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Kazakhstan Agribusiness Report Q4 2011
Business Monitor International, Sep 2011, Pages: 57
Business Monitor International's Poland Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Poland's agribusiness service.
BMI View: The Kazakh government's efforts to develop the country's agricultural industries continue to bear fruit. BMI are forecasting strong growth in terms of meat and dairy production, which will continue to benefit from supportive subsidy regimes through the forecast period. BMI have also raised their wheat forecast significantly this quarter in line with encouraging yield reports and expect to see production bounce back significantly from last year's poor season. This comes at an excellent time for Kazakhstan's farmers, with global supplies tight due to poor harvests in the EU and US.
Key Forecasts
- Above-average rains and good conditions in general have led wheat production to overshoot previous estimates. BMI are now forecasting production of 15.8mn tonnes for the 2011/12 season, up an excellent 62.3% year-on-year (y-o-y) and 1.8mn tonnes above their previous forecast.
- In 2010/11, corn production fell to 275,000 tonnes, down 42% y-o-y due to the drought of 2010. Output is expected to bounce back, however, and BMI are forecasting production for 2011/12 of 416,000 tonnes.
- BMI have reduced Their milk production forecast for 2011 in line with new data for H111. BMI now expect production to come in at 5.41mn tonnes, up 0.58% y-o-y and down 140,000 tonnes on their previous forecast.
- Poultry production in 2010 came in at 101,000 tonnes, a year-on-year gain of 11.1%. In 2011, BMI forecast production of 107,000 tonnes, up 7.0%.
- To 2015, poultry demand is forecast to increase by 69.6%, while consumption of pork and beef will increase by 29.2% and 21.2% respectively.
Industry Developments
In 2010, Black Sea states such as Russia and Ukraine imposed grain export controls in order to ensure domestic supply after severe drought reduced output. In May, Ukraine removed its quotas while replacing the regime with export duties of 9%-14% on wheat, corn and barley. Russia finally removed its export ban on July 1, prompting questions about whether the country would similarly try to manage export levels through duties. The moves come at a time when poor growing conditions in the US and the EU are likely to severely reduce global supply. BMI is therefore sceptical that the coming months will see significant reductions in already high wheat and corn prices - to the benefit of Kazakh farmers.
In 2011, Kazakhstan was hit by at least three foot and mouth outbreaks, showing that the disease continues to pose a serious risk to the country's dairy and beef industries. Hundreds of animals were destroyed in moves to prevent the spread of disease. While all three outbreaks were contained, there remains the possibility of a wider epidemic, and BMI see this as posing downside risk to their forecasts through their outlook period.
The government has created a 300,000-tonne poultry feed fund to support producers and reduce their costs. It is also offering reduced interest rates on loans to buy poultry-producing equipment. In July, Rabiga Tokseitova, director of animal husbandry and veterinary safety under the Ministry of Agriculture, said the government planned to reduce imports of poultry to 30,000 tonnes by 2016 through such measures.
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