Drought has taken a greater-than-expected toll on the 2012/13 Kazakh wheat harvest, and we forecast production to slump to 11.0mn tonnes, with only 7mn tonnes projected to be exported and domestic consumers feeling the squeeze as flour prices soar. The livestock sector is expected to escape the worst of the effects, as the local corn harvest has held up well and the government has set aside feed grains to aid farmers, although dairy yields are expected to suffer from the deterioration of grazing pastures.
- Wheat production to 2016/17: -13.0% to 19.8mn tonnes. Efforts to diversify into oilseeds and other field crops and the likely lack of a repeat of the perfect conditions of 2011/12 will see production fall over our five-year forecast period.
- Butter consumption growth to 2017: 65.3% to 73,400 tonnes. This will come from increased demand for dairy value-added products on the back of accelerating urbanisation and improvements in infrastructure.
- Beef production growth to 2016/17: 35.7% to 576,700 tonnes. The comprehensive overhaul of the beef herd continues apace as imported breeding stocks improve quality.
- 2013 real GDP growth: 5.8%, up from 5.3% in 2012.
- 2013 average consumer price inflation: 6.5% year-on-year (y-o-y), up from 6.2% y-o-y in 2012.
- BMI universe agribusiness market value: 28.5% y-o-y decrease to US$7.5bn in 2012/13, forecast to grow on average 8.7% annually between 2011/12 and 2016/17.
Severe drought has reduced our expectations for the recently completed 2012/13 wheat harvest to such an extent that we now forecast a 51.6% y-o-y decrease to 11.0mn tonnes. It should be noted, however, that this decline is exaggerated in severity, as it follows 2011/12's post-Soviet era record 22.7mn tonnes of wheat harvested.
The area planted to wheat in Kazakhstan has fallen by 2% in 2012/13, from 13.8mn hectares (ha) in 2011/12 to 13.5mn ha in 2012/13. While this decline is hardly precipitous, the US Department of Agriculture reports that it is likely to be part of a longer-term trend away from such a heavy concentration on wheat. Oilseed plantings, especially flax and rapeseed, have increased in 2012/13, up 19% to 380,000 ha and 47% to 230,000 ha respectively, and this is a phenomenon taking place almost entirely in northern wheat-growing regions. Experts believe that the changes are the result of three major factors. First, the huge wheat harvest in 2011 resulted in lower and unstable market prices, especially compared with oilseeds.
Second, in larger agricultural enterprises, farmers are beginning to implement crop rotations as opposed to monoculture wheat. Third, the government has developed a strong support programme for the livestock sector, which has caused an increase in demand for feedstuffs. We see this as a positive move for arable farmers, who will benefit from no longer having all their eggs in one basket, but also for the country's growing livestock sector, which will be better served by easier access to feed grains in the landlocked country.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Kazakhstan Agribusiness Report Q1 2013