Miller Magazine Issue: 125 May 2020

Kazakhstan 98 MILLER / MAY 2020 Kazakhstan is the leading country in Central Asia and has emerged as a major transport and logistics hub in the re- gion. The country links the large and fast-growing markets of China and South Asia and those of Russia and Western Europe by road, rail, and a port on the Caspian Sea. Kazakh- stan, the last republic to leave the Soviet Union in 1991, has rich natural resources and enormous economic potential. It is the 9th largest country in the world with an area of 2 mil- lion 724 thousand 900 square kilometers. With a popula- tion of 18.5 million, it is one of the least densely populated countries. The country has shown rapid development per- formance with market reforms initiated after the collapse of the Soviet Union and large investments in the oil sector. The Central Asian country is dependent on oil revenue and the economy relies heavily on hydrocarbon exports, de- spite the government's diversification efforts. Its economic growth is largely based on gas and oil revenues (35% of GDP and 75% of exports). In 2019, Kazakh GDP grew by 4.5%, as domestic demand, business spending and con- struction boom supported economic activity. Nonetheless, this was lower than 4.1% a year earlier, with higher oil rev- enues supporting growth during the period. GDP growth is expected to fall to -2.5% in 2020, due to the outbreak of the COVID-19 and pick up to 4.1% in 2021, according to the updated IMF forecasts from 14th April 2020. The country, with its large and fertile lands, has great potential in agriculture. The sector accounts for 4.4% of GDP and employs 14.9% of the working population. Agriculture in the country is extensive, but aging infra- structure limits its development. More than half of the products are vegetable crops (cereals, including wheat, oilseeds, cucurbits). Kazakhstan is one of the world's leading wheat producers. Livestock and dairy industries account for a significant share of the agricultural sector. Kazakhstan is almost self-sufficient in agri-food. Kazakhstan is a major player in the grain and flour mar- ket. It is one of the top 10 grain exporters in the world, ex- porting to over 70 countries. The main markets for Kazakh wheat are Uzbekistan, Tajikistan, Kyrgyzstan and Afghani- stan. The Central Asian country has been trying to increase its wheat export and find new markets. Speaking to Miller Magazine, Nurlan Ospanov, Chairman of the Kazakh Grain Union, says Kazakhstani exporters are constantly in search of markets and optimal routes for delivering products to consumers. This is not an easy task, given the geographical location of the country. “We are also working to improve the quality of exported products and establish a fair price for our products. We understand that our partners are in- terested in stable quality and compliance with the plan and delivery time of products, so the most important task for us is to solve current problems, which will allow us to comply with the requirements of our partners,” says Mr. Ospanov. Although its potential, Kazakhstan has a big disadvan- tage for the grain trade, because it cannot conduct mar- itime trade. Remoteness from global markets and lack of direct access to ports are obstacles for grain export in Ka- zakhstan. ınfrastructural restrictions and transport-logistical costs, lack of guarantees in terms of deliveries restrict imple- mentation of grain export potential of the country. The im- perfect transport-logistical system of grain transportation in Kazakhstan reduces the competitiveness of grain producers and grain traders on the global market. The country needs to develop sea (river), train and highway infrastructures and create alternative routes. Increasing the grain storage capacity is also another factor that will ease the country. According to Kazakhstan’s Ministry of Agriculture, the grain storage capacity of the country is 26 million tons. In Kazakhstan, for many years only wheat, barley and sunflower were produced. But in the past ten years, the situation has changed markedly. Thus, due to the reduction in wheat sowing, the production of such crops as flax and rape seeds, barley and lentils has significantly increased. For example, the sown area for flax seeds in- creased from 556 thousand hectares in 2014 to 1.287 million hectares in 2019, that is more than 2.3 times. Thus, Kazakhstan has become a major producer and export- er of flax seeds. The volume of production and export of Kazakh flax in the season 2018/19 amounted to 25% and 35% of the volume of Current Grains, Wheat and Barley Stocks on March 1, MMT Source: Kazakhstan Statistics Service