By, probably a complete coincidence, immediately after the end of the presidential elections in Turkey won by the incumbent President Recep Tayyip Erdogan, the Turkish currency suffered yet another collapse.
According to EastFruit analysts, it will have a huge impact on the fruit and vegetable trade of the entire region: Central Asia, the Caucasus, Eastern Europe, the Middle East and even the European Union.
Since the end of the elections, the value of the Turkish lira against the US dollar has already decreased by 14%, and the downward trend continues. Interestingly, exactly two years ago, one dollar was worth 8.67 Turkish lira, and today – it is already worth 23.37 lira. Thus, in two years, the Turkish currency has already fallen in value by 2.7 times.
A depreciation of the local currency always stimulates exports and severely limits the possibilities of imports. In the first 4 months of 2023, exports of fruits and vegetables from Turkey increased by 10%, and this was at a time when the exchange rate was held at a stable level. After its devaluation, we should expect a new round of growth in the volume of exports of fresh fruits and vegetables, as well as dried fruits and nuts of Turkish origin.
Turkey is the largest exporter of fresh fruits and vegetables in the region, and its annual export revenue from vegetables and fruits exceeds $6 billion per year. In Europe, only the Netherlands exports more than Turkey. In the Middle East, Turkey’s closest competitor can be considered Morocco, which exports almost half as much produce as Turkey. Also, the volume of fruit and vegetable exports from Turkey is twice the exports from Egypt. Therefore, undoubtedly, the influence of Turkey on the trade in vegetables, fruits and nuts in our region is huge.
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In 2022, the volume of Turkish fruit and vegetable exports slightly decreased, but this was primarily due to the low yield of the main Turkish fruit and vegetable export category – hazelnuts and due to decrease in the level of demand for Turkish vegetables and fruits in Ukraine and Russia caused by Russian invasion into Ukraine’s sovereign territory. For most of the other positions, Türkiye still showed an increase in export shipments.
Turkey’s positions for which exports may increase sharply after the recent devaluation, are: greenhouse tomatoes and cucumbers, cherries, apricots, peaches, nectarines, plums, dried fruits, and watermelons. So far, Turkey has a ban on the exports of onions and potatoes, but if the ban is lifted in the coming days, these products will also be actively exported.
Devaluation will also cause problems to the fruit and vegetable sector of Turkey. The cost of imported seeds, fertilizers, plant protection products, machinery and equipment will increase sharply, although much of this is indeed produced domestically.
This may lead to a deterioration in the quality parameters of the products grown, however, at the beginning of the harvesting of a new fruit crop, Turkey will probably still increase exports of apples, lemons, tangerines, hazelnuts, almonds, avocados and several other fruits and vegetables assuming normal weather conditions. It is possible that we will even see the first major exports of Turkish bananas, as Turkish banana production is now booming.
Of course, devaluation is very bad news for local consumers. The cost of food and other goods for Turkish consumers will rise and so will the poverty levels, limiting domestic demand for expensive produce.