Required Report - public distribution

**Date:** 2/1/2006

**GAIN Report Number:** TU6006

TU6006

**Turkey**

**Tree Nuts**

**Semi Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Jim Higgiston Agricultural Counselor

U.S. Embassy

**Prepared by:**

Unal Sarigedik, Agricultural Specialist

**Report Highlights:**

Turkey is expecting a normal hazelnut crop in MY 2006 given the good
weather condition thus far. However, late frosts before May may affect
the crop and production estimate. MY 2005 production results still vary
although production estimates remain at 525,000 MT. Export prices
declined from USD 950 per hundred kilograms of raw whole kernels early
in the season to USD 830 per hundred kilograms last week due to reduced
demand. Prices may decline further if production increases. In MY 2005,
Turkey is projected to export similar quantities (about 400,000 MT, in
shell) as it did in MY 2004 with exports increasing in MY 2006 due to
higher production.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Semi-Annual Report

Ankara \[TU1\]

\[TU\]

Turkey is expecting a normal year for hazelnut production in MY 2006,
after having difficult production problems in MY 2003 and MY 2004 due to
severe frosts and less than normal production levels in MY 2005 due to
frost damage in hazelnut orchards from the two previous years. Weather
conditions have been mostly normal thus far crop development this year.
The low temperatures and snow at the end of January are not expected to
affect hazelnut development adversely since orchards have not bloomed
yet. However, a reliable estimate for hazelnut production will not be
available until the end of April because a late frost in April could
still affect orchards. Industry sources indicate that orchards should be
fully recovered from the 2003 and 2004 frosts. MY 2006 production is
currently projected at 600,000 MT.

Final production results for MY 2005 are still not available. Annual
demand traditionally declines around the New Year because importers
normally purchase large quantities prior to Christmas. At the same time,
overall hazelnut consumption declined this past year because of higher
costs due to short supplies. Almonds replaced hazelnuts in many cases
because the price of almonds was significantly lower than hazelnuts.
This decline in demand has caused hazelnut sales and prices to begin to
decline in international markets. Farmers are delivering smaller
quantities to the market hoping that prices will increase again. This is
making accurate production estimates more difficult. MY 2005 hazelnut
production estimates still vary a quite a lot. Industry estimates range
between 450,000 MT and 600,000 MT.

FISKOBIRLIK, the Turkish hazelnut cooperative, announced gross
procurement prices at YTL 7.45 per kilogram of Giresun type, YTL 7.05
per kilogram of Levant type, and YTL 6.90 per kilogram of Akcakoca
(pointed) type hazelnuts at the beginning of MY 2005 and these prices
have not changed (all in shell). In MY 2005, FISKOBIRLIK procured about
50,000 MT before stopping any further procurement. This quantity is much
higher than the quantities procured during the last two years.
FISKOBIRLIK procured only about 17,000 MT in MY 2004 and 8,000 MT in MY
2003 due to smaller supplies and also lower procurement prices in MY
2003. FISKOBIRLIK's MY 2004 gross procurement prices were YTL 5.25 per
kilogram for Giresun type, YTL 5.05 per kilogram for Levant type and YTL
4.75 per kilogram for Akcakoca type hazelnuts. FISKOBIRLIK announced
only one price, which was YTL 2.50 (TL 2,500,000) per kilogram, for all
types of in shell hazelnuts (Giresun, Levant, and Akcakoca) in MY 2003.

Kernel yields of MY 2005 crop are slightly better than normal (around
51-52 percent). However, nut quality is a little smaller than normal in
the eastern production areas but larger in the western production areas.
It is estimated that nut quality in the eastern production areas is
about 25 percent of standard #1 (13-15 mm), 65 percent of standard #2
(11-13 mm), and 10 percent of standard #3 (9-11 mm) or shrunken kernels
while in western production areas, the quality is about 55 percent of
standard #1, 40 percent of standard #2, and 5 percent of standard #3. In
MY 2004, the quality was estimated at about 20 percent of the crop as
standard #1 (13-15 mm), 70 percent as standard #2 (11-13 mm), and the
remaining crop (about 10 Percent) as standard #3 (9-11 mm) or shrunken
kernels.

FISKOBIRLIK reportedly had about 10,000 MT of hazelnuts in its stocks at
the end of MY 2004. Of this total, about 8,000 MT were estimated to be
MY 2004 crop. FISKOBIRLIK sold only a small quantity of older years'
crop hazelnuts from its stocks since the beginning of the marketing
year. FISKOBIRLIK has not sold hazelnuts from MY 2004 crop. Industry
sources indicate that FISKOBIRLIK will have a problem due to higher
procurement prices whether they decide to sell last year's crop at a
loss or keep it in stocks. FISKOBIRLIK bought a total of about 50,000 MT
of hazelnuts from member producers but paid only a small proportion
(about YTL 120 million) of the total payments, which was about YTL 350
million. To pay the remaining debt, FISKOBIRLIK asked for new loans from
the GOT, but were refused.

The Minister of Industry and Trade recently announced that the GOT
eliminated all of FISKOBIRLIK's debts. Total debts added up to about YTL
2.1 billion, including debts to Treasury from crushing hazelnuts from
FISKOBIRLIK stocks for oil in the past (about YTL 1.5 billion), to
several GOT funds (a total of about YTL 428 million), and to one private
bank (about YTL 152 million). FISKOBIRLIK is now looking for new loans
from the private banks to pay its debts to member producers for MY 2005
procurement. If the prospects of the MY 2006 crop turns out to be normal
or better (600,000 MT or higher), market prices, which declined in
recent weeks, are expected to decline further and, as a result,
FISKOBIRLIK will have even a bigger financial problem.

During MY 2004 (September 2004 -- August 2005), Turkey exported 389,187
MT (in shell) of hazelnuts and received little over than USD 1.5 million
in revenues. During CY 2005, Turkey exported 418,725 MT (in shell) of
hazelnuts and received slightly more than USD 1.9 million in revenues.

**PSD Table for Hazelnuts**

+-------------+------+-------+------+-------+------+-------+-------+
| Turkey      |      |       |      |       |      |       |       |
|             |      |       |      |       |      |       |       |
| Filberts,   |      |       |      |       |      |       |       |
| Inshell     |      |       |      |       |      |       |       |
| Basis       |      |       |      |       |      |       |       |
+-------------+------+-------+------+-------+------+-------+-------+
|             | **20 | *     | **20 | **    | **20 | **    | **    |
|             | 04** | *Revi | 05** | Estim | 06** | Forec | UOM** |
|             |      | sed** |      | ate** |      | ast** |       |
+-------------+------+-------+------+-------+------+-------+-------+
|             | **   | **P   | **   | **P   | **   | **P   |       |
|             | USDA | ost** | USDA | ost** | USDA | ost** |       |
|             | Of   |       | Of   |       | Of   |       |       |
|             | fici | **    | fici | **    | fici | **    |       |
|             | al** | Estim | al** | Estim | al** | Estim |       |
|             |      | ate** |      | ate** |      | ate** |       |
|             | **\  |       | **\  |       | **\  |       |       |
|             | [Old | *     | [Old | *     | [Old | *     |       |
|             | \]** | *\[Ne | \]** | *\[Ne | \]** | *\[Ne |       |
|             |      | w\]** |      | w\]** |      | w\]** |       |
+-------------+------+-------+------+-------+------+-------+-------+
| ##          |      | 09    |      | 09    |      | 09    | MM    |
| #### Market |      | /2004 |      | /2005 |      | /2006 | /YYYY |
|  Year Begin |      |       |      |       |      |       |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Area      | 0    | 0     | 0    | 0     | 0    | 0     | HA    |
| Planted**   |      |       |      |       |      |       |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Area      | 0    | 0     | 0    | 0     | 0    | 0     | HA    |
| Harvested** |      |       |      |       |      |       |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Bearing   | 28   | 2     | 28   | 3     | 0    | 3     | 1000  |
| Trees**     | 6000 | 90000 | 7000 | 00000 |      | 10000 | TREES |
+-------------+------+-------+------+-------+------+-------+-------+
| **          | 1    | 14000 | 1    | 20000 | 0    | 18000 | 1000  |
| Non-Bearing | 2000 |       | 3000 |       |      |       | TREES |
| Trees**     |      |       |      |       |      |       |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Total     | 29   | 3     | 30   | 3     | 0    | 3     | 1000  |
| Trees**     | 8000 | 04000 | 0000 | 20000 |      | 28000 | TREES |
+-------------+------+-------+------+-------+------+-------+-------+
| **Beginning | 6    | 72000 | 3    | 15000 | 10   | 80000 | MT    |
| Stocks**    | 0000 |       | 5000 |       | 5000 |       |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **P         | 42   | 3     | 60   | 5     | 0    | 6     | MT    |
| roduction** | 5000 | 80000 | 0000 | 25000 |      | 00000 |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Imports** | 0    | 0     | 0    | 0     | 0    | 0     | MT    |
+-------------+------+-------+------+-------+------+-------+-------+
| **TOTAL     | 48   | 4     | 63   | 5     | 10   | 6     | MT    |
| SUPPLY**    | 5000 | 52000 | 5000 | 40000 | 5000 | 80000 |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Exports** | 40   | 3     | 45   | 4     | 0    | 4     | MT    |
|             | 0000 | 89187 | 0000 | 00000 |      | 50000 |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Domestic  | 5    | 47813 | 8    | 60000 | 0    | 80000 | MT    |
| Co          | 0000 |       | 0000 |       |      |       |       |
| nsumption** |      |       |      |       |      |       |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **Ending    | 3    | 15000 | 10   | 80000 | 0    | 1     | MT    |
| Stocks**    | 5000 |       | 5000 |       |      | 50000 |       |
+-------------+------+-------+------+-------+------+-------+-------+
| **TOTAL     | 48   | 4     | 63   | 5     | 0    | 6     | MT    |
| DIS         | 5000 | 52000 | 5000 | 40000 |      | 80000 |       |
| TRIBUTION** |      |       |      |       |      |       |       |
+-------------+------+-------+------+-------+------+-------+-------+

Turkey sold 237,648 MT of hazelnuts (in shell) during the first four
months of MY 2005 (September 1 -- December 31, 2005) for a total of
nearly USD 1.1 billion. Turkey exported 208,793 MT, 219,298 MT and
298,542 MT and received about USD 703 million, USD 395 million and USD
335 million during the same period in MY 2004, MY 2003 and MY 2002,
respectively. Whole natural hazelnuts were being sold at about USD 830
per one hundred kilograms and processed whole hazelnuts were being sold
at about USD 925 per one hundred kilograms in late January. These prices
were about USD 950 and USD 1,050 per one hundred kilograms early in the
season. Turkey sold larger quantities at higher prices in the beginning
of the marketing year due to the shortage of the production in Italy,
according to industry sources. Traders are projecting Turkey's total
sales to again reach nearly 400,000 MT (in shell) in MY 2005.

The current retail price for shelled roasted Giresun type hazelnuts in
Ankara is about YTL 28 per kilogram, compared to YTL 25 per kilogram
last August and YTL 20 per kilogram a year ago. (Since the beginning of
2005 Turkey started to use the New Turkish Lira by eliminating six zeros
of TL. YTL 1.00=TL 1,000,000.) Currently USD 1.00 = YTL 1.33, compared
to YTL 1,35 both in last August and last January.

The Export Trade Matrix represents unofficial export data received from
the Black Sea Exporters Union for MY 2004 and CY 2005.

In 2006, the import duty remains at 43.2 percent for shelled or in shell
hazelnuts and at 58.5 percent for processed hazelnut products for all
origins.

# Export Trade Matrix for Hazelnuts

+--------------------+-------------+--------------------+-------------+
| Turkey             |             |                    |             |
|                    |             |                    |             |
| Filberts, Inshell  |             |                    |             |
| Basis              |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| Time Period        | Sep. - Aug. | Units:             | Metric Tons |
+--------------------+-------------+--------------------+-------------+
| Exports for:       | 2004        |                    | CY 2005     |
+--------------------+-------------+--------------------+-------------+
| U.S.               | 6052        | U.S.               | 6165        |
+--------------------+-------------+--------------------+-------------+
| Others             |             | Others             |             |
+--------------------+-------------+--------------------+-------------+
| Germany            | 96916       | Italy              | 122177      |
+--------------------+-------------+--------------------+-------------+
| Italy              | 85264       | Germany            | 97034       |
+--------------------+-------------+--------------------+-------------+
| France             | 37125       | France             | 35364       |
+--------------------+-------------+--------------------+-------------+
| Belgium            | 24781       | Belgium            | 23634       |
+--------------------+-------------+--------------------+-------------+
| Netherlands        | 18180       | Switzerland        | 19677       |
+--------------------+-------------+--------------------+-------------+
| Switzerland        | 17216       | Netherlands        | 15434       |
+--------------------+-------------+--------------------+-------------+
| United Kingdom     | 11540       | Austria            | 10752       |
+--------------------+-------------+--------------------+-------------+
| Austria            | 10679       | United Kingdom     | 10175       |
+--------------------+-------------+--------------------+-------------+
| Russia             | 10922       | Spain              | 9930        |
+--------------------+-------------+--------------------+-------------+
| Poland             | 8925        | Poland             | 8867        |
+--------------------+-------------+--------------------+-------------+
| Total for Others   | 321548      |                    | 353044      |
+--------------------+-------------+--------------------+-------------+
| Others not Listed  | 61587       |                    | 59516       |
+--------------------+-------------+--------------------+-------------+
| Grand Total        | 389187      |                    | 418725      |
+--------------------+-------------+--------------------+-------------+