Required Report - public distribution

**Date:** 5/27/2005

**GAIN Report Number:** TU4021

TU4021

**Turkey**

**Tomatoes and Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Robert Hanson, Agricultural Attache

Ankara

**Prepared by:**

Ibrahim Sirtioglu, Agricultural Marketing Specialist

**Report Highlights:**

MY 2005 fresh tomato (table and industrial) production is projected at
9.5 MMT. MY 2005 tomato paste production is expected to be 260,000 MT.
Minor declines in both commodities are due to a decline in industrial
tomato production. MY 2004 exports of fresh tomatoes are expected to
remain the same as in MY 2003 (263,000 MT). Tomato paste exports,
however, are expected to decline to 165,000 MT due to Turkey\'s loss of
competitiveness in international markets due to a relatively strong
Turkish Lira.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Ankara \[TU1\]

\[TU\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Prices 4](#prices)

[Consumption 4](#consumption)

[Trade 4](#trade)

[Stocks 5](#stocks)

[Policy 5](#policy)

[Import policy 5](#import-policy)

# Executive Summary

MY 2004 total tomato production is expected to decline to 9.5 MMT due to
the decline in industrial tomato production. Farmers, who were offered
the same price for industrial tomatoes during the last two years despite
the ten percent annual inflation and increased cost of fuel and
fertilizer, switched to crops with better returns such as corn and wheat
and planted fewer industrial tomatoes. Turkish MY 2005 tomato paste
production will decline to 260,000 MT compared to 270,000 MT in MY 2004
due to processors not willing to increase production due to low world
paste prices.

According to official statistics, Turkey exported 103,000 MT of fresh
tomatoes and 118,000 MT of tomato paste during the first seven months of
MY 2004. Russia (38,000 MT) and Saudi Arabia (23,000 MT) were the
leading markets for fresh tomato exports. While Iraq (16,000 MT) emerged
to be the leading market for Turkish tomato paste exports, Russia
(13,000 MT), Saudi Arabia (12,000 MT) and Japan (12,000 MT) continue to
be important markets. MY 2004 year-end exports are expected to decline
to 165,000 compared to 185,000 MT in MY 2003 due to the over-valued
Turkish Lira preventing Turkish processors from effectively competing in
international markets. China and Iran are reportedly competing with
Turkish processors in Far Eastern and The Middle East markets.

Industry sources indicated that Turkish annual tomato paste exports will
remain about 150,000 MT and cannot reach 200,000 MT until the Turkish
Lira fluctuates and loses value against other competitors in the export
market.

# Production

MY 2005 total tomato production (table/fresh and industrial) is
estimated to be about 9.5 million tons compared to 9.6 in MY 2004 and
9.8 in MY 2003. The decline in total production is due to the decline in
industrial tomato production during the last two years. Lower than
expected prices for industrial tomatoes and better returns for
alternative crops such as corn and wheat in industrial tomato growing
regions are reasons for the decrease.

MY 2005 tomatoes are currently at the planting stage and recent rains
reportedly benefited the crop. Tomatoes are grown throughout Turkey, but
the bulk of production is concentrated in the Marmara and Aegean regions
where climatic conditions are nearly ideal. Recent trends in tomato
production include increased greenhouse production in southern Turkey
for fresh consumption in urban areas and export markets during the
winter.

Tomatoes produced for processing comprise about 25 percent of Turkey's
total production, while the remainder is destined for fresh consumption.
Processing tomatoes are grown mainly in the townships of Balikesir and
Canakkale in the Marmara region, Bergama and Turgutlu of the Aegean
region and in newly emerging areas of Tokat of Central Anatolia, where
the processing industry is located.

Wide varieties of fresh and industrial tomatoes are grown in Turkey.
There are about four hundred fresh tomato seed varieties and sixty
industrial seed varieties that were approved by the Ministry of
Agriculture. Sabrina, Dalmone, Gigante and Fantastic 144 are some of the
leading fresh varieties and New Crimson, Delicious Red, Bonanza and Rio
Grande are among the leading industrial varieties.

Tomato production is labor intensive and the bulk of production occurs
on small, family farms. Most planting continues to be done by hand.
Seedlings are started around mid-March and are transplanted after the
danger of frost has passed. Harvest of early varieties begins in late
July, with the peak harvest occurring around mid-August. Growers
generally begin to pick the crop when half of the field is ripe. Since
all harvesting is done by hand, three or even four pickings are
possible. Depending on the weather, hand picking can extend the harvest
until early October. About eighty percent of the processing tomato crop
is grown under commercial contract mainly with the larger tomato
processors. The remaining twenty percent of the crop is grown
independently for smaller processors, who generally do not contract, as
well as to supply the home processing market.

# Prices

(Current exchange rate is approximately: USD 1 = TL 1,400,000)

For 2005, industrial tomato processors are reportedly offering TL
100,000 per kilogram delivered to the factory. The price offered to
farmers has remained the same for the last two years despite the ten
percent annual inflation rate. Farmers are reportedly upset with the
prices and are switching to other crops. Processors are giving technical
assistance to farmers to use drip-irrigation to increase their yield per
hectare and make industrial tomato production more attractive.

Canned tomato paste currently retails for about TL 2,200,000 per
kilogram, which remains unchanged over the last two years despite the
ten percent annual domestic inflation. Processors and retailers
benefiting from lower interest rates, down to 12 percent from 42 percent
two years ago, were able to keep prices as they were.

## 

# Consumption

About 75 percent of the Turkey's total tomato production is consumed
fresh and the remainder is processed. Of the 25 percent of the crop that
is processed, about 85 percent is used to produce tomato paste, 10
percent is utilized for canned tomatoes, and the remainder is used for
catsup, tomato juice, dried tomatoes and other products. Total (nominal)
tomato paste production capacity is estimated at about 500,000 MT,
assuming three shifts and a 60-day harvest. However, hot summer weather
often shortens the harvest, reducing actual capacity to about 375,000
MT.

There are about 45 firms in the industry, with seven or eight large
firms (average annual tomato paste production of 15,000-20,000 MT)
accounting for about seventy percent of total tomato paste production.
Most large firms can process 2,000-3,000 MT of tomatoes daily. The
industry products yield (tomatoes to paste) is estimated at about 6
kilograms of tomatoes for 1.0 kilogram of paste.

Commercial tomato paste production for MY 2005 is projected to be
260,000 MT, about four percent less than last year. An over-valued
Turkish Lira, competition from other producing nations and low world
prices has forced processors to adopt a cautious approach and cut
production. In addition to commercial production, about 5,000 MT of
tomato paste is produced at home.

Turkey also produces processed tomatoes of which 95 percent are diced
tomatoes and the rest are whole, peeled tomatoes. MY 2005 canned tomato
production is expected to continue to increase and reach 35,000 MT (net
weight basis) due to increased export demand.

# Trade

Turkish fresh tomato exports in MY 2003 were 263,000 MT and MY 2004
exports are expected to be about the same. Russia and Saudi Arabia are
the leading markets for Turkish fresh tomato exports - combined exports
constitute about 70 percent of the annual total exports.

MY 2004 tomato paste exports are now estimated to be about 165,000 MT
compared to 185,000 MT in MY 2003. A stronger Turkish Lira and
competition of other tomato paste producing countries were the main
reasons the decline. Exports during the first seven months of the MY
2004 were 118,000 MT and Iraq emerged to the leading importer.

The tomato paste industry is very dependent on exports. Russia, Saudi
Arabia and Japan continue to be the leading export markets for Turkish
tomato paste producers. Other traditional markets such as Iraq and
Algeria are becoming important customers again while their economies and
political situations stabilize. Turkey is continuing to face increasing
competition of China and Iran in these and other export markets. While
China is competitive in the Far Eastern market, Iran competes with
Turkish paste exports in the Middle East and Central Asia.

The E.U. is not permitting Turkey to utilize its 30,000 MT tariff rate
quota since 1997 due to a dispute over E.U. meat exports to Turkey.
Out-of-quota exports are subject to 14.4 percent duty.

Turkey also exports the majority of its annual 35,000 MT of diced tomato
production. The E.U. continues to be the leading export market. The E.U.
allows Turkey to utilize 8,400 MT of its tariff rate quota of diced
tomatoes but exports above the quota are subject to 14.4 percent import
tax.

The current Turkish tomato paste FOB export price is about USD 675 Per
MT.

# Stocks

There are no official statistics on stocks for tomato and tomato
products. Industry sources estimate the 2004 marketing year-end stocks
at about 22,000 MT.

# Policy

The Agricultural Bank of Turkey is no longer able to provide subsidized
loans to agricultural producers and the government does not support
prices or otherwise assist tomato production. All production and
domestic and international marketing is handled by the private sector.
The GOT indirectly supports tomato paste exports by US\$ 68 per ton as a
form of tax deduction. If the tomato paste is produced under a contract
with farmers, an additional 40 percent (USD 26) is added to support of
which 32 percent of it is given to the farmers and 8 percent to the
processors.

# Import policy 

According to the 2005 customs regime fresh tomato and tomato paste
imports are subject to 19.5 and 135.9 percent imports taxes
respectively.

+---------------+--------+--------+--------+--------+--------+--------+
| **PSD Table** |        |        |        |        |        |        |
|               |        |        |        |        |        |        |
| **Turkey**    |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Fresh       |        |        |        |        |        |        |
| Tomatoes**    |        |        |        |        |        |        |
|               |        |        |        |        |        |        |
| **(HA)(MT)**  |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
|               | **     | **Rev  | **     | **Esti | **     | **Fore |
|               | 2003** | ised** | 2004** | mate** | 2005** | cast** |
+---------------+--------+--------+--------+--------+--------+--------+
|               | **USDA | **Post | **USDA | **Post | **USDA | **Post |
|               | Of     | Es     | Of     | Es     | Of     | Es     |
|               | ficial | timate | ficial | timate | ficial | timate |
|               | \[O    | \[N    | \[O    | \[N    | \[O    | \[N    |
|               | ld\]** | ew\]** | ld\]** | ew\]** | ld\]** | ew\]** |
+---------------+--------+--------+--------+--------+--------+--------+
| **Market Year |        | 0      |        | 0      |        | 0      |
| Begin**       |        | 9/2003 |        | 9/2004 |        | 9/2005 |
+---------------+--------+--------+--------+--------+--------+--------+
| **Plnt For    | 0      | 157400 | 0      | 156000 | 0      | 156000 |
| Fresh         |        |        |        |        |        |        |
| Consump**     |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Plnt For    | 0      | 38600  | 0      | 36000  | 0      | 34000  |
| Processing**  |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **TOTAL Area  | 0      | 196000 | 0      | 192000 | 0      | 190000 |
| Planted**     |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Harv. For   | 0      | 157400 | 0      | 156000 | 0      | 156000 |
| Fresh Cons.** |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Harv. For   | 0      | 38600  | 0      | 36000  | 0      | 34000  |
| Processing**  |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **TOTAL Area  | 0      | 196000 | 0      | 192000 | 0      | 190000 |
| Harvested**   |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Fresh Sale  | 0      | 7      | 0      | 7      | 0      | 7      |
| Production**  |        | 870000 |        | 800000 |        | 800000 |
+---------------+--------+--------+--------+--------+--------+--------+
| **Processing  | 0      | 1      | 0      | 1      | 0      | 1      |
| Production**  |        | 930000 |        | 800000 |        | 700000 |
+---------------+--------+--------+--------+--------+--------+--------+
| **TOTAL       | 0      | 9      | 0      | 9      | 0      | 9      |
| Production**  |        | 800000 |        | 600000 |        | 500000 |
+---------------+--------+--------+--------+--------+--------+--------+
| **TOTAL       | 0      | 9      | 0      | 9      | 0      | 9      |
| SUPPLY**      |        | 800000 |        | 600000 |        | 500000 |
+---------------+--------+--------+--------+--------+--------+--------+

  ------------------------ ------------- ----------------- ----------------
  **Export Trade Matrix**                                  

  **Country**              Turkey                          

  **Commodity**            Fresh                           
                           Tomatoes                        

  Time Period              Sept/Aug      Units:            Metric Tons

  Exports for:             MY 2003                         **MY 2004**

  U.S.                                   U.S.               

  Others                                 Others            

  Russia                   123475        Russia            38487

  Saudi Arabia             51928         Saudi Arabia      23385

  Romania                  15805         Romania           5929

  Serbia                   12582         Germany           5540

  Germany                  7782          Greece            4100

  Greece                   7431          France            2946

  France                   6450          Netherlands       2878

  Moldova                  6210          Moldova           2266

  Bosnia                   3808          Bulgaria          2080

  Austria                  3547          Serbia            1872

  Total for Others         239018                          89483

  Others not Listed        23825                           13693

  Grand Total              262843                          103176
  ------------------------ ------------- ----------------- ----------------

+---------------+--------+--------+--------+--------+--------+--------+
| **PSD Table** |        |        |        |        |        |        |
|               |        |        |        |        |        |        |
| **Turkey**    |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Tomato      |        |        |        |        |        |        |
| Paste,28-30%  |        |        |        |        |        |        |
| TSS Basis**   |        |        |        |        |        |        |
|               |        |        |        |        |        |        |
| (MT)(MT, Net  |        |        |        |        |        |        |
| Weight)       |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
|               | **     | **Rev  | **     | **Esti | **     | **Fore |
|               | 2003** | ised** | 2004** | mate** | 2005** | cast** |
+---------------+--------+--------+--------+--------+--------+--------+
|               | **USDA | **Post | **USDA | **Post | **USDA | **Post |
|               | Of     | Es     | Of     | Es     | Of     | Es     |
|               | ficial | timate | ficial | timate | ficial | timate |
|               | \[O    | \[N    | \[O    | \[N    | \[O    | \[N    |
|               | ld\]** | ew\]** | ld\]** | ew\]** | ld\]** | ew\]** |
+---------------+--------+--------+--------+--------+--------+--------+
| **Market Year |        | 0      |        | 0      |        | 0      |
| Begin**       |        | 9/2003 |        | 9/2004 |        | 9/2005 |
+---------------+--------+--------+--------+--------+--------+--------+
| **Deliv. To   | > 1    | 1      | 1      | 1      | 0      | 1      |
| Processors**  | 930000 | 930000 | 800000 | 800000 |        | 700000 |
+---------------+--------+--------+--------+--------+--------+--------+
| **Beginning   | 4369   | 4369   | 44369  | 29446  | 21869  | 21946  |
| Stocks**      |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| *             | 320000 | 320000 | 260000 | 270000 | 0      | 260000 |
| *Production** |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Imports**   | 0      | 0      | 0      | 0      | 0      | 0      |
+---------------+--------+--------+--------+--------+--------+--------+
| **TOTAL       | 324369 | 324369 | 304369 | 299446 | 21869  | 281946 |
| SUPPLY**      |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Exports**   | 170000 | 184923 | 170000 | 165000 | 0      | 155000 |
+---------------+--------+--------+--------+--------+--------+--------+
| **Domestic    | 110000 | 110000 | 112500 | 112500 | 0      | 115000 |
| Consumption** |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **Ending      | 44369  | 29446  | 21869  | 21946  | 0      | 11946  |
| Stocks**      |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+
| **TOTAL       | 324369 | 324369 | 304369 | 299446 | 0      | 281946 |
| D             |        |        |        |        |        |        |
| ISTRIBUTION** |        |        |        |        |        |        |
+---------------+--------+--------+--------+--------+--------+--------+

  ------------------ ------------------ ----------------- ------------ ------------ --
  **Export Trade                                                                    
  Matrix**                                                                          

  **Country**        Turkey                                                         

  **Commodity**      Tomato                                                         
                     Paste,28-30% TSS                                               
                     Basis                                                          

  Time Period        Sept/Aug           Units:            Metric tons               

  Exports for:       MY 2003                              **MY2004**                

  U.S.               200                U.S.              517                       

  Others                                Others                                      

  Russia             32919              Iraq              16021                     

  Japan              23302              Russia            13561                     

  Saudi Arabia       20205              Japan             12675                     

  Algeria            17018              Saudi Arabia      12624                     

  Germany            12043              Algeria           10725                     

  Iraq               8207               Romania           5876                      

  Sudan              5385               Germany           5493                      

  Kuwait             5385               Philippines       5421                      

  Oman               4555               Kuwait            3916                      

  Romania            3485               Sudan             3576                      

  Total for Others   132504                               89888                     

  Others not Listed  52219                                27636                     

  Grand Total        184923                               118041                    
  ------------------ ------------------ ----------------- ------------ ------------ --