Perfect storm hits Kazakhstan egg industry

19-08-2020 | | |
The Kazakh Egg Producers Association warns that the country s egg industry could collapse by the end of 2020. Photo: Henk Riswick
The Kazakh Egg Producers Association warns that the country s egg industry could collapse by the end of 2020. Photo: Henk Riswick

The Kazakhstan egg industry is in troubled waters due to state aid ending, feed shortages, and the fall out of the Covid pandemic on its export markets.

During the first six months of 2020, Kazakhstan produced 2.6 billion eggs, which is 5.6% less than last year, and the worst is still to come. By the end of 2020, the country’s egg industry could collapse, the Kazakh Egg Producers Association warned. The production could fall further from 4.5 billion in 2019 to 2 or 3 billion eggs in 2020, as small and medium-sized egg farms would be forced to cease operation, said Maxim Bozhko, chairman of the Egg Producers Association. Most countries in the Eurasia Economy Union increased egg production in the last six months. In Russia, the production climbed to 22.4 billion eggs, an increase of 0.5% compared to the first half of 2019; Kyrgyzstan saw a production of 297.8 million eggs (+0.8%) and production in Armenia rose to 450.8 million eggs (+6.3%). Within the trade block, only Belarus saw lower production numbers with 1.7 billion eggs (-0.9%).

No state aid

Local farmers blame the recent ending of state aid for the negative production dynamics. The Kazakh government paid KZT 75 billion (US$ 178 million) to egg producers during the past decade in the form of subsidies. Earlier this year, the Kazakh Agricultural Ministry announced that the authorities no longer saw the need to pay production subsidies to egg producers, as the country’s level of self-sufficiency on eggs reached a record-breaking 120%.

The government argued that during the past years, Kazakhstan egg producers were using the production subsidies to get a foothold in the foreign markets, with the national treasury subsidising low prices for eggs on foreign markets. In 2019, the country exported 1.5 billion eggs, the government estimated. By ending the state aid, an estimated 2,000 jobs are on the line, exports would drop sharply and the domestic market could be flooded with egg products from Russia and Belarus, Bozhko warned. If the decision to stop state subsidies is not revised, Kazakhstan will end up a net importer of eggs again, he added.

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Covid-19 takes a toll

The Covid-19 pandemic has disrupted the country’s feed market. Some local farmers were reportedly forced to cull their stock due to the lack of feed. One of the local poultry producers, Aitas KZ, reported that “thanks to timely funding the company managed to purchase enough feed so that it could maintain sustainable operation during the pandemic.” It is believed that not everyone was that lucky. Besides that, the poultry industry is suffering from the national currency devaluation, which pushed the prices for imported feed additives up. The average price of feed grain has recently reached KZT 90,000 (US$ 217) per ton in July, while normally at this time of year grain costs around KZT 60,000 (US$ 145).

Vladislav Vorotnikov Eastern European correspondent