After the abolition of the Russian Federation from July 1, 2022, the ban on grain exports to Kazakhstan illegal imports and subsequent deliveries of Russian wheat to the countries of Central Asia increased sharply. According to Yevgeny Karabanov, a representative of the Grain Union of Kazakhstan, transnational criminal groups are involved in the manipulations with it. Economists estimate the losses of Kazakhstan from illegal schemes at hundreds of millions of dollars.
“Grey schemes” of grain exports
According to market participants, borders with Kazakhstan vehicles with grain go according to Russian documents, and after crossing it, documents appear that this is grain from local farms.
“This chain of “gray schemes” involves not 2-3 people, stable transnational organized criminal groups have formed, which consist of citizens of Kazakhstan, the Russian Federation and the Central Asian republics. For fake documents, a local farmer is paid 2,000-3,000 tenge (4.2-6. 4 euros converted – Ed.) per ton of grain. And it is already entering the Kazakh elevators as a local one,” says Karabanov.
The Association of Commodity Producers of the Kostanay region confirms that grain from the Russian Federation is transported through the northern border – Kostanay, Pavlodar or Akmola regions. According to the Department of Economic Investigation for the Kostanay region, the imported grain is registered in the name of fictitious individuals and legal entities. When processing documents, the volume and cost are underestimated.
Everyone suffers from the shadow turnover: significant numbers
“Gray” importers receive significant profit from non-payment of value added tax (VAT) – it is 12% in Kazakhstan. According to the head of the Kostanay-Astyk agricultural production cooperative Vladimir Dranchuk, today the cost of 1 ton of grain in Kazakhstan is about 274 euros. The Russian Federation buys it from its producers for 14,000 rubles (about 232 euros) per ton. The difference of 42 euros is a decent amount for Kazakh farmers. In addition, according to Dranchuk’s calculations, due to non-payment of VAT on only 1 million tons of smuggled grain, Kazakhstan loses 32 million euros.
According to Rosselkhoznadzor, Evgeny Karabanov continues, over the past 9 months from Russia to Kazakhstan 2.4 million tons of grain were sent, and according to Kazakhstani statistics, only 1.2 million tons entered the country. “This is the “gray import”, the figure is significant. It is almost impossible to determine which grain is in transit to Tajikistan, Kyrgyzstan, Uzbekistan or Turkmenistan, and which one settles in Kazakhstan,” Karabanov clarifies.
According to the calculations of economists of the alliance of several specialized organizations of the grain market of Kazakhstan it follows that, for example, the cost of a legal supply of wheat from Russia to Uzbekistan – taking into account delivery by rail, payment of an export duty to the Russian Federation and the exporter’s margin – is about 446.5 euros per ton. The cost of illegally supplied to Uzbekistan through Kazakhstan is 333 euros per ton.
Shadow export of grain from the Russian Federation affects not only Kazakhstan
According to economists, on average, illegal imports of Russian wheat to Kazakhstan by road and its subsequent exports annually result in Kazakhstan’s losses in the amount of almost 430 million euros.
“It doesn’t matter to the buyer whether it is “white” or “gray” grain, it doesn’t say on it. As a result, this pressure of the import price is transferred to our domestic market. And thus, the farmer does not receive enough money, and conscientious grain processors are at a loss, and the state does not receive funds to the budget. And we are for fair competition,” Karabanov emphasizes.
Moreover, according to the participants of the Kazakh market, the shadow export of grain from Russia hits not only Kazakhstan, but also Russian farmers, deforming the grain balance on both sides of the border, since unscrupulous market participants leave regional flour millers, the elevator industry, as well as legal traders without grain. business.
Prohibition prohibition strife
Participants of the Kazakh grain market proposed to introduce a ban on the import of wheat, barley, corn, sunflower seeds and wheat flour into the country from September 1 by road. But they complain the authorities do not hear them or are afraid to impose any restrictions.
As explained in the Ministry of Agriculture of Kazakhstan, within the framework of the EAEU there is a “Treaty on the Eurasian Economic Union”, which refers to the free movement of goods and services. The treaty provides for restrictions only in certain cases, when it is mainly a threat to food or national security.
“The import of Russian grain does not fall under these restrictions in any way. An exception can be only if it is dangerous for humans or threatens the phytosanitary situation,” the department added.
Instead of a ban on the import of smuggled grain, the Kazakh authorities decided remove the restriction on the export of grain from September 10 and flour from the country, introduced due to fears of their shortage. However, a good harvest is expected in Kazakhstan this year – it is planned to harvest more than 13 million tons of wheat, which exceeds last year’s figure by 12%.