Sprouting Up

Kazakhstan’s current agriculture policy aims at developing more competitive agribusinesses. How do you describe the agenda of the government for the coming decade?

The Ministry of Agriculture has three main objectives: improving productivity, ensuring food security, and increasing the export potential of the agriculture sector. These problems can be solved by encouraging agro-industrial diversification, providing increased production of agricultural raw materials and food, boosting the technical and technological modernization of industry, and developing new approaches to state support for agriculture. In this regard, the Ministry has developed a program for the development of agriculture in the Republic of Kazakhstan for 2010-2014. In accordance with the program, policies are designed to achieve full self-sufficiency in the country for all types of agricultural products. This will be achieved through increased crop production, structural and technological diversification, the application of modern manufacturing technology, and the wider use of chemicals. The government is also working to develop new and currently unused irrigated land.

What measures have been taken by the government to improve the efficiency of livestock production and the mechanization of agriculture in the country?

The strategy provides for an increase in livestock production through the transfer of industrial know-how, the development of breeding stock, and the importation of breeding cattle. Particular attention has been paid to the development of beef cattle in the future.

The strategy in the processing of agricultural products is aimed at the technical and technological re-equipment of production and a transition to international quality standards, which will expand the range of food products and enable us to compete with our major trading partners in the Customs Union.

In order to stimulate the economic development of the industry and enhance its investment attractiveness, agricultural subsidies will continue, making maximum use of stimulus features.

To increase the production volume and quality of beef, a project called the “Development of Export Potential of Beef” was approved by the Head of State and is now being implemented. In the next five years, up to 60 feedlots with a total capacity of 150,000 feeding units will be built; 72,000 head of pedigree cattle will be delivered from abroad and 54 breeding farms will be created. Furthermore, a project to train 2,500 farmers with 300,000 head of breeding stock will be implemented. The implementation of these activities forms the budget that is available to agricultural producers in the form of credits.

How can Kazakhstan improve its status as a major international exporter of grain and livestock in the global market?

At present, Kazakhstan’s agricultural sector is a steadily growing segment of the economy, which provides not only the country’s food security but also the export of agricultural products.

It is very important to use the potential of agricultural resources such as large reserves of undeveloped land, water, and other natural wealth. Kazakhstan boasts more than 2.7 million square kilometers, and ranks ninth in the world in terms of land area.

As is well known in the current economic conditions, a key factor in ensuring a competitive edge is use of high technology and the scale of production with efficient organization. This can only be achieved through the expansion of our markets.

The Customs Union between Russia, Kazakhstan, and Belarus is an important step toward the integration of these countries. The customs border between our countries has been completely eliminated, and the transportation of goods shall be free. This has formed a single market for goods with a population under 170 million and total GDP of about $1.8 trillion.

According to the Kazakhstan Statistics Agency, in 2010 the volume of production in the food industry amounted to KZT673.3 billion, an increase of 12.9% over 2009. In terms of the production capacity of agricultural commodities, the volume and geography of exports will also expand. As for the prospects of food exports, we would like to note that global population growth exerts enormous pressure on agriculture as the production of agricultural products and processed products is not keeping up with the growing demand. The UN’s Food and Agriculture Organization (FAO) predicts that food consumption in the world will grow by 70% by 2050. Experts and analysts in the field of food security point out that today the world is already facing problems of food shortages and high prices, leading to famine, political unrest, and revolution. In particular, in 2011 the UN food index reached a maximum altitude. As a result, food is a hidden force that also shapes world politics. In this situation, given the presence of more than 93 million hectares of agricultural land in Kazakhstan and almost all types of climatic conditions and soil zones, Kazakhstan has great opportunities for increasing exports of agricultural products.

What steps are being taken to increase the volume and quality of small producers?

The program for the development of agriculture in Kazakhstan from 2010 to 2014 includes measures of state support aimed at improving the effectiveness of small, medium, and large farms, as well as family farms and the development of agriculture in general. The focus areas are the development of seed production, the reduction of the cost of fuel and lubricants (and other inventory items required for harvesting), the delivery of irrigated water to agricultural producers, the provision of bookmarks and cultivation of perennial fruit berries and grapes, the examination of the quality of Kazakhstani cotton, and the increased productivity and quality of crops.

The animal husbandry segment has seen a steady increase in cattle, poultry, and livestock production. In order to stimulate the development of domestic agricultural producers, including families and individual farmers, state support is aimed at decreasing the cost of breeding products by 50%, the cost of feed and concentrated feed by 45%, as well as partially refunding the cost of producing milk, wool, fine-wool sheep, mutton, horseflesh, kymis, and shubat. The support mechanism also includes non-financial support measures such as conducting training seminars for agricultural producers and granting access to free information on agricultural subjects.

Additionally, the Ministry of Agriculture is lending to farmers. Through concessional lending, the rural population is able to purchase equipment and livestock. The cost of credit, issued by subsidiaries of the Ministry’s holding company, is substantially below the cost of loans granted by the banking system and also has favorable payback schemes.

What is your outlook for 2012 and beyond?

The improvement and strengthening of state support will continue to increase, as well as investments in agriculture and the food industry. The agriculture master plan contains information on the necessary types of products and their volumes in line with the needs of the population and external markets, which allows investors to set clear targets and function as indicators for entrepreneurs as financial institutions in the implementation of investment projects. National holding KazAgro also implemented an investment program, for which the state allocated KZT120 billion. This fund will be used for high-tech investment projects including greenhouses, dairy farms, feedlots with developed infrastructure, vegetable and sunflower oil production, drip irrigation technology used in the cultivation of fruit and vegetables, fodder production, the expansion and modernization of poultry production, a network of slaughterhouses, a meat-processing complex capable of vacuum packaging, the production and processing of fine wool, infrastructure development, the export of grain, the creation of production for the assembly of agricultural machinery, and the construction and modernization of silos. These measures will help us identify potential investors for the most promising and economically profitable areas in the context of regional specializations in Kazakhstan.