Agriculture & Food
Covering more than 2.7 million sqkm, Kazakhstan is the world’s ninth-largest country. Some 80% of its land, or 77 million ha, is already devoted to farming of one sort or another, and 70% of this is permanent pasture, being largely made up of the fertile grassy plains known as the steppe. These seemingly boundless lands, stretching to the farthest horizon, were traditionally farmed by nomadic herdsman, shepherding their livestock from place to place in harmony with the seasons in the centuries-old practice of transhumance. This put the rearing of livestock at the heart not only of an industry and a way of life but also shaped the cultural identity of the Kazakhstani people. While these traditions have all but disappeared with the collapse of the Soviet Union, more than 40% of the population continues to live in rural areas. The agriculture industry itself contributes 6.9% of GDP and employs around 20% of the country’s workforce.
Pastoral husbandry of sheep, goats, cattle, camels and, especially, horses remains central to Kazakhstani agriculture to this day, though milk, meat, and crop yields remain relatively low by western standards, and have never recovered the levels of production reached in their Soviet-era heyday, when industry of all stripes was largely protected from market dynamics.
In recent years, the tradition of farming livestock on the open steppe has given way to the cultivation of crops, notably wheat, on a vast scale. As new, hardier, and more versatile strains are developed, so ever larger tracts of land can be cultivated. These days, Kazakhstan is better known as the “bread basket” of Asia, exporting its produce across the region. Owing to recent government drives to diversify the agriculture sector, Kazakhstan’s production is becoming more varied.
Arable land makes up just over 8% of the country—a far smaller portion than pastoral, but equally as important. Kazakhstan is the world’s sixth largest producer—and sixth largest exporter—of wheat, which makes up 2% of the country’s total exports. The neighboring provinces of Akmola, Kostany, and North Kazakhstan produce 70% of the country’s crop, of which around 90% is the hard-grain spring wheat variety. In 2014, Kazakhstan produced 14.5 million tons of wheat, up from 13.9 million tons in 2013, despite a reduction from 31.1 million ha over the same period. From a peak in 2008 of 14.8 million ha, the wheat-sown area has declined to 12.8 million ha in 2014, and is projected to fall to 12 million in 2016 and 11 million by 2020. Nonetheless, at the end of 2014, Kazakhstan remained the world’s largest exporter of flour per capita, and the country’s level of wheat productivity is the second highest in the world after Canada, at 900kg.
This reduction is partly due to the government’s diversification strategy, encouraging the cultivation of “priority” crops such as oil seed rape, barley, and other grains for feeding livestock—a policy that is continuing in 2015. There are three reasons for this. First is the government’s long-term desire to diversify away from wheat, and avoid the considerable (and costly) challenges involved in transporting the grain to market (Kazakhstan is land-locked and far from the nearest sea port). Kazakhstan’s traditional export markets of Russia and Ukraine are traditionally unreliable, often having good harvests of their own, and are expensive to transport to. The current fall in the value of the ruble has further reduced the Russian export market. Increasingly, Kazakhstani farmers look to their traditional CIS trading partners, particularly Turkmenistan but also Afghanistan and China. These countries invariably entail lower transport costs. Second is a drive to increase domestic consumption of grain in the country. This is primarily for feeding livestock in line with the government’s goal for Kazakhstan to be a net exporter of meat by 2020. This increase in crops for animal feed, or fodder, is a direct result of increased demand for meat, domestically but also from neighboring China, where the huge market for pork (and subsequent rise in grains for pig fodder) has a knock-on effect around the world (every kilogram of pork requires at least 6kg of grain-based feed, usually corn or soya-beans). State subsidies for corn and soya-beans rose by 313% and 175% respectively between 2013 and 2014.
The third reason is to encourage wider diversification of the sector, with smaller-scale crops including barley, cotton, sugar beets, sunflowers, flax, and rice. This helps the industry to cope with fluctuations in both the weather (Kazakhstan’s cold dry winters and hot dry summers are hostile to arable farming) and international market prices.
WHEAT -A- MIX
Recent figures illustrate the fall of wheat has already coincided with a rise in “feed grains.” Projected to 2020, wheat farming is expected to shrink by 14%, from 13.5 million ha in 2012 to 11.5 million ha in 2020. Over the same period, cultivation of feed crops is predicted to increase by 53%, from 2.8 million to 4.3 million. This diversification both reduces the reliance on fickle international grain markets, and the logistics of transporting the grain overseas, and ensures that Kazakhstan is better placed to provide for its own needs. Thus the home market is strengthened while a smaller area of fertile land is given to growing the same amount of wheat.
In addition, climate-smart technology holds great potential for growing crops in the dry steppes of northern Kazakhstan, in particular. Here vast areas of land hitherto too arid for conventional farming are now viable for cultivation. The “master plan” for agriculture, launched in 2013 for the “stabilization of the grain market” set out to implement moisture-saving technologies, with biotech a key component of this program, which runs to 2020. In January 2014, President Nazarbayev launched a firm policy for the (previously forbidden) cultivation of biotech crops, stating the country’s need to “keep up with the times.” This new technology—widely used around the world to overcome adverse farming conditions—is seen as central to the initiative of diversifying Kazakhstan’s agricultural output.
At the heart of these reforms to Kazakhstan’s agriculture industry lies the aim of re-structuring the economy from one heavily dependent upon oil and gas. Redefining agriculture is a significant part of this. The Asian Development Bank (ADB) invested some $40.2 million in 1H2014 specifically to develop the dairy and fruit sectors—two areas where there is big growth potential.
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The domestic meat market is strong, due to the high demands of traditional Kazakhstani cuisine. The predominant livestock are cattle (both dairy and beef) and sheep (around 12 million), largely reared in the south and east of the country, with pig farming more popular in the north. Horses, goats, camels, and poultry make up much of the rest of the sector.
The pastoral sector has long fallen short of international yields, however, efforts are being made to improve the quality of livestock. On average, milk yields are 60% lower in Kazakhstan than they would be in Europe. The quality of beef cattle stock is also being improved with the completion of a program to import 10,000 Aberdeen, Angus, and Hereford cattle from the UK, Europe, and the US over the past year. Total meat production increased to 871,000 tons by 1H2014, a 12% rise on the year before.
This puts Kazakhstan in a strong position to increase its meat exports, particularly to the GCC and the halal market. Kazakhstan is well placed to benefit from increased demand for meat from China, in particular. The government, while cutting export red tape, is also aiming to increase exports of beef to China and Russia to a staggering 180,000 tons by 2020. This is a rapidly growing market. In 2013, total beef exports were just 4,500 tons, of which most originated in West Kazakhstan, from where 1,308 tons were destined for Russia.
REAP WHAT YOU SOW
The government is focused on supporting agriculture’s transition to a more diversified, export-driven industry. The country’s agricultural heritage, its wide-open spaces and strategic position all combine to stand Kazakhstani produce in good stead. The booming markets to the country’s east, in particular, present a major opportunity. But with opportunities come challenges. Kazakhstani farming must overcome its post-Soviet legacy of low productivity in the livestock sector, improving quality for an increasingly mature Asian market.
The industry must also cope with the ever-changing economic fortunes of its neighbors. The whole Central Asian region, including Russia and Kazakhstan itself, is struggling to adjust to lower currency valuations and a new era of unpredictable markets. International markets aside, Kazakhstan’s agriculture reforms at home are helping to ensure the country’s food industry is more modern, more efficient, and more reflective of its needs in the 21st century.