September 2, 2010

Kazakhstan diversifies grain export markets

Kazakhstan has invested heavily in its grain infrastructure to increase access to new markets and reduce its dependence on expensive supplies across Russia.

Kazakh grain, though of high quality, is often uncompetitive against supplies from Russia and Ukraine due to the high cost of delivering it to port. Exporters frequently encounter a shortage of rail cars and can incur high fees leasing Russian wagons.

Kazakhstan plans to export eight million tonnes of grain this season. Around half will go to Central Asia and Afghanistan, two million tonnes to the Caucasus region and two million tonnes to Russia, Iran and other countries, the Agriculture Ministry says.

Drought has contributed to a forecast 30-35% decline in this year's grain crop, but Kazakhstan still expects to boost its harvests in the long term by investing in new technologies.

Kazakhstan's major projects to expand and diversify its grain export infrastructure include Aktau and Beineu, Kazakhstan, Baku, Azerbaijan, Amirabad, Iran, and China.

The Food Contract Corporation is in talks with China about construction of a grain terminal on the Kazakh-Chinese border. Kazakhstan wants to supply grain both to China itself and onward to South Korea, Japan, Singapore and other Asian countries.

Some trial shipments have taken place, but the project faces obstacles. China and Kazakhstan operate different rail gauges. China wants its grain to be delivered in 50 kg sacks, while South Korea wants it delivered in containers, said Kazybek Omarov, director of the corporation's commercial department. One proposal envisages construction of a single terminal on the border, comprising a packing line and an elevator capable of storing 25,000 tonnes of grain.

About one million tonnes per year of grain could be moved via this route, should both countries agree on construction of the terminal.