The 2025 harvest results and prospects for Kazakhstan's agricultural exports in the new season were discussed on October 2 in Astana at the country's main grain forum, Agricom 2025. Sergey Potapov, CEO of Bunge Kazakhstan, shared his perspective on the situation with the ElDala.kz portal.
"Market conditions are excellent."
- Sergey Viktorovich, experts agree that Kazakhstan will have an average grain harvest this season, both in terms of volume and quality. Who benefits from these results, and who does not?
- Yes, the season will be average, based solely on the numbers. But the harvest will be significantly, if not radically, different than usual. Our core products, the main ones we typically produce in large volumes, are wheat and barley. But this year, thanks to the implementation of the acreage diversification program, grains are beginning to play a smaller role in our production and export potential. Oilseeds are increasingly taking their place. Flax, sunflower, and rapeseed were sown in large quantities this year, and we expect a bountiful harvest. Overall, the price environment for oilseeds is excellent.
- Prices for all types of oilseeds are above 200,000 tenge per ton.
- Yes, and that's why growing oilseeds is much more profitable than grains. Of course, it's also more challenging. The infrastructure for drying, processing, storing, and transporting oilseeds still needs improvement, but it's all developing rapidly. For example, separate storage is essential for flax, especially when exporting to Europe. Flax there needs to meet strict quality requirements, especially for herbicide content. So, the infrastructure needs to be improved.
That's basically how this season differs from our usual harvests.
Plus, of course, we can note the increased professionalism and adoption of modern agricultural technologies by our farmers. Because if you look back even five or six years, the outcome of the growing season was somewhat like a lottery, heavily dependent on weather conditions. Now, even unfavorable weather doesn't create insurmountable problems, and we see this: despite everything, we have a good harvest in both volume and quality. The flax is in good condition, and the flaxseed, even before it's harvested, is in good condition. In my opinion, this is a sign of the quality of Kazakhstan's agricultural sector today.
"There is no alternative to Kazakhstani flax"
- Speaking of diversification, the relatively high prices for these crops are driving the expansion of acreage under oilseeds. How long will oilseeds remain valuable? Is there a risk of them declining?
- Market conditions are favorable. I see the best prospects for flax, as it has, as we say, sustainable demand. Because the global market is currently shaping up in such a way that Europe has no alternative to Kazakh flax. Yes, there's Canada, but it has its own challenges and issues regarding quality and logistics. There were supplies to the EU from Russia, but now there's sanctions pressure there, and that will increase starting January 1st. Consequently, Kazakh flax will have an even better chance of remaining in demand on the European market and maintaining a good price.
- So, farmers don't have to worry about price declines.
- Absolutely. I don't expect any price declines for flax. Perhaps now, during the mass harvest, there will be some decline because not all farmers have the capacity to ensure storage, and they'll bring larger volumes to market. But everything will quickly return to previous price levels. It's important to understand that European demand for Kazakh flax this year is up to 500,000 tons, and we won't be able to supply more than 250,000 tons based on our harvest and our logistics. That is, the gap between supply and demand is large, and I see no reason to expect prices to fall.
By the way, the situation with sunflower seeds is less predictable. We're counting on stabilization of what we have today and don't expect growth. The harvest is good, and much depends on demand for sunflower oil in our traditional markets, Uzbekistan and China.
"The market there is bottomless, as experts say."
"Of course, it is. But much will depend on our competitors, particularly the Russian Federation—how they act and what they offer. So, again, the situation is less predictable."
Of course, we, as Bunge, want to participate in this business. But since the merger process is still ongoing and will continue until the new year, all infrastructure projects have been put on hold for now. And starting January 1, 2026, we have a plan to actively develop and move forward, including in the production and export of sunflower oil.
"We're interested in rapeseed."
- As one of the largest traders, Bunge can shape demand for certain crops in Kazakhstan's domestic market. Besides flax, what else can we target farmers with?
- Absolutely, and we do this through our agricultural partnership program. Under this program, we provide pre-financing to producers at the start of the growing season. We have a list of suppliers with whom we work and with whom we enter into forward contracts for the crops we're interested in.
Our list of partners is growing year after year, and the funding volume is expanding. This year, it's up to 80 billion tenge. These are our own funds, and we disburse them in March, precisely when farmers need the money most. Since our partners are already proven, reliable companies, we set acceptable terms for financing, interest-free, and immediately lock in the prices at which we will purchase the harvest.
And, of course, when we do this, we choose the product that interests us. Besides flax, we're very interested in rapeseed. Those are our current priorities.
We're also currently considering safflower. Perhaps, by the next sowing campaign, we'll launch a program specifically for safflower. We might even consider providing seeds. This will depend on our shareholders' appetite.
"Our durum isn't in demand in Italy"
- For a long time, durum wheat, which was always priced about 30 percent higher than soft wheat, was considered an interesting crop for diversification in Kazakhstan. But this season, its price has dropped. What's the reason for this, and should we expect durum prices to rise in the winter or spring?
- Two factors have always influenced the price and demand for durum wheat: the harvest in Europe and Canada, and the quality of our own durum. Unfortunately, we tend to be completely unpredictable in terms of vitreousness and protein content. These two key parameters are crucial for durum wheat exports to Europe.
For the last two or three seasons, the weather has been unfavorable in the fall, with rainfall, which directly impacts both protein and vitreousness.
Considering Canada's good harvest and Europe's above-average harvest, our average-quality durum wheat is becoming completely unpopular in the Italian market. And there's no significant domestic demand for durum in Kazakhstan. This undoubtedly discourages producers from investing in this crop at all. It's probably the least attractive crop right now from a production perspective.
Perhaps the transport subsidy promised for the next year could somehow improve the situation with durum wheat supplies from Kazakhstan to Europe. But today there is no possibility of export, because we are still $40 away from the price at which our farmers want to sell their durum.
"We've put lentils aside for now."
- Lentils are another crop that's both difficult to grow and price-sensitive. Last season, they were one of the most profitable diversification options, but this season, their price has dropped by half. What are the prospects here?
- Yes, lentils are a very demanding crop. We had a rather unpleasant experience with them last year. We bought a lot of lentils and shipped them to Turkey. The whole process was very difficult, in part because we had to find alternatives to Russian infrastructure. The fact is that Vittera back then, and Bunge now, are operating under global sanctions and are very sensitive to this issue. Therefore, we were limited in our tools for fulfilling our previously signed contracts. Yes, we fulfilled them, but it was difficult. And the final profitability was not what we had previously estimated.
Lentils are also a very delicate crop in terms of presentation, storage, and so on. We realized that managing all of this in the current environment is difficult. So, we've put lentils aside for now and are focusing on flax and rapeseed, and later on sunflowers.
"Russia's Huge Harvest Will Curb Grain Price Rise"
- Despite diversification, wheat remains the main crop in Kazakhstan. What's the forecast here? Prices have dropped, so should we expect a rebound after the mass harvest?
- We should expect prices to stabilize, but we won't see explosive growth. I can predict that with 99% certainty. The first factor is grain quality. Yes, there will be good demand and a good price for high-protein, high-gluten wheat. But there's not much of that grain this year. Meanwhile, there's a lot of average-quality wheat in this harvest—ordinary third- and fourth-grade wheat. The market for this grain without transport subsidies is limited. And if there are no subsidies, there will be no trigger for price increases for this grain, and we will flounder around the current level.
Plus, don't forget, Russia has a huge grain harvest – 7 million tons more than last season. Our borders are open, and we believe that any significant increase in wheat prices here will lead to Russian grain coming our way. This factor will restrain grain price increases, even if such a trend develops.
Of course, if the government helps Kazakh wheat exports through transport subsidies, as it did last year, then wheat prices will rise, and this will primarily support our farmers.
"Every tenge of subsidies brings a farmer another four."
- So, you're in favor of extending transport subsidies next year?
- Yes, I'm a big proponent of that. It's truly a tool aimed at supporting farmers. Regardless of how it may seem from the outside, we traders are stuck with our fixed margins and are no longer making any money. And the main beneficiary is our farmer, since rising wheat prices directly impact his income.
It's clear that Kazakhstan is a landlocked country. We can and should produce more wheat, but expensive logistics to reach foreign markets prevent this. Transport subsidies solve this problem. As Yevgeny Karabanov, head of the analytics department at the Grain Union of Kazakhstan, noted in his speech at Agricom, for every tenge of subsidies, a farmer earned money and attracted four more.
"Good efficiency of state support."
"This is perhaps the most efficient subsidy in the history of Kazakhstan. Therefore, if I were the people responsible for this instrument, I wouldn't even consider the existence of transport subsidies—they absolutely must exist. We only need to think about how best to distribute them, when, and in what amounts." And the tool is very transparent and understandable.