Increasing the Accessibility of Licensed Warehouses
Increasing the Accessibility of Licensed Warehouses
Business Model Description
Investments in licensed warehouses in agriculture where warehouse managers store and insure the produce of farmers and issue a warehouse storage receipt that can be used as collateral by the farmers in agricultural commodity trade markets
Expected Impact
Investments in storage and warehousing will reduce food waste in the agricultural supply chain and work towards reducing the fluctuation of food prices.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Turkey: Aegean Region
- Turkey: Central Anatolia Region
- Turkey: Mediterranean Region
- Turkey: Southeastern Anatolia Region
Sector Classification
Food and Beverage
Development need
Significant challenges remain for Turkey in combatting hunger and climate change. The relevant indicators across SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities) suggest that the existing measures are insufficient to reach the target levels of poverty alleviation in the country by 2023, rendering food security and price stability increasingly important.
Policy priority
Turkey's 2nd Voluntary National Review on the Sustainable Development Goals, 11th Development Plan, and the 2020 Presidential Program place agriculture among the priority development areas. All of these documents highlight concerns over price stability and agricultural productivity. Development within this sector is also vital for rural livelihoods
Gender inequalities and marginalization issues
The share of women working in the agriculture sector is 25.1%, while the share of men is 14.9%. (23) This sector mainly provides employment to women in rural areas as seasonal workers. While this is the case, most of the production equipment are reportedly owned by men. (24) 24.8% of the Turkish population is classified as 'rural' by the FAO. (25)
Investment opportunities
There is a growing international and domestic demand for organic and sustainably produced food products. Moreover, advancements in agricultural technology provide opportunities for more cost-effective and sustainable production methods
Key bottlenecks
Turkish agricultural production mainly consists of smallholder farmers with fragmented land ownership. While increasing quality standards and technological efficiency, it is important to ensure that changes in the procurement and production systems do not drive these farmers out of the market.
Food and Beverage Retail
Development need
Food losses during harvests and in storage translate into lost income for small-scale farmers and into higher prices for poorer consumers. Academic studies on the subject find that the total edible food loss and waste generated every year in Turkey is approximately 26.04 million tons. he loss in the post‐harvest handling and storage stage of the food chains range from 0.02-8% and vegetables see the highest losses (12)(13)
Policy priority
Essential development goals noted by the 11th Development Plan, the VNR on SDGs and the 2020 Presidential Program include improving prosperity in rural areas and achieving sustained food security by increasing the yield and quality of agricultural products; the sustainable management of land and water resources; combatting climate change, desertification and erosion; and protecting biodiversity
Gender inequalities and marginalization issues
The share of women working in the agriculture sector is 25.1%, while the share of men is 14.9%. (23) This sector mainly provides employment to women in rural areas as seasonal workers. While this is the case, most of the production equipment are reportedly owned by men. (24) 24.8% of the Turkish population is classified as 'rural' by the FAO. (25)
Investment opportunities
There is a growing international and domestic demand for organic and sustainably produced food products. Moreover, advancements in agricultural technology provide opportunities for more cost-effective and sustainable production methods
Key bottlenecks
Turkish agricultural production mainly consists of smallholder farmers with fragmented land ownership. While increasing quality standards and technological efficiency, it is important to ensure that changes in the procurement and production systems do not drive these farmers out of the market.
Food Retailers and Distributors
Pipeline Opportunity
Increasing the Accessibility of Licensed Warehouses
Investments in licensed warehouses in agriculture where warehouse managers store and insure the produce of farmers and issue a warehouse storage receipt that can be used as collateral by the farmers in agricultural commodity trade markets
Business Case
Market Size and Environment
total storage capacity
The total storage capacity of the existing warehouses in November 2019 was 4.578.152 tons. (15)
Indicative Return
15% - 20%
Interviewed investors estimate an IRR between 15-20% for investments in this area.
Investment Timeframe
Medium Term (5–10 years)
Short to Medium Term - The financilization of this model will delay generating cash-flow. The warehouse receipts need to be accepted by the financial sector as a legitimate commodity trade model, agricultural commodity exchange markets need to be adopted at a wider-scale.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Market - Volatile
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Food losses during harvests and in storage translate into lost income for small-scale farmers and into higher prices for poorer consumers (12). Academic studies find that the total edible food loss and waste generated every year in Turkey is approximately 26.04 million tons (13).
The loss in the post‐harvest handling and storage stage of the food chains range from 0.02-8% and vegetables see the highest losses (8%) (12)
Licensed warehouses work towards controlling the fluctuations in agricultural prices, especially the dip in prices due to the accumulation of supply during the harvest periods and granting access to finance in commodity exchange markets and sustainable income for small-holder farmers. (14)
Gender & Marginalisation
25% of the agricultural produce coming out of the field in Turkey is wasted throughout the agricultural supply chain. This decreases the net earnings of Turkish farmers. There are 2.1 million farmers in Turkey. (26)
Expected Development Outcome
Facilitate the access of small-holder farmers to financing options: If taken up by the financial system, the product receipts issued by the licensed warehouses can serve as collateral in commodity exchange markets (Financial inclusion, SDG 8 & SDG 10)
Curb the price fluctuations in agriculture by securing supply throughout the year, rather than during the harvest period (SDG 2)
Gender & Marginalisation
Increase access to working capital for small producers with low incomes
Primary SDGs addressed
2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
2.3.2 Average income of small-scale food producers, by sex and indigenous status
2.c.1 Indicator of food price anomalies
12.90 (2014) (22)
12.3.1 (a) Food loss index and (b) food waste index
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Outcome Risks
Spoilage, losses and quality depreciation of the stored goods.
Other risks are related to the licensed warehouses: fraudulent activities, mishandling of the commodity and insolvency (21)
If the product receipts are not accepted by the financial sector, it might put the farmers who deposit their products at a financial loss
Rents might be too high for small-scale producers in comparison to the benefits of accruing product receipts
Impact Risks
Execution risk
Alignment risk
Stakeholder participation risk
Impact Classification
What
Reduced food waste
Who
This will profit warehouse owners, the farmers and the general public given increased access to high-quality nutritional products and reduced food prices.
Risk
Medium Risk (Risk of fraudulent activities and mishandling of the commodity and financial insolvency should be considered.)
Impact Thesis
Investments in storage and warehousing will reduce food waste in the agricultural supply chain and work towards reducing the fluctuation of food prices.
Enabling Environment
Policy Environment
2020 Presidential Program: highlights strategic investments for the control of price fluctuations in food and beverages.
11th Development Plan: States that the Turkish Grain Board will purchase grain through licensed warehouses and electronic receipts, which will be created for commodity transactions in Turkey. Product conservation and analysis efforts will also be increased.
(Policy document): The 2019-2023 Strategic Plan of the Ministry of Agriculture and Forestry emphasizes the need to maintain price stability in the agriculture sector and to prevent food waste and spoilage
Financial Environment
Financial incentives: Warehouse rent support will be paid for 5 years, financial support will be given to the producers who wish to carry their produce to the licensed storage sites, 25 TL per tone up to a maximum thereshold of 750 TL. (16, 17)
Fiscal incentives: Tax exceptions: (16) (17) Products purchased and sold through electronic product certificates benefit from the exemptions below until 31.12.2023; From agricultural withholding tax (2%), - Profit from income / corporate tax (20%), VAT (1%).
Other incentives: Ziraat Bank issues loans to farmers in exchange for warehouse receipts. (16)
Regulatory Environment
Code of Licensed Agricultural Product Warehousing no. 5300: published in Official Gazette no. 25730, regulates the licensed warehousing system in Turkey
The Turkish Ministry of Science, Industry and Technology (formerly the Ministry of Industry and Trade): is the designated institution for licensing warehouses and overseeing of the warehouse receipts system.
(Regulation): The General Directorate of Food and Control is the main service in charge of controlling and regulating food safety, veterinary and phytosanitary issues.
Marketplace Participants
Private Sector
Warehouse owners and managers such as TK Tarım Ürünleri Lisanslı Depoculuk Anonim Şirketi, TMO-TOBB Lidaş, Ege Tarım Ürünleri Lisanslı Depoculuk A.Ş, Anadolu Selçuklu (19). Domestic and international banks that might finance such investments and banks that will accept the product receipts issued by warehouses as collateral such as Ziraat Bank, Is Bank, Vakif Bank, Tarım Kredi Kooperatifleri (The Agricultural Credit Cooperatives of Turkey).
Government
The Ministry of Science, Industry and Technology, The Ministry of Agriculture
Non-Profit
Farmers, relevant agricultural bodies, Turkish Grain Board, The Union of Chambers and Commodity Exchanges, Customs and Tourism Enterprises
Target Locations
Turkey: Aegean Region
Turkey: Central Anatolia Region
Turkey: Mediterranean Region
Turkey: Southeastern Anatolia Region
References
- (1) Sustainable Development Report Dashboard 2020, OECD Members, Turkey, https://dashboards.sdgindex.org/?fbclid=IwAR1tzYVKRXvPD2mwfvhf-mLTGGQEjA76y_HlrprWhSzNYZcqrLZMLXzRIcI#/TUR
- (2) 11th Development Plan http://www.sbb.gov.tr/wp-content/uploads/2020/03/On_BirinciPLan_ingilizce_SonBaski.pdf
- (3) 2020 Annual Presidential Program, http://www.sbb.gov.tr/wp-content/uploads/2019/11/2020_Yili_Cumhurbaskanligi_Yillik_Programi.pdf
- (4) The New Economic Program of 2020-2022, http://www.sbb.gov.tr/wp-content/uploads/2019/10/YeniEkonomiProgrami_OVP_2020-2022.pdf
- (5) Sustainable Development Goals Evaluation Report from the Directorate of Strategy and Budget
- (6) The 2019-2023 Strategic Plan of the Ministry of Agriculture and Forestry, https://www.tarimorman.gov.tr/SGB/Belgeler/stratejikplan.pdf
- (7) R63 Working Plan 2019, https://www.dogaka.gov.tr/assets/upload/dosyalar/wwwdogakagovtr_603_ge7j97uv_tr63-bolge-plani-2014-2023.pdf
- (8) TR72 Region Strategic Sectors Analysis, http://www.oran.org.tr/images/dosyalar/20190523172559_0.pdf
- (9) TRB1 Regional Plan 2014-2023, https://fka.gov.tr/sharepoint/userfiles/Icerik_Dosya_Ekleri/BOLGE_PLANI/TRB1BOLGEPLANI(2014-2023).pdf
- (10) Presidency of Strategy and Budget, Turkey's SDGs 2nd VNR 2019. https://sustainabledevelopment.un.org/content/documents/23862Turkey_VNR_110719.pdf
- (26) Greenpeace, 2019, https://www.greenpeace.org/static/planet4-turkey-stateless/2019/11/e641d246-tu%CC%88rkiyenin-g%C4%B1da-ve-tar%C4%B1m-sistemi-rapor.pdf
- (11) TMO-TOBB Lidaş website, http://www.tmo-tobblidas.com.tr/
- (12) FAO, Food Losses and Food Waste in Turkey, http://www.fao.org/3/a-au824e.pdf
- (13) Bioresource Technology Journal, " Food loss and waste management in Turkey", https://doi.org/10.1016/j.biortech.2017.06.083
- (14) Düzce Commodity Exchange, https://www.duzcetb.org.tr/Dosyalar/lisansli-depoculuk-arastirmasi-ve-fizibilite-raporu-calismasi_4439508319i.pdf
- (15) Licensed Warehouse Statistics, https://www.ticaret.gov.tr/ic-ticaret/lisansli-depoculuk/istatistiklerle-lisansli-depoculuk
- (16) Lidasder Licensed Warehousing Incentives and State Aid http://www.lidasder.org.tr/tesvik-ve-devlet-yardimlari/
- (17) Ministry of Trade FAQ about Licensed Warehousing and Agricultural Commodity Markets, https://www.ticaret.gov.tr/ic-ticaret/sikca-sorulan-sorular/lisansli-depoculuk-ve-urun-ihtisas-borsasi#9
- (18) Ziraat Bank warehouse receipt loans information, https://www.ziraatbank.com.tr/en/sme/agriculture/other-loans/turkish-grain-board-warehouse-receipt-loans
- (19) T.C Ticaret Bakanlığı / The Ministry of Trade, Licensed Warehousing Enterprises with Establishment and Licensing Authorization
- (20) FAO report on Designing warehouse receipt legislation: Regulatory options and recent trends http://www.fao.org/3/a-i4318e.pdf
- (21) COMCEC Report on Improving Agricultural Market Performance: Creation and Development of Market Institutions
- (22) SDG Tracker - https://sdg-tracker.org/zero-hunger
- (23) ILOSTAT, 2019, https://ilostat.ilo.org/data/country-profiles/
- (24) FAOSTAT, 2018, http://www.fao.org/faostat/en/#country/223
- (25) FAO, 2018, http://www.fao.org/new-york/fao-statements/detail/en/c/1109620/
- (26) Turkis Statistical Services, 2021. https://cip.tuik.gov.tr/#.