April – 2020
Sugar beet production and planting area is forecast at 19.2 million metric tons (MMT) and 320,000 hectares (ha) in Marketing Year (MY) 2020/21, assuming favorable growing conditions similar to last year. The production quotas for MY 2020/21 were announced on December 25, 2019, which is identical to the amount allocated last year. The process of privatizing ten state-owned sugar factories has finished. Turkish confectionery products exports are increasing steadily.
Sugar Beets Sugar beet production and planting area is forecast at 19.2 MMT and 320,000 ha in MY 2020/21, assuming favorable growing conditions in line with last year. The sugar beet production estimate is slightly lower than the previous MY due to a slightly decreased planting area. Although the sugar quota remains the same in MY 2020/21, some sugar beet producers in certain regions shifted to corn and other crops because of the complexities of selling sugar beets under the quota and better return expectations for other crops this season.
The process of privatizing ten state-owned sugar factories has finished. However, the last three years were very turbulent in terms of sugar policy and debates on sugar in Turkey. The uncertainty of the Sugar Board, sugar quotas and the announcement to privatize state-owned sugar beet factories caused stress for producers and farmers. After the privatization of some sugar factories and losses of some planting area in recent years, the sugar beet planting area partly rebounded last year. A slight increase in the sugar beet quota resulted in production of 19.5 MMT of sugar beets from a harvested area of 325,000 hectares in marketing year (MY) 2019/20. Factories began processing sugar beets in the beginning of October and finished in January, in a period called the campaign period.
Currently, the average yield is about 60 metric tons per hectare. Turkey produces sugar from sugar beets in most regions, but the majority of production comes from the Central Anatolia region, near the cities of Ankara, Konya, Eskisehir, Afyon, Tokat and Yozgat. There are about 100,000 farmers who produce sugar beets in Turkey. Sugar beets are planted in 4-year rotations generally with corn, wheat, barley, potatoes, and sunflowers. Farmers plant their beets around April and harvest them in September/October. Planting for MY 2020/21 has started throughout Turkey. Production of sugar beets, and consequently sugar, is limited by quotas.
These are now set by Presidential Decree as of December 2019. Based on revised official statistics, Post’s revised sugar beet production and planting area estimates to 18 MMT and 300,000 ha in MY 2018/19. The reduction is linked to the privatization process of the sugar factories. Farmers who historically had sold their beets to sugar factories which were being privatized were reportedly uncertain about the future and some chose to diversify some of their land with other crops or not plant crops that year.
Ethanol and Molasses…
Molasses is a side product of sugar production from sugar beets, and production was around 700,000 MT in 2019, of which about 650,000 MT is used for the feed sector. The remainder is used for ethyl alcohol production and other purposes. Sugar beets are the main source of bioethanol production in Turkey, followed by corn and wheat. No additional sugar beets are planted to produce this bioethanol as it is produced from molasses, which is a side product of sugar production from sugar beets. Once the sugar is extracted from beets, the alcohol remaining in the molasses is converted into ethanol. Afterwards, the molasses is used as feed and as raw materials for the pharmaceutical industry, 3 cosmetics, construction, alcoholic beverages, and yeast.
Sugar beet pulp is used directly or as a mixture with molasses in the feed sector. Production of these side products is increasing in parallel with the amount of beets utilized by the factories. There are three plants in Turkey producing fuel-purpose bioethanol with an established total production of 160 million liters annually. The regulation of blending ethanol produced from domestic agricultural products with gasoline was first introduced in 2013 to comply with renewable energy policies, reduce import dependency in energy, and support the agricultural sector, according to Turkey’s Energy Market Regulatory Authority. The percentage of ethanol blended with gasoline types was raised to 3% from 2% in 2014.
As a measure taken to combat COVID-19, on March 13, 2020, Turkey suspended the requirement to include ethanol in gasoline for three months in order to provide an additional 20,000 cubic meters of ethanol capacity for the production of disinfectants and colognes in the country. Turkey also removed tariffs on ethyl alcohol imports amid its coronavirus pandemic response, announcing the decision in the Official Gazette on March 25, 2020. This measure aims to support the production of disinfectant and cologne (kolonya), a traditional ethanol-based scented disinfectant in Turkey and is only valid for imports for this purpose. It is in effect upon publication date and there is no statement regarding the end date, so it is valid until amended. The tariff on bulk ethyl alcohol imports was previously 10 percent.
With a population of approximately 83 million, Turkey is a significant sugar consumer. Turkey’s annual per capita consumption of total sugar is estimated to be 30 kg. Sugar consumption breaks down to about 80 percent used by the industry and 20 percent by households. The increase in home-use and industrial sugar consumption appears to be correlated with the increase in population and increasing foreign visitors. Currently, Turkey’s total annual sugar and sweetener consumption is over 3 MMT, where beet sugar accounts for between 2.8 and 2.9 MMT, and starch-based sugar (SBS) accounts for approximately 250,000 MT.
Increasing urbanization and the subsequent changes to lifestyles and eating habits play an important role in increasing sugar consumption. Starch-based sweeteners that are derived from corn are not consumed directly, but are used by the food industry as an ingredient in the production of candies, baked products, traditional desserts, ice cream, helva, jams, and alcoholic and non-alcoholic beverages. Post revised the centrifugal sugar consumption forecast to 2.95 MMT in MY 2019/20 which is slightly higher than previously forecast, mainly due lower exports than expected. The centrifugal sugar consumption is expected to remain high at 2.98 MMT due to strong demand for sugar products from the growing population in MY2020/21.
A number of Turkish agricultural exports benefit from Turkey’s Inward Processing Regime (IPR) policy. Sugar can be imported tariff free if used in products that will be exported and not marketed domestically. Almost all sugar imports in recent years have been done under the scope of the IPR with 4 zero tariffs by sugar product exporters. If imported for the domestic market, the tariff on sugar is 135 percent. The high fructose corn syrup (HFCS) tariff is also 135 percent.
Therefore, sugar imported for use in the domestic market is limited to specialty sugar that is not domestically produced (for medical, laboratory use, etc.). Turkey’s import and export figures for sugar in MY 2018/19 and for the first five months of MY 2019/20 are given in the below table. Due to an export restriction on sugar, during the first five months of MY 2019/20, Turkey exported only 431 MT of sugar, compared to 79,675 MT in the same period of the previous year.
Turkey imported about 157,650 MT of sugar in MY 2018/19. During the first five months of MY 2019/20, Turkey imported about 98,000 MT of sugar, compared to about 67,000 MT in the same period of the previous year. Post revised the import forecast from 230,000 MT to 200,000 MT raw sugar equivalent basis, for both beet sugar and HFCS in MY 2019/20 due to a possible slowdown in trade caused by Covid-19 in the following months. For MY 2020/21, sugar imports into Turkey are projected at 230,000 MT, raw sugar equivalent basis, with stable demand from sugar product exporters for both beet sugar and HFCS under normal trade circumstances.
Source: USDA (United States Department of Agriculture) Foreign Agricultural Service