TBY talks to Glokke Sergey Georgiyevich, Director of Eurasia Group, on the future of the agriculture sector, the effects of the global economic crisis, and his company’s partnership with John Deere.
TBY What is the future of the agriculture sector in Kazakhstan?
GLOKKE SERGEY GEORGIYEVICH Taking into consideration the rapidly changing world, Kazakhstan has strong prospects to rank number one in grain and livestock production worldwide. Analysis suggests the world’s population will double by 2050, meaning that within 50 years farmers from all over the world will have to produce more than has been produced in the last 10,000 years combined. Due to the potential cultivating area of more than 25 million hectares, Kazakhstan has the chance to be among the agricultural powers that will play a considerable role in the food supply security of our planet in the future. The main peculiarity of agriculture in Kazakhstan is the big differentiation in farm sizes: from small farms with less than 1 hectare in area to gigantic farms with up to 1 million hectares of cultivating area that have no analogues in the world. In addition, Kazakhstan has the possibility to grow almost all types of crops, which can guarantee food supply security, and this reveals the true export potential of the country. Aside from plant cultivation, Kazakhstan has infinite possibilities for producing and processing animal products of the highest quality. It should be mentioned that despite the slow pace of renewal for machinery and the tractor fleet, Kazakhstani farmers are eager to apply new advanced technologies and are ready to embrace changes and innovations. For example, Kazakhstan is one of the leaders in applying precise soil cultivation systems—such as John Deere’s Agricultural Management Solutions (AMS)—whereby all machinery is equipped with navigation and control of production process systems.
What is your main client base in Kazakhstan?
Our customers are all farmers in Kazakhstan, whether small, medium, or large in size, employing different levels of technology. We can offer complete solutions for every crop, climatic zone, and level of agriculture business.
How has the world economic crisis affected agriculture in Kazakhstan?
There is no doubt that the crisis had a negative effect on our business. Over 2009 and 2010 our sales volume decreased two or three fold compared to 2008, when the company witnessed a peak in sales. However, we are optimistic for 2011. The period from 2000 to 2008 saw the steady and fast-paced growth of investments in Kazakhstan’s agriculture sector, both from the state and foreign financial institutions. The specific effects that were seen included termination on a timely basis by foreign export credit agencies, which halted investments into all segments of the economy—including agriculture. Furthermore, the cost of financing was raised considerably either on floating capital, or investment activity (up 20% a year). To compound matters, investment in machinery and tractor facilities was cut, and the implementation of modern technologies slowed. Today, the only sources of investment into agriculture are the structural departments of KazAgro National Managerial Holding, such as KazAgroFinance, Agro Credit Corporation, and KazAgroOnym, which has the possibility to invest a proper budget, and third-party funds with lower operating costs. Nevertheless, the budget and proper funds are limited and allocated to a wide-ranging program in a few spheres such as drip irrigation, greenhouses, poultry farms, and so on. This does not allow the sector to meet its needs for machinery and tractor facilities.
What is your relationship with international manufacturer John Deere?
The John Deere Company is the greatest manufacturer of agricultural equipment in the world. To be a representative of such a company is a great honor and responsibility for us. At the time the deal was signed, the John Deere brand was not popular and well known enough in Kazakhstan in comparison with other equipment suppliers, which at that very moment had been known on the market for 3-5 years already. That is why from the very beginning we understood that there were a lot of suppliers with whom our potential customers had been working for several years, and we would need to find our own customers. We had a premium class product, due to which we were able to position ourselves in the market as not just a seller of “iron”, but a supplier of intellectual technologies and complete solutions in the sphere of agriculture. With such an approach we
succeeded in demonstrating the advantages of John Deere equipment and became a sales leader in the premium segment over the following three years.
What are the secrets behind the success of Eurasia Group?
If we speak of our success, our key assets are our employees. Our people are our power. We are very proud of the fact that we have managed to find a team in which the energy of the youth, and the experience of adults are combined. We are a team of professionals with the same visions, combined with the drive to implement the latest technologies and produce the best work possible to further agricultural development in Kazakhstan. Today, we can see that Eurasia Group has achieved a lot, but we have big plans for regional outlet development, after-sales service, and spare parts supply. Our aim is to improve availability for all customers and to better understand their needs and requirements.
What is your outlook for the agricultural sector in Kazakhstan over the coming decade?
Kazakhstan has great potential. I am sure that in the next 5-10 years one cannot imagine agriculture in Kazakhstan without satellite systems, electronic maps, online monitoring, and differentiated seed application systems. In the near future, thanks to the efforts of our country’s President Nazarbayev, Kazakhstan will adopt all the latest innovative technologies in agriculture. We foresee an increase in development in the meat and dairy livestock breeding sectors. This considerable role will be given to the southern regions of our country. Such agricultural branches as gardening, cotton, rice, soybean, corn, and sunflower growing will be actively developed. More advanced irrigation systems will grow in popularity, especially drip irrigation.
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