Risk Management

The main natural risks in agricultural production are; hail, frost, fire, drought, storm and flood disaster.

Turkey has a great potential in both plant and animal production, but agricultural production cannot be increased to the desired level. In this context, the Company's profit margins may fluctuate with the effect of fluctuations in the supply and demand balance on prices.

Due to the fact that production depends on natural conditions on a large scale, fluctuations in product yield, producer income and profitability may occur.

In our country, there is a risk of product loss that may be caused by bacterial, fungal and viral plant diseases and damages.

Natural and geographical risks refer to risks that cannot be predicted and measured. However, in case of the occurrence of the events listed above, the Company closely monitors the expected product yields at regional and international levels, and increases critical stock levels in order to be prepared for raw material price increases that may occur due to possible yield decreases. It also manages its risk by trading futures on commodity exchanges.

The main natural risks in agricultural production are; hail, frost, fire, drought, storm and flood disaster.

Turkey has a great potential in both plant and animal production, but agricultural production cannot be increased to the desired level. In this context, the Company's profit margins may fluctuate with the effect of fluctuations in the supply and demand balance on prices.

Due to the fact that production depends on natural conditions on a large scale, fluctuations in product yield, producer income and profitability may occur.

It covers the process risks that may prevent the products from being made in the prescribed quality, content and standards.

In the process where wheat is processed as raw material, there is a risk of foreign materials mixing into the produced product, both at each stage and between stages, in the flow route where wheat turns into flour.

There may be a risk of clumping, mold and infestation in the nooks and crannies of production facilities, production teams and equipment, packaging-shipping and warehouses.

Breakage, deterioration, etc. in the main production machines. There may be a risk of stopping the production of problems caused by reasons.

In the raw material input processes, foreign materials are kept away from the processes with magnets and garbage purifiers. Quality control is provided by various analyzes by taking samples from the products at certain stages.

The personnel are trained on these issues continuously and regularly, and the cleaning and control processes are inspected with "scatter sampling and period" methods. In addition, critical control points are determined (Final Control Sieve and Metal Detector) to eliminate the risk at those points.

Machinery maintenance and repair operations are carried out regularly, machine breakdowns are not expected for maintenance and repair and spare part replacements, and faults and malfunctions are promptly resolved by expert teams.

Comprehensive insurance policies have been drawn up against all kinds of machine breakdowns and breakdowns.

Occupational health and safety risks due to occupational accidents that may occur and risks related to the inability to employ the workforce that is suitable for the job and will not disrupt the sustainability of the activities.

Personnel trainings are carried out regularly against possible occupational accidents. In addition, in accordance with the provisions of the current legislation, the necessary service is obtained from the Occupational Safety Specialist.

The Human Resources Department, established within the Company, continues to take effective measures against the risks of poor use of existing human resources and confusion in roles and responsibilities, making employee succession planning for critical roles and positions, and presenting the necessary reports and information to the management.

It covers operational risks in purchasing (procurement), storage and shipping processes.

There is a risk of encountering operational risks in the processes of transporting the purchased raw materials to the warehouses of the Company, the duration of their stay in stock, and the delivery from warehouses to production or sales.

Loss, spillage, accident and etc. that may occur in all shipment processes of the Company. Comprehensive insurance policies are available against risks. In addition, flood, fire, theft, etc. that may occur during storage. Insurance policies were also made against losses and damages. Adequate internal control mechanisms have been established, especially in the shipping and storage processes.

There is a risk that current account balances, checks-notes and similar bills received due to credit sales made to credit customers remain unrequited and cannot be collected.

There may be a risk of misconduct by the personnel assigned for collection in domestic fields.

There is a risk that competitors will engage in aggressive competition practices in the domestic market and new players will enter the market.

Before making a credit (forward) sale, necessary market intelligence studies are carried out in accordance with the Company's risk policy, and a risk and limit amount is determined for the customers that are decided to work. In the ongoing activities, it is ensured to stay within the determined risk and limit limits.

Audits are carried out according to scattered periods and samples by the inspectors assigned in the locations where the Company operates in domestic markets, and comprehensive insurance policies are issued against fraud attempts.

There is always the risk of new players entering the market and existing players applying more aggressive sales policies, and the Company's Sales and Marketing Department closely monitors the developments in the domestic market against these risks.

It covers all kinds of risks that may be experienced in the import markets.

There is a risk of crisis, changes in production and tax policies in the markets of importing countries.

The company determines and maintains critical stock levels against such negativities.

World yield expectations are closely followed, and alternative import markets are constantly monitored and alternatives are kept in reserve.

Comprehensive insurance policies are issued against logistic risks in import processes.

It covers all kinds of risks that may be experienced in export markets.

It covers all kinds of risks that may be experienced in export markets.

There are risks of experiencing anti-dumping practices, political, economic and cyclical instability and negativities in export countries.

In particular, measures are taken against anti-dumping practices both by experts within the company and by professional organizations at the sectoral level.

Against the risk of cyclical, political and economic crises that may be encountered in export markets, the Export Department of the Company continuously and vigorously researches export markets and keeps alternative markets in reserve.

It covers the risk of foreign currency assets and liabilities being affected by exchange rate changes and the risks that may arise in costs and cash flow due to the increase in the interest rate applied to financial debts.

Foreign currency risk arises from the foreign currency short position between the Company's foreign currency liabilities and assets. The fact that the liabilities in foreign currency exceed the assets creates a foreign currency short position.

The company's foreign exchange open position is monitored and effectively managed by positions taken in the Futures Options Exchange and forward transactions with banks against any risk of fluctuation, thus turning them into predictable financial results. Position size is changed with the developments in the market and the hedging model applied.

The Company's Finance Department closely monitors the market and considers alternative methods against the risk of an increase in variable interest rates in the use of short and long-term foreign resources.

It covers the risk of price changes that may occur against the Company in wheat prices in internationally organized markets.

Foreign currency risk arises from the foreign currency short position between the Company's foreign currency liabilities and assets. The fact that the liabilities in foreign currency exceed the assets creates a foreign currency short position.

Wheat prices in our country are determined by TMO regulation. It intervenes in the market with different methods in order to protect the producer in price decreases and the consumer in increases.

According to the physical wheat position in our stock; Risks are limited by performing partial hedging transactions in Cbot (Chicago Board of Trade) and Matif exchanges at levels where domestic wheat prices and foreign stock market price spreads are excessively widened.