to Turkey is a rather difficult and time-consuming
process since two authorities of the Ministry of Agriculture are
involved. The Turkish livestock market provides many opportunities but
also challenges for US bovine genetic importers. Please see the
voluntary report on livestock genetics (TU6030) for detailed information
on trade figures and trade challenges. [ ]{.mark}

Detailed trade through 2005 was also provided in the same report. Turkey
has not imported any embryos during the first five months (January --
May) in 2006. However, Turkey imported nearly 700,000 doses of semen
worth of nearly USD 1.4 million during the same period. The following
table provides the details of semen imports.

## Turkey's Semen Imports in 2006 (Jan.-May)

+---------------------------+---------------------+-------------------+
| # Country {#country-1}    | **Unit**            | **Value**         |
|                           |                     |                   |
|                           | **(Doses)**         | **(USD)**         |
+---------------------------+---------------------+-------------------+
| United States             | 87,635              | 328,022           |
+---------------------------+---------------------+-------------------+
| Germany                   | 306,280             | 474,356           |
+---------------------------+---------------------+-------------------+
| Netherlands               | 85,449              | 193,989           |
+---------------------------+---------------------+-------------------+
| United Kingdom            | 35,740              | 73,153            |
+---------------------------+---------------------+-------------------+
| Canada                    | 55,650              | 107,783           |
+---------------------------+---------------------+-------------------+
| Austria                   | 13,220              | 14,578            |
+---------------------------+---------------------+-------------------+
| Denmark                   | 25,000              | 33,811            |
+---------------------------+---------------------+-------------------+
| France                    | 5,000               | 8,401             |
+---------------------------+---------------------+-------------------+
| Sweden                    | 2,000               | 13,042            |
+---------------------------+---------------------+-------------------+
| Spain                     | 30,000              | 50789             |
+---------------------------+---------------------+-------------------+
| Italy                     | 20,022              | 55,097            |
+---------------------------+---------------------+-------------------+
| Slovakia                  | 19,165              | 32,976            |
+---------------------------+---------------------+-------------------+
| # Total                   | **685,161**         | **1,385,997**     |
+---------------------------+---------------------+-------------------+

# Tallow

Turkey is a major importer of tallow, primarily for soap production.
Turkey has four times larger soap production capacity than it needs.
About two-thirds of Turkey's soap production is exported. The United
States has been the number one supplier for a number of years. Tallow
exports to Turkey were affected adversely after the BSE incidents in the
United States, especially after the second case of BSE in Texas. Turkish
soap industry solved the problem by persuading the Ministry of
Agriculture and Ministry of Health officials that tallow is processed
under certain pressure and at very high temperature so that it is no
longer harmful for soap users.

Tariff rate on tallow imports is four percent. However, soap producers
are receiving this amount back after they document that they consumed
all of the tallow imported for producing soap. Turkish tallow imports
for 2005 and first five months in 2006 are provided in the following
table.

## Turkey's Tallow Imports

  -------------- -------------- -------------- -------------- --------------
  Country        2005 (Jan. --                 2006 (Jan. --  
                 Dec.)                         May)           

                 Quantity (MT)  Value (USD)    Quantity (MT)  Value (USD)

  United States  138,837        68,041,188     43,599         20,811,619

  Netherlands                                  500            234,726

  Uruguay                                      45             21,654

  Germany        37             40,365         24             24,414

  Total          138,874        68,081,553     44,168         21,092,413
  -------------- -------------- -------------- -------------- --------------