Business & Economics:
KAZAKHSTAN: DISAPPOINTING HARVEST DENTS ASTANA'S EXPORT PLANS
Joanna Lillis: 10/03/08

Kazakhstan, the breadbasket of Central Asia, is recording 2008 grain harvest yields that are considerably lower than last year's figure. The government, however, is confident that after satisfying domestic needs, the state will still be able to export a large volume of wheat.

Kazakhstan projects to harvest roughly 17 million tons of grain this year, Agriculture Minister Akylbek Kurishbayev reported during a September 27 cabinet meeting in Astana. The total is well below last year's harvest of 20.1 million tons, a record for Central Asia's only grain exporter.

With Kazakhstan aiming to become one of the world's top five wheat exporters, expectations were running high earlier in 2008. In April, Kurishbayev announced that the country aimed to boost the harvest to 26 million tons of grain, of which 18 million tons would be wheat. Reaching such totals would have put Kazakhstan in position to vault into the top five exporters. In the end, this year's figure stands to be even lower than 2006's harvest of 18.5 million tons.

The drop this year is being attributed to severe drought conditions in some areas. While yields were good in the North and West, heavily-populated southern areas and eastern regions experienced poor growing seasons. "This year has been complex for agriculture due to an extremely harsh drought that covered practically the whole country, especially its southern, south-eastern and eastern parts," Kurishbayev told parliament September 22 in remarks quoted by Kazakhstan Today news agency.

Intermittent bread shortages that hit Kazakhstan in the fall of 2007, including in the country's main cities of Astana and Almaty, resulted in widespread public grumbling. This year, the government is determined not to be caught off guard. Grain stabilization funds were set up in Kazakhstan's regions in 2007 to ensure steady supplies, and the state will purchase 600,000 tons of grain at $250 per ton from this year's harvest to replenish stocks. A further 450,000 tons will be bought to boost the separate national state grain reserve.

Prime Minister Karim Masimov, well aware that food shortages and price hikes can be potentially destabilizing, is maintaining strict oversight over stabilization funds for grain and other staples such as meat, dried milk, vegetable oil, sugar and rice. He has also made governors personally responsible for ensuring bread prices remain relatively stable.

Amid rising costs for foodstuffs globally, Kazakhstan's government has over the past year shown increasing awareness of the importance of food security. In addition to the stabilization funds, the government is backing amendments to laws regulating the grain market and agriculture. Parliament is expected to consider the amendments in the coming weeks. In addition, officials are investing some $1.1 billion in the agro-industrial complex this year, a 73 percent increase over the 2007 investment level, Interfax-Kazakhstan quoted Masimov as saying September 30.

In an additional effort to move away from the Soviet era of inter-dependency among republics and to promote Kazakhstan's food self-sufficiency, the government is giving credits worth $66 million dollars to 48 projects aimed at boosting output of meat, dairy products, and fruit and vegetables.

Any consequences from the shortfall in Kazakhstan's harvest may be felt the most in neighboring states, especially Kyrgyzstan and Tajikistan, both of which still depend heavily on Astana for grain supplies. Tajikistan is facing a genuine food emergency, as officials there recently announced that they were cutting their grain harvest projections by 30 percent. The Tajik harvest is now expected to produce 700,000 tons, far short of domestic consumption requirements of 1.2 million tons. Kyrgyzstan says it expects to exceed targets and harvest 840,000 tons of wheat, despite some areas being hit by drought. But officials in Bishkek say the country will still need to import up to 350,000 tons from Kazakhstan and Russia.

Kazakhstani officials are confident that they can fulfill regional demand. On September 1, Kazakhstan lifted a ban on wheat exports imposed in mid-April in response to rising prices on the domestic market amid a worldwide grain shortage, and further restrictions are not expected over the next year. Officials predict that up to 6 million tons of grain will be exported this year, but that would represent about a 33 percent decline over Kazakhstan's post-Soviet record high of 9.1 million tons exported in the 2007-2008 agricultural year. Heading into this year, officials had hoped to be in position to export 12 million tons of wheat.

Beyond climate conditions, Kazakhstani officials likely did not figure that politics would disrupt their grain export ambitions. But in the aftermath of the Georgian-Russian conflict in August, Kazakhstan shelved plans to build a grain terminal in the Georgian port of Poti, to which Kazakhstani investors had pledged $9 million in the 50-50 venture. "It is now clear that this question is linked to international problems, the situation in Georgia," Kurishbayev told parliament September 22, announcing that the deal was off.

Disappointing harvests and unexpected geopolitical developments notwithstanding, Kazakhstan still believes the goal of becoming one of the world's top five wheat exporters is within reach: Kurishbayev said in August that, with the large-scale introduction of state-of-the-art water-saving technologies, Kazakhstan stood a "realistic" chance of realizing its target in 2011.

Editor's Note: Joanna Lillis is a freelance writer who specializes in Central Asia.