The Ministry of Agriculture of Kazakhstan forecasts that this year, the country will produce a total of 12,8 million tons of grain, three million tons less than last year. But last year’s crop was so poor in quality that many small farmers found that the trouble was not worth the expense and left their cornfields without harvesting them. Most grain producers had to sell their wheat with low protein content at a great loss to casual buyers or fed their crop to cattle. Far from bringing profit, crop production did not even cover expenses. That finally ruined the confidence of farmers in the national grain-trading company Prodkorporatsya, a state monopoly, which earlier promised to buy up the grain produced by farmers for no less than $80 a ton.

Nevertheless, the government, in a bid to put the grain market under control, did not slacken its tight hold over farmers, constantly urging them to sell their produce to Prodkorporatsya. “We must not repeat mistakes of the past. The situation demands that we increase the production of more marketable hard wheat. We cannot let our grain out uncontrolled” said the Minister of Agriculture Akhmetjan Yesimov, addressing the farmers. He hinted that Prodkorporatsya would probably increase its purchasing price for wheat this year.

For many already ruined farmers, these words of comfort come too late. Nearly 30% of the more than 4,000 officially registered private farms in North Kazakhstan region went bankrupt last year as a result of the poor harvest. The reason is rooted not only in a lack of credit to buy pesticides and equipment: far more harm is done by the ever-present bureaucracy and corruption. “As soon as you got on your feet again after last year’s failed crop and started doing a successful business, inspectors from the tax office, financial police, and local administration came up pestering you with ridiculously excessive demands. The most depressing thing is that nobody in the government deigns to listen to our grievances”, complains Marat Shantemirov, a farmer from Shalakyn district in North Kazakhstan region.

Due to the dwindling fertility of soil and growing cultivation costs, the overall crop area in Kazakhstan was reduced from 23,3 million hectares in 1990 to 13,7 million hectares in 2003. Not only soil erosion and depletion of humus layers is responsible for the reduction of arable land. In many cases, the structuring of agricultural land was done by arbitrary decisions of governors in the regions.

Kazakhstan needs no more than 8 million tons of wheat for domestic consumption. If forecasts of rich harvest come true, the country will export 5,2 million tons, the key importers being Afghanistan, Azerbaijan, Iran, Tajikistan, China, Ukraine and EU countries. The economic benefit from this depends on many factors.

Given the poor state of agriculture, the government’s attempts to enhance the grain export potential of the country with little economic sacrifice seems to be impracticable. Kazakh grain producers are already facing bold challenges from Russian and Ukrainian competitors. True, these countries are interdependent for food security. Ukrainian prime minister Viktor Yanukovich, who visited Kazakhstan early in August, reached an agreement with his Kazakh counterparts to purchase 1,2 million tons of grain for $108,5 a ton. The deal aroused a wave of protests from grain traders in Kazakhstan. The price offered by Ukrainians is much lower than the price of grain imported by Ukraine from Russia. Last year Ukraine paid $140 and $180 a ton for Kazakh grain, depending on the quality of the wheat.

Most grain companies expressed their refusal to sell their wheat to Ukraine at that low price. The moment is highly embarrassing for the government, which is tied down to obligations to export 800,000 tons of wheat to Ukraine within the framework of the intergovernmental agreement only. Some kind of compromise was reached in that Ukraine would purchase last year’s crop from grain storages. Additionally, the Kazakh side is bidding for preferential terms for exporters of Kazakh hydrocarbons to Ukraine.

It is yet to be guessed how much of politics is mixed in this tangle. Both countries have in recent months repeatedly declared their commitment to the Eurasian Economic Community and to close ties with Russia. Theoretically, a common agricultural policy could speed up the much-discussed economic and political integration of these countries. However, taking into consideration the different approaches to agricultural reform adopted by Ukraine, Kazakhstan and Russia, and an apparent clash of national interests, such a policy can hardly be expected to be worked out in foreseeable future. Apart from that, for Kazakhstan, two pillars of its economic security, oil and grain, is something that cannot be easily bargained away.