Welcome to the 26th episode of İmece Tarım from the 37th floor of İş Bankası. Ahu Tanrıku, Emrah İnce, we are in a magnificent place. İş Bankası is very precious, very valuable to us. Always, right? When we say İş Bankası, it's much more than a bank, much beyond that. Our very precious guest, our General Manager Hakan Aran, we are together. We are hosting you, and you are hosting us. Hakan, welcome.
Regarding agriculture, of course, we have seen the highest contribution to inflation from the food sector, more than ever before. It has also lasted a very long time. While food prices are falling around the world, in Turkey, the food sector has continuously provided the largest contribution to inflation. Unfortunately, we have seen this frequently in Central Bank reports. The Central Bank generally attributed this food-driven inflation largely to climatic conditions. However, we know that there is also very significant pressure from the cost side. There are issues of efficiency in the food system, there are intermediaries. Many reasons can undoubtedly be counted on the real side, but the cost side is problematic. What do you expect regarding the food sector in the upcoming process, my General Manager? Why do you think food inflation has remained sticky in the inflation side?
Well, last year was not a good year for agriculture. We experienced too many disasters. Perhaps this will become our routine from now on. Because we talk about climate change and its effects. But last year, we experienced both flood disasters, frost, and foot-and-mouth disease, there were so many things. In every region, there were so many disasters that would upset the farmer and cause them to leave their crops in the field. This inevitably caused both a negative contribution of agriculture to growth and high food inflation. Along with drought, we are also experiencing flood disasters. For example, this year we had a very beautiful winter period. In terms of precipitation, in terms of snowfall. But last year, a similarly opposite dry period came on top of it.
Yes. Therefore, we need to get used to this from now on. We need to manage this. Because I cannot say, 'Oh, this happens once in 40 years. Well, it happened last year, so we will be comfortable this year.' Because the dimensions that climate change has reached can cause us to experience the same disasters every year. That's why we need to talk about different things there. But I think the main reason for food inflation is what we experienced in agriculture last year and that continuity. The second is that we are currently in the month of Ramadan. Therefore, there are some things in Turkey that trigger inflation, and food inflation reaches its highest point every year during Ramadan. All prices increase. Therefore, when combined with that effect, we started the year with high food inflation. Both January and February were high. We expected it to normalize in March. In March, it is high due to energy prices and the war. Therefore, this year, we need to be very careful in the fight against inflation, and considering the winter we have experienced on the food side, we should expect food inflation to decrease significantly from the summer months onwards.
At least the climate pressure is gone, but this time a war pressure has entered, we can say. That needs to recover as soon as possible. Of course, we need to talk about different things. We always talk about different things in İmece Tarım. Because İş Bankası, while making a great contribution to the conventional side for farmers, you are also doing very valuable work on the technology side. We are trying to announce these as much as we can, Emrah İnce. Because why? We are part of the solution, not the problem. There are problems. Talking about problems is important, of course, but we are on a platform where we can talk about solutions. Thanks to the General Manager representing İş Bankası and its subsidiary. This institution also has very serious services for Turkish agriculture in finding solutions. Now, by entering from here, I would like to ask our General Manager directly. Of course, you do not see agriculture only as an area where credit is given. You stated that you see agriculture as a strategic area. You did not stop at this statement. You are reflecting it in the field with the actions you have taken and the innovations you have brought to the agricultural sector. With this strategic plan, how do you plan to transform agriculture in Turkey in the next 5 to 10 years by also activating these instruments, my General Manager?
Well, first of all, thank you very much for your comments. We, while evaluating how strategic the agricultural sector is for Turkey and positioning it in a special place in our own credit strategies, we separated tourism and agriculture from other sectors. Because the energy topic we are talking about in the world, the counterpart of energy in industry, in the world economy, for us, the counterpart of agriculture is like that. Therefore, if we are talking about the national security of these countries, food security is an inseparable part of national security. If we are talking about energy for the entire system to stand, food is important for the continuation of humanity. Therefore, this area needs to be supported, but supported differently. When we looked, we saw that the agricultural area is increasingly falling out of favor. It is a natural result of industrialization. I am not blaming anyone. As we transition from an agricultural society to an industrial society, the popularity of industry increases. Now even industrialists are troubled. Because a transition is being made from industry to a digital service economy. Therefore, while we are talking about the troubles of the transition from agriculture to industry, the industrialist is currently experiencing the difficulties of the transition from industry to the next phase, the technology transformation. Therefore, as I said, without blaming anyone, the agricultural issue is not an area that we can leave behind, that we can say let it shrink, regardless of the direction of transformation. Now, fewer and fewer people are dealing with agriculture. And dealing with agriculture is becoming more and more unprofitable. In this case, state support needs to be increased. Second, the need for financing is increasing. It becomes a state of living on credit, and the payment of credit, the disasters we talked about earlier also increase the risk in this regard. There is a lack of appetite for both lenders and borrowers. When we see this picture, we at İş Bankası said this. There is a supporting bank. Very good. There is a bank that has been doing this for years, whose name is this. There is a bank that gives credit. And there, there is a need for financing for agriculture, but if a different story is to be told for agriculture, for agriculture to be done with technology, with higher efficiency, and for us to get more and higher quality products, there is no institution to finance this story. There is a gap in the actor. Because we saw this gap, the strategic importance of agriculture for us, along with the need to fill this gap, triggered İş Bankası to take action. Therefore, when we say what kind of agriculture, what kind of picture we envision for the next 8 to 10 years, I can say this very clearly. We envision a Turkish agriculture that has transitioned to a production model supported by smart technologies, taking into account climate risks, more efficient, and with high added value. And for this, we are mobilizing all our energy, all our financial power, and our minds for this.
Let me connect this right away, Avcum. Of course, while doing this, financing is a very important gap. Access to financing is an even more important problem. There is also financial literacy. Of course, our farmer is focused on production from the soil and wants to experience various agronomic experiences to increase efficiency. You will definitely talk about the technology side of this. There is a side where you touch the farmer. But the spirit of İmece, which is also the name of our program, the spirit of mutual aid in Anatolia, the spirit of İmece that forms the basis of this mutual aid culture, when we think about it, small and medium-sized producers, the distribution of agriculture in our country is generally this, and how do you support cooperatives, especially in terms of access to financing, and what are the obstacles you encounter in their access to financing?
Yes. Especially the segment we most frequently sit down and talk to, confide in, host in our programs, and where we go as guests, are producer cooperatives. And these production cooperatives, the cooperatives led by our female farmers. These can sometimes be on a larger scale, sometimes on a very small scale. As you said, they can be teams that have come together with the spirit of mutual aid. When we listen to how production is done there, what kind of problems there are, we actually saw two gaps in agriculture through these cooperatives. One is input cooperatives. The other is sales cooperatives. That is, there is cooperativization in production. The production power is turning into cooperatives, but input cooperatives are gone, and sales cooperatives have also decreased. And it is not in a position to solve the problems of the farmer, the producer. So what did we do? We positioned the mobile application, which is also the name of your program, as an input cooperative. There, 300,000 to 1,000 of our farmers who are members will buy diesel, fertilizer? As a bank, we make bulk agreements. We get discount rates. We give our farmer an additional card. We make additional discounts on the card. We make additional installments. We put payment-free periods. Therefore, by using our bulk purchasing power, we reduce input costs, especially fertilizer and diesel. And by providing easy financing, we extend the maturity of financing. We make it more easily accessible. For example, in İMC Mobile, we tried to simulate input cooperatives. We digitized them a bit, didn't we? Digital cooperative. This is a fintech of ours, after all. Yes. On the other hand, you produced, you will sell. You need awareness. If you open a site on the internet, you can't get through the site. If you put it on internet sales stores, those stores take 25% of your money. Therefore, there was a problem here too. We positioned Pazarama here. We said that Pazarama is the sales place for all production cooperatives. Here, you don't pay rent for a shop. You deliver your products to your customers, you sell them. All the money from the product you sell is yours. We don't take anything from here. Second, I, as İş Bankası, pay the shipping fee. Therefore, the definition of this incentive scope has changed a bit. We supported those who produce and sell from production cooperatives by paying their shipping fees. Therefore, I think this is one of the most beautiful, most elegant supports given to production, to farmers, to those cooperatives. I can give an example of increasing profitability by correcting input costs, increasing sales ease, and reducing their sales-related costs. This is a very important issue. Because these are areas that our small producer, our farmer, cannot touch and solve. We see it in America, on the main continent, in Europe. Cooperatives have very large turnovers in the agricultural industry. They have very great competencies. There is such a gap in Turkey. You are right. Turkey has goals regarding cooperativization. It is progressing, albeit slowly. But the digital marketplace, especially for agricultural and food products, the fact that supports can be given here, starting with our female farmers, is both very promising for the sector and we have seen its reflections in the field. How did we see it? We attended with you, with your invitation, at the female farmer summit here, we mentioned it before. We saw our farmer sister who does shepherding with a drone. We saw our brother from Giresun who differentiates and sells hazelnuts despite being small-scale. We saw the marketing done by a pistachio producer in Osmaniye through Instagram, through digital media. In all the stories we saw, there was the power and will of a woman, but something was missing behind it. A founding spirit was missing. That founding spirit needed to guide. It needed to establish a platform. With education, with financing, with the İmece mobile teams touching the farmer in the field, I know the number of kilometers and the number of farmers touched. This gap, of course, alongside many activities of the public, the fact that a private sector institution does this in a complementary way is, of course, commendable. Isn't it, Avcum? We have talked a lot about these examples. Especially the fact that you are emphasizing this, I am very grateful. We have always done this. Because this needs to be emphasized, and there is an institution in front of us that makes us emphasize it and does not let us forget it. It did not do it like a rumor. It always took action on these issues and implemented them in the agricultural sector. Of course, from here, maybe you to technology... Of course, of course, I would like to enter a bit. Because most of the time, since I was also involved in making these programs, I saw that while such supports were being given to farmers, I mentioned a drone support earlier. Yes. There, we saw that the bank also established a structure supporting that drone. That is, the engineer farmers we call those who produce that drone, most of whom come from farming and have become engineers. You have added serious value to the startup ecosystem. Of course, we proudly talk about the Fintech side. It is one of your very important and strong muscles as a bank. But let's not skip the side of the support you give to the startup ecosystem. I find that very valuable. I know personally that you support young people who do very original, very unusual work. Can you tell us a bit?
Of course, well, one of İş Bankası's strong muscles is the support we give to the entrepreneurship world, and we have programs that bring entrepreneurs together there, acceleration programs. The biggest one was the Workup program. For example, we added the agriculture vertical to the Workup program. Workup Agri. And there, we bring together all entrepreneurs working on agricultural technologies in that program. Thousands of applications come there. For example, when we started that program, we saw what technologies are used in agriculture, what they can provide. As a bank, we saw that. But the problem is not us seeing it. It is for our farmers, who will implement it, to see it. So how do we do it? We opened agricultural specialized branches in 50 plains of Turkey. But do not think of the agricultural specialized branch as a traditional bank branch. Think of it as village squares that will bring together the entrepreneurs who entered this Workup Agri program with farmers. Imagine it inside a branch. With a tea house, with a square, and here we started to hold agricultural meetings, farmer meeting programs, and bring these known entrepreneurs together with farmers in our branches, and do programs there. This also facilitated the awareness, the fact that what we saw was also seen by our farmers, and especially the new generation of farmers, farmers who want to benefit from this, meeting with this technology. Afterwards, we activated the third leg. If you want to use this technology, you will see the benefit of this technology in 2 years. It will increase your efficiency this much, increase your production this much, reduce your costs this much. If you want to use this product for 2 years without payment, I provide the financing. Afterwards, with its contribution to you, there is a price that you can pay. Therefore, while gaining customers for entrepreneurs, increasing the value of their own companies, increasing efficiency in agricultural production in Turkey, we also started to do our main task, which is financing. But what we are financing is actually the financing of efficiency in agriculture, the use of technology in agriculture, and I see this with great happiness. You also pronounced it in our previous conversation. A very important part of our customers registered in the farmer registration system, 600,000 have become İş Bankası customers. After we embarked on this journey, in a short period of 34 years, the agricultural credits we extended to them reached a size of 110 billion lira. My market share in agricultural credits reached 40% among private banks. This is not an understandable thing. And when farmers are asked, 'Which bank would you recommend to us?', they say İş Bankası. Well, for years, there are banks that fill this gap. İş Bankası has come to the position of the first bank. When you take a step, when the farmer sees this, they come two steps closer to you. When I see the numerical equivalent of this, the equivalent in my recommendation score, and its equivalent in the field, including the entrepreneurship world, their contribution to them, most of them later became able to sell their products in Europe and America. Because when they say, 'I have these customers in Turkey, I am doing this business with them,' their sales abroad also became easier. A beautiful success story was created. Therefore, we brought together technology, entrepreneurship, and agriculture in this way.
