Kazakhstan's Sunflower Export Tax Generates 5 Billion Tenge, Boosts Farmer Subsidies

In February 2023, Kazakhstan implemented a sunflower seed export duty, resulting in a substantial influx of 5 billion tenge into the state budget, according to reports from LS citing the Ministry of Agriculture of the Republic of Kazakhstan. These funds are subsequently channeled into subsidies for agricultural producers, as outlined by the Ministry of Agriculture. The subsidies are designed to support farmers by facilitating their purchase of essential agricultural inputs such as fuels and lubricants, mineral fertilizers, seeds, and pesticides. Additionally, partial reimbursement is provided for the costs associated with supplying irrigation water.

Moreover, subsidies are extended for the delivery of oilseeds intended for processing. For the current fiscal year, approximately 2 billion tenge has been earmarked for this purpose. Despite the imposition of the export duty, Kazakhstan continues to witness active exports of sunflower seeds. Notably, during the first 11 months of 2023, the country exported 215.1 thousand tonnes of sunflower seeds, marking a decrease from the 268.1 thousand tonnes exported during the corresponding period in 2022. However, when considering the marketing year from October to September, total exports amounted to 315.1 thousand tonnes, which aligns with annual export figures.

Meanwhile, Kazakhstan has experienced an upsurge in sunflower oil production in the previous season. In the 2022/23 marketing year, crude sunflower oil production reached 417.6 thousand tonnes, reflecting a notable 50% year-on-year increase. Furthermore, refined sunflower oil production witnessed a modest yet significant 4% year-on-year growth, reaching 145.3 thousand tonnes. Concurrently, imports of bottled oil saw a decline of 11.3%, totaling 39.7 thousand tonnes. Export figures for sunflower oil in the 2022/23 marketing year surged by an impressive 77%, reaching 310.6 thousand tonnes.

However, despite the surge in production and exports, there remains a noticeable shortage of raw materials. Kazakh sunflower seed crushing facilities are operating at less than 50% capacity, indicating untapped potential within the sector. In light of these developments, deputies of the Mazhilis of Kazakhstan have proposed to the new government the abolition of the duty on sunflower seed exports, which currently stands at 20% or a minimum of 100 EUR per ton, as early as February of the current year.

The introduction of the sunflower seed export duty in February 2023 marked a significant policy shift in Kazakhstan's agricultural landscape, resulting in substantial revenue inflows to the state coffers. These funds, channeled into agricultural subsidies, are intended to bolster the resilience of farmers and support the sustainable growth of the agricultural sector. Despite challenges such as fluctuating export figures and raw material shortages, Kazakhstan remains poised to harness the full potential of its sunflower industry through strategic policy interventions and targeted support measures.