Kazakhstan Unveils New Plan Of Agro-Industrial Complex Development

Kazakhstan Unveils New Plan Of Agro-Industrial Complex Development

Program will subsidize more small farmers, reduce funding for wheat production and increase subsidies for oilseeds.

Over the next four years, Kazakhstan plans to improve the profitability of its grain industry by 30% to 40% through the introduction of a new state grants distribution scheme, approving of new organic standards and shifting from cultivation of wheat toward corn and soybeans, in accordance to the State Program of Agro-Industrial Complex Development in 2017-2021.

The key point of this new program is to enroll 670,000 small agricultural farmers into cooperatives with further engagement into subsidizing programs. From 2013-2016, nearly 1% of market participants accounted for 70% of state support, meaning only 68,000 large holdings received government aid during this time. The newly proposed schemes set the main target to ensure reasonable distribution of these funds, so they would be available for small producers as well.

The new program involves significant funding, as the government eyes to pump KZT 423 billion (U.S.$1.25 billion) in the segment of crop farming. In addition, KZT 1.5 billion (U.S.$4.5 million) should be spent on research activities to study land fertility and KZT 131 billion (U.S.$38 million) will be spent on phytosanitary activities in the fields. Additionally, the government intends to enter updated insurance programs, which should cover 100% of grain producers, although the amount of funding for this has yet to be determined.

Perhaps the most important financial point of the new program is that starting next year Kazakhstan will drastically cut funding of wheat production from KZT 7,100 (U.S.$21) per hectare to KZT 600 (U.S.$ 1.78) per hectare. Subsidies for corn also have been reduced from KZT 2,472 (U.S.$7.3) per hectare to KZT 1,600 per hectare (U.S.$4.7), while subsidies for soybeans, rapeseed and other oilseeds have been raised from KZT 7,460 (U.S.$22.1) to KZT 11,918 (U.S.$35.3) per hectare.

By 2021, Kazakhstan’s Agricultural Ministry plans to increase irrigated land area, expanding continuous-flow irrigated land 45%, or 610,000 hectares, to almost 2 million hectares, and flood-irrigated land from 368,000 hectares to 597,000 hectares. This measure should contribute to improvement of average yield, as productivity on irrigated land in Kazakhstan at the moment is nearly 30 times higher compared to non-irrigated land, according to the Ministry.

At the same time, the program has not specified any new targets in terms of production and yield, even though the old program, adopted back in 2013 and named Agribusiness 2020, envisaged a gradual increase in performance up to 21 million tonnes of grain production and 9.1 million tonnes of exports by 2020. In 2016, the country produced 23.7 million tonnes of grain, while exports are expected to be close to 9.5 million tonnes.

These figures are the country’s highest in nearly 25 years, but the plans stated by Kazakhstan President Nursultan Nazarbaev are even more ambitious, as he previously set the task for the government to make Kazakhstan one of the world’s top five grain exporters, primarily focusing on organic grain production.

In the Soviet era, North Kazakhstan production went primarily for domestic use, but now, with nearly 40 million hectares of agricultural land and more becoming available, the country has the ability to feed other parts of the world, Nazarbaev said in a Dec. 1, 2016, press conference.