#26 BFC Kyrgyzstan Agriculture Finance Bulletin

04/2016

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26 K y r gy zsta n Agriculture Finance Bulletin Parliamentary Committee Agrees to Insurance Tariffs Contributions UAE Investment Delegation Visits Kyrgyzstan Prime Minister Reinforces His Support for SME and Agricultural Lending Kyrgyz and Russian Companies to Create Joint Breeding Enterprise

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Agriculture Finance Bulletin Edition #26, April 2016

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

Parliamentary Committee Agrees to Insurance Tariffs Contributions ............................................ 2 Livestock Identification Set to Begin this Autumn........................................................................... 2 Jeenbekov Calls for Simplified Lending Conditions for Farmers ..................................................... 2 UAE Investment Delegation Visits Kyrgyzstan ................................................................................. 2

Foreign Aid ................................................................................................................. 3 5) 6) 7)

Agreement of Cooperation Signed with Ural State Agricultural University .................................... 3 Prime Minister Reinforces His Support for SME and Agricultural Lending ..................................... 3 Kashk Processing Plant Planned in Kochkor District ........................................................................ 3

Private Sector.............................................................................................................. 4 8) 9) 10) 11) 12) 13)

Spring Sowing 38% Complete .......................................................................................................... 4 Egg Production Increases................................................................................................................. 4 The International Issyk-Kul Farmers' Festival Held in Karakol......................................................... 4 Organics: The New Kyrgyz Agriculture ............................................................................................ 4 Russian Retailers have an Increased Interest in Kyrgyz Produce .................................................... 5 Kyrgyz and Russian Companies to Create Joint Breeding Enterprise .............................................. 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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State Initiatives 1)

Parliamentary Committee Agrees to Insurance Tariffs Contributions

April 26th, 2016, http://24.kg/ekonomika/31245_deputatyi_profilnogo_komiteta_soglasilis_s_predlojeniem_ustanavlivat_tarifyi_strahovyih_vzn osov_v_zavisimosti_ot_vida_selhozugodiy/

The Parliamentary Committee on Economic and Fiscal Policy agreed to a proposal to set tariffs on insurance contributions, depending on type of farmland. One of the authors of the bill noted that the document is designed to differentiate premium rates by land size and type of farmland. He believes that the developed system will ensure a level playing field in the payment of insurance premiums for the heads and members of farms not operating as a legal entity. In addition, the bill provides gradual increases in premium rates every two years.

2)

Livestock Identification Set to Begin this Autumn

April 25th, 2016, http://www.vb.kg/doc/338764_pasportizaciu_domashnego_skota_nachnyt_osenu.html

First Deputy Prime Minister Muhammetkaly Abulgazi announced that the government plans to begin the process of animal identification this autumn. The announcement came amid concerns from some in parliament that the process is not moving and will result in an inability of Kyrgyz farmers to export meat and dairy products. First Deputy Abulgazi added that there are still issues that need to be worked out with the identification system and that an awareness-raising campaign will take place prior to beginning the process.

Approximately KGS 40 million has been allocated from the budget for animal identification.

3)

Jeenbekov Calls for Simplified Lending Conditions for Farmers

April 15th, 2016, http://www.eng.24.kg/economics/180117-news24.html

Prime Minister Sooronbay Jeenbekov has called for a simplification in lending conditions for farmers. He outlined the necessity to simplify the conditions for lending to farmers and small- and medium-sized businesses as part of the priorities that should be implemented as part of the framework of the National Strategy for Sustainable Development approved by parliament in November 2015. He also instructed that work begin to accelerate the implementation of a project to create guarantee funds.

Jeenbekov emphasized the need for the development of Eurasian Economic Union markets to expand the opportunities for the sale of Kyrgyz agricultural products. The Prime Minister touched upon the issues of the spring field works, instructing ministries and agencies to carry out irrigation system monitoring in order to ensure continuous irrigation.

4)

UAE Investment Delegation Visits Kyrgyzstan

April 12th, 2016, http://kabar.kg/eng/economics/full/15652

A delegation from the United Arab Emirates (UAE) visited Kyrgyzstan between April 13 and 15, 2016.

The delegation, headed by Energy Minister Suhail Mohammed Faraj Al Mazroui, includes representatives from large investment companies and is interested in investment opportunities in Kyrgyzstan.

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The delegation comes in response to Kyrgyz President Atambaev’s 2014 visit to the UAE and has conducted bilateral meetings with representatives of the agricultural industry, the food industry, and construction, energy and TV companies from Kyrgyzstan. A Kyrgyzstan-UAE economic forum was also held on April 14, 2016 where Kyrgyzstan representatives spoke about various projects and opportunities for cooperation, exchange and investment with UAE companies and investors.

Foreign Aid 5)

Agreement of Cooperation Signed with Ural State Agricultural University

April 25th, 2016, http://www.vb.kg/doc/338796_agrarnye_yniversitety_rf_i_kr_podpisali_dogovor_o_naychnom_sotrydnichestve.html

An agreement of cooperation has been signed between Kyrgyz National Agrarian University and Ural State Agricultural University in Bishkek. The agreement will foster cooperation between scientists and students of the two universities in fields such as veterinary sciences and virology. The exchange is expected to help facilitate Kyrgyzstan’s deepening involvement in the Eurasian Economic Union, especially in regards to the breeding of cattle and horses, sectors requiring highly skilled veterinary staff.

6)

Prime Minister Reinforces His Support for SME and Agricultural Lending

April 19th, 2016, http://www.vb.kg/doc/338463_premer:_akcent_v_rabote_rkfr_neobhodimo_delat_na_podderjky_agrosektora.html

Prime Minister Sooronbai Jeenbekov met with Kubanychbek Kulmatov, CEO of the Russian-Kyrgyz Development Fund to discuss realization of the SME Lending Program.

The program is carried out through commercial banks in order to facilitate access to credit resources, and Kulmatov noted that the Fund plans to expand a list of partner banks in order to increase the availability of loans for SMEs and regional coverage. The Fund’s board has drafted a proposal mitigating the requirements for potential partner banks in order to facilitate the expansion.

The Fund’s SME program has started with a rate of under 5% per annum for loans, and the Fund is also preparing to allocate an additional KGS 10 billion for further SME development and agriculture financing at the direction of President Atambayev.

Prime Minister Jeenbekov stressed that SME and agricultural support is a key in economic development within the National Strategy of Sustainable Development for the Kyrgyz Republic for the period 20132017, especially as the country focuses on Eurasian integration.

7)

Kashk Processing Plant Planned in Kochkor District

April 14th, 2016, http://www.turmush.kg/ru/news:290334

The construction of a kashk processing plant is planned in Talaa-Bulak village of the Kochkor District. The plant will be opened within the framework of The United Nations Development Program, which has allocated USD 13,000 for technological infrastructure in the new plant.

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Private Sector 8)

Spring Sowing 38% Complete

April 27th, 2016, http://novosti.kg/2016/04/vesenne-polevye-raboty-v-kyrgyzstane-zaversheny-na-38-protsentov/

The spring sowing campaign in Kyrgyzstan is 38% complete. Economic Minister Arzybek Kozhoshev announced that this year there have been more sown crops that last season.

9)

Egg Production Increases

April 27th, 2016, http://kyrtag.kg/economy/v-chuyskoy-oblasti-uvelichilos-proizvodstvo-kurinykh-yaits-

Kyrgyzstan has produced over 90 million eggs from January through March, a 108.1% increase over 2015’s production. An increase in egg production was seen in all regions except Issyk-Kul.

10) The International Issyk-Kul Farmers' Festival Held in Karakol April 25th, 2016, http://kabar.kg/eng/regions/full/15737

Karakol hosted about 10,000 visitors to this month’s International Issyk-Kul Farmers' Festival. The festival was held to aid in the economic development of agriculture in the region. Products for seedgrowing, livestock breeding, and nursery gardens were all presented at the festival along with agricultural producers and new agricultural machinery and equipment.

About 300 farmers and farms presented their products at the festival, including different cattle breeds, tree seedlings, and flower crops. Fish farms and beekeepers also participated in the festival.

Festival organizers were the Office of the Plenipotentiary Representative of the Kyrgyz Government in Issyk-Kul, the Association of Breeding Farms, and the integrated Agricultural complex Reina Kench.

11) Organics: The New Kyrgyz Agriculture April 21st, 2016, http://www.eng.24.kg/community/180182-news24.html http://knews.kg/2016/04/20/kyrgyzstanu-prochat-budushhee-krupnogo-eksportera-ekologicheski-chistyh-produktov/

Organic products and by-products are increasingly being seen by many in Kyrgyzstan as the future of Kyrgyz agriculture, and the Federation of Organic Movement (FOM) is spearheading the effort to increase organic production in the country. Proponents of organic farming view organics as helping in three sectors: the local environment, nutrition, and the economy.

Cultivation of fruits and vegetables in an organic way rejects the use of chemicals for fertilizer and pest elimination, instead seeking alternatives that are viewed as natural. Use of animal waste, composting, and insect-defenders (insects with attack and consume larvae and eggs of insect-parasites) not only provide natural ways of fertilization and protection, but also help to revitalize soil that has rapidly lost fertility from use of chemicals and soil erosion.

Although more time consuming and labor-intensive, organic products sell for 30% to 40% higher (and sometimes even more) as they are seen as more nutritional than their non-organic counterparts; furthermore, a growing demand for organics domestically and abroad presents a unique opportunity for Kyrgyz agriculture to fill a growing niche. As Kyrgyzstan joins the Eurasian Economic Union, its lack of Page 4

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ability to produce in bulk has made it difficult to compete with countries like Kazakhstan. Organic products fill a niche focused on quality over quantity.

The FOM is currently working on helping expand cooperation and networks for organic products to help the emerging sector develop by consolidating farmers and organizing processing, marketing, transportation and storage efforts for the organic products.

12) Russian Retailers have an Increased Interest in Kyrgyz Produce April 16th, 2016, http://www.vb.kg/doc/338278_torgovye_seti_rossii_ykrepiat_sviazi_s_kyrgyzstanom.html

Russia's largest retailers participated in an international seminar designed to increase cooperation between trading companies from Russia and Kazakhstan and Kyrgyz producers and fruit and vegetable processors.

The seminar provides discussions of topical issues on Kyrgyz exports and their promotion in different markets. Parties will also get the necessary information about each other and discuss potential cooperation. Kyrgyz farmers, commodity producers and suppliers will also learn about the requirements of foreign partners in order to adapt their production for export.

The seminar took place between April 26, 2016 and April 28, 2016 in the Issyk-Kul region and was jointly organized by the Association of Food Industry Enterprises of Kyrgyzstan and the UNDP regional project “Aid for Trade,” which is financed by the Government of Finland.

13) Kyrgyz and Russian Companies to Create Joint Breeding Enterprise April 7th, 2016, http://www.vb.kg/doc/337592_kompanii_kyrgyzstana_i_samarskoy_oblasti_sozdadyt_selhozpredpriiatie.html

Kyrgyzstan’s Ayu Holding and Russia’s Neprik LLC have agreed to create a joint agricultural enterprise for the breeding of beef cattle (in particular, kalmyk cows and mandalong cows). The enterprise will be based on a farm enterprise in the Koshoy village of Chui oblast Koshoy with future plans for the construction of slaughterhouses, meat-processing and feed-milling areas as well as land for creating a food reserve. Products of the enterprise will be used for domestic needs and for export as well.

Neprik LLC is one the most developed farms in Samara region of Russia and specializes in the breeding of beef cattle. Neprik currently operates on about 20,000 hectares of land with more than 5,000 head of cattle, including more than 2,500 as breeding stock.

This project will be realized with support from the Russian-Kyrgyz Development Fund.

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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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