#31 Kyrgyz Agriculture Bulletin, BFC

09/2016

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31 K y r gy zsta n Agriculture Bulletin Prime Minister, World Bank Discuss Continued Cooperation Russia Allocates USD 2 Million for Development Project in Issyk‐Kul Agritourism is an Emerging Industry in Kyrgyzstan Buffer Zone Created in Osh for Beekeeping Development

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

Automated Phytosanitary Documentation Process has been Created ........................................... 2 Prime Minister, World Bank Discuss Continued Cooperation ......................................................... 2 Volume of Agricultural Loans to Increase to KGS 7 Billion .............................................................. 2 Phytosanitary and Veterinary Laboratory Renovations Nearing Completion ................................. 2 Kyrgyz Government Develops Crop Regionalization Plan ............................................................... 3 Agricultural Cooperative Development Plan to be Created ............................................................ 3

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

Russia Allocates USD 2 Million for Development Project in Issyk‐Kul ............................................. 3 WFP and Japan Partner to Empower Women Farmers in Kyrgyzstan ............................................ 4 Russian‐Kyrgyz Development Fund Attracting International Financing .......................................... 4 KGS 22 Million Grant to Support Rural Development in Kyrgyzstan ............................................... 4

Private Sector .............................................................................................................. 4 11) 12) 13) 14) 15) 16) 17)

Agritourism is an Emerging Industry in Kyrgyzstan ......................................................................... 4 Buffer Zone Created in Osh for Beekeeping Development ............................................................. 5 Sugar Imports into Kyrgyzstan Expected to Drop Drastically .......................................................... 5 EEU Farm Production Forecasted to have 8% Growth in 2016‐2017 .............................................. 5 Only 300 Tons of Fruits and Vegetables Exported this Year? .......................................................... 6 Kyrgyz Farmers Struggling to Gain a Foothold in EEU Markets ....................................................... 6 Are Domestic Varieties of Kyrgyz Vegetables Going Extinct? ......................................................... 6

Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related 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.

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

Phone: +41 44 784 22 22 Fax: +41 44 784 23 23

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BFC. Agriculture Bulletin

State Initiatives 1)

Automated Phytosanitary Documentation Process has been Created

September 29th, 2016, http://knews.kg/250236/v‐kyrgyzstane‐sozdana‐avtomatizirovannaya

The State Inspectorate for Veterinary and Phytosanitary Safety has completed work on the creation of an automated information system for veterinary and phytosanitary documentation, meaning that Kyrgyzstan can now fulfill its international obligations. Certificates, permits and other documents required to move products in the country and abroad will now be issued by means of this automated system, stored in a databases of the State Inspectorate and transmitted as necessary to relevant authorities in other countries in an electronic format. The system is expected to reduce the number of fake certificates, accelerate document registration, and ensure the traceability of products as well as provide more detailed, real‐time statistics.

2)

Prime Minister, World Bank Discuss Continued Cooperation

September 23rd, 2016, http://kabar.kg/eng/economics/full/17024

Prime Minister Sooronbai Jeenbeko met with World Bank Regional Director for Central Asia Lily Burunciuc to discuss current cooperation efforts between the World Bank and Kyrgyzstan as well as prospects for further cooperation. The success of previous projects, in particular the Integrated Dairy Productivity Improvement Project, was noted by both sides and has led World Bank management to increase funding for projects in Kyrgyzstan as compared to previous years. Priority projects have been outlined as being those in the areas of energy, transport and road infrastructure.

The Integrated Dairy Productivity Improvement Project helped develop the dairy industry in the Issyk‐ Kul region, fodder production, veterinary services, and investment support for farmers as well as the export potential of dairy products to neighboring countries.

3)

Volume of Agricultural Loans to Increase to KGS 7 Billion

September 21st, 2016, http://knews.kg/248032/obem‐kreditov‐na‐razvitie‐selskogo‐hozyajstva

Prime Minister Sooronbai Jeenbekov announced that the volume of agricultural loans will increase from KGS 5 billion to KGS 7 billion for the next two to three years. The Prime Minister stated that the move is to encourage more employment opportunities within the country as agriculture and industry are vital parts of the country’s economic future.

Funds from the Russian‐Kyrgyz Development Fund are also being channeled for entrepreneurship development.

4)

Phytosanitary and Veterinary Laboratory Renovations Nearing Completion

September 16th, 2016, http://novosti.kg/2016/09/rekonstruktsiyu‐fitosanitarnyh‐i‐veterinarnyh‐laboratorij‐zavershat‐v‐ oktyabre/

Minister of Agriculture and Land Reclamation Turdunazir Bekboev announced that renovations of Kyrgyz phytosanitary and veterinary laboratories should be completed in October, including much anticipated upgrades to centers in Osh and Bishkek. In all, 13 laboratories across the country are being renovated, and KGS 26 million have been allocated for the project.

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5)

Kyrgyz Government Develops Crop Regionalization Plan

September 16th, 2016, http://kabar.kg/society/full/111265

Prime Minister Sooronbai Jeenbekov held a meeting on the regionalization of crops (specialization of crop growth by region) which saw Agriculture Minister Turdunazir Bekboev present a drafted plan for specializing each region. If adopted, the plan would see the area of cultivated lands in 2017 increase by 4.8 thousand hectares to a total of 1,197.2 thousand hectares.

With Kyrgyzstan’s accession into the Eurasian Economic Union (EEU), new requirements to meet international standards can be more easily managed through regionalization of crops, which would make it easier for each region to broaden its agriculture and improve the quality of its products. The higher quality, subsequent increased demand, and easier access to EEU markets would lead to higher profits, motivating local farmers to plant in accordance with the regionalization plan.

6)

Agricultural Cooperative Development Plan to be Created

September 13th, 2016, http://knews.kg/245354/v‐kyrgyzstane‐razrabotayut‐kontseptsiyu‐po‐razvitiyu‐selhozkooperativov/

Prime Minister Sooronbai Jeenbekov has ordered the drafting of a concept for agricultural cooperative development for 2017‐2021. The concept will seek to create legal, economic and organizational conditions for the effective operation of agricultural cooperatives. This includes improved financial support for cooperative farming, expanding cooperatives to all agricultural sectors, introducing cooperative management and the development of a system of scientific, informational and consulting services for agricultural cooperatives.

Two stages are planned within the framework of this concept. During the first stage (2017‐2018), unresolved issues connected to promoting agricultural cooperation will be solved. During the second stage (2019‐2021), cooperation infrastructure will be organized.

Foreign Aid 7)

Russia Allocates USD 2 Million for Development Project in Issyk‐Kul

September 20th, 2016, http://kabar.kg/eng/economics/full/16996

Russia has allocated USD 2 million to aid in the development of the tourism and agro‐industrial sectors of the Issyk‐Kul region of Kyrgyzstan as part of a three‐year project. The project aims to develop and strengthen the links between the tourism sector and the agro‐industrial complex of Issyk‐Kul. The project, officially launched in September, was developed by the United Nations Industrial Development Organization (UNIDO), the Tourism Department of the Kyrgyz Ministry of Culture, the Information and Tourism Board of the Kyrgyz Republic and the Kyrgyz Ministry of Agriculture and Land Reclamation.

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8)

WFP and Japan Partner to Empower Women Farmers in Kyrgyzstan

September 20th, 2016, https://www.wfp.org/news/news‐release/wfp‐and‐japan‐partner‐empower‐women‐farmers‐kyrgyz‐ republic

The United Nations World Food Program (WFP) has joined forces with the Embassy of Japan to provide equipment which will support food‐processing businesses and rural women’s entrepreneurship across several rural Kyrgyz communities. The food‐processing equipment, which will support communities in producing fresh juices, jams, pickles and dried fruits and vegetables, will empower more than 2,000 vulnerable rural households, and primarily women.

Users of the equipment will be able to establish and operate enterprises to process agricultural produce and provide food‐processing services to other farmers. These businesses will help rural women to secure stable incomes and generate additional tax revenues for local communities. In addition, revenue generated through the lease of the equipment will be used for the purchase of additional equipment for local communities.

The WFP will also be providing training on food processing, food safety requirements, financial management, and value chain development to support business capacity development and boost women farmers’ incomes.

9)

Russian‐Kyrgyz Development Fund Attracting International Financing

September 7th, 2016, http://www.eng.24.kg/economics/181849‐news24.html

The Russian‐Kyrgyz Development Fund has begun seeking additional funding sources from international banks. The Czech Export Bank has already agreed to allocate an undisclosed amount to the fund for future lending, and additional banks such as the Asian Development Bank and KfW Development Bank are currently discussing details with the Fund for financing. It is an important move for the Fund to attract new cheap, long‐term investments into Kyrgyzstan while still adhering to its mission and policies.

Terms and conditions of on‐lending to entrepreneurs from the Fund remain to be set as they will be contingent on limits established with the Fund’s investor banks.

10) KGS 22 Million Grant to Support Rural Development in Kyrgyzstan September 7th, 2016, http://novosti.kg/2016/09/vsemirnyj‐bank‐vydelit‐kyrgyzstanu‐grant‐na‐razvitie‐selskoj‐mestnosti/

A KGS 22 million grant from the World Bank and Aga Khan Foundation will be allocated to support rural development in Kyrgyzstan. The funds are expected to be used for the implementation of agricultural development programs, education and health care in the Osh and Naryn regions.

Private Sector 11) Agritourism is an Emerging Industry in Kyrgyzstan September 27th, 2016, http://knews.kg/249472/kyrgyzstan‐edinstvennaya‐strana‐v‐tsentralnoj‐azii‐organizuyushhaya‐ agrotury/

Agritourism in Kyrgyzstan began to be organized in 2009 with the support of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) with the training of farmers in what services to provide Page 4

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agritourists as well as how to develop agritourism products. Today, the fruits of that labor are beginning to show with the number of agritourists in Kyrgyzstan reaching 443, more than double the number of agritourists in 2015. Currently, the Issyk‐Kul, Naryn, Jalal‐Abad and Osh regions are active in agritourism, and there are plans to involve the Talas and Batken regions in the near future.

Agritourism is a rural, eco‐tourism. For people who want to relax in the countryside and take a break from home, it presents an opportunity for calm holiday spent in nature. This kind of tourism is very attractive for farmers as well since it provides additional income.

12) Buffer Zone Created in Osh for Beekeeping Development September 26th, 2016, http://www.review.uz/index.php/novosti‐main/item/9729‐v‐kyrgyzstane‐sozdana‐bufernaya‐zona‐dlya‐ razvitiya‐pchelovodstva

The first buffer zone for bee stock breeding has been established in the Kara‐Kuldzhynsk district of the Osh region. The buffer zone provides a protective area for the development of improved bee species and bee products as well as the preservation of successful bee species. The import of other honey bees, bee colonies and queen bees of unknown origin is prohibited within a 20 kilometer radius around the buffer zone. The new buffer zone has six beekeepers actively working to produce better quality honey and grow high‐bred queen bees.

13) Sugar Imports into Kyrgyzstan Expected to Drop Drastically September 8th, 2016, http://www.eng.24.kg/economics/181880‐news24.html

Kyrgyzstan does not currently meet the sugar needs of its population; 80–82% of sugar in the domestic market is imported. This year, however, sugar imports into Kyrgyzstan are expected to decline drastically following an increase in the harvest of domestic sugar beets. For example, the Chui region harvested 183,200 tons of sugar beet last year but is expecting to harvest 450,000 tons this year. The increased harvest means that companies such as Kaindy‐Kant, which produced 24,100 tons of sugar in 2015, can increase their output into the domestic market. This year, Kaindy‐Kant anticipates the production of 85,600 tons of sugar, enough to cover the needs of 71.3% of the domestic market.

14) EEU Farm Production Forecasted to have 8% Growth in 2016‐2017 September 7th, 2016, http://kyrtag.kg/economy/v‐eaes‐prognoziruyut‐rost‐selkhozproizvodstva‐na‐8‐eksporta‐na‐19‐v‐2016‐ 2017‐gg

The Eurasian Economic Commission (EEC) Board has approved joint agricultural development forecasts and consolidated demand and supply forecasts on the main agricultural products in the Eurasian Economic Union (EEU) for 2016 ‐ 2017. The growth of farm production is expected to hit 8% within the Union, with exports projecting at 19% growth and mutual trade projecting 15% growth. In addition, the average self‐sufficiency rate for agricultural products is predicted to be at 94% in 2017.

Joint forecasts help to assess the economic status of the agricultural sector across the Union, its overall scale and areas of growth, and its investment attractiveness (taking into account the size of a single market and the food security situation). This helps connect agricultural products and raw materials with potential producers, increasing mutual trade and reducing a reliance on imports from other countries.

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15) Only 300 Tons of Fruits and Vegetables Exported this Year?

September 6th, 2016, http://kyrtag.kg/economy/po‐dannym‐minselkhoza‐kyrgyzstan‐s‐nachala‐goda‐eksportiroval‐vsego‐300‐ tonn‐plodoovoshchnoy‐produkts

According to data from the Ministry of Agriculture and Land Reclamation, Kyrgyzstan has only exported 300 tons of fruits and vegetables since the beginning of the year. This is despite Kyrgyz farmers producing 138.3% more vegetables than in the same period last year and a similar situation with Kyrgyz fruits and melons. In fact, Kyrgyz exports of fruits and vegetables to the Eurasian Economic Union (EEU) have fallen by 3.8 times in the last five months.

Azamat Orozbaev, First Deputy Chairman of the National Statistics Committee of Kyrgyzstan, noted that the difference in numbers arises from the fact that customs checkpoint requirements along the Kyrgyz‐ Kazakh border have been dropped since Kyrgyzstan’s accession into the EEU. Deputy Prime Minister Oleg Pankratov has requested the finalization of new methodologies for goods registration and determining the volume of sales to the EEU to be completed by mid‐September.

16) Kyrgyz Farmers Struggling to Gain a Foothold in EEU Markets September 6th, 2016, http://vesti.kg/index.php?option=com_k2&view=item&id=42132:nikto

Even after the accession of Kyrgyzstan into the Eurasian Economic Union, Kyrgyz farmers are still struggling to break into the Russian and Kazakhstan markets. Their sales outlets in the countries are filled with goods from non‐EEU member states like Uzbekistan, Tajikistan and Azerbaijan.

The reason for this difficulty is in Kyrgyz agricultural products needing certificates from logistic centers which are still being built; meanwhile, their non‐EEU member counterparts simply need to provide a register of products and negotiate supplies. Further aggravating the issue is that there is no organization of producers in Kyrgyzstan. It is often necessary for 3 or 4 producers to collaborate on logistics to physically get their products to EEU markets, and many buyers want the convenience of purchasing the entire load; however, many producers are unwilling to sell their products at the same cost as their colleagues, believing their products to be of a higher quality. As a result, buyers seek out other producers where procurement is easier.

If the government doesn’t step in soon to help in the construction of logistic centers and help producers better organize, many fear that Kyrgyz farmers are at risk of losing out entirely on the EEU market potential.

17) Are Domestic Varieties of Kyrgyz Vegetables Going Extinct?

September 2nd, 2016, http://vesti.kg/index.php?option=com_k2&view=item&id=42061:iz‐za

Encouraged by Kyrgyzstan’s entrance into the Eurasian Economic Union (EEU), farmers began to seek ways to increase crop volumes in recent years. However, this has meant that regionalized domestic products have given way to the cultivation of more profitable foreign varieties (often with less quality).

But this quest for increased volume and profitability has had unintended consequences, namely that these foreign varieties go largely unchecked, frequently have negative effects on the environment, and are causing the extinction of domestic varieties.

Former Agriculture Minister Dzhumakadyr Akeneev believes that the government needs to act now to ensure that Kyrgyz varieties have a future. This can be accomplished, he says, through restoring breeding farms, verifying imported seed varieties, and educating farmers on how to properly cultivate domestic varieties and market them in international markets.

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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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