Kazakhstan’s ambitious dairy development plan

The growth should primarily be fueled by government loans with subsidised interest rates for the construction and modernisation of milk farms and dairy processing infrastructure.

In 2023, plans to build 81 milk farms and 17 dairy processing plants were made public in Kazakhstan, many of them with state aid, local news outlet The DairyNews Central Asia estimated. It is yet to be seen, however, whether all these projects will be implemented.

Doubting the dairy sector

Mikhail Mishenko, director of the Dairy Intelligence Agency, a Moscow-based think tank, expressed doubts that the released figures are realistic.

“Frankly speaking, I don’t fully believe that these figures will be achieved given that the official sector in Kazakhstan, according to our estimates, produces 1.9 million tonnes of milk [per year],” Mishenko said, adding that some growth is possible due to a low-base effect.

Labour shortage

Daniyar Abitaev, deputy general director of the local dairy firm OAHK, said that only 10% of the announced projects would be implemented. He cited the labour shortage, and primarily a deficit of highly-skilled personnel, as the main constraint for the new dairy projects in Kazakhstan.

It will be challenging for Kazakhstan to purchase 100,000 heads of cattle, especially highly productive animals, in a relatively short period, Mishenko said.

Moreover, it will take around 10 years to repay investments in the dairy industry, Abitaev said. As a result, investors typically are reluctant to jump into big projects in the dairy sector.

Livestock feed

In addition, Mishenko voiced concerns that the disclosed plans say nothing about animal feed. A lack of feed in some cases could heavily weigh on the expansion plans. Besides, Kazakhstan has insufficient processing capacities to deal with 725,000 tonnes of milk, Mishenko said, emphasising that the planned 17 factories will not make a difference.

Azamat Saginbaev, executive director of the Kazakh Chamber of Dairy Industry, warned that some farmers might be seeking cheap money and are not realising what they are signed up for. He agreed that some recently disclosed development plans may eventually be cancelled.

Over the past few years, the Kazakh authorities and business organisations have shared ambitious goals of ramping up aquaculture and beef production and exports. However, in neither industry have the declared plans led to an actual rise in production performance.