KazGrain-2019: afterglow

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APK-Inform

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While visiting any conference events, we have certain emotions, but some time later we have only the so-called afterglow, which is probably the most important factor defining the quality. What was the afterglow of the international conference KazGrain-2019?

The conference of 2019 became one of the largest in the Central Asian region and brought together the record number of participants — more than 300 grain producers, traders and processors, owners of elevators, importers of grains, pulses and flour, suppliers of technical equipment and technologies, legal services, representatives of investment companies and banks. Also, we would like to note the high interest of logistics companies in participating in the event.

The geography of the conference participants included 28 countries. In particular, the delegates from China, Iran, Turkey, the UAE, Singapore, Japan, Canada, the USA, joined to the traditional partners of Kazakhstan — Russia, Uzbekistan, Azerbaijan, and Afghanistan. It is worth noting the growing interest of European and Ukrainian companies in the Kazakh market.

Conceptually, the conference agenda consisted of 2 blocks — KazGrain: Market and KazGrain: Grain storage and processing, which allowed covering not only the market trends, but also touch on the problematic issues and pressure points of the Kazakh market of grains and its by-products, as well as pay attention to the infrastructure of grain storage.

According to the Vice-Minister of Agriculture of the Republic of Kazakhstan, Gulmira Isayeva, the second international conference KazGrain-2019 already became the milestone event for the whole business community of Kazakhstan. One part of the participants actively listened the speakers, receiving the new information, making a discussion with them, and asked questions, the other — communicated in the lobby of the conference zone and on the sidelines of the hotel Rixos President Astana, enjoying the meeting not just with partners and friends, but also making new acquaintances.

Taking into account the proportions and depth of the conference agenda, it is difficult to highlight all interesting moments in one article, so the current material focuses on the grain market.

 

Wheat: from reducing of the areas to increasing of the production, using the modern technologies

Due to the overproduction of grain crops, and in order to exclude the provision of budgetary funds, since 2012 the Government of the Republic of Kazakhstan took the special measures to optimize the planted areas under the main export crop — wheat in the direction of the further reduction and expanding the areas under other popular crops.

According to G.Isayeva, reduction of the planted areas under wheat did not have the task to decrease its production. At the expense of the right modern technologies, high-quality seeds, the major task is to increase the production volumes of wheat in Kazakhstan.

Within frames of the ongoing program of diversification of wheat crops in Kazakhstan, since 2011 the areas decreased from 13.8 mln ha to 11.4 mln ha (down 2.4 mln ha). After the period of overproduction of wheat (in 2011, the harvest totaled 22.7 mln tonnes), in 2012 the harvest sharply fell to 9.8 mln tonnes.  However, for the following 6 years wheat production in the country stabilized at the level of 13-14 mln tonnes, due to the absence of significant weather and climatic disasters (droughts and heavy rains).

According to the Deputy Chairman of Board at the National Company Food Contract Corporation JSC, Sabit Kashkimbayev, in terms of the current areas of wheat crops and favourable weather conditions, Kazakhstan can reach the maximum production volumes at nearly 18 mln tonnes of wheat annually. Thus, the overproduction of wheat cannot be reached.

In turn, the Technology Sponsor — AgroMachHolding KZ JSC — presented models of the world famous agricultural machinery to participants of the event, designed specifically to work in the field and on farms — the tractor Lovol 1304, as well as the combine harvester Essil, which the participants managed to see not only in the presentation of the Deputy Chairman of the Board of the company, Dinara Shukizhanova, but even touch them and sit in the booths at the exhibition area of Rixos President Astana. D.Shukizhanova noted that to date, agricultural machinery in many agricultural enterprises of Kazakhstan is quite outdated and requires updating.

 

Expansion of the areas under forage crops, pulses and oilseeds as the diversification result

According to G.Isayeva, since 2011 the planted areas under other popular crops significantly increased: forage crops — up 1.1 mln ha (up 64%), cereals — up 40 thsd ha (up 19%), and pulses — up 3.9 times (up 322 thsd ha). At the same time, the areas under oilseeds increased by more than 1 mln ha, and totaled more than 2.8 mln ha in 2018, while the areas under forage crops grew by 0.8 mln ha. For 5 recent years, the average annual volume of grain production increased by 1.3 mln tonnes, and oilseeds — up 1 mln tonnes.

To date, Kazakhstan holds the leading position among the global producers of flaxseed, and the fifth position as the manufacturer of lentils. The significant growth of the production in the segment allowed to Kazakhstan to increase the share of pulses in the general country’s exports from nearly 0.2% in 2012 to 3% in 2018.

Also, in the season-2018/19 the production of barley reached the record level of 3.9 mln tonnes, up more than 60% compared with the figures 5 years ago. The volume of barley exports can reach 1.9 mln tonnes, which will be the maximum indicator. Generally, the share of barley in the general exports in 2018 reached 21%, as opposed to 4% in 2012.

 

Key sales markets of Kazakh wheat

The stable production rates of wheat for 5 recent years allowed to Kazakhstan to keep its positions in the rating of the global countries-exporters and ensure the exports varying at the level of 3.3 mln tonnes in 2014/15 MY to 5.3 mln tonnes in 2017/18 MY.

The season-2018/19 demonstrated the increased demand for Kazakh grain from the countries-importers. According to the official forecasts, in the current MY the exports of wheat will reach 5.4 mln tonnes and become the highest figures for 7 recent seasons (according to the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan).

According to the First Deputy Chairman of the representative office of the Afghanistan Chamber of Commerce & Industries (ACCI) in Kazakhstan, Ulfatullah Atayee, Afghanistan is interested in increasing of Kazakh wheat purchases.

To date, in Afghanistan the imports cover nearly 90% of the annual domestic consumption of wheat, and reach nearly 3.1 mln tonnes. At the same time, Kazakhstan, Pakistan and other neighbouring countries are the major suppliers of the grain to the country by rail, because Afghanistan is the landlocked country.

The government of Afghanistan plans to strengthen the trading relations with Kazakhstan, and plans to sign the agreement for the supply of 1 mln tonnes of wheat, in order to monopolize the wheat and flour business segment to control the prices on the domestic market and eliminate inflation in food products, the speaker said. At the same time, the current terms of payment for wheat supplies already became the major obstacle slowing down the growth of grain supplies to the country, he added.

Until the buyer (Afghan company) pays the invoice in total (100%), the seller (Kazakh supplier) will not load the grain for voyage to Afghanistan. At the same time, Pakistani suppliers do business with Afghan companies solely based on trust and mutual benefit to both, also there's no demand of 100% advance payment.

Due to the logistics problems, sometimes Kazakh companies take more than 30-45 days to deliver the cargoes, the expert said.

However, G.Isayeva noted that Kazakhstan not only plans to keep on the traditional markets, but also open up several new ones.

The Vice-Minister of Agriculture noted that to date, the Republic of Kazakhstan is negotiating with the governments of Georgia and Azerbaijan, which plan to increase the import volumes of Kazakh grains.

In previous years, grains from Kazakhstan demonstrated rather varying reach on the markets of the reporting countries. To date, Kazakhstan started developing the logistics, and the grain qualitative figures significantly exceed the figures of other countries, so they applied to Kazakhstan for increasing of the supplies. Both Azerbaijan and Georgia are ready to import nearly 1 mln tonnes of grains, G.Isayeva said.

 

Export destination

2016/2017

2017/2018

2018/2019
(29.03.19)

Azerbaijan

40.8

140.2

408.7

Georgia

0.1

65.0

98.4

Central Asia*

4 067.4

4 558.1

3 800.3

Afghanistan

2 433.6

2 374.6

1 731.3

Iran

13.9

41.2

2.4

China

281.3

360.4

459.7

Russia**

269.0

406.8

524.9

TOTAL

7 106.1

7 946.3

7 025.7

Global market

324.5

612.3

364.6

TOTAL (wheat and flour)

7 430.6

8 558.6

7 390.3

Exports of other grains, `000 tonnes

893.9

1 409.0

1 623.4

TOTAL grains and flour in grain equivalent, `000 tonnes

8 324.5

9 967.6

9 013.7

According to the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan

* Includes Uzbekistan, Tajikistan, Kyrgyzstan, Turkmenistan

** Countries of the far abroad, grain exports to which are provided through the ports of the Black, Azov, and Baltic Seas.

 

For several recent years, Kazakhstan increased grain supplies to China, due to the work carried out to amend the Protocol on harmonization of phytosanitary requirements for grain exports with China, signed in 2013.

Also, the CEO at Yihai Kerry (Shanghai) International Trading Co. Ltd., Fang Gang reported about the prospects of increasing of Kazakh wheat supplies to China.

China annually imports nearly 4-5 mln tonnes of wheat, in terms of the domestic consumption of the grain at nearly 100 mln tonnes. Thus, the share of imports totals slightly more than 4% of the annual demand of wheat in China. At the same time, it is necessary to specify that China mainly imports high-quality wheat for the further processing with the local grain, and producing of high-quality flour, the speaker said. In his opinion, it opens up good prospects for increasing of Kazakh wheat supplies to China, which volumes started dynamically growing in several recent years.

In particular, the instability of the US-Chinese trade caused a dramatic reduction in the grain imports from the US to China. At the same time, since July 2018 China stopped importing US wheat. Due to realization of the Chinese strategy "One Belt, One Road", the supplies of Kazakh wheat started steadily growing, and reached 466 thsd tonnes in 2018. Thus, Kazakhstan is gradually becoming one of the most important suppliers of wheat to China, the speaker said.

Also, F.Gang noted that China annually imports nearly 1.5 mln tonnes of high-protein wheat from Canada, and Kazakh wheat can theoretically replace nearly 30% of the reporting volumes. The expert called the absence of the varietal classification of wheat, because Chinese traders specify the grain by its grades only, as one of the major constraining factors for wheat shipments from Kazakhstan to China.

In addition, Kazakhstan needs to strengthen its advertising campaign to promote wheat for the Chinese market, and activate the positions of industry associations in the sphere, he added.

 

Logistics development = development of the exports of agricultural products

While speaking about grain exports and expansion of the geography of sales, it was impossible to leave the issues of infrastructure and logistics. In the very beginning of the conference, G.Isayeva paid special attention to the issue, and noted that Kazakhstan significantly improved the logistics infrastructure for several recent years.

The topic was continued in the special session, moderated by the Member of the Supervisory board, the International Institute of Logistics and Business "Silk Way", Member of the Presidium of the Union of Kazakhstan transport workers KAZLOGISTICS, Chairman of the Transport logistics subcommittee under the National Chamber of Entrepreneurs Atameken, Yerkhat Iskaliyev. Within its frames, speakers — the Deputy General Director at LLC TBI, Dmitry Persianov; the Head of strategic marketing and corporate communications department at JSC Rusagrotrans, Igor Pavenskiy; the Commercial Director at TRANSLOGSERVICE, Igor Romanovskiy; and representative of BTK Express, Kamal Guseynov — reported about the services of their companies to ensure the export transportation of grain goods from Kazakhstan, and offered new technologies and routes.

Summing up the above-mentioned, it should be noted that the highlighted moments were basically positive, and cover many problems faced by participants of the grain market of Kazakhstan.

We wish to Kazakhstan to get the further prosperity and strengthen its position in the TOP of the global producers and exporters of grains!

 

Elena Cherednichenko, APK-Inform Agency

 

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