Agriculture accounts for approximately 6% of Kazakhstan’s economic production. More than 74% of the country’s territory is suitable for agricultural production. However, only 25% of the land is arable. Farmers raise sheep and cattle, and livestock products include dairy goods, leather, meat, and wool. The country’s major crops are wheat, barley, cotton, and rice, with wheat exports, a major source of hard currency, ranking among the leading commodities in Kazakhstan's export trade. Kazakhstan is in the top 10 largest grain exporters in the world, which is exported to over 70 countries.
Nearly 80% of machinery currently in use is at the end of its lifecycle and needs to be replaced. Tractors in use for more than 10 years account for 94% of the entire fleet, while harvesting combines in similar condition make up 77%.
Local production of agricultural machinery and equipment is insignificant. In 2013, the Kazakhstani agricultural machinery and equipment sector was roughly estimated at approximately $500 million, of which $400 million was imported. Russia is a market leader for agricultural machinery and equipment with a 40% market share. Germany, Canada, the Netherlands, Belarus, Turkey, and China are other large suppliers. Local manufacturers of agricultural machinery and equipment in Kazakhstan include AgromashHolding JSC, Kamaz-Engineering JSC, SemAZ LLP, Hundai Truck and Bus.
In 2013, the lack of any significant growth in the market size for agricultural equipment was primarily due to a new Customs Union (CU) tariff policy which temporarily increased import tariffs on combines imported from outside the CU from 5% to 27.5%. Consequently, imports of combine harvesters to Kazakhstan from non-CU countries dropped in 2013, and the U.S. market share decreased from 11% of all imports of combine harvesters in 2012 to 7.5% in 2013. The new tariffs were approved in February 2013 and planned to be valid until fall 2013. At the beginning of 2014, the government of Kazakhstan introduced a quote of 300 units for combines imported from non-CU countries with a 5% import tariff.
Another result of entering into the CU is an anticipated increase in the local production/assembly of agricultural machinery and equipment. In recent years, Kazakhstan launched several assembly projects with firms from Russia, Ukraine, and Belarus, which are now under active development. The Government of Kazakhstan’s
Industrial Development Program has set new goals to double the local production of agricultural machinery and increase its exports to 8% by 2014.
U.S. exports to Kazakhstan consist mostly of grain harvesting combines, reapers, sprayers, tractors, seeders, cultivators, and grain drying and cleaning equipment. American products enjoy an excellent reputation in Kazakhstan. In light of the lower dollar exchange rate vs. the Euro, Kazakhstani buyers are interested in purchasing U.S. made equipment.
Best prospects include: 100-150 horse power (hp) tractors and combines for the southern regions, tractors of greater than 250 hp and combines for the northern regions, pneumatic seeders, reapers, sprayers, grain drying and cleaning technologies, grain storage equipment and storage quality control systems, water-saving technologies, engineering and design services for cattle feed complexes, and on-farm processing facilities.
Both the government of Kazakhstan as well as private entities are looking for international partners to increase existing domestic production of agricultural machinery and equipment and establish new manufacturing and assembly facilities.
For more information contact Commercial Specialist Nurlan Zhangarin.