Kazakhstan unrest: What is the impact on the dairy sector?
The recent unrest in Kazakhstan has hit dairy processing companies and retailers in major cities, and things are yet to fully return to normal, according to market participants.
Kazakhstan produces between 1.5 and 1.8 million tonnes of milk, fully meeting its domestic demand in some dairy products, the Dairy Union of Kazakhstan estimated. On the other hand, the country is dependent on the import of products with high added value, importing nearly 50% of cheese, 15% of butter, and 95% of dry milk powder.
Social unrest affects dairy sector
The Russian news outlet, Dairy News, citing local companies, reported that the main problems had been associated with problems in the financial sector. All of Kazakhstan’s financial institutions, including its banks and the stock market, remained suspended amid the country’s social unrest.
The violent unrest in Kazakhstan that began with peaceful protests in early January has left 225 people dead, prompting the authorities to introduce a state of emergency. It incurred losses of between US$2 billion and US$3 billion on the country’s economy, according to Kazakh President Kassym-Jomart Tokayev.
Dinmukhamed Aisautov, director of the corporate relations department at Danone Berkut, said that dairy companies had been severely affected by the recent political crisis, especially in big cities like Almaty and Shymkent.
“For sure, this situation directly affected the dairy industry. Many companies stopped receiving and processing milk. Shipments to stores and retail chains stopped. There was also no export,” Aisautov said, adding that currently, things are slowly coming back to the way they were.
“Events like this don’t usually last long, so it’s hoped we’ll be back to normal by the end of January,” Aisautov said, expressing confidence that the milk industry would be able to fully recover by May of 2022.
Dairy to stabilise in weeks
Vladimir Kozhevnikov, director of the Dairy Union of Kazakhstan, said that the fallout of the political crisis in the dairy industry was not as bad as in some other segments of the national economy.
“The number of orders has fallen, but this happened not because companies suffered financial losses, but because the consumer demand slump since banks shut down the operation. I think that by May and even earlier, the situation in the dairy industry will stabilise,” Kozhevnikov said.
Mikhail Mishchenko, director of the Russian Dairy Intelligence Agency, also expressed confidence that the situation in the Kazakhstan dairy industry would normalise in a matter of several weeks.
