#5 Kazakhstan Agriculture Bulletin, BFC

09/2016

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5 K A Z A K H s ta n Agriculture Bulletin Sweden and Kazakhstan Discuss Research Cooperation and Equipment Procurement New Cooperative Law Adopted Hungarian Experts to Assist with Agricultural Education Program Grain Harvest Estimated at 22 Million Tons

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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8) 9)

Sweden and Kazakhstan Discuss Research Cooperation and Equipment Procurement ................. 2 New Cooperative Law Adopted ....................................................................................................... 2 Agro‐Industry Attracts KZT 102.6 Billion in Five Years .................................................................... 2 Microcredit Volume Doubles to KZT 6 Million ................................................................................ 2 610,000 ha of Land to be Irrigated .................................................................................................. 3 Agriculture to Receive a Further KZT 97 Billion this Year ................................................................ 3 Rural Areas Receive KZT 10 Billion in State Employment Funding .................................................. 3 KazAgro Put KZT 72.6 Billion towards Spring Farming Activities in 2016 ........................................ 3 Cooperatives to Receive KZT 30 Billion in Funding ......................................................................... 4

Foreign Aid ................................................................................................................. 4 10) Hungarian Experts to Assist with Agricultural Education Program ................................................. 4

Private Sector .............................................................................................................. 4 11) 12) 13) 14) 15) 16) 17)

Outstanding Agricultural Loans Total KZT 80.2 Billion .................................................................... 4 State Grain Reserve Announces Procurement Prices...................................................................... 4 KZT 600 Million Almaty Rural Entrepreneur Microfinance Scheme Launched ............................... 5 700 Agricultural Education Seminars Announced ........................................................................... 5 Grain Harvest Estimated at 22 Million Tons .................................................................................... 5 46% of Flax Crop Exported to Europe .............................................................................................. 5 Agricultural Exports to Russia Almost Triple in First Half of 2016 ................................................... 6

Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related to Kazakhstan’s agricultural sector.

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BFC. Agriculture Bulletin

State Initiatives 1)

Sweden and Kazakhstan Discuss Research Cooperation and Equipment Procurement

October 4th, 2016, http://www.inform.kz/en/kazakhstan‐to‐apply‐sweden‐s‐experience‐in‐rational‐use‐of‐lands_a2956028

Askar Myrzakhmetov and Sven‐Erik Bucht – the Kazakh and Swedish Ministers of Agriculture – met to discuss bilateral opportunities. The meeting was also attended by Swedish agribusiness giants Alfa Laval, DeLaval, Tetra Pak and EMVE Sweden. The Swedish delegation expressed interest in selling agricultural equipment and technology, while the Kazakh side hopes to foster research partnerships in forage production, land rationalization, forestry and agricultural mechanization. The Swedish delegation will also participate in the Kyzylzhar Investment Forum in Petropavlovsk (Kazakhstan).

In 2015, Kazakh‐Swedish agricultural trade turnover totaled USD 10.1 million. Sweden imported 8,800 tons and 2,100 tons of Kazakh wheat and of soybean, respectively.

2)

New Cooperative Law Adopted

September 29th, 2016, http://agroinfo.kz/p11477864/

A new law on agricultural cooperatives came into effect. According to the Ministry of Agriculture, the legislation aims to tackle the sales, procurement, technical resource, financing, veterinary standard, and raw material stability issues caused by Kazakhstan’s mostly small‐scale farming operations. Cooperatives should become the nucleus of Kazakh agriculture, said President Nursultan Nazarbayev.

3)

Agro‐Industry Attracts KZT 102.6 Billion in Five Years

September 28th, 2016, http://www.inform.kz/en/russia‐china‐iran‐biggest‐investors‐of‐kazakhstan‐s‐agricultural‐ sector_a2953930

In the past five years, Kazakhstan’s agro‐industrial sector has attracted KZT 102.6 billion in domestic and foreign investment, according to the Ministry of Agriculture’s Rakhat Nurgaliyev. Russia, China and Iran are the sector’s largest investors, he added. Two oil crop processing plants will be built in partnership with the Russians: one in Almaty and one in North Kazakhstan, said Nurgaliyev. The agriculture sector attracts business from Italy, Germany, France, the Czech Republic, and Ukraine, noted Nurgaliyvev, while Finnish and Swedish companies have shown interest in investing.

4)

Microcredit Volume Doubles to KZT 6 Million

September 20th, 2016, http://www.kt.kz/rus/economy/razmer_mikrokreditov_dlja_seljchan_po_dorozhnoj_karte_zanjatosti_uvelichat_do_6_mln_ten ge_1153627186.html

The total value of microloans to small businesses has increased from KZT 3 million to KZT 6 million. To date, the Ministry of Agriculture has disbursed KZT 10 billion to KZT 30 billion in microloans, said Minister of Health and Social Development Tamara Duisenova. The scheme has roughly 9,000 beneficiaries. The max loan amount has been increased, while funds may also be used to form or join cooperatives, according to Duisenova.

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BFC. Agriculture Bulletin

5)

610,000 ha of Land to be Irrigated

September 9th, 2016, http://mgov.kz/ru/n‐rs‐ltan‐nazarbaev‐2016‐zhyldy‐so‐yna‐dejin‐a‐k‐damytudy‐memlekettik‐ba‐ darlamasyn‐zirleu‐azhet/

Over the next five years, 610,000 hectares of farmland will be irrigated through the development of an integrated water management program, the construction of new reservoirs, and emergency repairs to existing systems, announced President Nursultan Nazarbayev, creating 50,000 new jobs in the process.

By the end of 2016, a revised state agriculture program will ramp up productivity and diversification in key sectors, said Nazarbayev. As they provide 50% of agricultural output, small‐scale farms should be integrated to the commodity industry, said Nazarbayev. Infrastructure, primary production, storage and marketing programs should take small‐scale farms into account. Moreover, the farms should be integrated to service and harvesting cooperatives, said the President.

6)

Agriculture to Receive a Further KZT 97 Billion this Year

September 9th, 2016, http://mgov.kz/ru/prezident‐auyl‐sharushyly‐y‐salasyna‐osymsha‐97‐mlrd‐te‐ge‐b‐ludi‐tapsyrdy/

President Nursultan Nazarbayev announced a further KZT 97 billion (USD 287.1 million) in state funding will be allocated to the agriculture sector this year, with a focus on veterinary standards. State subsidization programs should be improved, with a focus on increasing productivity, while inefficient subsidy schemes should be dropped, added Nazarbayev.

7)

Rural Areas Receive KZT 10 Billion in State Employment Funding

September 9th, 2016, http://mgov.kz/ru/n‐nazarbaev‐kimet‐eldegi‐sha‐yn‐nesielendirudi‐ke‐ejtu‐bojynsha‐sharalar‐abyldauy‐ kerek/

With 60% of the self‐employed work force living in rural areas, pilot support projects worth KZT 10 billion have been launched in Aktobe, Kyzylorda, Almaty, South Kazakhstan region and Zhambyl regions through the Employment Road Map (ERM) 2020 program, said President Nursultan Nazarbayev. The five year ERM‐2020 program has a budget of KZT 450 billion, of which KZT 218 was disbursed this year, said Nazarbayev, creating 722,000 jobs of which 518,000 are permanent. A further KZT 270 billion was disbursed to tens of thousands of small and medium enterprises (SMEs) through the Business Road Map (BRM) 2020 scheme, announced the President.

8)

KazAgro Put KZT 72.6 Billion towards Spring Farming Activities in 2016

September 8th, 2016, http://www.dailynews.kz/economics/kazagro_profinansiroval_posevnuju_i_uborochnuju_na_726_milliarda_tenge

KazAgro – responsible for implementing the state’s agricultural programs – reported it allocated KZT 72.6 billion towards spring farming activities in 2016, covering 6.8 million hectares of farmland, or roughly half of the total. Roughly KZT 60 billion of that figure was disbursed in the form of loans.

KazAgro also subsidized the leasing of 1,500 pieces of agricultural machinery worth KZT 26.3 billion. In addition, KZT 8.6 billion was put towards the creation of 10 grain cooperatives with a total of 224 member farms covering 735,000 hectares, according to the company.

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BFC. Agriculture Bulletin

9)

Cooperatives to Receive KZT 30 Billion in Funding

September 7th, 2016, http://www.dailynews.kz/economics/agrarnaja_kreditnaja_korporatsija_uprostit_uslovija_finansirovanija_dlja_fermerov_alma tinskoj_oblasti

The Agrarian Credit Corporation – a financial subsidiary of KazAgro, responsible for implementing state agricultural programs – announced KZT 30 billion will be allocated to the creation of cooperatives this year, including KZT 2.8 billion for the Almaty region alone. The company came to an agreement with Almaty’s regional government to increase funding and credit access across all its programs in the area.

Since 2001, the Agrarian Credit Corporation has financed the creation of 180 agricultural cooperatives in 165 sectors involving some 12,000 producers.

Foreign Aid 10) Hungarian Experts to Assist with Agricultural Education Program September 23rd, 2016, http://bnews.kz/en/news/ekonomika/apk/hungarian_experts_to_share_experience_of_successful_development_of_agricultura l_industry‐2016_09_23‐1291364

The National Chamber of Entrepreneurs’ (Atameken) Center of Agro‐competencies has agreed a training partnership with LAC Holding. The Hungarian company will send its agricultural training experts to help develop educational programs, train the Center’s lecturers and experts, and participate in joint educational programs. Foreign expertise is paramount in the development of domestic training programs, said Center of Agro‐competencies director Toleutay Rakhimbekov. So far, the center has cooperated with organizations from the USA, Canada, Australia, Argentina, Germany, France, and Poland.

Private Sector 11) Outstanding Agricultural Loans Total KZT 80.2 Billion September 28th, 2016, https://www.kt.kz/rus/economy/nacbank_rk_otmechaet_rost_

Outstanding agricultural loans currently total KZT 80.2 billion and continue to increase, according to National Bank chief Daniyar Akishev. Other major sectors included processing, with KZT 85.7 billion in outstanding loans; and construction, with KZT 31.4 billion in outstanding loans. Across all sectors, loans totaled KZT 12.7 trillion. Lending to small businesses has increased by 35% since the beginning of the year, reaching KZT 2.8 billion, concluded Akishev.

12) State Grain Reserve Announces Procurement Prices September 23rd, 2016, http://www.fao.org/giews/food‐prices/food‐policies/detail/en/c/435492/

The Food Contract Corporation, responsible for managing state grain reserves, announced this year’s procurement prices. Third grade wheat will be purchased at KZT 41,000‐50,000 (USD 120‐146) per ton compared to KZT 41,000 per ton in 2015; fourth grade wheat will be purchased at KZT 34,000‐36,000 (USD 99‐105) per ton, compared to KZT 31,000 (USD 91) per ton in 2015; and second grade wheat will remain unchanged this year at KZT 25,000 (USD 73) per ton.

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BFC. Agriculture Bulletin

13) KZT 600 Million Almaty Rural Entrepreneur Microfinance Scheme Launched September 20th, 2016, http://agroinfo.kz/p723211/

The National Chamber of Commerce “Atameken” has launched a KZT 600 million microfinance program for rural entrepreneurs in the Almaty region. Atameken will provide KZT 300 million itself, while the remaining KZT 300 million will come from local organizations. To date, the program has received 139 applications worth KZT 677 million of which projects worth KZT 392.6 million have been approved. An estimated KZT 200 million has already been disbursed to 57 entrepreneurs. Atameken gave priority to sugar beet enterprises, according to press officer Diaz Beysenbek. Interest rates are 6% per annum, with effective interest rates at no more than 6.7%. Maximum maturity is 4 years and 6 months. Repayments may be made monthly, quarterly, semiannually, or annually. Beneficiaries may provide real estate as collateral, including land and buildings.

14) 700 Agricultural Education Seminars Announced September 20th, 2016, http://astanatimes.com/2016/09/more‐seminars‐on‐innovations‐and‐new‐technologies‐to‐be‐held‐for‐ farmers/

The National Chamber of Entrepreneurs “Atameken” has announced 700 upcoming agricultural education seminars, involving 217,000 participants. The training will be conducted by 100 domestic and foreign experts and will provide theoretical as well as practical know‐how on current technological innovations and best practice. The courses have three priorities: to provide a direct economic benefit to participants; to increase awareness of state support programs; and to promote the development of cooperatives, according to Atameken director Toleutai Rakhimbekov.

Seminars will be sensitive to regional specificities with camel breeding courses held in Almaty, Kyzylorda, Mangistau and South Kazakhstan; cereal crop courses held in Akmola, Kostanai, North Kazakhstan and Zhamby; corn courses in Taldykorgan; rice courses in Kyzylorda; cotton courses in South Kazakhstan; and beekeeping, and Caspian red deer breeding courses held in East Kazakhstan. Online agricultural portal “fermers.kz” will provide course scheduling, study materials and a live Q\u0026A session with lecturers.

15) Grain Harvest Estimated at 22 Million Tons September 20th, 2016, http://bnews.kz/en/news/ekonomika/apk/gross_collection_of_crops

This year’s grain harvest is estimated at 22 million tons, announced Minister of Agriculture Kayrat Aytuganov. As of September 20, 72% of the grain crop – or 11.1 million hectares – had been harvested yielding 16.5 million tons of grain – a 3.4% increase year‐on‐year, said Aytuganov. Grain is cultivated across 7.5 million hectares in Kostanay, Akmola and North Kazakhstan, while the harvest has moved to corn and rice in the southern regions, added Aytuganov.

16) 46% of Flax Crop Exported to Europe September 15th, 2016, http://bnews.kz/en/news/ekonomika/apk/kazakhstan_flax_and

Last year, 46% of the flaxseed (linseed) crop was exported to Europe, with high demand from Poland, according to Minister of Agriculture Kayrat Aytuganov. Moreover, there is high demand for rapeseed (colza seed) in China, he added. One ton of rapeseed is worth approximately KZT 120,000, with costs at KZT 48,000‐50,000 per ton, said the Minister. The figures are roughly the same for flaxseed, he added.

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BFC. Agriculture Bulletin

17) Agricultural Exports to Russia Almost Triple in First Half of 2016 September 14th, 2016, http://khabar.kz/ru/news/ekonomika/item/64094‐eksport‐selkhozsyrya‐i‐produktov‐v‐rossiyu‐vyros‐v‐ tri‐raza

In the first half of 2016, Kazakh agricultural goods exports to Russia increased 2.7 fold year‐on‐year, said Russian Minister of Economic Development Ilya Galkin at a meeting with a Kazakh trade delegation in Moscow. The trade forum – attended by 30 Kazakh agricultural, engineering, construction and pharmaceutical companies – was organized by the National Agency for Export and Investment KAZNEX INVEST. Following business‐to‐business negotiations, dozens of wholesale distribution contracts were signed with Russian partners. Roughly 70% of all export passes through Russian border regions, according to KAZNEX Deputy Chairman Meyrzhan Maykenov. With a market the size of Kazakhstan, domestic businesses are particularly interested in the Moscow region, said Maykenov. Trade turnover between Kazakhstan and Russia totaled USD 14.6 billion in 2015.

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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content.

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