2.1.2 Kazakhstan Agricultural Overview
Kazakhstan is an important producer and exporter of high-quality wheat. Average annual production is about 13 million tons, but output is highly dependent on weather and in recent years has fluctuated between 10 and 17 million tons. Between 2 and 8 million tons is exported annually, mainly to destinations in Europe (including Russia and Ukraine), northern Africa, and Central Asia. Kazakhstan also produces around 2 million tons of barley, and a small amount of oats, corn, and rice, but wheat is by far the country’s most important commodity. The production of oilseeds (sunflower seed and rapeseed) is increasing but total oilseed output remains well below 1.0 million tons. The country also grows a small amount of cotton in southern Kazakhstan, with annual lint output at around 100,000 tons.33
Land Use
According to Kazakhstan’s first comprehensive agricultural census, conducted in 2006, 61 percent of Kazakhstan’s 76.5 million hectares of agricultural land is permanent pasture, and 32 percent is classified as arable land (systematically cultivated for the production of row crops). Of the remainder, 3 percent is used for hay production and 4 percent is “long fallow” (indicating potentially arable land that has remained uncultivated for at least several consecutive years). Of the 24 million hectares of arable land, about two-thirds, approximately 18 million hectares, is devoted to grain production.34
Total sown area, including grains, forage crops (mostly perennial grasses), technical crops (chiefly oilseeds and cotton), and food crops (potatoes, vegetables, and melons) decreased sharply during the late 1990’s due to the contraction of grain and forage-crop area. (The decline in grain area actually began in the 1970’s.) Grain area began to rebound in 2000, and by 2008 had grown by 40 percent from the 1999 level, while forage area essentially stabilized in the early 2000’s after a 10-year nosedive.
The Main Wheat Production Region
Kazakhstan consists of 14 administrative territories, or oblasts. About 75 percent of the country’s wheat is produced in three oblasts in north-central Kazakhstan: Kostanai, Akmola, and North Kazakhstan. Kostanai alone plants about 4 million hectares of wheat, as much as the entire state of Kansas. Spring wheat occupies 95 percent of the total wheat area in Kazakhstan and virtually all of the wheat in the three north-central oblasts. Minor grains include spring barley and oats (which are grown in the same region as spring wheat), winter wheat (southern Kazakhstan.), and rice (southern Kazakhstan, mostly in Kzyl-Orda oblast).
Decline and Rebound in Wheat Area
After peaking at 19.6 million hectares in 1969, Kazakhstan wheat area began in the mid-1970's to decrease gradually as fields of marginal productivity were taken out of production. In the early 1990’s, following the breakup of the Soviet Union and the loss of massive government subsidies for State and collective farms and livestock enterprises, local agricultural officials began to set productivity thresholds for individual fields. Fields that consistently failed to meet the threshold typically 0.6 to 0.7 tons per hectare against a national average of about 0.9 tons per hectare were taken out of grain production and converted to permanent pasture. The decline in grain area accelerated in the mid-1990's when shrinking livestock inventories caused feed-grain demand to plummet, leading to a 75-percent drop in barley area between 1993 and 1999. During these six years, total grain area in Kazakhstan contracted at the rate of nearly 2 million hectares per year.
Wheat area started to rebound in 2000 and by 2009 had increased by nearly 70 percent, to 14.7 million hectares, coincident with a steady recovery in State subsidies for agricultural inputs. (Barley area remained fairly stable over the same time, fluctuating between 1.7 to 2.1 million hectares.)35
Figure 2: Kazakhstan Grain Area in the period of 1961-2009
Source: The agency of Statistics of the Republics of Kazakhstan, http:/www.stat.kz/ digital/agriculture/garin_area.html, (Retrieved on 15th of May,2011)
Oilseeds and Cotton
Oilseed area has nearly doubled in the past five years but still accounts for only about 6 percent of the country’s total crop area. The planted area of sunflowerseed, Kazakhstan’s main oilseed crop, has increased from about 450,000 hectares in 2004 to over 700,000 hectares in 2009. Sunflowers are grown mostly in eastern Kazakhstan. Rapeseed area has increased as well, from only 15,000 hectares in 2004 to about 200,000 hectares in 2009. Rape is grown in north-central Kazakhstan. Yields for both crops are consistently low, typically between 0.5 and 0.7 tons per hectare.
Cotton is grown only in South Kazakhstan oblast. Yields are lower than in neighboring Uzbekistan and production is hampered by a deteriorating irrigation infrastructure. (All of the country’s cotton is irrigated.) Planted area doubled bet-ween 1997 and 2004, reaching a record level of 216,000 hectares, then contracted nearly as sharply over the following five years. Estimated production for 2009 was the lowest in over ten years.
Grain Quality
Because of the country’s dry climate, the quality of Kazakhstan wheat is relatively high. Class 1 wheat (with protein content no less than 13.5 percent) and class 2 wheat (no less than 12.5 percent) are referred to as silnaya, or strong, and grade 3 (no less than 12.0 percent) as tsenaya, or valuable. All three are considered milling quality. Class 4 (no less than 11.5 percent) and class 5 (below 11.5 percent) are slabaya, or weak, and are used for feed grain or alcohol production. In a year of reasonably favorable weather and average yield, about 75 percent of the wheat crop will likely qualify as milling quality. In general, grain quality tends to be hi-gher in a drought year; quality typically increases as yield decreases. In the drought year of 2004, for example, 90 percent of the wheat qualified as milling grade. Qua-lity is highest in the more southern (and drier) production regions of the main pro-duction zone in north-central Kazakhstan. Protein content typically reaches 14 per-cent in Akmola and southern Kostanai oblasts. Above Petropav-lovsk, in the nor-thern tier of North Kazakhstan oblast, protein content seldom exceeds 11 percent. CropRotations
The dominant crop rotations for fields under conventional tillage systems are essentially unchanged from Soviet times, except that the share of wheat relative to barley and oats has expanded as planting decisions have become increasingly market-driven. The four-crop (or four-field) rotation is the most popular, and typically includes two consecutive years of wheat followed by one year of barley, oats or sometimes an oilseed crop depending on the location. Some enterprises have eliminated barley and oats from the rotation and plant nothing but wheat.
Conventional rotations include a year of clean fallow, during which no crop is planted. The purpose of the fallow year is to preserve soil moisture. Two consecutive years of wheat almost always follow the fallow year, and the first wheat crop enjoys the benefit of increased subsoil moisture. Assuming normal weather, yield drops by 15 to 20 percent for the second wheat crop. The use of clean fallow has decreased by 20 percent over the past five years due to the increasing use of reduced tillage.
Reduced Tillage
One of the most interesting developments in Kazakhstan agricultural in recent years has been the emergence and growth of reduced-tillage technology (described in Kazakhstan as moisture-saving technology). There is no strict definition of what constitutes reduced tillage or minimum tillage, but the term typically implies the elimination of moldboard plowing and an increased reliance on chemical weed control. Under a strict no-tillage system, neither plowing nor secondary tillage is used. According to the Ministry figures, reduced tillage was employed on almost 60 percent of the sown grain area in 2009, including 1.3 million hectares under no-tillage. The Ministry has set a nation-wide goal of up to 80 percent reduced tillage within five years.
Although grain producers indicate that there is no clear yield advantage to either conventional or reduced tillage in a season of normal precipitation, reduced tillage preserves soil moisture and reduces (but certainly does not eliminate) the risk of yield loss in the event of drought. Adoption of a reduced-tillage regime also enables grain producers to eliminate the fallow year from the typical four-year crop rotation and plant a crop every year, which substantially increases the productivity of the field.
Reduced-tillage technology lowers fuel costs by eliminating one or more field operations, but increases herbicide costs because cultivation is replaced with chemical weed control. According to agricultural-enterprise directors, the savings in fuel costs roughly compensate for the increased chemical costs. In order to encourage the increased use of reduced tillage, the Ministry of Agriculture offers a higher direct subsidy for no-tillage wheat than for conventional-tillage wheat, and plans to increase government subsidies for herbicides.
For enterprises with old machinery, the adoption of a reduced-tillage system typically entails the replacement of outdated seeders with newer units designed to accommodate the technology. This machinery upgrade can be prohibitively expensive, especially for small enterprises or family farms. (For more information on reduced tillage, link to trip report.)
Technology
Although weather remains the single most important determinant for grain yield in Kazakhstan, improvements in crop management practices fueled by expanding State subsidies have contributed to higher and more stable wheat yields. Beginning around 2002, government support for agriculture has increased significantly in the form of reduced prices for fuel, seed, fertilizer, and agricultural chemicals. The average wheat yield for 2005 through 2009 is 13 percent higher than the average yield of 1986 through 1990, which was the peak of the so-called intensive technology movement in the Soviet Union.
Following a post-Soviet-era plunge, application rates for mineral fertilizer increased nearly six-fold between 1999 and 2007, and continue to increase due in part to the subsidized prices. Arguably the most important technological factor contributing to the improvement in Kazakhstan grain yield is the increase in the use of certified planting seed. The government provides support to agricultural research facilities, paying 40 percent of the research and development costs for breeder and foundation seed. Most enterprises use only first-reproduction seed (similar to certified seed in the U.S.) or higher-quality elite seed. The growth in certified-seed use was rapid: in 2002, only 50 percent of planting seed was certified seed; the remaining 50 percent was "common" seed (seed reserved from the previous year's harvest). By 2004, the use of certified seed had increased to 94 percent, including an increase in the use of elite seed (top-quality certified seed) from 37 to 57 percent.
The Structure of Farm Management
Farms in Kazakhstan are divided into three categories: agricultural enterprises, private (or peasant) farms, and subsidiary household plots. Agricultural enterprises tend to be large-scale operations (similar to the State and collective farms of the Soviet era) and are involved strictly in commercial production of commodities. Agricultural enterprises account for about 65 percent of Kazakhstan grain production. The average size of the 5,000 enterprises that are involved in grain production is about 3,000 hectares, but large-scale operations dominate the grain-production sector. According to the 2006 agricultural census from the State Statistical Agency, 77 percent of the total grain output from agricultural enterprises is produced on enterprises that are larger than 5,000 hectares (about 12,500 acres).
Peasant farms are typically family farms and are substantially smaller than agricultural enterprises. Nearly 200,000 peasant farms produce grain, and they account for about 35 percent of the country's output. According to the 2006 census, 95 percent of the farms are smaller than 1,000 hectares.
Peasant farms, like agriculture enterprises, produce commodities mainly for sale rather than for private consumption. Official data indicate that grain yields on peasant farms are significantly lower than on agricultural enterprises. Agricultural officials and other observers attribute the yield gap in large part to the aging machinery fleet on peasant farms; peasant farms typically cannot afford to lease or purchase new equipment.
Household farms are small personal subsidiary plots (average size 0.15 hectares, or about one half of one acre) that are used to produce crops or livestock chiefly for personal consumption. Kazakhstan's 3 million household farms produce less than 1 percent of Kazakhstan grain but account for 50 percent of the country’s poultry inventory and 85 percent of the cattle.
Agro-holding companies play a large role in Kazakhstan agriculture. An agro-holding company typically operates as an umbrella company for numerous individual agricultural enterprises, providing operating capital and marketing channels for commodities produced on the farms. In Kostanai, the top grain-producing oblast in Kazakhstan, over 40 percent of the agricultural area is held by the four largest holding companies. (The largest holding company controls 900,000 hectares in Kostanai – 20 percent of the total sown area in the oblast – and owns 70 percent of the grain elevators.) In North Kazakhstan oblast, about 20 agro-holding companies control 80 percent of the sown area. The government owns all agricultural land, and farmland is leased to holding companies, agricultural enterprises, and peasant farmers under 49-year leases.