AGENDA

Executive Turkish Agrofood Growth Drivers Opportunities in Success 1 Summary 2 Industry Outlook 3 in 4 Turkish Agrofood Industry 5 Stories

EXECUTIVE SUMMARY TURKEY HAS A STRONG AND GROWING AGRICULTURAL EXECUTIVE SUMMARY INDUSTRY OFFERING OPPORTUNITIES IN MANY AREAS.

FAVORABLE INVESTMENT STRONG INTERNATIONAL LUCRATIVE OPPORTUNITIES IN STRENGTHS OF ENVIRONMENT PRESENCE SUB-SECTORS THE INDUSTRY

• Strong macroeconomic growth with • Global agrofood giants are • Geographically well-placed to • Agriculturally sufficient country with increasing income per capita and a present in Turkey with significant take advantage of trade favorable climate, large arable lands, bourgeoning middle-class productive activities, using Turkey opportunities and abundant availability of water as a hub to access regional in Europe, Middle East, and resources • Favorable demographics with a markets former Soviet countries dynamic, young, and skilled labor force • Considered to be one of the leading • Successful partnerships with local • With a growing population of more countries in the world in the field of • Cost-competitive labor prices. companies to grow in the region, than 83 million, Turkey is one of agriculture and food Compared to Europe and the rest of the capitalizing on locals’ experience the largest markets in the region world, the labor costs and networks • Export opportunities thanks to Turkey’s in the sector are 70% -80% lower • The government invests heavily in proximity to regional markets irrigation projects and • Strong government support through improvements to infrastructure • Strong food and agriculture sector, incentives which employed about 18% of the active population of the country and • Developed industrial and commercial represented approximately 6.6% of infrastructure GDP in 2020

invest.gov.tr | 03 AGENDA

Executive Turkish Agrofood Growth Drivers Opportunities in Success 1 Summary 2 Industry Outlook 3 in Turkey 4 Turkish Agrofood Industry 5 Stories

TURKISH AGROFOOD INDUSTRY OUTLOOK TURKEY AGRICULTURE SECTOR OUTLOOK TURKEY IS

LARGEST COUNTRY IN LARGEST AGRICULTURAL PRODUCING COUNTRY IN EUROPE IN TERMS OF rd st THE WORLD BY QUANTITY AGRICULTURAL FOR LEADING 1 ECONOMY (2019) 3 COMMODITIES (2019)

with its USD 49 billion agricultural production volume FRUITS, VEGETABLES, COARSE GRAINS, LARGEST COUNTRY IN th THE WORLD IN TERMS DAIRY AND OILS OF AGRICULTURAL 10 ECONOMY (2019)

Source: World Bank, United States Department of Agriculture invest.gov.tr | 05 TURKEY’S RANKINGS FOR AGRICULTURAL AND AGROFOOD PRODUCTION AND EXPORT (2019)

NO NO NO NO NO NO 1 2 4 1 2 3

GLOBAL GLOBAL GLOBAL GLOBAL GLOBAL GLOBAL PRODUCER OF PRODUCER OF PRODUCER OF EXPORTER OF EXPORTER OF EXPORTER OF Figs Melons Greenhouse Quinces Pasta Eggs Watermelons products Raisins Quinces Cucumbers Flour (Wheat) Sour cherries

Source: FAO invest.gov.tr | 06 TURKEY HAS BECOME A MAJOR PLAYER IN TURKEY AGRICULTURE SECTOR OUTLOOK THE WORLD AGRICULTURAL PRODUCTION IN THE LAST TWO DECADES.

Agriculture sector employed almost The sector’s value 18 percent of the country’s working increased by 96% population and that accounted for 6.6 between 2002 and 2020. percent of the country’s GDP in 2020.

60 160 144 142 143 136 140 50 53 51 106 49 47 120 40 45 100

30 80

60 20 24 40 10 20

0 0 2002 2016 2017 2018 2019 2020 Agriculture, GDP (billion USD) Agriculture, production (million tonnes)

Source: TurkStat invest.gov.tr | 07 AGROFOOD SECTOR VALUE CHAIN (2019/2020)

INPUTS PRODUCTION PROCESSING MARKETING CONSUMPTION

• Turkish fertilizer consumption • 2.8 million enterprises • 51k food companies with • Turkey's grocery retail market has • A domestic market of 83 per hectare: 115 kg while the 514k employment experienced rapid expansion in million with increasing per world average: 138 kg • 14k associations & parallel with the shift to modern capita food consumption cooperatives • 649 beverage companies Western-style grocery retail each year • Turkey's demand for with 17k employment formats. fertilizers is 10th highest in • 4.7 million employment: 18% • Turkey is well-positioned to the world. of national employment • Food manufacturing industry • Strong presence of Turkish easily reach Europe, MENA, turnover: 54b USD - most retailers such as BİM, A101, Şok and markets. • The lack of local raw material • Agricultural land: 37.7 million contributing sector to total and Migros, while foreign retailers supply in all three raw ha manufacturing sector including CarrefourSA (JV) and • Agrofood exports: material categories (Nitrat, turnover Metro are also performing well. USD 20.7Bn Phosphorus and Pottasium) • Average enterprise size: 6 ha Agrofood imports: • A large number of major • Total sales of grocery retailers USD 15.2Bn • 765 certified seed producers • 67% of total enterprises are multinationals active in (2019): USD 69Bn (Modern in Turkey& a significant below 5 ha size, realizing processing business: grocery retailers: 37Bn - proportion is multinational 22% of total planting Mondelēz, PepsiCo, The Traditional grocery retailers: brands & producing 1.1 Coca-Cola Company, Mars, 22Bn) million tons of seeds • 78% of planting activities are Nestle, Unilever, Corteva, Dr. carried out by remaining Oetker, Cargill, Ferrero, • Imports of consumer-oriented medium and large Danone, among others. agrofood products (2018): USD companies. 2.6Bn

Source: TurkStat, SSI, MOAF, USDA invest.gov.tr | 09 TURKEY HAS AN ESTIMATED TOTAL OF 11,000 PLANTS PLANT SPECIES, WHEREAS THE TOTAL NUMBER OF SPECIES IN EUROPE IS 11,500.

TURKEY IS THE WORLD Plant production Plant production LEADER IN THE (million tonnes) (billion USD) PRODUCTION OF VARIOUS CROPS. 2020

34,9 TOP PRODUCER 31 2002 Hazelnuts, apricots, figs, CAGR 25 cherries, quinces 2002-2020 2.4% 22,6 ONE OF TOP 5 PRODUCERS 58 69 13 Melons, apples, watermelons, cucumbers, 23 , , sour cherries, , , green beans, olives, beet, tomatoes,

Cereals and other crops Fruits, beverages and spices crops 2002 2020 ONE OF TOP 10 Vegetables PRODUCERS Cotton, barley, sunflower seed, grapes

Source: TurkStat invest.gov.tr | 10 TURKEY BOASTED PRODUCTION OF 22.9 MILLION ANIMAL PRODUCTS TONS OF MILK IN 2019, MAKING IT THE LEADING MILK AND DAIRY PRODUCER IN ITS REGION

The country is one of top ten producing countries of honey and eggs in the world.

Production of animal products Production of animal products (million tonnes) (billion USD)

45,6 2019

2002 1,2 0,4 0,8 CAGR 0,6 2002-2019 2,1 0,7 7.1%

14 8,4 22,9

2002 2019

Milk Red meat Aquaculture Poultry meat

Source: TurkStat invest.gov.tr | 11 TURKISH EXPORTS OF AGROFOOD PRODUCTS AGROFOOD FOREIGN TRADE INCREASED 5.5 TIMES IN THE LAST TWO DECADES.

Agrofood exports make up 12% of World leader in the export of flour, quinces and raisins Turkey’s total exports Breakdown of exports by sub-sector (2020) Exports (billion USD) 3% 13% 10% CAGR 20,7 19,2 19,7 2002-2020 18 18,6

84% 7,8 3,7 Plants and plant-based food Animal products and animal-based food Beverages 2002 2005 2016 2017 2018 2019 2020

Breakdown of imports by sub-sector (2020) Imports (billion USD) 11.9% 5 2 CAGR 15,2 % % 2002-2020 14,4 14,4 14,6 12,5

93% 2 3,4

2002 2005 2016 2017 2018 2019 2020 Plants and plant-based food Animal products and animal-based food Beverages

Source: TurkStat invest.gov.tr | 12 A SIGNIFICANT PORTION OF IMPORTED AGRO- MAJOR TRADE ITEMS (2020) PRODUCTS ARE USED BY AGROFOOD INDUSTRY TO PROCESS AND EXPORT.

Dried fruits and vegetables sector Vegetable oils sector Flour sector (million USD) (million USD) (million USD)

1.200 3.000 2.732 1.114 Top 3 trade items (million USD) Top 3 trade items (million USD) 2500 2.282 Top 3 trade items (million USD) 1.000 2.500 Exports Imports Exports Imports 2000 Exports Imports 800 2.000 1.580 Raisins 514 Raisins 50 Sunflower Sunflower 1500 1.500 638 678 Flour, wheat 951 Wheat 2,000 600 oil, refined oil, crude 964 1.000 1000 400 Dried Dried Soybean Palm oil, 260 22 198 503 apricots coconuts 500 meals refined Wheat 12 Wheat bran 268 200 102 500 0 Soybean 0 146 Sunflower 490 0 Wheat bran 0.8 Flour, wheat 4 Dried figs 234 Prunes 8 oil, crude

Sugar & Sugar products sector Pasta sector Fresh fruits sector (million USD) (million USD) (million USD)

900 814 2.000 1.867 Top 3 trade items (million USD) Top 3 trade items (million USD) Top 3 trade items (million USD) 800 2.500 2.247 1.800 Exports Imports Exports Imports 700 Exports Imports 1.600 2.000 1.400 Biscuits 362 Sugar 108 600 1.200 500 Pasta 763 Durum wheat 324 1.500 Mandarins 392 Bananas 170 1.000 332 Wafers and 400 800 338 Molasses 73 1.000 600 415 waffles 300 Semolina 32 Pasta 8 200 Lemons 272 Dates 57 400 500 296 200 Foods with 100 Candies 321 62 Durum wheat 17 Couscous 0.002 chocolates 0 0 0 Cherries 252 Oranges 14

Source: TurkStat invest.gov.tr | 13 THE LIVESTOCK SECTOR NEEDS FURTHER MAJOR TRADE ITEMS (2020) INVESTMENTS TO MEET THE GROWING DEMAND..

Fisheries sector (million USD) Poultry sector (million USD) Dairy sector (million USD)

378 Top 3 trade items (million USD) 450 405 Top 3 trade items (million USD) 400 Top 3 trade items (million USD) 1.200 400 Exports Imports 350 995 Exports Imports 1.000 350 Exports Imports Chicken meat, 300 300 Chicken meat, frozen 383 26 800 frozen 250 Chub 250 Cheese, Sea bream 256 29 60 Butter 35 600 mackerel 200 200 other 400 150 150 Turkey meat, frozen 14 Chicken meat 0.2 94 149 100 100 200 Other 251 Little tunny 29 26 Processed Cheese, products 50 50 55 23 0 0 cheese other Turkey meat, 0 Guinea fowl 5 0.07 frozen Sea bass 198 Salmon 25 Whey 51 Lactose 9

Livestock trade sector (million USD) Animal feed sector (million USD) Egg sector (million USD)

300 Top 3 trade items (million USD) 4.000 3.783 Top 3 trade items (million USD) 256 500 445 Top 3 trade items (million USD) 450 3.500 250 400 Exports Imports Exports Imports 3.000 200 350 Exports Imports 300 2.500 Soybean Egg 256 Egg 33 198 Soya bean 1,206 150 250 2.000 meals Chicken 30 Cattle 411 200 1.500 100 150 Turkey 81 1.000 580 Mixed feed 152 Maize 456 38 Egg, other 0.2 5 100 50 egg 50 Sheep 29 Sheep 14 500 0 Soybean 0 Maize 84 417 0 meals Chick 16 Horses 11 Shelled egg 0.06 Egg yolk 0.2

Source: TurkStat invest.gov.tr | 14 AGENDA

Executive Turkish Agrofood Growth Drivers Opportunities in Turkish Success 1 Summary 2 Industry Outlook 3 in Turkey 4 Agrofood Industry 5 Stories

GROWTH DRIVERS IN TURKEY TRACK RECORD GROWTH AND BRIGHT ROBUST ECONOMY FUTURE WITH PROVEN RESILIENCE 11th largest economy in the World

RANKING OF ECONOMIES BY GDP AT PPP AVERAGE ANNUAL REAL GDP GROWTH GDP GROWTH (%) (INDEX: 2002=100) 2003 2019 2020 2002-2020

1. USA 1. CHINA 1. CHINA registered the second largest economic growth in OECD 2. CHINA 2. USA 2. USA TURKEY 3. JAPAN 3. 3. INDİA 5.1 260 4. GERMANY 4. JAPAN 4. JAPAN TURKEY 240 5. INDIA 5. GERMANY 5. GERMANY

6. 6. RUSSIA 6. RUSSIA 3.6 POLAND 220 7. FRANCE 7. INDONESIA 7. INDONESIA 8. UK 8. BRAZIL 8. BRAZIL 200 POLAND 9. BRAZIL 9. UK 9. FRANCE 3.4 ROMANIA 180 ROMANIA 10. ITALY 10. FRANCE 10. UK BULGARIA 11. MEXICO 11. MEXICO 11. TURKEY 160 CZECHIA 12. INDONESIA 12. ITALY 12. ITALY 3.0 BULGARIA 13. SPAIN 13. TURKEY 13. MEXICO 140 HUNGARY 14. CANADA 14. S.KOREA 14. KOREA 120 15. S.KOREA 15. SPAIN 15. CANADA 2.4 CZECHIA 16. S.ARABIA 16. CANADA 16. SPAIN 100

17. 17. S.ARABIA 17. S.ARABIA

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1.9 HUNGARY 2002 18. TURKEY 18. IRAN 18. AUSTRALIA

Source: TurkStat, Eurostat, IMF, PPP: Purchasing Power Parity invest.gov.tr | 16 ROBUST ECONOMY TRIPLING SIZE OF THE ECONOMY OVER THE PAST 18 YEARS

Turkish economy has more than tripled over Robust domestic market and entrepreneurial private sector the past 18 years and is promising to be on the growing trend spurred investments and exports

Turkish Economy Contribution to GDP (GDP at current prices, $Billion) Growth 2002-2020 (%)

72 717

32

236 21

-1 2002 2020 Domestic Investment Exports Stocks Consumption Expenditures -24

Imports

Source: TurkStat invest.gov.tr | 17 TURKEY’S ECONOMIC GROWTH HAS PAVED THE WAY DOMESTIC MARKET FOR EMERGENCE OF A SIZEABLE AGRI-MIDDLE-CLASS WITH AN INCREASING PURCHASING POWER Income per capita Stock of Tractors (GDP per capita, current prices at (millions of tractors) purchasing power parity) 2 Largest tractor sales in Europe, 5th in the world, 75% of the local market supplied by local players

1.2 Major producers in Turkey

$ 10,997 $ 30,253

2002 2020 2002 2020

Source: TurkStat, IMF invest.gov.tr | 18 DOMESTIC MARKET FURTHER SUPPORTED BY DOMESTIC MARKET EMERGING URBAN CENTERS Total Population in 2020 83.6 Million

İstanbul 15.4 Million Denizli 1 Million Ankara 5.6 Million Muğla 1 Million İzmir 4.3 Million Eskişehir 0.8 Million Bursa 3.1 Million Mardin 0.8 Million Antalya 2.5 Million Trabzon 0.8 Million Adana 2.2 Million 0.8 Million Konya 2.2 Million Ordu 0.7 Million Şanlıurfa 2.1 Million Erzurum 0.7 Million Gaziantep 2.1 Million Afyonkarahisar 0.7 Million Kocaeli 1.9 Million Sivas 0.6 Million Mersin 1.8 Million Adıyaman 0.6 Million Diyarbakır 1.7 Million Batman 0.6 Million Hatay 1.6 Million Tokat 0.5 Million Manisa 1.4 Million Zonguldak 0.5 Million Kayseri 1.4 Million Elazığ 0.5 Million Samsun 1.3 Million Kütahya 0.5 Million Balıkesir 1.2 Million Osmaniye 0.5 Million Kahramanmaraş 1.1 Million Çanakkale 0.5 Million Van 1.1 Million Şırnak 0.5 Million 24 urban centers Aydın 1.1 Million Ağrı 0.5 Million With Populations Tekirdağ 1 Million Çorum 0.5 Million over 1 million Sakarya 1 Million

Source: TurkStat, 2020 invest.gov.tr | 19 TURKEY’S EDUCATION SYSTEM HAS BEEN SKILLED WORKFORCE WITH COST ADVANTAGE UPGRADED TO SUPPORT A SKILLED LABOR POOL THAT MEETS BUSINESS REQUIREMENTS..

ANNUAL NUMBER OF GRADUATES AVAILABILITY OF QUALIFIED ENGINEERS AVAILABILITY OF COMPETENT SENIOR MANAGERS (thousands) (10=Available; 0=Unavailable) (10=Available; 0=Unavailable)

2020 2020 2002 2019 7,35 6,74 6,15 5,72 5,75 5,65 5,47 4,86 4,92 891 495 4,45 4,18 3,91 3,39 2,75 287 177

University Vocational & Technical High

School

Turkey

Poland

Turkey

Poland

Czechia

Bulgaria

Czechia

Bulgaria

Hungary Slovakia

Hungary Slovakia

Romania Romania

LABOR FORCE BY EDUCATION LEVEL LABOR COST PER HOUR IN MANUFACTURING REMUNERATION OF MANAGEMENT/ENGINEER Total base salary plus bonuses and long-term incentives

University High School & Below 47,2 44,4 $K, 2018 160 $K, 2018 39,6 27,5% 10% 31,1 121 113 94 69 62 14,9 14,3 45 11,5 10,7 42 41 7,0 36 23

90% 5,6 5,6

UK

UK USA

72,5% USA

Turkey

Turkey

France

Poland

France

Poland

Czechia

Czechia

Bulgaria

Bulgaria

Slovakia Hungary

Hungary Slovakia

Romania

Romania

Germany Germany

Source: Ministry of National Education, Council of Higher Education, Turkstat, IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat invest.gov.tr | 20 DOMESTIC + ACCESSIBLE MARKETS DOMESTIC MARKET + EU MARKET + FREE TRADE AREA

Customs Union with the EU allows direct access to the EU Market 446 MILLION in EU

+

in 28 countries 457 with Free Trade MILLION 987 in FTA AREA Agreements MILLION CONSUMERS +

84 MILLION in TURKEY

Source: Eurostat, World Bank; Population as of 2019, Ministry of Trade, TurkStat invest.gov.tr | 21 TURKEY IS ALSO VERY ADVANTAGEOUS FOR MARINE TRANSPORTATION MARITIME TRANSPORTATION, ALLOWING AGROFOOD PRODUCERS TO EXPORT EASILY

Cargo handling statistics of Turkey in 2020 (tons)

Cereals 13,512,106 Oil seeds, oleaginous fruit and fats 6,817,726 Animal feed and foodstuff waste 4,701,744 Other non-perishable foodstuffs and 1,118,428 hops

Sugars 438,674 Fresh and frozen fruit and vegetables 312,207 Livestock 101,377 Beverages 48,840 Potatoes (excluding frozen ones) 24,339

invest.gov.tr | 22 INCENTIVES LUCRATIVE INCENTIVES FOR AGROFOOD INVESTMENTS

Ministry of Agriculture and Treasury land acquisition for Forestry agrofood investments

Supports based on Supports for facility investment/crop/animal building/expansion types

Organic/Good Rural Development EU-TR Financed Livestock Input supports Crop Certified seed and Other farming practices Support Program IPARD II Program supports (fertilizer, diesel) supports seedling supports supports supports

Ministry of Industry and Technology

General Regional Strategic Project Based Investment Investment Investment Investment Incentives Incentives Incentives Incentives

invest.gov.tr | 23 INCENTIVES MINISTRY OF AGRICULTURE AND FORESTRY SUPPORTS

EU&TR GRANT SUPPORTS IPARD II www.tkdk.gov.tr

• Part of the instrument for pre-accession assistance (IPA), RURAL DEVELOPMENT SUPPORT PROGRAM designed to support reforms in Turkey in the process of joining Period 2021-2025 the EU • Provides grants to agrofood investments in 42 provinces of Turkey • Ministry of Agriculture and Forestry provides grants to investors for • Covers expenses (e.g. construction, machinery and equipment their new or expansion investments in 81 provinces of Turkey purchase) up to 75% of total investment budget • Covers expenses (eg. construction, machinery and equipment • Support limits: 5,000 - 3,000,000 EUR purchase) up to 50% of total investment budget Maximum support limits varies between 1,500,000 - 3,000,000 TL • Supported areas based on type of the investment. •Meat and meat products • Rural development projects Supported areas •Milk and dairy products • Machinery parks •Diversifying of plant production • Renewable energy • Processing, packaging, and storing the agricultural products •Aquaculture production investment • Fixed investments (bovine, ovine, poultry, fisheries, mushroom, fertilizer processing, greenhouse, renewable energy sources etc.) • Greenhouse investments which utilize renewable energy sources • Processing, packing and storing the medicinal and aromatic plants IPARD - II PROGRAM • The program was approved by the EU Commission. • EU grant of 801 million €, • National contribution 244 Million € • TOTAL 1 Billion 45 Million €

Source: Ministry of Agriculture and Forestry invest.gov.tr | 24 INCENTIVES MINISTRY OF AGRICULTURE AND FORESTRY SUPPORTS

Supports based on investment/crop/animal types

Agricultural supports (billion TRY)

30

Ministry of Agriculture and Forestry supports around 2M 25 24 registered enterprises financially to boost the agriculture 22

sector. 20 17 Supported areas: 14,5 15 . Incentives for livestock breeding 12,8 . Supports for certain crops 11,5

. Supports for certified seed and seedling 10 . Supports for organic and good farming practices . Farm advisory services . Implementation of agricultural insurance 5

0 2016 2017 2018 2019 2020 2021*

Source: Ministry of Agriculture and Forestry invest.gov.tr | 25 MINISTRY OF INDUSTRY AND TECHNOLOGY INCENTIVES INVESTMENT INCENTIVE SCHEME

Incentives Provided By The Ministry Of Industry and Technology

General Regional Strategic Project Based Investment Investment Investment Investment Incentives Incentives Incentives Incentives

• Customs Duty • Customs • Customs Duty • Cash Support Exemption Duty Exemption Exemption • VAT Exemption Medium-High Tech • VAT Exemption • VAT Exemption • Customs Duty Exemption • VAT Exemption Incentives • Corporate Tax • Corporate Tax • Corporate tax reduction up to 200% of investment Reduction Reduction expenditures Priority • Social Security • Social Security • Social security premium support for up to 10 years Incentives Premium Support Premium Support (employer’s share) (Employer’s (Employer’s • Income tax withholding support for 10 years Share) Share) • Qualified personel support fort up to 5 years • Land Allocation • Land Allocation • Energy support for up to 50% of energy • Interest Rate Region 6 • Interest Rate expenditures for up to 10 years Support Incentives Support • 10 years Interest rate support for up to 10 years • VAT Refund • Capital contribution up to 49% of the investment + amount • Land allocation for 49 years Infrastructure support • Social Security Purchasing guarantee Premium Support • Facilitation of authorization-permit-license (Employee’s procedures Share) • VAT refund for building-construction • Income Tax expenditures Withholding Support

invest.gov.tr | 26 MINISTRY OF INDUSTRY AND TECHNOLOGY INCENTIVES INVESTMENT INCENTIVE SCHEME

• Customs Integrated Livestock investments Duty Exemption • VAT Exemption According to the • Corporate Tax Food and beverage investments investment incentives Reduction legislation from the • Social Security Premium Support Ministry of Industry and Aquaculture (Employer’s Technology Share) investments in these • Land Allocation Cold storage sectors are considered • Interest Rate under the “Regional Support Investment Incentives Greenhouse investments Scheme” • Social Security Premium Support (Employee’s Share) • Income Tax Withholding Min. TL 5M & 25 da high-tech greenhouse investments and Support licensed warehousing investments are prioritized areas that are eligible to benefit from the highly advantageous 5th region incentives.

invest.gov.tr | 27 TREASURY LANDS MAY BE ALLOCATED FOR LAND ACQUISITION AGROFOOD INVESTMENTS

THREE OPTIONAL MODELS

Land allocation with Leasing Purchasing relatively small fees

• Land allocation for agriculture / • Agricultural lands are rented for a • State owned land pieces can be livestock / aquaculture investments maximum of 10 years by a sold for agrofood investments with a for a maximum of 49 years with bargaining procedure. tender process. tender process • Treasury immovables for medicinal and aromatic plants and ornamental plants can be leased for up to 10 years with small fees compared to their actual prices.

Source: Ministry of Environment & Urbanization invest.gov.tr | 28 AGENDA

Executive Turkish Agrofood Growth Drivers Opportunities in Success 1 Summary 2 Industry Outlook 3 in Turkey 4 Turkish Agrofood Industry 5 Stories

OPPORTUNITIES IN TURKISH AGROFOOD INDUSTRY SELECTED OPPORTUNITIES

Key policy agendas for Turkish agrofood sector

Environment& Sustainability and High demand&import High value - added Health-friendly security of food supply

MAJOR COMMODITIES Rising opportunities

Sunflower & Greenhouse Industrial hemp sunflower oil Walnuts Almonds products Seeds

Wheat Medicinal and Essential Tropical Berries Frozen fruits aromatic oils fruits & vegetables plants Maize

Licensed Pet food Aquaculture Milk proteins warehousing Soya bean

invest.gov.tr | 30 IN 2019 TURKISH SEED MARKET SEEDS REACHED TO USD 750M MARKET VALUE

Foreign trade of seeds (Million USD)

KEY FACTS 179 177 158 152 155 • A total of 1.1M tonnes certified seed production in 2019 (8 times growth since 2002)

• The share of private sector involvement in seed production: from 47% in 71 71 2006 to 80% in 2019 21 • USD 200M subsidy given to domestic seed producers and users between 2005 and 2018 2003 2009 2018 2019 • Growing crop production led to the increase in seed demand and Exports Imports production over time. More room for growth!

• 765 certified seed producers in Turkey with a large number of Breakdown of seed production by crop (tonnes, 2019) multinationals carrying out production and R&D

Source: MOAF invest.gov.tr | 31 4TH LARGEST WALNUTS PRODUCER WALNUTS IN THE WORLD

Foreign trade of walnuts (shelled&with shell, million USD) KEY FACTS 255 215 221 • Consumers’ shift to healthier food has led to the rise in walnuts 207 177 demand. 171 140 • Yet the domestic production (225k tonnes, 2019) doesn’t meet the 125 116 104 consumption (289k tonnes, 2019) 89 74 67 75 • The most popular and common Turkish type: Chandler with 400 - 500 kg per 24-26 trees/da • Cash grants: up to 75% of sapling cost, up to 25% of initial investment cost as well as the loan with 95% discounted interest 2013 2014 2015 2016 2017 2018 2019 rate Exports Imports • Treasury land allocation for 49-yr period with very low prices

Economics of growing walnuts: A case study of Turkey Major production areas in Turkey

Size of garden 1000 da

Operating period 30 years

Initial investment cost (USD) 328,523

Annual operating cost (USD) 233,137

Annual operating revenue (USD) 1,013,422

Breakeven point 8 years

Internal rate of return 27.3%

Source: MOAF, FAO invest.gov.tr | 32 4TH LARGEST ALMONDS PRODUCER ALMONDS IN THE WORLD

Foreign trade of almonds (shelled&with shell, million USD) KEY FACTS 167 173 157 153 161 • Consumers’ shift to healthier food has led to the rise in 136 124 133 almonds demand. • A total of 150k tonnes production in 2019 121 118 114 112 108 • Yet the production doesn’t meet the consumption & an 98 98 106 import of 172m USD with 15% customs tax • Cash grants: up to 55% of sapling cost, up to 25% of initial investment cost as well as the loan with 95% discounted interest rate 2013 2014 2015 2016 2017 2018 2019 2020 • Treasury land allocation for 49-yr period with very low Imports Exports prices Shares of major producing cities in total production, 2019 Economics of growing almonds: A case study of Turkey

Size of garden 1000 da

Operating period 30 years

Initial investment cost (USD) 359,060

Annual operating cost (USD) 228,415

Annual operating revenue (USD) 860,044

Breakeven point 7 years

Internal rate of return 27.5%

Source: MOAF, FAO invest.gov.tr | 33 WITH ITS 790k DECARES OF GREENHOUSE AREA, TURKEY GREENHOUSE PRODUCTS IS THE 4TH COUNTRY IN THE WORLD AND 2nd IN EUROPE

Top vegetable producing cities (million tonnes, 2019)

KEY FACTS Muğla; 0,69; 9%

Adana; 1; 13% Antalya • 8.4 million tonnes of production with a total value of approx. USD 1.76 billion Mersin Others Antalya; 3,8; 49% • Out of 31 million tonnes of total vegetable production, 7.8 million Adana tonnes are greenhouse production. Others; 1,1; 14% Muğla • Average greenhouse size: 4 da

• Greenhouse farming breakdown is as follows: • 94% vegetable Mersin; 1,2; 15% • 5% fruits • 1% ornamental plants • In geothermal resources, Turkey is 1st in Europe, 7th in the world Breakdown of greenhouse products (2019)

• 4,344 da of area is being heated, potentially 30.000 da of area can Tomatoes be heated Cucumbers WatermelonsPeppers 10% 9% Zucchini Watermelons • An investment-friendly bank loan program: For a maximum loan of Cucumbers Bananas 3% 5% 4.5 million USD with a 25% to 75 % discounted interest rate Peppers 14% 4% Melons Bananas 2% • A prioritized investment area by the Ministry of Industry and Eggplants Technology (high-tech greenhouses) Strawberry Zucchini 2% Melons Others Strawberry 2% Tomatoes Others 49%

Source: Turkstat invest.gov.tr | 34 A FAST GROWING MARKET WITH PET FOOD PLENTY OF ROOM FOR INVESTORS

Foreign trade of dog&cat food (million USD) KEY FACTS 89,5

66,1 • Highest growth in Turkey due to the: 54,7 47,9 40,9 43,9 38,6 37,6 30,6 • Emergence of a sizeable middle-class with an increasing 16,7 purchasing power 4,4 6,2 7,1 8 2,7 4,3 • Dramatic increase in the number of pets 2013 2014 2015 2016 2017 2018 2019 2020 • from 958k in 2000 to 5m (3.8m cats&1.2m dogs) in 2019 Imports Exports • 7 out of 100 households have dogs • 10 out of 100 households have cats Turkish pet food market (million USD) • Increasing number of volunteers who feed stray dogs and cats 372 • High level of municipal involvement in stray dogs and cats feeding

• All premium brands are imported and sold with relatively higher prices. 185

• A total of 30 manufacturers (mostly small-scaled) present in the market (2021). 21

2000 2018 2023*

Source: TurkStat, FEDIAF invest.gov.tr | 35 MEDICINAL AND AROMATIC TURKEY WITH ITS DIVERSE CLIMATE AND FERTILE SOIL OFFERS A WIDE RANGE OF RAW MATERIALS TO PLANTS & ESSENTIAL OILS ESSENTIAL OILS PRODUCERS

Production of major medicinal and aromatic plants KEY FACTS Production Production of city Crop (Raw) Top producing city (Tonnes,2020) (tonnes,2020)

• An essential oils market of around USD 20 billion globally with an Dry pepper 256,735 Şanlıurfa annual CAGR of 7.5% 102,880 • Out of 347 species, which are grown in Turkey, 169 species are 23,866 Denizli 21,324 exported. • Mostly small-scaled, 36 manufacturers active in Turkish market Rose 18,202 Isparta 15,343 • Given a fast growing local and foreign demand and easy access 13,926 Konya 6,359 to raw materials, more room for growth for processing investors Anise 10,716 Denizli 1,849

Fennel 4,365 Burdur 3,268 A case study of essential oils production in Turkey Black cumin 3,412 Uşak 1,170

Investment location Denizli city Lavender 3,499 Isparta 852

Heather 1,788 Balıkesir 1,088 250 tonnes/year plant processing, 5 Technical capacity of the facility Important players in Turkish market tonnes/year oil yield

Investment period 3 years

Fixed investment cost (USD) 1,150,664

Annual operating cost (USD) 872,005 Annual operating revenue (USD) 4,546,234 Payback period of investment 1 Year 8 Months

Source: MOAF, South Aegean Development Agency invest.gov.tr | 36 A RISING MARKET FOR INDUSTRIAL INDUSTRIAL HEMP HEMP PROCESSING COMPANIES

KEY FACTS

• The government will expand industrial hemp production for seeds • Hemp is used as a raw material in many industrial products such as textiles, and fibers, currently allowed in 20 provinces on about 81 hectares bioplastic, and animal feed. (ha). • The production area of the hemp fiber used in textiles reached up to 160 da in • The production area, which was 10 decares in 2015, increased to 2019. 4,252 decares in 2020. • Two local hemp varieties were recently registered, namely, Narli and Vezir. • The seed production reached 273 tons in 2020, up by 14 times on the previous year.

Hemp seeds Hemp fibers used in textiles

4500 4252 300 4000 160 250 3500 3000 200 2500 101 150 2000 1500 100 55 45 46 1000 536 50 500 10 25 24 59 10 0 0 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 Area sown (Da) Production (Tonnes, Right Axis) Area sown (Da)

Source: TurkStat invest.gov.tr | 37 IN 2019 TURKEY HAS PRODUCED AQUACULTURE 837k TONNES OF FISHERY PRODUCTS

KEY FACTS

• Turkish products perform well in the EU market and has the potential to create new market opportunities in Russia and the USA. • A total of 837k tonnes production of fisheries (2019) • 373k tonnes come from aquaculture (66% from Aegean Region) & 2,127 facilities active across Turkey • Turkish coasts and regulations allow for large-scale farming. • 463k tonnes come from fishing • Catchy investment opportunities for seabass, seabream and trout (Turkish salmon) • Turkey’s exports of fishery products rose to 200k tonnes with around thanks to the low cost of production USD 1.03 billion (2019), which is twice that of 2013.

• 70% of the exports go to the EU countries A feasibility study of establishing an aquaculture facility • Annual per capita fisheries consumption: 6.2 kg. More room for growth! Rainbow trout Rainbow trout European sea bass (lake, dam) (sea water)

Exports Investment Location Black Sea Region

1025,6 951,8 Technical Capacity 1000 ton/year 1000 ton/year 1000 ton/year 854,7 790,3 675,8 692,2 568,2 Fixed Investment Cost 1,111,000 722,000 1,161,000 177,5 200,2 (USD) 101,1 115,4 121,1 145,5 156,7

2013 2014 2015 2016 2017 2018 2019 Investment Period 6 months 6 months 6 months

Values (Thousand US $) Quantities (Thousand Tons) Payback Period 6 years 2.57 years 2.5 years

Source: MOAF, Western Black Sea Development Agency invest.gov.tr | 38 A GROWING NUTRITION MARKET THAT FUELS MILK PROTEINS CONSUMPTION OF MILK PROTEINS

KEY FACTS • Few local companies active in milk proteins production. Plenty of room for new investors! • A growing domestic demand for milk proteins producers • Baby food market size: USD 1.2Bn • Enteral nutrition market size: USD 90M • Sports nutrition market size: USD 60M

A feasibility study of production of high value added milk products • Strong presence of manufacturing multinationals that use milk proteins as raw material in Turkey Low cholesterol butter, rennet casein, acid Products in scope casein, milk protein concentration and isolate, whey protein concentration and isolate, lactose

Investment location İzmir city

Technical capacity 50000 kg/daily raw milk, 50000 kg/daily whey

Investment period 2 years Fixed investment cost (USD) 5,500,000

Payback period of investment 3.3 years

Source: MOAF, Izmir Development Agency invest.gov.tr | 39 A GROWING MARKET WITH CONSUMER FROZEN VEGETABLES & FRUITS SHIFT TO HEALTHY PACKAGED FOOD

KEY FACTS

• Easy access to raw material • A total of USD 139M export volume in 2019 • A fresh fruits production of 21M tonnes • Major export destinations for frozen vegetables & fruits • A fresh vegetables production of 31M tonnes • USA (20%) • Germany (15%) • USD 330M domestic market size with an annual growth rate of • UK (11%) 17% • France (10%)

• Per capita consumption 1kg/annual (20kg/per person/annual in the EU). A market gap to fill! A feasibility study of establishing a frozen vegetables & fruits facility

Beans, Green Pea, Broccoli, Okra, Artichoke, • 49 local companies active in the field with a total production Products in scope Asparagus, Cherries, Sour Cherries, Strawberry, capacity of 1.1M tonnes. Plenty of room for new investors! Pomegranate, Black Mulberry, Raspberry

Investment location Aydın city

Technical capacity 5,450 tonnes / Year

Investment period 1 year

Fixed investment cost (USD) 1,000,000 • Major production centers: Manisa, İzmir, Bursa and Aydın ( 60% Payback period of investment 2 years of total activities)

Source: MOAF, South Aegean Development Agency invest.gov.tr | 40 TURKEY HAS RECENTLY BEEN HOME TO TROPICAL FRUITS & BERRIES TROPICAL FRUITS AND BERRIES PRODUCERS

KİWİ • High domestic demand! Also, the exports of tropical fruits and • From 26k production in 2010 to 73k berries has increased by 40% in the last 3 years (USD 6M in 2020). production in 2020 High profit margin! • Out of 73k production, 28k tonnes in • Along with major ones, following fruits are grown in Turkey: Yalova (2020) Mangoes, dragon fruit, papaya, pineapple, coconut, kumquat, RASPBERRY carambola, guava pear, passion fruit. • From 1.9k tonnes production in 2010 to 5.4k tonnes production in 2020 • Out of 5.4k, 5.3k tonnes in Bursa (2020) Yalova

Bursa

BLUEBERRY STRAWBERRY • From 170 tonnes production • From 300k tonnes in 2010 to in 2010 to 1.2k tonnes 546k tonnes in 2020 production in 2020 • Out of 546k production, 188k • Out of 1.2k, 673 tonnes in tonnes in Mersin (2020) Antalya and 264 tonnes in Bursa (2020) Antalya Mersin

AVOCADO BANANA • From 1k tonnes production in • From 210k tonnes in 2010 to 728k tonnes 2010 to 6k production in 2020 in 2020 • Out of 6k production, 4.9k • Out of 728k production, 400k tonnes in tonnes in Antalya (2020) Mersin, 300k in Antalya (2020)

Source: MOAF, TurkStat invest.gov.tr | 41 LICENSED WAREHOUSING PLENTY OF ROOM FOR NEW LICENSED WAREHOUSES

• Following crops can be stored in licensed warehouses: Cereals and legumes, cotton, • Bank loans with 50% discounted interest rate up to TL 50M hazelnuts, olives, olive oil, dried , pistachios. • Major players in the market:

• In the last three years the number of licensed warehouses tripled.

• 126 licensed warehouses across Turkey with 6M tonnes active capacity in 2020 with avg. annual growth rate of 36% in the last 5 years • Konya: 20.0% of total capacity • Yozgat: 9% of total capacity • Adana: 8.6% of total capacity • Gaziantep: 5% of total capacity A feasibility study of establishing a licensed warehouse

Investment location Konya city • The government target for 2023 to reach 140 warehouses with a total of 10M tonnes Technical capacity 20,000 tonnes capacity Investment period 2 years

Flat bottom investment: 1,919,000 • A prioritized investment area that can benefit from highly advantageous 5th region Fixed investment cost (USD) Cone base investment: 2,121,000 incentives: 67% of initial investment cost can be deducted.

Payback period of investment 12 years

Source: MOAF, Mevlana Development Agency invest.gov.tr | 42 AGENDA

Executive Turkish Agrofood Growth Drivers Opportunities in Success 1 Summary 2 Industry Outlook 3 in Turkey 4 Turkish Agrofood Industry 5 Stories

SUCCESS STORIES STRONG INTERNATIONAL PRESENCE SUCCESS STORIES IN TURKEY

invest.gov.tr | 44 AGROFOOD INDUSTRY GIANTS HAVE BEEN SUCCESS STORIES MANUFACTURING IN TURKEY FOR DECADES

• Operational for • Operational in Turkey • Producing in Manisa • Market share in • Operational in Turkey 139 years for 110 years OIZ since 2013 sparkling of of Coca- for around 60 years Cola Icecek (CCI) in • Operational in Turkey • 6 manufacturing • 2 manufacturing facilities • Made an initial Turkey is 65% • 200 employees for around 59 years facilities and 8 offices in Bursa investment of 95 in Turkey for million EUR and • Producing 25 brands • Headquarter & • More than 600 chemicals, • Employs 3,800 people directly expanded it to in 5 categories innovation center in employees in 7 performance and over 7,000 indirectly produce more Istanbul, seed locations in Turkey – products, functional varieties of products • Following the conditioning & Adana, Ankara, materials & solutions, • Produces locally 95% of the acquisition of Efes processing plant Istanbul, İzmir, Bursa, agricultural solutions products it sells in Turkey • 7 manufacturing Invest in 2005, facility in Adana, Balıkesir, Kocaeli, facilities, 6 of them evolved from a bottling sunflower R&D center • Sales of EUR 63 • Offers more than 800 processing nuts operation to a regional in Lüleburgaz • 3 production facilities: billion globally in 2018 products and around 50 beverage company starch & sweeteners brands in 12 different • Exporting to 100 in Bursa, fats & oils in • Managing 78 categories countries from Turkey • More than 2.500 Balıkesir, oleo- countries from Turkey employees and 10 chemicals in Kocaeli • From its production hub in production plants • 800 employees Turkey, exports to the neighboring countries, particularly to MENA countries

invest.gov.tr | 45 AGROFOOD INDUSTRY GIANTS HAVE BEEN SUCCESS STORIES MANUFACTURING IN TURKEY FOR DECADES

• Operational in Turkey for over 100 years • Operating in Turkey since 1993 • Operational in Turkey since 1998

• 8 manufacturing facilities, over 5,000 • An important production facility with an • Over 500 employees employees indoor area of ​​85.000 m2 in Gebze

• Uses Turkey as a management hub for • Sales of TL 872 million in 2018 35 countries • Employs about 1,200 people directly and • New factory for personal and homecare about 900 indirectly categories in Turkey creates an investment ecosystem of EUR 350 • Increased its investments in Turkey steadily million along with suppliers over the past 20 years

• 29 brands and presence in 9 out of 10 households with its products

• Exports from Turkey to 34 countries

invest.gov.tr | 46 invest.gov.tr

/InvestTurkey /InvestTurkey /invest-in-turkey/