Turkish citrus exporters have been benefiting from trade with ex-Soviet Union economies, says Morgan Barrett trader at Hart and Friedman (H&F). He says: “Sendings to these countries have increased and the market mechanics are different - they pay up front for the fruit, in contrast to the UK where exports are sent on commission only.
“Since we supply the wholesale markets where prices fluctuate throughout the season, it is not viable for us to pay up front for the fruit. There are some Turkish growers who understand the dynamics of the UK markets, but not the whole sector. As a result, our volumes arriving in the UK have declined by as much as 25 per cent over the last two years.”
Ayse Ozler, quality management systems director of exporting company Ozler Ziraat, says there are unique market dynamics for Turkish citrus which have developed in the last decade. These unfortunately have been damaging to exporters and placed producers in a strong position. She says: “Exporters buy the fruit at fixed prices from growers without knowing what global market prices will be.”
Ozler adds that at the beginning of a season exporter demand is very high and growers can therefore demand high prices. “This rush for fruit at the start of the season is very much a Turkish phenomenon and the relationship between the producer and exporter is interesting. In August, the exporter approaches the grower 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 phenomenon eventuated because most exporters are also involved with transportation and mainly supply Russia says Ozler. “Their priority is to fill truck capacity with whatever produce they can, and they are prepared to take the price risk because they are compensated by the transportation gains.” On top of that, payments in Russia are made in US dollars, which has been an attractive currency. However, says Ozler, the Turkish economy is stabilising and the dollar declining so the company is beginning to feel a change in the sector.
Despite the reduced volumes arriving in the UK, local production continues to expand as groves develop in the Cukurova region of Turkey to meet the increasing demand for exports and rising local consumption from tourists.
Bamex is one exporter that focuses on the UK market, and through its UK operation, Bamsped International, it supplies 70-80 per cent of its volumes to UK multiples (80 per cent) and wholesale markets (20 per cent). “Over the last five to 10 years, plantings of satsumas have gained a lot of ground and exports have increased by 20 per cent,” says Emrah Mulayim, director of Bamsped. “We have managed to extend the satsuma season by two to three weeks. This has been achieved because trees have been planted at higher altitudes, and are harvested later, from mid December to January.”
Bamex produce 50,000t of citrus fruit, including lemons, satsumas, novas and minneolas. Of this volume, 40,000-45,000t of Class I fruit are exported to the UK as either fresh produce or for processing. “We have had good growth for lemons and mandarins and our exports are up by 25 per cent. There has been pressure on the grapefruit category given the weather events affecting the sector in the last six months. Grapefruit has been short all round, but we have filled the gap with our Ruby Red fruit. So our export volumes have remained stable and we discovered there is demand for our pink grapefruit,” says Mulayim.
Turkey grows a variety of citrus fruits with production concentrated in the Mediterranean and Aegean regions. The primary region is Cukurova where 70 per cent of the country’s citrus is grown - 90 per cent of grapefruit and lemon, and 60 per cent of oranges and tangerines. The main orange varieties grown are Washington Navel and Valencia, the main lemon variety is Enterdonate, Star Ruby leads the grapefruit production and clementines, Fremont and satsumas dominate the mandarin category.
Overall oranges continue to dominate, accounting for half of the total production, while lemons and mandarins make up 22 per cent and grapefruit accounts for approximately five per cent. But three citrus varieties are growing in particular - Enterdonate lemons, Star Ruby grapefruit and satsumas.
Almost one third of total citrus production is sorted and graded for export by the country’s 12 largest packhouses and the UK has been a significant buyer of citrus fruit, predominantly to service the wholesale markets. Barrett says: “Normally you can’t take Turkish citrus into the supermarkets because the supply and quantity of sendings is not consistent. It is good wholesale market fruit and will remain so until we find a local packhouse that can deliver better quality.”
However, six of Bamex’s largest growers received Tesco’s Nature’s Choice certification in August 2004, and its packhouse is EurepGAP certified. The facility, based in southern Turkey near Adana, has a canning and freezing factory that is fully integrated and processes Class II citrus fruit. Mulayim says: “Turkey is taking over from Israel as the main supplier of canned citrus to the UK. We have placed some emphasis on the processing sector in the last five years, as the UK multiples and catering sector are both big buyers, importing 2,000 containers. Turkey supplies half of the volumes and we supply half of the Turkish imports - 400-500 containers. We are also focusing on niche markets such as Japan where demand is rapidly increasing.”
Tom Flemming of H&F says, in the last two years, the company’s involvement in the category has decreased because the fruit has become slow and difficult to sell. He says: “What we tend to get 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 now I would be surprised if we did one-fifth of that.”
Most Turkish exporters buy citrus speculatively for export says Ozler, but she 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 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 dollar, so exporters compensated for their losses through exchange rate movements. This will not be the case for too long because both the Turkish lira and economy are stable and strengthening.
“We have worked with UK companies on satsumas for five to six years, but decided against this because of the stiff competition between retailers - the product managers are under extreme pressure to satisfy them and this is reflected to exporters and producers,” she says.
“While the retailers want better selection and quality, they also want to pay lower prices. As an exporter, we have never made a good return in the UK with satsumas sales. Instead we sent 2,000t of satsumas to eastern European and Russian markets, where we receive better market prices and returns compared to the UK.”
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