Posted on February, 28, 2024 at 10:04 am
Since last year, grain from Kazakhstan has started to actively enter China. This is a promising market, according to Ospanov. However, it requires quality products. Meanwhile, Kazakhstan loses grain quality every year, writes the «APK News» agency.
If we look at global rankings, Kazakhstan ranks 8th-9th in grain trade. Among grain producers, it ranks 13th-14th. In terms of yield, the country ranks 103rd-109th out of 130 countries.
«We are in the zone of risky agriculture. When we talk about countries with high yield levels, it should be understood that they produce winter wheat, which gives maximum yield – 70 c/ha. China, India, the EU, and Russia are at the top. Meanwhile, we cultivate spring wheat.»
«Our neighbor, Russia, is the world leader in wheat exports. Currently, Russia is the main player in the world market. We are players in the sub-regional market – Central Asia,» said Nurlan Ospanov, Chairman of the Grain Union of Kazakhstan, in an interview with the YouTube channel ARMAN ABDOLLA.
According to the expert, from 2004 to 2015, Kazakhstan exported grain to 60 countries worldwide and was among the world’s elite market players. From 2015 to 2020, it exported to 32 countries. In 2022-2023, however, grain from Kazakhstan was purchased by only 15 countries. This means that the number of export destinations has decreased fourfold in 20 years.
The entire world grain trade is built on sea routes. Currently, Kazakhstan’s access to global markets is provided through the territory of Russia. However, in recent years, Russia has become a major exporter and uses all its port capacities for itself. Grain from Kazakhstan is shipped on a residual basis.
«Our ability to access global markets has decreased. During this time, tariffs for railway transportation have increased. Any increase in railway expenses makes our products uncompetitive. To deliver grain to Egypt, for example, we have different transport costs compared to Russian wheat. Consequently, our grain becomes unwanted there. What undermined us is that Russia increased its volumes and completely occupied all port infrastructure. This trend has led to us becoming a sub-regional player and being able to supply wheat only to our neighbors. In the Central Asian market, we did not have competitors before because, apart from us, no one supplied wheat there. However, in the last 5 years, Russia has been achieving record harvests year after year. It has so much wheat that it can continue to be the global leader in these markets, while needing to sell its excess further south. They are already looking at Kazakhstan and our traditional markets. Therefore, competition with Russian grain will exist both in our market and in our traditional markets in Central Asia,» Nurlan Ospanov is convinced.
All producers, no matter what they produce, consider China as a large and promising market. And Kazakhstan can enter the Chinese market with its grain. However, there are certain problems.
«It is very difficult to trade with China because the transport infrastructure does not yet allow us to trade in the volumes we need. Currently, the government is trying to expand the transport structure towards China; they will further expand border crossings. I think our potential for implementation will increase. And, what is very important, the Chinese demand quality products. And we will have to meet the requirements of Chinese standards,» noted Ospanov.
However, another problem could be the quality of the grain. Kazakh grain has always been famous for its high quality; however, experts say that in recent years there has been a trend of decreasing quality.
«It is strong; many use it to improve their grain, but there is a feeling, and this is said by many experts and grain producers themselves, that we are losing the quality of our grain,» said the head of the Grain Union of Kazakhstan.
«It all comes down to whether we follow agricultural technologies. In addition, it is necessary to acquire quality resources for wheat production. For most farmers, this is not possible due to a lack of working capital. And very high prices for production resources. High cost and low purchase prices, which have been decreasing for several years, make the grain production business unprofitable,» says Ospanov.
During this period, the grain business becomes unprofitable. There is not enough working capital to enter the sowing season. At the same time, annual expenses per hectare increase by 20 to 40%, so over 4 years, costs can increase by 100%. With the observance of agricultural technologies, direct production costs per hectare amount to about 100,000 tenge for wheat.
«Here, we also need to include the cost of money that farmers received from banks, that is, loan servicing. It is different for everyone. In 2022-2023, the cost of grain production was 100-105,000 tenge. This is despite the fact that the yield was good, and the grain quality was high,» added the expert.
According to Ospanov, the main problem is grain production with a high cost. This reduces profitability, makes us uncompetitive in domestic and export markets. We have low yields and high production costs per hectare. We annually feel the pressure from competitors, primarily from Russia.
«In this fight, we don’t have so many chances. But they exist. In a year or two, we won’t be able to change anything, but over five years, if we take the right steps, we will be able to defend our domestic market and our traditional external markets,» said Nurlan Ospanov.
According to the data of the National Statistics Bureau, in 2023, Kazakhstan exported 3.8 million tons of wheat and meslin. This is 24% more than in 2022. 2.7 million tons went to CIS countries. The main volume – 1.9 million tons – went to Uzbekistan. This is 40% more than in 2022. 400,000 tons went to Tajikistan – 12% more than in 2022. 230,000 tons went to Turkmenistan – this is 19% more than in 2022. 104,000 tons went to Azerbaijan – but here, there was a volume decrease by 14%.
To the rest of the world, 1.1 million tons were exported. This is 14% more than in 2022. 300,000 tons went to Afghanistan, where there was an annual growth in deliveries by 24%. There was a good growth in shipments to Italy – by 47% – from 60,000 tons in 2022 to 226,000 tons in 2023.
As for China, according to the data presented, only about 250,000 tons of wheat and meslin were sent there, of which 95,000 tons were in December 2023.
Source: Global News