Kazakhstan 2018 | AGRICULTURE | REVIEW

Agricultural productivity remains low, but Kazakhstan is developing the sector by increasing grain output and signing new export agreements.

Kazakhstan's agriculture sector is a relatively small part of the country's economy. Though the nation has significant natural resources, at just over a million square miles it is the ninth-largest country by land area and a combination of adverse conditions and economic decisions prioritizing other sectors have limited the production of the agricultural sector. At present, agriculture accounts for roughly 6% of the GDP, with grains and livestock the sector's main products. As part of its drive for a more diversified economy, the government has begun to look at how better use of the country's land could bring benefits. Both local and international observers believe that increasing productivity through greater technological investments could improve economic performance.

Almost three-fourths of Kazakhstan's land area has the potential for agricultural production, but only a quarter of the land is arable. Meat and leather production, which dates back to ancient times in the region, is a major part of Kazakhstan's agricultural mix. 2017 Kazakhstan exported 11,138 tons of meat products, with poultry accounting for 46%. Meat production takes place all over the country, but the majority of export goods come from the South Kazakhstan, West Kazakhstan and Almaty regions. Meat used to be a one of Kazakhstan's most significant economic products during the Soviet era, but in the years following the fall of the Soviet Union production fell on multiple occasions. The last few years have seen a strong recovery, however, as a result of improved efficiency and the government putting more public funding into the beef and poultry industry. Government figures estimated total poultry production at 160,000 tons in 2015, double 2010's amount. Similar trends are at play in the beef industry, where production has risen to more than 400,000 tons per year. The stated goal in 2015 was to increase the volume of beef exports from 14,000 tons to over 180,000 tons by 2020, but government officials have acknowledged that the nation will likely not meet this goal.

The agricultural sector's primary crops are wheat, barley, and rice, with wheat the primary export good. Despite the relative small size of the agricultural sector, Kazakhstan has been a major wheat exporter for several years and export volumes have been growing in recent years. According to government figures, Kazakhstan exported 4.9 million tons of grain in 2017, a 7% YoY increase. Wheat accounted for 3.9 million tons of that figure, with barley exports coming in at just under 900,000 tons. Overall grain production was at 22 million tons in 2017 and was concentrated in the north Kazakhstan, Kostanay, and Akmola regions, which all saw volumes of more than 5 million tons. By launching diversification projects and advising farmers on which crops to focus on, revenues rose from USD169.6 million in 2016 to USD354.2 million in 2017. Additional work remains to be done, however, as the per capita agricultural productivity remains below regional standards, and the lack of secondary processing facilities means that the country is failing to take advantage of value-added potential down the production chain.
Kazakhstan has begun to focus on opening new export markets for its agricultural output. China and Iran are the two destinations of most interest to the agricultural sector because of their proximity and large populations. In July 2017, Kazakhstan and China signed more than USD160 million in agreements during the Kazakh-Chinese Agriculture Investment Forum in Astana; the deals call for Kazakhstan to supply 200,000 metric tons of grains to China. The two countries will also construct a grain storage terminal on their border to better improve transport logistics and their educational institutions have pledged to work together to develop new agricultural technologies. Kazakhstan also has plans to export 240,000 heads of cattle to China. Meat exports are also expected to rise with Iran after Kazakhstan signed new quality agreements with the Islamic Republic in 2017. The Kazakhstani meat industry exported live sheep and lamb to Iran for the first time after these deals, and industry leaders are optimistic that this is a significant step to strengthening the relationship.