TURKEY Emerging Markets Program: E08MXDBC01
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TURKEY Emerging Markets Program: E08MXDBC01 Introducing US Pinto Beans into the Turkish Canning Industry Canning Market Report following Interviews with Turkish Canners February 23, 2009 J. Stobbs (Marketbase), 71 avenue Bosquet, 75007 Paris, FRANCE Tel. + 33 (0) 1 45 51 36 03 / Fax + 33 (0) 1 47 53 72 85 email: [email protected] Turkey EMP (Emerging Markets Program) Purpose The purpose of this EMP activity is to encourage the Turkish canning sector to switch from using a domestically-produced speckled dry bean, the Barbunya, to the US speckled bean, the Pinto. N.B. This Report relates to Part A of a 3-part EMP project to promote US Pinto beans in Turkey. Part A of the EMP calls for one-on-one interviews with Turkish canners and a Canning Market Report. TURKISH CANNING MARKET REPORT Background Information regarding the US Pinto bean and the Turkish pulse market In 2008, the US produced 1.3 million MT of dry beans in a harvested area of 1.5 million acres. The US Pinto bean is by far the largest US dry bean class in volume (2008: 526,000 MT, 46% of total US dry bean production), making it highly price-competitive in world markets. The US exported 118,000 MT of US Pinto beans in 2008, an increase of 43% over the previous year. The value of US Pinto bean exports in 2008, worldwide, was $111 million (source: FAS). While most other US dry bean classes have seen a reduction in plantings, the Pinto bean, cultivated mainly in North Dakota, Minnesota and Nebraska, has shown growth. Mexico has traditionally been the principal export market for US Pinto beans, although Angola has recently purchased important volumes. As production of US Pinto beans continues to grow, new export markets are becoming increasingly important for US producers. With a population of 71 million and GDP per capita of $9,400 (source: CIA Factbook, 2007) Turkey is a dynamic emerging market and a major pulse- consuming nation. Turkey has traditionally been a largely self-sustaining crop producer, with a highly-fragmented agro-infrastructure and a low level of mechanization. Two things have changed over the last ten years. Firstly, there has been a sharp increase in management standards, led largely by young Turks returning from overseas. This in turn has led to a dramatic change in land use, with the new managers focusing on quality and on high-profit-margin products. (In this ten-year period Turkey has become the world leader in cherries and tomato products.) US Dry Bean Council – Turkey EMP – Turkish Canning Report – Feb. 23, 2009 2 Secondly, the progress of the GAP project, an enormous irrigation scheme in the south-east of the country, involving the Atatürk dam and more than twenty subsidiary dams, has for the first time brought major investors into the agricultural sector and has seen the creation of large-acreage farms. One of the side-effects of this has been a dramatic drop in domestic pulse production. A lack of government subsidies to encourage plantings and improve seed and land quality, coupled with drought conditions and a shift to the higher- profit-margin products, has left Turkey with serious shortages of red lentils, green lentils and dry beans, most notably white beans and speckled beans. For example, in 2008 (January-December), Turkey had to import more than 12,000 MT (value: $7.4 million) of US Great Northern beans to compensate for a shortfall in its domestic production of the Turkish white sira bean (source: FAS). Turkey is experiencing a similar shortage of its domestic speckled bean, the Barbunya. Although annual consumption of speckled beans tops 50,000 MT, domestic production of the Barbunya has fallen to only a few thousand tons per year, if that. This shortfall has been made up by poor-quality imports from China and Kyrgyzstan, which are sold into the dry packaged market sector. However, Turkish canners can not rely on the uncertain quality and availability of Chinese and Kyrgyzstan beans. The canning industry, in particular, rejects these beans because it must have a steady source of high-quality raw materials that are readily available and reasonably priced. It is important to note that the US Pinto bean and the Turkish Barbunya bean are similar, but not the same. The US Pinto has speckles that are browner in color than the reddish Turkish Barbunya. However, when canned, the speckles of both classes of bean disappear, leaving a uniform, pinkish color. It is virtually impossible to tell the difference between a Pinto and a Barbunya in the canned state when judging by color and texture. Turkish importers who have tasted canned Pinto beans have declared that Pintos have a superior taste. US Dry Bean Council – Turkey EMP – Turkish Canning Report – Feb. 23, 2009 3 Barbunya Production & Prices The Barbunya is a traditional dry bean that has been grown in Turkey for hundreds of years. Recently, production of this class of bean has collapsed due to the factors mentioned before: drought, lack of government support subsidies, seed degeneration and a shift to higher-profit-margin crops, in addition to the influx of low-quality speckled beans from China and Kyrgyzstan. However, although the dry packaged sector can use low-quality Chinese and Kyrgyzstan beans, the canning industry can not. The canning process requires a dry bean that offers a uniform grain size, skin integrity, and standard color, taste and texture, so that the finished product remains of a consistent high quality. Since neither Chinese nor Kyrgyzstan beans meet these criteria, the Turkish canning sector must rely on its own domestic Barbunya. However, Barbunya production has fallen to record lows in recent years – only a few thousand tons – and is unlikely to recover. Prices to canners are reported to be between $1,400 to $1,600 per metric ton, a prohibitively high cost (source: Turkish trade/canners). It is little wonder that canners have had to cut back on their use of the Barbunya and are actively looking for a reliable substitute bean. Use of the Barbunya The Barbunya is used in Turkish canning as the principal ingredient in “Pilaki”, a bean, carrot and onion salad served cold in a spicy tomato sauce. Turkish housewives either make Pilaki from scratch using dry beans, or open a ready-to- serve can. Most Turkish households have a can of Pilaki on hand; it is a very popular dish, much like our baked beans in tomato sauce. The Barbunya is also present in many other traditional Turkish recipes but, given the high cost of the bean, canners no longer offer other types of dishes using this class of bean. The entry into the market of the US Pinto bean, available at a much lower cost, could encourage Turkish canners to rethink their product range and eventually add new speckled-bean ready-to-eat dishes. Apart from the retail food sector, the canned Pinto bean may also be used as a substitute for the Barbunya in food service (hotels, restaurants, institutions) and the military. Turkish canners that supply military contracts have a pressing need to offer large volumes of low-cost products. US Dry Bean Council – Turkey EMP – Turkish Canning Report – Feb. 23, 2009 4 Interviews with Turkish Canners Meetings took place in Turkey from January 23-30, 2009. A total of 7 canners and 1 catering company were interviewed at each company’s canning facility. Since canning companies are located throughout the country, J. Stobbs and a local consultant traveled to three different regions of Turkey: Istanbul, Bursa and Izmir. The local consultant provided language translation. During the canning interviews, Stobbs explained that the purpose of the visit was to encourage Turkish canners to use US Pinto beans as a substitute for the domestically-grown Barbunya. At each meeting, the US Pinto bean was presented in the canned state and compared with the canned Barbunya. This allowed Turkish canners to view both types of bean as a finished product. As all of the canners expressed basically the same reaction to canned US Pinto beans, their views are summarized below. Results US canned Pinto beans were judged by Turkish canners to have excellent taste, color and texture. The relatively low price of the US Pinto bean was also considered an advantage. However, canned Pintos were smaller in size than canned Barbunyas. What Turkish canners are looking for What US Pintos offer good color good skin integrity (low skin checks) good taste uniform grain size large size low moisture affordable, steady price consistent product availability The small size of the Pinto was the only characteristic of the US bean that was rated as a negative by the Turkish canners interviewed. As both the Pinto and the Barbunya are the same size in the dry state, more work will have to be done to discover how canners achieve such large canned Barbunyas. There may be moisture or water absorption ratio issues that can explain the difference in size. Despite this obstacle, several canners felt that the Pinto could work well in the food service sector, and for the military, as a going-in strategy. US Dry Bean Council – Turkey EMP – Turkish Canning Report – Feb. 23, 2009 5 In addition, each canning company requested a 5-kilo sample of US Pintos for testing; Stobbs is arranging for samples to be sent directly to Turkish canners by several US exporters. Next Steps Two further activities of this EMP are planned in 2009 to promote US Pinto beans in the Turkish canning industry: a Technical Seminar & Food Demonstration in Istanbul, and a Trade Mission by US Pinto exporters to visit Turkish canning companies.