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Trade: At five times the size of France, it is no great surprise that Kazakhstan is one of the world's largest grain producers and exporters. Kazakhstan plans to export between 3.5 and 4 million tons of grain in 2001/02, up from 3 million a year earlier. The main grain crop is milling wheat, which is typically high in quality and protein. There is a growing trend for Kazakhstan to export its grain to other international markets, apart from its traditional market in the CIS. The list of recent Kazakhstan grain importers includes the Russian Federation, Ukraine, Uzbekistan, Tajikistan, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Turkmenistan, Austria, the UK, Venezuela, Latvia, Lithuania, Estonia, Poland, Turkey, Switzerland, Netherlands, Saudi Arabia, Iran, China, Korea and Mongolia, with Russia consuming the bulk of these exports. Kazakhstan is targeting the Middle East as a future export region, and has built a new grain terminal on the Caspian for increasing shipments; a second may be built if demand proves strong. Sector Overview: The Republic of Kazakhstan is rich in land resources; more than 74% of the country's territory is suitable for agricultural production, representing 10% of GDP and employing over 20% of the labor force. The agricultural sector saw its first big gains in 1999, which correlates somewhat with the pace of privatization and Land Law reform. Most of Kazakhstan's 70,000 farms have been privatized. Although Kazakhstan's vast territory ranges from forest-steppes and steppes to half-deserted and deserted zones, the natural and climatic conditions in Kazakhstan are highly favorable to growing a wide variety of crops. Kazakhstan is a major producer of wheat, producing 18.3 million tons of wheat in 2001 (by bunker weight), up from 12.9 in 2000. Wheat is grown mainly in the northern-central regions. Other food crops include barley, maize, rice, potatoes, soybeans, and sugar beets, cotton, tobacco, sunflower, flax, soybean, and mustard. Cotton is the most important industrial crop grown on the irrigated soils of southern Kazakhstan. Orchards and vineyards are widespread. The rich soil and climate provide ideal conditions for growing wheat, barley, rice, corn, millet and buckwheat. For a country with a long nomadic history, it is not surprising that stockbreeding is the traditional and dominant agricultural sector. No less than three quarters of all agricultural land is used for grazing. Sheep breeding is predominant, while cattle breeding and growing of pigs, horses and camels are also well developed. Animal husbandry typically accounts for about 40% of the production value in agriculture in Kazakhstan. Primary meat products include beef, veal, chicken, horse, lamb, pork and rabbit. Agribusiness: Kazakhstan has embarked upon agricultural sector restructuring through the establishment of new corporate entities and privatization. Private ownership is now the dominant type of organization for agricultural production. Kazakhstan signed into effect an important Land Law in December 2000. Attempts at far-reaching land law reform were modified and limited by popular dissent, but will nonetheless be beneficial. In its current form, the Land Law allows local citizens to lease arable land for up to 99 years, but limits foreign ownership significantly. Later, progressive changes in the law should allow a greater role for foreign ownership with the right to inherit ownership, or to sell, grant, lease, pledge and transfer rights to joint-stock companies, associations and cooperatives. The Land Law also frees land and property from the burden of collective farming, provides protection from illegal expropriation and freedom of choice concerning farming activities and product choice, and equal access to markets, materials, information, and finance. In its current form, it frees up capital by allowing farmers to pledge their land as collateral for loans, which is a superior alternative to pledging future crop production to traders at unfavorable rates. The overall effect of this law will be to drive up demand for capital goods, technology, fuel (and possibly North American joint venture partners) in this sector, particularly as farmers learn to take more risks with capital. New regulations demonstrate the Government of Kazakhstan's willingness to assist the development of a smoothly functioning market. The existence of multiple wholesale markets, commodity exchanges, and credit associations, associations of commodity producers, and other service organizations are a further testimony to progress. Currently, there are 34 grain producing member-companies in the Grain Union of Kazakhstan, an NGO that combines member efforts to coordinate grain market activity. Investment
Outlook: Favorable natural conditions and large areas of arable land
provide cost-effective opportunities for private grain producing industry
and animal farm development. Conditions are favorable for the production
of large amounts of high-quality grain as well as meat and dairy farming.
The sector as a whole requires more automation and information technologies
to reduce production costs and water use, and to bring goods to market
more quickly. The application of new water-saving methods of soil irrigation
and the reconstruction of land used for rice, cotton and other crops is
very costly and demands substantial investment. Additionally, the fertilizer
production industry could yield substantial dividends. |
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