Market study on greenhouse industry in Kazakhstan
For ten years Kazakhstan increased greenhouse area by almost 20 times and reached 1.164 hectares by 2018. The volume of the greenhouse vegetables market amounted to 219 thousand tons. Next 3-4 years, about 40-50 hectares of greenhouses will be built in Kazakhstan. Unlike Russia, in Kazakhstan there are a lot of small producers of greenhouse vegetables. Family farms account for 49% of total greenhouse vegetables production, and their greenhouses occupy 53% of total greenhouses area. Government support for the industry plays an important role for the local market players and foreign investors.
Aim of the Report
The Dutch Ministry of Agriculture, Nature and Food Quality is pleased to share its new Market Study on Greenhouse Growing of Vegetables and Ornamentals in the Russian Federation and in the Kazakhstan Republic. By making this information available, the Ministry would like to facilitate interested Dutch exporters and suppliers in a better understanding of the specifics and future potential of the greenhouse sector in the Russian Federation and Kazakhstan. In addition, the information is meant to ensure better market access to Dutch suppliers and exporters, by providing relevant key contacts and outlining the necessary steps to be taken.
Findings of the Study
Experts identify state support of the greenhouse sector and preferential tax regimes for Kazakhstan agricultural producers as strengths of the industry. Moreover, the country is located in more favourable light zones compared to major regions of Russia. Industrial production of greenhouse vegetables in the framework of import substitution strategy is considered as an opportunity for the greenhouse sector of Kazakhstan as well as development of export potential of the sector. However, such weaknesses as low share of big industrial producers of greenhouse vegetables, low share of farms using modern high-intensity technologies, high import dependence of the greenhouse sector on materials and equipment and lack of qualified personnel hamper development of the industry. Increased competition with imported products, market saturation due to increased local production followed by lower prices and profitability are the threats challenging to the market players.
The feature of agriculture in Kazakhstan is the small commodity production, that is, a significant share of producers, including growers of vegetables in greenhouses, are small farms. Thus, family farms account for 49% of the production of greenhouse vegetables (the average greenhouse size of a family farm is about 0.15 hectares). This makes it difficult to introduce modern production technologies and hinders faster and better development of the industry.
The Kazakh greenhouse sector is concentrated in three southern regions: Almaty region, Turkestan region and Shymkent (regional center of Turkestan region). Kazakhstan greenhouse sector has more attractive business conditions than in Russia, but less attractive than in Uzbekistan.
The production structure is characterized by almost equal shares of tomatoes and cucumbers which are 47% and 49% correspondingly. The rest of the crop covers 4% of the production volume. The share of tomatoes is higher than in Russia.
The highest yield for typical agricultural enterprises is 23 kg/m2 for cucumbers and 26 kg/m2 for tomatoes. The yield in greenhouses of family farms is lower and totals 16 kg/m2 for cucumbers and 13 kg/m2 for tomatoes. Most likely, it is explained by insufficient use of modern technologies, even in most of new greenhouses.
Kazakhstan is a net importer of fresh greenhouse vegetables. The share of imported cucumbers is 15%, and the share of imported tomatoes is 61%. Almost 100% of the Kazakhstan market is provided by imported peppers, eggplants and salad crops. The main competitors are Uzbekistan and China which supply cheaper products. Exports are 4 times less than imports and almost 100% of production goes to Russia.
The share of greenhouses growing flowers is about 2% of the total area including agricultural enterprise, family farms and individual entrepreneurs. Mostly agricultural enterprises deal with production of flowers whose greenhouses occupy 82% of the area. The share of local flower production in Kazakhstan is around 19% which is slightly higher than in Russia.
According to experts, attractiveness of Kazakhstan greenhouse sector for investors is explained by warmer climate in Kazakhstan than in Russia, less bureaucracy than in Russia and government support for the industry. Simplified customs clearance procedures are the country’s advantage to do business for Dutch companies dealing with equipment and technology supply.
The full version of a new Market Study on Greenhouse Vegetable and Ornamental Growing in the Russian Federation and Kazakhstan Republic is available here.