The Dutch greenhouse industry sets the example for many regions around the world. With the leading position in the agricultural sector, Dutch expertise can be used to enhance greenhouse practices in the agricultural areas in Kazakhstan. In the regions of Nur Sultan and Almaty, hyper-modern greenhouses have been realised with sustainable growing methods and sustainability as a key aspect. However, the construction of Kazakh greenhouses surges and diffuses to less-developed parts of the country. Do you know how to use your expertise and management skills to capitalize on these new opportunities?
Introduction
The 1970s mark the era of the first development of greenhouses in the Republic of Kazakhstan. With (winter) greenhouses realised in the 1970s and 1980, the collapse of the soviet union halted these developments. The economic crisis decreased local and foreign investment, and by 1994 the production of greenhouse vegetables declined by more than 200%. The surge in greenhouse development in the 1970s covers the unique selling point of low energy prices. While the company had profitability of +70%-200%, the 1990’s increase in energy prices, abolishing subsidies, and the development of high-yielding crops led to a decrease in the initial 560 hectares of protected ground.
Since 2003, Kazakhstan sees a positive trend in the development, construction, and reconstruction of greenhouses. However, only in the last ten years has the greenhouse industry fully developed. From only 108 greenhouses with a total area of 59 hectares in 2008 to a total greenhouse area of almost 1.200 hectares in 2018. In 2018, the largest areas of greenhouses are concentrated on family farms (618 hectares – 53%). Agricultural enterprises have 180 hectares of area, whereas private farms are in the middle with 366 hectares.
Structure of production and yield
According to the market research by Ministerie van Landbouw, Natuur en Voedselkwaliteit, the structure of production can be categorised in three categories. Greenhouses mainly produce cucumbers (49%) and tomatoes (47%). Other vegetables (4%) include aubergine and types of salad. While there is no official data on the yield of vegetables, the calculated data for agricultural enterprises is 26kg/m2 for tomatoes and 23kg/m2 for cucumbers. For greenhouses owned by family farms, the yield is 50% of the agricultural enterprises.
Since Kazakhstan mainly produces tomatoes and cucumbers, other vegetables need to be imported from the bordering countries (e.g. China, Uzbekistan). Sweet pepper and tomatoes are the highest-demand vegetables (12.8 and 38.3 million euro), but also cucumbers (5.9mln. euro) and aubergine (3.5mln euro) are noteworthy import vegetables.
Government support
The Association of Greenhouses of Kazakhstan and the Ministry of Agriculture of the Republic of Kazakhstan developed rules for subsidizing greenhouse construction. Whereas funds initially were allocated per 1 hectare (3.500 euro) to compensate for the costs of greenhouses, nowadays this hectare subsidy is abolished. The producers of greenhouse vegetables have equal rights to government support with producers of other crops. These benefits include loans, subsidies for mineral fertilizer and herbicides, subsidizing the water cost for irrigation, reimbursement of (a part of) the cost for the expansion of greenhouse complexes and implementation of projects, and participating in leasing programs. In practice, only industrial greenhouses can apply for these subsidies. This entails that additional lighting systems and heating systems should be present and that the yield is comparably high.
Opportunities
State support including a preferential tax regime in the agricultural business is the main incentive for investment in the Kazakh greenhouse industry. Further, the export channel to Russia can be realised and is sustainable. The development of import substitutes (mainly bell peppers; aubergines; tomatoes) can be an opportunity to enter the local market. The export goods of tomatoes and cucumbers are also gaining foot in other markets such as the Middle East. Moreover, the rapid growth of the greenhouse sector in Kazakhstan (mostly in the south and the northwest of the country) includes the need for experts to lead the project. The Dutch knowledge is therefore required to share knowledge and supervise projects. Besides new greenhouses, reconstructing (older) models can be done to increase yield and apply sustainability principles. Moreover, with 14% of the Kazakh inhabitants working in the agricultural business, potential employees are abundant.
Dalsem argues that these hyper-modern greenhouses have risen in a relatively short period. In the case study of vegetable greenhouse BRBAPK LLP (2022) in Almaty (Kazakhstan) it is noticeable that Dutch knowledge and level of expertise are required. In this new greenhouse, the development of Dutch horticulture showcases a process in the form of “a step of 30 years”. On par, the openness for knowledge and the drive to learn are what make Kazakhs unique and “enables them to take fast steps”. With mutual respect, the Kazakhs learn from the Dutch and cooperate into making this a successful business.
The developments the Dutch can implement and bring to Kazakhstan are aspects such as optimizing production and quality, implementing process computers, and realizing the optimal greenhouse climate. This process computer is the competitive advantage in the Kazakh market. Utilizing the iSii computer, parameters such as the heating, humidification, screens, irrigation and lighting can be controlled and adjusted. With the competitive advantage, the Dutch knowledge goes hand in hand with the Kazakh mentality.
Conclusion
As this case study shows, the opportunities in Kazakhstan are evident in the constantly developing greenhouse sector and the aim to maintain expanding the agricultural business. Building these greenhouses is now only done in a couple of main areas (Almaty; Nur Sultan), but can be expanded to other locations. With the production of vegetables such as aubergine and bell peppers, you can enter the local market and fill the current import gap of these vegetables. that Dutch expertise and management can create a top competitor in the Kazakh market, this opportunity is one to keep in mind.
Sources
https://www.freshplaza.com/article/9437889/when-investing-in-a-kazakhstan-greenhouse-also-consider-the-most-advantageous-exchange-rate/
https://www.dalsem.com/en/Largest-Kazakh-glass-greenhouse-works-with-Dutch-knowledge-and-technology
https://www.agroberichtenbuitenland.nl/actueel/nieuws/2020/06/19/market-study-on-greenhouse-industry-in-kazakhstan
