Every year brings new challenges to agricultural producers in Kazakhstan. On the one hand, there are unfavorable weather conditions - but it is impossible to influence them in any way. On the other hand, if there are difficulties with the quantity and quality of the crop, constant logistics issues arise, which significantly complicates the work of farmers and traders. In addition, the state does not always listen to the “pains” of farmers, and market regulation often does not take into account the specifics of agricultural production. We decided to talk about the harvest, the situation in the grain and oilseed markets, logistics, government regulation, and farming culture with the head of one of the largest agricultural holdings in Kazakhstan, Atameken-Agro, Kintal Islamov.
- Kintal Kintalievich, what factors influenced the situation with the wheat harvest this year?
- This year was unsuccessful in terms of weather conditions. If we thought that last year was dry, this year was more difficult. There was some precipitation, but not everywhere and insufficient - in some places only 20-35 mm fell on the fields. Another unusual thing was the temperature regime at the end of May; for about 10 days the temperature was above 40 degrees. Because of this, there were huge losses of moisture in the fields. This was the tillering phase and, unfortunately, it was not successful for the plants. Then there was good rainfall, but then the intense heat came again, which made itself felt. The ear seemed to be large, but the number of grains in the ear was 1.5-2 times less than usual. The weight of the grains was also small, which affected the yield.
- But profitability depends on productivity...
- Absolutely right. On average, the wheat yield at the enterprises of our holding was 11.5 c/ha (versus 18 c/ha last year). Moreover, we started harvesting with an indicator of about 15 c/ha, in some fields we even received 18-25 c/ha, but then the rains came and the yield decreased significantly, and the proportion of sprouted grain also increased.
With such a yield, it is difficult to talk about any profitability. If we close at zero, it will be very good.
- What price for wheat, in your opinion, would be fair for agricultural producers in the current year?
- Taking into account the low yield (especially for those farmers who harvested at the level of 5-6 c/ha), I think the price should be no lower than 125 thousand tenge per ton. This is to at least cover losses. But, again, it all depends on how much the farmer invested in the crop and whether he followed agricultural technologies. For those who, relatively speaking, sowed and harvested, it will be quite enough. If the agricultural producer applied fertilizers, did all the processing, etc., this price may be insufficient.
- Can you already assess the quality of the harvest? Will Atameken-Agro be affected by the problem of shortage of quality seed material?
- The quality of wheat varies greatly across different fields and enterprises of the holding. In some places the percentage of sprouted wheat in the total crop is 3-5%, and in some places it is 50-80%. Sometimes even the grain visually does not look sprouted, but according to the falling number it is classified as unclassified wheat.
The harvesting of the Atameken-Agro enterprise has already been completed, processing is underway, we will dry it, conduct tests again, and after that it will only be clear what quality the grain is.
As for the seed, we harvested about 47% of the crop before the rainy season, so to some extent this saved us. We are fully provided with seeds for next year's sowing campaign. In this regard, I think our situation is much better than most agricultural producers.
- How do you think the extension of the export duty on sunflower seeds will affect the market?
- For us as an agricultural producer and exporter (and we export most of our products), this is a negative decision. We understand that the government wants to support domestic processors. But when they say that it is necessary to stimulate the export not of raw materials, but of processed products, because oil is a high-tech product, unlike seeds, I want to object - wait, how does this happen? The greatest added value comes not from oil producers, but from agricultural producers.
We do not mine grain on the edge of the field, but grow it, producing a high-tech product. We invest a lot of physical and intellectual work.
Judge for yourself: to get a harvest, we carry out more than 12 agrotechnological operations - soil preparation in the fall, autumn weed control, spring moisture retention, spring weed control, sowing, fertilization, rolling and harrowing after sowing, weed control during the growing season, control pests and diseases during the growing season (and constant monitoring), feeding in different phases of plant development, harvesting, cleaning, drying, storage and only then – shipment. And for some reason, when we export agricultural products, they say that we are exporting raw materials.
That is, government agencies take a position that is unclear to us. On the one hand, they support the agro-industrial complex, on the other, they do not give the opportunity to develop.
To earn money and cover losses, we have to sow various crops - grains, oilseeds, legumes. As soon as we have the opportunity to “spread our wings” a little (when world prices for agricultural products rise) - to update our fleet of equipment, for example, strict government regulation immediately begins. But in difficult years for farmers - and there are now more of them than prosperous ones - the state forgets about us, and we are left to our own devices, forced to save ourselves.
Due to unreasonable government policies, the agricultural industry is becoming less attractive to investors.
- Can you voice the financial losses from the introduction of restrictions on the export of sunflowers?
- For every ton we lose on average $150. For example, last year the Atameken-Agro holding produced about 70 thousand tons of sunflower seeds. That is, our total losses amounted to about $10 million - to make it clearer, with this money we could buy 20 modern seeding systems or 25 combines. President of Kazakhstan Kassym-Jomart Tokayev in his message emphasized the need to update the fleet of agricultural machinery and introduce new technologies, but how can we do this?! We are not allowed to earn these resources. And banks are reluctant to finance agricultural producers.
- What sunflower yield do you plan to achieve this year?
“This year the conditions were quite harsh, so we don’t count on high yields. Perhaps we will collect 10 c/ha. But, again, the cost of sunflower will be at the level of 180-200 thousand tenge per ton. At current export prices at FCA, we could get 210 thousand tenge per ton for seeds (excluding VAT) plus a certain amount for VAT refund. But, unfortunately, we cannot. And at the price that processors are offering us now, we get a loss of 40-50 thousand tenge per ton. That is, if usually sunflower helped us cover losses from growing grain, this year it will not work out that way. It would work out if the sunflower yield was 17 c/ha and higher, then the profitability would be about 10-15%. It’s a paradoxical situation: fuels and lubricants and agrochemicals are becoming more expensive, but the price of oil and sunflower remains stable.
We are a fairly large agricultural holding, but due to a lack of working capital we cannot afford to purchase a precision seeder and special headers for harvesting sunflowers, or install additional storage tanks...
Usually the goose that lays the golden eggs is protected, but in our country they are simply trying to slaughter it - this is a sad analogy that arises in connection with the situation in our agro-industrial complex and ill-conceived government regulation. As soon as we start earning a little money, they immediately start reproaching us for selling too much. Either wheat or sunflower.
By the way, I think that since there is a ban on importing wheat by road, let’s introduce a similar restriction on sunflower. So that Russian products do not collapse our market.
And in other countries - India, for example, there is a practice of introducing duties on imported agricultural products when prices for them are lower than for domestically produced products. We don’t have such forms of protection, so they bring everything to us, making domestic farmers vulnerable.
- You also have livestock farming. Does it not allow you to balance income in such a situation?
- Again, to develop livestock farming, investment is needed. And due to cash gaps, we suspended the construction of a dairy farm. The commissioning period will take at least 6 months, and then we need to bring in animals, but this is not done in the summer due to the heat, so we will only be able to open it next fall. That is, we will not receive income from the dairy farm for almost a year.
- Last year was marked by logistical problems in the grain market. Will everything happen again this year?
- The situation is reaching the point of absurdity. If last year logistical difficulties were associated with a shortage of wagons, this year KTZ does not coordinate plans. We have a contract, we have wagons and containers, even loaded with products, but we cannot send them to customers, everything is worth it.
It is very strange in the 21st century not to develop an automated system - whoever submitted the application first was approved.
And now we have some kind of chaos with railway transportation - there is no other way to call it. We simply cannot plan our activities.
When it comes to exports, things are not so simple. We supply our products, let’s say, to traditional markets for Kazakhstan - Uzbekistan, Tajikistan, Afghanistan... The situation with China is not very clear - sometimes they accept our grain, sometimes they don’t, and if they gave a signal that they can accept it, they don’t approve our plans.
It seems that EU countries are ready to give excellent prices for agricultural products (for durum wheat, lentils, flax...), but all the profits are “eaten up” by logistics. Over the past couple of years, its value has increased significantly. Both in the direction of Turkey and in the direction of Europe. In addition, there is the issue of delays - if the products do not arrive on time, you will pay a fine or even receive a refusal from the contract.
If the situation worsens, we will not even have enough money to pay our employees. The risks are very high. There are certain payment schedules for suppliers of spare parts, agricultural chemicals, etc. But if we do not meet product shipment schedules, how can we pay our suppliers?
- Will the structure of acreage in the Atameken-Agro holding change in connection with the current market situation?
- Yes, sure. Traditionally, we grow wheat, legumes and sunflowers in ratios of approximately 50%/25%/25%. And this year we will reduce the area under sunflowers by 2 times.
We will switch to those products whose trade is not (yet!) regulated by the state. We will increase the crops of other oilseeds - flax, rapeseed, and legumes.
- Let's move from market issues to farming culture. How has it changed in Kazakhstan in recent years?
- I think it has improved significantly. This was greatly facilitated by government support in terms of subsidizing the purchase of plant protection products and fertilizers. If earlier such an operation as seed dressing was practically absent, then recently it has become the norm for agricultural producers. Also, treating crops with fungicides - previously we focused on the so-called threshold of harmfulness and often missed the very moment after which it was no longer useful to apply them, but now they do it preventively. I am sure that insecticidal treatments should be carried out more often in the summer - the climate is changing, there are more and more insects in the fields.
Moisture is becoming an increasingly important factor affecting crop production. I have been working in agricultural production for 10 years and I can safely say that there have never been such dry seasons as the last 3 years in a row.
In previous years it was cooler and there were more moisture reserves. The spring reserves of moisture in the soil were usually enough for plants to “hold out” until June-early July, that is, for the most important phases of development.
In this regard, I would like to note the very weak level of agricultural science in Kazakhstan. It would be good if scientists were more involved in climate change, studying the effects of different sowing dates, moisture-saving technologies... But we are all carried away by digitalization. But what kind of digitalization can we talk about when basic scientific recommendations have not been developed - what to sow, when to sow, at what time to apply fertilizers, which ones, in what ratio, how to harvest, in what way... After all, each crop is a separate technology.
It is also necessary to adopt world experience, but be sure to adapt it to the conditions of Kazakhstan. Take the same No-Till technology - everything sounds beautiful, but the cornerstone of zero technology is crop residues, and there are fewer and fewer of them on Kazakh fields. Previously, if you went into a field, the wheat was chest-deep, but now if it’s knee-deep, that’s good. In general, science should help us in these matters, but for now, alas.
- And in conclusion, I can’t help but ask about the prospects for next year...
- Every year we hope for the best, wait for spring and go into battle. But let's be objective.
Next year will be quite difficult. The issue of working capital will become a priority. After all, the agricultural sector is financed not only by banks and government institutions, but also by suppliers of plant protection products and fertilizers, and there are quite a lot of them. They provide their products on credit, and can suffer great damage due to the current situation in the industry. Next year they may not only not have the desire, but also the ability to finance agricultural producers who will not pay them back, due to a shortage of working capital. There will be a chain reaction throughout the industry. Those farmers who have not previously attracted third-party financing are also likely to need borrowed funds. Many do not have seeds, and they have risen in price - up to 250 thousand tenge per ton (wheat). Already now you need to make an advance payment for the seeds. Of course, you can sow garbage, but then let’s not count on a normal harvest. And then it is possible that bans on grain exports, etc. will be introduced again, and we will again be forced to trade only on the domestic market, which will not allow us to receive sufficient funds for development. So we go in a vicious circle - from problem to problem.
Now the state promises to extend loan payments. I believe that the minimum extension period should be 3 years, and ideally, the longer the better. In addition, the interest rate should be reduced as much as possible so that agricultural producers can calmly resolve this difficult situation.
Moreover, the climate is changing, you see - sometimes drought, sometimes heavy rains, so where is the guarantee that next year we will be able to get a good harvest? It may turn out that there will be no one to sow... Now the main task is to preserve those who work on the land. Many people can’t stand it and sell their lands and farms – this is an economic aspect. There is also the problem of the age of those working in agricultural production - many farmers are over 60 years old, and there is a natural physical loss of managers from agribusiness. And there will be no one to replace them.
This year, more than ever, we expect a wise and balanced approach from the state to agricultural production, reasonable and real support. This is the only way to overcome difficulties and preserve farmers as a class.