Kazakhstan Agribusiness Report Q3 2010 – New Market Report Published
Published on July 02, 2010
Our View: A government drive to improve domestic food self-sufficiency, coupled with a state desire to achieve greater economic diversification, are two factors behind our generally favourable growth outlooks for agricultural commodities over the five-year forecast period.
– Poultry to outperform the wider livestock sector in supply and demand growth terms; production to increase by 46.0% to 2014, albeit from a comparatively low base
– Wheat production to grow by 22.3% to 2013/14; favourable growing conditions, increased export opportunities and greater public and private sector investment to fuel growth. However, barley will be the outperformer in growth terms, production rising 45.6% to 2013/14, but from a lower base
– Fluid milk production to increase by 19.4% to 2014; sector fragmentation and inefficiency, even in larger privatised farms, to impede greater production increases
– 2010 Real GDP Growth Forecast: 4% (up from 1.2% in 2009)
– 2010 Consumer Price Index (% chg y-o-y) Forecast: 6.4% (down from 7.9% in 2009 and 17.0% in 2008)
Key Trends and Developments The value of Kazakhstan’s agricultural output increased by 23.4% year-on-year (y-o-y) in 2008 (the latest period for which data is available) to reach KZT1,384.2bn (US$9.41bn). Of the total, crops accounted for 55% at KZT761.1mn suggesting that well-established sectors, such as the grains market, continue to dominate output over less mature areas, such as livestock and dairy. Excluding grains, which have benefited from Kazakhstan’s status as a major global grains trader, agriculture in the market is fairly underdeveloped. This immaturity and the fragmented nature of the sector is one of the reasons behind our favourable industry growth outlook; significant strides can be made through increased commercialisation alone.
Risk to Outlook
Specific risks to our outlook are detailed in each Commodity Outlook. However, a key theme running through our forecasts is the impact that a significant and sustained uptick in oil prices could have on agricultural investment and thus growth. Of course, higher oil prices would mean greater government revenues and the capacity to invest more in economic diversification. However, a sustained period of inflated prices would remove one of the key motivations for economic diversification and could thus stall planned efforts.