Kazakhstan extends moratorium on bread price increases until end of October

By bne IntelliNews September 30, 2014

bne -


Kazakhstan has extended the capping of bread prices until the end of October to avert social discontent caused by rising food prices. 

The original memoranda on grain prices were signed by the Agriculture Ministry, local administrations and the Food Contract Corporation national grain operator in February following a 19% devaluation of the tenge. The extension of the memoranda will help maintain the price of bread until the grain of the new harvest hits the market. 

"The State Commission for Modernising the Kazakh Economy adopted a resolution on September 10 to extend the duration of memoranda on measures to stabilise the price of a loaf made of wheat flour grade 2 and [the price of] flour grade 2," the grain operator said in a press release on September 30. "In order to avoid a sharp rise in the price of the cheapest bread until satiating the domestic market with flour of the new grain harvest, the state commission decided to extend the duration of the aforementioned memoranda,” the press release explained. 

Food Contract Corporation purchases grain to build up state and commercial reserves at a set price in order to prevent the sale of grain at a dumping price. It plans to purchase 280,000 tonnes for a state reserve and buy up 1m tonnes for commercial reserves this year. 

Under the memoranda, Food Contract Corporation set aside 518,000 tonnes of grain - 182,000 tonnes from state reserves and 336,000 from commercial reserves - to release it to the market between February and August 2014. The national operator plans to supply 100,000 tonnes of grain in September and October. As of September 1, the regions received 401,200 tonnes of grain. The plan envisages supplying wheat to mills chosen by local administration at a set price of KZT30,000 (some $165) per tonne. The average price of the "social" loaf, i.e. bread made of wheat grade 2, is around KZT60 ($0.33) in the country's largest city, Almaty. A kilo of flour grade 2 costs about KZT120 ($0.66).

The harvest is underway in the country's main grain-growing regions in the north. According to the Agriculture Ministry, grain farmers reaped 12.9m tonnes of grain from 11.1m ha of land as of September 29. The total area sown under grain is 15.9m ha.

In order to help farmers successfully conduct the grain-harvesting campaign the Kazakh government provides subsidies for fuel, and it also regulates the prices of diesel fuel and octane 80 and 92 petrols in the country to keep food prices under control. Ahead of the harvest, the Oil and Gas Ministry pledged that the country's oil refineries would supply 410,000 tonnes of diesel fuel at a reduced price of KZT95 per litre. With transport and other costs borne by fuel distributors, diesel fuel is estimated to cost KZT108 per litre for farmers against KZT115 per litre on the market. As of September 29 the refineries delivered 354,600 tonnes of diesel fuel to farmers. 

Grain exports soar to Iran and China

The government expects the grain harvest to total 17m tonnes this year, of which 6m tonnes will be consumed domestically and 7m tonnes will be exported. Last year the country harvested 18.9m tonnes of grain, and 14.7m tonnes in 2012. In September Saktash Khasenov, chairman of the Agriculture Ministry's Committee for State Agricultural Inspection, said that the country had exported 8.7m tonnes of grain in the 2013-2014 marketing year, including 5m tonnes since the beginning of 2014. Iran, Turkey, Azerbaijan, Russia, Uzbekistan, Kyrgyzstan and Tajikistan are the main export destinations for Kazakh grain.

In April Nurbek Dairbekov, commercial director of Food Contract Corporation, said that Iran was set to import 1.2m tonnes of grain from Kazakhstan this year against around 0.5m in the previous years. He linked the increase in the Iranian imports to the construction of a Kazakhstan-Turkmenistan-Iran railway line which is expected to start operations this November. Dairbekov also suggested that China would increase purchases of Kazakh grain to about 370,000 tonnes this year, double the amount it purchased in the previous two years.

With the aim of increasing grain deliveries to Iran and China and further to the Gulf and Asia-Pacific, the Kazakh government has announced it will build grain terminals on the Turkmen-Iranian and Kazakh-Chinese borders.

Related Articles

COMMMENT: Great challenges for Eurasia call for decisive solutions

Juha Kähkönen of the IMF - The Caucasus and Central Asia (CCA) region continues to navigate a wave of external shocks – the slump in global prices of oil and other key commodities, the slowdown ... more

IMF calls for Central Asia to tighten monetary policy

Naubet Bisenov in Almaty -   Caucasus and Central Asian (CCA) countries need to tighten their monetary policy to anchor inflation expectations, but excess tightening may weaken financial ... more

COMMENT: Once I lived the life of a millionaire…

Peter Szopo of Erste Asset Management -   No, the title of this column is not the first line of the autobiography of an erstwhile emerging markets investor – although it could be. Somebody who ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.