Agro-business expects investments

May 29. Kazpravda


Agro-business expects investmentsOnly new competitive agricultural projects can reduce the dependence on import of food products in the city of Almaty.

The market of food consumption in Almaty is the largest in the country. According to expert estimates, its capacity is about $ 2.8 billion and this figure for the recent 5 years has grown by 800mln. Almaty residents annually consume more than 215 ton of meat, 200 ton of flour, 600 tons of vegetables, and the scale of other products’ consumption is also impressive. Along with the population’s growth the need for food increases from year to year, but for many factors, including the quality of products, the grocery baskets of Almaty residents are filled with goods imported from near and far abroad.

The nearest neighbor, Almaty region, satisfies the need of the city’s market only at 40%. At one of the recent meetings Mayor Akhmetzhan Yesimov said that they need a more systematic approach to solve the problem of food security.

– The Almaty region has all reserves for saturating the market of the southern metropolis with high-quality and not expensive products, – he said. – One of the important areas of our country, especially in the light of forthcoming accession to the WTO is increasing its own production with involvement of investors who have high technologies in the field of agribusiness. Thereby we will increase the volume and range of market and reduce dependence on imports.

Agriculture Minister Asylzhan Mamytbekov speaking on the problems which affect the development of agricultural sector in the Almaty region noted that agriculture ceases to be a risky industry thanks to the newly adopted program “Agribusiness 2020” that provides a number of new tools to support manufacturers. Now the Parliament is considering a number of bills that would allow agricultural producers to compensate up to 20-30% of invested funds. A set of measures of state support and subsidies are envisaged to attract new investors with important social and agricultural projects.

One of the major investors, who believe that Almaty market is attractive for investment, is an Israeli company LR Group with nearly 27- year experience in agricultural business. Israeli partners are ready to invest considerable sum – millions of dollars in three agricultural projects in Almaty region. According to the company’s president Ami Lusting, analysis of the local market showed a shortage of meat, and therefore it is reasonable to create a feeding base. Investors will grow 29 thousand calves a year with a guarantee to increase the weight of each animal from 80 to 500 kg. Israeli businessmen in their calculations are accurate and follow their techniques in keeping with a business plan. But local entrepreneurs are often criticized for the failure to start business when they come to the food market.

The struggle for the local market in Almaty unfolds at a particular angle. Almaty residents will not go hungry, ever since the purchasing power of the city is high, and the range on the shelves is diverse. With the creation of the Customs Union the supply of food from Belarus and Russia greatly increased, as well as from China and Uzbekistan, northern and southern regions of our country.

According to expert estimates, as noted by deputy akim of Almaty Yerbol Shormanov, the share of imported products account for 40% of dairy products, 40% of fruits and vegetables, i.e. the city is dependent on some products, which increases the risks of inflationary processes.

However, domestic producers from Almaty region should fight for the Almaty market.

Last year, the city’s enterprises manufactured food products at KZT 146bln. But the backbone of the agricultural producers is working in the Almaty oblast, which invests around KZT 10 billion in the development of food belt, and the financial institutions of “Kazagro” account for the lion share of these funds.

However, as it turned out, the funding through “Kazagro” decreases from year to year: if in 2009 the share of investment was 91%, in 2011 only 70%, and in the last year this figure fell to 50%. One of the reasons, according to the oblast governor Ansar Musakhanov, is the complicity of lending procedures, and “Kazagro” should find common ground with agricultural producers in the region, including in the framework of the new national program “Agribusiness in 2020.” Now there is a large backlog for prospects in the oblast: more than 60 hectares of land that need investments.

In the result, the local authorities, giving “green light” to investors hope to influence the food prices. And prices for basic foods are really growing. Thus, for the past 5 years, the cost of meat in Almaty increased by 80%, meat products – by 90%, milk – by 25%, fresh vegetables’ price has doubled. Analysis of statistical data conducted in mid-March of this year, showed that prices for 25 kinds of food included in the food basket in Almaty city are by 20-50% higher than in the region.

Another step which in the future will save money of Kazakhstani citizens is the project of “Kazagro” on the launch of electronic portal allowing the agricultural producers directly, without intermediaries, to conclude contracts with retail outlets. This experience is already available in Russia and Israel.

By the way, in Astana the sale of milk through electronic portal has reduced the price of retail chains by 7%. In the future, this project will be launched in other cities.