Slide1: Expert Group Meeting 2005, Jeddah Hamdi BAGCI CEO Cotton Production And Consumption: an Evaluation About Turkey


CONTENTS: CONTENTS World Cotton Statistics Production IDB Members’ Share In Cotton Production IDB Members’ Share In Cotton Consumption Consumption Exports IDB Members’ Share In Exports Imports IDB Members’ Share In Imports Turkey Key Indicators & Cotton Statistics Key Indicators Production Areas South-Eastern Anatolia Development Project (GAP) Production Consumption Exports Imports Principles of WTO Developing Countries In WTO Turkey Exports In Textile Sector Turkey Imports In Textile Sector Cotton Trading Platform In Turkey Spot Market Major Institutions In Cotton Sector ITB Trading Volume Cotton Spot Prices State Incentives Raisin Export Prices Cotton Standardization In Turkey Cotton Standardization In The USA Futures Market Cotton Futures A New Market for Cotton


WORLD COTTON STATISTICS: WORLD COTTON STATISTICS


Leading Countries In Cotton Production(1,000 tones): Leading Countries In Cotton Production (1,000 tones) Source: Cotton World Statistics, September 2003 Cotton: Review of the World Situation, March-April 2004 (*) CIS: Comon wealth of Independent States :Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan


Leading Countries In Cotton Production: Source: Cotton World Statistics September 2003 Cotton: Review of the World Situation, March-April 2004 (*) Prediction Leading Countries In Cotton Production


(*)IDB Members’ Share In Cotton Production: Source: Cotton World Statistics, September 2003 Cotton: Review of the World Situation, March-April 2004 (*) IDB members: Azerbaijan, Egypt, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan, Uzbekistan (*)IDB Members’ Share In Cotton Production All IDB Members: Afghanistan, Albania, Algeria, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei-Darusssallam, Burkina-Faso, Cameroon, Chad, Union of Comoros, Djibouti, Egypt, Gabon, Gambia, Guinea, Guinea-Bissau, Indonesia, Iran, Iraq, Jordan,Kazakhstan, Kuwait, Kyrghyz, Lebanon, Libyan Arab Jamahiriya, Malaysia, Maldives, Mali, Mauritania, Morocco,Mozambique, Niger, Nigeria, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sudan, Suriname, Syrian, Tajikistan, Togo, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates, Uzbekistan, Yemen


Leading Countries In Cotton Yield(Kg/Ha): Leading Countries In Cotton Yield (Kg/Ha) Source: Cotton World Statistics, September 2003 Cotton: Review of the World Situation, March-April 2004 (*) CIS: Commonwealth of Independent States :Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan


Leading Countries In Cotton Consumption (1,000 tones): Leading Countries In Cotton Consumption (1,000 tones) Source: Cotton World Statistics, September 2003 Cotton: Review of the World Situation, March-April 2004 (*) CIS: Commonwealth of Independent States :Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan


Leading Countries In Cotton Consumption: Source: Cotton World Statistics, September 2003 Cotton: Review of the World Situation, March-April 2004 (*) Prediction Leading Countries In Cotton Consumption


(*)IDB Members’ Share In Cotton Consumption: Source: Cotton World Statistics, September 2003 Cotton: Review of the World Situation, March-April 2004 (*) IDB members: Azerbaijan, Egypt, Kazakhstan, Kyrgyzstan, Mali, Pakistan, Syria, Tajikistan, Turkey, Turkmenistan, Uzbekistan (*)IDB Members’ Share In Cotton Consumption All IDB Members: Afghanistan, Albania, Algeria, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei-Darusssallam, Burkina-Faso, Cameroon, Chad, Union of Comoros, Djibouti, Egypt, Gabon, Gambia, Guinea, Guinea-Bissau, Indonesia, Iran, Iraq, Jordan,Kazakhstan, Kuwait, Kyrghyz, Lebanon, Libyan Arab Jamahiriya, Malaysia, Maldives, Mali, Mauritania, Morocco,Mozambique, Niger, Nigeria, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sudan, Suriname, Syrian, Tajikistan, Togo, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates, Uzbekistan, Yemen


Leading Cotton Exporters: Source: Cotton: Review of the World Situation, March-April 2004 CIS: Azerbaijan, Kazakhstan, Kyrghyz, Tajikistan, Turkmenistan, Uzbekistan (*) Prediction Leading Cotton Exporters


IDB Members’ Share In Exports: IDB Members’ Share In Exports Source: ICAC Cotton World Statistics IDB Members: Afghanistan, Albania, Algeria, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei-Darusssallam, Burkina-Faso, Cameroon, Chad, Union of Comoros, Djibouti, Egypt, Gabon, Gambia, Guinea, Guinea-Bissau, Indonesia, Iran, Iraq, Jordan,Kazakhstan, Kuwait, Kyrghyz, Lebanon, Libyan Arab Jamahiriya, Malaysia, Maldives, Mali, Mauritania, Morocco,Mozambique, Niger, Nigeria, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sudan, Suriname, Syrian, Tajikistan, Togo, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates, Uzbekistan, Yemen


Leading Cotton Importers: Source: Cotton World Statistics, September 2003 Cotton: Review of the World Situation, March-April 2004 (*) Prediction Leading Cotton Importers


IDB Members’ Share In Imports: IDB Members’ Share In Imports Source: ICAC Cotton World Statistics IDB Members: Afghanistan, Albania, Algeria, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei-Darusssallam, Burkina-Faso, Cameroon, Chad, Union of Comoros, Djibouti, Egypt, Gabon, Gambia, Guinea, Guinea-Bissau, Guyana, Indonesia, Iran, Iraq, Jordan,Kazakhstan, Kuwait, Kyrghyz, Lebanon, Libyan Arab Jamahiriya, Malaysia, Maldives, Mali, Mauritania, Morocco,Mozambique, Niger, Nigeria, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sudan, Suriname, Syrian, Tajikistan, Togo, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates, Uzbekistan, Yemen, Cote d’Ivoire


TURKEY KEY INDICATORS & COTTON STATISTICS: TURKEY KEY INDICATORS & COTTON STATISTICS


Key Indicators(2003): Key Indicators (2003) Source: Turkish Treasury World Bank


Cotton Production Areas: Cotton Production Areas Aegean Antalya Cukurova South East Anatolia


Production Areas By Regions (thousands of hectares): Production Areas By Regions (thousands of hectares) Source: Izmir Mercantile Exchange


South-Eastern Anatolia Regional Development Project( GAP ): South-Eastern Anatolia Regional Development Project ( GAP ) GAP covers 9 cities: Its master plan prepared in 1989


South-Eastern AnatoliaRegional Development Project( GAP ): The area has 1.7 millions ha irrigation potential (20 percent of total area which is irrigated in Turkey). Total cost of the project : $32 billion The projection of this project: 22 Dams 19 hydroelectric power station 27 billion kwh electric per year South-Eastern Anatolia Regional Development Project ( GAP ) Source: GAP- Regional Development Institution


The Prediction: South-Eastern Anatolia Cotton Production In 2010: The Prediction: South-Eastern Anatolia Cotton Production In 2010 In 2002/2003 season total production area : 377,647 ha 321,000 ha allocated to cotton production in South-Eastern Anatolia (85%) Cotton production: 434,868 tones Cotton yield: 1,388 kg/ha The projection for 2010; The total area which is irrigated will be 1,276,000 ha 1,084,600 ha will be allocated to cotton production in South-Eastern Anatolia (85%) The average of change in yield by year: +5% (1996-2004) Cotton yield in 2010: 1,953 kg/ha Cotton production: 2,118,224 tones Source: Izmir Mercantile Exchange GAP- Regional Development Institution


The Prediction: South-Eastern Anatolia Cotton Production In 2010: The Prediction: South-Eastern Anatolia Cotton Production In 2010 *If South-Eastern Anatolia Development Project continues, the production amount in 2010 will be 5 times bigger than that of in 2003.


Turkey Cotton Production: Turkey Cotton Production Source: Izmir Mercantile Exchange (*) Prediction


Regions’ Share In Cotton Production: Regions’ Share In Cotton Production Source: Izmir Mercantile Exchange (*) Prediction


Cotton Exports: Cotton Exports Source: Prime Ministry For Foreign Trade


Exports By Countries: Exports By Countries Source: Prime Ministry For Foreign Trade


Cotton Imports: Cotton Imports Source: Prime Ministry For Foreign Trade


Imports By Countries: Imports By Countries Source: Prime Ministry For Foreign Trade


Exporting Countries’ Shares: Exporting Countries’ Shares Source: Prime Ministry For Foreign Trade


Importing Countries’ Shares : Importing Countries’ Shares Source: Prime Ministry For Foreign Trade


Why Do Turkey Import Cotton From USA & Europe?: Why Do Turkey Import Cotton From USA & Europe? GSM Credits Secure Trading Platform Existence of Transparent Market Structure Information Dissemination The Quality Standards


The Reasons of Undeveloped Cooperation With IDB Members?: The Reasons of Undeveloped Cooperation With IDB Members? Insufficient Information & data Restrictions on foreign trade Non-existence of institutional market structure


Turkey Exports In Textile & Ready-Made Sectors: Turkey Exports In Textile & Ready-Made Sectors Source: The General Secretarıat of Istanbul Textıle & Apparel Exporters' Assocıatıons 17 percent of the biggest 500 firms in Turkey belongs to Textile sector. Source: Istanbul Chamber of Industry


Textile & Ready-Made Sector’s Share In Exports: Textile & Ready-Made Sector’s Share In Exports Source: Prime Ministry For Foreign Trade


Turkey Imports In Textile & Ready-Made Sectors: Turkey Imports In Textile & Ready-Made Sectors Source: the general secretarıat of istanbul textıle & apparel exporters' assocıatıons


Cotton Trading Platform In Turkey: Cotton Trading Platform In Turkey


Spot Market: Spot Market Cotton prices determined at regional exchanges in accordance with free trade rules. No-state intervention on cotton prices Cotton import & export free No trade barriers exist Izmir Mercantile Exchange is the most active cotton trading platform since 1891 Spot prices disseminate via data vendors.


Market Participants In Cotton spot Market: Cotton producers Producers can sell their cotton to ginners or Agricultural Sales Cooperatives Producers can sell their cotton directly to the ginners in cash or deliver their cotton & fix prices later Ginners Ginners are very active players in Cotton spot market. They buy from producers & sell companies via Mercantile Exchanges) Agricultural Sales cooperatives There are three sales cooperatives in Turkey & their share is 20% in cotton market. Agents & Brokers at Izmir Mercantile Exchange Agent & brokers buy & sale cotton on behalf of Ginners or Companies Textile Companies Market Participants In Cotton spot Market


Prospective Developments: Prospective Developments Licensed Warehouse Law Accepted By The Parliament Product Specialized Exchange Law Accepted. According to these laws private sector can establish licensed warehouses & a new exchange which operates national or regional basis. These developments will effects commodity markets positively.


Cotton Research & Cotton Seeds: Nazilli Cotton Investigation Institute: The main function of the institute is to collect data, make strategic investigation about cotton for Aegean and The Mediterranean Regions and rehabilitation of seeds. Institute observed 16 different cotton species (Nazilli-84). Institute produced green, brown cotton. It tries to produce black cotton which is suitable for textile sector. In private sector, the cotton seeds with Bayer patent are produced by utilizing highest technology in the world. Cotton Research & Cotton Seeds


ITB Trading Volume: ITB Trading Volume Source: Izmir Mercantile Exchange


Cotton Spot & Futures Prices: Cotton Spot & Futures Prices The correlation between world and Turkey cotton prices is high Source: Izmir Mercantile Exchange


State Incentives: State Incentives There are three types of incentives in Turkey; Direct Income Payments Incentives payments for cotton producers per /kg. (0,20 USD/Kg for 2004/2005 season) Sell cheaper diesel oil for farmers


Seed & Plant: Seed & Plant Farmers can freely choose Seed Production areas


Cotton StandardizationIn Turkey: In Turkey grade and calibration standards of cotton developed by Turkish Standards Institution (TSE) Standards of cotton which will be export audited by Undersecretariat of the Prime Ministry for Foreign Trade Several fiber testing methods are used to select cotton standards. (HVI, specialist investigation…) Cotton Standardization In Turkey


Cotton StandardizationIn Turkey: Cotton Standardization In Turkey Cotton In Turkey separated into three basic classes: Cotton with short staple (domestic): Staple length is shorter than 19.05 mm Cotton with medium staple (Upland): Staple length is between 19.05 mm and 34.48 mm Cotton with short staple: Staple length is longer than 30.48 mm Source: Prime Ministry For Foreign Trade


Cotton StandardizationIn Turkey: The grade and sub-types of these three cotton classes determined based on; Color Micronaire Durability Uniformity Staple elasticity Source: Prime Ministry For Foreign Trade Cotton Standardization In Turkey


Cotton StandardizationIn Turkey: The great percent of cotton in Turkey belong to Upland class. Upland class separated into sub-classes: - White -Light spotted -Colored Aegean Standard 1 cotton which is underlying instrument of cotton futures at TurkDex belongs to medium staple and white classes. Cotton Standardization In Turkey


Market Structure: Market Structure Turkish Experience: No government intervention to prices, seed selection, land allocation for cotton producing, Both national and international cotton trade is free, Low taxes, Government involvement is limited in price determination, Direct income subsidy for farmer, Transparent and efficient spot and futures markets for cotton Ongoing processes: establishment of warehouses and national spot markets for agricultural products Current structure seems to be good for everyone: government, farmer and textile industry


Need for efficient price discovery: Need for efficient price discovery For whole region, a central cotton trading platform may help to attain efficient price discovery and liquidity, If prices freely float, there will be need for hedge (an efficient derivatives contract for the region).


For efficient markets…: For efficient markets… No government intervention, Standardized products, Licensed warehouses, Reliable intermediaries, Sound regulations, Efficient information dissemination about cotton production, Central trading platforms,


Futures Market: Futures Market 4 February, 2005 TURDEX launched. Aim: provide hedging and investment vehicle for interested parties. At Turkdex Cotton Future Contracts trades via electronic trading platform. Also TRY/USD, TRY/EURO, Stock Indices (ISE-30), 91 & 365 Day T-Bill And Wheat Futures Contract can be traded.


Cotton Futures Contract (1): Cotton Futures Contract (1)


Cotton Futures Contract(2): Cotton Futures Contract(2)


A New Market for Cotton: A New Market for Cotton Turkdex with its cotton and currency futures contract can serve on electronic trading platform to whole region.


How may the Cooperation between IDB Countries be Developed ? : How may the Cooperation between IDB Countries be Developed ? An institution to perform technical assistance for market structure, cotton production, trade and cotton productivity. Participation countries may share their experience & know-how about cotton sector (regulation, statistics, information dissemination, productivity).


Thank You…: Thank You…