The CITRUS orchard expansion occurring in the Cukurova region of Turkey is replacing cotton plantations, according to the USDA Foreign Agricultural Services report.
Export demand as well as increasing local consumption from holidaymakers are the reasons behind the development, in particular in Enterdonate lemons, Star Ruby grapefruit and satsumas.
Oranges are the main crop in Turkey accounting for half of total production, while lemons and mandarins represent 22 per cent and grapefruit about five percent. Approximately one third of production is sorted and graded for export by 12 large-scale packers, which is viewed as a risky business, and many packers have remained in business by relying on production from their own orchards.
In Turkey, there are unique market dynamics for citrus, which has been damaging for exporters and placed producers in a strong position for the last 10 years. “Exporters buy fruit at fixed prices without knowing what global market prices will be,” says Ayse Ozler, quality management systems director of exporting company Ozler Ziraat. She explains that at the season start, demand from exporters is very high and local growers ask for high prices, but once the fruit starts to hit the foreign markets, prices drop in line with market forces. “This rush for fruit at the start of the season is very much a Turkish phenomenon. The relationship between the producer and exporter is interesting. In August, the exporter approaches the producer and buys fruit at a fixed price, negotiated on the spot, and lays down a cash payment between 50-80 per cent,” she says.
“This year some exporters bought 100 per cent of fruit at fixed prices. This process is very different to other citrus producing countries. In Turkey, the producer has been in a very strong position but the mechanics are beginning to change. This system began because most exporters are also involved with transportation, supplying mainly Russia,” says Ozler. “Their priority is to fill truck capacity with what produce they can, and they are prepared to risk the price of the fruit because they make up for it on the transportation gains.
“Payments in Russia are made in US dollars, which has been an attractive currency, and exporters take the risk on the price of the fruit. However, the Turkish economy is stabilising and the USD is declining so we are beginning to feel a change in the sector,” she adds.
Most exporters buy citrus speculatively but Ozler hopes that with the weakening dollar, the real fruit players will stay in the sector and fair competition will evolve. She says: “I hope this will change in the near future otherwise some exporters can’t make money and won’t last for too long.
“Previously, government export subsidies were high and many companies abused them, but now the subsidies are only symbolic: the Turkish lira was valueless against the dollar, and at the end of the season, the USD rose against the lira and exporters compensated their losses through exchange rates. This is not the case any more because both the Turkish lira and economy are stable and strengthening.”
Turkish citrus production is concentrated in the Mediterranean and Aegean regions, and is divided into three growing areas that specialise in a different crop. The primary region is Cukurova that grows 70 per cent of the country’s citrus - 90 per cent of grapefruit and lemon, and 60 per cent of oranges and easy peelers. Cukurova is subdivided into three regions - Hatay in the south, Adana in the middle and Mersin in the west. The main orange varieties grown are Washington (50 per cent) and Valencia (30 per cent). In lemons, Enterdonate is the main variety and Star Ruby dominates grapefruit production, while clementines, Fremont and satsumas dominate the mandarin category.
This year, Turkey experienced a severe frost in April that affected much of the horticulture production in the country. However, citrus production was not severely impacted and higher yields in non-frost affected areas offset the low yields of the affected regions. Volume forecasts for Turkish citrus this year by the USDA are for slight increases in orange volumes (1.28 million metric tonnes) and mandarins (565,000mt), but a drop in lemon yields (535,000mt) and for grapefruit production to fall by 19 per cent (110,000mt).
Turkish grower/exporter and packer, Ozler Ziraat, has orchards of 400 hectares in the Adana region. Ozler typically yields 12,000t of citrus a year and exports all varieties of citrus but mostly red and white grapefruit - Star Ruby, Ruby Red and White Marsh - as well as lemons, mandarins and oranges.
This season the growing conditions have resulted in a 70 per cent drop in yield compared to 2003. Ozler says: “Yields are very low this year. In 2003, we had excess yield from trees and we think the trees are tired. Because of the excess yield, growers left the fruit on the trees too long last season, which affected the blossoming during May and probably inhibited growth. The on-tree price is extremely expensive for grapefruit. It is very precious.”
Ozler have slowed down the supply of grapefruit to the UK and Europe in the last two weeks and have instead increased the volumes of mandarins, which are relatively cheaper. Star Ruby grapefruit is now selling at e800-900 for 15kg but at the start of the season it was e13. The market has slowed down because consumer demand for mandarins has lifted.
She adds: “Our first shipments were satsumas and there is a lot of fruit this season. Normally we send to the UK but this year we cancelled our programmes for the UK. A month ago, local prices for Satsumas were double what they are now. In addition, what the UK was offering for mandarins was too low, so we decided not to supply the UK and look to Europe instead. Prices have since dropped but with the recent rains, the fruit quality has been affected and we don’t have the volumes to send to the UK now.”
Tom Flemming, responsible for Turkish imports at Hart & Friedman, says Turkish citrus has been poor this season - lemons were small-sized and trade has been disastrous. “Grapefruit has been steady but it slows down around Christmas and we have stopped importing. We will start Turkish citrus again in January with Lamus lemons, and minneolas,” he says. “Currently we are selling out the lines we have, but the oranges and satsumas do not do the job. Over the last few years, the category has become unpopular.”
H&F will have Turkish citrus until the end of March, with the minneola season being the shortest from mid-January to the end of February. The newer lemon variety, Lamus, finishes in March, but by then, says Flemming, the market will already move on to Spanish and South African produce.
He adds: “Grapefruit stores well until April but this season hasn’t lasted that long in the last few years so we will likely finish by March. In all honesty, we don’t get as involved as we used to - in the last two years we have closed Turkish citrus down because the fruit has become so slow and difficult to sell.
“We have 10 pallets to sell now and we stock a mixture of Marsh grapefruit and lemons, but sizes aren’t good and difficult to sell - admittedly they are just wallpaper. Satsumas are in supply but we also have Spanish in which last better and arrive in the UK quicker than Turkish do.
“In the past,” continues Flemming, “when we took on Turkish satsuma programmes for the small supermarkets, we usually had them rejected because they go bad so quickly. What we tend to concentrate on now are fast-selling items such as chestnuts over Christmas, and then restart citrus in the New Year.”
Flemming says that Turkish citrus volumes coming in to the UK are falling and there seems to be more Eastern block business. “The majority of citrus is grown in the south-east region of Adana and Mersin and it is easy to transport over the Bosphorous, across the Black sea and straight into the east in three days. With the UK, the journey takes at least 10 days,” he says.
For Ozler, the biggest export lines for the UK are satsumas and Star Ruby grapefruits. “We have also worked in lemons at the beginning of October with good returns,” says Ozler. The lemons exported demanded high local prices but, when they hit the foreign markets, were competing with well-priced Argentinean lemons, and prices have since dropped.
She adds: “We have worked with UK companies for satsumas for five-six years, but this year we decided not to work on the job for the UK marketplace because of the crazy competition between retailers - the product managers are under extreme pressure to satisfy them and this is reflected to exporters and producers.
“While the retailers want better selection and quality, they also want to pay lower prices. As an exporter, we have never made profit in the UK with satsumas sales. Therefore, we decided not to be a player any more, at least for this year.
“Instead we sent 2,000t of satsumas to eastern European and Russian markets, where we receive better market prices and returns compared to UK,” she says.
Working with a Belgian agent during the peak citrus season because of ease of distribution, Ozler started the European season with sendings of clemanvilla for a German supermarket, a variety not demanded by UK consumers who prefer satsumas.
The Turkish season runs from October to May and finishes with Valencia oranges for Russia, because they cannot compete with Spanish produce coming to the UK. “We focus on grapefruit and oranges for Russian export,” says Ozler. “We expect mandarins to finish well but oranges are not performing strongly. We hope that grapefruit prices will bounce back to start of season prices after January, but this season will finish early since we don’t have the volumes.”
Ozler adds: “Our total packing capacity is 40,000t of citrus per season - 15,000t of grapefruit (38 per cent of volumes), 10,000t of mandarins (25 per cent), 10,000t of oranges (25 per cent), and 5,000t of lemons (12 per cent). All our production is EurepGAP certified and depending on the varying high-low yield due to climatic conditions, volumes vary between 10,000-12,000t. On average, our total production is broken down into: 24 per cent lemons, 27 per cent mandarins, 33 per cent grapefruit, and 16 per cent oranges. Our exports are predominantly to Europe, UK, Russia, Hong Kong, and in 2003, we sent 2,000t-2,500t of lemons, 2,500t of mandarins, 10,000t of grapefruit and 7,000t of oranges. Our biggest export produce is grapefruit to Russia - as well as lemons, mandarins, and oranges, and to Hong Kong - lemons and grapefruit.”
For Ozler grapefruit production has become very important and has moved into a leading position within European supermarket programmes. As for marketing citrus fruit, increasing exports to Eastern and Central European countries such as the Ukraine and Russia have increased, especially lemons from September to January.
Russia is a growing market for Turkey, says Ozler because the economy has stabilised under the Putin administration. “Increasingly, people are willing and able to pay more for better quality,” she says. “It is a country with a big population so there is a market for all kinds of fruit quality and size. Turkey also has a big logistics advantage compared to Spain, Morocco and Egypt. And receiving payment is not difficult if you are set up properly in Russia, contrary to what many people believe.”
Turkey’s citrus market share is increasing every year because the sector has been improving fruit quality since Russia became a potential market. “For our company,” says Ozler, “Russia has challenged us to focus on quality - to grow fruit that can withstand the transportation all the way to Siberia, in tough conditions for 17 days without problems. We have achieved that level of quality.
“Exporting to Russia has allowed us to be more selective with fruit destined for European, UK, and Asian markets. For Ozler, to work and expand in the Russian market is our biggest challenge and our biggest opportunity at the same time,” she adds.
USDA forecasts anticipate Turkish citrus exports to be up for oranges and mandarins and down on lemons and grapefruit because of yields compared to 2003. However, Flemming from H&F says he has no plans to go to Turkey and is only playing with the category.
He says: “What we tend to have these days are the off-cuts not wanted by the Eastern block. During the peak a few years back, we traded close to 500,000 cartons of Turkish citrus, but this year I would be surprised if we did one fifth of that - about 100,000 boxes.
“For a lot of produce, the world has become smaller in terms of shipping and it is easier now - the usefulness of Europe has diminished. We will be plodding along with the Turkish citrus category, but not in great volumes.”
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