Kazakh farmers risk losing their traditional markets due to an influx of cheap Russian grain into Central Asia, which could lead to a financial crisis in the industry, reports infohub.kz.
Yevgeny Karabanov, head of the analytical committee of the Grain Union of Kazakhstan, said in an interview with the YouTube channel Tenge Talks that Russia, facing difficulties exporting grain to its traditional foreign markets, is seeking alternative destinations, including Central Asian countries. This poses a direct threat to Kazakh wheat and flour producers, who could lose their key buyers.
The expert cited a specific example: in the Rostov region, one of Russia's main grain export centers, fourth-class wheat from farms is offered at about 6,000 rubles per ton, equivalent to about 31,500 tenge. For comparison, similar wheat in Kazakhstan costs around 85-90 thousand tenge per ton. "Look at the difference. And it continues to get cheaper. A huge amount of grain is not in demand because there is no way to export it," Karabanov noted.
The expert sees particular danger not so much in direct imports of Russian grain into Kazakhstan, but in competition for foreign markets. Uzbekistan, Tajikistan, Kyrgyzstan, Turkmenistan, and Afghanistan have traditionally been the main destinations for Kazakh products. However, cheaper Russian grain and flour are now entering these same markets. "If our traditional consumers focus on cheaper Russian grain, there will be no demand for our grain," Karabanov stressed.
In this situation, Kazakh farms will either have to lower prices or face problems selling their harvest. However, the possibilities for price reduction are limited by production costs, which, according to the expert, amount to about 70-80 thousand tenge per ton excluding VAT. A prolonged fall in market prices could force some farms to sell their harvest at a loss.
Karabanov believes that it is no longer about possible excess profits, but about the survival of farmers. They are still recovering from the difficult year of 2023, when drought and rains during harvesting led to losses of part of the harvest and a drop in prices below 50 thousand tenge per ton. In the following two years, farms closed financial gaps and debts. A new price shock could again put them in a difficult position, causing a shortage of working capital for the next sowing season.
Moreover, the current supply of Russian grain may not be at its maximum. The mass harvesting campaign in Siberia, Altai, and the Urals has not yet begun, and after grain from these regions enters the market, supply could increase even further. Karabanov called what is happening the "worst-case scenario" for the Kazakh grain market and suggested that the government may need unconventional measures to support domestic producers.
Certain import restrictions are already in place: since July 27, Kazakhstan has banned the import of wheat by road and water transport, while rail supplies are allowed only for domestic processors and poultry farms. However, these measures do not solve the problem of competition in third-country markets.