Food production in the Republic of Kazakhstan
In January-May 2020, Kazakhstan produced food products in the amount of 743.3 million tenge, which is 18.8% more than a year earlier. Adjusted for inflation, real growth was 2.3%.
More than half of all food production in value terms was accounted for by three segments. One fifth (20%) – for the production of flour and cereal products, starches and starch products: 148.3 million tenge. Slightly less than 17.4% – for processing and preserving meat and production of meat products: 129 million tenge. Production of dairy products – 17.1% of the total production, or 126.8 million tenge. 11% and 10% were accounted for the production of vegetable oils, as well as other food products, at 87.5 and 102.5 million tenge, respectively.
A broad perspective market
World population growth till 2100
According to UN forecasts, over the next 30 years, the world’s population will increase by two billion people, reaching 9.7 billion people by 2050, and by 2100 – 11 billion people. This undoubtedly indicates an increase in the consumption of food products.
Vegetable oil is used by 97-98% of families, the vast majority of which (90%) give
preference for sunflower oil, using it for frying, dressing salads and making homemade mayonnaise or canned food.
In addition, according to the EEC forecasts in 2021, the volume of sunflower oil consumption in the EU will amount to 4,093 thousand tons, in China – 1,541 thousand tons, in India – 2,724 thousand tons.
Current state of the market
Export and production of sunflower oil
Sunflower seed production
There has been a steady increase in oilseed production
The sown area for oilseeds expanded due to the diversification of crop production, an increase in support under the State Program for the Development of the Agroindustrial Complex of the Republic of Kazakhstan for 2017-2021 and a favorable market environment.
The volume and quality of the sunflower oil produced depends on the yield of sown areas. In this regard, it is important to consider climate change issues when growing crops.
The main problems of the domestic market
Despite the growing export of sunflower oil, due to the lack of raw materials in order to provide raw materials for processing enterprises, the country has to import sunflower seeds. Market needs are covered by imports (mainly from the Russian Federation) 83.3 thousand tons. In terms of price, Russian raw materials are competitive with the seeds of some farmers from Kazakhstan. The main importers of Kazakhstani sunflower are Uzbekistan (48%) and China (47%). Kazakhstani raw materials in these areas are sold cheaper than Russian sunflower.
According to statistics, 64% of the gross harvest of sunflower seeds in Kazakhstan is exported, while in some cases it is more profitable to export products than to supply raw materials to the local market. In such price conditions, the increased demand from the external market in connection with the COVID-19 pandemic can lead to a sharp increase in exports with the subsequent appearance of a shortage of raw materials for processing, which will jeopardize the security of the domestic market.
Measures for the supply of raw materials processing enterprises*
o Using the possibility of processing raw materials grown in quarantine zones
o Increase in yield from 1 hectare of sown area
o Concessional lending to replenish working capital for the purchase of raw materials at certain times (harvest season)
o Construction of modern infrastructure for storage of oilseeds
o Encouraging peasant farms to sell raw materials for processing to local oil producers
* Currently, a permitting procedure has been established for the export of sunflower seeds from the customs territory of the Eurasian Economic Union until August 31, 2020
Sunflower seed yield forecast
At the moment, the yield is inferior to the indicators of Russia and Ukraine
o At the moment, the yield is inferior to the indicators of Russia and Ukraine
o There is the potential to increase yields through more efficient sowing, correct crop rotation, and the use of quality machinery
By 2050, an increase in the yield of oilseeds is projected due to the trend of climate change. Predictive calculations were carried out for climatic conditions of 2030 and 2050 according to the climate change scenario. Calculations showed that under the conditions of the expected climate in 2030, the yield of sunflower seeds on average in the regions will be 102-109% of their current level, and in the conditions of 2050 – 100-105%. This means that while maintaining the level of agricultural culture established at the present stage until 2050, a decrease in the yield of sunflower seeds is not expected. On the contrary, due to the optimization of the thermal regime, it is possible to increase the yield of sunflower seeds by 2-9% by 2030, by 2050 – up to 5%, relative to modern standards. This indicates the need to expand thermophilic crops in the northern and eastern regions of Kazakhstan.
For players of this market: it is now relevant!
The prohibition of exports of sunflower reduces Kazakhstan’s oil to the foreign market
For the third month in a row, there has been a decrease in the export of oilseeds. This is largely due to the prohibition of sunflower export in force within the EAEU, which was formally canceled on July 1 (permissive procedure introduced).
According to customs data, compared to the previous month, shipments of oilseeds in June decreased by 41% and amounted to 28.3 thousand tons (48 thousand tons in May).
Kazakhstan approved the procedure for issuing conclusions for the export of sunflower
By order of the Minister of Agriculture of Kazakhstan dated July 28, 2020 No. 240, the Rules for issuing an opinion (permitting document) for the export of sunflower seeds from the territory of the republic to third countries were approved.
According to the Rules, the conclusion will be issued by the territorial divisions of the State Inspection Committee in the agroindustrial complex of the Ministry of Agriculture of the Republic of Kazakhstan.
To obtain a permit, you must submit:
– application for the issuance of an opinion (permitting document) for the export of sunflower seeds from the territory of the Republic of Kazakhstan to third countries;
– copy of the invoice or consignment note for sunflower seeds;
– identity document and (or) a document confirming the authority of the representative (for identification).