#34 Kyrgyzstan Agriculture Bulletin, BFC

12/2016

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34 K y r gy zsta n Agriculture Bulletin Veterinary Controls at Kyrgyz-Kazakh Border Still an Issue Kyrgyzstan, Qatar to Expand Bilateral Cooperation

Russia Boosts Support for WFP Project KGS 57 Billion Needed to Restore Irrigation Networks

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

Veterinary Controls at Kyrgyz‐Kazakh Border Still an Issue ............................................................ 2 New VAT Proposed for Meat Imports ............................................................................................. 2 New Plant Breeding and Seed Production Law Signed ................................................................... 2 EEC Discusses New Agro‐Industrial Data System ............................................................................ 2 Kyrgyzstan, Qatar to Expand Bilateral Cooperation ........................................................................ 3 Minister of Economy Outlines Plan to Help Kyrgyz Businesses ....................................................... 3

Foreign Aid ................................................................................................................. 4 7) 8) 9) 10)

Russia Boosts Support for WFP Project ........................................................................................... 4 Joint Steering Committee for OVOP Project Meets ........................................................................ 4 USD 5 Million Project to Help Dairy Sector ..................................................................................... 5 UNDP Launches Osh Development Program ................................................................................... 5

Private Sector .............................................................................................................. 5 11) KGS 57 Billion Needed to Restore Irrigation Networks ................................................................... 5 12) KGS 4.7 Billion in Preferential Loans for Agricultural Producers ..................................................... 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. Read more »

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BFC Agriculture Bulletin

State Initiatives 1)

Veterinary Controls at Kyrgyz‐Kazakh Border Still an Issue

December 26th, 2016, http://www.eng.24.kg/evraziasoyuz/183503‐news24.html

Kyrgyzstan will once again raise the issue of veterinary control checkpoints along the Kyrgyz‐Kazakh border at a summit of Eurasian Economic Union (EEU) heads of state. The issue has previously been raised, and Kyrgyzstan has executed the road map necessary for their removal. Experts have come and inspected checkpoints, laboratories, and the activities of the veterinary services.

This issue was discussed at the last council meeting in Moscow with all countries, except Kazakhstan, confirming that Kyrgyz services are ready and within EEU commitments and that veterinary control along the border could be removed. For its part, Kazakhstan states that the issue requires approval from leadership but that they expect the proper documentation to be signed and the controls removed in the near future.

2)

New VAT Proposed for Meat Imports

December 21st, 2016, http://vesti.kg/index.php?option=com_k2&view=item&id=43875:pomoch‐pomogli‐da‐ne‐tak&Itemid=79

Member of Parliament Azamat Arapbaev has launched an initiative which would see VAT collection for meat imports at a rate of KGS 60 per kilogram. The proposed tax, meant to support Kyrgyz agricultural producers and entrepreneurs, has been met negatively by some agricultural experts, saying that this is not the path to success because Kyrgyz farmers do not need these bans; they need access to affordable credit and cheaper access to artificial insemination equipment. Many fear that the VAT will only worsen the situation with meat being smuggled into the country, harming Kyrgyz farmers instead of helping them.

3)

New Plant Breeding and Seed Production Law Signed

December 20th, 2016, http://kabar.kg/society/full/115420

Kyrgyz President Almazbek Atambayev signed the Law on "Ratification of the Agreement on the multilateral interstate specialization of production and supply of seeds varieties and hybrids of agricultural crops, planting material of fruit, berry crops and grapes." The agreement will allow the seed sector of the Kyrgyz Republic to develop cooperation in the field of plant breeding and seed production with Commonwealth of Independent States (CIS) members. The law will come into full force following ten days after the date of its publication.

4)

EEC Discusses New Agro‐Industrial Data System

December 15th, 2016, http://www.eurasiancommission.org/ru/nae/news/Pages/15‐12‐2016‐3.aspx

At a meeting of the Advisory Committee on Agro‐Industrial Policy, the Board of the Eurasian Economic Commission (EEC) discussed requirements for the agro‐industrial complex data system of the Eurasian Economic Union (EEU). The data system of the agroindustrial complex will allow users to simulate production, taking into account changes in the demand for goods and services in the market, assess food security, and will increase the level of scientific research and use of modern developments and technologies in the agricultural sector. Data exchange on the basis of integrated information resources Page 2

BFC Agriculture Bulletin

of EEU will optimize business processes and increase the efficiency and quality of decisions while also ensuring the accessibility and openness of information to all stakeholders.

The data system is being developed with the Treaty on the EEU in mind, and all EEU member states are working with industry experts on its development. It is currently planned that seven common resources will be entered into the system, including a single register of technical crops varieties, forward‐looking indicators for agribusiness development, a database of breeding animals and breeding achievements, and ongoing and planned research activities.

5)

Kyrgyzstan, Qatar to Expand Bilateral Cooperation

December 7th, 2016, http://kabar.kg/eng/economics/full/17717

Kyrgyz Minister of Economy Arzybek Kozhoshev and Qatari Ambassador Mohammed bin Arar Umeyr Al‐ Ramzani al‐Naimi met to discuss the current status of bilateral cooperation between the two countries and the possibility of expanding them. During the meeting, the two sides reached an agreement to hold the first meeting of the Intergovernmental Kyrgyz‐Qatari Commission in March 2017.

The sides also discussed the possibility of organizing and holding of a business forum and an agricultural exhibition and exchanged views on the possibility of introducing the halal industry to the Kyrgyz Republic, which could see Kyrgyzstan become a supplier of meat, honey and other agricultural products to Qatar.

Minister Kozhoshev places great importance on developing and intensifying relationships with Qatari partners in trade, investment, entrepreneurship and agriculture. The Qatari Ambassador, for his part, noted that cooperation between the business environment of the two countries and familiarization with the investment potential of the Kyrgyz Republic are very important. Both expressed hope that the constructive nature of the meeting would continue.

6)

Minister of Economy Outlines Plan to Help Kyrgyz Businesses

December 6th, 2016, http://www.eng.24.kg/economics/183176‐news24.html

Minister of Economy Arzybek Kozhoshev outlined government priorities to help Kyrgyz businesses with preferential loans and a reduction in the number of necessary licenses as well as with exporting goods to other markets. According to the Minister, KGS 700 million will be allocated in 2017 to support farmers, with KGS 350 million of that used to support livestock and crop production and the other KGS 350 million used to support the processing sector. Any additional funds will be allocated for cheap loans for the garment industry.

The Ministry has also submitted a plan for subsidizing interest rates for export‐oriented companies, including a list of 300 companies who would benefit from such a subsidy. In addition, the Minister has developed a modified Tax Code to address some of the shortcomings of the current tax legislation.

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BFC Agriculture Bulletin

Foreign Aid 7)

Russia Boosts Support for WFP Project

December 21st, 2016, http://donors.kg/en/3158‐russian‐federation‐boosts‐support‐to‐wfp‐to‐strengthen‐rural‐livelihoods‐of‐ the‐most‐vulnerable‐in‐the‐kyrgyz‐republic#.WF1‐7aLp7m5

The Russian Federation is contributing USD 5 million to support the United Nations World Food Program (WFP) and Kyrgyz government in their joint development project which is aimed at increasing the incomes of vulnerable rural populations by improving rural infrastructure and providing skills training.

This contribution will allow the project to expand to support new rural communities and small townships.

To date, this project has directly benefited over 240,000 vulnerable Kyrgyz people through the creation of community‐prioritized assets, income‐generating activities and skills training. The project has also helped to restore irrigation networks and key infrastructure such as bridges, roads, canals and dams in addition to bringing croplands back into use. Moreover, nearly half of the participants in the WFP’s vocational training have found employment, started their own businesses, or are involved in income‐ generating activities.

The Russian Federation has contributed over USD 50 million to support WFP activities that improve food security, enhance productive safety nets and optimize school meals in the Kyrgyz Republic, making it the single largest donor to WFP in the country.

8)

Joint Steering Committee for OVOP Project Meets

December 5th, 2016, http://mineconom.gov.kg/index.php?option=com_content&view=article&id=6892&catid=63&lang=ru

During a meeting of the Joint Steering Committee for the One Village, One Product (OVOP) project, the results of the project’s efforts in the Issyk‐Kul region were discussed along with further steps for the project to take. The One Village, One Product (OVOP) project, designed and initiated by the Japan International Cooperation Agency (JICA), has been operating in Kyrgyzstan for ten months. In that time, the project has helped increase production to more than 800 different products offered from the Issyk‐ Kul region and has increased the number of internal points of sale from 4 to 32. In addition, the OVOP project has sparked the signing of 22 contracts within Kyrgyzstan and an additional 16 outside of it.

Sales volumes since the project’s inception amount to KGS 53 million, helping 1,700 people who specialize in different areas of production such as handicraft production, jams and juices from wild berries and dried fruits, beekeeping and dairy production.

Currently, project activities are being carried out to open an OVOP center in Bishkek. The main purpose of the center is to unite the efforts of people in the economic development of rural areas of Kyrgyzstan through the promotion of local products. The OVOP center in Bishkek will be an outlet for local, raw materials and will also provide consulting and information services. The center is also envisaged to assist in the development of production, the organization of retail sales and the establishment of business relations.

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BFC Agriculture Bulletin

9)

USD 5 Million Project to Help Dairy Sector

December 2nd, 2016, http://kabar.kg/eng/economics/full/17667

The World Bank’s Board of Executive Directors approved USD 5 million in financing for the Integrated Dairy Productivity Improvement Project. The project is aimed at enhancing dairy animal productivity and milk quality on farms in the Issyk‐Kul region and will help boost incomes for approximately 24,000 households. USD 2.75 million of the financing is a concessional credit while the rest is being provided as a grant.

Kyrgyz dairy products have a reputation for being organic and tasty because of a production model based on natural pastures. However, most local milk producers and processors find it difficult to capitalize on new market opportunities due to their inability to meet the animal health, food safety and quality standards. The Integrated Dairy Productivity Improvement Project will increase production and make the export of Kyrgyz dairy products more sustainable, increase incomes of dairy farmers, and create new jobs along the dairy supply chain. Specifically, the project will support cattle identification and registration, initiate a zone free of animal diseases and provide better artificial insemination services. The project will also introduce the concept of model dairy villages to share good dairy farming practices and facilitate access to finance for small farmers for equipment purchases.

The World Bank’s overall mission in the Kyrgyz Republic is to reduce poverty and promote economic growth and shared prosperity. The Bank’s financial assistance to the Kyrgyz Republic since 1992 amounts to over USD 1.3 billion in the form of grants and concessional credits.

10) UNDP Launches Osh Development Program December 1st, 2016, http://www.vb.kg/doc/351398_proon_zapyskaet_programmy_integrirovannogo_razvitiia_oshskoy_oblasti.html

The United Nations, with support from the Russian Federation, is allocating USD 4.5 million for agribusiness development and technical education in the Osh region of Kyrgyzstan. A similar program was launched by the United Nations Development Program in 2014 for the Naryn region, which was a success and has continued working in the region even after Russian funding for the project ended.

Private Sector 11) KGS 57 Billion Needed to Restore Irrigation Networks December 16th, 2016, http://24.kg/obschestvo/41766_v_kyirgyizstane_50_tyisyach_gektarov_oroshaemyih_zemel_v_plachevnom_sostoyanii_/

According to the director of Water Resources and Land Reclamation Department, Kokumbek Tashtanaliev, 50,000 hectares of land in Kyrgyzstan has had irrigation restored, costing KGS 57 billion. It is estimated that an additional KGS 57 billion would be needed to provide irrigation for the remaining 66,000 hectares and to increase water supplies.

The Ministry of Agriculture has been charged with developing the final draft for the state program for irrigation development for 2017–2025. The draft is scheduled to be finished prior to February 1, 2017. In addition, the Ministry has been charged with attracting additional investments for modernizing Kyrgyzstan’s irrigation networks.

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12) KGS 4.7 Billion in Preferential Loans for Agricultural Producers December 8th, 2016, http://www.minfin.kg/ru/novosti/novosti/na‐1‐dekabrya‐2016‐g‐13‐157‐selskim‐tovaroproizvod.html

More than 13,000 Kyrgyz agricultural producers have received preferential loans amounting to KGS 4.7 billion since the beginning of 2016, as of December 1. According to reports provided by commercial banks, these funds have been allocated for crop production (KGS 529.25 million), animal production (KGS 3.74 billion) and agricultural processing (KGS 515.53 million).

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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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