GROW, I SAY

Kazakhstan 2014 | AGRICULTURE | INTERVIEW

TBY talks to Dulat Aitzhanov, Chairman of the Executive Board at the National Management Holding KazAgro, on developing the agriculture sector, export markets, and diversification.

Dulat Aitzhanov
BIOGRAPHY
Dulat Aitzhanov was born in 1968 and graduated from Almaty State University. He is currently Chairman of the Executive Board at the National Management Holding KazAgro, and previous positions have include Vice-Minister of Agriculture, Chairman of the Executive Board at KazAgroFinance, and Advisor to the Deputy Prime Minister.

What is KazAgro's strategy for the development of the agriculture sector in Kazakhstan?

The major goal of KazAgro is to ensure the food security of Kazakhstan. At the same time, we also aim to improve national export potential. KazAgro focuses on developing markets for agricultural products, providing the financing needed to create new farming facilities as well as guidance on issues related to the establishment of new facilities, and assistance in the trade of agricultural products. In effect, it allows assistance in the financing of the sector and ensures agricultural companies have access to bank loans at low interest rates. We also provide business assistance on issues related to the optimum use of science and innovative technologies.

How would you rate the infrastructure of the sector in Kazakhstan? Which area is most in need of improvement?

Traditionally, the key segments of agriculture were crops and livestock. Following the collapse of the Soviet Union, Kazakhstan managed to retain its crop production. Currently, we are trying to improve the livestock component, as there is significant export potential, considering the Russian market, and the growing demand for beef and lamb. In terms of crops, we are improving oilseed production, which has higher added value. We are currently considering setting up infrastructure for the processing of crops, fruit, and vegetables, as well as for the production of wool. These are the major agricultural areas of export potential.

Are you looking to new markets?

Currently, we are trying to expand in China and Iran. This said, we need to assess whether it is necessary to expand our exports while Kazakhstan remains a member of the Customs Union, and there are certain restrictions on exports. The Customs Union market comprises 170 million potential customers, which is more than sufficient for our capacities. The Russian market is an extremely large one, and we are currently discussing the possibility of entering the Moscow region and others including the Ural and Siberian markets. There are 18 million people living in Moscow, which is comparable to the total population of Kazakhstan.

Do you think that the agricultural sector will play a role in the long-term diversification of the economy?

One should acknowledge that Kazakhstan is a country with an agricultural sector that dominates the economy. Its potential is significant, especially considering global food-safety issues. At present, we are not effectively using our full territory. Moreover, it is possible to diversify our product offering, although currently we are focusing on just a few crops. If we manage to develop the oilseed, meat, and crop sectors, it will already have quite a significant impact on the economy. KazAgro is not responsible for defining areas for development. We mostly work in investment and finance, in areas defined by the Ministry and the President. We aim at setting up production, delivering investments to producers, and ensuring that products comply with high-quality standards and are competitive globally. In 2013, KazAgro acquired the BBB+ rating (Russia has a BBB rating), which is quite impressive. This has allowed the national holding to borrow approximately $1 billion overseas. These foreign investments are essential for the further development of the sector. One of our fundamental principles is to attract foreign investors instead of domestic borrowings.

What is your opinion on the role of the agricultural sector in attracting foreign investments?

KazAgro plays quite a remarkable role in attracting foreign investments. When foreign investors enter a market, they need to understand the investment climate and find reliable partners. As long as the holding remains a quasi-government entity, it is easier for foreign investors to establish working relationships with us. Our credit rating is another asset. Since 2013, we have been working actively with leading global companies on entering the Kazakhstani market. We will now be scoping for measurable results of our efforts.