Kazakhstan is the second-largest republic of the former Soviet Union, after Russia, and the ninth-largest country in the world. With 19 million inhabitants and a territory of 2,725 thousand km2, it is one of the least densely populated countries. The country has an abundance of natural resources, including oil, gas, coal, uranium, and other mineral deposits. Kazakhstan is also emerging as a major transport and logistics hub in the region, linking the large and fast-growing markets of China and South Asia to those of Russia and Western Europe by road, rail and ports on the Caspian Sea. Kazakhstan presents a trade gateway to a market of about 100 million consumers in Caspian Sea countries, 76 million in Central Asia and 350 million in Western China.

Kazakhstan has an export-oriented economy that is highly dependent on shipments of oil and related products (58 percent of total exports). In addition to oil, its main export commodities include natural gas, ferrous metals, copper, aluminum, zinc and uranium. It counts China, Italy, Russia, the Netherlands, Uzbekistan, India, Turkey, and France as its main export destinations. However, spillovers from Russia’s economic collapse will disrupt Kazakhstan’s supply chains, weaken trade flows and dent its growth prospects, according to the World Bank. Real GDP growth is expected to be 3.5-4.0 percent in 2023. 

Agriculture plays an essential role in Kazakhstan’s economic, social, and environmental development. Given its abundance of land and the fact that yields are low compared to regional levels, Kazakhstan is considered to have a large agricultural potential. The Kazakh government sees agriculture as a priority sector and is seeking to improve its competitiveness and increase the level of investments.

Kazakhstan is Central Asia’s largest grain producer and only significant exporter. Over a third of Kazakhstanis’ livelihoods depend directly or indirectly on the country’s extensive rangelands for food, fodder, fuel, and medicinal plants. Animal husbandry also remains an important economic activity with around 75 percent of all agricultural land used for grazing. 

In 2021, the agricultural sector accounted for approximately 5.1% of Kazakhstan’s economic production. Approximately 45% of the country’s population lives in rural areas, and incomes of almost 30% of the economically active population are generated by employment in the agricultural sector. According to the Statistics Committee of the Ministry of National Economy, out of the total number of 8.5 million employed, two million people work in the agricultural sector. Approximately 75% of the country’s territory is suitable for agricultural production, but only about 30% of the land is currently under agricultural production. 

Kazakhstan remains Central Asia’s largest grain producer, capable of exporting approximately half of all the grain it produces each year. Together with Russia and Ukraine, Kazakhstan is considered as a ‘future main player’ in world grain supply. 

Wheat is the country’s largest crop by acreage, accounting for 80% of grain production, but it also produces barley, cotton, sunflower seeds, and rice. The country is also the region’s largest flour exporter by volume, shipping mostly to other Central Asian countries and Afghanistan. 

Most of Kazakhstan’s grain is produced in the three northern regions of Akmola, North Kazakhstan, and Kostanay, while large-scale production also takes place in East Kazakhstan, Abai, and Pavlodar. Farms in these regions can be quite large, some reaching 500,000 hectares or more. Producers in these regions rely on agricultural machinery, improved seed varieties, and multiple applications of fertilizers and pesticides to maintain production, while production in the south is smaller scale.

Located at the far eastern reach of the Eurasian wheat belt, globally Kazakhstan is ranked fourteenth in terms of wheat production and eighth for wheat exports. Wheat is an important component of Kazakhstan’s export trade and the country plays a key role in local, regional and international food security. However, although much of the agricultural area is sown to wheat, the yield per hectare is below regional and international levels. Thus, despite a range of uncertainties and an underdeveloped infrastructure, Kazakhstan’s development as a reliable and sustainable source of global wheat supply is of strategic importance.

On January 31, 2023, the Kazakh Bureau of National Statistics published the final report of area planted, area harvested, production, and yields for main crops. The Bureau reported no significant changes to the area harvested for wheat and barley in the 2022/2023 season compared to 2021/2022. The area harvested for oilseeds increased 15 percent in 2022/2023 as producers reported continued favorable domestic prices and export opportunities.

The Bureau reported wheat production at 16.4 million tons in 2022/2023, a 39 percent increase from the prior year due to improved weather and precipitation conditions. Similarly, barley production was reported at 3.3 million tons, also a 39 percent increase from last season. Wheat yields in 2022/23 are estimated at 1.27 tons per hectare, a 38 percent increase from the previous season.

On February 7, 2023, the Kazakh Ministry of Agriculture announced the country’s planting outlook for the 2023/2024 season. The total planting area for all crops was expected to be 23 million hectares, with no increase from 2022/2023. The Ministry anticipated some planting intention increases for feeding crops and sugar beets.

Kazakhstan usually exports six to seven million tons of grain and 1.5-2 million tons of flour, but last year was record-breaking for exporters. Kazakhstan exported 3.7 million tons of wheat and wheat flour in 2022/2023 (September-December), a 31 percent increase from the same period last season. Uzbekistan, Afghanistan, and Tajikistan remained the top three buyers of Kazakhstani wheat and wheat flour. Wheat exports to Uzbekistan were reported to be 1.5 million tons, an increase of 36 percent compared to the same period in the prior marketing year. Afghanistan was the second largest importer at one million tons, an increase of 82 percent compared to the same period the prior season. Tajikistan imported 519,000 MT, an increase of nearly 27 percent.

Based on the increase in wheat production and strong demand from traditional export markets, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Astana estimates wheat and wheat flour exports for the 2022/2023 season to be 9.5 million tons, which is a seven percent increase from the previous season.

The Kazakh Ministry of Agriculture is looking for ways to open new markets for Kazakh grain exports. In this regard, the ministry officials met with Chinese representatives to discuss agricultural market access issues. Chinese trade representatives suggested the possibility of receiving a Kazakh trade delegation, given that China has lifted most COVID-19 travel restrictions. In response to the perceived re-opening of the China market for Kazakh agricultural products, grain traders are more optimistic that grain exports to China could increase further, however, they noted grain container shipments to China are still relatively expensive.

Wheat and wheat flour exporters reported a prolonged shortage of rail cars for grain shipments within Central Asia. In previous years, seasonal rail cars shortages were reported to last up to three months, however, this year shortages persisted into February, six months after the harvest season. Kazakhstan’s railway authorities have acknowledged the shortages and pointed to the removal of trains by railway administrations in Russia, Uzbekistan, and China. According to the largest flour miller in Kostanay, flour exports from the mill in February were expected to be only 30 percent of the planned volume due to rail car shortages.

There is a strong regional concentration in the milling industry, and most milling capacity, particularly for export, is concentrated in three geographic clusters. In order of importance, they surround the cities of Kostanay, Shymkent and Karaganda. Almost half of Kazakhstan’s flour is produced by mills in the northern grain region.

The competitiveness of Kazakh wheat exports is massively affected by the transactional costs associated with shipping. They have a particularly strong negative impact in high-yielding years when the prices are low in both the world and the regional markets. Controlling and cutting transport and transaction cost is a key competitiveness factor in Kazakh wheat exports. Quantitative and regional coordination of wheat production and storage and shipping capacities, reducing the fluctuation of wheat production, infrastructure development projects, improved transport organization and cutting non-official costs are essential requirements.

Kazakhstan has great potential for expanding its wheat production and exports in the future. It could play a non-negligible role in fulfilling local, but especially regional, food security. By compensating for the export fluctuations of other major players, it could have an important stabilizing role on the world market for wheat and thereby contribute to global food security. Nevertheless, this positive view on the future of Kazakh wheat production is highly conditional on several factors. Climate change may lead to considerable yield losses, although increased fertilizer use and sustainable practices could mitigate the effects. In addition, investments in infrastructure and machinery will be essential to unlock the wheat potential of the country and to compensate for the potential consequences of climate change, water scarcity and soil degradation.