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Tel: (727) 224 48 41
(727) 224 48 44
http://www.rfcaratings.kz
Almaty 2015
Food Industry of the Republic of
Kazakhstan
Analytical service
Rating Agency of the RFCA:
Head of the research:
Dmitriy Sheikin
Analyst:
Aigerim Kulbayeva
JSC Rating Agency of the Regional
Financial Center of Almaty
136 Dostyk ave., 9 th floor,
office 904, 050051 Almaty,
The Republic of Kazakhstan
Any form of copying, reproduction, distribution and forwarding of texts, graphs and other types of materials posted on
the website of the "Rating Agency of the RFCA" must be accompanied by a hyperlink to the website
www.rfcaratings.kz and indication of the author of the material.
Copyright JSC Rating Agency of the RFCA 2016
2
Food Industry of Kazakhstan
Food industry plays one of the most significant roles in the economy of the Republic of
Kazakhstan. According to the Committee on Statistics of the Republic of Kazakhstan, in 2014
the food manufacturing contributed 6.0% to the total volume of the country’s industrial
production, and 18.1% to the manufacturing sector.
Source: Committee on Statistics of the Republic of Kazakhstan, RA RFCA
Over the decade of 2004-2014 food production in Kazakhstan increased by 233.3%,
reaching the volume of KZT 1 103.5 bln. in value terms. In comparison with 2013, production
went up by 13.7%. The dairy industry, grain and starch mill industry, bakery industry and the
meat industry are the largest (by production volume) in the structure of the country’s food
industry. Their shares in Kazakhstan’s food production in 2014 were: 19.6% for the dairy
industry, 19.1% for the grain and starch mill industry, 15.7% for the baking industry, 13.8% for
the meat industry.
Source: Committee on Statistics of the Republic of Kazakhstan
331,1 370,2418,6
490,8
623,5 629,8695,2
828,0 865,6970,1
1 103,5
0
200
400
600
800
1 000
1 200
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Food Production: 2004 - 2014
Food Production, KZT bln.
Meat processing and
preservation, prepared
meat products
manufacturing
13.8%
Fish and shellfish
processing and
preservation
0.9%
Fruits and vegetables
processing and
preservation
7.3%
Vegetable oils and
animal fats production
8.1%
Dairy production
19.6%
Grain and starch mill
production
19.1%
Bakery production
15.7%
Other foods production
13.5%
Animal feeds
production 2.0%
Structure of the Food Industry of Kazakhstan (%)
3
Therefore, the leading industry in food manufacturing of Kazakhstan is the dairy industry. In 2014,
its production amounted to KZT 216.4 bln. The largest output in the dairy industry was in milk and
cream production - 427.9 thous. tons in volume terms, an increase of 7.4% versus 2013. The largest
output in grain mill industry was observed in production of flour from grain and grain blends –
3 330.6 thous. tons, an insignificant increase of 0.1% versus 2013. In bakery industry the largest
output was in production of fresh bread – 726.1 thous. tons, 2.2% decrease versus 2013.
Production of meat and edible offal amounted to 218.9 thous. tons that is 4.1% more than in
2013. The largest contribution in amount of 82.2 thous. tons was made in production of fresh or
chilled meat of swine, goats and horses, an increase of 9.4% compared to 2013. It is also worth
noting the high volume in production of animal feeds, which amounted to 733.2 thous. tons in
2014, a 10.5% increase versus 2013.
By the end of 3Q2015, the specific weight of food industry in total industrial production of
Kazakhstan was 7.5%, and 19.2% in total manufacturing industry, that is significantly higher
than in the corresponding period of 2014. Thus, by the end of 2015 the industry’s share may
increase by no less than 1%.
Table 1. Production of Kazakhstan’s Food Industry:
2014-2015 (Jan-Sep), KZT bln.
Production volume
% change № Jan-Sep 2015 Jan-Sep 2014
1 Total Industrial production 10 329.3 14 044.4 -26.5%
2 Manufacturing 4 003.9 4 258.5 -6.0%
3 Food industry 769.7 762.8 0.9%
3.1 Meat Processing and Preservation, Prepared Meat
Products Manufacturing 110.5 104.4 5.8%
3.2 Fish and shellfish processing and preservation 7.4 6.8 9.0%
3.3 Fruits and vegetables processing and preservation 62.1 62.4 -.0.5%
3.4 Vegetable oils and animal fats production 50.9 57.7 -11.7%
3.5 Dairy production 137.9 138.8 -0.6%
3.6 Grain and starch mill production 165.0 153.0 7.9%
3.7 Bakery production 123.3 117.4 5.0%
3.8 Other foods production 93.0 108.0 -13.9%
3.9 Animal feeds production 19.5 14.3 36.3%
Source: Committee on Statistics of the Republic of Kazakhstan
Over 9M2015, the total volume of food production accounted for KZT 769.7 bln. in value
terms that is 0.9% more than in the same period of the previous year. The largest volume was
produced by the grain and starch mill industry – for the amount of KZT 165.0 bln., a 7.9%
increase compared with 2014. The dairy industry was the second best performer with the output
of KZT 138.0 bln., revealing a 0.6% decrease versus 2014.
4
The production of bakery industry amounted to KZT 123.3 bln., a 5.0% increase versus
2014.
In 9M2015, there were produced 2 752.9 thous. tons of flour from grain and grain blends
in grain and starch mill industry. There were produced 334.0 thous. tons of processed liquid milk
and cream in the dairy industry. In bakery industry – 540.4 thous. tons of fresh bread. The
animal feed output increased by 33.3% versus 9M2014 and accounted for 678.7 thous. tons.
Production and shipment balance analysis of the food industry in 2014 evidences that the
volume of the shipped products exceeded the volume of food produced on the enterprises
producing sausages, sunflower and cottonseed oil, rice, fresh bread and pasta.
Analyzing the data of the Committee on Statistics of the Republic of Kazakhstan for 2014,
we see that some items of food production do not meet domestic demand for them in full. Thus,
an existing internal demand is compensated by imports. That may have a negative impact on
country’s economy in future.
Source: Committee on Statistics of the Republic of Kazakhstan
Thus, lack of the meat (including poultry meat) and edible offal on Kazakhstan’s internal
market amounted to 182.2 thous. tons in 2014, and it was compensated by imports from the US
and the Russian Federation, which approximated 191.2 thous. tons. that year. Same situation is
observed in dairy industry, where the difference between domestic production and domestic
consumption equaled to 146.3 thous. tons. Local demand was satisfied by imports in total
volume of 176.3 thous. tons. Among all types of food products made in Kazakhstan, the only
one, the production of which could meet domestic demand, was the production of flour. It means
that although Kazakhstan has its own food industry, some types of food are still import-
dependent, and that, in our opinion, indicates to the low level of agricultural products’
processing.
3 4
96
,4
89
9,0
82
6 ,1
71
5,2
37
5,6
32
9,5
19
4,1
1 6
57
,5
1 0
81
,2
90
3,6
86
1,5
53
3,5
39
7,7
23
5,2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Flour Meat and
poultry meat,
edible offal
Bakery products Dairy products
(without fresh
milk)
Sugar Vegetable oils Fruit and
vegetable juices
Production and Consumption of several types of Food Products in
Kazakstan in 2014, thous. tons
Production Consumption
5
Table 2. Production and Consumption of several types of Food Products in 2014,
thous. tons
№ Products Production Imports Exports Consumption
1 Meat and poultry meat, edible
offal 899.0 191.2 9,0 1 081.2
2 Prepared and preserved meat 69.9 39.1 1.9 107.1
3 Fruit and vegetable juices 194.1 42.7 1.6 235.2
4 Vegetable oils 329.5 115.8 47.6 397.7
5 Sunflower oil 234.9 67.7 16.2 286.5
6 Dairy products (without fresh
milk) 715.2 176.3 30.1 861.5
7 Processed liquid milk and
cream 466.3 42.2 20.9 487.6
8 Flour 3 496.4 5.6 1 844.6 1 657.5
9 Bakery and confectionery
products 826.1 84.9 7.4 903.6
10
Bread; fresh pastry goods and
cakes (with sweetening
additives)
739.9 14.9 1.2 753.6
11 Sugar 536.0 160.4 2.5 533.5
12 Chocolate and chocolate
confectionery 100.7 92.1 29.5 163.4
13 Processed tea and coffee 21.5 40.3 2.6 59.1
14
Macaroni, noodles, couscous
and similar farinaceous
products
150.6 28.4 20.5 158.4
Source: Committee on Statistics of the Republic of Kazakhstan
Imports of prepared foods and foods of animal and plant origin accounted for 10.5% in the
structure of Kazakhstan’s imports; an increase amounted to 1% versus 2013. Exports of that
particular food group amounted to 3.3% in the structure of Kazakhstan’s exports. It worth noting
that over the past 5 years, Specific weights of the food products’ imports and exports have not
changed significantly and vary around 9% -11% and 2% - 4% respectively.
From the diagram below it is clear that Kazakhstan’s imports of finished food products and
foods of plant and animal origin far exceed the exports of the same products in Kazakhstan’s
exports. Such situation at domestic food market is the result of an insufficient load of the
domestic food production facilities.
6
Source: Committee on Statistics of the Republic of Kazakhstan, RA RFCA
In 2014 imports of finished food products and foods of plant and animal origin amounted
to USD 41 295.5 mln. that is 15.4% less than in 2013. Imports of meat and edible offal amounted
to USD 243.8 mln. Products of this type were imported from the US (42.7% to the total imports
of the item). The rest of the products were from the Russian Federation (14.8%), Ukraine
(13.6%) and others. Kazakhstan is the country with the high level of meat consumption.
However, the country has a deficit of its own meat products, therefore it has to import relatively
high amount (20%) from abroad. Despite the fact of the largest output of the dairy products in
2014 there was still not enough of it to satisfy domestic demand. In 2014, the imports of
processed milk and cream accounted for USD 206.6 mln. The major part of imported milk and
cream originated from CIS countries: the Russian Federation (37.8%), Belarus (21.8%) and
Kyrgyzstan (8.2%). Production of sugar is less than milk’ in the country; meanwhile its
consumption 1.5 times exceeds its production. For example, imports of cane sugar amounted to
USD 248.4 mln. The main part of cane sugar was imported from Brazil (51.3%), the rest – from
Poland (9.9%), Belarus (9.6%), etc.
According to results of 1Q-3Q 2015, imports of meat and edible offal totaled to USD
146.6 mln.: 45.8% of them were from the US, 38.8% - from the CIS countries and etc. Cane
sugar was imported in the amount of USD 128.8 mln., mainly from Brazil (30.1%), Moldova
(20.9%) and Belarus (12.5%). Chocolate and other prepared foods were imported on a sum of
USD 117.1 mln., mainly from the Russian Federation (70.6%) and Ukraine (18.4%).
10.3%10.8%
9.2% 9.5%
10.5%
3.3%
2.2%
3.5% 3.2% 3.3%
0%
2%
4%
6%
8%
10%
12%
2010 2011 2012 2013 2014
Imports and exports of finished food products and foods of plant and
animal origin (%)
Imports Exports
7
Source: Committee on Statistics of the Republic of Kazakhstan, RA RFCA
The export of food products manufactured in Kazakhstan is far behind the other countries’
exports. In 2014 the export of finished food products and foods of plant and animal origin
amounted to USD 2 637.7 mln. that is 3.5% less than in 2013. The share of export of those
products equaled only 3.3% in total exports of Kazakhstan. The most of the Kazakhstan food
exports go to the CIS countries.
As of 2014, the export of wheat and meslin to Iran (19.0%), Tajikistan (18.7%),
Uzbekistan (16.0%) and other countries amounted to USD 960.0 mln. The export of wheat flour
and wheat and rye flour blend to Uzbekistan (41.3%) and Afghanistan (39.5%) accounted for
USD 561.5 mln. The export of barley to Iran (70.8%), Jordan (10.5%) and the Russian
Federation (9.2%) and other countries amounted to USD 142.8 mln.
As of 9M2015, the export of meat and edible offal to the Russian Federation from
Kazakhstan amounted to USD 14.9 mln. and was 97% of exports. Also in the period Kazakhstan
exported wheat and meslin on a sum of USD 455.6 mln., mainly to the CIS countries, such as
Uzbekistan (31.2%) and Tajikistan (29.4%). Export of wheat flour and wheat and rye flour blend
went mainly to Afghanistan (44.7%) and Uzbekistan (40.7%) and amounted to USD 348.3 mln.
in total.
In accordance with the Committee on Statistics of the Republic of Kazakhstan, in 3Q2015
almost half of consumer monthly spending in Kazakhstan (47.4%) was for food products. In the
structure of total cash spending expenses for food products were the highest (43.8%). They
averaged KZT 50 265 per capita. Thus, in 3Q2015 there was observed a growth of consumption
in all main groups of food products (except potatoes).
3.3%
96.7%
Exports of food products in total exports of Kazakhstan (%)
Finished food products, foods of plant and animal origin Others
8
Source: Committee on Statistics of the Republic of Kazakhstan, RA RFCA
The highest expenses in the structure of consumer spending, among all types of food
products, were on meat and meat products (15.0%), bread and cereals (6.5%). The highest level
of meat consumption was observed in Atyrau region, the lowest – in South Kazakhstan region.
Comparing the consumption of the main types of food products in rural and urban areas,
the largest differentiation was in consumption of eggs, bread and grain products.
In reporting period, 10% of the low-income population consumed 3.8 times less fish and
seafood and 3.2 times less meat and meat products compared with 10% of high-income
population.
According to the Kazakhstan Committee on Statistics, the prices for beef, chicken, fish,
sunflower oil, spread, milk, rice, wheat flour, macaroni, sugar and tea suffered an increase, in
9M2015.
The most «wanted» among all food products was meat. Consumer spending on it amounted
to KZT 15 966 per capita. Prices for meat in 3Q2015 were following: in December 2014, price
for beef was KZT 823 394 per ton, in September 2015 it amounted to KZT 783 735 per ton,
having decreased by 6.0%. However, in September 2015 there was an increase of 1.2%. Prices
for poultry meat (including chicken, duck meat, etc.) in the period followed the suit. Generally,
for the given period of time poultry meat prices decreased by 25.3% to September 2015, having
reached KZT 389 619 per ton. Prices for lamb conversely increased by 22.6%, having reached
KZT 1.1 mln. per ton.
47.4%
28.8%
23.8%
Food products in consumer
spending, 3Q2015 (%)
43,8%
26,5%
22,0%
7,7%
Food products in expenditures,
3Q2015 (%)
Food products
Non-food products
Chargeable services
Financial support, taxes, loan repayments and other payments
9
Source: Committee on Statistics of the Republic of Kazakhstan, RA RFCA
Source: Committee on Statistics of the Republic of Kazakhstan, RA RFCA
Bread and grain products, as well as dairy products are in great demand in Kazakhstan. Consumer
spending on bakery and grain products in Q3 2015 averaged KZT 6 912 per capita. Consumer spending
on dairy products averaged KZT 4 661 per capita. At the same time, prices of wheat bread over the period
December 2014 – September 2015 declined by 4.8%, but grew in August-September. Prices of ground
823,4774,4 783,7
867,9
1 086,2 1 064,4
521,7
373,8 389,6
,
200,
400,
600,
800,
1000,
1200,
Dec 2014 Aug 2015 Sep 2015
Price change for several types of meat products
(December 2014 - September 2015), thous. KZT
Beef and veal, fresh or chilled: carcasses, semi-carcasses and forequarters
Lamb, fresh or chilled: carcasses, semi-carcasses
Poultry, fresh chilled: carcasses
91 12495 119 95 457
59 453 57 737 59 141
140 062133 474 134 979
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
Dec 2014 Aug 2015 Sep 2015
Price change for several types of food products
(December 2014 - September 2015), thous. KZT/ ton
Wheat bread Fine ground flour Processed liquid milk
10
flour from wheat and meslin decreased by 0.5% for the corresponding period. Processed liquid milk in
September 2015 became also cheaper by 3.6% compared to December 2014 price, but became more
expensive compared to price in August 2015.
Food manufacturing is an inseparable part of manufacturing industry of the Republic of
Kazakhstan. Therefore, the specificity of the manufacturing industry is the same in food
industry too. The main feature of the Kazakhstan’s industry is its explicit raw-material
orientation. Other weak sides of the manufacturing are: under-developed industrial
infrastructure, 38.7% fixed capital depreciation in manufacturing industry of the country,
recourse intensiveness, power consuming, and lack of skilled staff. For the purpose of
development of Kazakhstan’s manufacturing industry in general, and a food manufacturing, in
particular, as per President’s address to the nation of Kazakhstan «New Decade - New
Economic Growth - New Opportunities of Kazakhstan» there were created several large-scale
state programs.
As long as the food manufacturing industry of Kazakhstan is inter-related with the
agricultural sector, the state’s support in agriculture would have a positive effect on food sector
too. In the framework of the State program for Accelerated Industrial and Innovative
Development of Kazakhstan for 2010-2014 (SPAIID), there were given the tasks of ensuring the
appropriate conditions for the increase of competitiveness in agricultural sector. The targets in
the program «Support to the agro-industrial complex» were: the increase in gross value added of
agriculture at least by 16% compared to 2008 in volume terms, improvement of labor
productivity in the agro-industrial sector from USD 3,000 per person employed in agriculture not
less than 2 times compared to 2008 in volume terms, an increase of the share of local products in
total volume of their resources by 80%. Presently, the program objectives were partially
achieved, and a share of domestic food in 2014 amounted to slightly more than 80% of their total
resources. However, there are still ways to improve. For example, to improve the quality of
domestic agricultural and food products to match the level of high-quality imported products, as
well as to develop agricultural products’ processing.
For a further support and development of Kazakhstan’s manufacturing industry in 2014 the
State Program of financing SMEs in manufacturing industry was developed. Priority in this
Program was given to food manufacturing. JSC «Baiterek National Management Holding» and
its subsidiary company JSC «Damu Entrepreneurship Development Fund» signed loan
agreements with commercial banks on funding of new projects of SMEs, as well as on
refinancing of the entrepreneurs’ projects on more favorable terms. 50% of investments were
allocated to finance new projects of SMEs, the rest 50% was allowed to be used for refinancing
of borrowers. The plan will let SMEs to operate successfully.
There is the other program of food manufacturing development called «Performance
2020». Given Program is aimed at labor efficiency increase in priority sectors of the economy,
including food manufacturing industry, until 2020. The goals of the program comprise: increase
of labor productivity by no less than 1.5 times on manufacturing enterprises, which received
long-term leasing loans, increase of average load of enterprise facilities up to 80 % until 2018,
no less than two times increase of labor productivity. The republic budget allocates KZT 28.9
bln. for the Program implementation.
11
To increase food industry output and decrease food imports dependence there was drafted
the Program of food and manufacturing industry development. In the draft, there were mapped
the major objectives, performed close analysis of the correct situation, project roadmaps set, the
list of current and planned enterprises was checked, the facilities accounted, modernization and
constructions plans were developed and were defined the mechanisms of state support and funds
needed.
The plan of the project allocates KZT 261.8 bln. for food manufacturing industry
development in 2015-2019.
Within the Program, there were revealed following constraints on the food industry
development, also there were proposed measures to overcome them:
• Taxation – it’s worth introducing changes into the Tax code, especially the first payment of
VAT issue, IIT taxation of private farms, VAT returns on exports, expansion of the list of
areas that are subjects to tax benefits low tax rates;
• The high cost of packaging – it’s necessary to take measures on development of national
companies engaged in production of packaging materials and labelling machines;
• A limited number of sales outlets - there is a need to expand modern retail outlets, to
increase the number of sales centers, as well as to provide an easy access to them;
• Low culture of consumption – the extensive media coverage of such topics as the benefit of
fresh organic products’ consumption is essential;
• Inadequate trade regulation – it is crucial to ensure monitoring of trade turnover of food and
manufacturing industry and to develop amendments on foreign trade regulation.
On successful implementation of the program, in 2019 there is expected an increase of
investments in fixed cap of food industry and food processing industry to KZT 97 bln. (versus
KZT 33 bln. in 2013), increase in food production to KZT 1 271 bln. (versus KZT 973 bln.),
decrease in food imports to KZT 1 322 mln. (versus KZT 2 977 mln.), increase of employment
in food industry to 68 thous. ppl. (versus 52 thous. ppl. in 2013).
12
Published by JSC Rating Agency of the Regional Financial Center of Almaty (Rating Agency of the RFCA)
Any form of copying, reproduction, distribution and forwarding of texts, graphs and other types of materials posted
on the website of the "Rating Agency of the RFCA" must be accompanied by a hyperlink to the website
www.rfcaratings.kz and indication of the author of the material.
Copyright JSC Rating Agency of the RFCA 2016
JSC Rating Agency of the RFCA
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Business Center Pioneer
050051 Almaty
Telephone: (727) 224 48 41, 224 48 44
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