FoodCorporation actions paralyzed grain market in Kazakhstan

The ease with which the FoodCorporation manages budget money has always been surprising.  Here is another example: on October 28, the company, part of the state holding KazAgro, suddenly announced an increase in purchase prices for grain.  Moreover, raising them above the market – 85 thousand tenge per ton.

 The peasants reacted immediately, writes KazakhZerno.kz.  If earlier they sold their grain at 78 – 80 thousand tenge, now they demand at least 90. Moreover, they refuse from previously concluded contracts and return the money.  All farmers expect that the price will not only remain at the current level, but may also creep higher.

 And here we see what a disservice the FoodCorporation provides to the country’s farmers.

 The fact is that she herself plans to purchase a strictly limited amount at the announced price.  And – only with certain companies.  This is generally the work style of the FoodCorporation – maximum opacity and dubious selectivity in choosing partners.  Who, how, under what conditions gets the right to supply them with grain – a secret behind seven seals, which could be opened by anti-corruption special services, but for some reason not paying attention to the signs of the existence of doubtful schemes for using public funds.

But this is a separate discussion.  Now we are talking about how the FoodCorporation is substituting peasants who, naturally, dream of selling their crops at a higher price.  No, nobody is going to blame them for this.  But the fact is that the market nevertheless regulates the price, and if non-market factors (such as the purchase of FoodCorporation) come into force, then sooner or later they will come to naught.  And the situation is returning to reality.

 And the reality is that there were much more grains than everyone had planned.  And in the whole world, and among our closest neighbors.  In Russia, with expectations of 110 million tons, 122 million were threshing already. And they continue to harvest.  In Ukraine, with the expectation of 60 million tons, 77 million were pouring into the bins.

What does this lead to?  Naturally, to reduce artificially “heated” prices.  Already today, a ton of wheat costs $ 210 – 213 on a barge in Novorossiysk, and $ 220 on an elevator in Kazakhstan!  And she still needs to be delivered to the port!  And this is about $ 50.

 As a result, Kazakh grain is becoming uncompetitive.  And not needed by anyone except the FoodCorporation.  But she is an episodic buyer, as we have said.  He will take his 200 thousand tons – and hello.  What will all the other farmers stay with?

And they will stay with a nose.  After all, experts are warning more and more insistently that instead of growing to 100 thousand tenge per ton, grain will soon drop to 70 thousand. And then those who today refused the contract for 80 thousand will regret it.

Flour mills also warn about this – flour from such expensive wheat is not sold in our traditional markets.  The maximum price of grain suitable for flour mills is 70–75 thousand. And this means that expensive Kazakh grain is not needed for mills.  They act simply – they take wheat in Russia, where it turned out to be much more than expectations.  Kazakhstan enters a large amount of grain from the border regions of the Russian Federation, and this cannot but put pressure on the price.

 Who will end up in the victims through the fault of the FoodCorporation?  The peasants.

“To prevent this from happening, it is high time to bring the FoodCorporation to the need to conduct transparent tenders for the purchase of grain”, the expert said. ”They twist state money, because they are part of the structure of the KazAgro holding.  So, they should spend it under control, and as efficiently as possible.  That is, declare an open tender and purchase the right amount from the one who made the lowest price offer.  And it’s not clear who doesn’t take at a fixed inflated price.  This is the only way to protect the market from manipulation, and peasants, traders and flour mills – from damage”.    

Myrzabek Smagulov

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