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Kazakhstan. Ag Ministry Outlines Support Programs for 2020

17.03.2020 12:10 "Agro Perspectiva" (Kyiv) Following are selected highlights from a report issued by a U.S.Department of Agriculture attache in Nur-Sultan (Astana) (Kazakhstan Republic), the Ministry of Agriculture announced the broad outlines of their plans for agricultural programs in 2020. Most major programs will continue, with the exception of the specific subsidy for eggs.

Kazakhstan continues to prioritize modernization of its ag sector through preferential loans to farmers and ranchers.

General Information

On February 21, Kazakhstans Ministry of Agriculture held its annual strategy meeting, with departments and sub-agencies reporting on their 2019results and plans for 2020. Updates included the publication of full-year grain production numbers, announcements regarding subsidies and government-supported financing programs, and establishment of ministry priorities. This report summarizes some of the key reports from that meeting.

Egg Subsidy Cancelled

One major announcement at the meeting was the cancellation of the long-standing subsidy for egg production. The ministry explained that the subsidy is no longer needed due to the successful growth of the sector in recent years. In particular, the Ministry of Agriculture issued a press release highlighting that Kazakhstan turned from a net importer to a net exporter of eggs since the subsidies started in 2010.

The annual cost of the subsidy was approximately 75billion tenge ($197.4million) over ten years. The ministry highlighted that the subsidy enabled egg producers to upgrade their equipment though subsidized loans and subsidized investments. According to the Agricultural Development Program approved in 2018, existing specific commodity subsidies will be gradually phased out. For instance, livestock production subsidies are scheduled to be eliminated in 2020. However, the end of direct production subsidies does not mean a total end to government support. Egg producers will continue to enjoy subsidized loans and investment subsidies. At the same time, the Ministry of Agriculture expects that egg producers will continue development of the sector and will diversify their production (e.g., egg powder, egg protein, mélange, fermented yolk, egg powder mixes) and export markets.

Post Comment: As of this writing, the Kazakhstani government has not yet issued regulations on operation and funding of farm programs in 2020. Therefore, status of specific commodity subsidies for livestock products besides eggs is not officially announced. Specific per hectare subsidies for field crops were phased out in 2016, and subsidies per metric ton of oilseeds were eliminated in 2018.

Record Ag Loans Issued in 2019

KazAgro, a financial institution under the Ministry of Agriculture, highlighted its efforts to provide affordable financing to farmers and ag companies. KazAgro noted that in the last three years, the banking sector sharply decreased funding to the agricultural sector from 140($368million) to 89billion tenge ($234million). However, KazAgro increased its ag loan portfolio during the last three years. In 2019, the loan portfolio of KazAgro hit a record of 449billion tenge ($1.1billion), which is almost two times higher than in 2017. In 2018, the portfolio was 385billion tenge ($1billion), while in 2017it was 246billion tenge ($647million). The largest portion of the portfolio is for crop production (52percent), followed by livestock (35percent), food processing sector (8percent), and other sectors (five percent). However, KazAgro also had significant debt on its balance sheets, which they attributed mainly to currency exchange rates and the default of commercial banks. KazAgro noted that it was able to decrease its debt from 117($307million) to 9billion tenge ($23.6million) during the year.

In 2019, KazAgro financed the following projects:

Purchase of 170,000head of cattle and 545head of small livestock (sheep and goats);

Ten dairy operations;

Two poultry farms with 36tons of broiler meat production;

Ten orchards and 11greenhouses, including 5greenhouses with irrigation;

Ten projects on food processing;

Inputs for four million hectares for planting;

Financial leasing for 5,900units of agricultural machinery.

In 2019, KazAgros reported a total of 77,000clients. The lions share (86percent) of KazAgros loans are long-term loans, with average loan amount of 18million tenge ($47,000) per client.

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