KAZAKHSTANI GRAIN IN SEARCH OF NEW MARKETS.

Kazakhstani grain-producers are facing two new challenges. One is that grain yields have fallen substantially since the Soviet period. Compared with a 1997 grain output of 12.3 million tons and exports of 3.5 million, Kazakhstan this year is expected to have a lower than average harvest of only 10.5 million tons, of which a mere 2.5 million are expected to be exported. (Reuters, June 24) The other challenge is that Kazakhstan’s traditional market–Russia–has in some recent years produced higher domestic yields.

Kazakhstan’s latest yields are a far cry from the thirty million tons the country used to produce regularly in the Soviet era. This year’s unusually high temperatures are the immediate cause of the predicted shortfall, but long-term factors also play a role. In the wake of large-scale privatization, farmers lack the finances to repair machinery and pay for fertilizers and seeds. Thousands of farm workers are working without pay, leading to substantial out-migration from rural areas. In many places, privatization has not led to enough reductions in farm size to achieve effective management. Meanwhile, even if early reports of poor 1998 crop conditions in Russia hold out the promise of renewed demand for Kazakhstani exports, Russia’s high 1997 crop curtailed demand for Kazakhstani grain this trade year.

At a government meeting convened on June 23, Nurlan Smagulov, chief of one of Kazakhstan’s largest state-owned grain exporting companies, called on the government to help exporters by subsidizing grain production and reducing transport costs for grain, which often has to travel thousands of kilometers by rail to reach its final destination. He argued against the government’s plans to control exports by introducing compulsory grain export licensing, arguing that this would hinder healthy competition. Meanwhile, producers are seeking to tap new markets. During a visit to Astana last week, Iran’s Mines and Metals Minister, Eshaq Jahangiri, signed a contract for the delivery of 100,000 tons of grain to Iran. (Russian agencies, June 24) — SC

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