Who benefits from driving agriculture in Kazakhstan into a debt hole?

The unprofitability of the agricultural sector of Kazakhstan, where seemingly all conditions for normal business, a paradoxical thing. While everyone from the President to the ordinary farmer agree that the industry needs reform. Only now, all the reforms in the resources rich Kazakhstan turn to dust. The reason is trivial: the incredible appetites of the managers, not tied to creation, and pulling capital out of the industry.

The crisis in agriculture say a lot, often and for the most part ineffectual, since the problems remain problems and are not solved for decades. In recent years, for example, the lack of fodder in 2017, said Vice-agriculture Minister Kairat aituganov during the meeting of the Government. Then Aituganov said that the shortage of fodder in the country is 8.7 million tonnes of fodder units, that is the reason for the shortfall of 13% of the gross output of animal husbandry is 211 billion tenge. Two years later, the situation has not improved. That agriculture in Kazakhstan is in decline, said the President.

“But it is no secret that the industry remains weakly attractive for investors. In agriculture attracted only 1% of the total volume of foreign direct investment and 3.2 % of fixed capital investment!… This is a very alarming figures. All international financial institutions in one voice say that we have a huge potential in agriculture. And things there. So, we are bad managers. Another conclusion here is no,” said the President of Kazakhstan Kassym-Jomart Tokayev.

The conclusion is logical. That’s just the backdrop of the withdrawal of the appointment by the Minister of agriculture of the person, which the industry has well very little, very controversial. One would assume that an economist and a lawyer by training Saparkhan Omarov offer some clear decision on the conclusion of branch from crisis, but, alas… As the above said, the things are there. Although, it would seem that the soil is highly fertile, and people with a similar education should first and foremost be able to read and draw conclusions.

Who is the Minister of agriculture? First of all, the Manager, whose duties are simply obliged to write if not with a hot iron, at least in red letters requirement to be able to buy and sell. In this “able” being the operative word. But somehow this is not happening.

Let’s deal. Unless of Kazakhstan for more than twenty years, stopped eating meat? Or vegetables? Or the inhabitants of the country without exception refused the bread and unanimously decided not to wear coats made of calfskin? It seems that nothing happened, but still no mechanisms to change the situation has not been established. The market, as before, holding a monopoly, small businesses are being strangled struggling with taxes and unaffordable loans.

“It turns out that investments and costs aimed at creating new small livestock farms are not subsidized.  That is, we leave without state support for novice farmers, the stake on which, among other things, was made by the program for the development of beef cattle breeding for 2017-2028 developed by the Ministry.  It turns out that we are contradicting ourselves,” said Berik Ospanov, chairman of the committee on agrarian issues of the Mazhilis, back in May this year.

The remark is wise, and I would like to know what the officials of the Ministry of Agriculture were guided by, distributing subsidies only in favor of large livestock companies.  The market, as you know, is made not only by agrarian monsters with large capitals, but also by small farms, which often have better products and lower prices.  All this in bulk makes up the total volume of the product, and competition affects prices, allowing the consumer to choose.

 However, it seems that the Kazakhstanis will not be allowed to do this, otherwise how can one explain such a strange decision?  You can assure yourself that only large manufacturers can save the industry, but in the East there is a wise saying: how many do not shout “halva” will not become sweeter in your mouth.  Such a decision leads to inflation, and against the backdrop of galloping tenge, soaring to the sky, it will end with total impoverishment and bankruptcy of small farms, and, accordingly, a rise in the cost of food, which the average person cannot like.

 And these, alas, are not empty allegations.  Salaries of the population – do not grow, incomes of small farmers – do not grow, but prices for everything else – from fuel for equipment to feed.  In Kazakhstan for a month in July, all types of meat and meat products went up.  So, 1.6% added to the cost of chickens, and chicken legs went up by 1.2%.  Red meat and sausages became more expensive.  Horse meat increased in price by 2.9%, pork – by 2.4%, lamb – by 2.3%, which sharply hit the consumer’s wallet, reducing purchasing power.

 Farmers who take loans find themselves in a disastrous situation, and this will lead to another bankruptcy, unemployment, as a result, which already looks like a diagnosis of a deadly disease in the entire agricultural sector.  It should also be added, to the point of disgust, low wages, dropping the employees of this sphere not just below the poverty line, but to the very edge bordering on poverty.  Thirty to forty thousand tenge – these are the incomes of agricultural workers, and even this money goes to people with interruptions, especially in winter.  Hence the mass migration.

For example, 4952 people left the agricultural North-Kazakhstan region only for the period of January-May of this year, while 2823 arrived. Thus, the negative migration balance amounted to 2129 people.  By the end of the year, this figure will increase at least three times.  Having no opportunity to earn money on the earth, people leave for cities for long tenge.

 As for the producers themselves, the majority unanimously claimed: it is quite possible to fill Kazakhstan with meat and dairy products, vegetables and grain, but manufacturers need large foreign currency unsecured loans from 10 to 20 million for a long period at a low percentage of the National Bank without intermediary structures in  form of “KazAgro”.  Alas, under the current conditions, most of the small farms prefer to work “in black”, without registration, registration and, accordingly, without paying tax to the treasury.  And it seems like they would like to work honestly, but the trouble is: it doesn’t work.  There are no control levers in the state that allow small farmers not to drown.

 Unfortunately, there are much more questions than answers, but no one gives answers, and it seems that they are not going to give them.  Despite a number of critical publications of KazakhZerno.kz, the editorial office did not receive a single response from the Ministry of Agriculture with explanations, although the press secretary of Mr. Omarov repeatedly got into controversy on the discussion pages, defending the boss and urging him to address all the questions.  In all likelihood, the press service simply has nothing to say.  How to explain why the crisis in the country’s agriculture has not passed for two decades. 

Fedor Korozyabko

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