Formation and development of the Kazakh export strategy - the main assistance, expected by flour millers
In 2013 in agricultural complex of Kazakhstan there had been accepted the range of the important documents, defining the stable development of the industry in prospect. In particular it is the program of development “Agribusiness 2020” and created the Unique Grain Holding by order of the President of the Republic. What was the passed year for agrarian sector and what to expect in the flour milling industry of the country in 2014 would tell the President of the Union of the grain processors of Kazakhstan, Evgeniy Gun.
- In order to resume the passed years please provide us with your estimation of its results for Kazakhstan agriculture
In total it was positive. Unfortunately the crop was not as high as we expected. It was above average, but much less than we expected. Quality was also worse than we hoped. Thus last year it was a problem to find 4th grade wheat, and this year it is not to find 5th one.
At the same time despite the low crop 2012 the exports reached good rates. The year is significant by stabilizing prices for bread realized by the government. But the stated experience of the stabilizing funds use showed it is time to refuse from the bread prices control. Thus neither producers nor population are ready for it.
The passed year was not the best one for milling industry. The flour exports decreased tio 1.75 mln tonnes in 2013 as opposed to 2.2 mln tonnes in 2012. The stated fact caused the production volumes decline, milling enterprises workload decrease and the range of the milling producing enterprises shutdown.
- Have your forecasts for 2013 justified?
Unfortunately our forecast for milling industry was not justified. The years was much worse than the previous one (2012). But also unfortunately we expect 2014 to become much worse than 2013. Flour export markets capacity to decrease causing the industry stagnation.
- How did the participating in the Customs Union impact on the agrarian market development?
It is hard to provide the exact estimation. It is obvious the Customs Union favored the development of the near border trade with grain and flour, meanwhile the most volumes of the trade are being transported by trucks. As a result the volumes due to the absence of the customs offices on the border checkpoints are not under the control of the Customs Union, but it is the next issue.
- What were the main difficulties you faced in 2013?
First of all it was the unfavorable weather conditions causing the harvesting campaign start delay for month almost so the circumstances followed it (a lot of grain with the moisture rates exceeding the allowed and needed to be dried, a lot of grain with various qualitative parameters).
The second problem we faced was the limited financial resources and the difficulties to approach them.
As for the milling industry, the absence of the active position of the government on the foreign markets, the absence of the exporting strategy. But it is necessary to specify that the milling industry of Kazakhstan in the recent years has become the leader among the processing industries of the agricultural complex of the country, the leader on the flour export market. So of course the range of the top-priority requirements of the industry faced the significant changes. It is important for industry the active presence of the government while solving the issues of the intergovernmental regulation of the trade relationships, the artificial barriers and discrimination remove. Unfortunately there is no full understanding the mutual cooperation.
- What measures of the state support are necessary for the stable activity of the milling industry in 2014?
The main support expected by the millers is the formation and development of the export strategy for the milling industries' products.
To date almost all the countries-importers of Kazakh flour limit the flour imports and develop own production facilities. At the same time the limitations contradict the principles of the free trade. And of course no one but the government should solve the issues.
- Due to the current situation in the industry what is your forecast on the grain and flour prices development in the industry?
It is barely possible there will be prices increase in the first half of 2014. Thus, the world market tendencies, the grain stocks in the neighboring countries, and grain stocks in Kazakhstan favor the bearish trend development. Most probable the prices increase in the nearest 2-3 months (within 5-10%). But we will see it later. The market high volatility does not allow to make the good forecast. The flour market will follow the grain one development.
- What are the plans and expectations of the Grain processors Union of Kazakhstan in 2014?
As always that governmental-private partnership will be more active. We rely a lot of hopes for the last year founded National Chamber of entrepreneurs. Hope with its help we will be able to solve the current and strategic issues faster and simpler.
Interviewed by Evgenia Severina
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