Struggling Kazakhstan to subsidise grain freight from January 1

Kazakhstan is to follow Russia’s lead and start subsidising the cost of rail freight for wheat exporters in order to get struggling farmers’ crop to market.

While exact details of the plan remain sketchy, Vice Minister of Agriculture Nurzhan Altayev told local media Wednesday that some KZT 9.7 billion ($28.9 million) has been earmarked from January 1 to help get Kazakhstan’s grain out of the country.

Ministry officials had previously categorically rejected the idea of state intervention in the grain market, although a lack of sales and collapsing prices appears to have forced their hand.

A domestic buying campaign, run by the Food Corporation, is designed to provide price support for farmers, buying up grains in times of plenty in order to maintain a floor price and releasing them when supply is tight in order to prevent excessive inflation.

The Food Corporation has already purchased a reported 270,000 mt this marketing year with plans to reach 330,000 mt by the end of the campaign.

However, competition from Russia has proven too much, as cheap wheat has made its way over the border into Kazakhstan. Prices paid by the Food Corporation to farmers slipped from KZT 60,000/mt ($178.84/mt) to just KZT 30,000/mt.

Competition from Russia is becoming familiar refrain for farmers and wheat exporters around the world this year, and it is apparently starting to take its toll.

Auezkhan Darinov, head of the Kazakh Farmers Union, warned in local news agency Atameken that problems are already emerging for next year’s crop sowing due to a lack of revenue.