Purpose

Article 1 - The purpose of this Regulation is to arrange principles and methods for the establishment, allocation, cancellation, and transfer of quotas of companies, and for the allocation of new quotas in order to provide stability in the domestic sugar production and supply.

Grounds

Article 2 - This Regulation was prepared in accordance with the Article 4 of the Sugar Law No: 4634.

Definitions

Article 3 - The terms used in this Regulation, namely;

a) Law defines the Sugar Law No: 4634,

b) Organization defines the Sugar Organization,

c) Board defines the Sugar Board,

d) Company defines legal entities having and/or operating one or more than one sugar factories in its organizational structure,

e) Sugar defines sugar solution, invert sugar syrup and inuline syrup, composed of dissolved saccharose or invert sugar syrup or both into water, classified as white sugar (standard, refined cube and crystal sugar), half-white sugar, refined sugar, raw sugar, and brown sugar, produced with sugar beet or sugar cane, with crystallized saccharose and starch origins, in the form of liquid or dried glucose syrup.

f) Sugar Factory defines enterprises producing sugar by treating the products set forth in the item (g) and raw sugar apart from those enterprises using sugar as an input,

g) Raw material defines the main input used in the sugar production.

h) Marketing Year defines the period between September 1 and August 31.

i) Total Domestic Quota A defines amount of sugar produced according to domestic demand and distributed to domestic marketing during the marketing year,

j) Company Quota A defines the Company share in the total domestic quota A,

k) Total Domestic Quota B defines the amount of sugar in a certain percentage of the Total Domestic Quota A and produced storable sugar with saccharose origins for keeping safety reasons countrywide in the marketing year,

l) Company Quota B defines the Company share in the total domestic quota B,

m) Sugar C defines the amount of sugar which was produced apart from Quota A and B and which could not have been marketed, and raw white sugar produced to be treated on the condition of export

Section II

Establishment, Allocation, Cancellation and Transfer of Quotas

Establishment of Quotas

Article 4 - The Board establishes the Total Domestic Quota A belonging to the following five marketing years separately for sugar with saccharose origins and other sugars by June 30 and for certain periods when required by evaluating domestic demand data.

Domestic demand estimation is calculated by the Organization or by an expert institution or enterprise to be deemed appropriate by the Organization by taking into consideration sales and foreign trade data of companies to be provided by the Board, consumption of relevant public and private organizations and factors affecting the consumption, and foreign trade data.

Total Quota A to be determined for sugar with starch origins cannot exceed 10 % of the Total Domestic Quota A. The Cabinet of Ministers is authorized to increase and decrease this amount 50 % by taking the view of Organization into consideration.

The Organization establishes the Domestic Total B Quota required to be stored for safety share by taking views of relevant organization into consideration and in a way to secure domestic supply as a certain amount of the Total Domestic Quota A.

The Quota B is not established for other sugars without the quality of being stored except for sugar with saccharose origins.

The Board establishes the Company Quota A and Company Quota B belonging to following five marketing years by June 30 and by taking into consideration treatment and sugar production capacities of factories on the condition of being covered by established Total Domestic Quota A and Total Domestic Quota B amounts. Quotas are calculated by taking term of production of companies, average actual daily raw material treatment capacities for the last three years and/or production amounts and profits as basis. The Company Quota A for sugars with saccharose origins is established by taking average actual daily raw material treatment capacities for the last three years, term of production and profits according to the raw material as basis. The Company Quota A for sugars with starch origins is established by taking production amounts of the last three years as a basis. In the event that total amount of the Company Quota A and Company Quota B to be calculated in this way is higher or lower than the Total Domestic Quota A and Total Domestic Quota B amounts, the amount to be added or deducted is balanced with the Total Domestic Quota A and Total Domestic Quota B amounts by increasing or decreasing the shares of companies in the rate of shares of companies in the average production for the last three years. In the event that increasing amounts exceed the production capacity of the company, the amount of the quota exceeding, which is the difference between the annual production capacity and the annual production quota, is distributed by the Board in the rate of inactive capacities of companies and by taking views of the companies into consideration. Companies given quotas notify the Board in written in 15 days whether they will use the quota in the same marketing year or not.

For companies to start production for the first time, companies with less than operation of 3 years, and factories received capacity increase permission before the Law enters into force, nominal production data is taken into consideration for establishing quotas. For the application of this paragraph for sugars with starch origins, total of glucose and isoglucose production capacities is taken into consideration. The Company Quota is calculated by dividing total quota for sugars with starch origins to total production capacity of sugars with starch origins, and multiplying the calculated figure with the factory production capacity.

Production of the Sugar C is optional, and the Board does not establish quotas for the Sugar C.

Allocation of Quotas

Article 5 - Allocation of quotas to the active companies is performed by the Board, and the companies are notified in written in 30 days following the quota establishment date of the Board.

It is necessary to provide quotas to establish new factories and/or to increase the production capacity of the existing factories. Companies will apply to the Board in written in order to establish quotas with the capacity report and date of initiation of production between January 1 and April 30. The application is taken into consideration in accordance with the principles set forth in the item 4 of this Regulation and in the first quota establishment period. The decision of the Board is announced in written.

Cancellation and Transfer of Quotas

Article 6 - If the companies provide supplies less than 90 % of the quotas established for them in two successive years without a reason without any sound grounds, they will lose their quota rights in the amount of the difference between the quota and the supply for the term to be defined by the Board. Companies cannot provide new quotas for the quota right they lost for such terms.

Quotas allocated to companies are cancelled provided that they are not used in the terms to be established by the Board. The Board can distribute the cancelled quotas between other companies starting with the company with the highest amount of difference between the annual production capacity and the annual quota by taking the views of the companies into consideration.

If deemed necessary, sugar transfers among quotas can be performed in the market year. The Board takes the decision to perform sugar transfers among quotas, and notifies the relevant companies in maximum 15 days following the date of the decision.

Provided that a part of the Quota A cannot be marketed, the amount which cannot be marketed is transferred to the Quota A of the following year, and the Quota A of the next year is decreased in the amount of the Quota A, or provided that the companies request in the current marketing year and that the Board deems appropriate, total amount or part of the Quota A which cannot be marketed can be transferred to the Sugar C on the condition of being exported in the same marketing year.

Companies are required to inform the Board in 15 days following the end of each marketing year August 31 in written on the amount of sugar in the Quota A and which they cannot sold, and the amount of the Quota A, which they want to transfer to the Sugar C, in the current marketing year. Decisions on the requests of companies to transfer the Quota A sugar to the Sugar C are taken by the Board, and the relevant company is notified in written.

Companies can perform transfers of quotas between their factories according to the capacity changes they will make or due to force majeure by the decision of the Board. For performing such transfers, companies notify the Board about the amount of the transfer they are planning to perform between its factories in written. The Board evaluates the proposal, and notifies the company about its reply in written by 15 days.

Section III

Responsibility and Control

Responsibility

Article 7 - Companies are fully obliged to observe all decisions related to quotas taken by the Board. Penalty liabilities of the companies concerning this obligation is set forth in the Article 11 of the Law.

Companies are required to prepare and keep records of all information related to production features, campaign term, production, sale, and storage activities for all kinds of sugars included in the scope of the Law in a correct manner, and to inform the Board about other information requested by the Board within the framework of the Law and regulations in periods of months in the first two weeks of the following month in a correct and complete manner.

In performing the duties vested by the Law and this Regulation, the Board can request all kinds of information deemed to be necessary from public institutions and organizations, from real or legal entities producing goods or extending services in the market, marketing and selling such goods or services, and from all kinds of unions established for such institutions and organizations, and for real or legal entities.

In the event that information is requested by the Board or a request is made to perform controls at the relevant site, and it was determined that incorrect, incomplete or misleading information is given or no information is given or no opportunity to perform controls at the relevant site is given, such companies are warned in seven days to provide the extension of such information and/or the opportunity to perform controls at the relevant site. Provided that no information is extended or no opportunity to perform controls at the relevant site is given during this term, the penalty liabilities set forth in the Article 11 of the Law are implemented.

Control

Article 8 - The Organization can make researches and controls in the Company or in the affiliated factories on subjects related to its duties. For this, independent controlling organizations can make researches and controls on behalf of the Organization when necessary.

Validity

Article 9 - This Regulation enters into force on the date of its publication in the Official Journal.

Execution

Article 10 - The Sugar Board executes the provisions of this Regulation.