Kazakhstan: Sweet dreams of AgriMinistry officials are nightmares of peasants

Новость на Казах-зерно:

At the end of March there was a republican meeting of Kazakhstan farmers in Astana. Farmers gathered to the capital city to raise and discuss topical issues.

A.K. Darinov – the President of the Republican public association “Union of Farmers of Kazakhstan”, mentioned in his report, that last year farmers  harvested a   record grain crop – 29.7 million tons.

But instead of profits – harvest brought a big problem for most producers, and especially for the peasants and farmers. The reason is sluggishness of authorized bodies, where the first violin plays the Ministry of Agriculture, who has not been resolved in a timely manner with the problems of storage and distribution of harvest.

Note “KazaкhZerno.kz”: there is not a few wheat in the stocks. According to statistics, on March 1st stocks of grain were over 20 million tons.

Meanwhile, the pace of grain exports remain very low relative to the total balance. Director of  Agriculture Department   – Anna Buts said that Kazakhstan exported 7.8 million tons of grain this marketing year.  There are only three months to the end of this marketing year and Kazakhstan may export  no more than 2.5 – 3 million tons.

“Food Corporation marked cards or winning in any case”

Mr. Darinov cited the example of several depressing episodes from the practice of early  years. Thus, in 2010, when the harvest was disappointing because of dry weather conditions, Food Corporation  sold 2 million tons of  low-quality wheat for the price 21 000 tenge per tonne to grain companies  the summer before harvesting.  In turn, the grain companies, rewrote grain on their balance and resold  them at a higher price.

“Leaving aside questions of legality of such actions, I should  note that literally in the same period, was announced the commercial purchase of 2 million tons of grain at a price of 26 thousand tenge.  It happened at a time when the farmers had no free grain residue because of low yield, and the market price reached 35 thousand tenge per ton. The resources of Food Corporation were used for getting the required number of grain. Also farmers  were forced to donate grain at a unfavorable price according to quotas “- said the speaker.

On the contrary, in the high-yield year  2011, there were cases of abuse and tightening processes to bring the quota for commercial purchase of grain in the amount of 5 million tons at a price of 25 thousand tenge. “So, between the adoption of Government decisions on the grain purchase (August 18, 2011) and beginning the paperwork,  has been more than 40 days. During this time, Food Corporations could not agree on quotas brought to the producers. In this case business entities took advantage of this situation, that   have been actively buying low-quality wheat  at a price of 10-12 thousand tenge per ton in the period of harvesting(2.5 times cheaper than the Government price)”- cited Mr. Darinov.

There were also voiced other problems of a large crop along with price issues. There were highlighted the negative aspects associated with the implementation of the legislation on the grain in terms of regulating relations between members of the grain market( i.e. deliverers of grain), and the owners of grain elevators and grain items. Last, using the monopoly position and the status of authorized elevator, put the potential deliverers of grain in unequal conditions with the use of discriminatory and deceptive practice.

“In good years, many grain elevators owned by grain companies and holding companies, in violation of applicable law, they refused to take the grain from farmers.  They  let to go through the gates for the motors  with the grain of their businesses. Others were  put  under unacceptable, onerous terms and conditions. They did not even take the grain that farmers have passed on Food Corporation quota “- said the speaker.

No matter how good the crop is, there is no money anyway…

Given examples demonstrate that the peasants remain in their own interests in any case of drought or crop year ( i.e. no profit and with a lot of problems for the storage and harvest sale). “So it’s not a coincidence, but rather a pattern of capitalism. As a result, the fruits of their labor enjoy everyone, but not the peasants, “- said Mr. Darinov.

Meanwhile, the belated action of the Ministry of moving grain from elevators, the unwillingness or inability to look for additional capacity for temporary storage of grain, have led to the fact that a significant portion of the crop remained in the field.

In such circumstances it is almost impossible to ensure complete safe and   quality parameters of grain. Also, there is no guarantee of their destruction or damage.

In this context, the speaker noted that instead of solving problem issues to stabilize or improve the profitability of farms, the ministry decided to change  the mechanism of state support of grain production. The essence of these changes was the abolition of the existing mechanism for granting subsidies to one hectare of sowing area and introducing instead a mechanism for issuing guarantees of seasonal loans in financial institutions. “We have stated this  approach  for  state support only for those who work with  credit. At the same time, those who work without credit, are fully deprived of state support measures. That is more than 90 percent of peasant households and farms all over the country.  Therefore, we proposed to keep the existing subsidy mechanism in grain farming, and the proposed loan guarantee mechanism to introduce as an additional measure of state support. “

In order to process associations of small farmers Union offered to accept and implement a program of cooperation. In order to increase the availability of credit for medium and small producers Union offered to continue to expand program for developing a network of rural credit cooperatives. Unfortunately, all these proposals are overlooked.

Новость на Казах-зерно:Also, Farmers’ Union of Kazakhstan expressed its disagreement with the idea of changing the existing tax regime in agriculture – increasing the size of the tax on agricultural land. According to the Ministry of Agriculture, the current size of the land tax does not make efficient use of land resources. And by raising the tax on land officials of Ministry of Agriculture are counting on the fact that the peasants would refuse to inefficient use of land and thus opens the way for the transition of land from less efficient to more efficient entity.

However, in the farmers’ opinion, this approach is fundamentally wrong for several reasons.

First of all the low efficiency  of agricultural land usage, primarily related to the unattractiveness of agriculture because of the high risks and low profitability, rather than lower the size of the land tax.

The second reason, which was announced on the forum – low technical equipment of most small and medium-sized businesses. There is no secret that the majority of agricultural producers are currently working on a physically and morally obsolete equipment. The rate of technological renovation of the technology park remain very low, and for the absolute majority of agricultural enterprises, and especially for medium and small farms that do not have access to credit – is a pipe dream. Those funds, that are intended for the leasing program are scanty, and they accrue to selected business entities, as a rule, grain companies and large agricultural enterprises.

“Many times we have offered the idea to increase the leasing program and enter the mechanism for subsidizing the cost of the acquired new agricultural techniques. For example Russia decided to implement the program of fleet renewal of agricultural machinery in 2012, where the priority of this program, as in 2011, is based on support for small farms in the countryside with the possibility of acquisition of equipment with a 50% discount. By the way, for the peasants of China, the cost of subsidized agricultural machinery is 70%. The question is – can we ensure the competitiveness and survival of our farmers? Hence, it is necessary to seek alternative ways to increase farmers’ access to financing, including subsidizing the cost of equipment for farms and farmers, in accordance with the Message of the Head of State, “- said Darinov.

And, thirdly, the state could legally remove unused or inefficiently used land without increasing the land tax and make them work more effectively.

And as a good example, the chairman of Union of Farmers’ proposed to study the experience of China, where in order to support agriculture, government completely  abolish the tax on agricultural land.

Farmers are also fully supported the idea of creating a single grain holding. But they noted: ” For the present we do not understand neither the structure nor the principles of its activities. If there were bonded principle of purchasing grain, the farmers would not be satisfied. But if the holding  share the profits derived from export of grain fairly, as in Canada, it will suit the farmers.

Will the Foreign countries help Kazakh livestock?

As noted Mr. Darinov, there were many differences with the Union Ministry of Agriculture for livestock development.

“First of all, working with scientists, we were talking about the need for a balanced approach to the bulk import of livestock. We offered to create a solid foundation to provide forage and veterinary safety, and then bring in cattle. We discussed the ways of importation of breeding stock with the appropriate genetic potential, taking into account the recommendations of scientific organizations. We also talked about the construction of feedlots in the condition of primary sources(depending on the availability of fattening contingent and reproductive capacity base). In our understanding, they must occur as a natural need for reproductive subjects base. Unfortunately, these moments are not perceived by the leadership of the Ministry of Agriculture. As a result, today we have the sad results, “- said Mr. Darinov.

Note: “KazaкhZerno.kz”: At the beginning of 1990 there were  9,757,2 thousand head of cattle In Kazakhstan, 35,660,5 thousand head of sheep and goats, 3,223,8 thousand pigs, 1,626,3 thousand head of horses, 143 thousand camels, and 59.9 million poultry.

At the end of 2010 there is an entirely different picture. By the beginning of 2011, there were 6,175,3 thousand head of cattle, 17,988,1 thousand head of sheep and goats, 1.344 million heads of pigs, 1,528,3 thousand horses, 169.6 thousand camels, and 32 , 8 million head of poultry.

As a result, since 1990 the number of cattle decreased by 36.7%, sheep and goats – by 49.6%, pigs – by 58.3%, horses – 6%, camels increased by 18.6% and birds decreased by 45.2%. The average for the last 20 years Kazakhstan has restored the population of all species of livestock and poultry by 54% by 1990.

Bulk import of breeding cattle, without scientific recommendations, led to the fact that under the guise of breeding was introduced cattle with dubious pedigrees. It happened in   Mamai Enbekshilderskyi district in Akmola region, where state-owned company “KazAgro”  national holding   with the Americans imported cattle in late 2010. And today, at least half of the offspring produced from this stock does not meet the tribal status, – argued the speaker.

Media are filled with information on the importation of foreign cattle in Kazakhstan. People open up new farms, where hundreds of imported productive Dutch, Hungarian, German cattle is in the calculation of a miracle. They hope that  overseas cows is ready to produce strong calves immediately, which a year later turned into one-ton monsters consisting of pure marble export  meat. But there are no miracles. These foreign cows fit to hang on the neck a table: “We are going to die for the sake of improving food security in Kazakhstan and potential of  beef export”. These are little things that decide everything: technology content , diets, lack of professional staff .

The fact that almost all the major feedlots on the 5 000  head of herd  or more now are empty is another good reason for farmers.

Because of this vast sub-budgets are frozen, and the repayment of credits is a  big question.

Новость на Казах-зерно:According to this information there is a question:  why do the authorities have no interest in the efficiency of budget funds invested here?

According to developed rules and mechanisms, subsidies for fattening will receive only those subjects who have at least 400 head of herd on the constant fattening. Thus, officials Of Ministry of Agriculture denied state support for all the small and medium-sized businesses. Even though this category of agricultural enterprises as major supplier of meat to the domestic market.

Note:”KazaкhZerno.kz”:  The first herd of cattle in Kazakhstan increased by 40 thousand in 1999.  In 2000, cows and bulls were another 8000 more. In 2001, a greater increase – 186 900 heads. It took six years to increase the number of cattle on a thousand heads. In 2004 there were 5203.9 thousand cattle in Kazakhsan.  Another five years livestock producers tried to overcome the bar stock of 6000 heads (6095.2 thousand in 2009). In 2011, the smooth system of annual population increase began to falter. In 2010, there were 6175.3 thousand heads of cattle in Kazakhstan. If we apply our optimal population growth rate, then in 2011 we would reach 6545.8 thousand heads. And in 2012 it further reduced – to 5705.9 thousand heads.

So on which side is the Ministry of Agriculture? Or is it  just hit an own goal? Sadly to admit it, but probably for a long time farmers have to knock on closed doors. And, in fact, it is the door of their own home …

Mamytbekov’s sweet dreams

“The less you know –the better sleep,” apparently, this “wisdom” guided  the Minister of Agriculture Asylzhan Mamytbekov. He didn’t participate  in the meeting of the Union Farmers of Kazakhstan.

The country’s first leader is not aware of the fact that the peasants and farmers believe the majority of the current team innovations are lobbying only major grain producers, but does not work on building a fair system of access for all market participants in the mechanism of state support.

Mr. Mamytbekov didn’t listen to suggestions of farmers on the need for proven effective programs to create a network of rural credit unions.

Also the minister didn’t listen to farmers advice on how to improve the investment attractiveness and profitability of agriculture.  He’s already come up with a “way out” – to increase the tax on farmland in the hope that the small farms  will give up land that are currently unable to process due to the lack of state support.  For  example in China, the priority is given to the development of small farms, where the government subsidizes the purchase of equipment and exempt from land tax.

Mr. Mamytbekov  showed  that he doesn’t want to know about these problems in agriculture. The  official sleeps  peacefully and sees rosy dreams that everything  is great  in the agricultural sector!

Well, while the minister sleeps – the time flies. And now it is approaching to the beginning of sowing  date. We hope that someone from the court set his clock at the crib minister, and he did not sleep for all the problems of agrarian sector of Kazakhstan, as happened last year.

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