The grain market in China is expected to decline due to erratic weather changes. Cold temperatures have resulted in freezes that have affected the wheat.
There is at least half as less wheat produced than grown in previous years. The lack of rain in some of the areas where wheat is primarily grown has resulted in nearly a 100% reduction of precipitation compared to previous seasons, according to reseach by Beijing Orient Agribusiness Consultants. Dry weather caused a detrimental shortage in wheat during the winter months of 2010.
Globally, China consumes the largest amount of wheat, forcing it to rely on an increase of exports from foreign countries. The combination of reduced production and the necessity to import an increasing amount of wheat from abroad may encourage price inflation.
Trade Agreement Support
The Food and Agriculture Organization (FAO) says that grain production should be increased in Central Asian countries to level the market. The FAO also recommends that counties in the area develop a trade agreement to allow food to flow more freely and help stabilize the market. Countries that are more dependent on grain imports could benefit the most from the trade deals.
The FAO suggests that Kazakhstan should increase its grain production to mitigate the food shortage: Kazakhstan has experienced a decrease in revenue from agriculture in the past few years, ranking it near 45th in terms of world agriculture revenues. The FAO still believes that the country is in the best position to aid its Central Asian neighbors.
Key Statistics - Kazakhstan's Economy (source: CIA World Factbook)
- GDP: $196.4 billion in 2010, ranking 54th in the world compared to $183.6 billion in 2009
- Exports: $59.23 billion in 2010, ranking 47th in the world
- Export commodities: oil 59%, metals 19%, chemicals 5%, machinery 3% as well as grain, wool, meat and coal
- Export partners: China 15.6%, Russia 8.9%, France 8.5%, Germany 7.8%, Ukraine 5.1%, Romania 4.8%, Italy 4.7%, US 4%