Author: Chairman of the National Association of Oilseed Processors (NAOP) Yadykar Ibragimov
The agro-industrial complex of Kazakhstan has shown growth in recent years. In 2024, farmers harvested a good yield of grain crops, second only to the harvest of 2011 in terms of volume. However, the industry faces challenges such as limited demand for grain and consequently low prices, which prioritize, without delay, the diversification of sown areas and the development of deep processing in the coming years, which will determine the stability and development of the agricultural sector.
Wheat prices have significantly decreased in recent years and may even fall below production costs depending on the region and farm, creating serious difficulties for Kazakh farmers and undermining their financial stability.
Current State of Sown Areas
In 2024, the total sown area for all agricultural crops in the republic exceeded 23 million hectares. This area can be broken down into three main groups: cereals (70%), oilseeds (13%), and forage crops (13%). Specifically, cereals consist of 96% wheat and barley, with shares of 82% and 14% respectively, while the dominant oilseed crops are sunflower and flax. For comparison, in Russia in 2023, cereal crops occupied 55%, and oilseeds - 22% of the total sown area.
Comparing the current sown areas in Kazakhstan with 2010, when cereals accounted for 76% of the total structure and oilseeds only 9%, it can be noted that the transition from monoculture—wheat is indeed occurring, albeit at minimal rates.
Adjusted Sown Area in 2024
Overall, significant discrepancies in crop rotation across different regions indicate that there is potential for changing the structure of sown areas, which can be realized in the short term.
Narrowing Markets for Wheat and Dependence on Central Asian Countries
According to USDA data, from the 2010/11 to 2023/24 season, wheat production in Central Asian countries, Afghanistan, Azerbaijan, and Iran increased by +12% or +4.4 million tons. During the same period, Russia, the world leader in wheat exports, increased production by 120% or 50 million tons. Meanwhile, domestic consumption in these countries increased by only 7 million tons over the same period, mainly due to Afghanistan, Uzbekistan, and Iran. The surplus created by the difference in production growth (54.4 million tons) and consumption (7 million tons) of wheat amounted to 47 million tons, which began to displace Kazakh grain, resulting in our republic losing its once-traditional markets: Azerbaijan, Turkey, Egypt, Georgia, and Kyrgyzstan. From the 2006/07 to 2013/14 marketing years, Kazakhstan shipped an average of over 2.4 million tons of wheat per season to these countries, with peak volumes exceeding 4 million tons. However, since the 2014/15 season, shipments to these countries have declined to minimal levels due to increased supply from the Russian Federation ( Russia increased wheat production by 18 million tons from 2010/11 to 2014/15 ). Thus, Kazakhstan has averaged just over 350,000 tons in sales to Azerbaijan, Turkey, and Kyrgyzstan per season, while shipments to Egypt and Georgia have completely ceased.
Another important and traditional market for Kazakh wheat—Iran—imported an average of 0.5 million tons of wheat per season from Kazakhstan from the 2008/9 to 2015/16 marketing years, but starting from the 2016/17 marketing year, it halted purchases for four seasons due to achieving self-sufficiency with its own production. However, due to drought in 2020 and 2021, which significantly reduced wheat yields in Iran, the Islamic Republic resumed purchases of this crop in the 2020/21 and 2021/22 seasons. Beginning with the 2022/23 marketing year, shipments of Kazakh wheat ceased due to Iran's complete reorientation towards Russian grain.
As a result, Kazakhstan lost or reduced its share in the markets of seven countries with stable demand, including Russia, to which the republic used to ship an average of about 0.5 million tons of wheat.
These circumstances led Kazakhstan to redirect its wheat export volumes to Central Asian countries. For instance, from the 2004/5 to 2011/12 season, the share of Uzbekistan and Tajikistan averaged 14%, while since the 2018/19 marketing year it reached 66% of the wheat export volume from Kazakhstan, indicating a high dependence and key influence of these two countries on wheat pricing in Kazakhstan ( currently, exports of wheat to Central Asia and Afghanistan account for over 80% ).
It is also worth mentioning new markets that have emerged for our republic, particularly the market of China. However, China is pursuing an import substitution policy by increasing its own yields, along with tariff regulations and import quotas. Given the expected increase in wheat production in China in the 2024/25 season by 3.5 million tons, the volume of imports will also be limited.
The geopolitical situation in the world and the sanctions policy against Russia are forcing Russian exporters to seek new markets, including expanding their presence in Central Asian countries and China. These circumstances create risks for Kazakhstan, potentially leading to a complete loss of wheat markets due to a decline in competitiveness associated with lower production costs in Russia, which significantly exceeds supply volumes.
It is important to note that the border regions of Russia, namely the Siberian, Volga, and Ural Federal Districts, which supply grain to Kazakhstan, produce more than 30 million tons of wheat annually on average. Meanwhile, according to the "Unified Plan for Achieving National Development Goals by 2030," Russia plans to increase agricultural production volumes by at least 25% compared to the 2021 level, and the export volume of agricultural products by at least 1.5 times. In particular, foreign grain supplies are expected to reach 80 million tons by 2030 ( actual grain exports in the 2023/24 marketing year are 72 million tons, including 54.1 million tons of wheat ).
Considering these factors, the export of Russian wheat to Kazakhstan will continue, leading to fierce competition, and the intention to reduce the railway transit tariff on Russian grain across Kazakhstan, which is being discussed by the Ministry of Agriculture of the Russian Federation, if implemented, will contribute to the displacement of Kazakh grain from the markets of Central Asian countries and China.
The Trend towards Self-Sufficiency in Wheat as a Risk Factor for Farmers
There are additional factors in the medium term that contribute to the further decline in demand for domestic wheat from importing countries, particularly the implementation of a self-sufficiency strategy for grain.
China aims to increase grain production by 50 million tons by 2030, exceeding the record grain harvest of 706.5 million tons in 2024 by 7%. Uzbekistan and Tajikistan are also implementing programs to enhance agricultural productivity, focusing on high-yield seed varieties and training farmers in new agricultural technologies.
In 2023, Uzbekistan increased its grain production to 8 million tons, and in 2024, the harvest exceeded 9 million tons, with wheat accounting for 6.7 million tons. According to the "Uzbekistan – 2030" strategy, the average grain yield is planned to be raised to 80-85 centners per hectare from the current average of 49 centners per hectare, and an additional 300,000 hectares of land will be developed using water-saving technologies, including sowing wheat. Wheat in Uzbekistan and Tajikistan is mainly grown on irrigated lands, which results in yield figures that are significantly higher than in Kazakhstan and Russia.
In Afghanistan, there is a process of increasing sown areas and wheat yields, as well as accumulating strategic reserves, which will contribute to the goal of achieving greater food self-sufficiency. According to the National Statistics and Information Administration of the Islamic Emirate, in 2024, irrigated land areas in the country increased by 3%, while areas dedicated to rainfed agriculture grew by 8%, with sown areas for wheat increasing by