ALMATY, Nov 24 (TCA, By CHARLES VAN DER LEEUW). The former Soviet Union is back in the race where it comes to keeping the world fed and its population’s daily bread secured.
With record-breaking harvests, Kazakhstan, Ukraine and Russia are set to conquer a global market share in cereal sales, combining to create an impressive quarter of the world market. With extra efforts in terms of investment into innovative technology, the former realm of proletarian brotherhood could well become for food what the Middle East has been for oil during the last couple of decades.
On November 11, Kazakh President Nursultan Nazarbayev hailed what he qualified as Kazakhstan’s largest grain harvest in 55 years – coming close to 30 million tons, including more than 20 million tons of wheat. Over the first 10 months of the current year, with the summer harvest about to be completed, Kazakhstan’s total agro-output’s cash value topped the equivalent of 13 billion US dollars, according to data from the National Statistics Agency.
Through the year, Kazakhstan expected an overall cereals output of 26 million tons – a record-breaking figure that more than doubles the summer harvest of 2010, when farmers all over the northern hemisphere were hit hard by floods in its southern parts while vast surfaces of farmland further north fell victim to drought. This year, climatic conditions have been far better – leading to solid storage build-up and stable prices on world markets.
As of early November, though, the Ministry of Agriculture reported the completion of the summer harvest, with the impressive result of 29.5 million tons of cereals. Due to favorable weather conditions and improved irrigation technology, in particular in the south of the country, the main factor in the increase has been a boost in surface productivity rather than an increase in farmland.
In previous years Kazakhstan found itself at the bottom of the productivity list in the former Soviet Union, this year’s yield was up to 1.84 tons per hectare – up from 0.94 tons in the previous year. The overall results have put Kazakhstan among the ranks of the six largest grain producers in the world.
According to deputy agriculture minister Marat Tolebayev, as quoted by the Kiev-based agro-news agency Agrimarket, “Kazakhstan’s grain export capacity for this year can be put at 15 million tons, up from 10 million in 2010.” According to the official, Kazakhstan has the potential to double its output and triple its export capacity in the years to come, provided the ongoing modernization of the agro-sector continues along with the attraction of fresh investments.
Solid storage reserves, maintained since the middle of the new millennium’s first decade, are a guarantee that increases in external sales will not harm conditions on the domestic market and keep the price of bread, a sensitive sociopolitical issue around the globe, affordable throughout society. As of November 1, Kazakhstan had up to 25 million tons of cereals in reserve, including 22.6 million tons of wheat, 1.64 million tons of barley and lesser quantities of rice, oats, rye and maize.
The state agency in control of grain exports from Kazakhstan coordinates marketing and sales operations together with the former USSR’s two other exporting countries, namely the Russian Federation and Ukraine. The agency purchases fixed quantities of grain from farms against guaranteed prices, leaving farmers free to sell their surplus on the free market.
Russia expects a full-year harvest of 93.9 million tons of grain, including 55.1 million tons of wheat, for 2011, with the aim to boost the figure to an all-time high of 105 million tons in 2012. Ukraine is expected to produce close to 53 million tons of grain through the year, with the target for 2012 set at 54 million. This brings the combined export capacity of the former Soviet grain-troika close to 50 million tons in the July 2011-June 2012 marketing year.
Wheat on Europe’s integrated agro-commodities market settled at 141.30 Sterling as of November 21 this year, down from 167.25 pounds a year earlier and from 199 pounds at the end of 2010. It means that volatile markets indicate the coming of a grain glut as it happened back in 2009. Increased volumes of production are thereby the only way to preserve one’s market share. With this, along with nice weather, available, Central Asia could well keep up its agro-sector’s attractiveness for investors. One thing, however, remains certain: in farming, like in most other upstream enterprises, nothing is cheap any more.
KEY FIGURES IN KAZAKHSTAN’S AGRO-OUTPUT 2003-2011
period 2003 2006 2009 2010 2011*
crop area (million hectares) 17.454 18.369 21.423 21.439 21.200
incl. cereals 13.873 14.840 17.207 16.619 16.200
incl. wheat 11.362 12.426 14.751 14.262 13.800
cereals harvest (million tons) 14.777 16.512 20.831 12.185 29.500
incl. wheat 11.537 13.461 17.052 9.638 20.200
productivity (tons/hectare) 1.08 1.17 1.27 0.80 1.84
incl. wheat 1.03 1.13 1.19 0.73 n.a.
* preliminary score
source: National Statistics Agency of Kazakhstan