Kazakhstan: Record Harvests, Price Decline, and Trade Conflicts
Market Overview Kazakhstan (March 2025)
Kazakhstan is experiencing strong grain production, particularly in wheat and barley. Favorable weather conditions over the past year have resulted in an above-average harvest, significantly boosting exports. However, trade barriers with Russia persist.
Wheat Production and Trade
- Total Production: 16.5 million metric tons of wheat in MY 2024/2025 (+26% compared to the previous year).
- Yield Increase: Average yield of 1.32 tons per hectare (+43%).
- Export Increase: Expected wheat exports of 10 million metric tons (+27% compared to the previous year).
- Price Decline: Prices dropped from $166/MT to $127/MT due to quality issues and high supply.
- Lower Snowfall: A mild winter in 2024/2025 could negatively impact the 2025/2026 harvest.
Trade Conflict with Russia: Protectionism and Geopolitical Tensions
Kazakhstan and Russia, traditionally close economic partners, are currently experiencing significant trade conflicts in the agricultural sector. These are driven more by economic protectionism and geopolitical interests than phytosanitary concerns.
- Russia Blocks Kazakh Exports for Economic Reasons: Kazakhstan's record wheat harvest has significantly lowered prices, putting pressure on Russian farmers. Kazakh wheat has become more competitive in traditional Russian markets (such as Central Asia), prompting Russia to impose trade barriers to protect its domestic agriculture.
- Trade Barriers as a Political Tool: Since October 2024, Russia has imposed import restrictions on various Kazakh agricultural products, including wheat, tomatoes, flaxseed, and lentils. Rosselkhoznadzor, Russia’s agricultural oversight authority, officially cites increased pest infestations as the reason. However, many analysts view this as a protectionist measure to shield Russian producers.
- Kazakhstan’s Response: Kazakhstan has expressed concern over these trade barriers and sought a diplomatic resolution. Kazakh Minister of Agriculture Aidarbek Saparov hoped to resolve tensions through bilateral talks within a week.
- Transit Issues: Russia only allows the transit of Kazakh grain under strict conditions. Kazakh exporters report major logistical problems, as new phytosanitary regulations require direct shipment of railway wagons onto vessels without intermediate storage. This has made exports to Europe and the Caucasus extremely difficult and costly.
- Reaction to Kazakh Wheat Import Restrictions: In August 2024, Kazakhstan itself imposed restrictions on Russian wheat imports to protect its farmers from price drops. This measure expired on January 1, 2025, but Russia has continued its restrictions.
- Geopolitical Background: Kazakhstan is actively seeking alternative export routes for grain and oil to reduce dependence on Russian transport corridors. Meanwhile, Russia is attempting to maintain its geopolitical control over Central Asia by limiting Kazakhstan’s trade options.
Top Kazakh Wheat Export Markets
- Uzbekistan (+28%)
- Afghanistan (+3%)
- Tajikistan (+19%)
- China (-21%)
- Iran (Significant import decline)
Barley Production and Trade
- Production: 3.8 million metric tons (+46.9% compared to the previous year).
- Exports: 1.8 million metric tons expected, main markets: Iran, China, Uzbekistan.
- Price Decline: Prices fell from $114/MT to $95/MT between September and December 2024.
Storage & Infrastructure
- Kazakh grain silos are 39% full (8 million metric tons of free capacity).
- Regional differences: North Kazakhstan 45% capacity, Almaty only 4%.
Political Developments & Tariffs
- Kazakhstan lifted wheat import restrictions on Russia (effective January 1, 2025).
- Rail Transport Agreements with Iran, Russia, and Turkmenistan aim to improve export routes.
- Unified EAEU Tariffs for Grain: 5% import tariff for wheat and barley.
Conclusion & Outlook
- High Production, Falling Prices: The record harvest is pushing prices down, and the government is responding with financial aid.
- Trade Conflicts Hindering Growth: Russia’s transit restrictions remain a challenge.
- Russia Uses Economic and Trade Barriers as Geopolitical Leverage: Kazakhstan is exploring alternatives to reduce dependence on Russia.
- Weather Risks for 2025/2026: Low snowfall could reduce yields and increase pest problems.
The geopolitical situation between Kazakhstan and Russia remains tense, and further developments in trade policy will be crucial in determining how Kazakhstan can diversify its exports in the future.
