22 BFC Kyrgyzstan Agriculture Finance Bulletin

12/2015

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22 K y r gy z s ta n Agriculture Finance Bulletin Government Should Introduce ExportOriented Agriculture Incentives KGS 608 Million in Approved Russian-Kyrgyz Development Fund Projects Kyrgyz-Expo 2015 Already Bearing Dried Fruit Chinese Businessmen Looking for Kyrgyz Partnership Opportunities

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Agriculture Finance Bulletin Edition #22, December 2015

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

Government Should Introduce Export-Oriented Agriculture Incentives ........................................ 2 Member of Parliament Proposed Government Bean Purchase ...................................................... 2 Sariev and Bekboev Meet to Discuss Future Agricultural Development......................................... 2 Kamchatka Looks to Kyrgyzstan for Fruits and Vegetables ............................................................. 3 Islamic Association of China Seeks Cooperation with Kyrgyz Agriculture ....................................... 3 Sariev: Agriculture Needs an Infusion of the Use of Modern Technology ...................................... 3

Foreign Aid ................................................................................................................. 4 7)

KGS 608 Million in Approved Russian-Kyrgyz Development Fund Projects .................................... 4

Private Sector.............................................................................................................. 4 8) 9) 10) 11) 12)

Kyrgyz-Expo 2015 Already Bearing Dried Fruit ................................................................................ 4 Livestock Production on the Increase ............................................................................................. 4 Chinese Businessmen Looking for Kyrgyz Partnership Opportunities............................................. 4 Farmers in Southern Kyrgyzstan Cannot Find Buyers for Tobacco ................................................. 5 Russia Businesses Interested in Kyrgyz Food Products ................................................................... 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

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BFC. Agriculture Finance Bulletin.

State Initiatives 1)

Government Should Introduce Export-Oriented Agriculture Incentives

December 29th, 2015, http://www.timesca.com/news/26-opinion-head/16148-kyrgyzstan-s-development-priorities-for-2016

Due to their high-impact on the economy and employment, the government should focus on developing agriculture and tourism in 2016, according to Giorgio Fiacconi, founder of the Times of Central Asia. The agro-processing industry should be expanded, adding value to Kyrgyzstan’s fruit, vegetables, meat and milk. Due to the knowhow and technology required, this cannot be achieved without the participation of foreign companies, argues Fiacconi. Having satisfied local demand, agribusinesses should focus on Kazakhstan and Russia, while the government should introduce export-oriented incentives, including cheap credit, stricter quality control standards and modernization support schemes, concluded Fiacconi.

Read More »

2)

Member of Parliament Proposed Government Bean Purchase

December 9th, 2015, http://www.vb.kg/doc/330685_dastan_djymabekov_prizval_kabmin_zakypit_fasol_y_fermerov_na_1_mlrd_somov.html

Member of Parliament Dastanbek Dzhumabekov is urging the Kyrgyz government to purchase beans from Talas farmers at the price of KGS one billion with funds from the Russian-Kyrgyz Development Fund. In an address to Finance Minister Adylbek Kasymalieva, he proposed discussion of the matter with Fund representatives: “The government could store beans and sell them in 7-8 months at a higher price.”

Earlier this year, farmers in Talas were not able to sell their beans due to low bean prices. After numerous meetings, the government did agree to set a price of KGS 35 to KGS 36 per kilogram.

While the Fund provides funding for all sectors of the economy, priority is given to industry, agricultural processing and infrastructure.

3)

Sariev and Bekboev Meet to Discuss Future Agricultural Development

December 8th, 2015, http://www.vb.kg/doc/330600_temir_sariev:_vmesto_semian_fermeram_nado_vydavat_lgotnye_kredity.html

Prime Minister Sariev announced during a meeting with Minister of Agriculture and Land Reclamation that the government will invest KGS 15 billion for agricultural development over the next 5 years. The investment is expected to provide immediate results next year with the opening of 260 greenhouses, 10 logistics centers and numerous slaughter houses.

During the meeting, the Prime Minister also instructed Minister Bekboev to examine the question of the rising cost of milk. According to Sariev, the price of milk has fallen to almost KGS 10 at the producer level; however, retail prices for the product are still several times higher. The two also discussed an accreditation system for boosting the quality of seeds and, ultimately, produce in the country. After the meeting, the Prime Minister noted, “the government will assist in solving the problems of each sector individually.”

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BFC. Agriculture Finance Bulletin.

4)

Kamchatka Looks to Kyrgyzstan for Fruits and Vegetables

December 7th, 2015, http://www.vestipk.ru/?id=30611

The Honorary Consul of the Kyrgyz Republic in Khabarovsk has meet with the Governor of Kamchatka to discuss the possibility of directly supplying Kyrgyz produce in Kamchatka. The list of offered produce includes both fruits and vegetables and could be ready for import into Kamchatka by March 2016.

“For us, of course, geography of deliveries is important. We have to focus on the price and quality of imported products. If the price matches the quality, the demand will be great,” said the Governor. The specifics of any potential agreement will shortly be spelled out after the consulate prepares its proposal for Kamchatka commercial enterprises.

5)

Islamic Association of China Seeks Cooperation with Kyrgyz Agriculture

December 7th, 2015, http://kabar.kg/eng/economics/full/14615

The delegation of the Islamic Association of China recently met with Kyrgyz representatives to discuss issues of cooperation within the halal industry. Such an agreement would be in line with the Kyrgyz National Sustainable Development Strategy as developing agricultural production is a key priority to be developed.

Adilzhang Azhikelim, Vice President of the Islamic Association of China, also expressed interest in cooperation in other sectors as well — particularly in animal husbandry, in which Kyrgyzstan is highly developed. The two sides noted the important role in developing further cooperation and believe that the two countries have a great potential for developing strong trade and economic relations.

6)

Sariev: Agriculture Needs an Infusion of the Use of Modern Technology

December 5th, 2015, http://www.vb.kg/doc/330440_temir_sariev:_fermery_ne_ispolzyut_sovremennye_tehnologii.html

Prime Minister Temir Sariev urged farmers in the Chui region to make better use of the available modern technology. Speaking at a meeting with farmers, Sariev noted that the potential for the development of the agricultural industry in the country is huge, but farmers do not use available technology to maximize this potential.

“The government provides loans at low interest rates; these funds can be used to open logistics centers, greenhouses, vegetable stores and slaughter houses. I put the challenge to each district to open, in the next year, 2-3 greenhouses and have 2 harvests per year. We have the funds to allocate for agricultural development,” he said. The Prime Minister also believes agricultural lending needs to increase in the country: “now there are applications from farmers for only KGS 300 million to KGS 400 million. But banks have up to KGS 75 billion available.”

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BFC. Agriculture Finance Bulletin.

Foreign Aid 7)

KGS 608 Million in Approved Russian-Kyrgyz Development Fund Projects

December 2nd, 2015, http://www.eng.24.kg/economics/178287-news24.html

Small and medium business in Kyrgyzstan will receive loans for KGS 608 million from the Russian-Kyrgyz Development Fund. According to the Fund, at least 56 projects have been approved under the Fund’s program of targeted financing of small and medium businesses. The main share of applications selected for funding were projects for the processing and production of agricultural products (57.3%), followed by those in the manufacturing industry (35.1%) that will focus largely on modernization of production equipment.

Private Sector 8)

Kyrgyz-Expo 2015 Already Bearing Dried Fruit

December 17th, 2015, http://www.vb.kg/doc/331178_kyrgyzskie_fermery_nachnyt_eksportirovat_syhofrykty_v_rossiu.html

The recent international business forum Kyrgyz-Expo 2015 held in Moscow is already proving its worth.

A contract for RUB 100 million on the supply of dried fruit between a yet-to-be-named Kyrgyz company and a Russian company has been signed.

The forum was attended by business community representatives from Kyrgyzstan and Russia as well as other member states of the Eurasian Economic Union. Senior officials of the Eurasian Economic Commission also attended and spoke on the new opportunities for business under the EAEC. Chairman of the organizing committee for the forum, Abdygany Shakirov felt optimistic about more such deals to follow, “Hopefully, […] other mutually beneficial agreements will follow.”

9)

Livestock Production on the Increase

December 15th, 2015, http://www.agro.kg/ru/news/8002/

The National Statistical Committee of the Kyrgyz Republic reports an increase in livestock production stemming from an increase in Kyrgyz livestock numbers. According to the committee, the production of livestock and poultry for slaughter increased by 2.9%, milk by 2.5%, and wool by 2.3%. Growth in livestock registration was reported in all regions across the country, and animal production now makes up 46% of the total agricultural output.

10) Chinese Businessmen Looking for Kyrgyz Partnership Opportunities December 14th, 2015, http://kabar.kg/eng/economics/full/14682

A delegation from the Chinese province of Gansu held a presentation of agriculture, food, medicine, building materials and other products for Kyrgyz businessmen.

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BFC. Agriculture Finance Bulletin.

According to the vice president of the Kyrgyz Chamber of Commerce, ten companies are ready and willing to cooperate with Kyrgyz businessmen: “I am very happy that the delegation has finally come to Kyrgyzstan; earlier they visited neighboring Kazakhstan where they concluded a number of agreements.

I hope that today's meeting will also bring contracts to our Kyrgyz businessmen. For its part, the Kyrgyz Chamber of Commerce is ready to provide all possible support.”

The Gansu delegation informed Kyrgyz entrepreneurs of the trade and economic potential of the province. They believe this meeting will initiate effective cooperation and prove mutually beneficial.

11) Farmers in Southern Kyrgyzstan Cannot Find Buyers for Tobacco December 10th, 2015, http://www.agro.kg/ru/news/7993/

Tobacco farmers in southern Kyrgyzstan find themselves in a desperate situation. Planting for the next season begins at the end of January, and many cannot sell this year’s crop. Farmers are having difficulty in preparing for the coming year, and there are difficulties in the repayment loans. Trade unions are urging Parliament to step in and immediately assist in the sale of the harvest The main purchaser of tobacco CJSC “Suneli Tobacco” closed earlier this year, leaving only one remaining buyer: Osh Djubek. Osh Djubek has contracts with 78 of the more than 200 tobacco farmers.

While Osh Djubek is willing to accept tobacco from sources outside their contractual obligations, they will only do so after having found a place to resell the tobacco.

CJSC "Suneli Tobacco" announced their closure in February 2015 due to a decrease in global demand for the variety of tobacco grown by Kyrgyz farmers.

12) Russia Businesses Interested in Kyrgyz Food Products December 2nd, 2015, http://kabar.kg/eng/economics/full/14578

Russian product association SoyuzAgroProm is becoming increasingly interested in the food products of Kyrgyzstan. General Director Olga Serebryakova met with Krygyz entrepreneurs early in December with a focus on finding partners for the production and processing of Kyrgyz agricultural products to be exported to Russia. “Our company is engaged in processing food, about 112 kinds of juices, jams, canned products and pickles. We know about the quality and taste of vegetables and fruits made in your country, and Russia is interested in the supply of high-quality agricultural products,” said Serebryakova.

Representatives from Kyrgyz regional chambers of commerce and heads of the Kyrgyz companies which are aimed at expanding cooperation with Russian businesses attended the meeting.

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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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