#27 BFC Kyrgyzstan Agriculture Finance Bulletin

05/2016

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27 K y r gy zsta n Agriculture Finance Bulletin Bishkek Hosts 4th Annual International Agricultural Exhibition Kyrgyzstan and Kazakhstan Reach Agreement on Transboundary Waters UNDP Program Help Naryn Oblast Develop its Agricultural Sector Government Stepping Up Support to Enter Foreign Markets

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Agriculture Finance Bulletin Edition #27, May 2016

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

Bishkek Hosts 4th Annual International Agricultural Exhibition ..................................................... 2 Animal Identification Has Begun in Kyrgyzstan ............................................................................... 2 Naryn Region Explore Russian Export Potential .............................................................................. 2 Agricultural Producers Received KGS 2.1 Billion in Preferential Loans ........................................... 2 Kyrgyzstan and Turkey to Sign Cooperation Agreement on Agriculture ......................................... 3 Kyrgyzstan and Kazakhstan Reach Agreement on Transboundary Waters..................................... 3

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

UNDP Program Help Naryn Oblast Develop its Agricultural Sector ................................................ 3 Agri-gender Statistics Important for Continued Economic Development ...................................... 4 3.5 Thousand Apricot Seedlings Planted in the Naryn Region ........................................................ 4

Private Sector.............................................................................................................. 4 10) 11) 12) 13) 14) 15) 16)

Naryn Region Cultivates Buckwheat................................................................................................ 4 Kyrgyzstan Makes First Cotton Deliverys of to Bangladesh ............................................................ 5 Chinese Entrepreneurs Ready to Purchase Kyrgyz Agricultural Products ....................................... 5 Aiyl Bank Has Suspended Issuing Preferential Loans ...................................................................... 5 Agricultural Processors Ask for Government Help with Concessional Loans .................................. 5 Kyrgyz Greenhouses Struggling Due to Smuggling .......................................................................... 6 Government Stepping Up Support to Enter Foreign Markets ......................................................... 6

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

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BFC Agriculture Finance Bulletin

State Initiatives 1)

Bishkek Hosts 4th Annual International Agricultural Exhibition

May 25th, 2016, http://www.eng.24.kg/community/180549-news24.html

Aiyl-Agro-2016, the 4th annual International Agricultural Exhibition, took place in Bishkek this month.

Organized by the Ministry of Agriculture and Land Reclamation and its partners, the exhibition presented the agricultural machinery and equipment of 32 companies from 20 countries. Agricultural producers, farmers, employees of village councils, and district administrations from all regions of the country as well as the ambassadors of several countries were invited to participate in exhibition. The exhibition also fostered an atmosphere where farmers interested in modern agricultural machinery could connect and sign agreements for purchase with agricultural machinery producers.

2)

Animal Identification Has Begun in Kyrgyzstan

May 25th, 2016, http://novosti.kg/2016/05/v-kyrgyzstane-nachalas-identifikatsiya-domashnih-zhivotnyh/

The process of identifying animals has started in Kyrgyzstan. Prime Minister Sooronbay Jeenbekov had previously issued an order to purchase 500 sets of equipment and to create a specialized software program for animal identification. Animal identification has now begun in the Kara-Buura, Issyk-Ata and Nookat districts. Computers and smart phones are being sent to all regions of the country as part of the identification process.

Animal identification is being carried out in order to meet international standards for the export of agricultural products of animal origin. The Kyrgyz government hopes that this, along with vaccinations, will reduce the need for veterinary controls upon export and greatly increase farmers’ access to Eurasian Economic Union markets.

3)

Naryn Region Explore Russian Export Potential

May 22nd, 2016, http://www.vb.kg/doc/340214_narynskaia_oblast_naladit_eksport_prodykcii_v_rossiu.html

Representatives of the Naryn region of the Kyrgyz Republic met with Russian diplomats during a working visit organized by the International Entrepreneurs Association (with the support of the United Nations Development Program). The parties discussed issues connected with agricultural exports to Russia and improving the investment climate in the Naryn region.

During the visit, the President of the International Entrepreneurs Association and the First Deputy Representative of the Government in Naryn oblast signed a cooperation agreement which led to a joint visit by the two entities to the Russian-Kyrgyz Business Council to discuss the perspectives of milk and meat export to Russia.

4)

Agricultural Producers Received KGS 2.1 Billion in Preferential Loans

May 7th, 2016, http://www.vb.kg/doc/339397_selskie_tovaroproizvoditeli_polychili_21_mlrd_somov_lgotnyh_kreditov.html

A total of KGS 2.1 billion in preferential loans has been made to approximately 6,500 Kyrgyz agricultural producers since the beginning of the year as part of the Financing of Agriculture-4 project. This year, the target audience for preferential loans was expanded to include actors involved in the processing of agricultural products and services (greenhouses, slaughterhouse, logistics centers and others).

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The project provides the lending for agricultural producers from commercial banks with a 10% per annum interest rate, up to three year repayment period and a grace period of up to six months. In addition, up to KGS 100,000 can be loaned to individuals without collateral for up to twelve months. The project also provides for refinancing existing debt from other financial institutions under certain conditions. The Kyrgyz Ministry of Finance provides the interest rate subsidies, and the first tranche (KGS 400 million) from the national budget will be used to help lend an expected KGS 2.7 billion to agricultural producers.

5)

Kyrgyzstan and Turkey to Sign Cooperation Agreement on Agriculture

May 6th, 2016, http://www.vb.kg/doc/339318_kr_i_tyrciia_dogovorilis_o_sotrydnichestve_v_sfere_selskogo_hoziaystva.html

A memorandum of understanding on cooperation in the field of agriculture between Turkey and the Kyrgyz government is expected to be signed this month following a meeting at the 30th session of the Food and Agriculture Organization’s Regional Conference for Europe.

6)

Kyrgyzstan and Kazakhstan Reach Agreement on Transboundary Waters

May 4th, 2016, http://easttime.info/news/kyrgyzstan/kyrgyzstan-and-kazakhstan-agree-use-transboundary-waters

Kazakhstan and Kyrgyzstan have reached an agreement to ensure the uninterrupted supply of irrigation water from the Shu and Talas rivers. The agreement was reached at a meeting of the Joint Commission of Kazakhstan and Kyrgyzstan on the Use of Interstate Water Facilities and saw both sides adjust their scheduled water intakes based on current water availability. The collective use of water resources in the transboundary basins is an important factor of regional and bilateral cooperation in Central Asia. The issue is particularly relevant for Kazakhstan as about 80% of its water resources are formed in the territory of neighboring Kyrgyzstan.

The event was held with the technical and financial support the United Nations Development Program in Kyrgyzstan and Kazakhstan, the United Nations Economic Commission for Europe, and the Global Environment Facility.

Foreign Aid 7)

UNDP Program Help Naryn Oblast Develop its Agricultural Sector

May 30th, 2016, http://www.gazeta.kg/news/kyrgyzstan/87375-narynskie-fermery-poluchili-finansovuyu-podderzhku-otoon.html

The United Nations Development Program (UNDP) project, Integrated Development of Naryn Oblast, has provided financial support for 84 initiatives of Naryn farmers. The new enterprises opened during the project have provided regular employment for 374 people. The total amount of grants for the establishment of fish farms, poultry and greenhouses, plants for processing wool and the manufacture of felt and repair shops for agricultural machinery, tire and cutting furniture, was USD 436,000 and hopes to provide successful models for other residents of the area.

The Integrated Development of Naryn Oblast project is funded by the Russian Federation and is being implemented by the UNDP Naryn Area-Based Development Program in 30 villages. The key aim of the program is to reduce poverty by creating the conditions for socio-economic development.

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BFC Agriculture Finance Bulletin

8)

Agri-gender Statistics Important for Continued Economic Development

May 17th, 2016, http://www.fao.org/europe/news/detail-news/en/c/414841/

Gender profiles for the agricultural and rural sectors of Tajikistan and Kyrgyzstan along with a new agrigender statistics toolkit were presented at a two-day workshop. The new products, aimed at supporting enhanced production and use of sex-disaggregated agricultural data, are part of the Food and Agriculture Organization of the United Nations’ (FAO) effort to help empower rural women.

Gender statistics are important as evidence when confronting deeply embedded gender bias and discrimination. FAO’s agri-gender statistics toolkit can point to priority areas where data is lacking, fill those information gaps and analyze the situation for further action.

Women in Central Asia face serious challenges when it comes to economic opportunity. Those living in rural areas are especially disadvantaged, even though their contribution to agricultural production is significant. FAO has presented evidence that female farmers can thrive when they have access to the same resources as men, making them an important but untapped economic potential in the region.

Sex-disaggregated data is available in Central Asian countries but is not fully comprehensive and interlinked with other social spheres, hampering experts and decision-makers from getting a complete picture.

Work on the agri-gender statistics toolkit and the two country analyses was carried out under the FAOTurkey Partnership Program.

9)

3.5 Thousand Apricot Seedlings Planted in the Naryn Region

May 6th, 2016, http://knews.kg/2016/05/06/v-naryne-vysadili-3-5-tys-sazhentsev-abrikosa/

3.5 thousand apricot seedlings have been planted in the Naryn region of Kyrgyzstan as part of Food and Agriculture Organization of the United Nations (FAO)/ Global Environment Facility (GEF) project. "Redcheeked" seedlings varieties were bought in nurseries in Issyk-Kul and planted on an area of 12 hectares.

The project provides that apricot orchard be developed over 25 hectares, and work on the remaining 13 hectares is expected to be continued in the autumn.

The FAO/GEF project "Sustainable Management of Mountain Forests and Land Resources of the Kyrgyz Republic under Climate Change Conditions" was launched in September 2014.

Private Sector 10) Naryn Region Cultivates Buckwheat May 30th, 2016, http://www.eng.24.kg/economics/180600-news24.html

Farmers in the Dzhumgal district of the Naryn region sowed 32 hectares of buckwheat last year and received a crop of 40 tons. The experiment to see how successful buckwheat cultivation could be in the Naryn region saw twelve farmers receive seeds, fertilizers and buckwheat cleaning machinery to this end.

Barley, a more common grain grown in the area, requires less water and can grow in a warmer climate; however, buckwheat (which grows between 1,800 and 2,200 meters above sea-level) produces twice as much per hectare and garners as much as KGS 52 more per kilogram in the market.

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BFC Agriculture Finance Bulletin

11) Kyrgyzstan Makes First Cotton Deliverys of to Bangladesh May 25th, 2016, http://www.vb.kg/doc/340428_v_bangladesh_dostavili_pervyu_probnyu_partiu_kyrgyzstanskogo_hlopka.html

The first test batch of Kyrgyz cotton has arrived in Chittagong Port, People's Republic of Bangladesh. For many years, Bangladesh has been one of the world's leading cotton buyers due to the fact that the country ranks second in the world in clothing production. Kyrgyzstan has never supplied cotton to Bangladesh because of inspection and banking conditions; however, this first step is aimed at promoting the establishment of trade relations, logistical routes, and the entry of Kyrgyz cotton to the Bangladesh market. Currently, the share of cotton produced in Kyrgyzstan represents about 4% to 5% of the total imported volume of cotton into Bangladesh.

12) Chinese Entrepreneurs Ready to Purchase Kyrgyz Agricultural Products May 23rd, 2016, http://kabar.kg/eng/economics/full/15972

Chinese entrepreneurs are ready to buy Kyrgyz agricultural products grown in greenhouses. The Minister of Agriculture and Land Reclamation, Turdunazir Bekboev, recently led a delegation to China and met with many entrepreneurs to discuss the construction of greenhouses and drip irrigation systems in Kyrgyzstan. The Chinese entrepreneurs then noted their readiness to directly buy agricultural products grown in these greenhouses.

The past two years have seen trade and economic relations with China intensify, particularly in the field of agriculture. Minister Bekboev added that the next important step is to sign agreements that will be mutually beneficial with the interested Chinese entrepreneurs.

13) Aiyl Bank Has Suspended Issuing Preferential Loans May 21st, 2016, http://novosti.kg/2016/05/ajyl-bank-priostanovil-vydachu-lgotnyh-kreditov-fermeram/

Aiyl Bank suspended issuing preferential loans in April due to the lack of subsidies from the state budget. The Finance Ministry stated that the issuing of loan was suspended because of concerns regarding whether or not the preferential loan program was tantamount to the government subsidizing banks. The Finance Ministry further added that the funds would be transferred to Aiyl Bank as soon as they become available.

14) Agricultural Processors Ask for Government Help with Concessional Loans May 20th, 2016, http://www.eng.24.kg/economics/180492-news24.html

Processors of agricultural products have appealed to the government for help with concessional loans.

The government provides soft loans at 7% to 10% per annum for the development of the agricultural sector, which has helped increase the volumes of production and export of agricultural products; however, value chains are needed for the stable development of country's economy. A statement from the Chamber of Commerce and Industry of the Kyrgyz Republic noted that the government has continued financing farmers, but agricultural processors have applied for preferential loans and were refused due to a lack of funds. The statement asks the government to study the problem and resume concessional lending to agricultural processors.

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BFC Agriculture Finance Bulletin

15) Kyrgyz Greenhouses Struggling Due to Smuggling May 17th, 2016, http://www.vb.kg/doc/339919_mestnye_vladelcy_teplic_na_grani_bankrotstva_iz_za_kontrabandy_iz_kitaia.html http://www.eng.24.kg/economics/180451-news24.html

Kyrgyz farmers are struggling due to the smuggling of vegetables from China and Uzbekistan. According to the Bishkek Business Club, entrepreneurs sell more than 15 tons of cucumbers per day in the capital, and most of them are illegally imported from China and Uzbekistan. Smuggling is becoming a large issue to farmers who have invested more than KGS 50 million to create greenhouses and now cannot sell their products and repay their loans.

16) Government Stepping Up Support to Enter Foreign Markets May 7th, 2016, http://www.timesca.com/index.php/news/16632-kyrgyz-farmers-need-government-support-to-enter-foreignmarkets

Despite the government reporting a 6.7% growth in agriculture, farmers are still facing difficulties in selling their products. To help support farmers, the government is developing a strategic program to aid in the selling of Kyrgyz agricultural products abroad including quality control measures, information campaigns, food certification programs and expedited processes for exporting agriculture goods.

The government believes that with increased quality, certification, fast outlets and the proper knowledge, Kyrgyz farmers will have an incredible opportunity to enter new markets and place a lasting footprint in them, particularly within the Eurasian Economic Union. As an example of the possibilities, many point to Kyrgyz farmers’ entrance at Moscow’s new Food City agricultural complex which enables farmers to trade directly with consumers in the 50,000 square-meter pavilion. Prime Minister Jeenbekov has also directed working groups to explore additional markets for Kyrgyz agricultural products.

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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.

The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners.

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