Tough political situation in Afghanistan can change drastically the structure of food trade not only in Central Asia, but in the world in generally, as the country is the largest global importer of flour and it depends a lot on food import. We discussed the most “hot” issues with the founder of the group of companies Severnoe Zerno LLC, Expert of the Kazakh Grain Union, Evgeny Karabanov.
What Kazakh exporters should wait for in the nearest future? Will Afghanistan face humanitarian crisis? How will the trade structure change on markets of flour and grain? What international sanction developments will Afghanistan face? All these questions and other market drivers are covered in the comment of the expert.
Afghanistan is the largest global importer of flour. The country imported 1.885 mln tonnes of flour in 2020. Kazakhstan and Uzbekistan are the main suppliers of products to the Afghan market. In 2020, Kazakhstan supplied 1.153 mln tonnes of flour at the sum of 302 mln USD to Afghanistan. This volume has already amounted to 430 thsd tonnes in the first 6 months of 2021!
Uzbekistan supplied 721 thsd tonnes of flour to Afghanistan in 2020. Most of the flour was produced from Kazakh wheat, since Uzbekistan is a major importer of wheat from Kazakhstan.
The share of Afghanistan in the overall export volume of Kazakh flour is currently at 61% in 2021. Besides, Afghanistan imports significant volumes of Kazakh wheat. In 2020, it imported 593 thsd tonnes of at the sum of 138.5 mln USD, including 528 thsd tonnes of Kazakh wheat at the sum of 117.3 mln USD.
The population of Afghanistan is 39.6 mln people as of the beginning of 2021. Thus, it is one of the most populous countries in the region. Moreover, it is one of the poorest countries that depends a lot on food import. Over the last 10 years, the population growth totaled 10 mln people. Recent change of government is very “sensitive” event for Afghanistan as to the food provisions because the country imports not only wheat and flour, but also vegetable oils and other food products.
If payments stop, the supply of food to the country is stopped automatically.
To date, the United States has frozen assets of the Central Bank of Afghanistan in the amount of 9.4 bln USD. In addition, according to Afghan partners, local banks have completely disabled SWIFT payments, meaning there is no way to proceed with payments.
This situation can bring global humanitarian crisis to Afghanistan. Country’s GDP used to be fully granted by the US financial injections. However, the withdrawal of US forces from Afghanistan and the vanishing of US influence can cause certain problems. This situation can affect Kazakhstan as well, as the stoppage of supply of large volumes of Kazakh flour can hurt Kazakh milling sector.
Therefore, a possible implementation of duties as a way to support millers is nor relevant under the current situation. There is a big question mark over the further food supply to Afghanistan. It is likely that the country start to receiver humanitarian aid, as it was about 20 years ago within World Food Program, Red Cross and support from certain countries. For Kazakhstan, this will mean the loss of a large market with a capacity of more than 2 mln tonnes of grain per year!
Of course, the supply of humanitarian aid is advisable from the neighboring countries, and if international organizations buy products, then Kazakhstan is a promising partner due to its well-established logistics, proven manufacturers and experience. However, much will depend on funding. One can hope for a fast stabilization of the situation.
Interviewed by Polina Kalaida