In this section, we have always shared information about how potato growing is developing in different parts of Russia. But this time they decided to go beyond their usual borders in all senses and devoted a significant part of the issue to Kazakhstan - Russia's southern neighbor, which had not previously held the title of "potato-growing power" in history, but managed to turn from a major importer into an exporter of potatoes in a very short time.
Kairat Bisetaev, Chairman of the Board of the Union of Potato and Vegetable Growers of Kazakhstan, tells about how the country managed to achieve such success and what tasks it still has to solve.
About achievements and a little about statistics
Kazakhstan has always been import-dependent for potatoes. In Soviet times, we received potatoes from Belarus, in the post-Soviet period - from neighboring countries.
The potato industry received a serious impetus for the development in the 5s. At this time, a general economic recovery began in Kazakhstan and a competent credit policy was carried out: financial resources were issued for 7-4 years at 2008% per annum. Leasing programs were no less profitable. In conditions of “cheap money” it was relatively easy to start a business, and by 2010-XNUMX one could speak of the first noticeable results. Although at that time Kazakhstan was still dependent on foreign supplies: since January, potatoes from Pakistan, Iran, China, not to mention Kyrgyzstan and Russia, were massively imported into the country.
By 2016-17, Kazakhstan's potato growers, for the first time in the country's history, managed to fully provide the domestic market with products and displace imports. Moreover, the volume of fees allowed us to speak of a serious export potential. The government and business, of course, can attribute this fact to their achievements.
Now in the country's agricultural farms (not counting the personal farms of citizens) about 25 thousand hectares are allocated for potatoes, this entire area is under irrigation. These 25 thousand hectares feed the entire urban population of Kazakhstan, and besides, we can export 200-300 thousand tons.
The average potato yield is 35-37 t / ha. I think this is a good result, five years ago in most farms the yield did not exceed 30 t / ha, but since then the competence of potato growers has greatly increased. I think that if in the coming years there are no serious blows to our business "from outside", the average yield will reach 40 t / ha. Although there are already farms in the country harvesting 50-55 t / ha, and we believe that this is the very benchmark to which it is necessary to strive.
The total volume of gross harvest, according to official data, is about 4 million tons of potatoes (in farms of all forms). In reality, I think, no more than 2-2,2 million tons. Unfortunately, the tradition of counting "with errors" has been preserved in our country since the Soviet era, but in the near future we will get rid of it: digitalization is being actively introduced in the country, an inventory of all lands is under way. I am sure this will help solve the problem with biased statistics.
Seed growing supported by Europe and breeding by order of business
Since the early 2000s, potato growers in Kazakhstan have relied on modern, highly productive varieties of European selection. Now the share of these varieties in farms exceeds 90%, and significant amounts of seed are imported annually from Germany and the Netherlands. This is a serious problem for our country.
Kazakhstan has developed a program for the development of potato selection and seed production, but it is designed for a long period of implementation, and so far we are at the very beginning of this path.
One of the key strategic tasks that we set ourselves for the near future is a significant increase in the volume of seed potatoes produced in our country.
Kazakhstan has a number of advantages for the development of seed production. We do not have a deficit of territories (as, for example, in the Netherlands), that is, there are no problems with compliance with a four-field crop rotation. The pluses include a sharply continental climate: harsh winters help get rid of many pathogens, and dry summers make it easier to control bacterial and fungal diseases. Taking this into account, it is obvious that at relatively low (less than in many European countries) costs we can get a high-quality healthy harvest.
We expect to attract the attention of European breeders in order to jointly grow European varieties of seed potatoes on our territory, and then sell them not only in Kazakhstan, but also in the countries of Central Asia and Russia.
Certain steps in this direction are already being taken. Thus, a delegation from Kazakhstan (representatives of business, the Ministry of Agriculture) visited the Netherlands, met with breeders, representatives of the NAK (Main Inspection Service of the Netherlands for the Quality Control of Seed Material), discussed the possibilities of cooperation. And we saw interest from Europe.
Now we have to go through two important stages, preceding the start of joint work.
The first is to join the UPOV (Organization for the Protection of Breeders' Copyright). The second is to develop our own seed certification system (it will be based on the NAK system adapted to our conditions).
I am sure that all this is feasible, which means (against the background of a rather attractive investment climate in Kazakhstan as a whole), plans for interaction will be implemented.
But speaking about the need to attract European specialists, the importance of growing European varieties in our territory, we do not forget about our selection. Now, 36 varieties of potatoes are included in the Register of Breeding Achievements of Kazakhstan. We want to expand this list, but new Kazakh varieties should be comparable in characteristics with the best foreign ones.
What kind of potatoes do modern agricultural producers want to grow in Kazakhstan?
First, we need early and mid-early varieties - this is a request from the farms of the northern regions of Kazakhstan (where the main "potato" enterprises are located). I note that there are not enough such varieties for historical reasons: the Institute of Potato and Vegetable Growing of Kazakhstan is located in Almaty, that is, in the south of the country. And the scientists of the institute have always focused on varieties for cultivation in the south.
Secondly, varieties with yellow flesh are in demand on the market, this is the trend of the last 7-8 years.
Also in the list of necessary qualities of the product is high yield, excellent presentation (many domestic varieties are famous for their excellent taste, but at the same time they have uneven peel and deep eyes, which prevents Kazakh potatoes from competing with European ones), good keeping quality, resistance to diseases and pests.
And this is not just the wishes of the farmers, but practically a program for action.
In January 2020, business representatives participated for the first time in a meeting of the Academic Council of the Institute of Potato and Vegetable Growing of Kazakhstan. The heads of agricultural enterprises had the opportunity to talk about their needs and make adjustments to the work plan of breeders for the coming years. I hope that working in dialogue, we will get good results.
As I said, the last three years in Kazakhstan, the yield of potatoes has been seriously increasing. But the achieved indicators are not the limit, they can be increased by at least one and a half times, which means that another 400-450 thousand tons of products can be obtained even without increasing the area. The main condition for this is high-quality seeds of highly productive varieties.
Land and water as the main drivers of growth
However, the area will also increase. Kazakhstan has free land on which to do business and sufficient water resources to continue to develop irrigation.
Potato growing in Kazakhstan is one of those plant growing subsectors that naturally develop at the expense of business. When agriculture becomes attractive, outside investors first of all want to invest in irrigation, realizing that the entire agricultural wedge in Kazakhstan is located in the zone of risky farming. For the entire growing season (from spring to August inclusive) in the country, on average, 50 to 150 mm of precipitation falls, so irrigation is our salvation. Thus, the attractiveness of agriculture in Kazakhstan can be judged by the development of irrigation.
And today a separate state program for the development of water resources and irrigation has been adopted. Now in the country there are about 1200-1300 thousand hectares under irrigation, by 2027 the task is to double these areas, and this is quite realistic.
And if people introduce watering, then first of all they want to grow potatoes and vegetables of the borsch set, because these crops provide the highest return (especially in the northern part of Kazakhstan, where we have the largest water resources).
Storage. Domestic market is provided with potatoes 10 months a year
I cannot say that Kazakhstan has 100% solved the issue of supplying modern potato storage facilities. We have a lot to work on. Nevertheless, farmers fully provide the domestic market with quality potatoes from mid-July (from the beginning of harvesting early potatoes) to April inclusive.
May could have been closed without difficulty. But at this time, fresh potatoes from Uzbekistan usually begin to come to us, and there is no point in competing with them with the products of the old crop. From mid-May to mid-July, we sell fresh potatoes from more southern countries and we think that's okay.
Sales on the gray market
With regret, I can note that at the moment almost all potatoes grown in Kazakh agricultural farms (as well as borscht vegetables) are sold through the markets. Even the bulk of Moscow retail chains (at least 80%) prefer to buy “dirty products” at bazaars - that is, in places where no payment systems operate and it is impossible to trace the number of intermediaries.
The fact is that supermarkets classify potatoes as products that simply have to be in the assortment, they do not rely on profit from it, therefore they buy "through third parties." As a result, quality potatoes are far from always on store shelves, although they are produced in sufficient quantities.
Of course, there are exceptions: one trading network has been buying potatoes directly from the farms that are part of the Union for four years and considers this product to be one of those on which to really make money. The network competently builds a pricing policy, competes with bazaars, and it does well. But so far this is an isolated example.
In general, the situation when there is a gray market between the farmer and the final buyer of the product, which strongly affects the price level, is no longer satisfactory to anyone. Such a scheme does not increase the farmer's income, and the product becomes less accessible to the population.
We hope that the recently organized Ministry of Trade of Kazakhstan will help to correct the situation, which will professionally promote agricultural products - including on the domestic market.
The Union of Potato and Vegetable Growers is now working together with the new ministry to build commodity routes, ensuring their transparency at all stages. We want all market participants to understand: where markups occur and why, at what price the product gets to the buyer and what share of it the manufacturer gets.
How much is the “entrance ticket” to the business and under what conditions will the investment pay off? Reflections on potato prices
Potato growing is a complex business that requires large investments at the initial stage. We need special equipment, irrigation equipment, storage. The "admission ticket" is very expensive. As a rule, a beginner potato grower has to take investment loans. And it is very important that at the time when this loan is being serviced (as a rule, it is 5-7 years), the market works flawlessly. That is, the farmer must receive a high-quality product in large volumes, and the market must buy this product at a price that will provide the manufacturer with profitability. Unfortunately, both the first and the second do not always happen.
To begin with, when a person acquires everything they need to get started, they often have no funds left for running expenses. And in our conditions, in order to grow a decent harvest of potatoes, it is necessary to invest about 1 million tenge per hectare during the season (for comparison: when growing grain, costs are about 1 thousand tenge / ha, oilseeds - 30 thousand tenge / ha). This is a lot of money, and it is necessary for the farm to fully purchase fertilizers, protective equipment, and renew seeds on time. Not always and not everyone succeeds. But if the farmer, due to lack of funds, begins to simplify the technology, the yield falls, and the producer does not receive the income that would allow him to normally service the loans that hang on him.
On the other hand, it so happens that a strong farm, which has enough working capital, gets a large harvest of high-quality potatoes, but cannot sell the grown at a profit: in conditions when the domestic market is oversaturated and exports are unstable, the price of potatoes does not provide profitability.
Currency fluctuations provide very big problems for potato growers. We work on European and American technology, buy European plant protection products and seeds. But we are selling the bulk of the crop on the domestic market. When the tenge falls, it hits the potato profitability hard.
Not so long ago, a graph was published in Kazakhstan, reflecting the increase in prices for goods in the consumer basket over the past 10 years. During this time, the country has experienced a lot: jumps in exchange rates, inflation. Many vital products have risen in price at times. But potatoes took the last line in this rating, their price increased by only 46%.
Moreover, when drawing up the schedule, for some reason, the indicators of 2018 were not taken into account (very difficult for potato growers in terms of falling income). If they were taken into account, then the growth for potatoes would be 20 percent.
We work under conditions when the market determines the price. But it is important to understand that if farmers systematically suffer losses, the country may at some point simply lose some industry. In my opinion, the authorities should control this situation.
It is necessary to develop our own breeding, to establish processing, to conduct jewelry work in foreign markets - this is the formula that will allow us to strengthen and develop the potato growing direction in the country.
Export. Focusing on the nearest neighbors
It is known that crop growth leads to big problems if the country does not have a well-thought-out system for marketing the crops grown. From a business point of view, Kazakhstan really needs a healthy protectionist policy to promote our products to foreign markets.
We all understand that potatoes are not a commodity that can be traded around the world. This is a local product that is in demand primarily among the closest neighbors. We are guided by them.
One of the most important directions for us is Uzbekistan. Every year this country imports 300-400 thousand tons of the product (and sometimes up to 500 thousand tons). At the same time, the maximum volume of potato supplies from Kazakhstan to Uzbekistan has not yet exceeded 269 thousand tons. There is room to grow. The geographical location of our country, production volumes and product quality allow us, with a competent export policy, to supply about 300-350 thousand tons to Uzbekistan.
The Russian market is no less interesting for Kazakhstan. Of course, a lot of potatoes are grown in Russia: we see both the dynamics of yield growth and a constant decline in import volumes. But still Russia buys potatoes abroad and a lot (on the scale of Kazakhstan).
In addition, it should be noted that in Russia irrigation is well developed in the central part of the country, but in the Urals, in Western and Eastern Siberia, potatoes are often grown without irrigation, there are crop failures, while these territories are a fairly capacious market. And we see our niche here. From an economic point of view, it is much more reasonable to supply potatoes to these regions from the northern regions of Kazakhstan than from Bryansk or Chuvashia.
With a competent arrangement of logistics, given the certain advantages that Kazakhstan has as a member of the Eurasian Economic Community, we could effectively work with networks in the eastern part of Russia. Now we do not do this for a simple reason: there is not enough intermediary. We have producers who grow excellent products and know how to store them. On the Russian side, there are buyers (retail chains) who are ready to accept the goods and are interested in it. But the supply of products to retail chains is a very difficult matter, there are a lot of nuances, it is a separate business. Finding people who want to do it is a separate task that we cannot yet solve.
The third potential export destination is China. In this country, the processes of reduction of agricultural land are actively underway (due to urbanization, the construction of a large number of industrial enterprises), there is also the problem of soil degradation - and all this against the background of a constantly growing population. Every year the question becomes more acute: how to feed the population? Scientists of the country believe that a possible answer could be a restructuring of the diet of the country's inhabitants (the main product should not be the usual rice, but more high-calorie potatoes).
At the same time, it is clear that in local realities, an increase in the consumption of potatoes by each citizen, even by 1 kg per year, is an increase of 1,5 million tons at once, which opens up great prospects for exporters. It cannot be ruled out that the policy of changing the diet in the country will be implemented faster than the process of developing new areas. And our agricultural producers must be ready for this.
Recycling. We create from scratch
With processing, everything is a little more complicated.
In 2016, the Union of Potato and Vegetable Growers of Kazakhstan invited one of the largest potato processors in the world - a well-known Dutch company to visit our country. We showed the representatives of the company our farms, and the specialists appreciated both our achievements and our capabilities. And in a few years - after testing of special varieties in all regions of the country - and our great prospects.
The company decided to open a plant in the south of our country, in the Almaty region, as it turned out that it is here that potatoes for processing into fries show the best results: the climate and soils make it possible to obtain a yield of up to 100 t / ha.
The place for construction was determined, the amount of financing was agreed. But the project has not yet been implemented. The main problem is that in the south of Kazakhstan there are no large potato farms ready to take on the responsible role of suppliers of raw materials for the plant. It is necessary first to deal with the development of the resource base. The company's specialists are ready to do this, but this year a pandemic has become an obstacle to starting work.
We are very grateful to our potential partners that they are serious about this issue, and we hope for the best. This project is very important for the country: it can give a serious impetus to the development of potato growing in general, and to the formation of the processing industry. Let's not forget that Kazakhstan in this regard is very different from Russia, where there are traditions of the production of products from potatoes (starch, for example), there are factories (albeit outdated, since Soviet times), there are research institutes working for these factories - which means there are specialists, technologies and experience. We have to create everything from scratch.
Season 2020. Recovery time
This year has brought many challenges to everyone.
Spring was remembered by the introduction of quarantine and the borders closed around the world. We must pay tribute to our government: for the sowing campaign to take place, the management of work processes in March, April and May was carried out almost in manual mode. Each deputy akim of the region was in direct communication with all customs posts located on the territory of his region, any issues were resolved promptly. Nerves were wasted, but all shipments of seeds that came to us from Europe were delivered on time.
Since April, an abnormal heat began in the country, which stood for three months. The air humidity reached 15%, the earth was heated to 60 ° C. Watering had to be started a month earlier than usual. Nevertheless, we got a decent harvest of potatoes - according to the last count, we harvested about 900 thousand tons in the industrial sector. This is not the highest result if we compare it with the indicators for the previous five years, but it allows us to provide the domestic market with reinforced concrete and export another 250-280 thousand tons abroad.
Of the positive trends this year, I can note the relatively high prices for our products.
Over the past three years, potato growers have been in tough conditions of low - almost zero - profitability, and in 2018 many remained in a serious minus. And now we hope that due to the good price this year we will be able to “lick our wounds”: remove delinquent loans, repair equipment, and strengthen work on nutrition and plant protection. At the moment we do not have the opportunity to talk about development, while we are talking about restoration.
Well, in general, the history of the formation of potato growing in Kazakhstan is a worthy example of the successful synergy of private initiative, investment climate and nature in creating a practically new industry. And this is just the beginning!