Changing Competitiveness of the Wheat Sector of Kazakhstan and Sources of Future Productivity Growth
AbstractEconomic incentives in Kazakhstan have been radically reshaped since the Soviet era ended in 1991. In the first phase of transition, the economy and agricultural sectors declined by 40-50%. Overall economic growth refused in 1996, and agriculture is likely to enter a recovery phase soon. The economy of Kazakhstan is undergoing rapid structural change, and agriculture is experiencing strong inter-sectoral competition. The change to market-oriented and commercially-driven agriculture has altered fundamentally the incentives faced by Kazakhstan's wheat farmers. They have reduced use of inputs sharply because of the need to pay market prices for fertilizer, fuel, and other inputs, while severely curtailing investment in machinery and their farms generally. There is considerable potential for productivity improvements and adoption of new technologies in the wheat production and marketing sectors. Farmers are likely to resume investment only slowly and are likely to adopt only those changes that are low cost and which are based on low-input methods of production. Assessed under 1998 conditions, these wheat growing methods are about 20% more competitive than the energy and input-intensive technologies of the Soviet era. Because of the new commercial pressures brought on by the opening of the Kazakhstan economy to global markets, the production methods of the Soviet era are no longer relevant to Kazakhstan's wheat farmers. A fundamental change of thinking and approach to the situation faced by farmers is required in research, extension, training and education. The new commercial circumstances of agriculture call for strategic analysis of the future for Kazakhstan's farming and of related policies, research and education. Action is required in these areas to reinvigorate Kazakhstan's agriculture, and programs should commence as soon as possible. The future for wheat in Kazakhstan is promising, providing there is concerted and strategic change in the mindsets, culture, and approaches of those working in and supporting the wheat industry.
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Bibliographic InfoPaper provided by CIMMYT: International Maize and Wheat Improvement Center in its series Economics Working Papers with number 7686.
Date of creation: 1999
Date of revision:
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