Required Report - public distribution

**Date:** 9/29/2005

**GAIN Report Number:** TU5041

TU5041

**Turkey**

**Sugar**

**Semi Annual**

**2005**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Unal Sarigedik, Agriculture Specialist

**Report Highlights:**

The outlook for Turkey\'s MY 2006 sugar beet and centrifugal sugar
production remains good. Weather has been good in most growing regions.
The Turkish government increased the production quota for starch-based
sweeteners again in MY 2005. Despite overproduction, several new
refineries will become operational in the near future.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Semi-Annual Report

Ankara \[TU1\]

\[TU\]

Table of Contents

[Production 3](#production)

[Production: Sugar Beets 3](#production-sugar-beets)

[PS&D for Sugar Beets 3](#psd-for-sugar-beets)

[Production: Centrifugal Sugar 3](#production-centrifugal-sugar)

[PS&D for Centrifugal Sugar 4](#psd-for-centrifugal-sugar)

[Production: Cornstarch-Based Sweeteners
4](#production-cornstarch-based-sweeteners)

[Consumption 4](#consumption)

[Prices 5](#prices)

[Trade 5](#trade)

[Export Trade Matrix for Centrifugal Sugar
5](#export-trade-matrix-for-centrifugal-sugar)

[Import Trade Matrix for Centrifugal Sugar
6](#import-trade-matrix-for-centrifugal-sugar)

[Stocks 6](#stocks)

#   

# Production

## Production: Sugar Beets

In MY 2006, sugar beet crop is expected to be good in most growing
areas. Weather conditions have been good as well as beet yields. Post
still estimates sugar beet production at about 14.5 MMT and with
centrifugal sugar production to reach 2.175 MMT. The sugar beet harvest
started a few weeks ago and is continuing in major growing areas where
yields appear to be good.

### PS&D for Sugar Beets

+--------------+-------+-------+-------+-------+-------+-------+-----+
| Turkey       |       |       |       |       |       |       |     |
|              |       |       |       |       |       |       |     |
| ######       |       |       |       |       |       |       |     |
|  Sugar Beets |       |       |       |       |       |       |     |
+--------------+-------+-------+-------+-------+-------+-------+-----+
|              | **2   | *     | **2   | **    | **2   | **    | *   |
|              | 004** | *Revi | 005** | Estim | 006** | Forec | *UO |
|              |       | sed** |       | ate** |       | ast** | M** |
+--------------+-------+-------+-------+-------+-------+-------+-----+
|              | *     | *     | *     | *     | *     | *     |     |
|              | *USDA | *Post | *USDA | *Post | *USDA | *Post |     |
|              | Off   | Estim | Off   | Estim | Off   | Estim |     |
|              | icial | ate** | icial | ate** | icial | ate** |     |
|              | \[Ol  |       | \[Ol  |       | \[Ol  |       |     |
|              | d\]** | *     | d\]** | *     | d\]** | *     |     |
|              |       | *\[Ne |       | *\[Ne |       | *\[Ne |     |
|              |       | w\]** |       | w\]** |       | w\]** |     |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| #            |       | 09    |       | 09    |       | 09    | M   |
| ###### Marke |       | /2003 |       | /2004 |       | /2005 | M/Y |
| t Year Begin |       |       |       |       |       |       | YYY |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| **Area       | 330   | 315   | 330   | 330   | 320   | 320   | 1   |
| Planted**    |       |       |       |       |       |       | 000 |
|              |       |       |       |       |       |       | HA  |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| **Area       | 330   | 314   | 329   | 329   | 320   | 320   | 1   |
| Harvested**  |       |       |       |       |       |       | 000 |
|              |       |       |       |       |       |       | HA  |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| **           | 14100 | 12575 | 13800 | 13800 | 14500 | 14500 | 1   |
| Production** |       |       |       |       |       |       | 000 |
|              |       |       |       |       |       |       | MT  |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| **TOTAL      | 14100 | 12575 | 13800 | 13800 | 14500 | 14500 | 1   |
| SUPPLY**     |       |       |       |       |       |       | 000 |
|              |       |       |       |       |       |       | MT  |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| *            | 14100 | 12575 | 13800 | 13800 | 14500 | 14500 | 1   |
| *Utilization |       |       |       |       |       |       | 000 |
| for Sugar**  |       |       |       |       |       |       | MT  |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| **Utilizatn  | 0     | 0     | 0     | 0     | 0     | 0     | 1   |
| for          |       |       |       |       |       |       | 000 |
| Alcohol**    |       |       |       |       |       |       | MT  |
+--------------+-------+-------+-------+-------+-------+-------+-----+
| **TOTAL      | 14100 | 12575 | 13800 | 13800 | 14500 | 14500 | 1   |
| U            |       |       |       |       |       |       | 000 |
| TILIZATION** |       |       |       |       |       |       | MT  |
+--------------+-------+-------+-------+-------+-------+-------+-----+

## 

## 

## Production: Centrifugal Sugar 

There are a total of 33 sugar refineries in Turkey. Out of this total,
25 factories are owned and run by the Turkish Sugar Corporation (TSC),
six are owned by PANKOBIRLIK, and two owned by the private sector. The
refinery in Adapazari was bought recently by PANKOBIRLIK but has not
been operating since the major earthquake in the region in 1999.
PANKOBIRLIK is expected restore this refinery in the near future to
prepare for production. The quota assigned for the Adapazari refinery
for MY 2006 will be processed at nearby Alpullu and Susurluk factories
of the TSC. Two other refineries are being constructed. Aksaray refinery
is owned by the private sector, and Bogazliyan refinery is owned by
PANKOBIRLIK. Both of these refineries should be completed by the end of
the year.

PANKOBIRLIK recently constructed another factory in Cumra, Konya. Cumra
factory was constructed without any financial assistance from the
government and cost about USD 150 million. The factory processes 12,000
MT of sugar beets per day, the largest capacity in Turkey. Cumra
refinery processed about 300,000 MT of sugar beets in MY 2005 and is
expected to process nearly 1.5 MMT of sugar beets in MY 2006 when it
will hopefully be operating at full capacity. Even though Cumra refinery
is a newly constructed refinery with modern technology, it operates only
120-130 days during its campaign period. PANKOBIRLIK, which is the
Central Union for Sugar Beet Producers' Cooperatives, has been
constructing new refineries in expectation that inefficient TSC
refineries will be taken out of the production through GOT privatization
policies.

## 

### PS&D for Centrifugal Sugar 

+-----------------+------+------+------+------+-------+------+-------+
| Turkey          |      |      |      |      |       |      |       |
|                 |      |      |      |      |       |      |       |
| Sugar,          |      |      |      |      |       |      |       |
| Centrifugal     |      |      |      |      |       |      |       |
+-----------------+------+------+------+------+-------+------+-------+
|                 | **20 | **R  | **20 | **Es | **2   | **Fo | **    |
|                 | 04** | evis | 05** | tima | 006** | reca | UOM** |
|                 |      | ed** |      | te** |       | st** |       |
+-----------------+------+------+------+------+-------+------+-------+
|                 | **   | **Po | **   | **Po | *     | **   |       |
|                 | USDA | st** | USDA | st** | *USDA | Post |       |
|                 | Of   |      | Of   |      | Off   | Es   |       |
|                 | fici | **Es | fici | **Es | icial | tima |       |
|                 | al** | tima | al** | tima | \[Ol  | te** |       |
|                 |      | te** |      | te** | d\]** |      |       |
|                 | **\  |      | **\  |      |       | **\  |       |
|                 | [Old | **\  | [Old | **\  |       | [New |       |
|                 | \]** | [New | \]** | [New |       | \]** |       |
|                 |      | \]** |      | \]** |       |      |       |
+-----------------+------+------+------+------+-------+------+-------+
| ####### Ma      |      | 09/  |      | 09/  |       | 09/  | MM    |
| rket Year Begin |      | 2003 |      | 2004 |       | 2005 | /YYYY |
+-----------------+------+------+------+------+-------+------+-------+
| **Beginning     | 730  | 730  | 484  | 485  | 583   | 610  | 1000  |
| Stocks**        |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Beet Sugar    | 1915 | 1915 | 2109 | 2110 | 2175  | 2175 | 1000  |
| Production**    |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Cane Sugar    | 0    | 0    | 0    | 0    | 0     | 0    | 1000  |
| Production**    |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **TOTAL Sugar   | 1915 | 1915 | 2109 | 2110 | 2175  | 2175 | 1000  |
| Production**    |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Raw Imports** | 0    | 0    | 0    | 0    | 0     | 0    | 1000  |
|                 |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Refined       | 1    | 0    | 0    | 0    | 0     | 0    | 1000  |
| Imp.(Raw Val)** |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **TOTAL         | 1    | 0    | 0    | 0    | 0     | 0    | 1000  |
| Imports**       |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **TOTAL         | 2646 | 2645 | 2593 | 2595 | 2758  | 2785 | 1000  |
| SUPPLY**        |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Raw Exports** | 0    | 0    | 0    | 0    | 0     | 0    | 1000  |
|                 |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Refined       | 232  | 230  | 50   | 25   | 50    | 25   | 1000  |
| Exp.(Raw Val)** |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **TOTAL         | 232  | 230  | 50   | 25   | 50    | 25   | 1000  |
| EXPORTS**       |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Human Dom.    | 1930 | 1930 | 1960 | 1960 | 2000  | 2000 | 1000  |
| Consumption**   |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Other         | 0    | 0    | 0    | 0    | 0     | 0    | 1000  |
| Disappearance** |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Total         | 1930 | 1930 | 1960 | 1960 | 2000  | 2000 | 1000  |
| Disappearance** |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **Ending        | 484  | 485  | 583  | 610  | 708   | 760  | 1000  |
| Stocks**        |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+
| **TOTAL         | 2646 | 2645 | 2593 | 2595 | 2758  | 2785 | 1000  |
| DISTRIBUTION**  |      |      |      |      |       |      | MT    |
+-----------------+------+------+------+------+-------+------+-------+

## 

## Production: Cornstarch-Based Sweeteners

The quota for cornstarch based sweetener (SBS) producers was increased
from 234,000 MT to 351,000 MT (from 10 percent to 15 percent of the
total production) in MY 2005. For the past several years the quota has
been increased. Thus far, there have not been any announcements
regarding a quota increase for MY 2006.

There are five factories producing SBS with a quota with a total
capacity of around 900,000 MT in Turkey. Two of these factories have one
hundred percent international capital; two have one hundred percent
domestic capital and one is a mixture of domestic and international
capital. A total of 525,000 MT of corn is used to produce SBS in Turkey.
This amount increases to 825,000 MT with the inclusion of corn-based
starch. Two new factories started to produce starch based sweeteners
recently. These are owned by the private sector. These factories do not
have production quotas and their production capacities are not known.
Even though the Sugar Board is limiting total production of sugar and
sweeteners, it is doubtful that these limits are strictly followed.
There has not been any development on the revised Sugar Law, which is
still waiting in Parliament.

# Consumption

SBS producers primarily Use domestically grown corn because of two
reasons: biotechnology and politics. SBS are used primarily by the soft
drink industry in Turkey. The soft drink industry requires that the SBS
be produced from non-GMO corn, which forces SBS producers to use
domestically grown corn even though domestically grown corn prices are
higher than international corn prices. The GOT increased the duty on
corn imports from 100 percent to 130 percent to reduce the
attractiveness of imported corn. SBS producers are also trying to use
more of the domestically grown corn for political reasons since they
have faced significant and often inflammatory criticism from sugar beet
farmers and processors. Please see TU5020 for an update on corn
production and trade in Turkey.

# 

# Prices

Turkey has some of the highest prices for sugar in the world. Ex-factory
sugar selling prices of TSC were last increased on June 18, 2004. This
is the only price adjustment TSC made since April 2003. The current
ex-factory prices follow:

+---------------------------------------+------------------------------+
| **Type of Sugar**                     | **June 18, 2004**            |
+---------------------------------------+------------------------------+
| Crystal Sugar                         | YTL/Kg.                      |
|                                       |                              |
|                                       | (VAT included)               |
+---------------------------------------+------------------------------+
| \- 50 Kg. bags                        | 1.696                        |
+---------------------------------------+------------------------------+
| Cube Sugar                            |                              |
+---------------------------------------+------------------------------+
| \- 50 Kg. bags                        | 1.841                        |
+---------------------------------------+------------------------------+
| \- 1 Kg. boxes (25 boxes)             | 1.949                        |
+---------------------------------------+------------------------------+

These prices are about USD 1,250 per MT, USD 1,370 per MT, and 1,450 per
MT for crystal sugar and cube sugar in bags and boxes, respectively. The
profit margin of the factories and the VAT are included in these prices.
(Note: USD 1.00 is currently about YTL 1.35)

# Trade

In recent years, Iraq has been the major market for Turkish sugar
exports, followed by Azerbaijan. Exports are expected to continue to
decline since supply has been reduced and the GOT does not provide any
subsidy for sugar exports. Export and Import Matrixes provide trade data
for MY 2004 and for the first eleven months of MY 2005.

## Export Trade Matrix for Centrifugal Sugar

  ----------------- ------------------ ------------------ ---------------
  Time Period       Sep. - Aug.        Units:             Metric Tons

  Exports for:      2004               Sep. - July        **2005**

  U.S.              47                 U.S.               18

  Others                               Others             

  Iraq              156847             Iraq               14308

  Georgia           38571              Azerbaijan         6182

  Northern Cyprus   8435               Germany            4039

  United Arab Em.   7673               Northern Cyprus    548

  Azerbaijan        7420               France             538

  Iran              4783               Romania            444

  Germany           4200               Lebanon            109

  Russia            2174               Israel             67

  France            475                Kuwait             66

  Turkmenistan      435                Libya              57

  Total for Others  231013                                26358

  Others not Listed 1019                                  342

  Grand Total       232079                                26718
  ----------------- ------------------ ------------------ ---------------

##  Import Trade Matrix for Centrifugal Sugar

  --------------------- -------------- -------------------- --------------
                                                            

  Time Period           Sep. - Aug.    Units:               Metric Tons

  Imports for:          2004           Sep. - July          **2005**

  U.S.                  20             U.S.                 32

  Others                               Others               

  United Kingdom        243            United Kingdom       909

  Germany               113            Germany              603

  France                87             Netherlands          150

  Italy                 40             France               112

  Spain                 27             Denmark              83

                                       Spain                14

                                       Italy                13

                                                             

                                                             

                                                             

  Total for Others      510                                 1884

  Others not Listed                                          

  Grand Total           530                                 1916
  --------------------- -------------- -------------------- --------------

# 

# 

# Stocks

Similarly, sugar stocks have declined because of the GOT policy to
restrict the total amount of sugar and CSS production.