The data of customs statistics of Kazakhstan and Russia for the period from September to December 2021 indicate that the measures taken by us to regulate the export of sunflower seeds and sunflower oil have a negative impact on the business and income of Kazakhstani enterprises and, moreover, could provoke illegal export from Kazakhstan raw sunflower oil.
Using the data for Uzbekistan and Tajikistan as an example, it can be seen that in September-December 2021, there was an uncharacteristic and inexplicable increase in the volume of supplies of vegetable oil to these countries under the code 1517909100 “Other non-volatile vegetable oils, liquid, mixed.”
Products under code 1517909100 are not subject to export duties and quotas either in Russia or in Kazakhstan. Therefore, it can be assumed with a certain degree of certainty about the facts of illegal export of raw sunflower oil in the amount of 50.3 thousand tons, including from the territory of Russia in September-December 2021 - in the amount of 42.5 thousand tons and Kazakhstan in November-December 2021 - in the amount of 7.8 thousand tons. Such facts in our country can be investigated by the Financial Monitoring Agency, using the data of the customs authorities of Kazakhstan for each case of export of goods under the code 1517909100.
The effect of the restriction on the export of sunflower seeds led to a sharp decrease in the export of oilseeds from the Republic of Kazakhstan in September-December 2021 compared to the same period in 2020 and 2019. At the same time, there was no noticeable increase in the export of sunflower oil during this period.
The initiators of introducing restrictions on the export of oilseeds from Kazakhstan may have expected that importing countries under such conditions would be forced to increase imports of Kazakhstani sunflower oil. But it turns out that importers from Uzbekistan and Tajikistan replaced part of the lost volumes of oilseeds from the Republic of Kazakhstan with imports of Russian products under the code 1517909100 in the amount of 37.7 thousand tons (89.7 thousand tons in sunflower seeds equivalent). At the same time, it is not excluded that the data of customs statistics for January 2022 will show the continued import of products by these countries under the code 1517909100.
Stocks formed in this way in importing countries will reduce their demand and may affect the volume of exports of sunflower seeds and sunflower oil from the Republic of Kazakhstan. Therefore, a significant decrease in export and domestic prices for sunflower seeds is quite expected in the Republic of Kazakhstan against the background of:
(a) the availability of stocks and, related to this fact, a decrease in demand from traditional markets for the sale of Kazakhstani products;
(b) the expected discarding of sunflower seeds by farmers in preparation for the 2022 planting campaign;
(c) the presence of only oil producers as active buyers of oilseeds in the domestic market and the observed decrease in purchase prices for sunflower seeds.
It is also necessary to take into account the current specifics of trade in the market of sunflower seeds and sunflower oil. Thus, an increased demand for sunflower seeds and refined sunflower oil by importing countries is observed in the period from December to March. Further, the demand for them and the pace of exports are noticeably declining. As for trade in raw sunflower oil, the greatest demand for it falls on December-April. Therefore, based on the established trading practices, in the remaining period until the end of the current season, a gradual decrease (starting from April 2022) in demand from importing countries for sunflower seeds and refined oil is expected. A decrease in demand for crude butter is expected from May 2022. As a result, it may happen that we will miss the opportunities of active trade during the period of increased demand for Kazakhstani oilseeds and sunflower oil, and farmers and oil producers will be forced to sell their products in the face of a gradual decrease in demand from importers. In this regard, the economic benefit of the market entities lost in this regard will be associated with unprofessional decisions taken in the Republic of Kazakhstan to regulate foreign trade in the interests of exporters of raw sunflower oil.
Farmers' plans to sell their products during this period at the most favorable prices may not be realized. In this case, the solvency of farmers in the period of preparation for the upcoming sowing campaign may be significantly limited, which, in turn, will negatively affect the new oilseed crop.
Based on the foregoing, we consider it justified for the Ministry of Agriculture of the Republic of Kazakhstan:
- together with industry associations, promptly form a real balance of supply and demand for sunflower seeds and sunflower oil. Determine for the period until the end of the current season the volumes of oilseeds necessary to ensure domestic consumption, as well as the export potential for sunflower seeds and sunflower oil;
- to cancel from March 1, 2022 the export quota for sunflower seeds and sunflower oil, replacing it with another regulatory measure - export monitoring. After the development of the export potential and based on the results of monitoring, introduce a ban on the export of sunflower seeds and raw sunflower oil.
These measures, proposed in the interests of farmers, are aimed at stabilizing domestic prices for sunflower seeds, which can be achieved by creating competition between oil producers and exporters of sunflower seeds and forming a fair purchase price on this basis.