Kazakhstan still a long way from ambitious beef export target

By bne IntelliNews April 11, 2013

Clare Nuttall in Astana -

In the last three years, tens of thousands of breeding cattle have been imported to Kazakhstan from as far away as Australia in a drive to make the country a high quality beef producer and meet the government's ambitious target of exporting 60,000 tonnes of beef a year by 2016. Restrictions on exports to Russia mean that almost all meat produced in Kazakhstan is consumed domestically, but officials at state agricultural holding company KazAgro are confident that controls will be lifted in time to meet the target.

Airlifts of pedigree cattle from the plains of North Dakota to the Kazakhstani steppe started in October 2010. Some 2,000 Angus and Hereford cattle were flown over by KazBeef, a joint venture set up by Dakota-based Global Beef Consultants and Kazakhstan's largest meat producer KazMeat. This was followed by mass airlifts from other countries, including 2,500 Angus heifers flown in from Australia by another major Kazakhstani meat producer Sever Agro N to stock a ranch in the far north of the country near the Russian border.

According to Alpamys Omarov, deputy director of KazAgro, the imported cattle have acclimatised well to Kazakhstan's extreme continental climate, helped by consultants from the US, Australia and other countries. "We have imported cattle from Australia, Canada, the US and the EU," Omarov says. "The climate in the northern plains of the US is similar to ours and in Canada it is even colder. Australia of course has a warmer climate, but cattle from all countries performed well in Kazakhstan."

The only major setback so far came when 722 heads of Austrian cattle, intended for two farms in north Kazakhstan, were discovered during their quarantine period to be carrying the agent for viral diarrhea and Shmalenberg's virus. The animals were destroyed, preventing the infection from spreading to cattle already in situ, and Kazakhstan is seeking compensation from the supplier. However, the incident highlighted the risks of large-scale cattle imports and in future Kazakhstani inspectors will check cattle before they are imported.

Getting the numbers up

Until recently, cattle such as Angus, Charolais and Hereford were not bred in Kazakhstan, which urgently needs to improve the gene pool of its cattle as well as simply boost numbers. Kazakhstan saw a sharp fall in the number of cattle in the years immediately following the collapse of the Soviet Union in 1991. As the collective farms broke up and the new government paid less attention to supporting agriculture than the emerging oil and gas industry, productivity slumped in areas from grain to dairy products.

Wheat production, for example, plummeted in the 1990s, but has recovered in the last decade with strong government support, and despite fluctuations from year to year achieved a record harvest in 2011. It has been a similar story for animal husbandry, where the number of animals and the quality of livestock declined sharply in the 1990s. Now both farmers and government are working to reverse the decline and bring the sector into the 21st century.

KazAgro is helping the sector to grow by providing financial support for farmers through its Sybaga programme, which enables farmers to obtain cheap credits to buy cattle and build related infrastructure. This includes improving the quality of herds by helping farmers to import high-quality breeding cattle.

According to Omarov, the programme has been popular with farmers. A total of 59,000 heads of cattle were purchased in 2012 alone, compared with a target of 42,000. Since Sybaga was launched, Kazakhstani farmers have imported 30,000 cattle - some 8,000 more than projected - and KazAgro is aiming to support the import of 72,000 cattle by 2016.

KazAgro also supports investments into infrastructure, because of the need to build everything from feedlots to modern factories that can process and package meat products to the high sanitary standards required for export. When the Sybaga programme started, Kazakhstan had feedlots with spaces for 37,500 heads of cattle; by 2016 this is set to increase to 150,000.

Interest has also been sparked among international investors, with Israel's LR Group reported in March to have signed a deal with KazAgro to set up beef production in south Kazakhstan. LR is planning to build a large-scale complex handling everything from production of fodder to meat processing.

However, it takes time to build up a herd and mature cattle for slaughter, and Kazakhstan has not yet seen an increase in beef production, which has fluctuated between 373,000 tonnes and 407,000 tonnes in the period from 2007 to 2012.

During the same period, Kazakhstan increased total meat production from 833,100 tonnes to 926,400 tonnes, with the main contributors being higher production of mutton, horsemeat and especially poultry, which almost doubled from 64,300 tonnes in 2007 to 123,100 tonnes in 2012.

With its population of just under 17m and large areas of steppe for grazing, Kazakhstan is ideally suited to ramp up meat production and increase exports to its neighbours. The creation of the Customs Union also meant that in theory Kazakhstani farmers should be able to export large volumes of meat to the Russian market.

In addition to the target of exporting 60,000 tonnes of beef a year by 2016, Astana wants to see exports of 180,000 tonnes a year by 2020. "In 1990, the final days of the Soviet Union, Kazakhstan was exporting around 200,000 tonnes of meat, so we believe the target is achievable," Omarov tells bne.

Unfortunately, in recent years Kazakhstan has been unable to export meat to Russia because of veterinary and accreditation requirements and other non-tariff barriers. As a result, Kazakhstan has made virtually no progress in boosting exports, although Omarov is optimistic that with the lifting of barriers expected before long the target is still achievable.

Although Kazakhstan also borders China and three Central Asian republics, Russia is considered the highest potential export market for Kazakhstani meat, and most large local companies are concentrating their efforts on preparing for exports to Russia. Modern meat processing and packaging factories are being built in northern cities such as Astana and Kostanai in readiness to access the market once it opens up.

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