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Kazakhstan Food and Drink Report Q1 2010
Business Monitor International, Nov 2009, Pages: 48
The Kazakhstan Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kazakhstan's food and drink industry.
While the global economic downtown has certainly had a negative impact on Kazakhstan’s food and drink industry, there are still certain sub-sectors continuing to perform well, as discussed in recently published Kazakhstan Food & Drink Report for Q110.
Despite the economic downturn, Kazakhstan’s food industry is one of the most promising in the Eurasia region, with the agricultural sector particularly important, thanks to the country’s favourable climate and vast areas of arable land. The government has made increasing agricultural output and exports a priority, and it appears that this policy is starting to bear fruit, as in October it was announced that the country had achieved record grain harvests of 21mn tonnes in 2009, exceeding the previous record of 20.1mn tonnes recorded in 2007. This record output will allow the government to move forward with its plans to boost wheat exports in 2010 and should also help keep down bread prices. Severe drought in 2009 led to low grain harvests and bread prices rising by around 12%, prompting the government to take action to keep prices stable.
In fact, the government has a history of intervening in the food industry. In August 2009, the government announced a decree to limit sugar imports to 54,423 tonnes until April 1 2010, as it looks to protect domestic producers. Kazakhstan currently imports most of its sugar from Russia, Belarus and Poland. Individual quotas have been assigned to local importers, which include food and drink producers who rely on imports to meet their production needs.
In fact, Kazakhstan continues to rely on imports to meet demand within various food segments. Therefore, despite the vast size of the country’s agricultural sector, BMI is forecasting that the food and drink trade balance will grow increasingly negative, reflecting the growing demand for imported food and drink products. While exports are projected to grow by an impressive 38.4% between 2009 and 2014, this will be outstripped by import growth, which is forecast to rise far faster, by almost 90%, and from a far higher starting point, ensuring that the trade balance grows increasingly negative despite gains made in the agricultural sector.
Kazakh consumers are curious to experiment with new food products and varieties, particularly after years of Soviet rule when there was little variety available. Therefore, diets have become more diverse over the past ten years, a trend expected to continue, despite the economic downturn. Foods that would have been considered luxury items in the past, such as snacks, sauces and seasonings, are all growing in popularity, contributing to the higher value of food sales. While the global recession has slowed down the growth of this trend, it has certainly not reversed it. For those investors willing to differ returns, Kazakstan’s food and drink industry still represents a good long-term growth prospect.
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