“First of all, a description must be done about “Syrian bread”. This type of bread should be included in tariff rates of trade and industry chambers. When tariff rate for Syrian type lavash is determined, it is possible to calculate costs and determine a base price. As a result, unfair competition and market disequilibrium will be prevented. Cost and market of the bread will become clear. And all bakeries will be subjected to inspections for possible legal actions.”
Head of Turkish Bread Manufacturers Federation Murat Kavuncu
Bakeries serve products for 80 million people in Turkey including refugees. But they are experiencing great difficulties. Unfair competition is among the most important problems of the sector. Another bleeding wound is unlicensed operation. The Head of Turkish Bread Manufacturers Federation Murat Kavuncu says they are combatting more than 12 thousand bakeries. President Murat Kavuncu also criticizes bread factories operated by municipalities as “state competed with its citizens.” President Kavuncu says, bread prices are still low although raw material price hikes and this constitutes a major problem for the sector. The number of Syrian bread producers has also increased rapidly in Turkey in recent years and they are a source of unfair competition .Murat Kavuncu gave an interview to BBM magazine and said that they have achieved to partially bring Syrian bread producers under control.
Mr. Kavuncu, what does Turkish Bread Manufacturers Federation do for progress of the sector?
We gathered all bakers, bakery product producers and bread producers under the roof of Turkish Bread Manufacturers Federation. We follow activities of World Health Organization and Food and Agriculture Organization of the United Nations on behalf of our bakers that are represented by our provincial heads and branch heads. Thanks to activities of Turkish Bread Manufacturers Federation, our bakers are using world class technology now. We can compete with Germany with this technology.
Would you please tell us about the situation of the sector and problems it has been facing?
We are doing our best but the sector faces great challenges. It has to be evaluated extensively including training, culture, craftsmanship, intermediate staff, bread production, bakery operating license, unfair competition, hygiene and health aspects and relationship with governor offices, municipalities and local government, Ministry of Food Agriculture and Livestock and Ministry of Health.
You may ask ‘why’? First of all, bakers have a tremendous responsibility. Because they are producing the main food of people. That is the bread. Turkish people also see the bread as blessed so it has also a spiritual aspect. When we evaluate the health aspect; inspection of bread production and storage in terms of hygiene, quality and technology is essential. One negative influence for the sector is price hikes for diesel, oil, electricity and raw material. Bakers also struggle against big problems like rent costs, labor costs and intermediate staff scarcity. When unfair competition among bakers is added the situation of the sector becomes heart breaking. Today many bakeries are operated but without any profit. Demand and supply gap also contains tremendous problems. So we have to prevent below cost pricing. If we achieve to do that both agriculture sector and bakery sector will pick up.
BREAD PRICES WERE BELOW COSTS SO ITS WEIGHT WAS DECREASED TO 200 GRAMS
You have mentioned that bakeries suffer from high rent expenses in metropoles like İstanbul, Ankara and İzmir and also cost increases. But bread prices remain constant and even a slight increase makes the fur fly. What do you do to overcome the problem of failing to make profit?
Unfair competition exists in the sector. There is no market equilibrium. The answer was inside your question. Rent and other costs are very high in big cities. And in order to make profit, bakers should sell a bread of 250 grams weight for 2 liras. But weight of bread has decreased from 250 grams to 200 grams as of start of the year. This step has disrupted the unity among bakers which had been achieved by Turkish Bread Manufacturers Federation with great efforts against unfair competition since 2013. The decision to decrease weight of the bread to 200 grams has caused significant problems in the market. Below cost pricing was the main reason for that decision. The cost for a bread of 250 grams was 0.95 liras because of recent price hikes for raw material as well as rent and labor cost increases. The weight of bread has decreased to 200 grams and costs were also decreased from 0.95 liras to 0.75 liras.
What do you think about Halk Ekmek (Public Bread) factories that are continuously growing in number and production capacity?
First of all my point of view is that: Municipalities and mayors should not compete with their own tradesmen and citizens. Municipalities are responsible from urban planning, cleaning and infrastructure. They are not responsible of trade. It is an improper practice for a municipality to establish a ‘public bread’ factory and compete with bakers of the city. Turkish Bread Manufacturers Federation is against ‘public bread’ factories. Why? Because, those companies sell 200-300 thousand breads a day for 0.75 liras without making profit and they threaten bakers’ job.
Municipalities claim that their aim is to support poor citizens with public bread factories. But Turkish Bread Manufacturers Federation has already launched a social responsibility campaign called ‘pending bread.’ We have identified poor citizens and distributed ration cards. I am calling on all mayors to identify poor dwellers among their communities and encourage them to obtain their ration cards. Poor citizens are welcomed to get free breads from bakeries.
SYRIAN PRODUCERS ARE A SOURCE OF UNFAIR COMPETITION
There are also Syrian players in the sector. Syrian lavash is being widely produced especially in some South Eastern and Mediterranean cities. How do these activities affect the sector?
Syrian refugees have been active in Turkish bakery sector since they arrived in Turkey. They are producing a kind of lavash bread called ‘Syrian lavash’. We call this bread ‘Syrian lavash’. But when we ask them, they call it as “traveler bread”. We do not have a price tariff for Syrian bread or passenger bread in Turkey. Still, nearly 9 million Syrian breads are produced in Turkey. They are so widespread that, there is also unfair competition among them. We receive many complaints about this. Therefore we established Syrian Bread Producers Associations in provinces like Mardin, Gaziantep, İstanbul and Yalova. We have gathered them under the roof of Turkish Bread Manufacturers Federation. We try to help them to solve their problems by institutionalizing their associations and involving them under the roof of our federation.
We have been carrying out works about Syrian bread for about 5 years. Syrian originated companies have started to establish large factories at Organized Industrialized Zones and Urfa. They do not have licenses for production. They are registered by chambers of commerce and industry. We have difficulty in explaining regulations to them. Recently we have taken an initiative in cooperation with Kilis governor, mayor and municipal police officers and carried out inspections. We had a similar initiative in Gaziantap province. We will continue to work on this subject.
What are your expectations from the government about Syrian bread?
First of all a description must be done about “Syrian bread”. This type of bread should be included in tariff rates of trade and industry chambers. When tariff rate for Syrian type lavash is determined like what we do for rye bread or full wheat bread, it is possible to calculate costs. When this is done, a base price will be determined for that bread. As a result, unfair competition and market disequilibrium are prevented. Cost and output market of the bread becomes clear. And all bakeries are subjected to inspections for possible legal actions.”
What do you do to prevent bread waste?
We have been working on measures to prevent wasting bread for about 7 years. We are satisfied with our efforts. The size of wastage in Turkey was huge. Number of breads produced is nearly 120 million and 12 million breads were wasted every day. Its economic size was 1,5 million liras/day. We have initiated R&D projects we have performed calculations and taken action to prevent wastage. We will continue to make effort and definitely prevent bread wastage. We don’t want to let our national capital and national assets to go to waste. We are continuously working to save our national wealth.
Do you have any suggestions for bakers before the month of Ramadan?
I hope that holy month of Ramadan will bring joy for our nation and Turkish-Islamic world. I pray Allah to make this month beneficial for our country, nation, bakers and food sector. Our bakers prepare themselves for the whole year before the month of Ramadan. Turkish people look forward to eat Ramadan pita which is a widespread tradition during the holy month. Prices for Ramadan pita will be much or less the same as the previous year. There will be no significant price hikes for standard pita or double pita. We have not increased pita prices for the 4th consequent year. Consumers will have hot pitas and breads on iftar tables without paying more. We have conveyed necessary instructions for producing pitas to bakers and they have completed their preparations accordingly.