In mid-August, some farms where sowing took place early are already preparing to start harvesting. And everyone is interested in the price at which they will be able to sell their harvest.
A large flour mill in the Karaganda region recently published a price offer for the purchase of wheat and other types of agricultural crops. The price level unpleasantly surprised farmers.
How much are the millers offering?
Thus, 86 thousand tenge with VAT (82 thousand tenge without VAT) is offered for class 3 wheat with 23-24% gluten.
88 thousand tenge with VAT (84 thousand tenge without VAT) is offered for class 3 wheat with 25-26% gluten.
Hi-pro wheat (gluten from 27% and above) is estimated at 90 thousand tenge with VAT (86 thousand tenge without VAT).
The plant is ready to buy class 4 wheat at 80 thousand tenge with VAT (76 thousand tenge without VAT). Given the weather conditions of the current season, most of the harvest will be of this quality - and in this price category.
For barley, they are offering 50 thousand tenge with VAT and 48 thousand tenge without VAT, for feed wheat (class 5) - 64 thousand tenge with VAT (60 thousand tenge without VAT).
Why did the prices fall?
Recall that at the end of July, the Ministry of Agriculture of the Republic of Kazakhstan reported the price of class 3 wheat in Kazakhstan from 97 thousand tenge (gluten up to 23%) to 126 thousand tenge (gluten above 28%). It turns out that the drop was from 10 to 30% for different categories of grain.
It is obvious that millers have decided to "nail" the prices of Kazakh wheat to the level of Russian ones, since the Ministry of Agriculture has imposed a complete ban on grain supplies from the Russian Federation, lifting the exception for flour mills and poultry farms.
Of course, for grain processors, a reduction in purchase prices is largely a forced step, since they need to compete with Russian flour both on the domestic market of Kazakhstan and on foreign markets. Having lost their cheap raw material base, they will not be able to do this.
However, this approach puts farmers in Kazakhstan in a clearly losing position in relation to Russian peasants, since their yield is higher, and therefore, the cost price is lower. They earn more, and can invest more in their development.
What will the price reduction lead to?
In Kazakhstan, already this year, farmers who received a harvest of less than 10 c/ha, at the current price level, will go into the minus by the end of the year, since they will not be able to recoup investments per hectare, which amount to at least 70 thousand tenge. We should expect many farms to go bankrupt, since no one has any margin of safety after a series of difficult seasons.
Hard wheat will give farmers the best marginality, for which grain processors are ready to pay 110 thousand tenge with VAT (106 thousand tenge without VAT).
Traditionally, prices are higher for malt and legumes. Thus, sunflower and flax are paid 150 thousand tenge with VAT (130 thousand tenge without VAT).
A ton of peas is estimated at 106 thousand tenge with VAT (104 thousand tenge without VAT).