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Wednesday, April 1, 2020

Corporate Commentary

Yerkin Tatishev and Daniel Kunin of Kusto Group on Building an Integrated Protein Strategy in Kazakhstan

Kusto Group aims to translate its own success into a booming agribusiness industry across Kazakhstan. Yerkin Tatishev, Chairman of the Board of Directors of Kusto Group, has a dream to modernize and expand the meat production industry in Kazakhstan. Daniel Kunin, a managing director at Kusto Group says, this effort “requires long-term thinking, strategic planning, intensive stakeholder mapping and understanding, and the creation of a network of inter-linked partnerships that are both joint ventures but also intensive public-private partnerships.”

The Singapore-based company founded by a group of young Kazakh entrepreneurs has a vision of producing enough meat produced in the region to feed the country in addition to exporting products to nearby nations and beyond. Through strategic partnerships with international firms and investors, the introduction of innovative technologies and a commitment to all levels of the value chain, Kusto Group aims to make this vision a reality.

Tatishev and Kusto aspire to add quality to both the production process and meat products, whether it be beef, lamb, chicken, or pork. While pork may not be in demand locally due to different eating habits, the market for export is blossoming.
Kazakhstan currently produces around 800 thousand tons of meat per year which is consumed within the country. Chicken is also imported to cover domestic demand. Tatishev explains, “Kazakhstan’s production potential in this area is estimated at about 10 million tons per year. Valued at around $30-40 billion! This income is comparable to our oil industry, which today returns about $40-50 billion a year.”

Raising Quality Standards Across The Industry

Kazakhstan’s agriculture segment is undeveloped, especially in the meat industry according to Tatishev and Kunin. The country has a unique opportunity to become a producer of high-quality protein without the addition of antibiotics. This type of protein is currently in high demand across markets and increasing worldwide.

This class of protein that Kusto Group intends to produce cannot be deemed “organic” by American standards, but it can be classified as “natural”. It carries a higher price tag because of this designation. There is a growing school of thought that deems unnatural products unhealthy, especially for the young, and the market demonstrates that consumers are ready to pay more for quality and safety.

Tatishev and Kunin have asserted that Kazakhstan has a real opportunity to become one of the top 5 producers of high-quality protein in the world. Kusto Group’s numerous partnerships with American firms demonstrate that they are not alone in their confidence in the country’s potential.

Kazakhstan has all the necessary ingredients to follow an American-style development of livestock husbandry. This development style utilizes a fattening diet based on non-GMO corn and soy.

The warmer climates of Brazil and Argentina force those countries to use grass-fed production, antibiotics, and other methods to grow livestock. The meat produced in these countries is economy-class meat. Tatishev believes that in Kazakhstan, there is an opportunity to develop an industry virtually from scratch that will provide premium-quality meat and make the country a world leader in the agriculture industry.

Yerkin Tatishev, center, Daniel Kunin, third from the left, and members of Kusto Group visit a farming operation in the United States
Yerkin Tatishev, center, Daniel Kunin, third from the left, and members of Kusto Group visit a farming operation in the United States

Building on Success

The Kusto Group’s livestock division in Kazakhstan, Kazbeef, become the largest producer of high-quality beef in the country in the past year. The company’s operations also include KazSeed, a producer of feed crops. Both KazBeef and KazSeed have developed partnerships with specialists from the United States who support their operations.

The newest partnership for Kusto Group is a project with Tyson Fresh Foods, a division of the food production giant Tyson Foods, in association with the Government of Kazakhstan to build a high-tech meat processing facility in Kazakhstan. The partnership represents the largest business deal in the agricultural sector since the country’s independence.

In addition to the Tyson deal, Kusto Group has entered into a joint venture with Nebraska-based Valmont Industries, the largest producer of precision irrigation system equipment. The new manufacturing facility they plan to collaborate on will be located in the center or northern region of Kazakhstan where the primary need for such irrigation systems is located.
KazBeef is committed to using modern technology and best practices in all levels of operation with the goal of producing 6 thousand tons of high-quality beef in a year. The demand for protein of this quality currently far exceeds the supply in both domestic and foreign markets, meaning there is no ceiling for growth.

Tatishev says, “Even in Kazakhstan, we are capable of producing much more than we produce now. Currently, all of our products are delivered domestically.” He continues with, “The Chinese recently came to us and offered a contract for 100 thousand tons of meat per year.” This market is huge, and they are interested in high-quality meat, which is a growing trend in the middle class and a trend across the world.

An Industry Transformed

Kusto Group conforms to the philosophy that in Kazakhstan, growth in the agricultural field needs to begin at the foundational level. Development takes time. Breeding stock needed to be established and restored. Improving genetics continues to be a focus for KazBeef. They have established its breeding stock by importing pedigreed cattle from the United States and now are working to increase this population.

High-yield, quality feed for livestock is also crucial. It is necessary to expand the production of corn, soybeans, and alfalfa. This must work in conjunction with adapting these crops to the climate of Kazakhstan. All this takes time.
According to Tatishev, this industry is being transformed right now. Kazakhstan has been limited by its level of food security, only producing what can feed the population right now. In reality, Kazakhstan can feed itself and many others around the world.

The changes are renewable and will not run out if managed with a competent approach. Fossil fuels are finite, running out and limited. There is no limit on land and water and, using the right technology and best practices, sustainable development is ensured. A strong animal husbandry sector will support a greater number of farms and employ hundreds of thousands of workers.


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Anna Papadopoulos
Anna Papadopoulos is an associate editor and oversees the global editorial division of CEOWORLD magazine, setting up the team structure and ensuring global alignment and cohesion in strategy. Working on a range of topics from fashion, higher education, travel, and lifestyle. Write at anna-papadopoulos@ceoworld.biz
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