Are the changes in the 2024 sowing season justified?

Yesterday at the meeting of the Government the Ministry of Agriculture presented changes in sown areas for 2024. In general, the main message of this was to increase diversification in crop production. The World of NAN editorial analyst decided to assess how effective it was to reduce or increase the area under crops in terms of prices and earnings.

The main change was the reduction of wheat acreage by 429.2 thousand hectares. Thus, with last year's yield of 9.9 c/ha, the gross output will be reduced by 425 thousand tons. Thus, the gross output for wheat will be reduced by ₸44.8 billion at the February average official price of ₸105.4 thousand per ton. With prices so low, this decision is surely a sensible one.

So what's in return? It is planned to increase the area of oilseed crops by 385.7 thousand hectares. In terms of money at last year's yield it is about 54 billion tenge according to our assumptions (60% share of sunflower). On the other hand, prices of sunflower producers fell by 31% on average last year, and flax-cudder by 14%. Thus, it may be risky and unprofitable to increase sown areas with such a decrease in prices.

It is also planned to reduce sown areas for rice by 6.4 thousand hectares (-6%). If the previous yields are maintained, the gross rice harvest may fall by 34 thousand tons or ₸6 billion in cash equivalent. Note that the retail price of rice has increased by 26% over the year. How appropriate is it to reduce the planting of rice with such a rise in prices and will it not lead to a new round of price increases? On the other hand, we have more than enough rice of our own, but if the harvest falls by 34 thousand tons, farmers will have to reduce exports by 32%.

In general, replacing wheat with other crops may be justified. But increasing acreage of fallen oilseeds, which are still suffering due to export duties, and reducing rice plantings amid rising retail prices may be controversial decisions. Nevertheless, all things being equal, farmers should not lose out on overall earnings.

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