Kazakhstan faces grain storage problem

ALMATY – Kazkahstan’s record 2011 harvest of 29.7m tonnes of wheat has left the country wrestling with issues of how to transport it, where to store it, and whom to sell it to.

Some analysts expect 3m to 4m tonnes of grain, or 10% to 13% of the harvest, to be lost because too little storage capacity or transportation problems.

Some predict large losses, others not so sure

Auyl Party leader Gani Kaliyev was one of the first to warn about the potential loss of as much as 15% of the harvest. Other analysts aren’t so sure.

The 29.7m-tonne harvest is the bunker weight, which includes moisture and non-grain matter.

After drying and sifting, the grain harvest’s weight will decrease by about 5%, so elevator storage capacity shouldn’t be a problem, said Kasum Amanzholov, an instructor at the Kazakh National Agrarian University. Little grain was lost during the Soviet era, agronomist and Communist Party leader Serikbolsyn Abdildin said.

“During Soviet times, Kazakhstan harvested up to 34-35m tonnes of grain per year,” he said, “none of which was lost, because we had enough elevators and granaries.”

“We have learned to store grain on threshing floors and under tarps,” Senator Gani Kasymov said. “The grain doesn’t lose its quality until March. What is indeed a problem is how to haul away grain quickly ... No one is saying that grain lies rotting away anywhere today. It just can’t be so because grain producers have an incentive to do everything to preserve the harvest.”

Losses from the alleged inadequacy of grain elevators will be minimal, not more than 1-2%, which is typical, said Beibitkhan Kabdrakhmanov, CEO of the state-owned Food Contracting Corporation.

No shortage of storage, experts say

“Only a small number of the grain elevators in Kazakhstan are completely filled,” he said. “For example, in Akmola Oblast, only 11 of 32 elevators are full; in Kostanai, 16 out of 31. In Aktobe, Almaty, East Kazakhstan, Zhambyl and West Kazakhstan oblasts, there isn’t a single grain elevator that is completely full. The country has 223 licensed grain elevators with 13.5m tonnes of capacity, unlicensed elevators with 8.9m tonnes of capacity and windmill storage capacity of 2m tonnes.”

Many private entrepreneurs don’t use grain elevators at all, Amanzholov said, explaining they place dryers directly beside piles of harvested grain. “They dry and bag grain on the spot; such grain doesn’t need to be stored in elevators before it’s sold. Small businessmen often use this method.”

Some say the potential loss lies more in grain transportation, rather than in storage, according to Kabdrakhmanov.

“Kazakhstan has a rather large number of grain trucks – 5,000, but the country needs approximately another 5,000 to meet its needs,” Kabdrakhmanov said.

Kazakhstan buys grain trucks from Russia and Ukraine, which don’t produce enough of them to meet Kazakhstan’s needs, Amanzholov said.

“New purchasing programmes, which should solve this problem, are being worked out,” he said. “But this problem (of not enough grain trucks) most likely won’t have any effect on the loss of grain. It might delay sales of grain, but probably losses won’t result. If (we) lose grain, it won’t be more than 1-2%.”

Management, sales are issues

Kazakhstani farmer Dmitry Ivanov planted grain on 21,000ha last spring and reaped a rich harvest. Today he does not know where to store this grain, so he left 10% of his crop in the field.

“I don’t really care about that, because it’s more important to me to sell the rest,” he said. “We are looking for potential buyers since we want to be rewarded for our work.”

The 2011 harvest was unprecedented, Mekhlis Suleimenov, a member of Kazakhstan’s National Academy of Sciences and senior researcher at the A.I. Barayev Grain Farming Research and Production Centre, said.

“We didn’t expect such a large yield,” he said. “Kazakhstani analysts predicted a little more than 20m tonnes, but the actual harvest turned out to be close to 30m tonnes.”

“Although part of the grain was left outdoors, one can’t say it is rotting away,” Suleimenov added. “Ripe grain can remain intact in the open, on asphalt pads, and one shouldn’t say it will be lost. We are always going to extremes in our forecasts: some say we won’t lose anything at all, while others predict very grave losses. As usual, the truth is somewhere in between – but losing 2-3m tonnes of grain is outright impossible.”

The government is looking for ways to increase exports, Suleimenov said. Kazakhstan’s customers include European and African countries, Turkey, Azerbaijan, Georgia, Afghanistan and the four other Central Asian states, MarketWatch reported in December.

Kazakhstan, however, faces difficulties in trying to export its record crop, MarketWatch reported. They “include a saturated market to Kazakhstan's south, a chronic shortage of railway wagons and competition with domestic producers for scarce grain-loading facilities in the Black Sea ports of Russia and Ukraine,” Kazakhstani grain analyst Dauren Oshakbayev told MarketWatch.

“Grain export prospects look rather weak at this time,” Suleimenov told Central Asia Online, “but eventually they will improve. The problem does exist, but it shouldn’t be dramatised.”

Kasymov agreed, noting that some analysts tend to exaggerate the situation.

“What Kazakhstan’s grain sector really lacks is co-ordination,” Amanzholov said. “There is no precise co-ordination either among state enterprises or between the government and private businesses. There is no general database, and as a result, even when empty storage facilities and transportation are available, the private businesses, for example, often don’t know about it.”