Kazakhstan continues actively developing the fat and oil industry, which is demonstrated by the increase of the sunflower seed exports by more than 40% and the construction of the modern processing plants, and the launch of the supporting programs for agriproducers. More detailed information about the current trends of fat and oil industry of Kazakhstan and the prospects of its development you can read in the interview of APK-Inform Agency with the President of the association Fat-and-oil Union of Kazakhstan, Konstantin Nevzorov.
— Konstantin, please, tell us what are the achievements of Kazakh fat and oil industry for the decade?
For 10 recent years, the general domestic production of sunflower seed increased in 2.5 times. The significant surplus is stipulated mostly by the rise in yield and the improvement of the agricultural technologies. Also, the processing industry is developing. The new modern extraction plants are built. The enterprises producing the specialized fats and margarines are being modernized with accordance to the modern requirements. The producers manufacture new mayonnaise and sauces products. The new large markets of distribution appear.
As a result, today Kazakhstan has 49 plants with the general processing capacity at 1.4 mln tonnes. By 2021, it is planned to introduce 6 more plants, so the processing capacity is to increase to more than 2 mln tonnes.
The new plants are planned to process both the main and secondary crops. For example, in the northern oblasts these are sunflower seed, flaxseed, rapeseed, and in the southern oblasts — sunflower seed, soybeans and cotton. The share of these multi-crops enterprises totals not higher than 30%, because the main obstacle here is the difference in the storage conditions and peeling of the oilseeds.
— Sunflower seed is of high demand, at the same time third year in a row the planted areas under this crop decline. What is the reason and how to stimulate the agrarians to increase the production of this crop?
The decrease of the planted areas under sunflower seed occurs mainly in East-Kazakhstan oblast where the agrarians started to be more caring to crop-rotation. Previously, in this region nearly 40% of the areas were used for the cultivation of the oilseeds, at affordable 20%, which negatively impacted the yield. Thus, in this oblast there is a decline of the planted areas, in order to achieve higher yield in a future. On the other hand, in North Kazakhstan, Kostanay and Akmola oblasts the planted areas under sunflower seed slightly increase. Herewith, these regions, have sufficient potential for the areas expansion without the harm to the crop rotation.
The long-terms financing with interest rates up to 2-3% can be a significant support for the agriproducers. Also, the construction of the large oil extraction plants with the strong infrastructure that could be the key enterprises that will an extra support.
— In 2018/19 MY, Kazakhstan exported more than 40% of sunflower seed. How can You comment it?
To date, the exports of sunflower seed is the driver of areas growth. The agriprocuders must have a choice: to sell the product for export, or to the processing plant. The prices of the raw materials should be regulated by the market only. Taking into account that Kazakhstan has an open border with Russia, the market imposes conditions of trade and production, and we observe both the imports and exports of sunflower seed to the neighboring oblasts of East Kazakhstan. The artificial limitations of the market and other non-market mechanisms of the influence on the market will certainly lead to the decrease of the planted areas, and in general the industry will receive more cons than pros.
— Does the processing plants have enough of sunflower seed supply? What are the state support programs for the domestic processing industry?
As for today the large modern oil extraction plants are fully supplied by the raw materials. The net cost of the processing on such enterprises is much lower than on the small and old plants. The high net-cost of the processing, old machinery and the absence of the cheap working capital do not allow the small plants to avoid the deficit of the raw materials, thus there is an under-load of the capacities. The artificial load of the non-profitable plants will do no good, because the large oil extraction plants from the neighboring countries still will produce cheaper products. Here, we it is necessary to deal with the economy of the under-loaded plants. The subsidizing of the raw materials, which are used for processing, was effective in the strengthening of the long-term collaboration of agriproducers and the processing plants.
— Condition to the lack of sunflower seed for loading the plants, do the processors think of the increase of the processing of other oilseeds — flaxseed, soybeans, rapeseed?
The combined process of the processing is available only for some plants. The high cost of the transportation for the light sunflower seed, comparing to flaxseed for example, makes its processing attractive inside the country and for the foreign buyers. Indeed, it is not a secret that some neighboring countries use non-market measures of support, for example, the taxes for bottled sunflower oil and exemption from VAT for the raw materials, in particular, for sunflower seed. However, instead of the modernization and the increase of the processing capacities can lead to the non-profitable plants, moreover, after entering the WTO the industry will have to orient on the market conditions.
If we look at the prospects of the increase of the flaxseed processing volumes, according to the Fat-and-oil Union of Kazakhstan there will be no significant increase and the production of linseed oil will be the same as this year. Because the main buyers of this product is China, which purchases not only vegetable oils in Kazakhstan, but also raw materials for further processing (flaxseed, sunflower seed) the demand for which increases. And after 25 Kazakh companies received the permission in October to export flaxseed to China, there are good reasons to forecast further increase of the export, and also of production.
— Konstantin, please tell us in more details about the project “Severnaya soya”. What is the timing for its fulfilment and what are the prospects for the market participants?
The project “Severnaya soya” started as a pilot one in North Kazakhstan oblast in March of 2019. The general planted areas totaled 20 thsd ha. The special seeds suitable for the northern climatic conditions were bought in Austria and Altay Kray in Russia. There are first results of the project: the average yield is 1.5-1.7 t/ha and in some fields — 2 t/ha. Witnessing such results many agrarians become very interested in the cultivation of this oilseed.
— The export of sunflower oil in 2018/19 MY totaled nearly 25%. What is a priority of this product for the country in terms of its export abroad in a short term perspective?
The main priority of every country is first of all the saturation and the protection of its domestic market, the food security. Sunflower oil is a product of strong demand. Due to the geographic position of the country and in compliance with agricultural technologies Kazakhstan can increase the planted areas under the sunflower seed several times not harming the crop rotation. Of course, the increase will be observed in Kostanay, North Kazakhstan, Pavlodar and Akmola oblasts.
— What is a level of development of the infrastructure and logistics of the fat and oil industry? In Your opinion, what should be changed for the effective development of the fat and oil industry in Kazakhstan?
The main problem today is the big distance among the fields with oilseeds and the storages, drying, peeling facilities, and the processing plants. These issues can be solved effectively by means of the construction of the mini-elevators and dispatch points, which will receive the oilseeds spanning up to 100 km.
Also, the risks are brought by the initiatives of the large producers of the oil tank cars which lobby their interests by trying to make amendments to the technical regulations of the Union. It is offered as if good will to transport the vegetable oils in such oil tanks, even raw oils, which later is processed. And here is the most interesting. We as an industrial association are totally against the finished products for food use to be transported in oil tanks even with the golden cover. The oil tanks contain the remains of the cleaning agents and different microbiology agents. If these contact the finished product it can cause severe damage. Is we speak about the transportation of the raw oils in black oil tanks for the further processing (refining, deodorization, whitening, etc) it is absolutely safe: the program EBL (electronic bill of lading) completely exclude the supplying of the tanks after their use for light oil products. There is a big question also to the fact, that Kazakhstan does not have the specialized repair depots for the maintaining of the stainless oil tanks, which transport the finished products. We must assume that when taking such poor decision the tanks must later be transported for maintenance to other countries, which leads to heavy expenditures.
— What are the prospects for the market participants in 2019/20 MY?
This year we expect the higher demand for the oilseeds. The large market players already show high interest to this industry of Kazakhstan. It is evident even if we look at the number of the participants of the upcoming conference KazOil2019 in Nur-Sultan on November 5.
Also, there is high interest to the production of the organic oilseeds, the areas under which increase rapidly. Kazakhstan steps into the economic battle for the new markets as a full player.
Interviewed by Anna Skotar, APK-Inform Agency
