Redefining our value in Turkey

10 June 2016

Ann Clifford / Consul General, Milan and Trade Commissioner, Italy and Turkey

Turkey has made a lot of international headlines in the past 24 months, most of them not all that positive. Geopolitical tension in the region is high, and relations inside and outside Turkey are strained.  

The economy slowed following the inconclusive election result last year, and differences of opinion inside the governing Justice and Development Party has recently meant more change. With a new Prime Minister appointed in May, the view is that like-minded leadership will now push public spending to keep the economy moving. 

After a decade as the star in Europe's growth charts, Turkey's upwards trajectory has definitely waned. While GDP growth is still around 3% per annum, per capita income figures have gone a little backwards and things in the private sector are particularly tight. 

Russia is an important source of tourists and an important export market for Turkey, so the freeze in the relationship is having a big impact. Foreign visitor numbers are down across the board, so tourism revenues have dropped significantly and the implications are being felt widely. And as everywhere, farmers are being affected by low milk prices. 

Turkish business people remain robustly pragmatic, however. Conflict and dissent is not new for this region - and trade continues. Cost cutting and improved productivity are increasingly in focus, which creates opportunities for NZ companies. 

"Turkey’s is the youngest population in Europe (half are below the age of 30), and local and international businesses are putting money on the future." 

This includes multinationals using Turkey as a hub in the region eg GE Healthcare, Sony, Microsoft, Intel, and Coca Cola – the latter servicing 90 countries from Istanbul. Burger King's Turkish franchise has been such a success that its owner TAB Agro now also runs the brand's 1000 outlets in China - and has aggressive growth plans. 

Big ‘family’ corporates are a cornerstone of the incredibly networked business landscape in Turkey. TAB Agro is one of the Ata Group's subsidiaries, which cover finance, agri/ farming, IT and hospitality. While now listed on the Borsa Istanbul, the local stock exchange, the group's origins lie with the Ata family - one of country's most powerful. Roughly half of the country's top 500 companies are (or were) family owned, and have invested down their value chains. 

Ata Group's farming business is Ata Sancak, focused on dairy, but the group has more recently turned its attention to beef also. Unable to secure enough meat for Burger King operations, they have invested in beef cattle farming and processing. 

Turkey is a proud agricultural nation (President Erdogan is committed to self sufficiency, and import tariffs for everyone remain high). But while the horticultural industry is well known across Europe, the dairy and beef/sheep sector has been slower to modernise. 

Still a land of many small family holdings, there is now a sizable corporate-funded intensive farming sector (more than 200 dairy farms with 500+ cows were recorded in 2013 alone). With plenty of investment capital targeting a home, this area is picked to continue to grow and to look for solutions to help drive performance. 

Both Government and the private sector are committed to the transformation - and the next decade will be key. 

The intensive model employed is using expensive inputs, including capital equipment - and we believe there are opportunities for New Zealand in number of areas. 

If we want to be part of this transformation, we will need to work together to raise awareness of NZ expertise - Turkey is out looking for advice from the world's best farmers, but our techniques either aren't thought about (we're an end product threat, not a source of expertise) or look different (grazing vs intensive housed models). 

Hosting some key influencers at the New Zealand National Agricultural Fielddays this month is part of this awareness raising – with the concentration of industry expertise, new innovation and sheer scale sure to create impact. Bringing Kiwi experts together with Turkish leaders will both increase our understanding of their challenges, and provide opportunities to identify solutions to fit current and future needs. 

This story was originally published in NBR on 10 June 2016.