02/2017
#
10 K A Z A K H s ta n Agriculture Bulletin Agricultural exports total USD 2.1 billion
KazAgro to be restructured
EIB pledges KazAgro EUR 200 million
4.8 million tons of grain and flour exported
All materials are published “as is� and are the property of their respective owners.
Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11)
Agricultural exports total USD 2.1 billion ........................................................................................ 2 25% of cooperatives not operational .............................................................................................. 2 Agro-lending interest rates cut........................................................................................................ 2 Universities launch new agricultural centers .................................................................................. 2 Subsidy program hits hurdles .......................................................................................................... 3 Calls for reservoir allotment review ................................................................................................ 3 State grain reserve announces advance purchases ........................................................................ 3 KazAgro to be restructured ............................................................................................................. 3 Certified organic labeling launched ................................................................................................. 3 Six-pronged agriculture program announced ................................................................................. 4 Minister of Agriculture sets targets ................................................................................................. 4
Foreign Aid ................................................................................................................. 4 12) EIB pledges KazAgro EUR 200 million .............................................................................................. 4
Private Sector.............................................................................................................. 5 13) 14) 15) 16) 17)
Vegetable oil production increases 13% ......................................................................................... 5 Fifth agrochemical forum held in Taraz ........................................................................................... 5 4.8 million tons of grain and flour exported.................................................................................... 5 Agricultural output increases 5.5% ................................................................................................. 5 Food exports fall .............................................................................................................................. 6
Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related to Kazakhstan’s agricultural sector. This bulletin is prepared by Business & Finance Consulting—a Swiss-based development finance consulting company with a long history of working in Eastern Europe, Central, South and South East Asia and North Africa. Read more »
BFC Max-Högger-Strasse 6 CH-8048 Zurich, Switzerland
Phone: +41 44 784 22 22 Fax: +41 44 784 23 23
info@bfconsulting.com www.bfconsulting.com
BFC Agriculture Bulletin
State Initiatives 1)
Agricultural exports total USD 2.1 billion
March 3rd, 2017, http://today.kz/news/ekonomika/2017-03-03/737419-minselhoz-rk-
In 2016, agricultural exports totaled USD 2.1 billion, a 5% increase year-on-year, according to First ViceMinister of Agriculture Kairat Aytuganov. Grain exports increased 29% to 5.3 million tons; flour increased 33% to 2.4 million tons; and vegetable oil increased 20%. The Ministry plans to increase penetration of the Chinese, Russian and Persian Gulf markets, said Aytuganov, which will contribute to an estimated 10% growth in agricultural exports in 2017. The Food Contract Corporation – the state grain reserve – will also be enrolled in export activities, added the Minister.
2)
25% of cooperatives not operational
March 3rd, 2017, https://ru.sputniknews.kz/economy/20170303/1706817/chetvert
Of the 157 cooperatives registered in 2017, 25% are not operational, said First Vice-Minister of Agriculture Kairat Aytuganov. Many cooperatives were created merely de jure in order to bolster statistics, added the Minister. Due to a generally poor understanding of cooperatives amongst the rural population, a special education group has been set up within the Ministry. The group has thus far trained 2,248 “Akims” (local heads of government). Existing cooperatives currently comprise 15,000 private farms, 100 milk collection points, and 7,000 feedlots, reported Aytuganov. Targets have yet to be reached, with 6 out of 11 planned cooperatives formed in Zhambyl; 17 of 35 in Kyzylorda; and 4 of 14 in Pavlodar. In Kyzylorda, 11 of 17 planned milk collection points were created, while 11 of 11 were established in Zhambyl. Regarding slaughterhouses, 3 of 12 were created in Kyzylorda, 6 of 6 in East Kazakhstan, and none as of yet in Atyrauskaya, said the Minister.
3)
Agro-lending interest rates cut
February 28th, 2017, http://agroinfo.kz/ken-dala-ili-kredity-na-polya/
The Agrarian Credit Corporation (ACC) announced a KZT 60 billion agricultural loan budget and a reduction in interest rates across the board. Direct loan rates will drop from 5% to 3% per annum and benefit from a pool of KZT 40 billion. Including bank guarantees, beneficiaries should pay no more than 6%-7% per annum. Second-tier banks will receive KZT 15 billion for on-lending at 2% per annum, down from 3%-5% per annum. Including bank guarantees, rates should reach no more than 6% per annum. Credit unions and microfinance institutions (MFIs) will receive KZT 5 billion for on-lending at 4% per annum, down from 5% last year. Including bank guarantees, beneficiaries should pay no more than 8% per annum. Of the total yearly agro-lending budget, roughly 20% will be allocated to oilseed crops, 5% to barely, and 75% to other crops. The ACC is a subsidiary of KazAgro, the national holding company responsible for the implementation of state agricultural policies.
4)
Universities launch new agricultural centers
February 28th, 2017, http://www.kazpravda.kz/news/ekonomika/v-astane-i-v-almati-sozdadut-agrotsentri/
The Kazakh National Agrarian University in Almaty and the S. Seifullin Kazakh Agro Technical University in Astana are to open new agricultural centers, announced First Vice-Minister of Agriculture Kairat Aituganov. The centers are part of a raft of measures introduced by the Ministry to boost agricultural science and production. Page 2
BFC Agriculture Bulletin
5)
Subsidy program hits hurdles
February 23rd, 2017, http://24.kz/ru/news/economyc/item/165090-agrarii-kostanaya-gotovyatsya-k-posevnoj
In 2017, the Agricultural Credit Corporation (ACC) will provide preferential loans for the following crops: barley, sugar beet, rice, corn, cotton, oats, potatoes and oilseeds. Some small farmers are struggling to provide collateral, however. With foreign buyers offering attractive prices, moreover, many sunflower, canola, flax and soybean farmers are unwilling to take their produce to domestic refineries, despite the subsidies that would ensue. The ACC is a subsidiary of KazAgro, the national holding company responsible for the implementation of state agricultural policies.
6)
Calls for reservoir allotment review
February 23rd, 2017, http://eng.kazakh-zerno.kz/index.php?option=com_content&task=view&id=1534
Senators R. Akhmetov, K. Absatirov, and S. Utemisov called on Prime Minister Bakhytzhan to review water reservoir resource allotment rules. Locals are finding it increasingly difficult and expensive to engage in traditional use of the reservoirs for fishing, bird breading and irrigation, said the senators in the written request. Under current rules, read the request, the water resources are rented out to businesses at a fee, creating competition and conflict with locals. Considering the difficult economic climate, the livelihood of locals often depends on weekly special permits they cannot afford, wrote the senators. The request goes on to call on local governments to review the allotment policies.
7)
State grain reserve announces advance purchases
February 23rd, 2017, http://www.fao.org/giews/food-prices/food-policies/detail/en/c/471916/
The Food Contract Corporation (FCC) – the state grain reserve – announced advance purchases of crops including wheat, maize, millet, rye, and soybeans, providing farmers with much needed capital for spring farming activities. Beneficiaries must provide credit guarantees, pay a 5% commission fee, and deliver the crops by December 1.
8)
KazAgro to be restructured
February 20th, 2017, http://today.kz/news/ekonomika/2017-02-20/736571-stal-izvesten-plan-reorganizatsii-kazagro/
KazAgro – the national holding company responsible for the implementation of state agricultural policies – will undergo major restructuring. To increase competition in the agro-lending sphere, its subsidiaries will be privatized and direct lending will cease. The restructuring program will be overseen by the Ministry of Agriculture, the Kazakhstan Stock Exchange, and the National Chamber of Entrepreneurs “Atameken”. Deloitte – a consulting firm – will assist with the sale of KazAgro’s subsidiaries. The cessation of direct lending in favor of on-lending to credit unions, microfinance institutions (MFIs), second-tier banks, and leasing companies will be gradual, and should bolster rural financial infrastructure.
9)
Certified organic labeling launched
February 10th, 2017, http://agrosektor.kz/agriculture-news/v-kazahstane-nazrela-neobhodimost-vvesti-sertifikaciyuorganicheskih-produktov.html
Kazakhstan will introduce an organic certification and labeling scheme, according to the Ministry of Agriculture’s Deputy Director of Strategic Planning and Analysis Asel Ramazanova. The certification Page 3
BFC Agriculture Bulletin
process will be implemented solely by private companies, added Ramazanova. The companies involved will need to partake in an accreditation program, continued the Deputy. Without providing full details, Ramazanova said at least three separate standards will need to be met before a product is certified organic.
10) Six-pronged agriculture program announced February 9th, 2017, https://primeminister.kz/en/news/selskoe_hozyaistvo/kazahstan-
The Ministry of Agriculture announced a six-pronged agricultural development program. First, the restructuring and elimination of up to 11 ineffective subsidy types, with a projected 7.5 factor increase farmer participation. Second, the formation of cooperatives comprising Kazakhstan’s 500,000 small farms. Thus far, Kazakhstan has 154 cooperatives comprising 100 milk collection points and 7,000 feedlots. Third, processing, storage, transportation, and marketing capacity development. Fourth, productivity increases and cost reduction through modernization and technology transfer apparatus development. An agricultural technology transfer center was launched last year. Fifth, the improvement of land-use; including increasing irrigated area by 40% to 600,000 hectares over the next five years. Sixth, investment increases in agricultural research. Two new agricultural centers have been launched at universities in Astana and Almaty. In addition, by 2021, the Ministry said it would increase food exports by 40% through production diversification. This year, food exports are set to increase 10%.
11) Minister of Agriculture sets targets February 7th, 2017, https://kapital.kz/economic/57343/investicii-v-apk-v-etom-godu-dolzhny-sostavit-76-mlrd-tenge.html
Minister of Agriculture Askar Myrzahmetov announced 2017 targets. Agricultural output and exports are set to increase through construction and modernization of processing facilities. Milk, meat, oil, and sugar processing capacities will increase by 170,000 tons, 12,000 tons, 20,000 tons, and 16,000 tons respectively. Fodder, oilseed, and other crops are set to increase to 540,000 hectares, said Myrzahmetov. An irrigation system rehabilitation program funded by the Islamic Development Bank (IDB) will increase irrigated area by 15,000 hectares, added the Minister. A further 7 emergency reservoirs have been rebuilt irrigating 12,000 hectares. A planned 176 cooperatives will be formed comprising 16,000 self-employed and unemployed workers. Meanwhile KazAgro – the national holding company responsible for implementing state agricultural policies – hopes to attract KZT 33 billion in investment in the first half of 2017 and KZT 76 billion in the latter half, according to Director Nurlybek Malele. KazAgro will continue lending to small and medium enterprises (SMEs) and cooperatives with the hope of creating 3,200 jobs, said Malele.
Foreign Aid 12) EIB pledges KazAgro EUR 200 million February 20th, 2017, http://www.inform.kz/en/european-investment-bank-we-have-en
The European Investment Bank (EIB) has approved four lending projects in Kazakhstan worth EUR 620 million – including EUR 200 million destined for KazAgro, announced the EIB Managerial Advisor for Central Asia Umberto Del Panta. The EIB supports “green” investments promoting sustainable small and medium enterprises (SMEs). According to Del Panta, the Bank has identified five “green” investment target sectors in Kazakhstan: agriculture, energy, transport, forestry, and water and waste management. KazAgro is the national holding company responsible for the implementation of state agricultural policies. Page 4
BFC Agriculture Bulletin
Private Sector 13) Vegetable oil production increases 13% March 3rd, 2017, http://www.apk-inform.com/en/news/1079131#.WL0uEqLp7m4
Vegetable oil production in the first five months of the market year 2016/2017 totaled 155,400 thousand tons, a 13% increase year-on-year, according to the Ministry of National Economy (MNE). In January 2017, vegetable oil production totaled 24,600 tons, a 6% increase year-on-year, reported the MNE. A Kazakh market year runs from September 1 to August 31.
14) Fifth agrochemical forum held in Taraz March 2nd, 2017, http://palata.kz/en/news/25752
The fifth annual Agrochemical Forum of Asia was held in Taraz. Registering over 370 participants, the forum gathers agrochemical value chain stakeholders including agribusinesses, fertilizer companies, agronomists, and government and state representatives across Central Asia and Commonwealth of Independent States (CIS) countries. The event provides a platform to discuss the current market atmosphere, soil fertility, new technologies, and pricing, while providing networking and deal-making opportunities. The forum was initiated by agrochemical companies Kazphosphate, EuroChim and KazAzot. The Ministry of Agriculture’s Agrochemical Director Erbolat Bazilzhanov said a 2007-2016 soil survey showed marked deterioration in fertility. According to the law, should the situation fail to improve, affected areas will be sequestered.
15) 4.8 million tons of grain and flour exported February 23rd, 2017, http://www.apk-inform.com/en/news/1078811#.WLFSCKLp7m4
Since the beginning of market year (September 1, 2016), Kazakhstan has exported 3.4 million tons of grain and 1.4 million tons of flour (requiring 1.9 million tons of grain), according to the Ministry of Agriculture. By comparison, during the 2015/2016 fiscal year, 5.4 million tons of grain and 2.1 million tons of flour were exported.
16) Agricultural output increases 5.5% February 22nd, 2017, http://finprom.kz/ru/article/masshtabnaya-gospodderzhka-selskogo-hozyajstva-daet-rezultaty-vypuskprodukcii-v-2016-godu-vyros-na-55-agrosektor-stal-oporoj-dlya-rosta-ekonomiki-kazahstana-v-proshlom-godu
In 2016, agricultural output grew 5.5%; crop production grew 7.8%, while livestock production fell 2.7%, compared to 2015. Private farms accounted for 48% of total output, a 4% decrease year-on-year. Output grew on the back of increased lending, which totaled KZT 249 billion, up 40% year-on-year. In 2015, lending had contracted sharply to KZT 178 billion, or 2.5 times less than in 2014. Last year, loan arrears remained low at 6% of loan volume. The figure rose sharply to 13% in December, though it is too early to say whether this represents a trend. KazAgro – the national holding company responsible for implementing state agricultural policies – is the main creditor, providing loans at an average 6.5% per annum with maturity of 4-10 years.
Page 5
BFC Agriculture Bulletin
17) Food exports fall February 20th, 2017, http://www.azernews.az/news.php?news_id=109155&cat=region
In 2016, food exports fell 20% to USD 623 million – a USD 155.6 million decrease. The loss comes on the back of decreased demand in the Commonwealth of Independent States (CIS), reported Stanradar, a news portal. Food exports to Uzbekistan fell 20% to USD 78 million, the largest drop in dollar terms, while exports to Tajikistan fell 14% to USD 42 million. In contrast, food exports to non-CIS countries rose 45% to USD 178 million, with Afghanistan witnessing a USD 120 million increase. In 2016, aggregate crop, flour and meat exports totaled USD 1.2 billion, a 2% increase year-on-year. Meanwhile Kazakhstan imported USD 9.67 billion worth of goods from the Eurasian Economic Union (EAEU) of which agricultural products totaled 13.9%, according to the Ministry of National Economy.
Page 6
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. The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners. Copyright of articles is retained by their authors.