Can Georgia Replace Russian Wheat Import with Kazakh?

Following the Russian ban on flights with Georgia, the issue of diversifying the wheat market in the country has been actively discussed due to expected restrictions on wheat imports.

At present, Russia is Georgia’s main wheat importer, followed by Kazakhstan.

Based on the official statistics of Georgia’s National Statistics Office, in January-May 2019, 171,000 tons of wheat were imported into Georgia, of which 117,000 tons came from Russia and 54,000 from Kazakhstan, while in 2018, 575,000 tons of wheat was imported to Georgia of which 482,000 tons were from Russia, 88,865 tons from Kazakhstan and only a small part from Ukraine and Turkey.

Last month, Georgia’s Ministry of Economy said they are planning to increase wheat imports from Kazakhstan. The issue was also discussed at a meeting of Minister of Economy and Sustainable Development of Georgia, Natia Turnava, with members of a large Kazakh state corporation ‘Prodcorporation’- Chairman of the Board Rinat Akberdin and Director Nurbek Daibekov.

The visit of the Prodcorporation working group took place in June within the framework of an agreement reached during the visit of the Prime Minister of Georgia, Mamuka Bakhtadze, to Kazakhstan.

Turnava stated that the increase of wheat import from Kazakhstan will enable the Georgian market to increase wheat supplies and diversify the market.

The Minister expressed hope that the negotiations will lead to beneficial agreement and the wheat from Kazakhstan will enter the Georgian market at a competitive price this year.

“The increase of wheat import from Kazakhstan will make wheat products for our population more available at a better price,” she said.

Wheat importers in Georgia also met the Minister of Economy. They say the Kazakh side plans to subsidize wheat transportation from Kazakhstan but further details are unknown as yet.

Chairman of the Wheat Association of Georgia, Levan Silagava, says diversification of the market is important for Georgia.

“Georgia plans to import around 320,000 tons of wheat from Kazakhstan,” he noted, adding the exact details about the amount and subsidies will be known in September and will depend on the wheat harvest in Kazakhstan.

Silagava believes the plan can work if the price of the Kazakh wheat is competitive after subsidizing its transportation.

“So far, everything depends on the price of the Kazakh wheat. We will know the details in September,’ he added.

Ketevan Kublashvili, Director General of Agricom Company, which is the main wheat importer in Georgia, says that even if wheat is imported from Kazakhstan, the Russian market cannot be fully replaced.

“Wheat from Russia gets to Georgia in two days, from Kazakhstan in two weeks. But the first thing is the price factor: if Kazakhstan takes over from Russian wheat in this regard, the Russian market could be cut by 50%,” she said.

She noted that Kazakhstan will develop a subsidy mechanism if it knows it has a good amount of crops, otherwise, they will not harm their own interests.

“After subsidizing the transportation of wheat to Georgia, Kazakhstan will be able to replace up to 40% of the market, but we will still mostly depend on Russia,” Kublashvili said.

Last month, Kublashvili said that Russia knows Georgia is nearly fully dependent on its wheat and might complicate import procedures. Russia has been Georgia’s largest wheat importer since 2014.

By Thea Morrison

Image source: Organic Facts