Saryagash Monopsony

Kazakhstan is one of the world's top ten wheat producers. According to the Ministry of Agriculture of the Republic of Kazakhstan last year the gross harvest was 25.1 million tons of grain and leguminous crops - one of the highest indicators over the past 10 years, including 16,4 mln. tons are wheat with  high quality,  high content of protein and gluten, which traditionally serves as flour improver in number of countries.

Taking into account high competitiveness of Kazakh grain products, the picture with sales markets is ambiguous. High demand in the world market, due to geopolitical events, caused growth of export of Kazakh wheat, but did not have a significant impact on expansion of geography of grain export. Unchanged importers by the end of 2022 were the countries of Central Asia.

The countries of Central Asia account for 63% of Kazakhstan's total grain exports. It is necessary to diversify sales markets for sustainable development of agro-industrial complex, allowing to minimize consequences of technical limitations and plan logistics with equal distribution of load on available infrastructure. For any commercial activity it is important to manage risks and ensure a stable income. Therefore,  concentration of exports on one region leads, first, to the maximum load on the transshipment stations, in this case Saryagash, and, second, to the dependence on the demand of a particular region, whose strategy is aimed at «haggling over» prices.

 The current “Saryagash monopsony” forms the cost of grain not in favor of Kazakh producers. By the way, monopsony is a situation, the reverse of monopoly, when there are several sellers and only one buyer in the market. Obviously, the lack of buyer competition led to a scenario where the price for the goods is dictated by the client.

According to www.margin.kz 

In addition, experts of grain market note annual growth of production cost of Kazakhstani grain. According to the forecast of Foodcorporation, due to influence of world and local inflation and significant growth of expenses for material resources, cost price of wheat will grow up to 100 thousand tenge per ton, thereby reducing profitability of grain production in Kazakhstan and certainly causing anxiety of local farmers.

A significant role in the export potential of the country is also played by the range of agricultural cargoes, which in recent years has expanded and has the prospect of mass exports with a clear rhythm throughout the year. About 80% of all export of agrarian cargoes is wheat, with increasing volumes of high value crops such as flax, rape, safflower, sunflower, etc., it is obvious that we urgently need to diversify markets towards countries with ready solutions for intensive trade, high solvency and ability to maintain a balance of interests.