END-USE MONITORING IN AFYON

UNCLAS ANKARA 003656

SIPDIS

SIPDIS

VIENNA PASS UNVIE

E.O. 12958: N/A
TAGS: SNAR AFIN BEXP TU
SUBJECT: END-USE MONITORING IN AFYON

REF: (A) Ankara 1434 (B) Ankara 1988


1. (SBU) SUMMARY: On June 6, we visited the Turkish Grain Board's
(TMO) poppy and alkaloid processing facility in Afyon, about 150
miles southwest of Ankara. We conducted end-use monitoring for
several INL-funded items, including seed processing equipment and
vehicles. TMO still uses the vast majority of the INL-funded
equipment, which officials say has dramatically increased the
efficiency and effectiveness of their operation. TMO officials told
us the facility may be partially privatized in the future, creating
an opportunity for a U.S. investor. End summary.

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U.S. Equipment Still Improving Production
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2. (SBU) The town of Afyon, which means opium in Turkish, is the
center of Turkey's legal poppy production, approximately 60 percent
of which is exported to the United States. TMO's Director of Poppy
and Alkaloid Affairs, Ali Gevenkiris, took us on a tour of TMO's
vast Afyon campus and showed us the seed processing equipment that
the United States donated with INL funding in 2001. Gevenkiris told
us that the equipment helped TMO raise the morphine content in its
poppy capsules from 0.4 percent to one percent, making it much more
marketable. He also explained that, because of the equipment's
modern technology, TMO has been able to reduce processing time
significantly. We were able to see the equipment in action, and
noted that it is very well cared for and operates without problems.



3. (SBU) During our visit, we toured nearby poppy fields in one of
the vehicles that INL donated in 1992. Despite its age, the vehicle
was in good working condition. Repairs on all INL-funded vehicles
are done locally, and all 20 of the vehicles donated in 1992 and
1993 are still in use (ref B).

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Possible Privatization of Alkaloid Facility
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4. (SBU) TMO officials said that Turkey is considering partially
privatizing the alkaloid facility. While telling us about their
investment plans for the facility (and indirectly asking for more
USG assistance),they said such investments would benefit the U.S.
companies eventually, since: 1) they were the major customers for
TMO's production; and 2) they were potential partners to the
facility if privatized.


5. (SBU) The officials complained about their difficulties in
employing and keeping qualified personnel due to bureaucracy and
TMO's inability to compete as a state-owned company with private
competitors. They said TMO already sent a draft outlining these
problems to the Ministry of Agriculture, but had no clue as to when
privatization could become reality. The officials thought the GOT
would still keep a majority share or use a "golden share" to retain
state oversight of opium production in Turkey. Given the 80-20 rule
which requires buyers to get 80% of their opium needs from
traditional producers (Turkey and India),and the recent improvement
in Turkish poppy content, the officials were optimistic about
foreign demand for the facility.


6. (SBU) Comment: The donations to TMO are one of the true success
stories of the INL program in Turkey. The INL-funded equipment has
had a concrete, long-lasting, and positive impact on TMO's
operations. Production has increased, and TMO's products have
become more marketable and profitable. Throughout our visit TMO
officials repeatedly expressed their thanks for the items donated.
If the privatization comes to pass, it may represent an opportunity
for U.S. firms.

WILSON