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Kazakhstan's crucial grain export sector is navigating a complex and challenging international landscape، facing new obstacles from Russia and internal tax system adjustments. These developments are forcing exporters and farmers to make difficult decisions، potentially impacting the nation's economy.

New Russian Border Controls

Russia has announced the implementation of enhanced، permanent controls at its border with Kazakhstan، citing a need to combat "grey imports." This measure، reportedly based on a statement from Russian Deputy Prime Minister Alexey Overchuk، is expected to lead to increased congestion for Kazakhstani trucks، resulting in higher costs and longer waiting times.

Overchuk indicated that while the Eurasian Economic Union (EAEU) theoretically offers open borders، goods entering from neighboring countries can create unfair competition within Russia's domestic market. Consequently، Russia is prepared to enact "very strict measures" to address this.

These new controls are not temporary؛ a directive was previously issued in September 2025 for the Federal Customs Service of Russia to strengthen monitoring by mobile groups along the Russian-Kazakhstani border section.

Challenges in the Iranian Market

The southern export route has also become more precarious. Shipments of Kazakhstani grain to Iran have been halted indefinitely due to the escalating military actions between the United States and Israel in the region.

Evgeny Karabanov، head of the analytical committee at the Grain Union of Kazakhstan، stated that while deliveries are paused in the short term، the long-term outlook depends on the continuation of military operations. Despite Kazakhstan exporting over 1.2 million tons of barley to Iran in the 2024/25 marketing year، the conflict has rendered all existing contracts subject to force majeure.

Even before the geopolitical tensions، Kazakhstan had been gradually losing ground in the Iranian market due to increasing competition from Russia. When Russia experiences a strong barley harvest، Kazakhstan's market share typically diminishes.

European Export Routes and Alternatives

Exporting to Europe also presents significant risks، particularly the transit of Kazakhstani grain through Russia to Baltic ports.

Industry representatives are advocating for reduced tariffs on alternative routes، emphasizing the need for logistical diversification. However، the Trans-Caspian International Transport Route (TITR) currently lacks the capacity to handle the required volumes.

While transit through Russian ports is the most cost-effective option، utilizing the EAEU's unified tariff، Kazakhstani cargo often faces lengthy queues due to the high load of Russian grain. Utilizing Baltic Sea ports necessitates international tariffs، nearly doubling the transportation costs.

The Trans-Caspian route itself faces limitations. The port of Poti is not equipped to process large volumes of grain، and overall transport costs are double that of sea freight. Furthermore، the absence of a deep-water port in Georgia prevents TITR from operating at full capacity for bulk cargo.

Port Access and Market Swaps

Russia has reportedly proposed a trade-off: granting access to its ports in exchange for the right to export Russian grain to Central Asia and China. Kazakhstani grain producers view this as an attempt to block their transit routes، arguing that southern markets are far more valuable than access to Russian ports.

Nurlan Ospanov، head of the Grain Union، deemed this exchange unfavorable، warning that Russia could potentially dominate the Central Asian market. While Kazakhstan's Ministry of Transport has indicated an agreement has been reached with Russia on this matter، the timeline for internal procedures remains unclear. Kazakhstani exporters remain concerned that Russia could block transit at any time، despite assurances of readiness to transport export cargo.

VAT System Changes

Domestically، new requirements concerning VAT refunds within Kazakhstan's Tax Code are creating uncertainty and stagnation in the market. Under the revised regulations، only 20% of the VAT paid by an exporter is recognized، with the remaining 80% not being refunded.

This effectively imposes an additional tax burden of 12.8% on the product's cost، diminishing the competitiveness of Kazakhstani grain or forcing a reduction in purchase prices for farmers. Industry associations estimate that farmers could face losses amounting to 100 billion tenge.

Consequently، the combination of external pressures and increased domestic tax burdens poses a significant risk of undermining the economic viability of Kazakhstan's grain exports.

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