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December 6, 2011

 

Kazakhstan's infrastructure limitations to affect grain exports

 

 

Kazakhstan's grain export would only meet two-thirds of their potential target due to the infrastructure limits.

 

Kazakhstan's grain crop this year more than doubled from last year's drought-affected harvest to hit 26 million tonnes, the Food Contract Corporation (FCC), the country's state grain trader, said.

 

While below some other forecasts, Kazakhstan's president, Nursultan Nazarbayev, has pegged the harvest at 29 million tonnes two weeks ago and that estimate had raised some eyebrows, following reports that the crop's bunker weight, before cleaning and drying, had reached about 30 million tonnes.

 

And, it represented a sharp contrast to last year, when production fell to 12.2 million tonnes, with the rebound fostered by conditions described as "nearly ideal" by the US Department of Agriculture, viewed as the world's main farming authority.

 

Sabit Kashkimbayev, a senior FCC manager, said, concurred with a Kazakh farm ministry estimate that the crop created potential export firepower of 15 million tonnes.

 

"But we will not be able to export physically such a volume," he said.

 

"If we manage to export some 10 million tonnes, including flour in grain equivalent, this will not be altogether bad."

 

While he failed to elucidate on his reasoning, many observers have said that Kazakhstan's shipments will be limited by the costs of transport to foreign-owned Black Sea ports needed to reach big buyers such as Egypt, Russian and Ukrainian supplies even if it gets there.

 

Kazakhstan's own Aktau port, on the land-locked Caspian Sea, is facing applications for trade well beyond its capacity of about 500,000 tonnes a year.

 

The export squeeze threatens to expose another logistical shortfall, in storage, forcing the country to maximise use of its own run-down complement of elevators and silos.

 

"Officially, storage capacity reaches 28 million tonnes, including 13, tonnes on farm, which is sufficient to store all the 2011 production," Agritel's Kiev office said.

 

"However, such facilities are often old and inefficient, and drying structures are lacking," the consultancy said, noting an estimate from a political spokesperson that the country may lose some three million tonnes of grain to poor storage.

 

Kazakhstan, which has leased 5,000 grain wagons from Russia's RusAgroTrans, has boosted its storage space by keeping grain in railcars.

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