The overproduction of potatoes in Kazakhstan was previously reported by the Ministry of Agriculture. What to expect from this consumer, at what price will he buy his favorite root crop? Whose markets are waiting for our products and when will the French fries factory appear in Kazakhstan?
With these questions, we turned to the head of the Union of Potato and Vegetable Growers of Kazakhstan Kairat Bisetaev.
- Kairat Serikbaevich, what is the market situation now? I remember there were years when it was predicted that the price could rise to 300 tenge.
- It was 2017, it was a record harvest, then we sold 270 thousand tons for export. For the first time in the history of Kazakhstan, we have achieved such a volume of foreign sales. In 2018, this figure was 170 thousand tons. There was a problem with sales, that is, there was an overproduction just last year. In autumn and winter, until spring, we sold potatoes for 30-35 tenge. And only in the spring the price rose to 75 tenge. I'm talking about prices from the warehouse of potato growers. At the end of the 2018 harvest, potato growers were in the red. This year's harvest is slightly more modest than last year - the weather conditions were tough.
- About what volumes are we talking about?
- If we talk about the potato growers of our Union, and these are farmers who have 50 hectares and more, are engaged in the industrial cultivation of potatoes, then in general it is about 700-750 thousand tons.
- Does such a volume completely cover the domestic need of the country?
- We are closing the market. I think that this year we will sell to Uzbekistan at the level of last year - at least 170-200 thousand tons. This is a medium-pessimistic forecast, and if we talk about an optimistic forecast, then somewhere around 250 thousand tons.
- Do we have good sales at the expense of Uzbekistan?
- Yes, this year Uzbekistan plans to import in the range of 300-350 thousand tons. These are preliminary plans. They will begin to harvest their crops in the second half of October. As a rule, they import from Kazakhstan and Russia. Russia is an autumn player in the Uzbek market. In addition, the Kyrgyz agreed on supplies with Uzbekistan this year. Last year there were none. Therefore, the competition is not easy.
I think we need to sell up to 200 thousand tons to Uzbekistan. Based on this, the balance is still pretty good. There are enough potatoes on the domestic market. What will happen in the retail market, we do not know.
The most important thing for our Union is to return the profitability of potatoes to us. Because it is very difficult to work negatively. Such disastrous years do happen, of course. One year is not fatal, but two years in a row - we must not allow this. The potato business is expensive in itself: you need to build an irrigation system, warehouses, buy special equipment. The overwhelming majority of potato growers have a loan burden that needs to be serviced.
- What is the current cost of potatoes?
- Many consider the production cost, in fact, it is not bad - within 20-25 tenge. But we still have loan obligations. If you ply them, then you get the same amount from above. Therefore, we need to sell at least 45 tenge. From stock. This is the threshold below which we cannot fall. And everything above 45 tenge, this already gives us profitability.
- In the summer you said that you are negotiating with Russian retail chains, are there any results?
- They come to us, because in the Urals, in Western Siberia there are no potato growers who could provide them with sufficient amounts to fulfill the contract from January to April. This period is in short supply. And we store vegetables until April-May and we can supply them.
But the fact is that we are industrialists, peasants. We can grow and store, and take them to a warehouse, other specialists should deal with logistics and other issues. The contract itself contains many stringent requirements. This is a refund, if suddenly it is not for sale, and retrobonuses, and deferred payment, and other things that we have not encountered and we do not need.
A peasant will not be able to maintain a trade department with workers who will travel to distribution centers in Russia and negotiate. This is unrealistic. We are looking for an intermediary who could do this on our behalf and earn money on it.
The best option that was invented long ago in Europe is when the peasants unite in a cooperative and hire the one who will be engaged in marketing.
- Do you have a desire to create such a cooperative?
- There is. We are going to this, but we can not yet find people - professional sellers who would agree to this. I have already negotiated with several. Retailers, in turn, cannot come to us.
- Studied statistics for the last two years. Last year we imported potatoes from Great Britain and France.
- These are seeds.
- And China.
- Seeds are also imported from China. Now the Kazakh Agro Technical University is working together with a Chinese company that is engaged in breeding.
- This year we imported seeds from Finland and the Netherlands.
- Holland and Germany have always been with us, we import annually. There is also a small amount of seeds from Finland.
“So we don’t have our seeds?”
- Everyone who is engaged in the industrial cultivation of potatoes, in hectares - this is about 25 thousand in Kazakhstan, mostly sit on the European seed selection. 1-1,5% are given to Russia and Kazakhstan.
We work with European varieties, as ours are not competitive in comparison with them. We buy the best varieties, we know well all breeders. For the consumer, this is a plus. You eat good potatoes that meet the taste, have a beautiful appearance and yield. For us it is very important.
- The official statistics for January-August suggests that the import of root crops decreased by five times, to 5 thousand tons. It seems that we will close the gate for foreign suppliers soon.
- No, we do not close it, it is. And we do not see this tragedy. We have two types of imports, except for seeds. The first is in the offseason, this is June-July.
- This is the period when Pakistan comes to us?
- Yes, Pakistan, Kyrgyzstan and early Uzbek potatoes. This is normal, although we believe that the Turkestan region can grow early potatoes, but since, I repeat once again, the entrance ticket to this business is expensive, our entrepreneurs do not want to take particular risks. Therefore, we import. This is one kind of import. And the second type is cross-border, advantageous in terms of logistics. For example, it is more profitable to import the Atyrau region from neighboring regions than from Pavlodar and Karaganda. Therefore, there is always an import of Russian potatoes. And that's okay. It's the same in the south. There are Kyrgyz potatoes. And to say that we need to oust them from our market by 100 percent - we do not set such a task.
- Okay, we figured it out. Why do you think we still do not have a potato processing plant? For two years they have been talking, they promise to build in the Almaty region in 2020. Uzbekistan, they say, has already built it.
- Uzbekistan has opened a plant, but it is small. It is three times less than what is planned to be installed here. The project that we will have in Kazakhstan is very serious. It will allow you to work at the highest level. Its products can be delivered to fast foods without any problems. According to the requirements of the same McDonald's, KFC, Burger King, the Uzbek plant does not pass. We are now, while the project has not yet begun, and there are various difficulties that, I hope, will soon be resolved, we are already preparing to introduce a new certification system for potato seeds. This is one of the main requirements for the delivery of fries in the network of the same McDonald's.
Our Ministry of Agriculture has agreed with the Dutch Ministry that they will help us in the transfer of technology. We are now studying their experience and want to do something similar with us, in Kazakhstan. For such plants, one of the important conditions is product traceability. Unfortunately, our current system does not allow this, but we are working on it. The Ministry of Agriculture is ready to make a pilot project for potatoes and, if successful, to spread it to other crops.
- Since this year, rules have been adopted that will allow retailers to keep prices for some social products, but in return for this they will receive soft loans. How do you feel about this?
- I do not quite agree with that. It would be fairer to give this money to the peasants. We can get a higher yield and better quality, but in the spring we do not have enough money to comply with all the technologies as it should be. And if the Government gave us this money through the akimats in the spring, the peasants could fix part of their harvest at prices.
- The meat alliance seems to be in solidarity with you. But there was an opinion, I do not remember whose, that farmers already receive money in the form of subsidies.
- I and the same Meat Union agree with me that it is necessary to gradually reduce the number of subsidies. This is irrecoverable budget money. We are also responsible citizens of the country. Any subsidy should solve some temporary problem. We need loans more, cheap and long. This is more efficient and less market distorting.
- Thanks for the interview!
Aigul Tulekbaeva, https://inbusiness.kz/ru