Where do subsidies go, or Save the Bird’s souls

“Good afternoon, we have a catastrophic situation. In a difficult situation were domestic poultry factories near large megacities – Nur-Sultan and Almaty, “- the excited voice of the president of the Union of Poultry farms of the Republic of Kazakhstan Ruslan Ismailovich Sharipov sounded in the tube. Certainly, the correspondent of “KazakhZerno.kz” could not help but seek clarification. That is why once again our site provides the podium to representatives of perspective, but for some reason the attention-focused branch of republican agriculture.

The problem of uneven grant delivery and even more – chronic underfunding of agriculture and poultry farming, in particular – may become fatal this difficult year. This is evident both at the republican level and at the local level. According to the deputy of the Majilis Nurzhan Altaev, referring to the figures of the MSH, in 2019 in seven regions, the maslikhats redistributed 29.2 billion tenge allocated to agriculture for other purposes, and in just two years, 2017-2019, the total amount of redistributed, that is, actually under received by the republican APK, is 85 billion tenge. Yes, there – in only one VKO in the still not ended 2019, 4.1 billion tenge was redistributed! Something, apparently, turned out to be more important than veterinary activities, subsidies and other needs of ARCC. Akmola, Karaganda, Almaty regions also “distinguished” by catastrophic underfunding of our industry enterprises.

And how many poultry farms did not receive in the areas you indicated?

This year, only egg-based poultry farms in Akmola region were initially subsidized (18% of eggs produced in the republic, 18% of total poultry meat), well, if 20% of the required amounts, the last payment was in January. In the Almaty region (20 and 46% respectively) AND further – silence, and on receiving subsidies for the first three months of 2019, those who have arrived can be forgotten. According to the rules, it is possible to apply for subsidies no later than six months, and now October, so, it turns out, the winter worked with a loss. After all, it is not by mistake of poultry-shops – they have treated in the established order, in the right time, and now what? No money, but do you hold on?

As I understand, this problem is multifaceted, and it is reflected in different ways at the level of the CPC and poultry industry in general in the republic, at the regional level and directly affects the work of each poultry farm. Let us start with microeconomic levels – what is the risk of getting subsidies on the ground?

I will answer you right now: Growing social tensions, decreasing tax payments and even closing the enterprise. Hens-shears and broilers of industrial breeding, especially breed, creatures are very whimsical. Leave them for a day without food or water – and all, it will take 2-3 months to restore the egg or set of mass. What will be the profitability of business, when an unhappy chicken brings out after a long break, truly the egg is not simple, but golden, throw it yourself. I will not give him any answer to the question of how he would be able to bear such costs, for censorship reasons. Moreover, if the disease is brought?

It is not necessary to go far beyond the example – the new factory “KazRosBroiler” for several years stood abandoned because their thousands of livestock contracted Newcastle disease and died in a couple of days. The investor did not have enough working capital to start production again, and it was broken. That is why we need subsidies as air – to replenish working capital. In Akmola region, the factory alone produces about a million (!) eggs per day; imagine how much money is preserved in these inventories.

On the one hand, these are perishable products, and on the other – day on the day the funds from its realization the factory does not receive. Therefore, grants are made in time and help close the gap.

Then – about the frames. A person from the street cannot be put into a bird’s eye, for a minimum year he is in the status of an assistant or a subsidiary worker, the same applies to specialists, they have a very narrow specialization. Now imagine that some 2,000 workers and specialists will be on the street if poultry farms are closed in the same Almaty region. On the one hand, these people will find it difficult to find jobs, and on the other hand, they will not be replaced in production. The patent situation, which can destroy not only entire enterprises, but also the entire industry.

At the regional level, perhaps, are the systemic costs of government regulation also added to these problems?

Yes, it is. Our long-standing plight is the uneven distribution of subsidies across regions, as we have already talked about with you. Moreover, if in Kostanay, Turkestan, North-Kazakhstan regions birds receive their 100%, then in Akmola and Almaty sit on zero. This bizarre electoral focus breeds unnecessary nervousness about injustice and ultimately destructive competition. In addition, it was the measures of state regulation that led to this situation. In particular, when agricultural subsidies began to be transferred to the akimats with a single tranche, and before that they were strictly defined sums with a target appointment.

By the way, it was the Union of poultry farmers that then conducted a preliminary expert evaluation of production volumes at poultry farms, necessary for asking for subsidies, and we were responsible for each figure. As a result, the industry has developed quite well, and now the Kazakhstan people enjoy the fruits of this development – domestic enterprises close the 100% need for egg and increase the production of poultry meat. It seems that this is the act of relaxing on some state people, who seem to have taken this frontier forever. Nevertheless, this state of affairs will not survive without support – and anyone who found up at the conscious age of the 1990’s, when the state was not up to its strategic plans in the economy, will agree.

What is the reaction of the Ministry of Agriculture to these blatant facts?

Of course, the relevant department – the Ministry of Defense – cannot look quietly, as a result of underfunding among agricultural producers, defaults and bankruptcies are coming, the decline in gross production, which will put a stop to state programs approved at the highest level. An additional 36.6 billion tenge was requested for subsidies for various branches of agriculture, but the Ministry of Finance gave this request because of insufficient justification. In general, like something is being done, but everything is as much as anything is.

I am only interested – who will be the extreme when the factory farm starts to close? When poultry farmers have to knife their livestock so hard, because there is nothing to feed it? That is a real prospect; I am not hurling fear now. Because of the lack of subsidies, it is likely that our enterprises will remain without working capital and without fodder. It is now necessary to buy wheat – and because of bad harvest per ton ask 70-80 thousand tenge against 40 thousand tenge last year. In addition, what will happen in March? 100 thousand tenge?

The subsidies now paid, and thus the well-priced wheat purchased, will save a lot of money in the future, which will have to be spent on starting the factory from scratch. Alternatively, the success of domestic poultry farming can be said only in the past.

Therefore, budgetary production subsidies are the only possible source of working capital replenishment.

In fact, yes. In the advertised program “Economics of simple things” no support measures for the current factories of the egg industry are provided, there are even preferential loans. It was said that it would be possible to raise the price of the egg by 12%, because the meat was raised by 20%, but we do not have such an opportunity. First, because even this kind of consumer-pleasing measure will largely solve nothing. Secondly, I guarantee those two weeks after that, the antimonopoly authorities will look here monopolistic collusion and write to all market participants’ multi-million fines, which in court still try to dispute. Thirdly, and in the main, we cannot raise prices because otherwise we will quickly lose the domestic market by giving it to Russian producers.

This is where domestic policies affect export potential. After all, all the above-mentioned problems and excesses, naturally, are closely monitored by our neighbors and the Customs Union, and our competitors, and foreign consumers of domestic agriculture products …

That is the reality. It is necessary to look the truth in the eyes and recognize that in comparison with the Russian and Belarusian Kazakhstan poultry farming lags behind. Yes, we have a strong influence in the Central Asian region: We provide Kyrgyzstan, Tajikistan, and we are present in the markets of Afghanistan, Mongolia. But the development of the industry is hampered by the almost complete absence of the entire range of goods for poultry factories, we buy everything abroad – and poylki-kormushka, and minerals, vitamins, daily chickens and everything else – and the Russian Federation and the Republic of Belarus did not lose their domestic production. We have only grain of feed from our own, but this is not enough, and I have already mentioned the situation with grain.

Also on an inter-state scale, I would not drop from the accounts of Uzbekistan, where numerous privileges are provided for my own agricultural production. By the way, it is now Uzbekistan that is buying wheat from our fields for its poultry farms, which does not add confidence to Kazakhstan poultry farms. This situation must also be responded to at the highest possible level.

In summary, what is the way out of this situation? What aspects of the development of domestic poultry farming should the state and stakeholders pay close attention to?

Again. The practice of chronic under-funding of the urgent needs of agriculture and poultry farming, in particular, must be eliminated. We were gradually getting on the hunger pack, but this practice should be abolished. Thus, according to the Union of Poultry farmers, in 2016 everything was relatively good – 18,615,633 thousand tenge (42% of the allocated for livestock) and additional subsidies for 620,456 thousand tenge, in fact the amount allocated was 80% of the declared amount. In 2017, only 27% of the animal industry’s subsidies were laid for the development of poultry farming – 19,536,000 tenge, and in fact, only 69% of this small amount was allocated. In 2018, the case was very bad – with a need of 22,075,168 thousand tenge, 13,720,493 thousand tenge (62%) was allocated, and in fact 35% – 7,802 882.8 thousand tenge.

It is also necessary to return strict allocations for grants and to end the outdated method of allocating transfers, based on the number of employees rather than on the actual volume of output.

Moreover, the main thing is to solve the issue of allocating subsidies as soon as possible, so that the domestic industry does not remain without working capital purchased by feed, and in the future it is not calculated and some enterprises.

We understand that the state now has a complex social agenda, there were unplanned large expenses (the restoration of the city of Arysi), but, having supported the poultry industry immediately, the state will not remain a part of the market. There are also positive examples of interaction between the state and agricultural business: Thus, in the Zhambyl region, there was not enough funds for subsidies, and the maslikhat from the local budget sought the opportunity to pay them. Therefore, as you can see, if there is an interest of local authorities, it is easier to work. Moreover, after all, poultry farms do not pull the blanket on themselves: For these support measures under memorandum, they can supply their products at lower prices to social shops and fairs, for schools, hospitals, children’s institutions.

We highly appreciate the state support that opens new poultry farms and welcome constructive dialog – as, as a rule, mutual concessions are always beneficial. In addition, here is on this optimistic note… Thank you for the interview.

Natalia Zhuravlyeva

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