The Grain Union of Kazakhstan officially addressed the Minister of Agriculture of the Republic of Kazakhstan E. Karashukeev with a proposal to objectively assess the balance of supply and demand for sunflower seeds and raw sunflower oil in order to establish the presence or absence of a threat of a shortage of raw materials for the production and supply of sunflower oil to the domestic market.
The relevance of this proposal is caused by the decision of the Interdepartmental Commission on Foreign Trade Policy and Participation in International Economic Organizations dated January 28, 2022, which increased the quota for the export of both raw and refined sunflower oil from the territory of the Republic of Kazakhstan. Another factor is the policy of the Russian Federation to curb the export of sunflower seeds and crude oil to the Republic of Kazakhstan in connection with the suspicion of re-export of Russian products by Kazakh companies to the markets of Central Asian countries.
The situation is aggravated by the fact that the Ministry of Agriculture of the Republic of Kazakhstan promptly initiated and posted on a specialized Internet resource a draft of the relevant legal act on increasing the quota for oil, the discussion of which ends on February 17 of this year.
The Grain Union also drew attention to the fact that the measures to regulate the export of sunflower seeds and sunflower oil, taken by the Government of the country in the current season, actually excluded the activity of grain traders in the domestic market. This circumstance was immediately reflected in domestic prices, since only processing enterprises remained the main buyers of sunflower seeds.
According to the ZSK, if in October-November the internal price for sunflower seeds with the participation of grain traders in the market was 240-250 thousand tenge per ton, then in December-January, when mainly processing enterprises remained on the market, the internal price dropped to 210-215 thousand tons (moreover, with the condition of delivery to the oil plant, and these are additional costs for agricultural producers). At the same time, grain traders who participated in the purchase during this period offered a price of 220-225 thousand tenge per ton (including VAT). But the low volumes of individual quotas that grain traders received hindered their proposals for purchase volumes and did not affect the objective formation of the market price for sunflower seeds.
Thus, the current domestic price formed by processing enterprises does not reflect real supply and demand and is not fair for SKHTP. This circumstance, against the background of the expected increase in the supply for sale by agricultural producers in the period of preparation for the upcoming sowing campaign, may lead to a further decrease in domestic prices for sunflower seeds. And this will have a negative impact on the solvency and ability of agricultural enterprises to fully prepare for spring field work, especially at current prices for seeds, fertilizers, pesticides and fuels and lubricants, the growth of which is observed not by percentages, but by several times. In such a situation, many agricultural producers expect the Government of the country to take prompt measures to prevent a collapse in domestic prices for sunflower seeds.
Given the current situation and the need to make a balanced decision in the interests of the entire market, and not just processing enterprises, the Grain Union of Kazakhstan proposed the following to the Ministry of Agriculture of the Republic of Kazakhstan:
- suspend work on making a decision to increase the quota for the export of sunflower oil;
- together with interested industry unions, objectively assess the balance of supply and demand for sunflower seeds;
- promptly review measures to regulate the export of sunflower seeds and sunflower oil in order to form a fair market price for SKhTP in the domestic market.
Press service of ZSK