In the land down under, where the sun shines bright, and the cattle roam free, the dairy industry is facing some challenges. The Kazakh dairy sector, in particular, is feeling the heat as Russian dairy companies dominate the market with substantial state aid. But what exactly is happening in this corner of the world, and what can be done to level the playing field? Let’s dive into the details and explore the ins and outs of the Kazakh dairy industry.
State Support for Dairy
In Kazakhstan, dairy farmers are eligible for state aid from the national budget. The government had earmarked a substantial amount of 11.2 billion tenge (US$24.8 million) in 2023 to support dairy businesses. This funding includes partial reimbursements for investments in new capacities and subsidies on interest rates for bank loans. While these numbers may seem impressive, they are not enough to compete with the trade bloc of the Eurasia Economic Union (EEU), comprising 5 post-Soviet countries.
Director of the Kazakh dairy union, Vladimir Kozhevnikov, highlighted the disparity in state support for the dairy industry across EEU member countries. While Belarus receives 18% of state aid as a percentage of dairy business revenue, Russia gets 10%, and Kazakhstan only receives 3-4%. Despite the challenges, Kozhevnikov remains optimistic and believes that agriculture, including dairy farming, can overcome these obstacles with the right strategies in place.
Dairy Issues
As Kazakh dairy companies grapple with rising imports from Russia, they also face longstanding issues within the industry. One major problem is the lack of high-quality raw milk for processing. Kozhevnikov pointed out that only a third of the total production volume is suitable for making premium dairy products due to non-compliance with production standards by many milk farmers. To address this issue, the government must initiate a comprehensive reform of the dairy sector.
Kozhevnikov stressed the importance of developing large-scale farming and consolidating backyard farms into cooperatives or organized production entities. Currently, dairy processing factories have to source milk from thousands of individual households, which is an inefficient and unsustainable practice. By streamlining milk production and ensuring adherence to quality standards, Kazakh dairy companies can enhance their competitiveness in the market.
The Road Ahead for Kazakh Dairy
In the face of strong competition from Russian dairy firms and internal challenges, the Kazakh dairy industry must adapt and evolve to survive and thrive. Government support plays a crucial role in providing a level playing field for local businesses. By increasing state aid, improving quality standards, and promoting cooperation among dairy farmers, Kazakhstan can enhance its dairy sector’s resilience and competitiveness.
As the sun sets on the Kazakh dairy landscape, a new dawn emerges with opportunities for growth and innovation. With concerted efforts from all stakeholders, including government authorities, dairy farmers, and industry experts, the future looks promising for the dairy industry in Kazakhstan. By addressing key issues, implementing strategic reforms, and fostering a culture of excellence, Kazakh dairy companies can carve a niche for themselves in the global dairy market.
In conclusion, the challenges facing the Kazakh dairy industry are significant but not insurmountable. With the right support, policies, and initiatives in place, Kazakh dairy companies can overcome the odds and emerge as strong contenders in the international dairy market. By focusing on quality, efficiency, and sustainability, the future of the Kazakh dairy sector looks bright and promising. Let’s raise a glass of cold milk to toast to the resilience and determination of Kazakh dairy farmers as they navigate the ever-changing landscape of the dairy industry. Cheers to a bright and prosperous future for Kazakh dairy!
