Clare Nuttall in Almaty -

Kazakhstan is planning to export up to 3m tonnes of grain to East and Southeast Asia this year after China lifted a ban on such exports through its territory.

Overall, Kazakhstan is willing to export 3m tonnes of grain via China this year as both Japan, the world's largest importer of grain, and South Korea look to the Black Sea grain belt as a new source of imports. Kazakhstan will export a total of 2m tonnes of grain to South Korea in 2010, President Nursultan Nazarbayev announced during a visit to Seoul on April 22. Imports to South Asian countries with fast-growing populations and little available arable land are also increasing.

Until recently, Kazakhstan was unable to access these markets due to a Chinese ban on grain transit through its territory. However, from the beginning of this year the ban has been lifted. Kazakhstan's Contract Food Corporation, part of state holding company KazAgro, signed an agreement with China Cereals, Oils and Foods Corporation (Cofko) to export 20,000 tonnes of wheat during the spring of 2010; 50% of the total was delivered during the first two months of this year. "One of the perspective directions for Kazakhstan grain export is China and South Asian countries," says Zhanna Baitemirova, head of the analytical service at KazAgroMarketing. "In 2011-12, construction of a grain terminal on the Chinese border at Kostyk-Alashankou or Khorgos is planned. The terminal will have capacity of around 500,000 tonnes, and will include an elevator with storage capacity of 25,000 tonnes."

Although China is a major grain producer, there are already signs the country will substantially increase imports this year, with Chinese companies signing contracts for additional imports from the US and Australia in early 2010.

Beijing is also very interested in using Kazakh lands to produce crops for Chinese consumption, which is likely to have been a factor in the decision to open up the country to Kazakh exports. However, this is an extremely contentious issue in Kazakhstan, with rumours of Chinese land purchases sparking rare demonstrations in Almaty. Kazakh government officials insist the law prohibits the sale of land to foreigners, but are considering leasing land to China.

Spreading the grain around

Even before China opened up its borders, Kazakhstan's grain exports were becoming increasingly diverse. "The bulk of Kazakhstan's grain exports were traditionally to [Commonwealth of Independent States] countries. However, in recent years their share decreased considerably. In 2006, it was 62%, but by 2009 it had decreased to 41%," says Baitemirova.

Outside the CIS, Kazakhstan's main export markets in 2009 were Iran, Turkey and Afghanistan, which accounted for 735,000 tonnes, 440,000 tonnes and 316,100 tonnes of grain respectively. Exports to Iran have increased rapidly from just 27,900 tonnes in 2006, and are set to increase further after the Kazakh grain terminal in Amirabad became operational in May. KazAgro plans to export up to 2m tonnes of grain to Iran this year, KazAgro chairman Assylzhan Mamytbekov told a March 2010 grain conference in Astana.

Kazakhstan is also building a terminal in Baku, which, like the Amirabad terminal, will receive shipments from the new grain terminal at Kazakhstan's Caspian port of Aktau. "Establishing transport infrastructure for grain export, including sea terminals in Aktau, Baku and Amirabad, will create conditions for the clear-cut ascendancy of Kazakh grain exporters among the Caspian littoral countries and in the Caucasus," says Baitemirova.

At the same time, a new mill elevator complex is being built at Beyenu in the Mangystau region, which will make it possible to increase transport of grain and flour by road and rail transport to Uzbekistan, Turkmenistan and Afghanistan.