Kazakhstan Reduces Grain Export, Expects High Yield in 2013-2014

ASTANA – Kazakhstan, one of the world’s largest exporters of grain, saw a reduction of grain exports to 7.1 million tons in the 2012-2013 marketing year, Minister of Agriculture Assylzhan Mamytbekov announced in early July.

“For this marketing year, which lasted from July to July, 7.1 million tons of grain were exported,” Mamytbekov said at a meeting held as part of the days of industrialisation campaign in early July.

He recalled that in the 2011-2012 marketing year, Kazakhstan’s grain exports amounted to nearly 12 million tons. Commenting on the country’s ability to export grain, Mamytbekov said, “We must understand that Central Asia, the Caucasus and the western part of China, as well as Iran and Afghanistan, represent our traditional market, the market where we are the most competitive.”

“We should target this market; where approximate consumption is around 6-6.5 million tons. The rest of the grain we produce, we will be forced to export to distant countries, mainly via the Black Sea and the Baltic Sea. Transportation of the grain there will add another $100 per ton to the cost,” he continued.

For this reason, Kazakhstan’s agricultural sector has the goal of diversifying crop production and reducing the amount of grain to a level that will best suit domestic consumption and the most profitable exports.

“This is about seven million tons in the domestic market and approximately seven million in the foreign market. Under these conditions our price will be at the level of the Chicago or Paris stock exchanges. We see revenue fluctuations from $100 to $300 and these swings negatively affect the market,” Mamytbekov said.

Commenting on each export area separately, the minister said Iran consumes about four million tons of grain, only one million tons of which is supplied by Kazakhstan. As the minister said, “We deliver about half a million tons of grain by railway through Saryagash and half a million through the port of Aktau on the Caspian Sea Route.”

“The railway which will connect Uzen station [Kazakhstan] and Gorgan [Iran] will allow us to export an additional 2-2.5 million tons of grain. This is beneficial for Iran, given that the main population lives in the north of the country. They buy grain through Bandarabas port on the Persian Gulf and transport the grain across the country. Therefore, the Iranians are building this road very actively; it’s in their interest as well. This will increase our export potential,” Mamytbekov added.

According to the minister, the Chinese market is considered promising for Kazakhstan’s grain supply.

“In 2009, we delivered only 15 tons to China. It was one truck and it was a trial batch. To date, these volumes have exceeded 200,000 tons. Volumes are small, but the dynamics are very promising,” he said.

The minister believes the Caucasus markets to be beneficial for Kazakhstan, too, “especially Azerbaijan and parts of Armenia and Georgia.”

“Given this, Kazmortransflot is going to buy ferries… We want a train to arrive at the port of Aktau and load grain on the ferry. Then it will be transported by sea and joined directly to the train on the Caucasian Railway. Afterward, it will continue on its way further. This will optimise costs and make our grain more competitive,” the minister concluded.

In June, Head of the Department of Agriculture of the North Kazakhstan region Altynbek Abdullayev commented on the forecasts of grain production in that area, one of the country’s four main grain producing regions.

“Crops are sown on an area of 3,620 hectares, oilseeds are sown on an area of 410,900 hectares, which makes 112 percent of the volume we have been tasked to reach, and feed crops of the year are sown on area of 93,400 hectares. Overall, crop-growing areas in the region will reach 4.3 million hectares,” Abdullayev said.

To obtain a good yield and ensure an increase in grain quality, farms used 21,000 tons of mineral fertilisers on an area of 340,000 hectares. In order to conduct spring fieldwork in a timely fashion, 58 highly effective seeding complexes were purchased. Overall, 1,061 seeding complexes took part in the current planting, which cover more than 70 percent of the area under crops.

“To ensure the spring field work is completed, a number of measures to address the financial and logistical support of agricultural producers were introduced. The government has allocated 65,000 tons of diesel fuel at a reduced price to subsidise agricultural production. Out of the total amount of 7.6 billion tenge [$49.7 million], 5.1 billion tenge [$33.4 million] is allocated for husbandry,” Abdullayev said.

To support them during spring fieldwork, farms received credits through Kazagro and the budget. Overall, 322 applications for the total sum of 20 billion tenge [$131 million] were financed.

“All of the above measures have helped the spring sowing be carried out in an organised fashion,” Abdullayev underlined.

At the same time, according to the Food and Agriculture Organisation (FAO) forecast, the next harvest of wheat in the world could grow by 5.4 percent compared with last year’s and could reach 695 million tons, which is only six million tons less than the record harvest of 2011. It is expected that the bulk of this growth will come from EU and CIS countries, where due to high prices, cultivation areas are being expanded. Normal harvests in Russia and Ukraine, which suffered droughts last year, are also expected to contribute to the growth.

Central Asia is predicted to have favourable conditions and the main producing countries are also expected to collect high or even record harvests. Forecast figures for the U.S., by contrast, predict a decreased output due to the prolonged drought in most areas.

Informa Economics also provided a preliminary forecast of global wheat production for the 2013-2014 season. According to them, the world’s grain output should reach 701.1 million tons. Kazakhstan is predicted to collect 18.5 million tons, Russia will collect 55.5 million tons, China 118 million, Canada 26.5 million, the United States 61.1 million, the E.U. 139.1 million, Argentina 12.4 million and Australia 27.6 million tons.

“We have an optimistic outlook for the harvest,” Mamytbekov said on the eve of the spring planting, noting that from 2008-2012, the average yield in the country amounted to 17.7 million tons, and, if taken over the past decade, from 2003-2012, it amounted to 16.6 million tons.

At the same time, despite the expected increase in exports of Kazakh wheat in 2013-2014, exports could rise to no more than 7.5 million tons.

The main factors that will deter Kazakh wheat exports in the next season, according to U.S. experts, will be low initial stocks and reduced demand for Kazakh wheat from Russian buyers.

In addition, according to experts, in the next season Russia might become a competitor for Kazakhstan due to a good harvest of its own. However, Kazakhstan might become an exporter of wheat to Egypt, a topic currently under negotiation and subject to the situation in that country.

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