Agribusiness to Kazakhstan
Trends and opportunities
Land and climate
Agriculture is an important pillar of the Kazakhstan economy. The total
area of agricultural land in Kazakhstan is 222 million hectares, including
24 million hectares of arable land, 188 million hectares of pasture, five
million hectares of hayfields and approximately 4.5 million hectares of
fallow land. The country covers several different agro-ecological systems.
The north, where most grains are produced, is suitable for rain-fed
agriculture. The centre-south is desert and semi-desert, with mountains in
the south and east of the country. In the south, agriculture is mostly
dependent on irrigation (1.2 million hectares), while the east is
traditionally planted with oil-seed crops (mostly sunflower).
Economic indicators and challenges
The agricultural sector is a key pillar of the Kazakhstan economy from both
a social and economic development perspective. The sector employs around
one fifth of the economically active population and 46.8 per cent of the
population live in rural areas. Key agricultural sectors are animal
husbandry and plant growing (grain and feed crops).
In 2017, Kazakhstan’s gross agricultural output increased by 2.9 per cent
and foodstuff production by 4.1 per cent.
A favorable investment climate has contributed to increased investment in
the agricultural sector of the country. In 2017, capital investment in
agriculture grew by 29 per cent and in foodstuff production by almost 32
per cent (for comparison, investment in construction grew 11.8 per cent,
industry – 3.8 per cent, trade – 21.8 per cent, communication-9.5 per cent).
Despite abundant land resources and increasing agricultural production, the
contribution of agriculture to Kazakhstan’s gross domestic product (GDP)
has been around 6 to 8 per cent over the last five years according to the
Ministry of Agriculture (versus 13 per cent in 1996). This is largely due to
faster growth in the oil and resources industries as well as weak
productivity in the agricultural sector.
The agribusiness sector, and particularly the livestock and dairy
industries, are a focus of the Kazakhstan government’s policy, which is
seeking to reduce dependence on oil and gas. The government has a
stated aim of doubling the size of the non-oil sectors by 2025 and is
focusing on the development of priority export-oriented sectors
(agriculture, food production, metal making, mechanical engineering and
Kazakhstan has fertile soil and a strong agricultural tradition with more
than 70 per cent of Kazakhstan’s land area occupied by agricultural crops
and animal husbandry (Source: BMI, Kazakhstan Agribusiness Report Q2 2018). It has
achieved self-sufficiency in wheat and last year achieved self-sufficiency
in beef and lamb.
In 2013, the Kazakh Ministry of Agriculture released a master plan for the
stabilisation of the grain market. The Agribusiness-2020 program specifies
goals and projections for grain production, consumption and exports for the
period 2013-2020. The development of the livestock industry is linked with
the diversification of arable production away from wheat. According to the
plan, the sown area for all grains will stay relatively the same during
this period. It envisages a considerable shift from wheat to feed grains.
The area sown to wheat is expected to reduce by 14 per cent from 13.5
million hectares in 2012 to 11.5 million hectares in 2020. Feed grains are
expected to increase by 53 per cent from 2.8 million to 4.3 million hectares
As a result of farm restructuring, small holdings and households have
become the main agricultural producers, accounting for more than 56 per cent
of total agricultural output. Large agricultural enterprises account for
around 20 per cent of output and collective farms 24 per cent. Households are
particularly dominant in livestock production and this is a constraint on
the potential for a large-scale industry expansion. In addition, the
productivity in the livestock sector is considerably lower than
Small enterprises and family farms account for around 80 per cent of meat
production. Around 90 per cent of dairy production comes from the household
sector with most output for home consumption.
The majority of dairy cattle in Kazakhstan belong to small-scale farmers
reliant on traditional grazing practices. This makes milk output very
dependent on the quality of pasture and in turn makes the weather a crucial
factor in determining yields (Source: BMI Kazakhstan Agribusiness Report Q2 2018).
According to the National ‘100 Concrete Steps’ plan the share of imported
milk in Kazakhstan is to be reduced from 28 per cent to 18 per cent by 2020.
It is planned to increase milk production by 500 thousand tonnes by 2020 and
to increase processing capacity from 40 per cent to 70 per cent.
This is to be achieved via creation of production cooperatives and
introduction of latest technologies to run workshops with foreign experts
in the field of dairy farming, financing agricultural projects through the
National Holding Baiterek and KazAgro, tighter control of falsification and
safety of products, establishment of logistics centers and the development
of technical regulations.
The Kazakh government has announced it wants to invest US$1.5 billion in
milk and meat production in the coming years to address major challenges
facing both sectors (Source: BMI Q2 2018). Crop yields can be
increased further; 2017 yields (tonnes per hectare) were 1.34 for grains,
0.97 for oilseed crops and 25.4 for vegetables.
Kazakhstan has the largest amount of permanent pasture per animal in the
world, which can serve for year-round feeding. Currently, Kazakhstan has
6.7 million head of cattle, more than 18 million sheep and goats, and nearly
39.9 million poultry (Source: Kazakhstan Statistics Committee, 2017). The Government is
providing financial support to increase these numbers – from 2011 a state
program ‘Sybaga’, administered by the state holding KazAgro, subsidises
imports of breeding cattle and brood stock with a target to increase cattle
by 61 percent by 2020. Australia has been a major cattle supplier along
with the US and Canada. The first shipments of Australian pedigree cattle
arrived in November 2011.
Kazakhstan has ambitious plans to become one of the world's top five largest beef
exporters. To this end, it is planned to purchase around 1 million heifers over 7 years, develop aggregated processing and support services.
Productivity should increase from current US$1,000 to US$8,000 per person
engaged in beef cattle farming.
Although landlocked, fish are an important part of the country's
agricultural sector. Kazakhstan’s reservoirs, rivers and the Caspian Sea
are rich in valuable fish species such as sturgeon (beluga, stellate
sturgeon), pikeperch and trout.
Food processing ranks amongst the most promising areas for investment.
Because of insufficient food-processing capacity, Kazakhstan has to import
much of its food supplies.
Water availability is of growing importance. Given the need for large
volumes of water for agricultural purposes, the Agribusiness-2020 strategy
also calls for the introduction of modern water-saving agricultural
technologies and an end to water wastage. The target set by the President
of Kazakhstan is to introduce a minimum of 600 thousand hectares of
irrigated land during the next five years (Source: bnews.kz , Sep 2016). These developments are supported by major development
banks including the EBRD, ADB and the World Bank.
In recent years, the agricultural sector in Kazakhstan has shown a
remarkable and continuous growth in output. Committed state support and
opportunities created by an enlarged market (the Eurasian Economic Union
with Russia, Belarus, Armenia and Kirgizstan) makes agriculture an
attractive sector for investment. To unleash its potential, the sector must
tackle a number of problems, including low productivity and low yield, as
well as lack of strategies and technologies pertaining to successful
entrepreneurship. In addition, there are high transportation costs,
logistics and infrastructure limitations, access to certain markets
(especially China) as well as availability of accessible credit. The sector
also needs to renew its stock of agricultural machinery, most of which is
quite old and has a level of depletion of 80 per cent.
The liberalisation of the agricultural sector will continue. However, the
dominance of state-owned enterprises in a variety of agribusiness
sub sectors and the absence of private land ownership continue to be major
obstacles to investment growth in the sector (BMI Q2 2018).
The Government of Kazakhstan is strengthening its indirect support measures
to increase agricultural competitiveness. The state program of support for
agribusiness (covering 2013-2020) stipulates a 450 per cent increase in
state financial support by 2020. The program targets diversification of
crop production, increased production from dry lands, further agricultural
land development and improved taxation. In livestock, the program supports
exports, stimulates the development of meat livestock, and increases
breeding potential (by importing high quality breeding stock). Indirect
support include subsidies and credit insurance. The government also wants
to protect local producers within the regional trade organisations
(Eurasian Economic Union, WTO) by watching for violations of fair trade,
controlling technical regulations, placing a priority on local producers in
state procurement and developing logistics infrastructure.
State support measures are being revised to maximise coverage of
agricultural producers and stimulate introduction of new technologies,
increase productivity and achieve food safety via digitalisation and
technological modernisation, introduction of precision farming and Smart
For technological modernisation the government plans to re-direct
inefficient subsidies for subsiding leasing interest rates and to increase
investment subsidies. Through state support measures, the government plans
to ensure investment of up to 240 billion tenge (AUD$938.7 million) in
technology to entrepreneurs by 2021.
The state operator – KazAgro – plays an
important role as it administers various state programs, supports
agricultural development and oversees public spending in the sector. The
holding includes several entities such as Food Contract Corporation,
Agrarian Financial Support Fund, Agrarian Credit Corporation,
KazAgroFinance, KazAgroMarketing, KazAgroGarant and KazAgroOnim. All
organisations work with local agribusinesses and provide knowledge and know
how. They have developed web portals to ensure constant feedback for
potential investors and offer various information and logistical services.
There are plans to reform the agrarian science for the purpose of
introduction of new technologies available worldwide. Agrarian educational
institutions will be turned into research institutes and will incorporate
research and pilot facilities.
According to the Ministry of Agriculture, financing of agrarian science for 2018-2020 is 12.6 billion tenge (AUD$ 49.3 million). Financing is carried
out according to 21 priority directions of science development. At the same
time, the Ministry intends to increase the participation of businesses in
the promotion of agrarian science.
The government is also supporting the development of transport
infrastructure by investing in roads, railways, and expansion of grain
terminals on the Caspian Sea. It is also involved in the Belt and Road
initiative, as the country aims to become the largest business and transit
hub of the Central Asia region, a bridge between Europe and Asia.
Areas of opportunity for Australian exporters and investors include:
- supply of genetic material (the main breeds of interest are Angus and
Hereford), artificial insemination and embryo transplant technologies
- farm management technologies and services
- agricultural consulting services (e.g. pasture development)
- agricultural machinery and software
- modern irrigation system/technology, wind erosion protection technologies
- grain infrastructure and services
- access to an enlarged market, which includes Russia, Belarus, Kyrgyzstan
and Armenia as Kazakhstan’s partners within the Eurasian Economic Union as
well as China, Iran, Azerbaijan.
- agribusiness specialists training.
The Government of Kazakhstan welcomes foreign investment in:
- meat and milk production
- food production with high value-add
- oilseed crops and soy beans
- wool and skin production and processing
- investment in developing regions, including foreign direct investment in
Marketing your products and services
Some of the issues for potential exporters and investors to consider
- State-owned firms are key players in the market
- Under-development of large-scale animal farming: most livestock producers
are household plots which lack financial resources
- Landlocked country: no access to open-sea ports, high transportation
tariffs in neighboring countries (particularly, Russia)
- Infrastructure remains underdeveloped, particularly for perishable goods
- Low level of development of agricultural technologies, large depletion of
Weak vertical integration/coordination between production and processing
- Underdeveloped marketing strategies, particularly for export markets
- Generally high risk of agriculture because of harsh climate
- Competition and potential trade disputes with its partners (Russia,
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