Kazakhstan will always be successful in provision the domestic market with grain - Nurlan Tleubayev
2012 was rather difficult for the grain industry of Kazakhstan. Grain general production decrease, harvested wheat qualitative parameters decrease, logistic problems the industry met – all the stated facts were in the past 2012. Of course a lot of countries faced the same problems in 2012, and far not all of them found out how to solve them. Was Kazakhstan successful in it? This and other issues will be stated by the president of ALE “Grain Union of Kazakhstan” Nurlan Tleubayev.
- In the beginning of our conversation, please few words about the structure and the main tasks of the Grain Union of Kazakhstan.
- Grain Union of Kazakhstan is non commercial organization of the professional participants of the grain market, whose main task is to coordinate the activity of the Union participants, their interests defense, and also the development of the grain market. The main area of our activity is Kazakhstan first of all, and also the CIS countries, international trading and food organizations.
- As for situation on Kazakhstan grain market, 2012/13 season was rather difficult and the country beard the essential losses of grain compared to 2011/12 MY. Is there the sufficient volume of stocks in order to provide the domestic needs and the realization of the export potential?
- Considering the fact that wheat and other grains are being produced on the unwatered lands, not only Kazakhstan crop but the world one depends on the weather conditions. In 2012 we produced the less volume of grain compared to 2011. Meanwhile in 2011 we harvested the record volumes in every region of the country.
Though Kazakhstan will always be able to provide own needs with the grain, wheat in particular, which totals nearly 5 mln tonnes. And the stated volume can be provided despite the unfavorable weather conditions. Note this year we entered with large-scale carry-over stocks of grain, besides the government worked out the procedure of the realization of the grain interventions and purchased nearly 5 mln tonnes of wheat in the previous season.
This caused the grain prices decrease in Kazakhstan in 2012 facing the lower level compared to the world one, so the market was working well without being faced any deficit.
As for the exports potential of Kazakhstan, in the current season it will total nearly 6.5-7 mln tones, including 3.8 mln tonnes of wheat and 3 mln tonnes of flour in grain, and nearly 2.1 mln tonnes of flour.
- Unfavorable weather conditions decline the quality of the harvested grain. How did the qualitative parameters of grain of crop 2012 impact on the export activity of the Kazakhstan grain trading companies?
- In the drought years the grain yield faces a decrease, so the anomaly heat impacts on the wheat quality. The domestic millers purchased grain of the previous and current seasons crop, then mixed it and produced flour of great quality. So the qualitative parameters of the wheat 2012/13 season did not influence the export activity of Kazakhstan grain traders.
- But still in Kazakhstan grain prices are rather high on the domestic and foreign markets. What was it provided by?
As for the prices, they are high not only in Kazakhstan, but also in the world. In the drought years, when the grain production faces a decrease or is equal to its consumption – prices face an increase in Russia, Ukraine and Kazakhstan. Prices growth is the world tendency.
As for the factors able to provide the grain prices decrease, everything will depend on the condition of winter plantings. If the winter-spring 2013 will bring no any bad change, the grain holders will begin to sell the current volumes causing the price decrease.
As for Kazakhstan wheat prices, they face stable trend and total nearly 300 USD/ tonne EXW. The stated rate will vary in the range of 10% and we should not expect the essential decrease. Traditionally the major importer of Kazakhstan wheat is Russia – the wheat quality and price are acceptable for the importer. The stable demand on Russian side will provide the prices decrease and it seems the imports of Kazakhstan grain will total nearly 1 mln tonnes.
- Who else pays attention on Kazakhstan grain?
- The traditional sales markets of Kazakhstan grain are the Middle Asia countries, Georgia, Azerbaijan, Iran, Afghanistan. The reasons of the active demand from Middle Asia countries is there is no where to buy grain. The nearest grain (expect of Kazakhstan one) they are able to purchase is Russia, but consider the transport costs.
As for Afghanistan, there is the certain cycle: sometimes they buy larger volumes of our grain, and sometimes the less ones. The reason is they have an alternative provided by Pakistan. So if our grain and flour prices are lower, Afghanistan buys it, but if the Pakistan wheat is cheaper – then it is being bought there.
As for Iran, there is the supply volumes decrease due to the problems with logistics. Our port capacities provide shipping in the stated direction at the level of 650-700 thsd tonnes of grain. But due to the difficulties with payment the supplies volumes decrease to 20-25 thsd tonnes per month.
- But still how did the grain high prices impact on the buying potential on the world market in 2012?
- We are not able to state any prices for imported commodities. For example, when the price for our flour was 415 USD/tonnes it was suitable for everyone, but when the price on Sary-Agash grew to 450 USD/tonne, the demand fall down. The reason is that Tajikistan started flour purchasing from Afghanistan and Pakistan. So we work in accordance with the world tendencies.
- Please provide us with a few words on trade with grains on FOB Aktau and appearing difficulties.
- As it was stated above from Aktau port we ship grain only to Iran and consider the stated company rather prospective buyer, first of all considering the price attractiveness. Thus in 2011 when there was no problems with payment, Iran used to buy our grain by 200 USD/tonne EXW, meanwhile price of supplies in the direction of the Black sea region totaled just 135 USD/tonne. Of course, in the stated situation the traders try to ship from Aktau port.
- In our conversation it is impossible not to talk about logistics
- Really, there is the stated problem in Kazakhstan. But in the recent years there have been provided the certain steps for its solving. Of course it is bad that it is so late, but still great that we started to do it.
In 2010/11 China purchased nearly 340 thsd tonnes of Kazakhstan grain. This year China stopped purchasing of our grain but it is clear in 2013/14 MY the purchasing will resume and then it will be able to assess significance of the opening of new railway border-terminal between Kazakhstan and China – Altynkol-Horgos.
Besides the problems with Iran will be solved soon. Thus, their domestic consumption totals nearly 17.5 mln tonnes wheat annually, meanwhile the production – just 14.5 mln tonnes. So, Iran has to import at least 3 mln tonnes. Considering the geographical position of Iran, at least 1.5 mln tonnes of the stated volumes will be purchased from Russia or Kazakhstan. So the logistics problems will be solved for this direction too.
Another potential buyer for us is Turkey. To date we supply grain on the domestic market by transit throughout the territory of Russia, so it is more expensive. But to date Azerbaijan is financing the building of the railway to join Georgia, Azerbaijan and Turkey. It is to be finished by 2013 though I doubt of that by 2014 is real date. Owing the stated facts Kazakhstan grain will improve its presence on the Turkish market.
- In September 2012 Kazakhstan started transferring of rolling stock into the private company. How do you explain the stated innovation?
- Company “Kazemirtrans” is not the private company. The current situation was in Russia 4 years ago when OJSC Russian railway transferred its cars to Rusagrotrans. The stated activities are the first stage of the privatization. Kazakhstan just followed the Russian example.
- In order to finish our conversation, please provide is with your expectations of 2012/13 season.
- In the current MY we should not expect the large-scale volumes of the grain general production. The main reason is the worsened financial position of our agrarians. The drought caused grain shortage and so the agrarians faced the funds decrease they are able to direct for planting campaign. So we expect the planted areas decrease and the crop will not reach the record rates.
Thus in 2013 we do not expect any problems with grain railway transportation and also appear of the deficit of capacities for its storing.
In 2012/13 MY we expect rather active work of the grain market of Kazakhstan.
Interviewed by Olga Ramazanova,
expert of foreign trade department of APK-INFORM
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