Grain Shortage Hits Major Exporter

The price of bread in Kazakhstan is set to rise even though this year’s grain harvest is expected to top 20 million tons. NBCentralAsia analysts say that the government has forfeited grain security at home to strengthen its position on global markets.



On September 10, the ministry of agriculture announced that bread prices will go up by five to seven tenge on average this month, or around five US cents.



To stabilise prices, the ministry has proposed that the government purchase grain on the domestic market and use it to create a reserve stockpile.



NBCentralAsia economic observer Ivan Voytsekhovsky, explained that the grain from last year’s crop has all been exported and this year’s harvest is not in yet, leaving a temporary gap in supply.



Global wheat prices jumped to an all time high in mid August due to a worldwide dip in supply. Kazakstan is the sixth largest grain exporter in the world, selling mostly to the four other Central Asian states. The whole region is experiencing shortages and the price of bread in Tajikistan’s capital Dushanbe rose 33 per cent last week alone.



NBCentralAsia analysts say Kazakstan has failed to manage the situation and should have kept back reserves to cover the grain deficit at home.



Political scientist Eduard Poletaev says that Kazak grain producers are sidelining domestic customers by strengthening their position on world markets.



“The global [grain] situation is in Kazak exporters’ favour, but unfortunately this situation is harming both domestic buyers and Central Asian buyers,” he said.



Poletaev said the crisis has been a test of both the market economy and the state’s ability to regulate the grain market, and has shown that the Kazak economy still has weaknesses.



Kazakstan has struggled with inflation in recent years, and the official rate for January-August this year is six per cent year on year, although independent observers say the true figure may be much higher than the official one.



Voytsekhovsky warns that the inflation rate could rise further unless the government acts to restrain rising bread prices. He suggests this could be done by restricting grain exports or at least imposing temporary quotas.



(NBCentralAsia draws comment and analysis from a broad range of political observers across the region.)