Current Situation in the World and Kazakhstan
According to the Food and Agriculture Organization of the United Nations (FAO), in 2023 global meat production reached 365 million tons, which is 0.8 percentage points more than in 2022 (362 million tons).
China is the global leader in meat production and consumption, having produced almost 95 million tons of meat in 2022. The United States follows with a production of nearly 50 million tons. Brazil, which produced over 31 million tons, rounds out the top three.
Moreover, Brazil is also the global leader in meat exports, having exported more than 9 million tons of meat in 2022.
During the same period, Kazakhstan produced nearly 1.8 million tons of meat.
Kazakhstan has all the necessary conditions for producing high-quality meat not only for the domestic market but also has the potential to export meat abroad, particularly expanding markets in China and the Middle East. However, Kazakhstan is forced to import meat not only from neighboring countries but also from distant foreign countries such as Brazil.
Despite its vast territories, as of January 1, 2024, the total number of livestock (large and small) in Kazakhstan does not exceed 30 million heads and 44 million domestic birds. Comparatively, this is very little when compared to Mongolia, which has similar climatic conditions (more details in my analysis — “Who Eats More Meat: Mongolia or Kazakhstan?”).
Current Industry Problems in Kazakhstan
In his recent Speech addressed to the People of Kazakhstan, the President stated that a special commission had identified the non-existence of 2 million heads of large cattle (LC) and more than 3 million heads of small cattle (SC). This discovery is crucial for understanding the depth of the problems in the industry and is a positive step, as recognizing a problem is half the solution.
The figures announced by the Head of State immediately indicate several existing problems in the sector:
- Corruption in the support system for agricultural producers, where state aid likely ranged from 150 to 300 thousand tenge per head of cattle (according to the rules for subsidizing the development of breeding livestock, increasing productivity and quality of livestock products);
- Flaws in the KPI system for local executive bodies. It is no secret that akims (regional governors) are faced with a simple yet challenging KPI. They are required to increase the livestock population by a percentage compared to the previous year. For example, an annual growth of the livestock population by 10%, but the downside of such a KPI is that livestock can die, be stolen, have feed problems, etc. To retain their “seat,” akims may resort to “drawing figures,” filling in the statistical sheet with knowingly false information.
Potential Damage from Data Falsification:
- Economic damage from inefficient subsidization along the cattle line could amount to between 300 and 600 billion tenge;
- The country failed to receive more than 807 million kilograms of meat (684 million kilograms for LC and 123 million kilograms for SC);
- On foreign markets, Kazakhstan could have earned over $5.4 billion (the average price per kilogram of beef in the world market is $6.8 USD, and lamb is $5.4 USD).
In addition to meat, Kazakhstan could earn additional income from processing livestock products. For example, one cow can produce 16 pairs of shoes, and related industry goods can be manufactured, etc.
Recommendation:
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Shift from direct subsidization to facilitating industry credit;
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Improve the KPI system for local executive bodies, particularly aimed at developing a “closed-loop” economy that creates opportunities for modernizing production and introducing innovations, ensuring an annual increase in productivity by 3%, and consequently, a GDP growth of 7%.
Author: Erlan Karimov
Economist
