Overview

Overview	2006	2007	2008(estimated)
Total Market Size	351	431	481
Total Local Production	16	16	17
Total Exports	5	5	6
Total Imports	340	420	470
Imports from the U.S.	89	126	180

In USD Millions; Note: the above statistics are unofficial estimate based on Kazakhstan customs data and industry source.

Agriculture accounts for about 9% of Kazakhstan’s economic production.  Agricultural land occupies about 93 million hectares with 22 million hectares of arable land.  Farmers raise sheep and cattle, and chief livestock products are dairy goods, leather, meat, and wool.  The country’s major crops include wheat, barley, cotton, and rice.  Wheat exports, a major source of hard currency, rank among the leading commodities in Kazakhstan's export trade. Kazakhstan’s land code allows private ownership of agricultural land or long-term lease for Kazakhstani companies.

2008 was a successful year for the agricultural sector as agricultural output grew by 17%. The export of agricultural products, mainly presented by wheat, grew 57% reaching $2.9 billion. According to the Ministry of Agriculture, for the first time the agriculture industry reached a positive balance in its export-import operations.

Nearly 80% of machinery currently used is at the end of its lifecycle and agricultural companies are actively replacing it.  Local production is insignificant and major demand is satisfied by imports.  In 2008, the Kazakhstani agricultural machinery and equipment sector was estimated at $480 million, with $470 million of that from imports.  The U.S. is a market leader for agricultural machinery and equipment with a 30% market share, followed by Russia (20%), Germany (15%), and Canada (12%).  This represents a great change in the market division, showing U.S. market share growing dramatically while the traditional leading supplier, Russia, has decreased its market share from 30% to 20%.  Italy, Netherlands, Belarus, Turkey and China were other large suppliers.  In 2007, Kazakhstani agricultural companies made the largest investments into grain harvesting combines, seeders and tractors.  According to industry specialists, it is profitable for local firms to purchase Western machinery when the price of grain reaches $100 per ton.

In 2008, Kazakhstan had a harvest of 15.6 million tons of grain in bunker weight. The export potential is 6 million tons. Grain producers enjoyed relatively high prices, which varied from $160 to $220 per ton in different regions.  Kazakhstan avoided a sharp decrease in grain prices, which seriously impacted neighboring grain producing countries, due to a higher quality of Kazakhstani wheat normally having higher gluten content.

Currently there are about 15 million hectares under grain cultivation, with an average yield of about 12 quintals per hectare.  However, as industry specialists note, climatic conditions in the wheat growing areas in the north of Kazakhstan permit increasing average yield rates up to 20 quintals per hectare, provided farmers use modern technologies and equipment.  Average production cost is about $65 per ton. In the next 3-5 years, Kazakhstan plans to increase grain exports up to 10-12 million tons per year by modernizing agricultural technologies, machinery fleet, developing export routes and related infrastructure.  As a result of increased exports, revenue is expected to grow to $5 billion.

Kazakhstan’s agricultural sector has been receiving increased investment infusion from the national budget over the last three years.  Starting in 2008, the GOK plans to further increase financial support to agriculture and allocate over $1 billion annually over the next three years.  The GOK announced that it would not cut funding to the agricultural sector, even under the difficult conditions of the financial crisis. On the other hand, Kazakhstani farmers are facing a lack of financing previously available from commercial banks. Due to the severe liquidity crisis, Kazakhstani banks have avoided lending to agriculture, and sharply increased annual interest rates up 15-20%.

For purchase and lease of agricultural machinery and equipment, commercial banks and state supported financing are available.  Kazagrofinance, a state leasing organization that uses combined financing resources, including government allocations and international export credit agency loans, leases agricultural machinery at the most favorable terms on the market – 4%-8.5% annual interest rate for a 7-year term.

Best Prospects/Services

U.S. exports to Kazakhstan mostly consist of grain harvesting combines, reapers, sprayers, tractors, seeders, cultivators, and grain drying and cleaning equipment.  American products enjoy an excellent reputation with Kazakhstani producers.  In light of the lower dollar exchange rate vs. the Euro, Kazakhstani producers are very much interested in purchasing U.S.-made equipment.  Interest by large agricultural producers in importing Western made equipment will remain high due to the need to replace worn out equipment and the availability of state-funded financial resources.

Best prospects include: 100-150 hp tractors and combines for southern regions, tractors of greater than 250 hp and combines for northern regions, pneumatic seeders, reapers, sprayers, grain drying and cleaning technologies, storage quality control systems, engineering and design services for cattle feed complexes and on-farm processing facilities.

Opportunities

The government of Kazakhstan and local producers are looking for partners to increase domestic production of some agricultural equipment and set up new manufacturing facilities of agricultural machinery and equipment by attracting foreign investment and expertise.