Despite the presence of highly productive modern processors, the share of
mandiras (traditional processors) remains high in dairy processing. Mandiras
rely on labor-intensive processing facilities making sub-standard products and
their productivity is one-third the rate of the modern sector. But they survive
by avoiding tax and regulatory obligations.
Dual Structure
While productivity in the Turkish dairy processing industry has been improving over the last decade, it still suffers from its dual nature, typical of many industries in the Turkish economy. A traditional, low tech, labor-intensive informal segment (mandiras) coexists with sophisticated, large-scale, modern dairy processors.
Modern dairy processors boast productivity rates of 93 percent of the U.S. But, since mandiras process almost 60 percent of raw milk, the overall productivity of the Turkish dairy processing sector is just one-half that of the U.S.
Unfair (And Unsafe) Operations Ensure Survival
Traditional operators have shown great resiliency in the face of competitors who offer a superior range of high quality products. But, it is not because of their efficiency or effectiveness. It is because they save money by evading their tax and social security obligations, and by not adhering to sanitary standards.
Exacerbating the problem is the fact that 70 percent of the food distribution system operates in the same way and so is more than willing to serve as a distribution channel for sub-standard dairy products from informal operators.
On the demand side, consumers' low level of knowledge about hygiene means that they buy mandiras' products despite their poor sanitary conditions.
Improving Health, Products, and Jobs
It is only possible to foster the development of the Turkish dairy processing industry by enforcing tax and other financial laws and sanitation codes. There is an important role for traditional operators who modernize. International experience shows that there are many opportunities to become specialized niche players. But, mandiras who chose not to modernize will ultimately exit the market, leaving more capacity for specialists and other modern processors.
If the necessary measures are taken, 70,000 new jobs can be
created by 2015, and consumers will have healthier products at affordable
prices. Launch this chapter (PDF - 423 KB)
