The Grain Union of Kazakhstan calls for the cancellation of the export duty on sunflower exports to support grain producers.

The Grain Union of Kazakhstan is calling for the cancellation of the export duty on sunflower seed exports from February 15, 2024. According to the union, processors' warehouses are overflowing with sunflower seeds, and oil exports have significantly decreased. The recovery of exports to China is expected only in March. 

As a result, a price reduction is expected, as reported by the "APK Novosti" agency. This season, grain producers have faced negative consequences from low harvests, low-quality products, low export and domestic market prices, grain transportation issues, and restrictions on sunflower seed exports. 

The low demand for low-quality grains from domestic buyers and importers is creating serious financial problems for grain producers, jeopardizing their financial obligations to creditors and preparations for the upcoming planting campaign, according to the Grain Union.

 Grain producers use available funds primarily to repay loans, leasing, and maintain their credit history, and then for taxes and wages. Meanwhile, most grain producers have significant debts to suppliers of plant protection products, seeds, spare parts, and fuel. This may lead to a reduction in trade credit from input suppliers in the upcoming planting campaign. 

Suppliers are actively pursuing claims, up to freezing the accounts and products of grain producers, notes the Grain Union. Considering the challenging conditions of the current season and the need to finance activities for the upcoming planting campaign, the Grain Union of Kazakhstan considers it "extremely important to cancel the export duty on sunflower seed exports from February 15, 2024." 

With this goal in mind, grain producers will be able to sell their products for export at a fair price and meet demand in Uzbekistan and China, according to the union's statement. 

The price difference between domestic and export prices is about 60,000 tenge per ton. With the potential export volume of sunflower seeds of 226 thousand tons, grain producers could receive additional income of 13.6 billion tenge, which, combined with current production costs, will enable a successful planting campaign covering an area of ​​no less than 136 thousand hectares, with costs of 100 thousand tenge per hectare (for wheat production). 

The cancellation of the duty is also relevant because many grain producers have not conducted the necessary sunflower seed drying, and high humidity of oilseeds in storage leads to quality loss and decreased demand from buyers. In spring and with rising air temperatures, this problem may worsen, grain producers add. 

According to experts' estimates, a significant amount of sunflower seeds and crude oil has accumulated in oil factories' warehouses due to a significant reduction in oil exports since December 2023. This is primarily due to the ban on sending grain and its products to China.

 The ban, imposed in December 2023 and repeatedly extended until January 31, 2024, will remain in effect until March 2024 due to the Chinese New Year holidays. Consequently, local oil factories' demand for local sunflower seeds is low, and sales and shipments of oil stocks in the domestic market are unlikely. This could put pressure on domestic prices and have a negative impact on Kazakhstan's grain producers, according to the Grain Union.