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    Global Markets: Wheat – Turkey’s Govt. Eliminates Import Taxes as Domestic Prices Surge

    To combat food-price inflation, a Presidential Decree was issued in October that eliminates Turkey import taxes on wheat, corn, and barley. By reducing tariffs on wheat from 45 percent to zero through December 31, the government aims to encourage local producers to sell stocks and stabilize domestic prices. Importing wheat without taxes would be significantly less than the domestic wheat exchange prices.

    This policy was implemented as Turkey domestic wheat prices have once again climbed to record levels this year. Hard Red Anatolian Wheat reached 2,333 Turkish lira (TL) per ton this month1, a 48 percent increase from last year. With a stumbling economy and the lira depreciating rapidly, the situation for Turkey wheat producers, consumers, and traders appears bleak.

    Turkey’s producer price index rose more than 18 percent since last year, and wheat price inflation is outpacing core inflation2 by a significant margin. The Turkey state-operated grain board (known as TMO) continues to buy wheat from Turkey farmers at pre-established intervention prices,3 subsidizing domestic prices to levels higher than those of the global market.

    These agricultural support programs, along with high tariffs and the country’s macroeconomic crisis, have driven domestic wheat prices above international prices in recent years. Moreover, with wheat prices surging internationally in October, the cost of wheat imports has also increased, further pressuring domestic prices upwards.

    Imports are forecast down significantly since 2019/20 (Jun/May) due to a larger domestic crop, but are still likely to remain at historically high levels, supported by zero tariffs. Despite larger production, additional imports will be needed to fulfill internal consumption needs.

    Recent tenders issued by TMO have further stabilized the domestic market, and these efforts are projected to support domestic milling and curb historic inflation. These imports are also expected to satisfy the needs of its wheat processing sector.

    With Turkey being the world’s largest exporter of both wheat flour and pasta, the country relies on wheat imports to support processing of wheat products and exports, along with meeting domestic demand.

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