EurasiaNet Business & Economics - Central Asia: Kazakhstan's Neighbors Await Decision On Grain Exports

BUSINESS & ECONOMICS

CENTRAL ASIA: KAZAKHSTAN’S NEIGHBORS AWAIT DECISION ON GRAIN EXPORTS
4/09/08
By Bruce Pannier
A EurasiaNet Partner Post from RFE/RL

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Kazakh Prime Minister Karim Masimov says Almaty plans this week to either introduce new duties on grain, or impose a complete ban on exports. The decision could have serious repercussions for neighboring states, which have endured one of their worst winters in decades.

The move by Kazakhstan is designed to lower bread prices in Kazakhstan, where inflation has hit people hard. Spiraling prices for basic goods has already sparked protests through the region.

Kazakhstan is the breadbasket of Central Asia, and the only state in the region that exports grain, about 50 percent of the 21 million tons it says it harvested last year. According to Stratfor, Kyrgyzstan imports 214,000 tons of grain from Kazakhstan; Tajikistan 216,000 tons; Uzbekistan 117,000 tons; and Turkmenistan 2,400 tons.

Central Asian countries have few alternatives to Kazakh grain. Transportation costs often make grain from elsewhere prohibitively expensive, while growing more grain of their own is not a viable option. Much of the land in Kazakhstan’s four southern neighbors is used to grow cotton, and the cropland that exists is incapable of providing enough grain for the bread needed for the roughly 45 million people living there.

The Kazakh government indicated in March that the status of grain exports this year was being discussed. Anar Mishimbaeva, the chairwoman of the Kazakh Statistics Agency, told RFE/RL’s Kazakh Service that increases in grain prices are a worldwide phenomenon. She says the price of grain and grain products went up by 1 to 2 percent in March and "will go up even more."

The PROD food-contract corporation is the state company that has a monopoly on all grain in Kazakhstan. "The situation with prices on the world market has risen so much," says PROD Chairman Ruslan Azimov, who says a temporary ban on grain exports is "completely normal" during the planting period.

Pakistan, India, and Vietnam have already introduced bans on grain exports. Great efforts are being made by all states to prevent crop thefts.

Allegations Of Favoritism

Auezkhan Darimov, the chairman of the Farmers’ Union of Kazakhstan, says PROD’s purchase price for Kazakh grain is much less than they hoped for. "The PROD corporation never buys our crops at high prices, always at a [lower-than-market] price," Darimov says. "And the corporation doesn’t allow farmers to sell [their] crops to anyone else."

PROD reportedly does not allow just anyone to farm, either. There is something similar to an annual tender for farmers. The best bids receive money from PROD in advance for their crop and have access to a seed-credit agency.

There have been allegations of favoritism in that process and critics say some farmers "farm out" their own contracts, taking money from PROD, pocketing some and then giving another farmer money to actually grow the grain. That other farmer might then repeat the process, with each farmer receiving less and less to grow their crops.

But not every farmer gets a "contract" and their farms have little chance of being fully productive, at a time when the region needs every bit of grain it can grow.

Editor�s Note: Erzhan Karabek of RFE/RL’s Kazakh Service contributed to this report.

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