HAZELNUT PROBLEMS AND SOLUTIONS
ORDU COMMODITY EXCHANGE (May 2014)
Hazelnut Sector Problems and New Type Solution Suggestions
– Hazelnut Law
– Inventory Control System (SKS)
– Agricultural Management and Cooperatives
– Production Focused Agricultural Support
– Setting Standards for Traders Doing Nuts Trade
Although hazelnut stands out as a product that we are a leader in its production and trade, it has always been on the agenda with its problems since it was an economic value and unfortunately its problems are still discussed. However, the problems in the hazelnut market are increasing. The actual implementation of the “Support Price Guaranteed Support Purchase”, which is the classical support model, was terminated with the Resolution of the Council of Ministers 2009/15201 and 2009/15202 published in the Official Gazette dated 15.07.2009 and numbered 27289. A new era started in hazelnut. The hazelnut trade was left to completely free market conditions with the applications that will be referred to as “New Hazelnut Strategy” with BKK, which comes into force in 2009. It will no longer be possible to make a “support price” by explaining the “base price”. TMO, which entered the hazelnut market in 2006 season, will be withdrawn from the market by evaluating the stocks that will not buy hazelnut purchasing.
For the producer, “Area-Based Income Support” and “Transition to Alternative Product Support” payments will be made until the end of 2012. As a strategy requirement, it was calculated that the state was not in the hazelnut sector at any stage after 2012. With the new Hazelnut Strategy, the provinces that allow hazelnut production is determined once again, and it was written on the basis of cities and districts. In the years when the New Hazelnut Strategy was implemented, the problem of “excess supply”, which is the chronic problem of the hazelnut industry, due to the low yield due to natural conditions, while the hazelnut prices were above a certain level, there were no real conditions to test the system. However, it has been tested that it will not be easy to give up Area Based Income Support. Likewise, the implementation period of the support, which is planned to end in 2012, has been extended. Nuts “Turkey Agriculture Basins Production and Support Model” is not within the scope of supported products. In addition, if Area Based Support disappeared, it would have been completely abandoned to its fate, and it was understood that it would not be easy to give up support when there were political concerns and facts on the other side.
So what was targeted with the New Hazelnut Strategy?
– Determination of hazelnut price according to the principles of supply and demand law in free-market conditions and allocation of a fully competitive market
– Increased welfare of the manufacturer
– Increased quality and efficiency
– The establishment of a corporate structure that will shape the sector (Licensed Warehousing, Hazelnut Specialty Exchange, Producer Associations etc.)
– Hazelnut trade made easier, trader and industrialists’ profit margin increased
– Preventing hazelnuts from being burdened by the treasure is, of course, possible to extend the list of targets targeted by the strategy, but in general, the expectations or goals of both the state and the industry were in this direction. In the intervening years;
– Determination of price of hazelnut in free-market by applying the law of supply and demand couldn’t succeed in. However, speculation and manipulation claims followed in quick succession. With the complaints made to the Competition Board every year, the Mercantile and industrialists in the region and the Commodity Exchanges are constantly examined. A perception has been created that the parties in the sector will never come together, supply and demand cannot agree, and a reasonable market price point can never be established.
– The welfare level of the producer has not increased. On the contrary, the soil became insatiable. The lands that are subject to inheritance law continued to be divided continuously. The rural-based producer profile has undergone a natural liquidation and rural-to-urban migration continued. The payment of Area Based Income Support to the producer directly removed the producer from the production process. A group of producers emerged that received support not because of what they produced but because they owned the property.
– Factors such as non-production-oriented support, producer profile that is not based on rural residence, land division rapidly decrease the efficiency received from the unit area, of course, the quality was also negatively affected.
– Even though licensed warehousing pilot applications started in 2012 in Düzce and Ünye, the doors of these warehouses, which can accept the product in symbolic amounts, were hit one season later. While all the expenses for opening those warehouses were wasted, the frustration experienced was greater. Another interesting aspect of the work; Questioning the applications of Licensed Warehousing, generating ideas about where to make mistakes or wrongs caused severe reactions. With the perception that there is a group of nuts enemies (!) And traitors (!) Against the Licensed Warehouse, There was a meaningless otherization.
– A complete environment of uncertainty has been created for the trader and the industrialist. Especially the chaos markets that emerged during the evaluation of the hazelnut in the hands of TMO have been confused. The trader and industrialist had to compete with unrealistic prices, and this situation still continues. Due to this uncertainty and high blood pressure trading was the most common commodity exchanges. At the point where the state says “Count me out”, both the producer and the trader, the industrialist, were looking for a partner, a search for a responsible person. In this quest, the Commodity Exchanges, trader and industrialist organizations, were made a target.
– Area Based Income Support was to be completed in 2012, but its completion could not be considered and was extended until 2015. It can be seen that when 2015 comes, its extension will come to the agenda again and it will likely be extended. Support for hazelnuts is a cost for treasury and a burden continues to increase.
As can be seen, there is not much progress in the hazelnut industry. The fact that the 2014 season was largely burnt by being affected by the frost disaster and the price of 6 TL climbed to 10 TL at a time and the increase continues as of now indicates a decisive truth in the hazelnut industry. “State intervention is essential in the hazelnut industry” State intervention in the hazelnut industry should never be perceived as it should be back to the outdated “Buying Price Guaranteed Support.”
– Consumption-oriented serious problems are experienced and for the first time in 2014, a proposal such as importing hazelnuts came to the agenda for the first time in its history. We hope that this work, which is in the form of solution suggestions, focusing on the problems in the hazelnut sector, will lead to the establishment of “Hazelnut Workshops” to be organized by the state. At the point reached today, it is that no institution in the sector has the status to organize Hazelnut Workshops and include the entire sector in this. The National Hazelnut Council (NHC) could not be institutionalized to become the roof organization of the sector. In the meantime, because the institutions wore each other, they moved away from the ground to do common business. In fact, even this is a serious problem that needs to be addressed on its own.
For years, Turkey, which is one of the 5 countries that are agricultural country and the world’s self-sufficient in agricultural production in the territory, was able to achieve an independent Agricultural Law in 2006. Considering this great delay in the enforcement of the Agricultural Law, it is understandable that a “Hazelnut Law” has not been requested, that it has not been studied and may not have come to mind. Nuts-related issues are always regulated by secondary legislation. Special laws, Regulations, Decisions of the Council of Ministers and so on. There is a situation such as producing legislation according to the changing conjuncture. There is no basic legislation regarding hazelnuts and all of the existing ones are secondary and rather messy.
While legislating the Hazelnut Law, the final declarations of common and intensive workshops covering all representatives in the sector should be taken as the basis. It has been written up to this time; Determinations and reports and the things put forward in this study should be a source for the creation of this law. Hazelnut Law, which is inevitable to be prepared, should not be a bureaucratic output to be put in front of the sector, it should be in the form of a collection that includes even customs, customs and practices. In its simplest form, the 50% efficiency basis, regarded as customary and customary in the hazelnut sector, is now legally perceived, has not been able to be ruled anywhere. As in this simple example, a Hazelnut Law that covers and regulates all that exists is essential. It will make it easier for everyone, especially the state, to write down all the forms of commercial customization that shape the industry, from the production stage to the final stage.
STOCK CONTROL SYSTEM (SCS)
Following the frost disaster in the seasons of 2004 and 2014, the negative impact of the market and the sudden and very high level of prices have made it impossible to fulfil commercial agreements, while many companies have suffered great losses while unfortunately. Today, while a situation where world hazelnut production cannot meet world hazelnut consumption is evident, product loss based on natural disasters increases the demand for the product and makes it more meaningful. Hazelnut first time in history, so clearly spoken to Turkey’s hazelnut imports. Turkey, hazelnut is a leader in the production and trade; As of the seasons, it earns around $ 2 billion in export revenue without using imported inputs. Considering the size of the world market, which is the raw material of the hazelnut, it is seen that it is not a dream to get much larger shares from this market.
An Inventory Control System by the state in Turkey (SCS) should be established. Thanks to the SCS, in the years when the product is abundant, hazelnuts will be purchased by the state and stored under ideal conditions, and the product will be supplied to the market at affordable prices in the years when the product is low, thereby maintaining the supply-demand balance. Issues to be considered in the establishment and functioning of the SCS;
– The SCS is not a Licensed Warehouse Managership. The purpose and operation of Licensed Warehousing should not be confused with the SCS.
– Products to be purchased by the state under the SCS are not purchases. The state will act as a prudent trader and must be withdrawn from the market after purchasing the product, which it plans to buy for that season, regardless of the producer or trader, at the market price.
– Hazelnut is a more marketable product even from gold. Every day of the year and every hour of the day are rare commodities that can be converted into cash immediately at any price acceptable in market conditions. This liquid feature is the economic reality that will eliminate the perception of “cost is” for waiting time in the warehouse in the hands of the state.
– The main point to be considered here is the following; the state should not be a “ruthless competitor” for traders and industrialists, whether buying nuts or selling nuts. Attention should be paid to buy and sell prices and not speculate on prices formed under free-market conditions.
– Elements such as the functioning of the SCS, its objectives and form of control should be regulated in the Hazelnut Law.
AGRICULTURAL BUSINESS AND COOPERATION
The biggest problem focused on production is no doubt that the hazelnut fields are divided. Agricultural land is rapidly split with the structural support of the inheritance law and the appeal of Area Based Income Support. In small agricultural lands, hazelnut production with high cost, low productivity and traditional methods, of course, reveals the quality problem.
In the “Hazelnut Law”, which will be our main basis, the provisions that will prevent the division of agricultural lands should be included. A method such as making agricultural supports to “Agricultural Enterprises” legal entity should be adopted. Hazelnut producer is the first owner of the product. Economic reality is in favor of having the right and authority to determine the price of who owns the product. However, in the hazelnut industry, this reality works in reverse. The producer, who owns the product, goes to the buyer and says, “How much money is nuts?” He asks and sells his product at the price the buyer appreciates. The change of this reverse perception is possible with the manufacturer’s corporate identity and strengthening and awareness of its power. Cooperatives should be encouraged simultaneously with the promotion and allocation of agribusiness. The product sales process should be made by and through the cooperative. It is possible to see examples of producers’ associations and cooperatives doing great business in European countries. In these countries where Agricultural Management is common, it will be seen how the cooperatives created by 8-10 thousand producers come together to value the product and increase the welfare level of the producer.
AGRICULTURAL SUPPORT WITH PRODUCTION FOCUS
“Base Price Guaranteed Support Purchase”, which is the classical support model, and “Area-Based Income Support” which is still being implemented, is not the focus of production. When both support models are evaluated in terms of results,
– They were burdened with the treasure
– It has no effect to create economic value and return to the economy.
– Quality and efficiency decreased
– It did not increase the income and welfare level of the producer.
– It could not remove the production from traditional molds and prevented modernization in agriculture.
Not only did it solve any of the existing problems, but it also created new problems.
It is very important that agricultural supports are production oriented. Giving support to the manufacturer only because it can prove its quality, eliminates the producer-production relationship. A system that encourages laziness, such as being able to win without producing, is emerging. Today, there is such a producer profile; Buying bread from the oven, meat from the butcher, vegetables from the greengrocer, making all the workmanship of the agricultural land in return for the price and unaware of the quality. He should have done the work subject to agricultural activity. Today, there is a producer profile that has become a boss.
And the fact is that; The main reason for this situation that creates “boss producers” is the wrong support policies implemented.
Agricultural supports should have incentive features. Every support should encourage improvement, and every improvement should open up new supports.
– Production process and product should be supported. With the support of the production process; Providing support for situations such as the preference to mechanization in agricultural activity, orientation to the production of new and high-yielding products, the transition to good agriculture and organic farming methods, and diversification of products. If the product is supported; a certain amount of quality and per unit area, a certain amount of efficiency should be supported, the product should not be supported by an inefficient and poor quality production process, and no waste of resources should be caused. In this way, a homogeneity in total quality will be achieved.
– Ensuring that the support process should ensure being fair. Today, the same amount of support per decare is provided for the person who lives on the agricultural land and tries to get along with the agricultural activity (real producer), he is a businessman but also has the same amount of support for the owner of the agricultural land and not related to the definition of the producer. Such situations should not be given a place. Strict determinations are obligatory in the sense that the state provides unconditional support and incentives within the concept of “it is for Allah to take without giving”. He must sift and touch frequently. It is also known that the vast majority of the support payments made up to this time were made to those who are not real producers, who regard hazelnuts as a side income.
– When designing agricultural supports and incentives, the perception of seeing only productive problems should be overcome. Support and incentives should be considered as a whole and for the entire industry. Issues such as opening up to new markets, supporting and promoting R&D activities that will add value to the product should also be considered within the scope of these supports. In the hazelnut, which we refer to as a national product, there is tremendous cooperation from producer to merchant, from the merchant to industrialist and exporter. There is a great deal to be done on a Hazelnut Law, which will be prepared in order to wrap this collaboration into flesh.
BRINGING STANDARDS TO HAZELNUT MERCHANTS
Another important issue is that standard is lacking for traders engaged in hazelnut trade. Ordu Commodity Exchange was established in 1936; It is understood that about 1,630 traders have been deleted since then. While some of these are due to death, another very important part has failed. The merchant profession has not been a transferable value for generations. How sad it is; The history of the hazelnut industry is full of sunken firms. In fact, this situation is a problem for our country in general. It has become a brand and has lived for many generations and has not developed a business culture. Today, “Coca Cola” or “Ford”, which are world brands, have been in existence for many generations. Being a brand is also related to the fact that its commercial activity is not easily accessible. That is, some standards must be carried, and those standards must be tied to certificate-like documents and those documents must have an economic value. Now, are there any blood ties with the founders of Coca Cola’s executives or owners today? Of course no. It has become a brand, and those who carry the standards of having that brand have continued. While it is ensured that even a simple egg has certain standards by printing a number on it, it is not right and sufficient to consider a weighbridge and a safe enough for those who want to trade an exceptional reputation like nuts. The merchants engaged in hazelnut trade are legal or private enterprises under the Turkish Commercial Code (TCC), their responsibilities in the business life and the characteristics they should bear are determined in the TCC. However, the hazelnut industry has its own customs, customs and practices. These customs, customs, and practices are all legal and importantly legitimate. Traders engaged in hazelnuts continue their commercial activities with these customs and practices. With the Hazelnut Law, legal standards should be introduced to the merchants and merchants who will deal with hazelnuts.
It is useful to reveal all the problems experienced and to be experienced in the hazelnut sector, and all the words that have been said and will be said by organizing “Hazelnut Workshops”. The theme and the slogan of these hazelnut workshops should be under the title of “We Want the Hazelnut Law”. It is the uncertainty that worries the entire hazelnut industry. The disappearance of this uncertainty is possible only if the state is actively involved in the sector. We have experienced that it is not sustainable for the state by saying “Count me out” for a product that we are a leader in production and trade.