06/2017
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40 K y r gy zsta n Agriculture Bulletin EEC approves new regulations for fish product safety USAID launches new initiative to finance farmers Rural women benefit from UN-Kyrgyz development project Guarantee Fund issues KGS 63.2 million in guarantees
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7)
Parliament adopts new land transformation bill ............................................................................ 2 Proposal to reduce number of testing laboratories ........................................................................ 2 Cattle identification continues, horses next.................................................................................... 2 Guarantee Fund, Hungarian Trade House to cooperate ................................................................. 2 EEC approves new regulations for fish product safety.................................................................... 3 Land degradation considered a threat to food security .................................................................. 3 Over KGS 2.75 billion in preferential agricultural loans .................................................................. 3
Foreign Aid ................................................................................................................. 4 8) 9) 10) 11) 12)
Seminar held on creating agricultural logistics centers................................................................... 4 Tracking climate technology in the agrifood sector ........................................................................ 4 New vegetable consolidation center opens in Aravan .................................................................... 5 USAID launches new initiative to finance farmers .......................................................................... 5 Rural women benefit from UN-Kyrgyz development project ......................................................... 5
Private Sector.............................................................................................................. 6 13) 14) 15) 16)
Guarantee Fund issues KGS 63.2 million in guarantees .................................................................. 6 New milk processing plant opens in Osh ......................................................................................... 6 Kyrgyz wheat and flour industry in jeopardy................................................................................... 6 How to make Kyrgyz exports more competitive ............................................................................. 7
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)
Parliament adopts new land transformation bill
June 29th, 2017, http://www.vb.kg/doc/362500_parlament_kyrgyzstana_yzakonil_zastroennye_do_2009_goda_oroshaemye_zemli.html
Parliament has adopted a new land transformation bill which will pave the way for 13,398 hectares of land to be transformed for the legal construction of buildings. Of this amount, 11,704 hectares is irrigated, arable land. It should be noted that the bill will only allow for the transformation of lands with constructions built on it prior to 2009, when the moratorium on the transformation of irrigated lands was passed into law. There are 38,700 houses where 42,200 families live on agricultural lands that will be legalized because of the bill’s adoption.
2)
Proposal to reduce number of testing laboratories
June 23rd, 2017, http://vesti.kg/index.php?option=com_k2&view=item&id=46755:stoit-li-podderzhat-optimizatsiyu-laboratoriykyirgyizstana?&Itemid=79
The Ministry of Agriculture is proposing to reduce the number of testing laboratories in Kyrgyzstan from 28 to 19. The idea behind the reduction is to invest the money saved from the reduction back into the laboratories in order to increase their effectiveness. In Soviet times, there was a need for more laboratories; however, this has changed due to improved technologies and a vastly different geopolitical situation. A reduction in laboratories will improve the quality of technical equipment and the training of specialists. For example, only two laboratories currently have accreditation from foreign markets. With a reduced number, it will be faster and easier to bring all national laboratories to this standard, making it easier to Kyrgyz farmers to reach international markets. Additionally, improved quality will benefit all domestic consumers as they will be more reliably protected in terms of food safety and have greater access to better quality foods. The initiative is being supported by Ministry officials and domestic experts.
3)
Cattle identification continues, horses next
June 19th, 2017, http://novosti.kg/2017/06/identifikatsiya-krupnorogatogo-skota-prodolzhaetsya/
According to the State Inspectorate for Veterinary and Phytosanitary Security, cattle identification in Kyrgyzstan is continuing and is expected to be completed by the end of the year, resulting in 1.5 million head of cattle being identified. In 2018, the identification of horses is expected to begin. The law on the identification of domestic animals was adopted in 2013; however, the actual process of identification only began in November 2016.
4)
Guarantee Fund, Hungarian Trade House to cooperate
June 19th, 2017, http://kabar.kg/news/oao-garantiinyi-fond-i-torgovyi-dom-vengrii-podpisali-memorandum-o-sotrudnichestve/
Hungary’s National Trade House (NTH) has signed a memorandum of cooperation with JSC Guarantee Fund. Under the framework of the memorandum, NTH will supply Hungarian technologies to the Kyrgyz Republic, provide financing from the Hungarian export-import bank and establish cooperation with Page 2
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Kyrgyz entrepreneurs. The trade house is also considering opening an office in Kyrgyzstan to better respond to business needs. Malik Abakirov, chairman of the Guarantee Fund, noted that the potential for cooperation with NTH is great, especially in the field of agriculture, and will allow Kyrgyz entrepreneurs to be able to more easily receive seeds, young animals, forest seedlings and new technologies and equipment as well as have greater access to financing and promotional opportunities for exporting to both Hungary and other countries associated with the trade house. Both sides also discussed issues related to holding training seminars for entrepreneurs in Kyrgyzstan and Hungary, especially in processing of meat, milk, vegetables, berries and fruits as well as ways to promote products for export and the organization of industrial forestry.
5)
EEC approves new regulations for fish product safety
June 16th, 2017, http://www.eurasiancommission.org/ru/nae/news/Pages/16-06-2017.aspx
The Advisory Committee on Technical Regulations of the Eurasian Economic Commission (EEC) has approved lists of standards for technical regulations in the Eurasian Economic Union (EEU), including on the safety of fish and fish products. These regulations will ensure that entrepreneurs sell goods that meet the requirements for both safety and quality. The list of regulations regarding fish and fish product safety includes technical requirements for chilled, frozen, dried, cold- and hot-smoked fish, fish preserves and caviar, among others. These requirements take into account international (ISO) and European (EN) provisions.
6)
Land degradation considered a threat to food security
June 16th, 2017, http://kabar.kg/news/protcessy-degradatcii-pochv-predstavliaet-ugrozu-prodovol-stvennoi-bezopasnostistrany-minsel-khoz/
Speaking at a press conference timed to coincide with World Day to Combat Desertification and Soil Degradation, Deputy Agriculture Minister Zhanybek Kerimaliyev noted that the degradation of soils and agricultural lands represent a significant threat to Kyrgyzstan’s food security and that the government is taking measures to conserve land resources through a coordination council and an expert group. The issue is considered of such importance to Kyrgyzstan that the 2013-2017 National Strategy for Sustainable Development, which prioritizes agricultural development, considers combating land degradation as vital to the country’s stability and, as such, transferred it from the ecological category to the category of threats to the sustainable development of Kyrgyzstan.
7)
Over KGS 2.75 billion in preferential agricultural loans
June 12th, 2017, http://www.minfin.kg/ru/novosti/novosti/po-dannym-kombankov-strany-s-nachala-goda-7152-sel.html
Within the frames of the ‘Financing of Agriculture-5’ project, 7,152 rural commodity producers have received more than KGS 2.75 billion in preferential loans (as of June 8, 2017). Of this amount, KGS 529 million has been directed for crop production, KGS 1.91 billion for livestock production and KGS 315 million for agricultural processing and services.
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BFC Agriculture Bulletin
Foreign Aid 8)
Seminar held on creating agricultural logistics centers
June 23rd, 2017, http://www.agroprod.kg/index.php?newsID=395
The Ministry of Agriculture joined with Japan International Cooperation Agency (JICA) to hold a seminar for the business community and agricultural producers in all regions of Kyrgyzstan. The aim of the seminar was to provide information about projects for the construction of trade and logistics centers as well as to facilitate the exchange of information between participants in order to foster cooperation aimed at developing and establishing needed trade and logistics centers in Kyrgyzstan. At the seminar, participants learned about similar logistics center projects in Japan as well as the results of JICA’s ‘One Village One Product’ project, which has brought together 2,000 people in 178 groups across 47 villages so far in 2017. Representatives of the Kyrgyz Association of Exporters and Importers also talked about internal and external barriers when exporting agricultural products. Other projects were also presented, such as the creation of a supply chain for beans from Talas. At the conclusion of the seminar, Deputy Agriculture Minister Erkinbek Choduyev reminded participants that one of the main problems for the agricultural sector today is the insufficient volume of agricultural products for export and that, for this reason, it is necessary to create large logistics centers in both the south and the north of the country.
9)
Tracking climate technology in the agrifood sector
June 22nd, 2017, http://www.ebrd.com/news/2017/new-ebrdfao-methodology-tracks-climate-technology-uptake-in-theagrifood-sector.html
With food production and supply chains consuming nearly a third of global energy and emitting almost a quarter of greenhouse gases, the adoption of climate-smart technologies and practices is seen as key to building resilient food and agriculture systems better adapted to our changing world. While it is relatively easy to collect and assess data on climate technology trends and their adoption, such data for the agrifood sector is virtually non-existent. That is why the European Bank for Reconstruction and Development (EBRD) and the Food and Agriculture Organization of the United Nations (FAO), in collaboration with the International Energy Agency, have developed a methodology to help countries and investors track climate technology trends and uptake. Better data collection and analysis will help decision-makers and investors make smarter investments in energy efficiency, renewable energy and climate resilience as well as attract climate finance to advance climate change adaptation and mitigation efforts. EBRD and FAO first applied this methodology in Morocco and presented their findings during the 2016 COP22 climate talks in Morocco. They now plan to roll the approach out in Kazakhstan and Kyrgyzstan, and eventually in other countries. As more countries improve their data collection on emissions and market penetration for climate technologies, it is hoped that it will facilitate cross-country comparisons and enhance the scope of regional and international cooperation on climate change action. EBRD and FAO carried out this work under the umbrella of a Finance and Technology Transfer Center for Climate Change (FINTECC) initiative.
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10) New vegetable consolidation center opens in Aravan June 15th, 2017, https://www.usaid.gov/kyrgyz-republic/press-releases/jun-15-2017-usaid-expands-markets-farmers-southkyrgyzstan
A new vegetable consolidation center in Aravan has opened and will directly benefit thousands of farmers in the southern Kyrgyzstan. The new facility, the result of a partnership between the United States Agency for International Development (USAID) and private entrepreneur Avaz Abdurahimov, is one of the largest in the south and is capable of sorting, cleaning and packaging approximately 24,000 tons of vegetables per year. The center will create new market and income opportunities for farmers in the Aravan, Nookat, Kara Su and Uzgen regions. In its first year of operation, the center aims to supply retail chains in Kyrgyzstan and Kazakhstan with up to 18,000 tons of potatoes and 6,000 tons of onions. The center also plans to export vegetables to Tajikistan and Uzbekistan in bulk.
11) USAID launches new initiative to finance farmers June 10th, 2017, http://www.kyrgyzkorm.kg/news/v-kyrgyzstane-zapuskayut-proekt-po-finansirovaniyu-fermerov.html
The United States Agency for International Development (USAID) is launching a new initiative as part of its ‘Agro Horizon’ project. Within the frames of this new initiative, USAID has signed memorandums of understanding with two Kyrgyz financial institutions: Bai Tushum Bank and Kyrgyz Investment and Credit Bank (KICB). Bai Tushum will take part in lending within value chains with partners Kaindy Kant, Talas Sut and Ozon Ata. Lending within value chains provides an opportunity to develop sustainable, mutually beneficial economic relationships between farmers, financial institutions, and processors. The advantages of such lending are: farmers are guaranteed a place to sell their products at pre-agreed upon prices; producer companies receive quality products and are guaranteed increased production volumes; and financial institutions are able to supply credit to the parties knowing a relationship exists which provides for guaranteed outcomes. Moreover, such an arrangement significantly reduces the cost of credit. Both Bai Tushum and KICB will take part in another initiative: the introduction of mobile banking applications that allow for the rapid assessment of a customer’s business on the ground as well as making it possible for customers to access account information, receive and repay loans, transfer funds and make service payments — without the need to visit a physical bank location. As a result of the partnership with the banks, the ‘Agro Horizon’ project plans to inject USD 3 million in cash and technical resources into the Kyrgyz agricultural sector over the next two years, helping 5,600 farmers. Moreover, the project will also contribute to the further development of both the agricultural sector and remote services made via mobile banking applications, thereby increasing the overall level of financial involvement of farmers in the country.
12) Rural women benefit from UN-Kyrgyz development project June 6th, 2017, http://knews.kg/2017/06/uchastnitsy-sovmestnogo-proekta-oon-i-kyrgyzstana-povysili-proizvoditelnost-svoihfermerskih-hozyajstv-na-30-70/
A donor meeting for the ‘Expansion of Economic Opportunities for Rural Women in Kyrgyzstan’ project was held, at which it was announced that project efforts have helped to increase productivity on women-operated farms by 30-70% and increase their overall income by 30%. Project participants have also helped reduce unemployment and poverty by opening their own business such as bakeries, computer courses, photo studios, greenhouses and sewing and carpet-making workshops.
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The joint United Nations (UN)-Kyrgyz project has been ongoing in 73 pilot villages in the Chui, Naryn, Osh and Jalal-Abad regions since 2014 and has helped more than 3,000 rural women. Indirectly, the project has also helped improve the financial position of about 8,000 people. Within the framework of the project, participants have received trainings in modern agrotechnologies, business and marketing fundamentals and leadership as well as support in the form of seed capital, seeds and equipment for opening a business and developing farms. The three-year project was implemented by four UN agencies, with USD 2.5 million in financial support from Norway and Sweden.
Private Sector 13) Guarantee Fund issues KGS 63.2 million in guarantees June 15th, 2017, https://24.kg/english/54854_Guarantee_fund_issues_guarantees_for_632_million_soms/
Through May 31, 2017, the Guarantee Fund has issued KGS 63.2 million in guarantees for small- and medium-sized entrepreneurs, helping them obtain KGS 243 million in loans. For entrepreneurs engaged in agriculture, there were 26 guarantees given, which covered KGS 11.9 million. This helped enable agricultural entrepreneurs obtain KGS 34.9 million in loans. The net profit of JSC Guarantee Fund for the past five months has amounted to KGS 6.5 million.
14) New milk processing plant opens in Osh June 12th, 2017, http://novosti.kg/2017/06/v-oshe-otkrylsya-krupnejshij-molokopererabatyvayushhij-zavod/
A new milk processing plant has opened in the Osh region and is now the largest such plant in the region. The new plant is providing employment for approximately 40 people and also serves as an outlet for dairy farmers in three regions (Osh, Batken and Jalal-Abad) to sell their milk. The plant’s opening is also expected to contribute to lower prices for dairy products in southern Kyrgyzstan.
15) Kyrgyz wheat and flour industry in jeopardy June 7th, 2017, https://ru.sputnik.kg/economy/20170607/1033721602/kyrgyzstan-mozhet-lishitsya-svoej-muki-i-pshenicy.html
Rustam Zhunushev, chairman of the Committee of Kyrgyz Millers, is warning that Kyrgyzstan may lose its domestically produced flour and wheat if a plan to reintroduce a VAT on imported wheat goes through. Prior to mid-2015, Kyrgyzstan imposed a KGS 3 per kilogram import tax on flour. With Kyrgyzstan’s accession into the Eurasian Economic Union (EEU), that tax was abolished. As a result, most domestic enterprises could not compete with imported flour. Following this, a 12% VAT on imported wheat (Kyrgyz flour is produced from a mix of Kyrgyz and Kazakh wheat) was cancelled, enabling to Kyrgyz enterprises to load up on wheat and remain more competitive. Recently, however, Deputy Kenzhebek Bokoev proposed the reintroduction of the VAT on imported wheat in order to replenish the budget, arguing that the cost of flour will also rise and offset any financial losses to the industry from the VAT. Zhunushev counters that the industry simply cannot survive a price raise and that the industry will come to a complete standstill, leaving Kyrgyz farmers unable to sell their wheat and the country completely reliant on importers for wheat and flour. Zhunushev, instead, proposes that revenue be increased another way, such as developing a mechanism to combat black-market flour imports, which has cost the treasury an estimated KGS 1.8 billion in lost revenue since 2015. Page 6
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16) How to make Kyrgyz exports more competitive June 1st, 2017, http://vesti.kg/index.php?option=com_k2&view=item&id=46346:kak-chinovniki-perelozhili-vsyu-otvetstvennostna-fermerov&Itemid=79
Deputy Economic Minister, speaking about the issues Kyrgyz exports have in foreign markets, lamented that Kyrgyz entrepreneurs lack the skills and knowledge to successfully market and entrench themselves in other markets. Specifically, the Deputy Minister pointed to a lack of knowledge of foreign languages and an inability to properly price, package and label their products. As a result, Kyrgyz goods are “stuck”, unable to penetrate new markets. Agricultural sector expert Ulan Adamaliev, while admitting the Deputy Minister’s criticisms are valid, questions what the government intends to do to help solve these issues as such obstacles can only be solved by working together — this includes the involvement of the government. The real problem, as Adamaliev sees it, is the lack of efficacy from government institutions, including the government’s ministries. For example, Adamaliev points to no criteria for evaluating the work of state bodies to see what is effective and what needs to be modified. Another criticism from Adamaliev is that the government lacks the proper direction given from the top down. For instance, a task can be given, but then no plan is made for its implementation, resulting in no true development and only spoken promises. Adamaliev gives the example of the problems with proper labeling and prices of products. He holds that the government should work with private industry to develop new policies which will allow entrepreneurs to easily understand and meet the requirements necessary for successfully entering international markets.
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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com Articles are taken directly from local sources without any fact-checking; they are provided as a convenience and for informational purposes only. Business & Finance Consulting (BFC)’s editing is limited to providing a short summary in English of the texts, highlighting the main points of the original articles. All rights reserved by the authors. BFC takes no responsibility and does not make any representation or warranty, express or implied, or assume any responsibility whatsoever for the content, accuracy, and reliability, or completeness of any of the articles.