23 BFC Kyrgyzstan Agriculture Finance Bulletin

01/2016

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23 K y r gy z s ta n Agriculture Finance Bulletin Big Investment Opportunities for Turkish Businessmen in Kyrgyzstan Prime Minster Sariev Supports Modern Agricultural Technology Initiatives Kyrgyz Agriculture Neared KGS 200 Billion in Production in 2015 Kyrgyzstan Milk and Meat Production Up in 2015

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Agriculture Finance Bulletin Edition #23, January 2016

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8)

Big Investment Opportunities for Turkish Businessmen in Kyrgyzstan ........................................... 2 Belarusian Delegation Working Towards Closer Kyrgyz Relations .................................................. 2 Kyrgyzstan to Increase Sugar Beet Production................................................................................ 2 Deputies Demand Hay Export Restriction ....................................................................................... 3 Kyrgyz Delegation to Take Part in “Green Week 2016” in Berlin .................................................... 3 Kyrgyz Farmers to Start Receiving Subsidized Loans by the End of January ................................... 3 Kyrgyzstan Moving Towards Free Trade of Animal Products in the EEU ........................................ 3 Prime Minster Sariev Supports Modern Agricultural Technology Initiatives .................................. 4

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

Kyrgyz Agriculture Neared KGS 200 Billion in Production in 2015 .................................................. 4 Kyrgyz Beans and Carrots are Testing the Italian Market ............................................................... 4 Only 12 Kyrgyz Enterprises Can Export Agricultural Products to the EEU....................................... 4 Kyrgyzstan Milk and Meat Production Up in 2015 .......................................................................... 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

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

info@bfconsulting.com www.bfconsulting.com

BFC. Agriculture Finance Bulletin.

State Initiatives 1)

Big Investment Opportunities for Turkish Businessmen in Kyrgyzstan

January 21st, 2016, http://kabar.kg/eng/economics/full/14954

The Minister of Economy of Kyrgyzstan, Arzybek Kozhoshev, called on Turkish businessmen to invest in the largest projects in Kyrgyzstan at the Kyrgyz-Turkish Investment and Trade Forum in Ankara.

According to Kozhoshev, the highest priority for investment is the launch and promotion of projects in the energy sector, especially those along the Naryn River, as Kyrgyzstan has enormous hydropower potential. The completion of new, high-voltage lines is also seen as a top priority for the country as it seeks to move towards energy independence.

Another sphere for expanding cooperation between the two countries is that of the agricultural sector.

A favorable tax regime has been created in the agricultural sector, especially in agricultural products processing and the production of agricultural machinery. The government freed all entities engaged in this sector from taxes, and much attention is being paid to state support of agricultural producers.

Tourism remains yet another potential sector for Turkish investment. “We have a lot of reserves, biosphere zones, and resort and recreational facilities. There are great opportunities for eco-tourism, mountain tourism, mountaineering, hunting and other outdoor activities,” added the Minister.

2)

Belarusian Delegation Working Towards Closer Kyrgyz Relations

January 20th, 2016, http://kabar.kg/eng/economics/full/14946

First Vice Prime Minister of Kyrgyzstan Aaly Karashev welcomed Belarusian Ambassador Viktor Denisenko and his delegation with hopes of establishing closer ties with the country. “We are happy to welcome you in our country and are ready to develop cooperation in agriculture, manufacturing, and other areas, especially after our accession to the Eurasian Economic Union,” Karashev said.

Ambassador Denisenko expressed hope that the cooperation between Belarus and Kyrgyzstan will further advance: “We hope that Belarusian products will be popular with the Kyrgyzstani people, and we are currently in talks with Aiyl Bank on the possibility of leasing Belarus-made vehicles to local farmers.”

Minsk Tractor Works Director General Fyodor Domotenko, a part of the delegation, also expressed his optimism about the establishment of close ties with Kyrgyzstan in a mutually beneficial way.

3)

Kyrgyzstan to Increase Sugar Beet Production

January 18th, 2016, http://www.eng.24.kg/economics/178864-news24.html http://www.vb.kg/doc/332608_kabmin_ojidaet_yvelicheniia_posevnyh_ploshadey_saharnoy_svekly_do_15_tysiach_ga.html

Minister of Agriculture and Land Reclamation Turdunazir Bekboev announced at a recent parliamentary committee that Kyrgyzstan will be reducing its production of grain crops and replacing them with sugar beets: “Quality grain products come to us from Russia and Kazakhstan. We offered to produce industrial crops instead.”

The plan calls for increasing the acreage for sugar beets to 15,000 hectares and allocating funds to the Kaindy-Kant sugar factory for increased processing capabilities. Also, as part of the National Strategy for Sustainable Development and Kyrgyzstan’s accession to the EEU, the Minister also spoke of offering soft loans to farmers at 10% per annum, as opposed to the previous rate of 12%.

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BFC. Agriculture Finance Bulletin.

4)

Deputies Demand Hay Export Restriction

January 18th, 2016, http://www.vb.kg/doc/332621_depytaty_potrebovali_vvesti_ogranicheniia_na_vyvoz_sena_v_kitay.html

Deputies are calling on the Kyrgyz government to impose restrictions on hay exports to China. Speaking at a parliamentary committee on January 18, 2016, Committee Chair Mirlan Bakirov stated that such measures are necessary to prevent a situation in which a deficit in hay could lead to an increase in hay price and a possible loss of cattle.

5)

Kyrgyz Delegation to Take Part in “Green Week 2016” in Berlin

January 16th, 2016, http://kabar.kg/eng/economics/full/14899

A Kyrgyz delegation is taking part in an international agricultural exhibition in Berlin called “Green Week 2016.” Delegations and company representatives from over 70 countries will take part in the exhibition which includes a summit of agricultural ministers, forums, discussions and bilateral meetings between representatives of many of the attending countries.

6)

Kyrgyz Farmers to Start Receiving Subsidized Loans by the End of January

January 13th, 2016, http://www.eng.24.kg/economics/178803-news24.html

Kyrgyz farmers can start receiving subsidized loans beginning in the end of January 2016 under the fourth phase of the “Concessional Financing of Agriculture” project. The government aims to “spend at least KGS 400 million to subsidize interest rates on concessional lending for agriculture. It is planned to give about KGS 3 billion at 12% per annum,” according to First Vice Prime Minister Aaly Karashev, “but this money is not enough. The Ministry of Finance, the Ministry of Agriculture, Aiyl Bank, and RSK Bank must work on increase of the volume of concessional lending.”

2015 saw Kyrgyz farmers receive soft loans in the amount of KGS 3.8 billion, with at least 74% of that sum going to support breeders. This year, Prime Minister Sariev has instructed that an increase in lending go to villagers for the construction of greenhouses and slaughter plants.

7)

Kyrgyzstan Moving Towards Free Trade of Animal Products in the EEU

January 11th, 2016, http://www.vb.kg/doc/332169_kyrgyzstan_nachnet_eksportirovat_v_strany_eaes_jivotnovodcheskyu_prodykciu.html

Kyrgyzstan is beginning to position itself to commence exporting animal products to the Eurasian Economic Union (EEU), but “questions are arising regarding when the territory of the EEU will be able to freely move animal products from Kyrgyzstan. This will be possible when the republic provides a clear implementation strategy of the necessary requirements and all parties of our union will come to the conclusion that Kyrgyzstan is able to do it [appropriately],” stated Valery Sitnikov, Head of the Unit for Veterinary Measures for the EEU. Stressing the EEU’s common, mandatory requirements in areas of sanitation and veterinary and physical control, Sitnikov added that “right now, all parties are actively involved in preparing the necessary services of Kyrgyzstan to ensure their proper function. It's not just the presence of the equipment, but also the ability to use it. There is free education for Kyrgyz veterinary and phytosanitary specialists in Russia. Everything is being done in order to quickly establish the movement of various products from Kyrgyzstan.”

He concluded by noting that there are still a number of problems to be solved, but was confident in the eventual success of Kyrgyzstan being able to freely trade Kyrgyz animal products in the EEU. Page 3

BFC. Agriculture Finance Bulletin.

8)

Prime Minster Sariev Supports Modern Agricultural Technology Initiatives

January 7th, 2016, http://www.vb.kg/doc/332126_temir_sariev:_pravitelstvo_podderjit_iniciativy_v_stroitelstve_teplic.html

During a visit to the municipal greenhouse in the village Kok-Oi, Prime Minister Temir Sariev announced his support for modern agricultural technologies such as modern greenhouses and drip irrigation: “We need to actively take advantage of new and modern methods of cultivation of agricultural products.

Through the introduction of new approaches in the field of agriculture, we will be able to reach a new level of the agricultural sector of the country and improve the living standards of the population.”

The Prime Minister stressed his administration’s support of new construction to these aims and has entrusted the proper authorities with consideration of the granting of soft loans to citizens for the purpose of agricultural development.

Private Sector 9)

Kyrgyz Agriculture Neared KGS 200 Billion in Production in 2015

January 26th, 2016, http://www.gazeta.kg/news/kyrgyzstan/economy/40519-kyrgyzskie-fermery-proizveli-produkciyu-na-197mlrd-somov-v-2015-godu.html

The Ministry of Agriculture and Land Reclamation of the Kyrgyz Republic released the data for 2015. In 2015, Kyrgyzstan produced agricultural products worth KGS 197.65 billion, a 6.2% increase over 2014.

Production of field crops neared KGS 100 billion itself, and livestock provided product amounted to nearly KGS 94 billion. The area used for the cultivation of export crops also increased over 2014 with 5.6 thousand more hectares of potatoes being planted and 6.5 thousand more hectares for other vegetable crops.

10) Kyrgyz Beans and Carrots are Testing the Italian Market January 22nd, 2016, http://kabar.kg/eng/economics/full/14963

A test batch of organic Kyrgyz beans and carrots is currently being sold in Umbria in Italy. The test batch came as a result of participation at Expo 2015 in Milan and, if demand from Italian consumers is high enough, could result in a new outlet for the Kyrgyz products.

Vice President of the Kyrgyz Chamber of Commerce, Nurlan Musuraliev, noted that even if demand is strong in Italy for the products, there would be a number of difficulties to be overcome including logistics expenses, HACCP certifications and a short shelf-life for the organic products.

Italian consumers are mostly interested in the Kyrgyz beans and carrots but did show interest in dried fruits as well. Musuraliev also noted the difficulty for the import of Kyrgyz dried fruit into Italy because of strong Iranian competition.

11) Only 12 Kyrgyz Enterprises Can Export Agricultural Products to the EEU January 11th, 2016, http://www.agro.kg/ru/news/8089/

Twelve enterprises from Kyrgyzstan are currently included in the registry of the Eurasian Economic Union (EEU). Eight of the twelve enterprises are engaged in processing milk; two engage in processing fish; and two process honey. Inclusion in the register of the EEU allows these companies to export their products to other EEU countries because they meet all the requirements for veterinary safety. Currently, the State Inspectorate is working on the inclusion of six more Kyrgyz enterprises in the register of the EEU. Page 4

BFC. Agriculture Finance Bulletin.

12) Kyrgyzstan Milk and Meat Production Up in 2015 January 5th, 2016, http://www.vb.kg/doc/332015_v_kyrgyzstane_yvelichilos_proizvodstvo_miasa_i_moloka.html

Kyrgyzstan produced 346.9 thousand tons of meat between January 2015 and November 2015, a 2.9% increase over the same period in 2014. The growth occurred due to an increase in livestock in the county. Similarly, milk production increased over the same period by 2.5% to 1,385,000 tons.

Egg production over the same period was down 3.4%, largely due to poultry farm Shumkar’s cessation of activities.

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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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