The agricultural market and infrastructure of Central Asia and its flagship, Kazakhstan, are developing rapidly, on the one hand, and are subject to a number of “chronic diseases” on the other. And this year is a special one. Record grain harvest and logistics problems, new restrictions and at the same time new opportunities, loss of old markets and conquest of new ones, changes in state regulation and agricultural financing mechanisms... The main winter conference of the Asian agricultural market KAZAKH GRAIN & LOGISTIC FORUM 2024 , held on December 5-6 in Astana, discussed the current position of the grain and logistics markets of Kazakhstan in relation to global trends, the direction of their development, the problems being solved and the areas where more efforts are needed.
The event was organized by APK-Inform Asia and RDL group.
The conference KAZAKH GRAIN & LOGISTICS FORUM 2024 gathered about 170 delegates from 20 countries, including key market participants (exporters, importers, agricultural holdings, processors, logistics, etc.)
The first day of the event, December 5, was dedicated to the development of the grain market , both global and regional.
In the Global trends block, FAO Chief Economist Monica Totova said that according to FAO forecasts, in the current 2024/25 MY, global wheat stocks will decrease. The global wheat harvest in 2024 will increase slightly compared to the previous year, but will still be lower than the record figure of 2022.
“Wheat consumption is stable year-on-year, but exceeds production. The global wheat stocks will decrease in 2024/25 MY, especially in the major exporting countries. The global wheat trade is expected to decline in 2024/25 MY,” - said the spokesperson.
As for the price trends, according to the expert, the decline in wheat prices will continue in 2024, but will start to slow down. Thus, the world wheat prices in October this year decreased by 8% compared to October 2023, and by 5% compared to January 2024. Well, that's good news for Kazakhstani farmers and traders - fingers crossed!
The program of KAZAKH GRAIN & LOGISTIC FORUM 2024 focused on China, one of the largest players in the global agricultural market and also Kazakhstan's neighbor, on whose market it has high hopes. But whether this is justified, the conference speakers, who know the Chinese market very well and, as they say, firsthand, tried to answer.
Kazakhstani wheat exporters should pay attention to the domestic Chinese market rather than focusing on deliveries to the provinces bordering Kazakhstan. This opinion was expressed by Fang Gang, the director of the Chinese company ZHEJIANG GRAIN GROUP Co. (one of the largest state-owned enterprises of Zhejiang province).
“Kazakhstan, when supplying grain, focuses mainly on the neighboring Xinjiang province, but the volume of wheat production in this region is 3 times higher than in Kazakhstan. In addition, the price of wheat in this province is lower than in other regions of China,” the expert noted.
In his opinion, the main mistake of Kazakhstan's grain exporters is that they look at the price first. Meanwhile, it is necessary to take into account the seasonal factor, the difference in wheat production and consumption in the provinces of China, to assess stocks, etc.
“Henan province annually ranks first in the country in wheat production, with an annual output of 40 million tons. This is followed by Shandong, Anhui, Hebei, Jiangsu, Xinjiang, Shaanxi, Hubei, Gansu, Sichuan provinces... Since 2020, China's wheat imports usually peak in the first quarter of the year. The main wheat supplier country is Australia, with the United States and Canada mainly ranking second and third, respectively. The wheat stocks in the ports of South China have been in a seasonal decline since the beginning of the second half of the year, and now the stocks in the ports are at a low level,” said Mr. Zhang, Director of ZHEJIANG GRAIN GROUP Co.
He also noted that the main advantage of Kazakh wheat is its high quality (in particular, gluten). Due to this, wheat from Kazakhstan can partially replace grain from Australia and wheat grown in the Xinjiang Autonomous Region on the Chinese market.
At the same time, the expert emphasized that wheat production in China has remained high since 2022, with more than 50% of this grain being supplied by the country's own production, and imports are only an additional source of replenishment, but not the main one.
“China's annual wheat imports hover around 10 mln tonnes. It is estimated that the wheat stocks in the country at the end of 2024 will continue the upward trend that started in 2021,” Mr. Gang said.
Kazakh barley has more prospects on the Chinese market, according to another expert. One of the main reasons is that the price, at which China buys Kazakh barley, is the lowest among the TOP-10 suppliers of this grain to China in 2023 and 2024, said Ding Yuling, the CEO of the Chinese company Beijing Lianghai Zhichuang Technology Co., Ltd , founder of the website Gugejiujiu.
“In the period from January to September 2024, China imported a total of about 11.807 mln tons of barley from different countries. The average price under the CNF contract amounted to 268.61 USD per ton,” the speaker said.
According to him, the main supplier of barley to China is Australia - according to the results of 9 months of this year, about 4.68 mln tonnes of the grain were imported from there (the average price is $279.34 per tonne). Also, Argentina (1.6 mln tonnes, $268.61), France (1.55 mln tonnes, $259.88) and Canada (1.46 mln tonnes, $298.56) supplied large volumes.
At the same time, Kazakhstan exported 625.1 thsd tonnes of barley to China at the average price of $200.76 per tonne during this period. Judging by the data provided by the Chinese market expert, this is the lowest price among the TOP-10 barley suppliers to China.
“After 2019, China lifted the restrictions on barley imports from Kazakhstan and Russia, but still the amount of barley exported by these two countries to China is small and does not occupy the leading position in the barley import market in China,” the speaker emphasized.
According to Mr. Yulin, since 2016, China has more than doubled its barley exports, from 5.5 mln to 11.8 mln tonnes.
The second part of the grain session was devoted to trends in the Kazakh grain market.
Viktor Aslanov, Chairman of the Union of Field Growers of Kazakhstan, Independent Director of Food Corporation , believes that this season Kazakhstan may export a record amount of barley - about 2 mln tonnes.
He noted that during the two months of the current grain season (September-October), more than 0.5 mln tonnes of Kazakh barley have already been shipped to foreign markets. In particular, exports to Iran have resumed (251 thsd tonnes against only 400 tonnes in the same period last season). According to the results of the season, the expert forecasts the volume of Kazakh barley exports to Iran at 400 thsd tonnes.
China is also increasing its purchases (189 thsd tonnes against 183 thsd tonnes). By the way, the expert expects a new record of about 1 mln tonnes in the current season.
According to Mr. Aslanov, in 2024 barley production in Kazakhstan (excluding refining) increased to 4.5 mln tonnes (2.4 mln tonnes in 2023). Due to higher yields (17.3 c/ha in 2024, 10 c/ha in 2023), the cost of barley production was reduced from $120 to $90 per ton.
At the same time, the expert expects that even with the record exports, Kazakhstan may face quite high barley carry-over stocks by the end of the season - at 674 thsd tonnes.
They also touched upon important issues of agricultural financing and state support, which is especially valuable in this difficult season.
Almas Agibayev, Director of the Project Management Department of NUH Baiterek JSC , said that in 10 months of 2024, NUH Baiterek financed Kazakhstani farmers for 640 bln tenge. This is 15.4% higher than the figure for the whole of 2023. The speaker clarified that 319.5 bln tenge was allocated for spring field and harvesting works (Ken Dala-1 and Ken Dala-2 programs) (128% more than in 2023). The new loan guarantee program for spring field and harvesting operations was financed by 76.2 bln tenge. Preferential leasing of agricultural machinery amounted to 120 bln tenge (2.6 times more than in 2023).
According to the speaker, in 2025, Baiterek plans to allocate up to 700 bln tenge for spring field and harvesting works (applications started in November this year, 100 bln tenge is expected to be issued in December this year), and up to 200 bln tenge for preferential leasing.
Mr. Agibayev said that, in addition to these programs, in 2020-2024, Baiterek supported a number of projects for the storage, processing and transportation of agricultural products. This includes Smart Agro 2024 LLP's project to grow and store soybeans in the Zhetysu region (project cost - KZT 2.2 bln, start of financing - September 2024), Qazaq Astyq Group LLP's project to modernize a plant for the production of packaged vegetable oils in the Abai region (cost of KZT 16 bln).), the project of Qazaq Astyq Group LLP in the Abay region to modernize a plant for the production of packaged refined vegetable oil (cost of 16.5 bln tenge), the project of Unicorn Feed Limited to build a feed mill in the Akmola region worth 6.2 bln tenge, the construction of ALTAI MAI LLP plant for the production of refined vegetable oils and fats worth 19 bln tenge, etc.
Promising projects for 2025-2026, which are being considered by the holding, include two plants for deep processing of grain in Astana and Kostanay region, development of export agro-industrial clusters, etc.
Madiyar Sultanbek, Deputy Chairman of the Board of KAZAKH INVEST, presented a report on the prospects for the development of deep grain processing in Kazakhstan. He noted that Kazakhstan is one of the largest wheat producers, but processes less than 3% of grain.
“The development of deep processing opens up opportunities to create more than 200 types of high value-added products, such as bioethanol, gluten, and biopolymers. Processed products can be 20 times more expensive than raw materials, and their export potential is estimated at $6.1 bln, making the industry attractive to investors. According to some estimates, the potential of the entire industry exceeds $10 bln,” emphasized the representative of KAZAKH INVEST.
The first session culminated in the discussion “Portrait of Kazakhstan's grain industry, development dynamics and painful shocks”, during which key market participants and representatives of government agencies spoke about the “sore spots” and their vision of solving the industry's problems. They discussed what to do with the record grain harvest, what steps the government should take, what farmers should do, etc.
Active participants in the discussion were Viktor Aslanov, Chairman of the Union of Field Growers (who also moderated the discussion), Yerbol Yeseneyev, Deputy Chairman of the Board of Atameken, and Zeinolla Abdumanapov, chairman of the “KazGrain” association, Asel Yelemesova, director of inspection at CCIC Central Asia, chairman of the supervisory board of the “Union of Grain Processors of Kazakhstan”, Mukan Abdiev, and Chingiz Akhmerov, director of “Agrosynthesis”.
According to Mr. Aslanov, there is a certain “casteism” in the Kazakhstani agro-industrial complex: there are advanced enterprises that use modern technologies, but there is no system of technology transfer and successful cases (in other words, there is no exchange of experience). According to the expert, this is the main obstacle to the development of the domestic agro-industrial complex.
The moderator of the discussion invited the participants to compare the state of the grain market in Kazakhstan in 2024 with the situation in 2011, when a record harvest was also harvested.
Yerbol Yeseneyev, Deputy Chairman of the Board of Atameken , spoke frankly.
“Unfortunately, we have not learned any lessons from the past. We are treating the 'patient' with the same antibiotics, but the 'patient' is not resuscitated. Farms are still engaged in monoculture - wheat, have not diversified their production through livestock, have not gone into deep processing, the issue of transport infrastructure has not been resolved, and the improvements that have been made are too late,” he said, speaking about the state of the domestic agro-industrial complex.
In his opinion, the main problem is the lack of interagency coordination between the main government agencies that influence the development and support of the industry. For example, the Ministry of Agriculture is responsible for the development of agriculture and tries to provide conditions for high yields, while the Ministry of Transport does not create the right conditions for timely delivery of manufactured products to customers. Another example: The Ministry of Agriculture provides subsidies for the renewal of the machinery fleet, while the Ministry of Ecology and the Ministry of Transport introduce a scrappage fee for agricultural machinery...
“We would like to see synergy in the government's actions. Strong agriculture, sustainable agriculture = stability in the whole country. After a difficult year of 2023, 2024 will be even more difficult, and not all farmers will be included in 2025... The future belongs to sustainable farmers. Inefficient ones must go. People who see themselves in agriculture for the next 30 years, ready to invest in agriculture, teach and introduce their children to business, and introduce innovative technologies, should remain in this industry,” Mr. Yeseniev believes.
Zeinolla Abdumanapov, chairman of the “NAE KazGrain” LLP , was more optimistic about the situation in the industry. He noted that while in 2011 Kazakhstan's agro-industrial complex was still on a “roll”, over the past 6 years it has been actively developing and becoming one of the drivers of the economy. The world is paying more and more attention to food safety, and the demand for organic products is growing, which means that Kazakh farmers and traders have many prospects and opportunities.
During the discussion, Mukan Abdiyev, Chairman of the Supervisory Board of the Union of Grain Processors of Kazakhstan , spoke about the initiative of the Ministry of Agriculture to subsidize transportation costs for grain exports. He believes that the draft law should be finalized.
“The main market for Kazakh flour is Afghanistan. We understand that the market volume will not increase. What is the point of spending public funds to subsidize exports to Afghanistan of raw materials rather than processed products? To develop the Afghan milling industry? But why? In my opinion, it is better to help traders export grain through Iran, Russia or China to the Southeast,” Mr. Abdiyev emphasized.
The first day ended with a special session “Legal aspects of foreign trade: practical recommendations and challenges in international trade”.
The second day of the conference was devoted entirely to logistics, with an emphasis on the transportation of agricultural products. Together with industry experts, market participants discussed domestic cargo flows, transit potential and infrastructure development in Kazakhstan, grain logistics, rail transportation and the development of the Trans-Caspian International Transport Route (TCIR).
Gani Yessembayev, Deputy Director of the branch of NC KTZ JSC , said that this season the volume of Kazakh grain transportation for export has increased significantly in almost all directions.
Thus, shipments to Russia and via Russia increased by 93% - in 3 months of 2024/25 MY, exports amounted to 310 thsd tonnes (161 thsd tonnes in the same period last season). In particular, 104 thsd tonnes were shipped to Azerbaijan via Russia (in September-November 2023 - only 3 thsd tonnes, an increase of 35 times).
The spokesperson clarified that shipments through the Black Sea ports increased by 15% to 100 thsd tonnes, and to the Baltic countries and ports by 56% to 53 thsd tonnes.
A significant increase in shipments was recorded to Iran through the port of Aktau (25 times to 356 thsd tonnes), Afghanistan - by 58% to 145 thsd tonnes, China - by 1% to 445 thsd tonnes, and Central Asian countries (Uzbekistan, Tajikistan, Kyrgyzstan) - an increase of 23 to 56%.
As for China, the export potential to China far exceeds the capabilities of the host country, the KTZ representative noted.
“China has started taking samples from almost 50% of the warehouse. They take samples, send them to Urumqi, and wait for the laboratory's response... In general, it takes up to 2 weeks. Accordingly, there was a sharp accumulation of trains at the Khorgos and Alashankou sites... China has had a pretty good harvest this year and is thus protecting its market. For example, in November, we sent a telegram to the Chinese railway authority to approve transportation under the applications and additional plans of traders. Only on November 25 did we receive a response, and a number of grain cargoes were rejected altogether,” said Mr. Yessembayev.
According to him, about 17 container trains are currently being returned. About 400 wagons have been returned this season, including trains with wheat from Prodcorporation.
However, on December 2, with the participation of the Ministry of Agriculture, a meeting was held in Beijing with the General Administration of Customs of China, where the KTZ and business voiced all the problems. They agreed to set up a temporary working group. The CCW promised to promptly inform market participants about the situation on this issue.
Kazakhstani exporters expect the government to provide subsidies for the transportation of grain to be shipped through the ports of Russia and the Baltic States at $40 per ton. This information was announced by Kanat Kobesov, Chairman of the Supervisory Board of NurZholCompany LLP, Chairman of the Board of the National Association of Exporters KazGrain .
He emphasized that in the current realities, only those who are ready to be flexible and change will remain in the market. Logistics will meet the needs of trade in the short term, taking into account current geopolitical trends, sanctions and restrictions.
“Kazakhstan has harvested a record crop this year - more than 26 mln tonnes. Of course, it needs to be exported. However, to ship products to distant countries, we need to modernize the infrastructure, including port infrastructure, introduce digital services, etc.”, - said Mr. Kobesov.
According to him, the priority export destinations for Kazakh grain, where infrastructure needs to be modernized, are the EU countries, through Iran to the Persian Gulf countries, through the Transcaucasus countries to North Africa, the European Union and Turkey, to China and Southeast Asia.
The speaker also said that the overall increase in railroad tariffs for 2024 was about 25% (plus an expected increase of 24% in 2025).
They also touched upon the technical condition of rolling stock. Erlan Tulendiyev, CEO of Trans Logistic Capital Group , announced a sad statistic: only 18% of the total fleet of railcars in Central Asia is in good technical condition for the transportation of agricultural products. He noted that the bulk of grain in Central Asia is transported by rail, with its share of about 69% over the past 5 years.
“There are more than 12 thsd grain carriers in Central Asia, with an average age of 25 years (with a standard service life of 26-30 years), about 20% of grain carriers have already reached the end of their service life (over 30 years), 62% of cars (21-30 years old) are being refined in recent years,” the expert emphasized.
In his opinion, the main obstacles to the development of agro-logistics in Kazakhstan are:
- Lack of state programs for the development of agro-logistics;
- lack of qualified personnel in agricultural enterprises;
- high cost of product logistics programs for local enterprises and lack of tools to implement the logistics approach;
- lack of funds for the construction of modern large warehouses for agricultural products;
- low investment attractiveness of the agricultural sector.
According to E. Tulendiyev, a number of these problems can be solved by the Eurasian Agroexpress - New Logistics project, which aims to develop exports of agricultural products from EAEU member states to China, Uzbekistan, Vietnam and other countries of Southeast and Central Asia using the integration component on the project routes.
One of the project's goals is to provide a freight base for agricultural products to achieve deliveries of up to 500 thsd tonnes per year by 2025 and 1 mln tonnes per year by 2030 in the direction of China (at the pilot stage, the volumes will be about 60-100 thsd tonnes per year, or 1-2 container trains per week). In addition, it is planned to provide supplies in the amount of up to 400 thsd tonnes per year by 2025 and 900 thsd tonnes per year by 2030 in the direction of Uzbekistan (at the pilot stage, the volumes will be about 40-60 thsd tonnes per year, or 1 container train per week).
At the same time, the total delivery time is expected to be reduced to 10-14 days in the direction of China and 5-7 days in the direction of Uzbekistan.
Kazakh companies operating in the field of logistics shared good news at KAZAKH GRAIN & LOGISTIC FORUM 2024.
Thus, SEMURG INVEST LLC, the owner and developer of the multifunctional marine terminal Sarzha in the port of Kuryk, has purchased one dry cargo vessel to organize regular service on the Trans-Caspian route and plans to increase its fleet to 6 vessels. This was announced by Madina Anet, Business Development Director of SEMURG INVEST.
She said that as of today, 2 out of 9 designed berths have already been built and put into operation, and operational activities have begun. 16 km of access roads out of 27 envisaged in the project have already been built.
Two terminals of the Sarzha MMT are already handling cargo, and 4 are in the project.
Since October this year, the terminal has started transshipment of grain - 19 thsd tonnes have been transshipped to date. The grain terminal is scheduled to be fully completed in early 2025.
Madina Akhmedzhanova, Director of Kusto Logistics , announced the company's plans to build a logistics center near Aksenger station.
It will include a container terminal for 3,100 TEUs of containers, class A and B warehouses with an area of more than 55 thsd sq m, and an LNG area. The project will also offer additional 3PL+ services, including packaging, labeling, sorting and customs clearance.
KUSTO LOGISTICS will provide terminal services, form container trains and warehouse large-capacity containers.
During the two days, the conference guests were offered not only reports from the industry's top speakers, but also active networking, discussions, acquaintances, many business contacts, contracts and cooperation agreements.
Thus, following the results of negotiations and meetings in B2B format on the sidelines of KAZAKH GRAIN & LOGISTIC FORUM 2024, on December 5, the National Association of Exporters “KazGrain” signed a Memorandum of Understanding and Cooperation with the brokerage company Interpro International Gorinchem b.v. (Netherlands). The purpose of the document is to establish partnerships, develop long-term, effective cooperation between the parties aimed at implementing joint projects, as well as promoting domestic grain products on international markets.
So, KAZAKH GRAIN & LOGISTIC FORUM 2024 has been held and was a success! We hope that the information received from the industry's top speakers and discussions at the conference will become a starting point for developing effective solutions to problems in the grain segment and logistics.
The next meeting place for Kazakhstani agricultural producers, traders, logisticians and experts will be the international conference KazOil 2025, which will be held on February 13 in Astana and will be dedicated to the most dynamically developing industry in Kazakhstan's agro-industrial complex - oil and fat. More than 150 delegates from Kazakhstan, China, Uzbekistan, Europe, Asia and other countries interested in mutual cooperation in the oil and fat sector, as well as in trade, deep processing, logistics development and investment projects are expected to attend. Join us, we are waiting for old and new friends!
Prepared by Tatiana Lyagusha
