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Implementing President’s Address in the agro-industrial complex: Increase in investment and growth in livestock production

Tuesday, 10 December 2019, 12:33:21

President of Kazakhstan Kassym-Jomart Tokayev in his Address to the People of the Republic of Kazakhstan “Constructive Public Dialogue – the Basis of Kazakhstan's Stability and Prosperity” paid special attention to the agro-industrial complex. The government of the country has been given specific instructions for the further development of the industry. Read the report by PrimeMinister.kz on the implementation of the instructions of the Head of State and what changes are expected in agriculture.

Agro-industrial complex of the Republic of Kazakhstan today

According to the Ministry of Agriculture, according to the results of 10 months of 2019, the livestock sector ensured an increase in gross output by 3.9%, including meat by 5.5%, milk - 3.2%. The growth in livestock production is associated with the successful implementation of lending programs in livestock.

For 10 months of the current year, 806 households were credited for the purchase of cattle in the amount of 78.9 thousand heads, in the same period last year - 412 households for 39.1 thousand heads.

Food production over this period increased by 2.1%, drinks - by 13.9%.

During the reporting period, the industry attracted 379.4 billion tenge of investments, which is 37% more than the same period last year.

Literally today, Prime Minister of Kazakhstan Askar Mamin, who is on a working visit to the United States of America, held talks with representatives of Tyson Foods, the largest meat producer in the USA and the second-largest producer of meat products in the world. An agreement was signed on the participation of the company in the development of the domestic meat industry. Thus, the company plans to invest $1.5 billion in the creation in Kazakhstan of a full cycle - from feed production to processing and manufacturing of finished meat products.

Tyson Foods is a world famous brand. They export poultry, beef, pork meat to 68 countries of the world. Today it is one of the most famous brands in the world. They are now planning to enter Kazakhstan with their investments. In general, Tyson Foods wants to build three factories in Kazakhstan. Total investments will amount to $ 1 billion 250 million. It is planned that about 100 thousand new jobs will be created and accordingly new markets for beef will be opened. Tyson Foods plans to complete the construction of factories within two years. Plants are planned to be built in the central, southern and northern parts of Kazakhstan,” said Minister of Agriculture Omarov.

Also in the United States in Omaha, the Prime Minister of the Republic of Kazakhstan, A. Mamin, met with the Governor of Nebraska P. Ricketts and the President of Valmont Industries, the leader in irrigation systems, S. Kanievsky. The parties discussed the prospects for cooperation and exchange of experience in the application of high technologies for mechanized irrigation, telecommunications, renewable energy, infrastructure construction, as well as agricultural science and education.

Following the results of negotiations in the presence of Mamin and Ricketts between the Ministry of Agriculture of the Republic of Kazakhstan, the Kazakhstan company Kusto Group and Valmont Industries, an Agreement was signed on the principles of effective irrigation and improving agricultural productivity in the Republic of Kazakhstan.

The document provides for the construction in Kazakhstan in 2022 of the Valley irrigation plant production plant with a capacity of 1 thousand frontal and circular irrigation machines per year. US irrigation technologies will increase crop productivity and reduce agricultural costs by 50%.

In the future, it is planned to expand the production of the enterprise in Kazakhstan to the release of equipment for telecommunications, renewable energy and infrastructure construction. Products manufactured in the Republic of Kazakhstan will not only meet the needs of the domestic market, but also develop export potential to foreign markets.

Agricultural production indicators for 10 months of 2019

Despite the extremely difficult weather conditions of the current year, 19.7 million tons of grain were collected in the initial weight, the average yield was 12.9 c / ha.

Gross grain harvest in weight after refinement is forecasted to be about 18 million tons, which allows us to fully satisfy the republic’s domestic market demand for grain and export certain volumes of it.

13.1 million tons of wheat were harvested in initial weight, 4.4 million tons of barley, 49.6 thousand tons of buckwheat, and 595.8 thousand tons of rice. At the same time, the gross harvest of barley compared to the level of the previous year increased by 185.3 thousand tons, rice - by 57.3 thousand tons, vegetables - by 416.6 thousand tons, melons - by 51.1 thousand tons, the volume of harvested potatoes at the level of last year.

At the same time, 2.6 million tons of oilseeds were harvested, 345.5 thousand tons of raw cotton, 660.5 thousand tons of sugar beets, 3.7 million tons of potatoes, 4.2 million tons of vegetables and melons crops - 2.5 million tons.

Phased increase in irrigated land

In the Address, the President instructed to gradually increase the amount of irrigated land to 3 million hectares by 2030.

According to the Ministry of Agriculture, in accordance with paragraph 41 of the National Action Plan for the implementation of the President’s Adderess to the people of Kazakhstan “Constructive public dialogue - the basis of stability and prosperity of Kazakhstan” to the Ministry of Agriculture, together with interested state bodies, akims of the cities of Nur-Sultan, Almaty, Shymkent and oblasts, as well as NCE Atameken, have been instructed to develop proposals for a phased increase in the amount of irrigated land to 3 million hectares by 2030.

With a view to timely and high-quality implementation of this clause of the National Plan of Action, the Roadmap has been approved for the development of proposals for a phased increase in irrigated land to 3 million hectares by 2030. Also, in order to achieve this goal, a letter was sent to the local executive bodies together with the Ministry of Ecology, Geology and Natural Resources and Atameken NCE, as well as with other interested bodies to carry out work on identifying new irrigated areas, potential investors for the construction of irrigation networks and implementation projects for the development of new irrigated land.

Currently, local executive bodies are carrying out relevant work on the implementation of the Roadmap, information will be provided in the Ministry of Agriculture of the Republic of Kazakhstan.

In turn, the Ministry of Agriculture after receiving information will conduct an analysis, the results of which will be announced at a meeting with akimats.

In addition, Minister of Agriculture Omarov said that within the framework of the current state program for the development of the agro-industrial complex for 2017-2021, it is planned to put into circulation new lands on an area of ​​610 thousand hectares by 2021.

Today in Kazakhstan there are 1.4 million irrigated lands. If we add to this the planned 610 thousand ha, by 2021 we will reach 2 million ha. A lot of work is being done for this,” the minister said.

In order to achieve the goal of a phased increase in irrigated land, akimats of the regions, together with the Ministry of Ecology, Geology and Natural Resources, are intensifying efforts to identify potential investors for the construction of irrigation networks and implement projects to develop new irrigated lands with the participation of private partnership through the PPP mechanism.

The implementation of the above measures will increase the area of ​​irrigated land to 3 million hectares by 2030 and ensure growth in agricultural production by 4.5 times.

For this, the state provides all kinds of support. Negotiations are underway with an American company, presumably in the Pavlodar region, for the production of irrigation facilities. We hope that the production of irrigation equipment right here in Kazakhstan will enable our producers to buy this equipment at a low price,” Omarov said.

In addition, at a press conference on the site of the Government of the Republic of Kazakhstan in October of this year, Minister of Agriculture S. Omarov talked about ongoing work to involve unused agricultural land in production activities. So, according to him, all legislative frameworks have been revised, additional changes are planned. The Ministry has developed a roadmap on the withdrawal of unused agricultural land. As part of this Roadmap, a phased increase in tax on unused land is planned.

At this time, maslikhats of the regions have given rights to increase taxes on unused land up to 10 times. Today we plan to raise this tax from 20 to 30 times. This is currently under discussion. For example, in Russia this tax has been raised up to 100 times today,” Omarov said.

At the same time, the Ministry of Agriculture of the Republic of Kazakhstan plans to reduce the time for withdrawal of unused agricultural land. According to the minister, unused land is seized only through a court. This procedure takes from 2 to 3 years. Therefore, the Ministry of Agriculture is proposing that if land is not used, the lease is terminated unilaterally.

The draft Roadmap is currently under discussion by government agencies. Additionally, it will be discussed with the public.

Farmer support is a priority

In his Address, the Head of State named the Government’s priority to support farmers in marketing their products on foreign markets.

According to the Ministry of Agriculture of the Republic of Kazakhstan, in order to support farmers with the sale of their products to foreign markets, a series of measures are being taken to open markets and increase the volume of agricultural products exported.

One of the measures to open markets and increase exports is the coordination of veterinary and phytosanitary requirements of foreign countries. This made it possible to export the following Kazakhstani agricultural products:

to China: beef, lamb, live horses, fish, honey, wheat, wheat bran, soybeans, alfalfa, rapeseed meal, barley, corn and wheat flour. In 2019, protocols were signed for exporting to the PRC of dairy products, wool, flaxseeds, and pork.

to Iran: frozen and chilled mutton, beef, by-products of small cattle, chicken eggs, live sheep, barley, sunflower seeds, rapeseed and flax. On February 12, 2019, a Memorandum of Understanding was signed between the Ministry of Agriculture of the Republic of Kazakhstan, the Ministry of Agriculture of the Russian Federation and the Ministry of Agricultural Jihad of the Islamic Republic of Iran on cooperation in wheat trade.

to the CIS countries: live cattle and small cattle, beef, lamb, fish, dairy products, eggs, fruits and vegetables, wheat, corn, rice, sunflower seeds, flax and rapeseed.

to EU countries: fish, wheat, flax seeds.

in the United Arab Emirates - meat and meat products, chicken eggs and poultry.

to the Kingdom of Saudi Arabia - cattle and small cattle for slaughter.

According to the rules of international trade of the World Trade Organization, the export of livestock products and feed can be carried out only from enterprises included in the Registers following the results of inspections or the guarantee of veterinary and phytosanitary services of exporting countries.

So, under the guarantees of the veterinary service of the Republic of China, 64 enterprises are included in the Register of the Republic of China, having the right to supply fish and fish products to the Chinese market, 19 enterprises engaged in breeding and slaughter of farm animals are included in the Register of the Republic of Uzbekistan under guarantees of the veterinary service of the Republic of Kazakhstan.

Under the guarantee of the quarantine service of Kazakhstan, without inspection by Chinese specialists, 116 enterprises are included in the GTU registry.

In accordance with the Rules for the reimbursement of part of the costs of subjects of industrial and innovative activities to promote domestic processed goods, the following expenses are reimbursed:

1) the costs associated with advertising goods abroad;

2) the costs of direct participation in foreign exhibitions, fairs, festivals;

3) the costs associated with the development, translation into foreign languages ​​and the publication of a specialized catalog for distribution abroad;

4) the costs of maintaining branches, representative offices, retail space and a warehouse abroad;

5) the costs of the procedures associated with registration:

trademarks (brand) abroad, on electronic trading floors;

6) the costs of activities related to procedures for the compliance of goods with the requirements established by technical regulations, standards, including organization standards, or the terms of contracts or confirmation of the right to carry out activities to sell goods abroad (certificates, permits, registration certificates and other documents);

7) the costs associated with the delivery of goods by rail, air, road, sea transport and the organization of transportation.

Transition from raw materials export of agricultural products

The Address says that it is necessary to move away from the raw material orientation of agricultural exports, which reached 70%, while processing enterprises are only 40% loaded.

The Ministry of Agriculture of the Republic of Kazakhstan claims that in recent years, foreign companies have been attracted to the agribusiness sector, including those planning to implement projects in the field of crop production processing.

In 2017, in the Taiynsha district of the North Kazakhstan region, together with the Chinese investor Xi'an AiJu Cereals & Oil Industry Group Co., Ltd, an oil factory of Taiynsha-May LLP was constructed with a design raw material capacity of 365 thousand tons per year, the total project cost - $19 million. Products of the creamery (vegetable oil, oilcake) are exported to China.

Netherlands company Farm Frites Beheer B.V. plans to begin construction of a plant for the production of french fries in the Zhambyl region. The project cost is estimated at 46.8 billion tenge, productivity - up to 70 thousand tons of finished products.

In addition, at present, in 2017, in Tayynshinsky district of the North Kazakhstan region, work is underway to restore and resume the activities of the enterprise BioOperations LLP (formerly Biokhim LLP), which specializes in deep processing of grain crops. The total investment amounted to more than 11 billion tenge. The capacity of the wheat processing enterprise is over 172 thousand tons per year. Since 2018, the company began the production of wheat gluten, starch and animal feed. Since the end of 2019, it plans to begin production of bioethanol, whose productivity is estimated at 20 thousand tons of bioethanol per year, with a subsequent increase to 60 thousand tons by 2022.

As part of a working trip of Prime Minister Askar Mamin to the North Kazakhstan region in the city of Taiynsha of the same district, the second line of the BioOperations factory was launched – a starch and gluten production workshop.

As the general director of the BioOperations factory Almas Kalmurzin noted, on average about 20 thousand tons of gluten will be produced per year.

The capacity of the enterprise will increase, the production of gluten will increase. At the moment, we are already delivering to the Far and Near Abroad, including the USA, Europe, China. New markets are also being developed. This is both East Asia and India,” Kalmurzin said.

For the further development of the food and processing industry, the state provides preferential financing of projects under the programs “Business Road Map 2020” and “Economics of Simple Things.”

At the local level, investment subsidies are provided for the construction and modernization of agricultural processing enterprises up to 25% of the investment costs, subsidies for reducing the interest rate on loans received to replenish fixed and current assets.

Why is the industry attractive for investors?

The head of state noted that the urgent task is to attract foreign investors to agriculture. Negotiations are already underway, the Government of the Republic of Kazakhstan needs to achieve concrete results.

The agricultural sector is becoming attractive for business. According to the Ministry of Agriculture, only over the past 5 years, $3.3 billion (1.3 trillion tenge) of investments have been attracted to the industry, including the private sector invested about 80% of investments, in 2018 – $936 million (365.1 billion tenge).

And this is not the limit, the industry has great potential for a further increase in production volumes.

Given the geographical location, abundant land resources, as well as favorable climatic conditions, the agricultural sector of Kazakhstan is one of the most attractive sectors for investment.

In order to attract investment in the agricultural sector of the republic, both foreign and domestic, work is underway to create appropriate conditions for supporting entrepreneurship: subsidizing priority areas, providing soft loans and leasing, special taxation regimes for agribusiness entities.

For the implementation of investment projects in the agricultural sector, the Investment Subsidy Program is in place, which provides for the reimbursement of a portion of the expenses incurred by the subject of the agricultural sector for investments in 39 priority areas.

The Ministry monitors the implementation of 49 investment projects with the participation of foreign investors, including about 25 large investment projects totaling over $1,437.2 million, of which nine projects involving TNCs totaling about $320 million, 20 promising projects for the amount of $2,391.0 million and 4 projects introduced in the amount of $207.1 million.

What was 2019 for the agricultural sector?

On Oct. 28, the Head of State signed the Law “On Amendments and Additions to Some Legislative Acts of the Republic of Kazakhstan Regarding Agro-Industrial Complex Regulation.”

Elbasy set the country's agro-industrial complex the task of increasing labor productivity and export of processed products by 2.5 times, which is reflected in the current state program for the development of the agro-industrial complex for 2017-2021. However, the implementation of the State Program requires changes to the current legislation, which are provided for in this Law.

In general, the Law provides for amendments and additions - more than 800 amendments to 13 codes and 29 laws.

The law provides for the improvement of existing and the introduction of new financial instruments, the strengthening of veterinary and phytosanitary control in the border areas during the import and movement of goods, and the concentration of all control and supervision functions in the field of veterinary medicine and phytosanitary for the Ministry of Agriculture, the expansion of state support in terms of reducing the cost of remedies plants for agricultural producers.

In order to involve innovations in the development of the country's agriculture, the Law provides for subsidizing business expenses for co-financing research and development work.

Import Substitution Measures

The veterinary service is constantly examining the epizootic situation of other countries. So, in order to prevent the occurrence of diseases of animals and birds, veterinary measures are introduced in relation to countries.

The Committee strengthened control at the state border near the Russian Federation and the Kyrgyz Republic and 32 veterinary checkpoints were established.

The control and supervisory functions from the IOI were returned to the Committee, the transfer of 694 posts is expected.

Support measures for agricultural producers

In the State program for the development of the agricultural sector of the Republic of Kazakhstan for 2017-2021, the following measures of state support are provided:

investment subsidies (reimbursement of 25% of investments in the priority areas of the agricultural sector. Also subsidized are the costs of purchased agricultural machinery and equipment);

restoration of interest rate subsidies (interest rate on fixed assets is reduced by 10%, and on working capital by 5% per annum);

development of guarantee institutions (in the absence of sufficient collateral, support is provided for partial guarantee and loan insurance);

introduction of the mechanism of agricultural receipts (will allow investors / lenders to finance the production of agricultural products by selling the crop before its actual harvest (on the security of the future crop));

improvement of the agricultural insurance system (it will cover up to 80% of the costs of spring field work upon the occurrence of an insured event, and the determination of the insured event will be carried out according to objective data without the “human factor”, based on official statistics, data from space sensing of the earth).

In addition to the above measures of financial support, the Ministry of Agriculture subsidizes areas such as seed production, increasing productivity and the quality of livestock products, cheapens the cost of fertilizers, herbicides, subsidizes the delivery of irrigation water and many other directions.

Current legislation provides for the following special tax regimes for agricultural producers:

special tax treatment for agricultural producers and agricultural cooperatives;

special tax treatment for farmers or farms.

For manufacturers of agricultural products and agricultural cooperatives applying a special tax regime, a reduction of taxes by 70% is provided, with the exception of tax on agricultural land, land use fees, value added tax.

For peasant or farm enterprises (peasant farms) a single land tax has been established at a rate of 0.15% to 0.6% of the estimated value of land.

Peasant farms are not payers of such types of taxes as individual income tax, social tax, payment for emissions into the environment, land tax and fees for the use of land plots, taxes on transport and property.

Foreign legal entities, foreigners and stateless persons are not entitled to apply special tax regimes for agricultural producers.

At the same time, DAO JSC "NMH" KazAgro "implements a state policy to provide affordable credit funds to agricultural producers, including for the development of animal husbandry, crop production, processing of agricultural raw materials. These measures are provided at the expense of budgetary and attracted funds.

At the same time, the Ministry of Agriculture, being the operator of the second direction of the Program for the Development of Productive Employment and Mass Entrepreneurship for 2017-2021, “Enbek" is working to involve self-employed people and the unemployed in entrepreneurship by providing loans / microcredits to program participants implementing or planning to implement a business -projects in rural areas and small towns.

Lending mechanism: funds under the Program for microcrediting are provided to akimats of regions in the form of a budget loan. Akimat distributes these funds between Agrarian Credit Organization JSC (for further funding of MFIs and CT) and Agricultural Financing Support Fund JSC (for lending).

The terms of the Enbek Program: the program participants can be unemployed, people from certain categories of employees defined by the Government of the Republic of Kazakhstan, NEET youth, members of a low-income large family, low-income able-bodied disabled person, start-up / start-up young and active entrepreneur, agricultural cooperatives and their members , peasant and farm enterprises, participants of anchor cooperation, regardless of the duration of their activities.

The maximum loan / microloan amount is:

  • up to 8 thousand MCI for the development of anchor cooperation;
  • in other areas - up to 2.5 thousand MCI;
  • Loan term - up to 7 years;
  • Interest rate - no more than 6% per annum.

To date, under the current lending conditions, there are a number of programs aimed at developing agricultural and non-agricultural businesses in the countryside, detailed information on all existing loan products of the Fund can be found on the website http://www.kazagro.kz.

At present, in crop production, state support covers almost the entire production cycle of the main crops. In crop production, measures are taken for state support: the production of priority crops, the development of seed production, the purchase of fertilizers, the purchase of herbicides and the cost of water delivery services to agricultural producers.

The purpose of subsidies in the field of crop production is to increase production volumes, increase productivity and quality of products, load production capacities of enterprises for processing agricultural products and providing them with domestic raw materials.

In order to stimulate agricultural producers to introduce water-saving technologies of the Ministry of Agriculture, a subsidy program has been implemented since 2014 to reimburse part of the expenses incurred by the agro-industrial complex subject to investment investments, which provides for reimbursement of expenses for the purchase of drip and sprinkler irrigation systems and equipment.

These measures made it possible to introduce water-saving irrigation technologies on more than 20 thousand ha annually, and on Jan. 1, 2019, the area covered by water-saving technologies is 215.5 thousand ha.

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