Turkey is considered to be the gateway between Europe and Asia; it is a Eurasian country located on the Mediterranean, stretching across the Anatolian peninsula in southwest Asia and the Balkan region of southeastern Europe. It is bordered by the Black Sea, the Marmara Sea, the Aegean Sea, and the Mediterranean Sea. Turkey’s neighboring countries are Greece and Bulgaria in Europe, Syria and Iraq in the south, and Armenia and Iran in the south eastern region.
Oils and Fats Market
Table 1 – Turkish Oils and Fats Supply and Demand Table
(1,000 MT)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Opening Stock | 299 | 282 | 281 | 307 | 445 |
| Production | 1.885 | 2.034 | 2.118 | 2.236 | 2.031 |
| Import | 1.498 | 1.329 | 1.445 | 1.690 | 1.728 |
| Export | 667 | 651 | 711 | 967 | 941 |
| Consumption | 2.730 | 2.767 | 2.826 | 2.822 | 2.769 |
| Ending Stock | 286 | 231 | 307 | 445 | 493 |
Source: Oil World
The Turkish oils and fats market predominantly comprises sunflower oil as a staple for household consumers, and palm oil, which is preferred as an ingredient in the food manufacturing sector and the food service industry, due to its versatility and economic advantage, making it essential to most businesses.
Sunflower is a staple to the Turkish people as it is locally produced. The local production of sunflower seeds is expected to reach 1.9 million tonnes in the 2022/2023 season with another 1.4 million tonnes imported from Romania, Russia, Moldova, Bulgaria and China for crushing, in order to meet local demand and re-export markets of sunflower oil in the Middle East and Africa. Sunflower oil is also the most imported oil and/or fat at 1,400,000 MT in the Jan-Dec 2022 period.
Table 2 – Import of Malaysian Palm Oil and Palm Products by Turkey
(1000 MT)
| Products | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|
| Palm Oil | 530.767 | 550.432 | 615.872 | 703.588 | 824.770 |
| Palm Kernel Oil | 80.435 | 85.768 | 88.425 | 89.810 | 91.914 |
| Oleochemical Products | 89.546 | 100.567 | 104.425 | 85.879 | 92.508 |
| Finished Products | 29.879 | 34.000 | 48.104 | 31.645 | 30.738 |
| Total | 730.627 | 770.767 | 856.826 | 910.922 | 1.039.930 |
Source: MPOB
A bilateral free trade agreement between Malaysia and Turkey (MTFTA) was signed and concluded in April 2014, after four years of negotiations. There is a reduction of 9.2% in the import duties. Crude and refined palm oils from Malaysia which were taxed for 31.2% for the import duty was reduced to 21.8%. The tax on packed palm oil products remained at 46.8%. On the other hand, the import duty for Indonesian Palm Oil remained at 31.2%. With the signing and implementation of the MTFTA, Malaysian exporters have gained preferential market access into Turkey and have remained competitive in the Turkish market. As a result, Malaysian palm oil exports to Turkey boomed after MTFTA in 2015, and Turkey is currently the leading importer of Malaysian palm oil in this region.
Malaysian palm oil export to Turkey has increased by approximately 42% in the last five years. The growing food industry and HORECA sector have contributed to Turkey’s palm oil import. The HORECA sector boomed in the Jan-Dec 2022 period as tourism activities increased significantly.
Table 3 – Origin of Palm Oil Imported by Turkey Jan-Nov 2022
| Palm Oil Imports | Volume (tonnes) | Market Share (%) |
|---|---|---|
| Malaysia | 723.250 | 71 % |
| Indonesia | 301.308 | 29% |
| TOTAL |
Source: TUİK
Based on Turkish customs data, palm oil from Malaysia recorded 723.250 tonnes or 71% of the total palm oil imported into the country in the Jan-Nov 2022 period. The Turkish government lowered import duty on all vegetable oils and oilseeds to 0% untill 31 May 2023 to curb food inflation and secure enough supplies for local consumers. Thus the 10% lower import duty advantage had by Malaysian palm oil over Indonesian palm oil has been nullified. Therefore after the levelling of import duty on palm oil, Indonesian palm oil’s share has gone up to 29% since the implementation of MTFTA in 2015. Based on information collected from industry members, we expect that the Malaysian palm oil share will still continue to dominate the Turkish market.
Conclusion
Turkey’s food manufacturing and HORECA sectors is continuing its robust growth and so does the demand for more palm oil as Turkey is also the hub for Middle East, eastern European and African markets for oils and fats products and confectioneries.
Palm oil will be the most imported oil and/or fat for years to come in Turkey. However, there are challenges that need to be addressed. The biggest threat would be Indonesia’s FTA negotiations with Turkey. If Indonesia manages to get the same preferential tariff, the palm oil market share dynamics might change as more palm oil and products will be flooding Turkey. That is why, it is important for Malaysian companies to shore up their presence in Turkey, obtaining physical investments or strong local partners to create a barrier to entry for palm oil from other countries.
Prepared by: Hakan Alkan
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