Kazakhstan's wheat exports for January-August 2024 decreased by almost 40%, amounting to just over 3 million tons. Experts called this figure a complete failure and reported that the loss of part of the export markets is an indicator of the complete failure of state policy in the agricultural sector, including trade in agricultural products, the APK News agency reports.
"The country's foreign exchange earnings from wheat exports amounted to approximately $1 billion per year. And if wheat exports have collapsed to such an extent, then something is wrong in our agriculture (...) The Vice Minister of Trade said that exports have decreased by almost 40%. It should have been said that exports "collapsed". Still, a 40% decrease!" - commented on the situation the First Deputy Chairman of the Auyl Party, former Chairman of the Board of the National Scientific and Educational Center, former Advisor to the Minister of Agriculture Toleutai Rakhimbekov.
Why such a COLLAPSE of grain exports?
According to the Vice Minister of Trade, for the following reasons:
Firstly, the low harvest in 2023;
Secondly, increased competition in foreign markets.
“Our officials, of course, attribute last year’s low harvest to bad weather. But, according to official statistics, Kazakhstan harvested 16 million tons of grain last year. Plus, we need to add about 2 million tons of grain imported from Russia. A total of 18 million tons. The country’s domestic market consumes, let’s say with a stretch, about 8 million tons. In total, it turns out that about 10 million tons could be shipped for export. Where are they? The Vice Minister, especially the Minister of Trade and Integration, should have known about the fierce competition in foreign and not only foreign markets. After all, competition did not appear this year. It has always been there! And what is competition? It is a combination of two factors - price and quality. Any buyer, be it a housewife or the state, wants to buy any product at a cheaper price and better quality. But here we are far behind Russia - both in quality and in price," T. Rakhimbekov believes.
According to him, Russia has been under sanctions since 2014, but has begun to seriously reform the system of state support for agriculture. And Russian reforms have yielded positive results. The expert cited only one figure. In the 2000-2010s, Russia collected approximately 80-90 million tons of grain per year, and today - 130-140 million tons. That is, an increase of 1.5 times! And this is due to an increase in the yield of grain crops by 1.5 times. And there is no need to refer to the better natural and climatic conditions in Russia than in Kazakhstan.
Of course, in Russia there are, for example, Krasnodar, Stavropol Territories, where even in Soviet times the yield was at the level of 60 c/ha. But even if we compare the yields in the Omsk and North Kazakhstan regions, which have approximately the same natural, climatic and soil conditions, the comparison will clearly not be in Kazakhstan's favor.
Due to the 1.5 times higher yield, the cost of Russian grain is approximately 1.5 times lower than that of Kazakhstan. That is why millers in Kazakhstan and other countries buy Russian grain better than Kazakhstani grain. Because Russian grain is simply cheaper.
"Remember 2022. Our grain was offered at 180 thousand tenge per ton, and Russian grain, already brought to Kazakhstan, was sold at 120 thousand tenge. And the quality of Russian grain is much higher, because Russian farmers use fertilizers, pesticides, update seeds and equipment more than ours," T. Rakhimbekov noted.
Scientists say that to obtain normal yields, a combination of four factors is needed:
1) seeds;
2) fertilizers;
3) pesticides or plant protection products;
4) compliance with agricultural technologies, which require normal equipment and fuel and lubricants.
“In order to ensure all four factors for spring field work, money is needed, and preferably the sooner the better. Grain sowing is carried out in May. It is better for farmers to have money, of course, in November-December, or at worst - in January-February. But there is NO money! VPR lending is late. The so-called “cheapened” fuel comes in May, or even in June. Moreover, loans and fuel are only available to large agricultural producers who can provide collateral for loans, who can buy fuel and who have warehouses where they can dump this fuel. The overwhelming majority of agricultural producers do not have money for seeds, fertilizers and pesticides, for updating equipment. As a result, they sow with ancient seeds. They use the same seeds for 15-30 years, although scientists recommend scientifically substantiated terms for variety change in farms once every 3-4 years for grain crops. At least once every 6-7 years. Fertilizers and pesticides are used in volumes of no more than 10% of the needs," Toleutai Rakhimbekov gave an example.
Everyone knows about the condition of agricultural machinery and equipment. Many farmers still work on tractors and combines of Soviet manufacture. That is, the age of those tractors and combines is approaching 35 years and more, although their service life is 10-11 years.
What to do?
"We need a new state agricultural policy, for which it is necessary to develop a National Strategy for the Development of the AIC and Rural Areas for 50 years," T. Rakhimbekov is confident.
In his opinion, when developing the National Strategy, three factors should be taken as the initial information:
1) global climate change - more and more dry years are becoming more frequent, new varieties of crops and livestock breeds are needed, so to speak, drought-resistant;
2) large-scale soil degradation - it is necessary to change the culture of farming, develop new agricultural technologies;
3) change in the structure of agricultural production - today 80% of agricultural products are produced by small peasant and personal subsidiary farms.
When developing the National Strategy, he suggests remembering three specific features of agriculture:
1) high dependence on natural and climatic conditions;
2) seasonality;
3) high influence of the social factor.
In addition, two more points should not be forgotten:
1) the development of the village and agriculture are inextricably linked;
2) the nature and purpose of subsidies - subsidies are needed not only to cover part of the costs of farmers for the production of agricultural products.
Subsidies, on the one hand, are needed to ensure food security, or rather its key element, called the economic availability of agricultural products. So that people can buy based on their income. Therefore, it must be understood that subsidies are not allocated to farmers, but in fact to the entire population of the country.
On the other hand, subsidies in agriculture are a kind of social benefits to all rural residents for their consent to live in the countryside.
It is with these factors, features and moments in mind that a new state policy in the agricultural sector should be built.
Hence the three directions of the National Strategy, along which the state should make efforts:
1) the formation of agricultural infrastructure based on service and consumer cooperation of the agricultural producers themselves;
2) reforming the system of state support, primarily the systems of subsidies, loans, scientific and personnel support for the village;
3) reforming the taxation of the agro-industrial complex, primarily exemption from VAT on turnover of agricultural products and food products.
“If we do not do this, we will lose domestic agriculture, the village, the aul. And in conclusion. I do not know, someone slipped the idea of a complete rejection of subsidies in agriculture in favor of lending. But this “someone” clearly does not care about the fate of the people, for the fate of the state. All countries around the world pay subsidies in agriculture: the USA, the European Union, Japan, Canada, Argentina with Brazil, and Israel, and in these countries the share of subsidies reaches from 30 to 70% of the gross agricultural output. We cannot even reach 5%, but we want to completely abandon subsidies!” the expert said.
The refusal of subsidies in favor of loans will finally kill agriculture in Kazakhstan, and then the village, the aul, will die, Toleutai Rakhimbekov believes.
He separately focused on the concept of dumping, which, as they said, is applied to export prices.
"And what is dumping, to which the Vice Minister of Trade refers? Let's open Wikipedia. It says that it is the sale of goods and services at ARTIFICIALLY low prices. And Russia did not apply ARTIFICIAL lowering of prices for grain. Lower prices for Russian grain are the result of long-term state policy in the agricultural sector. As a result of the reform of the system of state support for agriculture, including state support for the export of agricultural products, undertaken in Russia since 2014, Russian grain has become much more competitive than Kazakh grain," Toleutai Rakhimbekov concluded.
Yesterday, at a briefing in the Government, Deputy Prime Minister Serik Zhumangarin said that in 2023 there was a narrowing of export markets. He named the decrease in the volume and quality of products as the reason. There was simply nothing to trade, he noted. But the quality of the grain and the connections that have been established historically allow us to look to the future calmly, said S. Zhumangarin.