#6 Kazakhstan Agriculture Bulletin, BFC

10/2016

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6 K A Z A K H s ta n Agriculture Bulletin KazAgro Invests KZT 226 Billion in Agriculture Sector Vice Minister of Agriculture Addresses China Overseas Investment Fair ADB to Issue KZT 66.4 Billion Irrigation System Restoration Loan Kazakhstan Plans to Significantly Increase Grain Exports to China

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

KazAgro Subsidiary Provided KZT 23 Billion for Agricultural Producers .......................................... 2 KazAgro Invests KZT 226 Billion in Agriculture Sector ..................................................................... 2 ACC Launch Down Payment‐Type Agricultural Equipment Loan .................................................... 2 Vice Minister of Agriculture Addresses China Overseas Investment Fair ....................................... 3 Climate Change Data Portal Launched ............................................................................................ 3 Ministry of Agriculture Promises 150 New Cooperatives by End of Year ....................................... 3 Agribusinesses and Livestock Industry to Receive KZT 42.9 Billion in Subsidies ............................. 3 Preferential Agricultural Loan Interest Rates to Fall by 1.5% .......................................................... 4

Foreign Aid ................................................................................................................. 4 9)

ADB to Issue KZT 66.4 Billion Irrigation System Restoration Loan .................................................. 4

Private Sector .............................................................................................................. 4 10) 11) 12) 13)

Kazakhstan Plans to Significantly Increase Grain Exports to China ................................................. 4 Grain Harvest Totals 23.68 Million Tons ......................................................................................... 5 Outstanding Agricultural Loans Total KZT 734 Billion ..................................................................... 5 Agricultural Investment Totals KZT 190 Billion in First Three Quarters .......................................... 5

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)

KazAgro Subsidiary Provided KZT 23 Billion for Agricultural Producers

November 3rd, 2016, http://www.kazagro.kz/en/holding?p_p_id=newsportlet_

The Agriculture Financial Support Fund JSC, which is part of National Managing Holding KazAgro JSC, has provided KZT 23 billion in 2016 for micro‐lending to agricultural producers as part of the Employment Roadmap 2020. The bulk of the funds were allocated for family cattle feedlots, the opening of milk receiving stations and the development of agricultural cooperatives. The funds helped to create nearly 100 milk receiving stations, enabling the processing of an additional 60,000 tons on milk annually. In addition, the funds helped establish and aid agricultural cooperatives which will, in turn, established livestock stations and facilitated easier access to finance for family‐run farms.

So far, the fund has helped more the 3,000 family‐run feedlots and has financed the construction of milk collection points. In total, the fund has financed 226 projects, 80% of which are involved in the agro‐ industrial complex.

2)

KazAgro Invests KZT 226 Billion in Agriculture Sector

October 31st, 2016, http://24.kz/ru/news/economyc/item/145936‐s‐nachala‐goda‐kazagro‐napravil‐na‐podderzhku‐apk‐ strany‐bolee‐226‐mlrd‐tenge

In the first nine months of 2016, KazAgro – the holding company responsible for implementing state agricultural programs – injected more than KZT 226 billion into the agro‐industrial complex. Of the total, KZT 183.1 billion went to farms and agribusinesses, KZT 17.8 billion to the purchase of agricultural machinery, and KZT 23.8 billion towards struggling enterprises, according to KazAgro figures. A further KZT 80 billion will be disbursed by the end of the year. KazAgro’s portfolio includes 530 projects worth KZT 324 billion, of which 487 projects worth KZT 273.4 billion were commissioned, creating 15,100 jobs.

This year, 34 new projects worth KZT 18.8 billion were launched, creating 1068 jobs, reported KazAgro.

In 2016, KazAgro received KZT 60 billion to finance sowing and harvesting activities, which was distributed to 2141 beneficiaries active on 5.3 million hectares. Including all funding sources, KazAgro allocated KZT 72.9 billion to 3235 beneficiaries for sowing and harvesting activities covering 6.9 million hectares. In addition, the company leased 1,877 units of agricultural machinery worth KZT 37.6 billion.

3)

ACC Launch Down Payment‐Type Agricultural Equipment Loan

October 31st, 2016, http://www.kazagro.kz/holding?p_p_id=newsportlet_

The Agrarian Credit Corporation (ACC) – a subsidiary of KazAgro – has launched a new down payment‐ type agricultural equipment loan, said Managing Director Aizhan Kenzhebayeva. Agricultural credit products typically have issues securing the necessary collateral, according to Kenzhebayeva. The loan will be similar to vehicle credit products successfully implemented by Kazakhstan’s second tier banks.

Down payments for the ACC loan may come in the form of cash, land, equipment, property or motor vehicles. The product has already received applications worth KZT 300 million, said Kenzhebayeva.

KazAgro is responsible for implementing the state’s agricultural programs.

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4)

Vice Minister of Agriculture Addresses China Overseas Investment Fair

October 27th, 2016, http://astanatimes.com/2016/10/chinese‐companies‐participate‐in‐15‐agricultural‐projects‐across‐ kazakhstan/

Vice Minister of Agriculture Gulmira Issayeva briefed the annual China Overseas Investment Fair (COIFair) on 15 major Kazakh‐Chinese agricultural projects. The parties are currently implementing 51 joint agricultural projects, with ventures in the agricultural machinery, irrigation, wheat cultivation, organic fiber production, and camel and mare’s milk processing, amongst others, said Issayeva. The Chinese market provides great potential for Kazakh agricultural goods, according to the Minister. In December 2015, several contracts were signed by then Prime Minister Karim Massimov. Other foreign participants in agricultural projects in Kazakhstan include Russia, Turkey, Germany, Ukraine, France, and South Korea, said Issayeva.

The Beijing‐based fair – organized by the China Overseas Development Association (CODA) – welcomed 6,000 participants from around 80 countries. The Chinese “One Belt, One Road” trade initiative was discussed alongside other economic opportunities.

5)

Climate Change Data Portal Launched

October 24th, 2016, https://primeminister.kz/en/news/selskoe_hozyaistvo/v‐kazahstane‐zapushchen‐geoportal‐dlya‐subektov‐ selskohozyaistvennogo‐proizvodstva‐13544

In a bid to mitigate the effects of climate change, the government has announced the launch of an online “geoportal” that will provide access to climate data and forecasts. Kazakhstan is a major wheat exporter, and most of its crops are heavily dependent on weather conditions. The geoportal will allow farmers, agribusinesses, researchers and government agencies to respond to changing situations and introduce measures tackling climate change. The portal will use data on geography, weather conditions, and agricultural production collected by the National Center of Space Research and Technology (NTsKIT JSC) since the 1990s.

6)

Ministry of Agriculture Promises 150 New Cooperatives by End of Year

October 18th, 2016, http://www.dailynews.kz/economics/150_selhozkooperativov_budet_organizovano_v_rk_do_kontsa_2016_goda

In a bid to maximize exploitation of private farms and increase processing capacity utilization, 150 cooperatives will be created by the end of the year, announced Deputy Minister of Agriculture Kairat Aituganov. The scheme will unite more than 100 milk collection centers and 2,200 feedlots. New cooperatives must have a minimum of 20 members, said Aituganov. The Ministry is implementing the project with the cooperation of regional governments and the Ministry of Healthcare and Social Development (MHSD). As of October 15, 42 milk collection points and 3200 feedlots were created, said Aituganov.

7)

Agribusinesses and Livestock Industry to Receive KZT 42.9 Billion in Subsidies

October 13th, 2016, https://primeminister.kz/en/news/selskoe_hozyaistvo/msh‐rk‐podveli‐itogi‐soveshchanii‐po‐problemnim‐ voprosam‐razvitiya‐apk‐regionov‐13474

Agribusinesses and the livestock industry will receive further subsidies worth KZT 12.7 billion and KZT 30.2 billion, respectively, according to the Ministry of Agriculture. The funds will be sourced from the Page 3

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economic growth and employment budget for 2016‐2017. The decision follows meetings Minister of Agriculture Askar Myrzakhmetov held with Kazakhstan’s regional governors from August 31 to September 21. Of the 150 issues raised by the governors, 45 concerned veterinary safety and 30 livestock industry funding, said the Ministry. Of the total, 80 have resulted in Ministry action, with the remaining 70 being addressed.

8)

Preferential Agricultural Loan Interest Rates to Fall by 1.5%

October 13th, 2016, http://24.kz/ru/news/economyc/item/142929‐na‐razvitie‐selskogo‐khozyajstva

KazAgro – the holding company responsible for implementing state agricultural programs – will reduce loan interest rates by 1.5%, announced the Ministry of Agriculture. Interest rates are currently between 6% and 9%. In addition, the loan application review process will be streamlined, the Ministry reported.

Foreign Aid 9)

ADB to Issue KZT 66.4 Billion Irrigation System Restoration Loan

October 21st, 2016, http://www.inform.kz/en/adb‐to‐help‐restore‐irrigated‐lands‐in‐kazakhstan_a2961246

The Asian Development Bank (ADB) will provide a KZT 66.4 billion loan for the restoration of irrigation systems across 278,000 hectares, according to ADB regional consultant Ismail Najar. Of the total, KZT 60 billion will be allocated to standard irrigation systems across 177,150 hectares and KZT 6.4 billion to flood irrigation systems across 101,600 hectares. Water management systems will also be improved, said Najar. Loan maturity is 18 years, with the project launching in 2018. The government aims to irrigate 610,000 hectares within five years.

Najar met with Karganda governor Nurmukhambet Abdibekov to discuss the restoration of standard irrigation systems across 28,000 hectares and flood irrigation systems across 4,000 hectares. The region produces 200,000 tons of potatoes, and 40,000 tons of vegetable and forage crops, said Abdibekov.

Private Sector 10) Kazakhstan Plans to Significantly Increase Grain Exports to China November 2nd, 2016, http://www.apk‐inform.com/en/news/1074526#.WBw8KKLp7m5

In the coming years, Kazakhstan plans to significantly increase the exports of grains to the Chinese market to approximately 1.0‐1.5 million tons annually by 2017‐2018 and then to 2.0‐2.5 million tons annually by the year 2020. Kazakhstan is planning the increase due to the launching of a new railway line from Kazakhstan towards the Kazakh‐Chinese border at Altynkol/Horgos in addition to a previously signed protocol between the two nations regarding bulk grain and the construction of terminals for the receipt and further shipment of the grain in China.

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11) Grain Harvest Totals 23.68 Million Tons November 1st, 2016, http://www.apk‐inform.com/en/news/1074474#.WBlBzaLp7m4

This year, 23.68 million tons of grain were harvested across 15.35 million hectares of land, with yields of 1.54 tons per hectare, according to the Ministry of Agriculture. In 2016, crops spanned a total 21.7 million ha across Kazakhstan, up 445,100 ha year‐on‐year. Notable crops include: 12.2 million ha of wheat – a 441,400 ha increase year‐on‐year; 4 million ha of forage – a 254,400 ha increase; 2 million ha of oilseed; 109,300 ha of cotton – a 109,300 ha increase; and 12,100 ha of sugar beet – a 2,700 ha increase.

12) Outstanding Agricultural Loans Total KZT 734 Billion October 18th, 2016, http://news.ivest.kz/114800088‐v‐kazahstane‐nablyudaetsya‐bum‐kreditovaniya‐selskogo‐hozyaystva

To date, agricultural loans outstanding total KZT 734 billion – a 67% increase over two years, according to online data portal Energyprom. During the same period, agricultural loan volume doubled. Of all loan types, agricultural loans totaled 9%, up from just under 5% two years ago, reported Energyprom. From January to August 2016, agricultural loans worth KZT 188 billion were issued, a twofold year‐on‐year increase. KazAgro – responsible for implementing state agricultural programs – disbursed 43% of all agricultural loans. The company’s outstanding loan portfolio jumped 20% since 2015, totaling KZT 84 billion, according to Energyprom.

In the first half of 2016, agricultural small, medium and large enterprises reported net profits of KZT 10 billion, compared to a KZT 7.3 billion loss reported during the same period last year. From January to June 2016, agriculture sector profitability was 3%, reported Energyprom.

13) Agricultural Investment Totals KZT 190 Billion in First Three Quarters October 17th, 2016, http://finprom.kz/ru/article/agrobiznes‐nastraivaetsya‐na‐globalnyj‐kapital‐obem‐mezhdunarodnyh‐ zajmov‐napravlennyh‐na‐tehnologicheskuyu‐modernizaciyu‐selskogo‐hozyajstva‐za‐god‐vyros‐v‐25‐raza‐s‐16‐do‐39‐milliardov‐ tenge

During the first three quarters of 2016, total investment in agriculture stood at KZT 190 billion – a 57% increase year‐on‐year and KZT 23.5 billion more than during the whole of 2015. Agribusinesses contributed 74% of the total while international financial institutions (IFIs) added a further 20.3%.

Amongst IFIs, the World Bank was the leading contributor. Over the same period, agricultural output grew 34%.

Going forward, a key focus of the state’s agricultural program will be increasing the sector’s attractiveness to domestic and international investors. The Ministry of Agriculture currently subsidizes 20%‐80% of expansion and equipment investments. To date, there are 24 international projects being monitored by the Ministry of Agriculture. Partners include Italy, Germany, China, Iran, Russia, Ukraine, Czech Republic and Turkey.

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