Who made Kazakhstan agribusiness flawed

“I’m tired of watching the Shymkent guys solve their problems at the expense of the whole country,” says a veteran of the agro-industrial complex of Kazakhstan.  The reason for the indignation of the aksakal this time was the information about the beginning of the trial of Vasily Rozinov, the founder of the Ivolga holding.

There is no need to explain who Vasily Rozinov is – the owner of Ivolga Holding, which was established in 1992, and has slowly become the largest agricultural holding in the world, controlling 1.5 million arable lands in Kazakhstan and Russia.  Plus, a network of elevators (20 in Kazakhstan, 11 in Russia – “KazakhZerno.kz”) with a capacity of 3 million tons, gas stations, agricultural processing enterprises, livestock and transport companies.

 But the end of this happy tale came in 2017, when Ivolga Holding stood on the brink of bankruptcy.  Vasily Rozinov managed to avoid this fate only by giving 90% of the assets to the investor in trust.  And in 2018, the holding completely ceased to exist in its previous form, and after re-registration it is called Olzha Agro LLP.  Its CEO is Aydarbek Khodzhanazarov.

At whose expense is the banquet

To understand the reasons for the rapid peak of agro giant, you first need to understand the reasons for its takeoff. Then we come to the “Shymkent guys” referred to by elder.

Now, the rapid growth of Ivolga came in the late 90’s-early 2000 years. By a strange “coincidence” akim of Kostanay region from 1998 to 2004 were Umirzak Shukeyev – the most respected political heavyweight from the clan of southerners. During this period, the holding company expanded and acquired property. In particular, and elevators. Why is it important? Let’s listen to no one else but the lawyer Vasily rosinov, a prominent lawyer Konstantin Gerashchenko, who recently in an interview with a national newspaper told how in Kazakhstan has long been arranged “rural economy”. Very interesting observations:

“If we briefly recall the background, then the grain receipts several years ago were documents that confirmed that a certain amount of grain was stored in the elevators.  Under these documents, businessmen took loans.  Today it has already been recognized that these receipts played a cruel joke with everyone – with agricultural enterprises, and with farmers, and with creditor banks.  Why?  Because no one monitored the availability of grain, and everything in our country worked just like that: they sold their grain, solving current problems, so that the grain of the new crop replenished the reserves of the old, already sold.

 Well, they took new loans for ready-made receipts.  So they lived.  That is, our rural economy was structured in this way.  But grain receipts themselves were at the same time not documents that would give someone rights or relieve them of duties.  These were just papers on the reception of grain for storage at the elevator.  Now that the Ministry of Agriculture has realized the flaw of the scheme, electronic agrarian receipts have been introduced instead of grain, but the consequences of the previous state of affairs are still being dismantled”, said Konstantin Gerashchenko.

Minister’s generosity

Since Konstantin Gerashchenko is an experienced lawyer, he does not draw conclusions from the facts.  But in this case, the answer to the eternal question “who is to blame” begs the obvious – the one who built this very flawed system.  Who is this?  Ministry of Agriculture.  More precisely?  I think no one needs to be reminded that Asylzhan Mamytbekov, the closest ally of Umirzak Shukeyev, and then himself, sat in the chair of the head of the Ministry of Agriculture of the Republic of Kazakhstan for a long time.

 As we can see, the rule “look for someone who benefits” works – no matter how “flawed” the system is, but it fulfills its role in skilled hands clearly – the growth scale of the Orioles into the world’s largest agricultural holding speaks for itself.  And grain receipts are far from the only instrument with which the “Shymkent guys” supported those who were beneficial to them.  Let us recall how Asylzhan Mamytbekov subsidized transport expenses for the shipment of grain abroad in 2011, when a record crop was harvested.  Guess who got the lion’s share of these billions?  Moreover, having received state aid from the hands of Asylzhan Mamytbekov, the agricultural holding still cut down the jackpot, selling grain abroad at much higher prices than they were on the oversaturated domestic market.

 The whole system of the “rural economy” has been built by the “Shymkent guys” (as the aksakal called them) for years in such a way that, with all its curvature and inferiority, it makes a profit – who needs it.  It is no accident that Vasily Rozinov ended up on the list of millionaires of the country, whose fortune was estimated at hundreds of millions of dollars.

 Hectoral subsidies?  You are welcome.  Cheap loans from KazAgro?  You are welcome.  Guaranteed sales to the reserves of Food Corporation in the event of a fall in grain prices?  You are welcome.  Travel subsidies?  You are welcome.  What can I say, if the country’s only grain terminal in the seaport of Aktau worked only for the largest grain companies, which Asylzhan Mamytbekov did not hesitate to talk about, explaining this with anything other than supporting private business at the expense of the state.

With outstretched hand

This whole structure was shaken when the holding’s appetites exceeded the ability of officials to satisfy them at the budget expense.  In addition, tenge devaluation followed, the problems of the KazAgro holding itself (which itself was on the verge of bankruptcy), lean years, a decrease in grain quality and increased competition in the foreign market.  The clumsy colossus gave a crack through which the Shymkent guys tried to escape from the sinking ship.

 How?  Found a new topic – the notorious meat project.  And again, the already run-in tools for supporting private business at the expense of the budget were used: soft loans, generous subsidies, support programs, and so on.  And again, this system is built very crookedly and flawed, with an aim to ensure that the recipients of state support are only the “necessary” companies – meat oligarchs who have replaced grain ones.  Moreover, it can be predicted in advance that livestock holdings will face the same fate as grain holdings – as soon as they are removed from this generous budget needle.  So, what is the elder sad about?  To beat him the fate of Vasily Rozinov or the Meat Union?  Of course not.  He, who has passed his life experience working on collective farms, state farms, and modern agricultural companies, is morally killed by the fact that Kazakhstan, having huge natural resources and potential, failed to build a “rural economy through the fault of unclean thoughts and hands of officials”  ”, Which would allow the agrarian, a man of the most noble work, to build a profitable business on his native land.  To feed yourself, your children, your country.  Those farms that are not connected with officials and do not receive budgetary support do not get rich, no matter how much they work.  From year to year they make ends meet, since the system was initially defective and crooked.  A simple example – fuel prices are rising every year – for some reason, grain is being restrained.  By whose will?  Those same officials who explain this need with an imaginary concern for the people.  So, after all, this people – this is the landowners!  And if you care about them, let them earn money, and do not put in a situation where the only way not to stretch your legs is to stand with your arms outstretched at your offices.

Myrzabek Smagulov

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