November 2019 Highlights of Kazakhstan Agricultural sector

Asian Development Bank to allocate $250 million to restore irrigation networks in Kazakhstan. Kazakhstan farmers to become key players in regional meat exports.  Two subsidiaries of KazAgro merge into one. Kazakhstan, EAEU to tighten control over dairy production in 2020. Kazakhstan plans to develop its brand in global meat market. Kazakhstan increases export of agricultural products by 9%. These are the highlights of Kazakhstan Agricultural sector introduced in November issue of the Economic Newsletter which is prepared by the Economic Section of the Embassy of the Kingdom of the Netherlands in Kazakhstan.

Asian Development Bank to allocate $250 million to restore irrigation networks in Kazakhstan

Over the next three years 250 billion tenge will be allocated from the budget for water supply to the population, this was announced by Senator Kairat Kozhamzharov during parliamentary hearings on water security.

The issue of another $250 million (97 billion tenge) against the guarantee of the Government was approved by the Asian Development Bank. This sum will be allotted for the restoration of irrigation networks in four regions of Kazakhstan.

The speaker noted that infrastructure work will be aimed at desalination, repair of canals, construction and reconstruction of more than 4 thousand hydraulic structures. In this regard, the Government should tighten control over targeted use of the funds.

“According to the conclusion of the Accounts Committee, the depreciation of the main water utilities of the republic is 56%, most of all in Almaty at 67%, Karaganda at 69%, Pavlodar at 61%, Almaty at 60%, and the Zhambyl and East Kazakhstan regions at 55%,” said Kairat Kozhamzharov, Kazinform reported.

Kazakhstan farmers to become key players in regional meat exports

On 14 November 2019, the World Bank and the Ministry of Agriculture of the Republic of Kazakhstan publicly discussed the details of the proposed Sustainable Livestock Development Project aimed at facilitating the development of an environmentally sustainable, inclusive and competitive livestock sector in Kazakhstan.

At the request of the Government of the Republic of Kazakhstan, the World Bank Group, jointly with the Ministry of Agriculture, is preparing the Kazakhstan Sustainable Livestock Development Program for 2020-2024.

“An interactive and transparent discussion is very important for the World Bank and the Ministry of Agriculture of Kazakhstan to design a successful and inclusive Program,” says Jean Francois Marteau, World Bank Country Manager for Kazakhstan. “We stand ready to support Kazakhstan in achieving its objectives to become a key regional player in high-value meat export markets, and to support an increase in the number of farmers involved in this business.”

The proposed Livestock Development Project aims to contribute to the diversification of Kazakhstan’s exports away from minerals and oil. It also aims to boost private sector growth and support development in rural areas. Finally, it will contribute to increasing agriculture productivity by improving the use of Kazakhstan’s vast pasture and grassland resource potential.

“The proposed Program for Livestock Development supports the Government’s State Program for Agro-Industrial Complex Development and the National Program for Livestock Development. The Program would focus on those results and objectives that are fundamental to the livestock sector development with the objective of increasing the competitiveness of the export-oriented meat value chains,” says Gulmira Isayeva, Vice-minister of Agriculture of the Republic of Kazakhstan.

The total amount of the loan will be up to $500 million. The World Bank proposes the use of the Program-for-Results tool - a financing instrument that links the disbursement of funds directly to the achievement of specific program results. This tool will also help to support government programs and utilize the World Bank’s expertise. The expected results include improvement of livestock traceability, better farming practices, and sector development that limits carbon emissions.

Representatives of the private sector, associations, unions, think tanks, media and civil society took part in the public consultation. The objective of the consultation was to inform stakeholders and allow for an open discussion and exchange of ideas around the implementation of the project, including its environmental and social assessment aspects, according to a press-release published on the website of the World Bank.

Two subsidiaries of KazAgro merge into one

The sole shareholder of Agrarian Credit Corporation made a decision on voluntary reorganization of the company by joining KazAgroProduct.

Agrarian credit corporation announced the decision of its sole shareholder dated October 18, 2019 to voluntarily reorganise Agrarian Credit Corporation by merging with it KazAgroProduct.

Agrarian credit corporation is a member of the group of companies of the KazAgro National Management Holding.

KazAgroProduct is also a subsidiary of KazAgro. The main activity of the company is the organisation of the purchase of livestock products from the agricultural entities of the country and the creation of sustainable production, procurement and processing of livestock products.

Parliament Speaker Nurlan Nigmatulin was indignant at the losses of the KazAgro holding. “Here is the problem, loan repayment. Colossal state funds are concentrated in KazAgro. This is the main financial operator. Hundreds of billions were sent to agriculture through this holding. At the end of 2018 alone, the accumulated loss of KazAgro amounted to almost 400 billion tenge. It turns out that the company generates losses instead of revenues.”

According to the chairman of the board of KazAgro, Yerbol Karashukeyev, out of 7 subsidiaries of KazAgro, only three will be left by the first quarter of next year.

“There will be about a thousand people reduced, administrative expenses are reduced. We completely change the controls of KazAgro. Highly professional foreign experts will be involved in the board of directors as independent directors. By 2020, we plan to bring the holding to a breakeven level. In the next 10-15 years, we want the accumulated loss, which until 2019 was formed, levelled and entered the growth path,” Karashukeyev assured.

Nigmatulin said that, in addition to transformation, it is necessary to radically change the system of bringing budget funds to agricultural producers. “Money gets there and disappears to no avail. President Kassym-Zhomart Tokayev spoke about the inept leadership. The agrarians themselves are talking about this. It is necessary to finance state policy in agriculture, but continuous infusion of state funds through inefficient companies should also not be allowed,” the Speaker said, Kazakh Zerno reports.

Kazakhstan, EAEU to tighten control over dairy production in 2020

The Kazakh government will tighten controls over dairy production starting Jan. 1 as part of the new Eurasian Economic Union Technical Regulation on the safety of milk and dairy products.

The requirements introduce new maximum quantitative indicators of mesophilic aerobic and facultative anaerobic microorganisms and somatic cells for raw milk, skimmed milk and cream, and will control their purity, acidity, density, bacterial contamination and fat rates.

The Eurasian Economic Commission Council adopted the technical regulation in 2013 to improve the safety and quality of milk and dairy products produced for food purposes in the EAEU.

To adapt to the upgraded conditions, Kazakh authorities arranged and gradually implemented measures to modernise and reform the local dairy industry. However, Kazakhstan postponed the introduction of new requirements twice. 

“The delay was caused by objective factors. First is the underdevelopment of the raw material base – more than 70% of milk going to processing is produced at private farms. This milk is often of low quality due to negligence regarding sanitary and veterinary norms such as vaccination, proper balanced feeding, improvement of genetic potential,” the Kazakh Ministry of Agriculture press service said. 

It was previously reported that approximately 90% of raw milk coming to Kazakh milk plants from farmers did not meet the EAEU technical regulation standards. 

To address this issue and raise the quality of the industry’s raw materials, Kazakhstan’s Ministry of Agriculture is focusing on increasing the number of organised dairy farms through its farming development programme. To provide the farms with succulent feed, the authorities propose to irrigate 120,000 hectares. 

In addition, Kazakhstan plans to build 244 family farms and 95 industrial dairy farms within five years. 

To date, 10 family farms with a total capacity of 989 head of cattle are already in operation in the Akmola, Aktobe, Almaty, Zhambyl, North Kazakhstan and Turkestan regions. Two more industrial farms operate in the Pavlodar and North Kazakhstan regions. Twelve additional milk reception points were created with state support  this year. To help farmers adapt, officials are also offering to develop anchor cooperation in the dairy industry sphere and expand state support for the technical equipment and re-equipment of the dairy farms, as well as to create training farms to increase knowledge in the field of dairy goods manufacturing. 

The country is also continuing with its road map on bringing Kazakhstan’s dairy products into compliance with EAEU safety requirements. 

The map was initiated by the Dairy Union of Kazakhstan and supported by the United Nations Food and Agriculture Organisation (FAO) and the Eurasian Development Bank. It provides for the improvement of laboratory facilities and quality control of raw materials and the preparation of suppliers for the implementation of EAEU. That process is underway. 

Kazakhstan’s Ministry of Agriculture has announced that Germany’s Federal Food and Agriculture Ministry will sign a joint statement on the milk project and two joint declarations on the German-Kazakh Agrarian and Political Dialogue Project in December.  An important element of this collaboration will be joint work in training staff in dairy cattle breeding.

“The ministers will discuss the extension of the transition period up to five years for Kazakhstan,” the Kazakh Ministry of Agriculture said, The Astana Times reported.  

Kazakhstan plans to develop its brand in global meat market

Kazakh entrepreneurs plan to promote their own breed of cattle starting next year through the Kazakh Whiteheaded Breed International Council.

Plans to create the council began after a memorandum was signed involving five-seven states, said Kazakh Whiteheaded Breed National Chamber Executive Director Dauren Matakbayev at the KazAgro/KazFarm 2019 international exhibition.

“Today the Kazakh Whiteheaded breed is the largest one in the country, both among pedigree breeds and commercial cattle. Approximately 230,000 heads are registered through the chamber, being bred officially by more than 300 farmers across the country. This is the most common breed,” he said.

The breed was produced by Soviet scientists in the mid-20th century based on aboriginal cattle and by implementing the Hereford breed gene pool, noted Matakbayev. Thus, the cattle have inherited the best features of both varieties.

“Farmers love this cattle species for its reliability – the cows stand our climate peculiarities very well. Also, they adapt easily and show strong reproductive capacities,” he said.

The name was not given randomly, said Matakbayev, as breeders want to increase international recognition of the Kazakh meat brand. He noted the council project will advance the cows’ genetics on the world stage, adding Argentina, Azerbaijan, Kyrgyzstan, Mongolia and Russia are interested in the breed.

“[When] ordering steaks or other meat dishes in restaurants, in 80% of cases we get the meat of Kazakh Whiteheaded, but just a few of us know about this. That’s why we want to popularise the brand. Kazakh citizens should know that they can buy marbled meat at an affordable price,” he added.

Last year Kazakhstan exported nearly 33,000 tons of meat to 11 countries, including approximately 20,000 tons of beef. The Ministry of Agriculture intends to increase the production of marbled meat, said Vice Minister Gulmira Issayeva in April, according to The Astana Times.

Kazakhstan increases export of agricultural products by 9%

Over 8 months of this year, Kazakhstan exported 7.7 million tons of agricultural products totaling $2,040.6 million, which is 9% more compared to the same period in 2018.

1.8 million tons of processed agricultural products were exported, occupying 23.2% in physical weight of the total agricultural exports, in the amount of $679.7 million, occupying 33.3% in monetary terms of the total agricultural exports.

To date, 19 types of agricultural products have gained access to the Chinese market. Kazakhstan supplies the beef, lamb, live horses, fish, honey, wheat, wheat bran, soybeans, alfalfa, rapeseed meal, barley, corn, wheat flour, dairy products, woolen raw materials, flaxseeds, pork, wheat feed flour to the Chinese market.

The markets of Iran and the United Arab Emirates are also open for Kazakh mutton, beef, live cattle and small cattle for slaughter, food eggs. Kazakhstan supplies fish, oilseeds and feed to the European Union, live cattle and small cattle for slaughter to Saudi Arabia, beef and lamb to Bahrain, Kazakh Zerno reports.

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