FAO Regional Office for Europe and Central Asia

FAO, EBRD and Kazakhstan look at grain market transparency

Currently the world’s eighth-largest wheat exporter, Kazakhstan can expect to benefit from a projected increase in global consumption of wheat over the next 10 years. But before the country can reach its full production and export potential, the sector still needs to address key challenges.

“Enhancing grain market transparency in Kazakhstan” is a joint technical-assistance project by the Food and Agriculture Organization (FAO) of the United Nations and the European Bank for Reconstruction and Development (EBRD), working together with local partners. The project concludes this week with a conference in Astana, organized by FAO and EBRD in cooperation with Talap, a local non-governmental organization.

The conference brought together 60 participants representing farmers, grain processers, government officials, representatives of the Food Contract Corporation, national and international grain-market analysts, quality control experts, transport companies, grain traders and commodity exchange experts. A range of issues covering grain-market data availability, grain storage, transport and commodity exchange trade was discussed during the conference.

One of the project’s two main objectives is to increase transparency in the country’s grain market for potential investors. The other is to foster Kazakhstan’s participation in the work of the Agricultural Market Information System (AMIS).

Grain market transparency
Over the AMIS project lifetime, the collection and dissemination of grain market data has improved significantly, including the collection of yield data through surveys, detailed official statistics on grain flows and stocks as well as a new electronic system for grain warehouse receipts.

However, further progress in market analysis could be achieved through the official release of – and regular updates on – the country’s grain balance, which is based on the national wheat-marketing year. In addition, wider dissemination of the data collected on grain use and consumption would considerably improve transparency, leading to better-informed decisions by domestic and foreign investors.

The conference participants concluded that developing grain trading through commodity exchanges requires macroeconomic and financial stability, the creation of a trusted legal and regulatory framework and a government price-support system that accommodates commodity exchange trade.

Kazakhstan’s participation in AMIS will support the improvement of grain-market data quality and availability through a regular and systematic exchange of data on markets and policies with other major grain-trading nations.

Focus on storage and drying
Grain storage and transport are two other priority areas in the country. “While Kazakhstan generally has sufficient capacity to store and transport grain by rail in a normal year, the distribution of storage capacity and the availability of grain drying equipment could still be improved,” said Dmitry Prikhodko, Economist at FAO’s Investment Centre Division.

“The EBRD is ready to support the development of this strategic sector, building on its substantial experience of investing in modern grain storage and logistics in transition economies,” added Azamat Shamsiev, Principal Banker in the EBRD agribusiness team.

Addressing the above challenges, which limit the further development of efficient grain-market infrastructure, would allow the country to fulfil its potential as a major wheat producer. While some initial steps have been made, measures to reform the sector are considered to be crucial for improving market efficiency and increasing Kazakhstan’s competitive position in the region and globally.

FAO and EBRD efforts in Kazakhstan are contributing to the FAO strategic objective of enabling inclusive and efficient agricultural and food systems.

17 November 2016, Astana, Kazakhstan