SG Expects that MayAgro of Turkey Take Part as One of D-8 Seed Bank in Food Security Programs

Istanbul, Turkey | February 02, 2009 by D-8 Secretariat

SG visited MayAgro Seeds, Turkey, to encourage them to take advantage as one of D-8 Seed Bank.

The world has been facing oil, food, and financial crisis.  The impacts to developing countries surely affect food security that may postpone the 2015 UN Millennium Development Goals (the MDGs) to reduce poverty by the end of 2015 up to 20%.

Food prices have soared. Just over the last 12 months the FAO food price index rose, on average, by 52 percent. Prices for some commodities, notably for maize continued to rise during the first half of 2008. Until mid-June 2008, maize prices rose by more than 70%, approaching a record level of nearly US$8/bushel. Likewise, prices for soybeans and soybean oil were at or near record levels by mid 2008.

The global food import bill has surged to 820 billion dollars in 2007, the highest level in history. Costs are projected to rise by another 26% in 2008 and could reach the all-time-high level of 1035 billion dollars in 2008. The most economically vulnerable countries are set to bear the highest burden in the cost of importing food, with total expenditures by Least-Developed Countries (LDCs) and Low-Income Food-Deficit countries (LIFDCs) anticipated to climb by 37 - 40 percent from 2007, after rising by 30 percent and 37 percent, respectively, already last year. The sustained rise in imported food expenditures for both vulnerable country groups constitutes a particularly worrying development, since, on current expectations, their annual food import basket could cost four times as much as it did in 2000.

No doubt, high food prices do not have to be bad news for all, and farmers normally stand to benefit. But this time only very few farmers managed to benefit from higher prices. Most of them have been squeezed by soaring costs. Again, the fact speak for them: Prices for fertilizer, seeds and animal feed have risen by 98, 72 and 60 percent, respectively since 2006. For some inputs these price rises even accelerated in 2008. On average, the FAO input price index doubled in the first four months of 2008, compared to the same period in 2007; US dollar prices of some fertilizers more than tripled.

In the next fifty years it could become much harder to feed the world if relevant actions are not taken immediately. Population will grow from 6.5 billion today to 8.3 billion in 2030 and nearly 9.2 billion in 2050.All of that growth will be concentrated in developing countries. Global food production will therefore need to increase by more than 50% by 2030, and nearly double by 2050.

During the 6th Summit of D-8 in Kuala Lumpur, Malaysia, July 2008, D-8 head of states has identified some potential cooperation to combat the rising food prices threat, one of them is establishing a Seeds Bank in D-8 Countries for enough seeds stock whenever are needed for increasing more food products within the countries, as well as a ready stock whenever needed by farmers because of natural disasters, and other unfortunate situation.

By definition, a seedbank stores seeds as a source for planting in case seed reserves elsewhere are destroyed. It is a type of gene bank. The seeds stored may be food crops, or those of rare species to protect biodiversity. The reasons for storing seeds may be varied. In the case of food crops, many useful plants that were developed over centuries are now no longer used for commercial agricultural production and are becoming rare. Storing seeds also guards against catastrophic events like natural disasters, outbreaks of disease, or war.

Taking into action of D-8 cooperation in food security programs, SG visited MayAgro Seeds, one of private sector that producing seeds, yesterday (29/01) in Bursa, Turkey to encourage them to takes part to become as one of seed bank among D-8 countries. SG met with president of MayAgro, Mehmet Ali Yormazoglu and talking some points of benefit as one D-8 Seed Bank. One of its, is as geographically, location Turkey is strategic to produce and supply varies of seeds to Africa, Europe, Middle East, and South Asia.  So that, MayAgro may take this advantage to wide their capacity of supply, not only for domestic supply, but also the region near Turkey.  This is a good market for D-8 to increase trade volume, as well as to raise profit for MayAgro itself. But, according to president of MayAgro, one of threaten in trade is too high tariff and import tax from destination countries. “Trade barriers, such as tariff and import tax, are still become big problem to exporter countries, besides red-tape problems”. SG has concerned about this.  “With Preferential Trade Agreement (PTA) among D-8 countries, these trade barriers would be expected to reduce so that any trade activities more easier for businessmen.”

In addition, IFC staff visited the offices of Mayagro Seed Co in the outskirts of Bursa, Turkey, and met with management and staff responsible for key business operations, including environmental and occupational health and safety issues and human resources. IFC staff reviewed existing management systems (where available); and visited the seed plant and warehouse operations in Bursa. Information of the operations in Antalya and Adana were made available in Bursa. The IFC team reviewed diverse company documentation including annual reports and business plans. There was formal documentation that detailed environmental and occupational health and safety issues for review. In addition a human resources manual was available for review. Project description The proposed IFC investment in Mayagro Seed Co, a family-owned, second-tier company active in agricultural seed sector, is in line with IFC’s strategy in Turkey to support emerging and viable second-tier companies to become more competitive; expand private sector’s reach to less developed parts of the country; target equity investments, especially in creditworthy high-growth second-tier companies; and explore co-investment opportunities with IFC’s private equity funds.

IFC proposes to invest up to 20% of Mayagro’s capital. In addition to the proposed IFC equity investment, Eurasia Capital Limited (“Eurasia” or the “Manager”), a new IFC private equity fund manager client currently launching Eurasia Capital Partners L.P., a private equity fund targeting Turkey.

Furthermore, SG look forward that MayAgro may takes these advantages as one of D-8 seed bank among D-8 countries. For this reason, there is a great opportunities to MayAgro to come to D-8 Ministerial Meeting on Food Security Programs in Kuala Lumpur, Malaysia next 25-27 February 2008 and contribute as one of D-8 Seed Bank.

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