Assuming normal weather, FAS Astana forecasts that Kazakhstan’s wheat crop in MY 2011 will rebound to 14.5 million metric tons (MMT) from the drought affected 9.7 MMT in MY 2010.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: KZ1102
Kazakhstan - Republic of
Grain and Feed Annual
Mary Ellen Smith
Assuming normal weather, FAS Astana forecasts that Kazakhstan?s wheat crop in MY 2011 will
rebound to 14.5 million metric tons (MMT) from the drought affected 9.7 MMT in MY 2010. Wheat
exports are forecast at 7 MMT, an increase by 2 MMT from MY 2010, and most wheat and flour will
be exported to Asian countries, while exports to Russia will not exceed 1 MMT. The total domestic
wheat consumption is forecast at approximately 7 MMT and food consumption will comprise 70
percent of the total.
According to all available forecasts, 2011 will be favorable for Kazakhstan with better grain and legume
yields although area sown to grain will decrease for the second consecutive year. In 2010, the sown
area to grain and legumes decreased by 583,000 hectares (1.44 million acres), and in 2011 forecasts
predict a sown area to grain and legumes will be reduced by an additional 89,000 hectares (220,000
acres). The share of wheat in the total grain production varied from 79 to 82 percent in 2005 ? 2010. In
connection with Kazakhstan?s program of livestock development greater attention of the Government is
currently focused on forage grasses, barley and corn, and area sown to wheat might decrease. However,
the soil and weather in Kazakhstan remains favorable first of all for growing milling quality wheat, and
its share in the total grain crop will keep at 78-80 percent. FAS Astana forecasts wheat production in
MY 2011 at 14.5 million metric tons (MMT), an increase by almost 50 percent from the drought
affected wheat crop in MY 2010.
Wheat exports are forecast to reach 7.1 MMT, and a significant portion of these exports will be wheat
flour. The government of Kazakhstan assists the development of the milling industry, and exports of
wheat flour versus exports of wheat are increasing, although official customs data on exports of wheat
flour are not available.
Domestic consumption of wheat is forecast at 6.8 MMT, including 2 MMT of feed consumption. Feed
consumption of wheat is forecast to increase from the dry year of 2010, but it will be lower than in MY
2009. Food consumption is forecast to resume to the traditional, stable levels of 4.8 MMT.
Wheat crop in 2010
Kazakhstan produces almost all types of grains, but 80 percent of its grain is wheat. Barley comprises
10-12 percent of grain crop, and other grains, such as corn, rice, oats, buckwheat, millet, and legumes
represent the rest. Wheat has been the primary, and for many years almost the only, commercial grain
crop in Kazakhstan. However, in the last two years production of other grains, especially fodder grains,
such as barley and corn, has been slowly increasing.
Table 1. Wheat Area, Production and Yields, 2004-2010, Average for 2004-2010
2004 2005 2006 2007 2008 2009 2010 Average
2004 - 2010
Planted Area, 1,000 Hectares
Total Grain: 14278.0 14841.9 14839.8 15427.9 16190 17207 16619.1 15409.5
- Wheat 11956.6 12647.9 12425.5 12892.3 13476.1 14751.0 14262 12971.6
Harvested Area, 1,000 Hectares
Wheat 11830 11788 11912 12667 12926 14329 13203 12191.2
Production, 1,000 Metric Tons (MT)s
Total Grain 12374.2 13781.4 16511.5 20137.8 15578.2 20830.5 12185.2 15772
- Wheat 9937.0 11198.3 13460.5 16466.9 12538.2 17052.0 9638.4 12729
Yields, MT per Harvested Hectare
Total Grain 0.88 1.0 1.17 1.33 1.01 1.26 0.8 1.16
- Wheat 0.84 0.95 1.13 1.3 0.97 1.19 0.73 1.05
Source: Statistical Agency of Kazakhstan Republic, harvested area is calculated by FAS Astana based
on production and yields.
About 80 percent of grain production is concentrated in three oblasts (regions) of Kazakhstan:
Akmolinskaya Oblast, Kostanai Oblast and the North Kazakhstan Oblast. These oblasts are also the
main wheat producers.
Forecast for 2011
According to the forecasts of the Ministry of Agriculture and Kazgidromet in spring 2011 moisture
reserves in the soil is varying between average and slightly below average, but forecasts for the 2011
crop are better than in the disastrously dry year of 2010. FAS Astana forecasts wheat crop in MY 2011
at 14.5 MMT, and the total grain crop might exceed 18 MMT.
A livestock development program was introduced in 2009 in parallel to another complementary
program "Development of Fodder." Data show that in 2011 the area sown to fodder crops increased by
3.8percent (95,000 hectares or 235,000 acres). The fodder development program proved popular to
small farmers, as many were interested in diversifying into other crops such as flax, peas, canola, lentils,
and sugar beets. Furthermore, it is perceived that these crops will prove popular in export markets.
Financing grain production will be one of the most serious problems in 2011 despite the increased grain
prices in MY 2010. As a result of last year?s crop failure, many small and middle-scale farmers
incurred debt, because most of them, being short of current, operating capital, were selling grain shortly
after the harvest at unfavorably low prices. In the fall of 2010, farmers flooded the market with their
grain to get cash immediately in order to lower the debt they accumulated for the spring field work. If
they waited for a better market price, then they would have ended up paying greater interest. As a result
of their eagerness to pay their debt early, they were receiving lower prices for their grain.
Prices for goods such as seeds, herbicides and diesel fuel are at all-record highs. The Ministry of
Agriculture signed an agreement with the Ministry of Oil and Gas to ensure fixed prices on fuel at the
time of sowing (March, April, and May).
In regions particularly affected by last year's drought, the availability of seeds has further complicated
the input dilemma. The Ministry of Agriculture is also addressing this matter, although there are signs
that there could be resources available in the state owned firm "Food Corporation?.
Most of machinery is relatively new, as it was purchased when the grain harvest was better, farmers?
returns were higher, and farmers were able to invest into it.
Spring wheat of milling qualities comprises the major portion of the wheat crop in Kazakhstan, and 70-
75 percent of domestic wheat consumption is food consumption (this also includes food and industrial
processing). FAS Astana forecasts this consumption in MY 2011 to recover to the average of 4.8
Feed consumption of grain should increase due to Kazakhstan?s livestock development program, due to
forecasted production of fodder crops. In the meantime, feed consumption of wheat will remain low.
FAS Astana forecasts feed wheat consumption (in PSD this category also includes residual) at 2.0
MMT, 0.6 MMT more than in the dry year 2010, but less than in MY 2009.
Wheat and wheat flour comprises the major portion of Kazakhstan?s grain exports. Before 2009, wheat
was the only grain export and Russia and other countries of the former Soviet Union were the dominant
market. However, since 2009, Kazakhstan began exporting barley and some other grains and increased
the range of export markets. In calendar year (CY) 2010, Kazakhstan exported over 5 MMT of wheat
and meslin and almost 0.4 MMT of barley (Table 2). Official data on wheat exports from Kazakhstan
in CY 2010 is 2.8 MMT higher than imports of wheat from Kazakhstan reported by the Global Trade
Atlas (GTA). There are no Kazakhstan?s customs data on exports of wheat flour. According to the
GTA, the world imports of Kazakhstan?s wheat flour in CY 2010 reached 3.7 MMT, or 5.2 MMT in
grain equivalent. Most wheat flour was shipped in July ? December (2.3 MMT, or 3.2 MMT in grain
equivalent). In thewheat flour markets Kazakhstan was competing with Russia and benefited from the
Russian grain and flour export ban of August 2010. However, when the ban on flour was lifted in
Russia in January 2011, markets for flour from Kazakhstan shrank, and exports began decreasing.
Kazakhstan usually ranks as the sixth or seventh largest wheat exporter in the world and typically
exports 25-40 percent of its crop. Transportation and infrastructure are holding Kazakhstan back from
realizing its full export potential.
In CY 2010 major wheat importers were Azerbaijan (1,335,310 MT), Georgia (264,826 MT),
Kirgizstan (354,729 MT), Tajikistan (452,643 MT), Uzbekistan (225,106 MT), Egypt (467,514), Iran
(468,118MT), Turkey (727,484 MT).
Table 2. Kazakhstan: Wheat exports, CY 2010, 1,000 MT
Saudi Arabia 12
Source: Ministry of Finance Republic of Kazakhstan
Since the official Kazakhstan Customs? monthly trade data are not available, FAS Astana estimates
marketing year (July ? June) wheat exports based on the monthly GTA data by major importers of
Kazakhstan?s wheat and wheat flour (in grain equivalent) in July ? December 2010. These shipments in
July December 2010 reached 4.2 MMT, but dropped in the beginning of 2011. FAS Astana estimates
that wheat (including flour in grain equivalent) exports from Kazakhstan at 5 MMT in MY 2010,
decline by 36 percent from MY 2009 due to lower crop and tight competition with Russian four
beginning January 2011. In MY 2011, wheat exports might regain to 7.1 MMT.
The Statistical Agency of Kazakhstan Republic updates monthly data on grain held at all enterprises
(agricultural enterprises and private farms, elevators and warehouses, flour and feed mills, etc.) since
January 2009 (Graph 1). The highest, post-harvest, grain inventories are reported in October-
November, and the lowest are in July-August. Changes of stocks throughout in 2009- 2011 allow
forecasting carry-over wheat stocks in the beginning of MY 2011 (July 1, 2011). Official data on grain
stocks split grain by consumption purposes: food, feed, seeds. The share of wheat for feeds is very
small, and does not exceed 3-5 percent of the total wheat stocks throughout a year. However, poultry
producers and feed millers sometimes use milling quality wheat, and the consumption of wheat in
feeding is larger.
Calculations based on the wheat stocks data for the period October 2010 - March 2011 show that the
monthly food and feed consumption of wheat was 0.75 MMT. As of April 1, 2011 wheat stocks at all
enterprises were 6.7 MMT. These stocks included 5.0 MMT of wheat for food and feed, and 1.7 MMT
of planting seeds of wheat. Given that most seeds will be planted in spring, and that the monthly food
consumption of wheat will remain the same as in October - March, FAS Astana estimates the end-of-
year carry-over stocks of wheat at 2.7 MMT in MY 2010. The end-of-year wheat stocks in MY 2011
are forecast at 3.3 MMT.
Graph 1. Kazakhstan: Grain Inventory, January 2009 ? April 2011, Monthly Data, 1,000 MT
Source: Statistical Agency of Kazakstan Republic. Web-site: www.stat.kz
Table 3. Kazakhstan: Wheat and Barley Inventories as of April 1, 2011, by Holders, 1,000 MT
Agricultural Flour-mills and
Total Enterprise Farmers Elevators Other
Grain Total 7,379 2,362 883 3,362 772
for food use 5,054 779 301 3,224 751
for seeds 1,952 1,392 519 40 0
for feeds 374 191 63 98 21
Wheat 6,736 2,003 759 3,240 734
for food use 4,874 692 277 3,173 732
for seeds 1,729 1,238 453 37 0
for feeds 134 73 29 29 2
Barley 391 208 84 73 26
for food 55 35 5 6 9
for seeds 149 95 52 1 -
for feeds 188 78 27 66 17
Source: Statistical Agency of Kazakstan Republic.
In efforts to diversify the economy, the Kazakh government has put considerable resources into
agriculture, including both grain and livestock production. In the area of grain, they have stepped up
subsidies, primarily focusing on boosting yield rather than expanding area.
Subsidizing fertilizer, herbicides and pesticides, and high-quality seed
Increasing the use of reduced tillage
Introducing more oilseed crops into the rotation: chiefly sunflowers in the drier areas and rape in
the northern, less arid regions
Increasing the pulse area to improve soil fertility.
Producers of agricultural products also benefit from a special tax regime and tax rebates.
In Kazakhstan, there are three major ways of selling grain in the domestic market:
- Small and medium-size agricultural producers prefer to sell their grain to local mills to reduce
transport costs and also to hide income.
- Producers can sell their grain to the government-controlled Food Corporation.
- Large agricultural producers and grain traders with can sell grain at the Kazakhstan?s Commodity
Exchange (Eurasian Trading System).
Besides, there are several large privately-held vertically integrated grain companies, such as Zernovaya
Industriya and Tsesna that can produce, store and market grain on their own, however, and to whoever
The National Company Food Contract Corporation (Food Corporation) was established by government
order ? 309 on March 21, 1995. In the beginning the company was managed by the Ministry of
Agriculture. In 2006 it was reorganized into a joint stock company and became a component of the
National Holding Company KazAgro. The reorganization released it from the direct control of the
Ministry of Agriculture, but the board of directors of KazAgro includes a deputy prime minister and key
decision makers from the Ministry of Agriculture. The official functions of the Food Contract
Corporation are the following: to provide a vertically-integrated management approach of the grain
industry in Kazakhstan and to manage government grain reserves. The Food Corporation has resources
to store grain in its own elevators or to contracts private elevators. The Food Corporation can transfer
grain stocks to areas of Kazakhstan that experience grain shortages. It can purchase grain directly from
producers; and manages the sale of grain to export markets via the Kazakhstan?s Commodity
Exchange. Food Corporation additionally finances the production of grain through its holding
To ensure the sufficiency of government grain reserves, the Food Corporation has the ability to set the
purchase price of grain that it buys from producers.. In 2010, Food Corporation purchased wheat at
26,500 tenge ($180) per MT although the actual market price of wheat was 33,000 to 35,000 tenge
($226-$240) per MT. As expected, grain producers tried to avoid selling their products to Food
Corporation however there is evidence to suggest that the local government administrators applied
considerable pressure to producers to sell to the Food Corporation in order to boost government
reserves. In 2010, the Food Corporation purchased wheat at 23,600 to 26,500 tenge ($160-$180) per
MT although the actual market price for a ton of grain was 33,000 to 35,000 tenge ($226-$240) per MT.
As expected, grain producers tried to avoid selling their products to Food Corporation; however, there
is evidence to suggest that the Ministry of Agriculture applied considerable pressure to producers to take
a loss and sell to Food Corporation regardless.
Production, Supply and Demand Data Statistics:
Table 4. Wheat, PSD
Wheat Kazakhstan 2009/2010 2010/2011 2011/2012
Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011
USDA Official New Post USDA Official New Post USDA Official New Post
Area Harvested 14,751 14,751 14,500 14,500 13,500
Beginning Stocks 1,998 1,998 3,686 3,686 2,661
Production 17,052 17,052 9,700 9,700 14,500
MY Imports 57 57 75 75 25
TY Imports 57 57 75 75 25
TY Imp. from U.S. 0 0 0 0 0
Total Supply 19,107 19,107 13,461 13,461 17,186
MY Exports 7,871 7,871 5,000 5,000 7,100
TY Exports 7,871 7,871 5,000 5,000 7,100
Feed and Residual 2,700 2,700 2,100 1,400 2,000
FSI Consumption 4,850 4,850 4,500 4,400 4,800
Total Consumption 7,550 7,550 6,600 5,800 6,800
Ending Stocks 3,686 3,686 1,861 2,661 3,286
Total Distribution 19,107 19,107 13,461 13,461 17,186
1000 HA, 1000 MT