Volga Baikal AGRO NEWS Update on the Prospects for the Development in Kazakhstan !!!
Kazakhstan: prospects for the development of the flour processing sector:
Flour mills of Kazakhstan are ready to transfer production to Russia.
There is a situation in the market of Kazakhstan when it is not profitable to engage in grain processing – profitability has gone into a negative plane. In this situation, the country’s millers thought about moving their enterprises to Russia, where there is cheap grain, and flour exports are not limited in any way.
Talgatbek Alikhan Kairatbekuly, Vice-President of the Union of Grain Processors of Kazakhstan: “On the one hand, we are being squeezed by the flour mills of Uzbekistan, which are supported by the state, due to which they can get cheaper flour from wheat bought at the same price with us. On the other hand, we are pressed by Russia, which produces cheaper flour at the expense of cheaper raw materials. Look: now Kazakh wheat at the Saryagash station costs $420-430 per ton. Russian flour also costs $460 there. And we can offer Kazakh flour no cheaper than $480. Naturally, she finds it difficult to find demand. Although the fair price of our flour, taking into account current prices for raw materials, is $525 per ton (plus 25% to the price of grain). That is, it’s not that we don’t earn now – we lose 10% on each ton of flour.”
In the current critical situation, they see only one way out – to transfer their capacities to Russia, where they can work on cheap grain. For them, this is a forced way out, because the business is looking for the most favorable conditions.
“Working in Russia on the Russian wheat, we will be able to sell flour to Afghanistan or Uzbekistan at $380 per ton – cheaper than Kazakh wheat, – highlighted Talgatbek Alikhan Kairatbekuly. – As a result, the demand for grain in the domestic market of Kazakhstan will fall by 3-4 million tons per year. And, of course, it will decrease in the foreign market under the increasing pressure of the Russian flour supplied to the same Central Asian countries.”