Gülfem Eren, Chairwoman of Grain Suppliers’ Association: “We observe that our farmers are tending towards to barley instead of wheat since the price rise is below the inflation rate. We also observe that wheat farmers use less certified seeds, fertilizers and pesticides. We have to support wheat farmers and encourage production in order to ensure food security.”
We are hosting an important figure at our special issue for IDMA (8th International Flour, Feed, Semolina, Rice, Corn, Bulghur Milling Machinery, Pulse, Pasta, Biscuit Technologies Exhibition). Grain Suppliers’ Association (HUBUDER) Chairwoman Gülfem Eren commented on the latest developments in the grain market for Miller Magazine. Gülfem Eren is the founder of HUBUDER which was established to bring Turkish grain traders under the same roof. Eren is a grain trader who follows supply-demand balances closely and successfully and foresees the direction of the market. HUBUDER Chairwoman stresses that global wheat production decreased this season but needs were met with the ending stocks and the prices have virtually remained unchanged. Eren expects the same harvest of the recent season to repeat itself this year provided that positive climate conditions continue until harvesting starts.
Here are the answers of HUBUDER Chairwoman Gülfem Eren to our editors:
Global wheat production is expected to be less than consumption this year. According to the latest report of International Grain Council, global production will be 735 MMT and consumption will be 744 MMT. How would wheat prices be affected from the shrinkage in supply?
Yes, you are right. Global wheat harvest faces a significant cutback this year, particularly in leading wheat exporters like Russia and the European Union. Production in these two regions is expected to decrease by around 25 MMT. On the other hand, wheat stocks were high thanks to the strong harvest in the last several years.
Dolayısıyla, bu sezon üretim düşüşü kaynaklı eksikliğin devir stoklarından karşılanması ile fiyatlarda dünya genelinde ciddi bir artış yaşanmadı. Therefore, because the shortage stemming from the decrease in this year’s production was met by the ending stocks, a significant price rise was not observed worldwide. If we look from Turkey’s perspective; indeed, weaker production in Russia and EU supported higher prices since those regions are among main wheat suppliers of Turkey. And prices of Russian and European wheat became closer to American wheat prices.
What are the current determinants for global grain prices?
There is no doubt that supply-demand balance is currently the most determining factor. Besides, we see that the US-China trade war affected soybean, corn and other grains’ prices significantly. Global growth projections, interest rate policies of certain central banks and energy prices also affect wheat prices to a certain extent.
Wheat cultivation areas decreased by 10 percent in Turkey this season. What is your yield expectation for the harvest?
We observe that our farmers are tending towards to barley instead of wheat because of economic difficulties, increased input costs and the fact that price rise of wheat is below the inflation rate. We also observe that wheat farmers use less certified seeds, fertilizers and pesticides. Of course, these factors will affect the harvest negatively. In addition to that, climate conditions are the most determining factor, for certain. I expect that the same harvest of the recent season to repeat itself this year provided that positive climate conditions continue until harvesting starts. Otherwise, if weather conditions will be problematic, this will have significant negative effects on the harvest.
Turkish Grain Council warned that the decrease in wheat cultivation area is alarming. Which steps should be taken for food security in Turkey in terms of wheat production which is of vital importance?
We have to support wheat farmers in order to ensure food security. Unfortunately, intervening the free market mechanism takes us to a vicious cycle. When we try to take bread prices under control, we discourage the production of the wheat, the main ingredient of bread. When the amount of production decreases, prices go up. We encourage imports to apply pressure on wheat prices and this stops local farmers from wheat production.
In my point of view, the government should develop a support plan for wheat. Our farmers should be supported for quality and modern wheat production. In addition to this, Turkish Grain Board and certified silos should change their purchasing criteria according to miller’s standards. Today, we realize that Turkish Grain Board’s stocks cannot meet the required wheat standards of millers. So, if farmers obtain quality products, all stakeholders of the sector will benefit. If quality standards met, possible surplus would be exported to global markets by Turkish Grain Board or Turkish flour industrialists, world’s leading flour exporters, would export the product after processing it into flour.
Currency depreciation in Turkey decreased wheat prices below the global levels last year. And a limitation has to be put in place for exports of flour made from local wheat. In what extent flour industrialists were affected from the currency shock? Could they get over this shock?
Unfortunately, flour exporters were affected by the sudden change in exports regime because of the economic fluctuations. When import requirement was imposed for wheat to be exported as flour, flour exporters were caught unprepared. This was particularly the case for the millers who were not accustomed to importing products or millers who have a difficulty in accessing financial resources. These difficulties still remain despite being slightly eased off in the last six months.
We also suggest you to read our previous article titled "Global oats market expected to increase at a CAGR of 5.5% in terms of revenue over 2018-2028".