Vegetable oil is a point of growth. How our state helps exporters?
The demand for vegetable oil on the world markets is steadily increasing. Manufacturers from Kazakhstan have an excellent opportunity to occupy their niche in this segment.
According to QazTrade of the MTI of the Republic of Kazakhstan, the export of sunflower oil from Kazakhstan in 2019 amounted to USD 81 mln., which is 2.8 times more than in 2015 (USD 28.9 mln.). In physical terms, 106.0 thousand tons of oil were exported, which is 3.6 times more than in 2015. For 9 months of 2020, the supply of sunflower oil from Kazakhstan amounted to USD 75.5 mln., which is 49.7% more than in the same period last year.
Most of the products are exported to China (38.2%), Uzbekistan (30.3%) and Tajikistan (15.5%). For the first 9 months of this year, a significant increase in exports is observed in the direction of Uzbekistan (+93.7%) and China (+61.7%).
Along with the demand, the price of vegetable oil has been growing over the past few years. Farmers try not to miss their chance. Oilseed crops areas are growing from year to year. But who buys raw materials? The one who will offer the best price and best conditions. And often these are foreign enterprises, since Kazakhstan producers do not always have working capital to pay off farmers immediately or even on prepayment, so sometimes in the summer factories are often idle, because they can not stock up on raw materials for the future.
However, it is more profitable for the development of Kazakhstan economy to sell not raw materials, but finished products, and therefore there is a need to support domestic producers. After all, every factory means stable jobs, social infrastructure and taxes to the budget. And the cost of ready-made oil is higher than the cost of seeds. By the way, the neighbors are in great demand for by-products of oil production - oilseed residues and seed cakes, which are very valuable additives in animal and poultry feed.
In addition, increasing the share of non-primary exports increases the country's competitiveness. Therefore, enterprises that decide to reach a new level and create full-cycle production facilities for selling their products abroad receive state support through Export Insurance Company "KazakhExport" JSC (a subsidiary of Baiterek NMH JSC, a subordinate organization of the Ministry of Trade and Integration of the Republic of Kazakhstan).
- Our company has been operating since 2013. Initially, we focused on rapeseed and reckoned on deliveries to Europe, where we were going to use rapeseed oil as a substitute for biodiesel, says Yevgeny Ibrayev, Commercial Director of Kostanay K-Oil LLP, But over time we switched to sunflower oil. They buy it very well in China and Central Asia. The problem is that we constantly need working capital to purchase raw materials. We opened a credit line, and KazakhExport provided us with a credit insurance service. Without this, it would be difficult for us to get the necessary money, the Bank requires collateral, and it usually does not cover the loan amount.
The growth in exports of Kazakhstan products is, among other things, also an incentive to develop local production. A good example of this is another enterprise of Kostanay region - Prombaza-7 LLP.
- Our production shop is located in the village of Kopychenka, Fedorovsky district, - says the head of LLP Mukambetzhan Akulov. - At first it was a small enterprise. Six people worked in the shop. And then we upgraded it, installed modern equipment from Germany, Italy, and China. Now it is a full-cycle enterprise from field to market. That is, we both produce oil, refine it, and bottle it, and our product is ready for sale in stores. And now we employ 45 people, not only villagers, many come from the city. We export mainly to China, and send 500-600 tons of oil every month. And up to 1,000 tons of oilseed residues and seed cakes to Russia. It is clear that we do not do without loans, and KazakhExport, our reliable partner, helped us a lot. It would be difficult without them. They provided us with insurance guarantees, so that the necessary funds arrived faster.
Significant support has been received also by IC Sey-Nar LLP from East Kazakhstan region. In 2018, KazakhExport provided this company with insurance coverage for a bank loan in the amount of KZT 2 bln. These funds were also intended for the purchase of raw materials to produce unrefined sunflower oil for export. The support was very effective, and now Sey-Nar Group of Companies is building a new oil production plant in Glubokovsky district of East Kazakhstan region. KazakhExport has already decided to provide insurance coverage for a loan for the implementation of this important investment project for the region in the amount of KZT 10 bln.
In general, since the beginning of the year, the volume of insurance coverage obligations accepted by KazakhExport has amounted to KZT 63 bln. In addition to the successful market conditions, it is the support of the state that gives oil producers a chance to successfully occupy this niche in the world market.
