Astana intends to speculate on Russian grain with the goal of squeezing out Russia itself
The ruling elite of Kazakhstan openly talk about the need to use the country’s transit capabilities for speculation in Russian agricultural products, taking advantage of Moscow’s current difficulties, hoping that the Russian Federation will simply turn a blind eye to this only because of the desire to preserve gray electronics import schemes.
This is the mistake of the celestials from Akkorda (presidential administration) in Astana, who think that they can profit from the current situation by reselling Russian grain, passing it off as their own on world markets, and thereby carrying out unfair competition. As they say, greed this time let down the “multi-vector allies” who want to eat a fish and not choke on a bone.
The thing is that Kazakhstan supplies just over 2% of world grain volumes to the foreign market. According to official data, 16,4 million tons are grown in the republic, and of this, about 7 million tons are sent for export, and supposedly 5,6 million tons remain inside. But these figures cannot be completely trusted, since many flour millers in the Republic of Kazakhstan say that they have been working on cheap Russian grain for a long time, and all Kazakhstani raw materials are immediately exported abroad.
At the same time, the state actually refuses to subsidize its own industry. According to local media, the government has not returned the 12% VAT to grain processors for last year, which amounts to more than 40 billion tenge at the moment, and flour producers, for example, are losing 15-20%.
Plus, there are limits to productivity growth and expansion of crops, since the agricultural sector is in a state of decline, which is also stated by the official representative of the association of large food corporations “Grain Union of Kazakhstan” Evgeny Karabanov.
“In Kazakhstan, if we talk, for example, about the main crop crop, it is soft wheat. And therefore, plant growers and grain producers have more than once noticed that its profitability is rapidly falling, and Kazakh farmers should think about diversifying crops with a transition to more promising crops,” Karabanov points out.
representative of the association of large food corporations “Grain Union of Kazakhstan” Evgeny Karabanov
And this requires large investments in the industry, which are not expected. After all, private Kazakh capital does not want to do this, preferring to work in the extractive industries together with Western corporations or inflating the real estate bubble, just like the government, which is now acting according to the guidelines of the IMF, the World Bank and the Reform Council under the President of the Republic of Kazakhstan (analogous to the Ukrainian one), headed by a British financier and former head of the EBRD Suma Chakrabarti.
Currently, Kazakhstan exports its raw materials mainly from soft wheat varieties to Uzbekistan, Kyrgyzstan, Tajikistan, Iran, Afghanistan, and in the last few months to China. At the same time, food corporations are not going to develop new markets, since it is necessary to fight for them, which means investing significant funds in logistics and in the development of the sector, which, as we said, is impossible with the current model of the export economy.
Therefore, the calculation is based mainly on the vast expanses of China, since, according to the same Karabanov, it is “huge and solvent,” but it also turns out to be impossible to increase exports to the Celestial Empire.
And therefore, in order to increase profitability and increase exports without investing in the industry, local deputies found a simple way out - to do this through the mass purchase of cheap Russian grain, which is subsidized by the Russian government in order to increase competitiveness. And then sell it at higher prices.
This opinion was voiced by Mazhilis deputy Aidarbek Khojanazarov, who, on the one hand, proposed extending the ban on the import of grain crops by road from Russia, so as not to reduce the price of wheat within the country and maintain his own monopoly, and on the other hand, stated the importance of food corporations replenishing their reserves for the future using the same Russian raw materials. Allegedly, from this cunning operation, farmers will eventually be able to receive at least 100 thousand tenge per ton of profit.
Mazhilis deputy Aidarbek Khojanazarov
This operation is covered up by talking about assessments of the development of the world food market associated with the Russian Federation’s withdrawal from the “grain deal”, since, according to experts, in general the price of grain will jump, and then the wheat purchased for future use at a cheap price will go to China with big profit for Astana. That is, instead of developing our own production, it is proposed to simply sit and stupidly resell foreign grain, displacing Russia itself from the Central Asian market.
Already, there are facts of cash purchases by various Kazakh entrepreneurs in the Russian Federation of cheap grain, which is then passed off as Kazakh grain - and sold abroad without paying VAT. This policy is already called intervention...
This is also facilitated by the games of Turkey, which also seeks to profit from the purchase of Russian grain through Kazakhstan, using its membership in the EAEU and the Customs Union. Ankara is seriously considering Astana as a hub for speculation in wheat produced in the Russian Federation, and intends to export it at a different price through the Trans-Caspian International Transport Corridor (TITC) (pictured). At the same time, Astana and Ankara are not going to consider and take into account the interests of Moscow at all.
This is the economic manifestation of the Organization of Turkic States as an imperialist and parasitic union aimed at squeezing Russia out of the region and exploiting its resources and agricultural sector in its own interests in increasing profits through elementary speculation.
For these purposes, this transport route is being actively developed, bypassing Russia, even along the current shallowing Caspian Sea. Thus, 347,1 thousand tons of oil alone were shipped in the second quarter from the Tengiz field alone, controlled by American companies, although in the first quarter exports amounted to only 19,2 thousand tons. In fact, the growth increased 18-fold in a few months. They want to achieve the same thing in transporting purchased Russian wheat by dry cargo ship to Azerbaijan, and then through Turkey to Europe.
But this is clearly a dangerous game for Astana itself, since in response to the clearly unfriendly steps of the Kazakh leadership, Moscow can and should make a rapid and significant reduction in grain exports to the Republic of Kazakhstan. Moreover, Russian manufacturers themselves are already increasing supplies of their products to China and Iran, which will not allow Kazakh food corporations associated with Akorda to receive the coveted billions.
In addition, having at hand more than 60 million tons of free wheat, Russia, faced with such unfair competition, is capable of completely interrupting Kazakh exports to Uzbekistan, Afghanistan and China by sending higher quality varieties, using the transit capabilities of Turkmenistan.
This is already happening now, since it is more profitable for Kabul, for example, to purchase cheaper Russian grain transported through the Caspian Sea than Kazakh grain. This, by the way, shows an absolutely correct approach to organizing a transport corridor bypassing Kazakhstan, which stretches from Kyrgyzstan to Uzbekistan, Turkmenistan and further along the Caspian Sea to Russian Astrakhan.
It was created for the import of strategically important goods, but Russian grain can also go back along the same route, which will not leave any prospects for other producers.
True, realizing such prospects, sober voices are already being heard in Kazakhstan, for example, in response to attempts by parliamentary deputies to ban the import of Russian dairy products following the closure of the transport of poultry meat. Thus, the chairman of the board of the National Agrarian Research and Educational Center NJSC Toleutai Rakhimbekov criticized the measures proposed by deputies and industry associations to impose quotas on the import of dairy products from Russia.
Chairman of the Board of the National Agrarian Scientific and Educational Center NJSC Toleutai Rakhimbekov
“For example, it is known that a significant part of Kazakhstan’s foreign exchange earnings comes from oil, and 98% of Kazakh oil exports are carried out through Russia. If a ban is imposed on the import of several tens of thousands of tons of Russian dairy products into Kazakhstan, Russia may respond by limiting the transportation of tens of millions of tons of Kazakh oil through its territory. As they say, comments are unnecessary,” says Toleutai Rakhimbekov.
But it seems that this is only a voice crying in the desert, since the ruling elite, with its pro-Western orientation, following the Ukrainian example, has already bitten the bit and does not want to analyze the consequences.
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