Kazakhstan struggles with selling grain it has produced

According to Nurlan Ospanov, head of the Kazakh Grain Union, Kazakhstani farmers can find themselves in a vulnerable position as they continue to struggle to find buyers for all the off-grade grain they have produced.

«Our potential in terms of grain exports is limited. We have China and Central Asia and we won’t supply grain any farther because it would require subsidizing transportation costs. Otherwise, it would be impossible to enter any new markets. That is why we are always talking about our traditional markets,» the head of the grain union said.

As Ospanov noted, neither the Food Corporation nor the Ministry of Agriculture can solve the problem of exporting fifth-class wheat and off-grade grain. Insufficient capacity of Kazakhstan’s transport infrastructure as well as limited transport capabilities of those who receive the grain are the main obstacle that prevents Kazakhstan’s grain exports from expanding further. For instance, grain importers just won’t be able to load one million tons of grain until the end of the year.

«Secondly. There is a domestic demand for off-grade grain, including for forage purposes. For instance, poultry producers can purchase about 700,000 to 800,000 tons of grain per year. Alcohol producers can buy around 200,000 to 300,000 tons a year. As a result, we can sell about one million tons of off-grade grain in the domestic market. However, we always remember that this demand would depend on the price because all those industries have their own economic calculations,» Ospanov said.

China is another possible destination for Kazakhstani grain, even though exports into this country are currently limited by some organizational obstacles. If these obstacles are successfully removed, the grain export to China will reach one million tons per year. However, even this scenario leaves behind around three million tons of grain that can’t be sold either domestically or abroad.

Farmers have discussed this problem for months. In early fall, the government suggested selling grain kept by Food Corporation at a listing price of $152.19 per ton. However, the total amount of such transactions can’t exceed 350,000 tons per year. On top of that, farmers said that this price is much lower than the production cost of $184.80 per ton.

According to data revealed in October, off-grade grain accounted for about half of all grain produced in Kazakhstan this year. However, Deputy Minister of Agriculture Azat Sultanov cited different figures. He said that off-grade grain accounts for 40% of all grain harvested in 2023.