13 BFC Kyrgyzstan Agriculture Finance Bulletin

03/2015

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13 K y r gy z s ta n Agriculture Finance Bulletin Budget of KGS 105.2 Million Allocated to Irrigation System Reparations Preferential Agro-Financing Program Approved USD 80 Million Allocated to Pastureland Management and Rehabilitation Osh Hosts “Agroexpo: Silk Road 2015”

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Agriculture Finance Bulletin Edition #13, March 2015

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5)

Budget of KGS 105.2 Million Allocated to Irrigation System Reparations....................................... 2 Spring-Time Farming Activities Begin Sooner in 2015..................................................................... 2 Preferential Agro-Financing Program Approved ............................................................................. 2 Veterinary Laboratories to Receive International Accreditation Within 3 Years ............................ 2 Turkey to Consider Removing Kyrgyz Kidney Bean Import Tariffs .................................................. 3

Foreign Aid ................................................................................................................. 3 6) 7) 8) 9) 10) 11)

900 Vehicles Provided to Farmers for Leasing ................................................................................ 3 IFC Host Food Safety Forum in Kyrgyzstan ...................................................................................... 3 Event on Food Safety and HACCP to be held in Bishkek ................................................................. 4 Japan Grants USD 490,000 in Support of Women Farmers ............................................................ 4 USD 80 Million Allocated to Pastureland Management and Rehabilitation ................................... 4 Kyrgyzstan Rejects Offer of Polish Agricultural Machinery ............................................................. 4

Private Sector.............................................................................................................. 5 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) 23)

Association of Meat Producers Requests Customs Accession Issues be Resolved ......................... 5 Walnuts to be Exported to South Korea.......................................................................................... 5 Kyrgyz Farmers Exhibit Goods at Agricultural Fair in India.............................................................. 5 Turkey’s Largest Livestock Company Expresses Interest in Importing Kyrgyz Meat ....................... 5 Meat and Milk Production Increases, Egg Production Decreases ................................................... 6 Qatar to Assess Import Potential of Kyrgyz Products ...................................................................... 6 Agreement Reached on Fruit and Vegetable Export to Russia ....................................................... 6 Kyrgyz Sugar Supply Drops .............................................................................................................. 6 Kazakhstan and Uzbekistan Cease Importing Kyrgyz Potatoes ....................................................... 7 Gazprom Neft Asia to Continue Discounting Fuel for Farmers ....................................................... 7 Beet Cultivation Technology Seminar held in Chui ......................................................................... 7 Osh Hosts “Agroexpo: Silk Road 2015” ........................................................................................... 7

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 »

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BFC. Agriculture Finance Bulletin.

State Initiatives 1)

Budget of KGS 105.2 Million Allocated to Irrigation System Reparations

March 20th, 2015, http://www.vb.kg/doc/307193_na_podgotovky_irrigacionnyh_setey_pravitelstvo_potratit_1052_mln_somov.html

Irrigation network rehabilitation was allocated a budget of KGS 105.2 million for 2015, announced the Ministry of Agriculture.

This year, KGS 73.2 million have been spent on repairing 80 pumping stations, 752 water measurement facilities and 279.2 km of canals. Work is still to be carried out on 107 pumping stations, 30 wells and 1222 other irrigation facilities.

2)

Spring-Time Farming Activities Begin Sooner in 2015

March 20th, 2015, http://www.vb.kg/doc/307206_minselhoz:_vesennie_polevye_raboty_nachnytsia_na_dve_nedeli_ranshe.html

Minister of Agriculture Taalaibek Aidaraliev announced that spring time farming activities will begin two weeks earlier this year. Currently farmers have 90% of the technology and equipment required to complete the activities.

The Ministry recommended that technical crops such as clover be sown in Chui, potatoes in the mountainous regions and fruit trees in the south.

3)

Preferential Agro-Financing Program Approved

March 12th, 2015, http://www.vb.kg/doc/306100_pravitelstvo_ytverdilo_proekt_po_finansirovaniu_selskogo_hoziaystva.html

Prime Minister Djoomart Otorbaev approved the "Financing agriculture-3" program, which will provide support to the livestock, agro-processing and seed farming sectors, as well as spring-time farming activities.

Additionally, preferential loans will be provided to cooperatives through the program. Interest rates are 10% per annum for the crop and livestock sectors and 9% per annum for the agro-processing, seed farming and livestock breeding sectors. The loan term is 24 months.

During the grace period, livestock and crop sectors debtors are exempt from principal payment for 6 months; debtors from cooperatives and the agro-processing, seed farming and livestock breeding sectors are exempt from principal payment for 9 months.

4)

Veterinary Laboratories to Receive International Accreditation Within 3 Years

March 2nd, 2015, http://www.vb.kg/doc/305045_veterinarnye_laboratorii_polychat_mejdynarodnyu_akkreditaciu_cherez_tri_goda.html

Kyrgyzstan’s veterinary laboratories will receive full international accreditation within three years, announced the National Center for Veterinary Diagnosis and Expertise’s Head of Chemical Toxicology, Ishimbekova Kurmankulov. The laboratories administer food safety tests for meat, milk, honey and eggs.

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Currently, only the laboratories’ antibiotics test is recognized internationally. The facilities are understaffed and the equipment unreliable, leading many farmers to treat animals themselves. Modern technology must be introduced before testing is recognized by both Russia and the European Union.

The laboratories in Osh and Bishkek receive the equipment necessary to perform internationally recognized immune-enzyme analyses, requiring and investment of USD 9 million, said Kurmankulov.

Laboratories testing non-veterinary food products already meet international standards, including those of the Customs Union.

5)

Turkey to Consider Removing Kyrgyz Kidney Bean Import Tariffs

March 2nd, 2015, http://kabar.kg/eng/economics/full/12349

Turkey is to consider Kyrgyzstan’s request to remove import tariffs on Kyrgyz kidney beans, said Turkey’s Minister of Agriculture Mehmet Mehdi Ecker.

The issue was discussed by the countries’ respective Ministers of Agriculture at a conference on the “Integration of Information Systems in Agriculture” held in Ankara.

The parties also discussed further cooperation in the agriculture sector, including Turkish assistance in the establishment of an internationally accredited livestock certification laboratory and technical training for Kyrgyz farmers.

Foreign Aid 6)

900 Vehicles Provided to Farmers for Leasing

March 21st, 2015, http://novosti.kg/2015/03/v-etom-godu-krestyane-smogut-zakupit-v-lizing-okolo-900-edinits-tehniki/

Prime Minister Kjoomart Otorbaev announced farmers will be able obtain loans for the lease 900 agricultural vehicles through a Eurasian Bank program.

7)

IFC Host Food Safety Forum in Kyrgyzstan

March 19th, 2015, http://kabar.kg/eng/economics/full/12512

The International Finance Corporation (IFC), a member of the World Bank Group, is holding an International Food Safety Forum in Bishkek. Held in Central Asia for the first time, the forum brings together over 100 food producers, retailers, industry experts and government officials to discuss food safety best practice and regulation, as well as SME globalization strategies.

Jesper Kjaer, a Senior Manager at IFC, said agribusiness is a vital contributor to Central Asian economies.

With ideal climates for the growth of fruit and vegetables, implementing food safety standards will increase the export potential to high-end markets, said Kjaer.

The IFC’s advisory work on food safety has helped attract of USD 159 million in invest and generate USD 323 million in additional sales.

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BFC. Agriculture Finance Bulletin.

8)

Event on Food Safety and HACCP to be held in Bishkek

March 18th, 2015, http://www.vb.kg/doc/306780_v_bishkeke_proydet_trening_po_razvitiu_sektora_pererabotki_ovoshey.html

The Kyrgyz Food Industry Association, the Tajik National Association of Small and Medium Businesses (NASMB) and the NGO British Expertise will host a 4th training event on food safety and HACCP (Hazard Analysis and Critical Control Points) in Bishkek in March, as part of the “Fruit and Vegetable Processing Sector Development in Kyrgyzstan and Tajikistan” program. SME representatives will be invited to visit “Top Night” LLC to see the implementation of HACCP first hand.

Attendees include representatives of SMEs, consulting firms, universities and relevant government agencies. The project is funded by the European Union through the “Central Asia Invest III” program.

9)

Japan Grants USD 490,000 in Support of Women Farmers

March 17th, 2015, http://www.vb.kg/doc/306594_iaponiia_vydeliaet_grant_v_razmere_490_tysiach_na_podderjky_jenshin_fermerov.html

The Japanese Government has issued a USD 490,000 grand in support of women farmers and entrepreneurs in the Kyrgyz Republic. The grant was issued through the UN World Food Programme (WFP) and will support approximately 2,000 vulnerable families through the provision of technical assistance and training in agricultural skills, business administration, budgeting, finance and nutrition.

The initiative will be implemented in the Naryn, Osh, Jalal-Abad, Batken and Talas oblasts.

The WFP Country Director for the Kyrgyz Republic, Ram Saravanamuttu, said the economic and social empowerment of rural women is key to the success of the Kyrgyz economy.

10) USD 80 Million Allocated to Pastureland Management and Rehabilitation March 10th, 2015, http://www.vb.kg/doc/305826_na_reabilitaciu_pastbish_kyrgyzstana_vydeleno_80_millionov.html

The Ministry of Agriculture launched the “Market and Livestock Development” project, supported by the World Bank and the International Fund for Agricultural Development (IFAD), amongst others.

The Director of the Ministry’s Pastureland Department, Abdumalik Egemberdiev announced USD 25 million will be allocated to the rehabilitation of pastureland in Naryn and Issyk-Kul, USD 15 million in Chu and Talas, and USD 9 million to the south of the country.

New computer systems that track and define pasture boundaries and conditions will be introduced, while the efficiency and administration of pasture committees will be improved, said Egemberdiev.

11) Kyrgyzstan Rejects Offer of Polish Agricultural Machinery March 6th, 2015, http://novosti.kg/2015/03/kyrgyzstan-reshil-otkazatsya-ot-polskoj-selhoztehniki/

Fearing that farmers will experience difficulties with operation and maintenance, Kyrgyzstan has rejected Poland’s offer of EUR 40 million worth of agriculture machinery. Kyrgyzstan is requesting the funds be invested in processing equipment instead.

The equipment is to be offered to farmers and enterprises on preferential terms.

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Private Sector 12) Association of Meat Producers Requests Customs Accession Issues be Resolved March 18th, 2015, http://www.vb.kg/doc/306842_proizvoditeli_miasa_potrebovali_reshit_problemy_otrasli_do_vstypleniia_v_ts.html

The President of the Association of Meat Producers and Processors, Yrysbek Abdurasulov, reiterated the need for Kyrgyzstan to address issues hampering accession to the Customs Union. Adequate packing, labelling and loading centres need to be created, while livestock distribution and disease-free zones need to be isolated, said Abdurasulov.

Minister of Agriculture Taalaibek Aidaraliev said that, while the government is aware of the issues, the necessary funds for the implementation of the proposals are lacking.

13) Walnuts to be Exported to South Korea March 17th, 2015, http://www.vb.kg/doc/306652_greckiy_oreh_bydyt_eksportirovat_v_koreu.html

South Korean company "Shinsegae Food” – owner of the largest supermarket chain in South Korea – agreed to an initial import of 40 tons of walnuts, increasing to 370 tons a month should the delivery be satisfactory, said the Ministry of Economy. Shinsegae Food also expressed interest in a joint walnut processing venture and the import of Kyrgyz honey.

The company’s supermarket chain – E Mart – has 150 branches across South Korea, reaching USD 10 billion in sales in 2014.

14) Kyrgyz Farmers Exhibit Goods at Agricultural Fair in India March 16th, 2015, http://kabar.kg/eng/economics/full/12472

For the first time, representatives of 6 Kyrgyz agro-businesses took part in the AAHAR international agricultural fair held in New Delhi, India.

The fair provides a platform for small to large businesses and commodity producers to exhibit their goods and services. Producers from more than 20 countries participated – including Japan, Poland, Canada and the USA.

15) Turkey’s Largest Livestock Company Expresses Interest in Importing Kyrgyz Meat March 16th, 2015, http://kabar.kg/eng/economics/full/12470

A Turkish delegation met with the Kyrgyz Minister of Agriculture, Taalaibek Aidaraliev, to discuss various avenues of cooperation in agriculture – including livestock breeding, identification and registration.

Representatives of Turkey’s largest livestock company also expressed interest in importing meat from Kyrgyzstan.

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BFC. Agriculture Finance Bulletin.

16) Meat and Milk Production Increases, Egg Production Decreases March 16th, 2015, http://www.vb.kg/doc/306519_v_kyrgyzstane_snizilos_proizvodstvo_kyrinyh_iaic.html

In January and February, 55,600 tons of meat (live weight) were produced – an increase of 1.6% yearon-year, announced the Ministry of Agriculture. Growth was partially attributed to the preferential agrolending scheme, through which KGS 4.2 billion were disbursed to the livestock sector (78% of total loans).

During the same period, milk production increased 1.9% to 147,300 tons. Production increased in all regions except Talas. Growth was attributed to the cow population rising by 25,800 to 744,000 heads.

Egg production totalled 48.7 million eggs, a decrease of 3.5% year-on-year. Production increased in all regions except Issyk-Kul, were production dropped by 66.2%. This was attributed mainly to one farm – Shumkar – which suffered a shortage of vitamin and mineral supplements as well as KGS 143 million debt, leading to reduction of hen numbers from 244,000 in 2014 to 74,000 thousand today.

17) Qatar to Assess Import Potential of Kyrgyz Products March 11th, 2015, http://kabar.kg/eng/economics/full/12428

Minister of Agriculture Taalaibek Aidaraliev held meetings with the Deputy Minister of Economy and Trade of Qatar, Sheikh Jassim bin Jaber Al-Thani, to discuss potential avenues of cooperation and possible exports to Qatar.

The Qatari Deputy Minister highlighted the quality and eco-credentials of Kyrgyz products, adding that, after prices are agreed, the only issue to be discussed in transportation. The Sheik further expressed interest in importing Kyrgyz beans.

Qatar’s Ambassador to Kyrgyzstan, Mohamed Bin Arar Al-Naimi, proposed an exhibition of Kyrgyz products in Qatar.

The Qatari delegation also met with representatives of local agro-processors.

18) Agreement Reached on Fruit and Vegetable Export to Russia March 7th, 2015, http://kabar.kg/eng/economics/full/12391

The Ministry of Agriculture announced dried fruit is to be exported to Russia. The agreement was reached between the President of the Kyrgyz Association of Organic Producers, U. Mamytov, and the Director of the Russian supermarket chain “Rainbow”, A. Ismailov.

Two tons of dried apricots will initially be delivered. The agreement also provides for the eventual export of frozen berries, snacks, canned fruit and vegetables, juices, dried fruit, cereals and nuts.

19) Kyrgyz Sugar Supply Drops March 5th, 2015, http://novosti.kg/2015/03/kyrgyzskogo-sahara-na-prilavkah-magazinov-stanovitsya-vse-menshe/

Kyrgyz sugar production fell significantly, say farmers, with only 20,000 tons sold in 2014. The shortage is due to an ongoing yearly drop in cultivated areas. To avoid shortages, the country began importing sugar.

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20) Kazakhstan and Uzbekistan Cease Importing Kyrgyz Potatoes March 5th, 2015, http://novosti.kg/2015/03/fermery-ne-mogut-prodat-kartofel/

Only 20% of the potato harvest has been sold, according to producers. Kazakhstan and Uzbekistan have ceased purchasing Kyrgyz potatoes and have begun importing from Iran and Pakistan instead.

Moreover, high Customs Union import duties are making exports to the area costly. Farmers are worried that prices will fall heavily while not resulting in the entire crop to be sold.

21) Gazprom Neft Asia to Continue Discounting Fuel for Farmers March 3rd, 2015, http://www.vb.kg/doc/305151_fermeram_kyrgyzstana_predostaviat_skidki_na_diztoplivo_i_benzin_marki_ai_80.html

Farmers will require 119,700 tons of fuel in 2015, roughly the same amount as last year, said the Head of the Association of Oil Traders, Medetbek Kerimkulov. Spring-time farming activities will require 40,500 tons of diesel and 9,700 tons of gasoline, said Kerimkulov, adding that supply is currently sufficient. Gazprom Neft Asia LLC will continue to provided fuel and gasoline “AI-80” to farmers at a discount of 40 tyiyn per liter.

22) Beet Cultivation Technology Seminar held in Chui March 3rd, 2015, http://www.vb.kg/doc/305113_sveklovodov_chyyskoy_oblasti_oznakomili_s_sovremennymi_tehnologiiami.html

Beet cultivation technology seminars were held in Chui. Beet growers and sowing machine operators were taught how to prepare soil for maximum crop density and familiarized with modern technologies, including a pneumatic sowing drill. Participants were also informed about various means of obtaining finance.

The event was organized by a group of companies engaged in seed breeding and Kyrgyzstan’s only sugar company “Kaindy-Kant”. The plant only meets 20% of domestic demand.

The event was part of a government sugar beet industry revival program, including the introduction of modern technologies, machinery and seed breeding techniques, and the rehabilitation of existing sugar beet processing plans. The scheme should increase production to 100,000 tons per year.

23) Osh Hosts “Agroexpo: Silk Road 2015” February 28th, 2015, http://kabar.kg/eng/regions/full/12340

The “Agroexpo: Silk Road 2015” trade fair was held in Osh from February 26-28.

More than 30 businesses from Russia, Holland, Turkey, Italy, France, South Korea, Iran and other countries participated. Agricultural production equipment, quality seed and drop irrigation systems were amongst the items exhibited.

This is the 11th “Agroexpo: Silk Road”. The trade fair is organized with the support of international and local organizations.

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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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