Changes in the list of top 10 importers

In the context of trading partners, there have been some changes: for 5 months of this year, India, Romania and Greece were in the top 10 importers of Kazakhstani products. As the statistics of world trade show, in January-May 2020, in most of the countries that buy Kazakhstan’s products, total imports decreased, which also affected the decline in exports of Kazakhstani goods.

In addition, most of Kazakhstan’s trading partners have changed the structure of imported goods to more necessary ones. Many countries have started stocking up on food and medicine amid the current situation in the world.

NON-RAW EXPORT OF RK: IN PLUS ONLY FOOD

For certain goods, a decrease in export earnings is observed despite the increase in supplies in kind, which indicates a sharp decline in product prices. The total reduction in exports for these goods is $ 204 million.

Commodity prices after external shocks are starting to gain momentum. If the market situation is stable, by the next half of the year, export deliveries will resume their indicators for these goods.

A tangible increase in exports was shown by parts of rolling stock, aluminum oxides, titanium, hydrocarbons and sunflower oil. In terms of industries, exports grew only in the food industry (3.2%).

The maximum decrease falls on the metallurgical industry – $ 871.3 million or 21.4%. Given that the industry accounts for 62% of exports, this decline is the main driver of the decline in processed exports.

EXPORT OF PROCESSED AGRICULTURAL PRODUCTS: GROWTH UNDER LIMITS

Despite the imposed restrictions due to food security during the state of emergency, sunflower oil and wheat flour in aggregate for 5 months of this year showed an increase. It should be noted that export earnings from flour increased against the background of a decrease in physical. volumes, which indicates an abrupt rise in prices for this product

There are goods for which a decrease in exports is accompanied by a decrease in imports, which indicates the ongoing process of import substitution. The decline in exports for such 34 goods is $ 10.2 million, while imports for these commodity items decreased by $ 42.6 million

In the current reality, the decline in prices and volumes of exports of metals, the export of processed agricultural products will be able to compensate for part of the reduction in Kazakhstani exports. It is necessary to increase the supply of products to traditional sales markets, taking into account food security inside the country

EXPORT OF PROCESSED AGRICULTURAL PRODUCTS: RISKS OF FOOD SECURITY

Pandemic could disrupt global food supply chains

Restrictive measures introduced by a number of countries and the closure of borders have an impact on supply chains and lead to a shortage of agricultural products. Disruptions to logistics can be disastrous.

China depends on imports of soybeans from Brazil, USA, Argentina. And they, in turn, are used, among other things, as feed for the pig population that has already become thinner due to ASF. And its shortage will directly affect the production of animal protein in the PRC.

According to the Ministry of Agriculture of the Republic of Kazakhstan, the sown area under this crop, including reached a record 140 thousand hectares for the country. The gross harvest of soybeans amounted to more than 250 thousand tons

Desert Locust threat

According to the UN, due to moisture and winds, locusts can attack up to 20% of countries, destroying crops, and this will end in widespread famine in several countries in Asia, Africa and the Middle East, which will affect up to 5 million people.

According to the Food and Agriculture Organization of the United Nations, to date, 44 countries are faced with crisis problems resulting in food shortages.

Main problems:

• Grain harvest is below average
• Floods
• Desert Locust
• Impact of the rainy seasons on livestock
• Economic instability
• Low oil prices
• Long periods of drought

EXPORT OF AGRICULTURAL PRODUCTS: COURSE ON THE NEIGHBORS

Growth points for occupying niches in the Russian Federation

In the current situation with closed borders and stricter sanitary requirements for imports, neighboring countries with common borders are attractive markets. Among the bordering countries for the export of agricultural products, the RF and the PRC have the greatest potential. With the effective use of the advantages provided by the EAEU Treaty, Kazakhstani food producers have a unique opportunity to take a place in the list of suppliers and firmly gain a foothold in the Russian market.

Growth in food demand in China *

As noted earlier, one of the consequences of the pandemic could be a food crisis in the world. China is at high risk of food shortages. For 5 months of this year, traditional imported products have shown a high level of growth. For domestic exports, pork, beef and parts of domestic chicken carcasses can become interesting items. In terms of goods, various types of pork showed the maximum growth

Given the availability of simplified algorithms for the export of many of the above-mentioned goods to the PRC, these categories are good niches for increasing the export of Kazakhstan.

EXPORT OF PROCESSED AGRICULTURAL PRODUCTS: NEW SALES MARKETS

Opportunities for expanding the geography of exports during the crisis period

According to a report by the Global Food Crisis Network, the number of hungry people in the world could rise to 265 million by 2020 due to a significant worsening of negative trends.

Almost 1 billion people are chronically malnourished in the world – every eighth inhabitant of the planet.

The top twenty countries with the highest number of undernourished include 7 states in South and Southeast Asia, including India (1st place) and China (2nd place), 2 states in the Middle East, and 11 countries in Africa.

African countries account for about 5% of world imports of agri-food products.

n 2018, the continent purchased US $ 83 billion worth of food and agricultural raw materials

A significant increase in the consumption of confectionery, processed foods and sugary drinks is expected in Egypt and several countries in sub-Saharan Africa from 2.4 million tons to 16 million tons.

The demand for milk powder by 2028 will grow from 238 thousand tons to 1.2 million tons, cheese – from 76 thousand tons to 238 thousand tons, butter – from 35 thousand tons to 159 thousand tons.

ENTERING FOREIGN MARKETS

Algorithm for the export of agricultural products

THE CRISIS IS A TIME OF OPPORTUNITIES FOR BOTH FOR EXPORT AND FOR IMPORT SUBSTITUTION For 5 months of this year, as expected, the import of medical products used in the prevention of infection and therapy of COVID-19 showed a record growth. Due to insufficient production in the country, further growth of this indicator is expected.

In many countries of the world, there is an uncontrolled spread of COVID-19, which maintains the demand for the above-named products. At the same time, after the end of the pandemic, the majority of the population will form a so-called “consumer habit” of using an antiseptic and wearing a mask. Considering that there are already enterprises in the Republic of Kazakhstan that produce medical masks and all kinds of antiseptics, it becomes possible to increase exports by increasing production for these commodity items. However, in order to prevent a deficit within the country, mechanisms are needed to control the export of these goods, which are sold jointly with the Ministry of Health of the Republic of Kazakhstan. At the same time, the priority areas are the EAEU countries and the countries with which there is an FTA agreement.

A new niche for export – goods of “self-isolation” in the Russian Federation

As you know, in April 2020, the regime of non-working days and self-isolation was in effect in the Russian Federation. According to ITC, imports for 4 months of this year, imports of sports equipment in the Russian Federation increased by 20% compared to last year and reached $ 5.6 million. At the same time, the total imports of the EAEU countries (except for Kazakhstan) in 2019 for these goods is 150, $ 8 million Also, the import of nitrogen fertilizers increased due to the high interest in the sowing season in the dachas

In this regard, there is a possibility of increasing the export of goods necessary for canning the autumn fruit and vegetable harvest.