THE rolling, fertile steppe of northern Kazakhstan resembles North Dakota. The climate is similar, too—perfect for rearing cattle that provide juicy steaks. It is also close to Russia, a market that is suddenly rather hungry.
Long before the Russian government banned many food imports from North America and Europe in early August, authorities in Kazakhstan were trying to diversify an economy dependent on oil and gas. Since 2010, under a $1 billion, five-year programme, the government has flown in 50,000 Black Angus and Hereford cattle (and lots of frozen semen) from Australia, Canada and America.
“Steaks are still a luxury product here, but the market is growing”, says Beibit Yerubayev, the American-educated boss of Kazbeef, a company backed by $50m in low-interest loans and in possession of a 2,000 square-kilometre (770 square-mile) land concession. With 9,000 head of cattle, Mr Yerubayev is now selling his home-grown steaks in Astana, the capital, for half the cost of an imported Argentine cut.
Kazbeef highlights how capitalism works in authoritarian Kazakhstan. Officials credit President Nursultan Nazarbayev with the ingenious idea of building a high-quality beef industry. When they satisfy presidential whims, state-backed companies enjoy preferential financing. But Soviet-style planning risks top-down bungling. Mr Yerubayev had to rewrite the business plan handed to him with his loan.
For his premium brand to thrive, Kazakhstan’s population of 17m is not enough. The big markets, Mr Yerubayev says, are Russia and China. In 2013 Kazakh ranchers exported 300 tonnes of prime beef to Russia. Even before the recent ban on Western produce, Kazakhstan was on track to meet an export target of 10,000 tonnes to Russia this year. Now, because of the ban, officials believe those numbers could be even higher, along with exports of lamb, pork, vegetables and melons.
A sudden rise in exports could, however, fuel inflation by raising prices of domestic foodstuffs. But Kazakhstan’s membership in a Russian-led trade bloc is a mixed blessing. By erasing customs checks with Russia and Belarus, the group (to become the Eurasian Union in January) has eased access to markets. Many Kazakh officials worry privately about hitching their nation’s future to an isolationist Russia. For businessmen like Mr Yerubayev, however, the customs union is a boon, and the food-import ban an unexpected bonus. “It’s showtime”, he says.
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