Kazakhstan: the Saskatchewan of Asia

Last April, North Kazakhstan issued a statement on seeding and crop production for the province.

The language and data in the document is astounding, sounding like an episode of The Simpsons that mocks Soviet-era propaganda from the 1970s.

“Last year, our agrarians increased oilseeds by 40 percent; we continue to intensively engage in this work this year,” the document says.

“Five hundred and forty-eight thousand tons of seeds have been planted, including 462,000 tons of cereals and legumes … (and) 13,662 tractors of various modifications, 16,299 grain seeders and 1,147 modern high-performance seeding complexes are planned to participate in the sowing campaign.”

The highly specific information, such as 16,299 grain seeders, may raise eyebrows, but the potential for crop production in North Kazakhstan and the entire country is no joke.

Related stories in this WP Special Report:

Kazakhstan is part of the Eurasian Steppe, a massive geography of grasslands stretching from Eastern Europe to China. The steppe in Ukraine, Russia and parts of Kazakhstan has some of the richest agricultural soil in the world.

Related story: Challenging assumptions

Al Scholz, a retired agrologist, lived in northern Kazakhstan for six months in 2010. While there he measured the depth of topsoil in the region.

“The shallowest topsoil I found was about 10 to 12 inches. (The) average was 24 to 30 inches of topsoil — and no stones,” said Scholz, who worked as an agronomic research consultant at a 50,000 acre farm in Kazakhstan.

The climate and growing conditions in parts of Kazakhstan are comparable to Saskatchewan, and the mix of annual crops is similar — wheat, flax, oilseeds and pulses.

“They grow absolutely everything we do,” said Scholz, who is now retired and lives near Blackstrap Lake south of Saskatoon.

When Scholz was there, however, Kazakh farmers had poor yields compared to Western Canada. Crop yields in 2010 were about half of Saskatchewan’s, mostly because of slipshod agronomy and lax management, Scholz said.

It could take another 10 to 15 years for Kazakh farmers to get their act together. But when they do, “they will out-produce us,” Scholz said.

“Not only with (sales to) China, (but) India.”

The notion of Kazakhstan stealing market share from Canada is already proving true.

Canadian exports of lentils to Turkey dropped from 419,528 tonnes in 2015 to 190,286 tonnes in 2017.

Meanwhile, Kazakh lentil exports to Turkey have boomed.

Lentil acres in Kazakhstan went from 17,000 in 2014 to 820,000 acres in 2017.

Wheat is Kazakhstan’s biggest crop and its largest agricultural export.

In 2018-19, wheat production was forecast at 14 million tonnes. Canada, in comparison, produced 31 million tonnes in 2018.

However, in 2017 the Kazakh government announced plans to move away from wheat. It cut subsidies for wheat and corn production and increased subsidies for oilseeds, World-Grain.com reported.

QUICK FACTS

Kazakhstan is the world’s largest landlocked country, sharing borders with Russia, China, Kyrgyzstan, Uzbekistan and Turkmenistan.

  • Population: 18.5 million
  • Land area: ninth largest in the world
  • Labour force: agriculture 18.1 percent, industry 20.4, services 61.6
  • Ethnic diversity: Kazakhs 66.01 percent, Russians 21.05, Uzbeks 3.07, Ukrainians 1.7, Uighurs 1.44, Tatars 1.17, Germans 1.0
  • Major exports: energy (78 per- cent), mining (8 percent) and agriculture (3 percent)
  • Capital: Nur Sultan (formerly Astana)

Source: staff research

Kazakh data on oilseed acres indicates that rapeseed, flax, soybeans and sunflowers remain minor crops. However, the country is quickly moving toward its goal of 7.4 million acres of oilseeds by 2021. Last year oilseed acreage was 6.9 million, Blackseagrain.net said.

Vegetable oil crushing is also expanding.

The Kazakh Department of Statistics said the country broke vegetable oil production records for nearly every month in 2018.

Last June, for instance, it produced 29,200 tonnes of vegetable oil. That’s a tiny volume compared to Canada, which produced 360,000 tonnes of canola oil in January.

However, the 29,200 tonnes of vegetable oil could get much, much larger.

If China gets its way, Kazakhstan could become the Saskatchewan of Asia.

In February, Grain.org reported that Kazakhstan is “ground zero” for China’s agricultural plans in Central Asia. As part of the Belt and Road Initiative, a plan to strengthen investment and trade links with dozens of countries, China is committing billions to infrastructure in Kazakhstan.

A large chunk of the money is directed at agriculture.

“Chinese interests are eyeing Kazakhstan as a new source of wheat, sugar, meat and vegetable oil,” Grain.org said.

“Kazakhstan is already on its way to tripling wheat exports to China by 2020.”

Chinese firms have built a massive inland port in the town of Korghos near the border of China and Kazakhstan and a new livestock slaughter plant has been built near the border with China.

As well, Chinese groups are spending millions on agricultural science and innovation in Kazakhstan.

China has set up agricultural research centres in the country, including one in the town of Turgen, west of Almaty.

Last year Xinhua, a Chinese news agency, said new varieties of wheat, soybeans and oilseed rapeseed are being tested at the research park in Turgen.

Moving grains and oilseeds to China from Kazakhstan, a landlocked country, is a demanding task.

There is a rail line to the city of Xian in western China, but transporting bulk shipments of grain and oilseeds may not be economical.

The distance from Xian to Almaty is 2,900 kilometres.

CHINA’S BELT AND ROAD AG PROJECTS

  • Chinese companies have 657 agricultural projects in Belt and Road countries, valued at $9.4 billion — up 70 percent from five years ago.
  • More than 400 senior agricultural experts from China teach modern farming methods to other nations.
  • A state-owned investment
    firm is building a massive quarantine farm, near the Kazakh border, to hold livestock imported from Kazakhstan. The farm will have capacity for 100,000 cattle, 30,000 sheep and 12,000 donkeys and horses.

Source: Dim Sums, a blog on rural China economics

Exporting processed commodities to China, such as vegetable oil, flour, noodles, canola meal and meat, likely makes more sense.

China may want to import more food from Kazakhstan and the Kazakh government may want that to happen, but Kazakh farmers may not be ready for that reality.

Kazakhstan declared its independence from Russia in December 1991. More than 27 years have passed, but the Soviet approach to farming still lingers in rural Kazakhstan.

Scholz did his consulting work on a 50,000 acre farm with 250 employees.

“They have got to give … people in rural areas jobs, otherwise (the locals) will steal.”

The “they” are the companies and families that own or lease farmland in Russia, Ukraine and Kazakhstan. In much of the region, oligarchs acquired gigantic swaths of farmland after the collapse of the Soviet Union in the early 1990s.

Scholz was in Kazakhstan in 2010 but inefficient use of labour remains a problem in 2019.

“The CIS countries, communism broke the farming culture. You don’t have a farming mentality,” said Kolby Nichol, vice-president of international sales with Farmers Edge, a precision agriculture company based in Winnipeg that sells its products and services around the globe.

“What happens is you turn it into a business. The trouble is that … a farm doesn’t fit into that mould of a nine to five job.”

Farmers Edge has five employees in Russia, and Nichol has traveled there many times since 2010. One of the challenges for large-scale farms in Russia, Ukraine and Kazakhstan is finding employees who care about the success of the farm.

A grain producer in Western Canada might have 12 roles and responsibilities on his farm, but a tractor operator in Russia only drives the tractor. Somebody else likely delivers the seed, another employee delivers the fertilizer and the agronomist adjusts the settings on the seeder.

“If the tractor breaks down or runs out of fuel … he just waits until fuel is brought to him or the tractor is fixed,” Nichol said.

Scholz witnessed similar issues in Kazakhstan. He tried to convince tractor operators to drive five km-h at seeding so they could achieve the proper density of plants and good germination of the crop.

They would drive slowly but only when Scholz was watching. As soon as he left they cranked up the engine and seeded at 10 km-h.

The same thing happened at harvest time.

“The combine operators, it seemed to be a race, which operator could get across the field faster.”

Another issue is management. When Nichol talks to farm managers in Russia, he doesn’t meet them at the farm. The meetings happen with a lawyer or accountant who runs crop production from Moscow.

“A lot of the farms have offices in Moscow. It would be like going to visit a Saskatchewan farm, but going to their offices in Toronto.”

Farmers in the former Soviet Union also lack financial services such as crop insurance that Canadian producers take for granted.

“Access to capital is a big one, having (credit) to purchase the proper amount of fertilizer, the proper amount of inputs,” Nichol said.

“They don’t have crop insurance like we have here. Everyone is self-insured, so it (alters) how you look at things.”

Farms in Kazakhstan, Russia and Ukraine may have challenges, but they also have tremendous advantages, such as land cost and availability. Kazakhstan, for instance, may have seven million acres of unused agricultural land.

“Land is cheap, relative, labour is cheap, relative, and access to land would be the biggest thing,” Nichol said.

“It’s pretty difficult to roll into Western Canada and … just start up a 500,000 acre farm, (but) that happens all the time in Russia.”

China’s ambition to develop reliable sources of food stretches east and beyond the borders of Kazakhstan.

In early April, COFCO International, a state-owned agri-business in China, announced plans to double its grain imports from the Black Sea region in the next two or three years.

China and Chinese firms have pledged to invest a minimum of $7 billion in Ukrainian infrastructure projects, Xinhua reported last year.

One of the completed projects is a $40 million dredging of a Black Sea port at Yunzhny, so larger ships can load and unload.

In other words, Kazakhstan is just one part of China’s plan for the Eurasian Steppe.

The amount of arable land in the steppes of Ukraine, Russia and Kazakhstan are more than triple the acreage of Western Canada. For now, exports from the region explode in years with favourable weather and plummet in dry or wet years.

If their farmers figure out the agronomy and the management to get decent yields in years with adverse weather, Canada could struggle to compete.

“Within the next 25 years that Eurasian Steppe … will (become) a more consistent exporter,” Scholz said.

“Going forward, on commodity agriculture, they’re going to eat our lunch.”

Nichol is less concerned.

Yes, Russia, Ukraine and Kazakhstan could dramatically boost their agri-food exports, but that prediction has been around for two decades.

A “hockey stick” scenario, where production and exports suddenly explode off the charts, is unlikely, he said.

“I don’t really see it coming in a wave…. Improvements (in those countries) will be methodical and slow. But it’s coming.”

About the author

Comments

explore

Stories from our other publications