Green horizons: Forest sector in Kazakhstan
Forest industry and resources
Kazakhstan’s forest industry is not developed as in some other countries due to various factors including arid climate in many regions and historical land use patterns. However, Kazakh republic used to produce wood pellet for 300 mln USD dollars and Kazakhstan was at 3rd place of wood producer after Russia and Ukraine before the collapse of the Soviet Union and ahead of Belarus. Starting from those time Kazakhstan’s cover is primarily concentrated in the northern parts of the country, particularly in regions like Pavlodar, North Kazakhstan and Akmolinskaya oblast.
According to the Agency of Statistics of Kazakhstan the total area of forests and other wooded lands (FOWL), or ”lands with forest cover” is around 13 million ha or 5 % of the total area Kazakhstan. The government is the only and main owner mostly through the State Forest Fund. There is a legal framework for private ownership outside the State Forest Fund through development of private afforestation, plantation and creation of agroforestry plantations. The main principles of governmental policy have been reflected in the Forest and Eco Codes. The Forest Code was created and approved in 2003 with further changes/updates in 2017. It’s worth mentioning that the new development strategy of the Forest industry has been presented in the National Strategy and Biodiversity plan in 2023.
Challenges and opportunities
There are around 70 main players in the commercial market located in the North and East of Kazakhstan. The growth of the timber market has grown 11-15 % on average annually from 2013 to 2022 in the national currency. The Stat agency reported that the market consumption in 2022 was estimated to be around 534 million euro in total. It is worth to point out that the import from Russia was about 84% in 2022.
It is essential to note Kazakhstan has not joined US and EU economic sanctions regime and continues to trade with Russia and other countries under normal legal circumstances. It means these sanctions impacting Russia may indirectly affect the trade with Central Asia. Therefore, it is prudent for companies engaging in business with this region to implement comprehensive KYC (Know Your Customer) compliance processes and thorough screening of all trading partners and end users.
Nowadays the local producers have been managing around 1,4 million ha which is around 20% of 7,2 million ha of the State Forest Fund which is appropriate for the Forest production. Despite the fact that the government has transferred a considerably sufficient share of land to the private sector the rate of the forestland development is still low around 13,6%. Such low rate is determined by lack of processing facilities and new and effective technologies. The national experts have estimated 2,0 million m3 as the additional potential to the current one.
Climate change and weak forest management have been contributing to increasing risk to deforestation and for anthropogenic forest degradation due to fire and other natural and anthropogenic negative impacts. Lack of qualified personnel at the governmental and regional levels leads to absence of sustainable monitoring or oversight and sufficient forest management.
Opportunities for Finnish companies
As it’s mentioned above the Forest Industry is included in the National Strategy and Biodiversity plan where the following targets are highlighted:
- To decrease dependency on imports by implementing new technologies and modernizing the processing facilities. According to the national experts there is a potential to increase the market capacity of the local producers on 3-5 times
- To build new channels and markets of distribution across the Central Asia and even including China. The current situation with sanctions on Russia creates new opportunities for Kazakh producers to increase production and export potential
- To expand the private forest fund
- To increase and sustain the state support in afforestation and reduce areas damaged by pests and diseases by 50%
In November 2023 there was Forest Forum with Finnish delegation in Astana initiated by the Kazakh government. During the forum, the discussions ranged from setting up sustainable forest management and fire monitoring and prevention and to upgrading processing facilities.
As the Kazakh Ministry stated during the Forum there are needs in a short term of period in the following areas:
- Around 7,500 unites of equipment are needed in short terms starting from small patrol forest complexes, tractors, fire trucks, unmanned aerial vehicles, motorboats etc. at the governmental level
- Modernization of the processing facilities and fire monitoring system incl. tracking and early warning systems, fire spreading prevention
- Implementation of new technologies and expertise in forest management
- Consultancy on analysis of the current legislation and governmental measures, methodology of data collecting and harmonization of the state policies and regulation
- Consultancy and cooperation in education programs and development of comprehensive professional trainings
TF activities available for Finnish companies
Team Finland network can support Finnish companies in the activities in Kazakhstan:
- Embassy of Finland in Astana
- EastCham Finland
If you are interested in this opportunity, please contact Altyn Shakirkhanova, Senior Business Advisor / Head of EastCham Branch in Kazakhstan [email protected].