11 BFC Kyrgyzstan Agriculture Finance Bulletin

01/2015

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11 K y r gy z s ta n Agriculture Finance Bulletin Western Sanctions May Lead to Increase in Russian Imports of Kyrgyz Agricultural Products Turkish Company ISKO Interested in Building Cotton and Wool Processing Factories in Kyrgyzstan World Bank supports Agricultural Productivity Assistance Project in Kyrgyz Republic Low Wholesale Bean Price Worries Talas Farmers

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Agriculture Finance Bulletin Edition #11, January 2015

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

Kyrgyz Delegation Attends International Green Week in Berlin ..................................................... 2 World Bank to Send Experts to Assess Viability of Drip Irrigation System ...................................... 2 Government Requests Talks on the Abolition of Turkey’s Bean Import Tax .................................. 2 Prime Minister Otorbaev Discusses Ministry of Agriculture Performance ..................................... 3 5 Hectare Agricultural Land Unit Proposed ..................................................................................... 3 Ministry of Agriculture Publishes Drafts on Cooperative Development ......................................... 3 Agriculture Exports Discussed with Qatari Delegation.................................................................... 4 Western Sanctions May Lead to Increase in Russian Imports of Kyrgyz Agricultural Products ...... 4

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

Turkish Company ISKO Interested in Building Cotton and Wool Processing Factories in Kyrgyzstan ......................................................................................................................................................... 4 10) World Bank supports Agricultural Productivity Assistance Project in Kyrgyz Republic .................. 4

Private Sector.............................................................................................................. 5 11) FAO: Sharp Decrease in Kyrgyz Grain Production ........................................................................... 5 12) Low Wholesale Bean Price Worries Talas Farmers ......................................................................... 5

Note: The Agriculture Finance Bulletin presents a monthly roundup of headlines and news stories related to investments and financing flows to Kyrgyzstan’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 Kyrgyzstan. Currently, BFC is implementing the Agricultural Lending Programme for KfW. Read more »

BFC Max-Högger-Strasse 6 CH-8048 Zurich, Switzerland

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BFC. Agriculture Finance Bulletin.

State Initiatives 1)

Kyrgyz Delegation Attends International Green Week in Berlin

January 28th, 2015, http://kabar.kg/eng/economics/full/12045

A Kyrgyz delegation headed by Agriculture Minister Taalaibek Aidaraliev participated in the International Green Week – a food and agriculture industry exhibition held in Berlin from 16th to 25th of January. The opening ceremony was attended by Germany’s Chancellor Angela Merkel.

The exhibition promotes partnerships with leading companies from Germany and elsewhere and holds summits and seminars. Agriculture Ministers from 65 countries participated in the event, while 1,700 companies from 70 countries presented their products. The Kyrgyz delegation also visited agricultural cooperatives in the federal state of Brandenburg.

Aidaraliev also met with representatives of the Bavarian State Ministry of Food, Agriculture and Forestry. The Minister reiterated that, in accordance with agreements reached in November 2014, the Federal State of Bavaria will assist Kyrgyzstan with further development of cooperatives, abattoirs and the establishment of seed and cattle stock databases.

2)

World Bank to Send Experts to Assess Viability of Drip Irrigation System

January 24th, 2015, http://kabar.kg/eng/economics/full/12002

In a recent meeting with representatives of the World Bank, Minister of Agriculture and Land reclamation Taalaibek Aidaraliev discussed the implementation of a drip irrigation system in Kyrgyzstan.

Kyrgyz farmers have been pushing for the system since last year’s drought and water supply issues.

Accordingly, over the last 6 months, the government has set up a feasibility study and is looking for suitable investors, said the Minister.

World Bank representative David Luck said that further research is required before the project can be deemed financially viable – adding that the World Bank will send experts to Kyrgyzstan to assess the project later this year.

3)

Government Requests Talks on the Abolition of Turkey’s Bean Import Tax

January 16th, 2015, http://www.akipress.com/news:554329/

Prime Minister Djoomart Otorbayev requested that the Ministry of Agriculture set up talks with Turkey regarding the abolition of its recent value added tax on imported beans. The Prime Minister lamented the Ministry’s failure to consult with Turkey prior to the introduction of VAT. Turkey is the main export destination for Kyrgyz beans.

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4)

Prime Minister Otorbaev Discusses Ministry of Agriculture Performance

January 14th, 2015, http://kabar.kg/rus/economics/full/88850

Prime Minister Djoomart Otorbaev met with Minister of Agriculture Taalaibek Aidaraliev to discuss the Ministry’s performance and curriculum for 2015.

According to Otorbaev, in 2014, farmers were granted preferential loans totaling KGS 5.28 billion through the “Financing Agriculture 2” project, while the European Bank for Reconstruction and Development (EBRD) disbursed a loan of USD 20 million for the leasing of 243 units of agricultural machinery. An additional 350 units were purchased through farmers’ private funds.

While these signs were encouraging, the Ministry failed to deliver on other points, said the Prime Minister – including sufficiently increasing the reliability of statistics; further developing veterinary policies; promptly establishing logistics centers; and prioritizing development of irrigation systems.

Moreover, the Ministry failed to sufficiently increase internal efficiency and strengthen its regulations and document controls, adding that the aforementioned criticisms should be taken into accounting when implementing this year’s program.

5)

5 Hectare Agricultural Land Unit Proposed

January 14th, 2015, http://www.gazeta.kg/news/kyrgyzstan/society/16082-v-parlamente-predlagayut-zemelnye-doli-iuchastki-selhoznaznacheniya-vydelyat-tolko-v-razmere-ne-menee-5-ga.html

Omurbek Tekebayev – leader of the Ata Meken party – proposed that a unit of agricultural land be no less than 5 hectares.

The initiative is being introduced in an attempt to combat illegal re-categorization, whereby land owners subdivide agricultural land into small plots and sell them for construction – mainly around towns.

According to Tekebayev, arable land currently totals more than 10 million hectares, of which 1.28 million is currently under cultivation . To ensure food security, the UN estimates that cultivated land per capita should be at least 0.3 ha. In Kyrgyzstan, the figure stands at 0.2 ha per capita, said Tekebayev.

6)

Ministry of Agriculture Publishes Drafts on Cooperative Development

January 13th, 2015, http://www.vb.kg/doc/299253_koncepciu_razvitiia_selhozkooperacii_vynesli_na_obshestvennoe_obsyjdenie.html

The Ministry of Agriculture and Land reclamation issued the following drafts: “On the establishment of agricultural cooperatives” and “On the development of the agricultural cooperative system in the Kyrgyz Republic for 2015-2017”. The proposals aim to increase integration and efficiency between the state, private sector and non-governmental organizations.

As agriculture accounts for more than 18.5% of GDP, improving living standards in rural areas depends heavily on its development, said the Ministry of Agriculture. One of the foundations of agrarian land reform is the June 2004 law on cooperatives, allowing the effective pooling of farmers’ resources.

Most of the development planned since the enactment of the law has been carried out – however, further development is required, added the Ministry. The main aim is to ensure food security across Kyrgyzstan.

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BFC. Agriculture Finance Bulletin.

7)

Agriculture Exports Discussed with Qatari Delegation

January 10th, 2015, http://kabar.kg/rus/economics/full/88668

The Ministry of Agriculture and Land Reclamation reported on-going high level talks with a Qatari delegation regarding the export of agricultural products.

The delegation includes the Assistant Economy and Trade Minister, the Director of the Ministry of Economy’s Supply Department, representatives of Al Meera, Hasad Food, and WDAM food companies and the Qatari Customs Department.

8)

Western Sanctions May Lead to Increase in Russian Imports of Kyrgyz Agricultural Products

January 3rd, 2015, http://kabar.kg/rus/economics/full/88538

Western sanctions against Russia and the latter’s subsequent shift towards alternative suppliers bodes well for Kyrgyz exports, according to Tolkunbek Abdygulov, Chairman of the National Bank of Kyrgyzstan, noting that agricultural and light industry products are the most likely to benefit.

The increase in exports could see a reduction in local stocks, leading to domestic price hikes. However, talk of an export increase may be premature, as Kyrgyz agricultural products must first conform to Customs Union standards, said Abdygulov.

Foreign Aid 9)

Turkish Company ISKO Interested in Building Cotton and Wool Processing Factories in Kyrgyzstan

January 23rd, 2015, http://kabar.kg/eng/economics/full/11972

During a meeting between Minister of Agriculture Taalaibek Aidaraliev and a Turkish delegation, representatives of Turkish company ISKO expressed interest in building a cotton and wool processing factory in Kyrgyzstan, reported the Ministry of Agriculture. The factory will create local jobs and products will be shipped to Turkey, the Ministry added.

The Turkish representatives visited ginneries in Osh to evaluate current processing methods.

10) World Bank supports Agricultural Productivity Assistance Project in Kyrgyz Republic January 13th, 2015, http://www.worldbank.org/en/results/2015/01/13/in-the-kyrgyz-republic-women-working-together-togrow-vegetables-and-profits

In Jalalabad province, 79 women’s “self-help” groups were established through the World Bank supported Agricultural Productivity Assistance Project.

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Group members partake in basic training in cultivation techniques and land management, and are given USD 20-25 of high quality seed. When planting begins in spring, they supplied with fertilizer. Proceeds from the harvest are used to reimburse the cost of the seeds and fertilizer and allow on-lending to new beneficiaries.

Membership costs KGS 50 a month. The proceeds are used to fund the seeds and fertilizer, as well as cash handouts. The program also provides access to precise weather forecasts.

Private Sector 11) FAO: Sharp Decrease in Kyrgyz Grain Production January 28th, 2015, http://www.vb.kg/doc/301013_fao:_v_kyrgyzstane_rezko_snizilos_proizvodstvo_zernovyh.html

The Food and Agriculture Organization (FAO) reported a sharp decrease in Kyrgyz grain production in 2014 – drought caused an 18% reduction in the wheat, maize and barley yield.

The FAO said weather conditions in Central Asia favor growing winter crops. While preliminary data forecasts stabilization or potential growth in production volumes, Kyrgyzstan will continue to be dependent on cereal imports, the volumes of which are also expected to increase.

In December, the price of wheat flour reached near record levels due to high domestic energy and transport costs, and currency depreciation at the end of 2014. The price of potatoes has also increased, said the FAO. Households are very sensitive to price fluctuations and crop yields, according to the organization, as approximately 35% of the population lives below the poverty line and households spend 60% of their budget on food.

12) Low Wholesale Bean Price Worries Talas Farmers January 8th, 2015, http://novosti.kg/2015/01/v-talase-fermery-obespokoeny-nizkoj-optovoj-tsenoj-na-fasol/

Talas farmers expressed concern regarding the low wholesale bean price– currently at KGS 55 per kilo.

The low price is due to a poor harvest and an increase in bean cultivation year-on-year. The Ministers of Agriculture of Kyrgyzstan and Turkey are to meet to discuss an increase in bean exports.

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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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