Posted on December, 6, 2024 at 09:25 am
Kazakhstan’s Food Contract Corporation (FCC), a state-owned company that regulates the grain market, plans to reduce its investments in the fixed capital of its grain terminal at the port of Aktau, citing Russia’s actions as the reason. The draft decree outlining this decision was published on the Legalacts.egov.kz portal.
The changes will impact investments in the fixed capital of the Ak Biday Terminal. The FCC explained that, due to the current geopolitical situation, grain shipments through terminals at the port of Aktau to Iran have sharply declined.
This decline is attributed to Russia redirecting its export shipments to Iran via the port of Astrakhan. Consequently, the FCC decided to cut investment in the fixed assets of the Aktau grain terminal from $8.3 million to $4.7 million for the period of 2024-2030.
The draft also revealed that the FCC has reduced the minimum volume of grain shipments to strategic markets in 2024 from 205,000 tons to 150,000 tons. The company mentioned three primary reasons for this adjustment:
The FCC noted that it purchased grain at inflated prices, resulting in selling prices that were uncompetitive in both domestic and export markets.
«The uncontrolled import of Russian grain is oversaturating the domestic market and displacing Kazakhstan’s grain in foreign markets. As a result, farmers are losing access to grain sales channels and prices continue to drop,» the FCC stated.
The FCC claims that grain accounts for only 5% of KTZ’s transportation operations, making it a lower priority than other cargo such as coal, ore and metals.
«KTZ’s lack of coordination with the agribusiness policy has already resulted in negative feedback from Chinese partners regarding the instability of Kazakhstan’s grain supplies. Out of the average monthly export plan of 144,000 tons, only 30,500 tons or 30% of the plan has been coordinated,» the FCC stated.
The grain market regulator also announced a reduction in the volume of agricultural products covered by its support programs for 2024, cutting it from 800,000 tons to 450,000 tons due to funding shortages. Initially, $190 million was planned for the forward purchase program, but only $76 million was allocated from the budget.
«With the reduction in allocated funds from 100 billion tenge to 40 billion tenge, purchasing the originally planned 800,000 tons of grain is no longer feasible. As a result, the target purchase volume will need to be adjusted,» the draft decree explained.
The reduction in volumes under the support programs will also apply to subsequent years.
Source: KYPCNB