Drought and cheap grain: Akmola agricultural holding operating at a loss on grain crops

Doszhan Bakirov, head of Akmola Feniks JSC, is responsible for crop production at the Shanyrak holding. He manages 4 enterprises with a land bank of 38,000 hectares in the Tselinograd District of Akmola Region, where 13 crops are grown. The season proved difficult: there was little rainfall during the growing period, and daytime temperatures in June and July rarely dropped below 30 degrees. The farm usually harvests 13–17 c/ha of grain; this year yields fell by half.

Due to the heat, wheat gluten content rose to 32–34%, compared with the usual 28–30%, but demand for Hi-Pro grain is weak. China, a major new buyer, purchases feed flour, for which high protein is undesirable. Hi-Pro currently sells for 90,000–100,000 tenge per tonne, third-class wheat from 90,000 tenge, and fourth-class wheat for 85,000 tenge. "The price gap between grain quality grades is now only 5,000 tenge per tonne," says Bakirov.

The production cost of one hectare of grain crops on the farm is around 80,000–85,000 tenge, and costs are rising by at least 10–15% a year. In just a couple of years, the budget for crop protection products has grown from 400 million to 700 million tenge. According to Bakirov's calculations, at current yields Hi-Pro would need to cost 150,000 tenge per tonne and third-class wheat 120,000–130,000 tenge to break even. He sees cheap Russian grain as the main reason for the price decline: after its ports were put out of action, Russia redirected it to Central Asian markets.