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Kazakhstan plans to create national grain company

Kazakhstan, a top 10 world wheat exporter, unveiled a tentative plan on Feb. 24 to create a national grain company funded by the state and private business that would equip the former Soviet republic with better infrastructure to move its grain to market.

The company, a response to President Nursultan Nazarbayev’s call to better organize the grain business, would trade Kazakh grain on international markets and invest in new elevators, rail and port capacity, the Agriculture Ministry said.

“Our route to the Black Sea is very limited. We need to develop the infrastructure of the Asian market,” Yevgeny Aman, executive secretary at the ministry, told reporters. “If we don’t hurry, we could be too late.”

Kazakhstan more than doubled its grain harvest to 27 million tonnes last year, its biggest crop since independence in 1991.

But exports beyond its core markets of Central Asia, Iran and Afghanistan are hampered by a shortage of rail wagons and the rail-freight costs that make its grain more expensive than competing Russian or Ukrainian supplies in the Black Sea region.

Traders say Kazakhstan will do well to ship two-thirds of its exportable grain surplus of 15 million tonnes this season. The country exported 5.9 million tonnes of wheat and flour in the last complete marketing year to June 30, 2011.

“We feel the need to take action … to consolidate and open up markets,” Aman said. He said the company should be formed by the end of this year, possibly as a 50-50 partnership between the state and private traders.

“Somebody should develop infrastructure, and private business is not inclined to undertake major infrastructure projects,” he said. “Likewise, the government shouldn’t build large elevators and worry about filling them.”

Aman gave no details about possible private-sector participants in the venture, an initiative ordered by Nazarbayev during the president’s state-of-the-nation address last month.

“Today, this is just a concept; an understanding that we need to carry out the president’s instruction,” Aman said.

Materials prepared by the ministry proposed that the “united” grain company would take on the functions of a trader, buying up stocks on the open market as well as from state-owned market regulator and trader, the Food Contract Corporation.

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