The rapid expansion of processing capacity in Kazakhstan has triggered intense domestic competition, leaving local oil-crushing plants entirely dependent on China—a situation reminiscent of the unfortunate trajectory previously experienced by Kazakhstan’s flour-milling industry. This assessment comes from Viktor Aslanov, Chairman of the Union of Crop Growers of Kazakhstan. He argues that the 52,000-tenge export duty on sunflower seeds has failed to deliver the intended results; instead, processors are engaging in price-dumping in foreign markets, while the resulting financial losses have fallen squarely on the shoulders of farmers, reports the APK Novosti news agency.
In recent years, the sunflower processing sector has seen a dramatic surge, which has led to a significant internal imbalance.
"In 2019, the capacity of oil-processing plants in our country was estimated at around 2.5 million tonnes per year. By 2026—according to the processors themselves and official statistics—that figure has climbed to 5.2 million tonnes, an increase of nearly 2.5 times. The number of enterprises has more than doubled. While sunflower production is also growing, it simply cannot keep pace with this expansion in processing capacity," said Viktor Aslanov.
As a result, the industry is grappling with a straightforward yet harsh reality: the number of market players has multiplied, while, in practical terms, there remains only one major buyer.
Uzbekistan, being a highly price-sensitive market, is unwilling to purchase oil at premium rates, which only serves to further intensify competition. China remains the sole stable, large-scale importer.
Observing the situation from their side of the negotiating table—and well aware of the state subsidies and preferences enjoyed by Kazakhstani plants—Chinese counterparties have begun to openly dictate terms and demand lower prices. According to the head of the Union of Crop Growers, importers are employing the exact same tactics once used by Central Asian buyers of Kazakhstani flour: they are biding their time, haggling, and driving prices down. As a result, extreme price-dumping has emerged among certain enterprises, while others are left with no choice but to watch it unfold.
"So, this is where that 52,000-tenge duty has ended up," observes Viktor Aslanov.
Against this backdrop, discontent is mounting among agricultural producers in Kazakhstan’s grain-growing regions. Farmers are joining forces to push for the repeal of the export restriction.
"Just recently, the Association of Agricultural Producers of the Kostanay Region submitted a formal appeal to the relevant authorities, calling for the abolition of the export duty on sunflower seeds. I am aware that farmers in the North Kazakhstan, Pavlodar, and Akmola regions share the same intention. Every region where sunflowers are grown opposes this duty," the speaker noted.
The initial expectation was that the 52,000-tenge cost would be distributed across the entire supply chain, thereby providing a boost to the market. In reality, however, the entire burden has fallen squarely on the shoulders of the farmers.
Over the past two years, when global prices were exceptionally high, the duty did not pose a problem. But in 2026, weather conditions caused sunflower yields to return to historical norms, and prices have stabilized at a standard level of approximately 180,000 tenge per ton. At a time when farmers are seeing significant downturns in other crops, sunflowers were supposed to serve as a "lifeline"—yet the duty is now siphoning off their remaining profit margins. The most severe consequence of siphoning these funds from the earnings of agricultural producers is the blow dealt to the infrastructure of Kazakhstan’s rural villages. V. Aslanov explained that there is an unspoken agreement in the country between the state and agribusiness: agricultural enterprises receive tax incentives and subsidies, but in return, they support the social sphere in their respective villages.
"What does a shortfall of 52,000 tenge per tonne actually mean? It means a school in a rural village that doesn’t get renovated, a kindergarten that doesn’t get fixed up, or children unable to travel to competitions or academic olympiads. It means unpaid bonuses for machine operators—the hardworking men who bring this grain to harvest. This isn’t an attempt to elicit sympathy; these are the hard facts," states Viktor Aslanov.
Today, representatives of local government bodies often approach farmers, asking them to fund the needs of their villages. Yet, the agricultural producers are forced to decline: that 52,000 tenge per tonne has already been siphoned off at the source—and it never made its way back into the local economy or the rural communities.
It is worth recalling that in the early 2000s, processing grain into flour in Kazakhstan seemed like a gold mine. Hundreds of mills were built across the country, particularly in the north. The total processing capacity exceeded 12–13 million tonnes of grain annually, even though the domestic market required less than 2 million tonnes. Uzbekistan, Afghanistan, Tajikistan, and Kyrgyzstan became the primary buyers of Kazakhstani flour, accounting for over 90% of total exports. Buyers in Uzbekistan quickly realized that Kazakhstan’s mills were sitting idle and struggling under the weight of intense domestic competition. These importers began aggressively driving down prices. Having pushed down the cost of finished flour, Uzbekistan and other neighbors introduced preferential excise taxes and differentiated railway tariffs—making it profitable to import cheap raw grain from Kazakhstan, but unprofitable to import finished flour. Meanwhile, Uzbekistan went on to build its own flour mills. Over the years, Kazakhstan has shifted from being an exporter of finished, high-value-added products to serving merely as a raw-material supplier—specifically, exporting grain to mills in Uzbekistan. Hundreds of domestic flour-milling enterprises have gone bankrupt, shut down, or are operating at only 20–30% of their capacity.
V. Aslanov believes that a similar scenario is now unfolding in the vegetable oil industry; the sector is falling into the exact same trap. The only difference is that while Uzbekistan once held the upper hand over the flour millers, China now occupies that position in relation to the oil-processing industry.
The rationale behind state protectionism—the introduction of a 52,000-tenge duty—was to ensure that the processing margin remained within Kazakhstan. In practice, however, due to excessive production capacity and the dictates of a single buyer (China), this margin is effectively being handed over to Chinese importers.
Ultimately, while the state has effectively extracted 52,000 tenge from farmers, the oil-processing plants have not become any wealthier; they are forced to pass these funds on to China in the form of price discounts—essentially engaging in dumping.