Market Update/
Turkish farmers and traders respond to government’s chickpea restrictions

On October 16 2021, Turkey’s Ministry of Trade issued a communiqué that placed chickpeas on the List of Goods Registered for Export. This means that Turkish traders are required to seek permission from the Turkish Exporters’ Assembly (TIM) before exporting any quantity of chickpeas out of the country. 

This measure did not technically ban the export of chickpeas. But according to Tuba Memis, a senior manager at Memisoglu Tarim (TAT) — one of the largest pulses companies in Turkey — subsequent guidance received from TIM made it clear that “The export of chickpeas will not be allowed.” According to Memi?, the de-facto export ban only applies to chickpeas of Turkish origin. As of early November, there remains a lot of uncertainty in the market about how long the restrictions will remain in place.

The longer the ban goes on, however, the greater risk there is that Turkey’s traders lose ground in their key export markets. Pakistan is the world’s largest importer of chickpeas (valued at $206 million in 2019) and an important market for Turkey. According to Faisal Majeed, CEO of Bombi’s Group, a Pakistani agro-trader, Turkey was already losing market share in Pakistan due to high prices. 

“Recently, the prices of Turkish chickpeas have been quite high,” he said. “So we were already reducing imports from Turkey and sourcing cheaper alternatives.” Majeed says that Russia — which exclusively produces 6-7mm caliber chickpeas, compared with the 8-9mm caliber which dominate the Turkish market — is a cheaper alternative. But he also notes that “There is not much stock left there,” given that the country produces its chickpeas almost exclusively for export.

In contrast to Russia, Turkey has one of the world’s highest consumption rates for chickpeas. For much of the last decade and beyond, Turkey was a net importer of chickpeas. The country only reversed this trend in 2018, when total exports increased from 23,000 tonnes to 117,000 tonnes. According to Memis, the significant increase in production was due, in large part, to support from the government, particularly the “Turkish Grain Board's purchase guarantee for farmers.”

But this year, it is rising temperatures that are causing domestic production to fall and forcing the government’s hand in terms of policy responses. May 2021 was the warmest May recorded for 50 years in Turkey. And in August — when chickpeas are harvested — the country faced some of the worst wildfires it has seen in decades. 

Over the summer, the government’s statistical institute, Turkstat, forecasted that chickpea yields would be significantly lower: a 12.7 percent fall on 2020 output, down to 550,000 tonnes, though some other pulses (including dry beans) would see modest increases.

In a statement announcing the export restriction on October 16, TIM said that these were “necessary measures… taken to protect the domestic supply-foreign demand balance and price stability in the face of recent drought, yield and quality problems.” 

In response to the restrictions, Memis says that Turkish traders are working both to protect their international export markets and help contain domestic prices. To protect their markets, she says that traders and farmers are lobbying the government to repeal the measures and they hope to receive a positive response. Memi? also points out that the restrictions do not cover chickpeas bought from abroad. So for manufacturers and traders with custom-bonded warehouses, or processing facilities based in free zones, there are still trading opportunities available.

The fight to contain domestic food prices is a more challenging one. Turkey is currently facing steep inflation. In September, data from the central bank showed that prices of food and non-alcoholic beverages were up by nearly 29 percent year-on-year (though the bank also believes there are early indications that food price inflation has passed its peak). The drought has played its part in that trend. So, too, has a weakening currency:  the lira has lost nearly 25 percent of its value against the US dollar this year. 

In early September, the government reduced import taxes on chickpeas and lentils from 19.3 percent to 0 percent, until 31 December. Memis says that this move precipitated a high volume of chickpea imports from Mexico, Canada, Russia and Australia, which are due to arrive in November and December. Most of these chickpeas are higher calibres. 

Around 25 percent of Turkish chickpea production is of the 9mm caliber; 60 percent is 8mm; and 15 percent is 7mm, according to Memis. “Chickpeas consumed in Turkey are mostly 9 mm or larger —  7mm and 8mm chickpeas are not consumed much here. So we mainly export the 7mm and 8mm calibers. This is an important advantage which helps us reduce costs and offer more affordable prices domestically,” said Memi?.

“If we do not have a market for 7 and 8mm calibers, our domestically-sold 9mm chickpea costs will be higher. Domestic chickpeas consumption (of 7-8mm caliber) is not satisfactory for Turkish farmers to produce more. Without export markets, we could see falling production and increased imports. Not only would traders lose their markets but domestic prices could also increase,” she continued.

It’s clear that the short-to-medium term outlook in Turkey’s chickpea sector remains highly uncertain. Farmers, traders and large domestic consumers will be watching closely to see how this export restriction affects the market and how the Ministry of Trade will respond to changing circumstances.