Kazakhstan is uniquely capable of emulating the prosperity achieved in the American agricultural sector. Learning from the American experience, recreating successes and avoiding mistakes, Kusto Group aspires to establish in Kazakhstan in 10-20 years what it took the Americans 100 years to accomplish.
Kusto Group, whose chairman is Yerkin Tatishev, aspires to build a comprehensive agriculture ecosystem that supports an integrated protein strategy in Kazakhstan. Specifically, Tatishev aims to take into account all aspects of the value chain that could have far-reaching implications on the countryâ€™s economy.
According to Daniel Kunin, Managing Director of Kusto Group
This is a project where the winners can include local farmers in rural and under-developed regions â€“ it can include city dwellers looking for affordable, local sources of food and meat, and it can benefit exporters and foreign customers with a growing demand for healthy products. Many others who stand to benefit in the complex web that is agribusiness. I believe Kazakh agriculture will stand out because it will be sustainable â€“ which is a very attractive way to generate income, reduce poverty and build lasting wealth.
Building an agricultural ecosystem in Kazakhstan
While the United States and Kazakhstan are not comparable today in terms of agricultural output and yields â€“ the countries are similar in crucial ways that opens the door to introducing an American model of agribusiness which saves water, improves crop efficiency, relies on non-GMOs, and has a sustainable impact on the land. Implemented together, they can all jumpstart meat production.
We do not approach the deficits or shortcomings experienced today in the industry with pessimism,â€™ says Kunin, but rather with optimism that they provide an opportunity to realize the enormous potential in Kazakhstan.
Kusto Agro, a division of the company, has developed a keen understanding of todayâ€™s modern agricultural industry when they entered the Ukrainian market eight years ago. Today, the company plans to take advantage of the competencies acquired there to the maximum extent possible in Kazakhstan.
Kusto Group, which operates in multiple divisions across three continents, has begun the task of contributing to Kazakhstanâ€™s agricultural transformation by first establishing a foundational ecosystem that will support their long-term goals of a productive, sustainable industry.
The company has focused its efforts in five primary domains: non-GMO seed cultivation, mechanized irrigation and water saving, feed and agro production, livestock rearing and processing and export.
Daniel Kunin, Managing Director of Kusto Group, With Nir Darnov, director at Tambour Speaking at the recent Central Asian AgTech Summit, Yernur Aydarkin, Managing Director of Kusto Agro Kazakhstan, explained Kusto Groupâ€™s holistic approach saying, You can draw an analogy with human health – it is ideal when everything works in tandem: sleep, proper nutrition, physical activity, mental state. Also, in the agricultural business, quality inputs will result in a well-functioning system – from the production of high-quality feed, the use of the best seeds and irrigation technology to the sale of finished products.
Kazbeef: A holistic approach to livestock
Kusto Group has been building and expanding its operations in the beef cattle market for the last few years under its KazBeef division, located in the Akmola region of Kazakhstan.
With a commitment first and foremost to quality, Kazbeef was the first to import premium Angus and Hereford breeding stock from the United States. Today, the company has 120,000 hectares of pasture in the Akmola region alone, 5 thousand heads of breeding stock cattle and two feedlots with a total capacity of 15 thousand heads of cattle. The company recently built a new state-of-the-art meat processing facility in Schuchinsk, increasing storage capabilities to 6,000 tons of produce per year.
In 2018, KazBeef produced more than 1 thousand tons of meat, which went entirely to the domestic Metro distribution network. By the end of this year, the company expects to increase output by an additional 50% to 1.5 thousand tons. Kazbeef aims to achieve a projected production volume of 8 thousand tons in the next two to three years.
However, these volumes are just the beginning, given the tremendous potential of Kazakhstan. As the ninth largest country in the world, with an abundance of space and rich, fertile land, and a climate ideal for animal rearing, the country is primed to become the regional and global leader in agriculture.
The basic ingredients are there, and now we need to make use of the best technology and investment to make it a reality, says Yerkin Tatishev. However, such a transition cannot happen overnight. It requires policymakers and business leaders to work hand-in-glove and develop an approach characterised by a broad range of high-growth, high-skilled and high-quality industries. I am pleased to see this collaborative approach starting to fall into place, particularly in areas that can benefit lower-income rural communities.
An increasing demand for high-quality beef, both domestically and from neighboring markets such as China (which has an almost unlimited capacity), is helping to fuel growth.
There is definitely demand, says Aydarkin. For example, we were recently approached by one of the largest beef dealers in China, that sees volumes of more than 500 thousand tons of meat annually. This is more than the entire annual output in Kazakhstan! They looked at our enterprise, tasted our meat and said that they are prepared to take everything that we offer, the condition – a stable supply. Of course, it is important not to put all your eggs in one basket. After all, if you configure the entire system with only an eye on China, any problems entering the market will result in huge losses for the industry. Therefore, our strategy is to sell part of our volume inside Kazakhstan and export the rest. This guarantees us stability. It is also important for us to provide Kazakhstanis with high-quality, healthy meat.
Introducing innovation and best practices to Kazakhstan
Feed production is an integral part of Kusto Groupâ€™s strategy. Their operation includes the cultivation of non-GMO corn for grain and silage, barley and other crops. The company has placed an emphasis on owning their own food supply as a key to profitability â€“ ensuring quality and avoiding the volatility of prices and unmanageable logistics.
Kustoâ€™s investment in feed production aims to not only provide a supply for its own integrated operation, but also to offer a high-quality, stable domestic product to partner farms, as well as smaller third-party feedlots who do not have the financial means to invest in their own feed sector.
This continues the companyâ€™s vision of working in a collaborative fashion with the entire agricultural ecosystem of Kazakhstan, not just their own operations, and has played a role in Kusto Groupâ€™s activities to improve seed production abilities and to introduce modern soil irrigation technology. Following the American model of development, the company initiated a joint venture with the Minnesota-based Baumgartner Agricultural Science and Service (BASS) to introduce non-GMO seed production methods to Kazakhstan. It is estimated that 10% of the plantâ€™s production will be used to supply Kusto Groupâ€™s own operations and the rest will be sold on the domestic market and exported to Asia and Europe.
Kusto Group also signed a deal this year to partner with US-based Valmont Industries, a leading producer of irrigation systems, to build a production plant in Kazakhstan. Currently, only 7% of arable land in Kazakhstan is irrigated, which accounts for about 40% of the countryâ€™s agricultural production. The introduction of modern irrigation systems will no doubt have a positive, far-reaching impact on the industry.
Achieving sustainable, profitable growth
Building a sustainable protein export business and modern agricultural sector in Kazakhstan is a fascinating, supremely complex and interesting project, Daniel Kunin explains. By definition, it requires long-term thinking, strategic planning, intensive stakeholder mapping and understanding, and the creation of a network of inter-linked partnerships that are both joint ventures but also intensive public-private partnerships.
Kusto Group also aims to integrate farmers into their agricultural ecosystem, playing a role in transitioning the sector from the framework of Soviet-modeled subsistence farming to a competitive network of small commodity producers. Their initiatives include a breeding stock rental program to help farmers build their own herds at a lower initial investment cost. The engagement of these farmers will help the entire system to increase productivity and achieve stable, sustainable growth.
Achieving our ambitious â€“ but attainable â€“ vision of helping transform Kazakhstanâ€™s agricultural system will create a modern, competitive and prosperous sector in the national economy that can complement and maybe one day surpass the oil industry, says Kunin. Once the elements of a well-functioning system are established, success will follow.