Development problems of agro-industrial complex in the Republic of Kazakhstan

The article is about development of agricultural complex in Kazakhstan. There are main problems of agricultural sector discussed in this work. All the information is based on the statistical key figures. Also the article notes importance of cluster implementation, government support and government programs.

Key words: agricultural sector, cluster, government support programs, agribusiness, science, competitiveness.

Significant results in the agricultural sector of the country have been achieved over a period of independence of the Republic of Kazakhstan (hereinafter — RK): there is a constant output growth on the basis of market relations, increase in productivity and labor efficiency, capital maintenance and infrastructure recovery of the sector are carried out, self-sufficiency in staple foods has been achieved, significant increase in export of cereal crops, oilseeds and fishery products has been achieved. [1, p.4]

The world food crisis stimulates all countries to build their own agricultural production. In this regard, the issue of food security has sharply risen. According to the Statistics Agency of Kazakhstan, in 2013 the enterprise for processing of agricultural products produced 5 % of the national industrial output and 16.5 % of manufacturing industry. The main share in the production of foodstuffs belongs to cereal-processing industry (23.5 %), dairy (16.3 %), bakery (15.3 %), meat processing (13.4 %), horticultural (8.1 %), oil and fat (7, 8 %) industries. There is a high level of imports for some products. By the end of 2013 the country imported food products worth more than 3 billions of dollars: mostly pastry (544.6 millions of dollars), dairy products (419.5 millions of dollars), sugar (240.5 millions of dollars), poultry meat (186.1 millions of dollars), and horticultural canned goods (155.6 millions of dollars). [2] In general, the volume of foreign trade of derived products of agricultural raw materials and food industry of the country in 2013 amounted to 4 250 millions of dollars (Table 1). The main reasons for the high proportion of imports, weak growth in production volumes of domestic products and incomplete workload of enterprises is a problem in the field of technical regulation, including the monitoring of standards, lack of qualified personnel, low development level of trade and logistics infrastructure, low availability of working capital, high proportion of morally worn-out equipment, and lack of qualified domestic raw materials.

Table 1

Import structure over a period of January-December of 2014, thousand US dollars

Main products are imported to Kazakhstan on a large scale, only expensive luxury foods are imported less. This situation is dangerous for the country's economy: dependence on the external market merely increases, competition, in both domestic and foreign markets increases. Kazakhstan provides itself and neighboring countries by a few positions, mostly bread and cereal products. Although the production of many of the imported goods can be carried out in the country (canned meat, macaroni products, margarine, yogurt, sausages, confectionery products, vegetable oils, and others.). But at the moment the level of dependence on imports of basic food products is high. [3]

In a market economy the agricultural sector requires an optimal combination of state regulation and market forces, makes it necessary to develop a theory of stabilization and improvement of state influence practices on the macro- and micro-economic processes in agriculture and related industries. Currently, an important component of sustainable development of the agricultural sector is formation and implementation of cluster initiatives in the most competitive sectors of the agro-industrial complex, which would entail improving agricultural technologies and quality of products, increase in value added and income of agro-industrial complex. In given period of economic development of the Republic of Kazakhstan analysis of the agricultural sector, in terms of its factors of production, evaluates it as a very attractive sector for inclusion in the list of priority, in order to accelerate development through the cluster approach. The geographical proximity of potential participants in Kazakhstan is one of the factors that makes it possible to use the cluster approach fully in the agriculture development.

The main objective of the clusters establishment and development in the agro-industrial complex of the Republic of Kazakhstan is to create conditions for the expansion of domestic production and improving products competitiveness in these industries on the basis of integrative ties formation and government regulation improvement. [4] According to the Concept of prospective national clusters formation in the Republic of Kazakhstan until 2020, a platform for coordination of vision, plans and programs for cluster members, as well as its development strategy is the Council under the chairmanship of the Minister of Agriculture of the Republic of Kazakhstan. The Council consists of an integrator and participating enterprises. In this case, the integrator is a Joint National Executive Holding company (thereafter — NEH) «KazAgro». Members of the Board are National Chamber of entrepreneurs (industry association), industry research institutes, AEO «Nazarbayev University», JSC «Management Company FTZ PIT», as well as universities. [5]

Development of clusters in the sectors of manufacturing and processing is promising nowadays:

-          Grain (in Akmolinskaya, Kostanaiskaya and North-Kazakhstan regions);

-          Milk (in Akmolinskaya, Almatinskaya, East-Kazakhstan, Kostanaiskaya and North-Kazahstan regions);

-          Fruits and vegetables (in Almatinskaya, Zhambylskaya and South Kazakhstan regions);

-          Meat (in Kostanaiskaya, Pavlodarskaya and North Kazakhstan regions);

-          Rice (in the Kyzylordinskaya region, fish — in Atyrauskaya, East Kazakhstan and Karagandinskaya regions, cotton — in South Kazakhstan region);

-          Hides (in Aktubinskaya, Karagandinskaya and North Kazakhstan regions);

-          Wool (in Aktubinskaya, East Kazakhstan and Zhambylskaya regions).

There is an active merging of science and agriculture today due to the support of the state, which will solve the strategic tasks, set by the President of RK Nursultan Nazarbayev, to become a leader in the production of organic agricultural products. [6] Budget is allocated annually in an amount of almost 5 billion tenge for only agricultural research and development, starting this 2015 year this amount will exceeded 6 billion. The cluster approach of regional development involves intertwining of science, business and government. For example, in the Almaty region, scientists are working together with farmers in the fields and cattle-breeding complexes, conducting experiments. Kazakh Research Institute of Plant Protection and Quarantine has been working for two years with the farm «Bayserke-Agro» where people are interested in innovation, and realize that without scientific support in the face of fierce competition, especially in the run-up to accession to the WTO, it is very hard not survive. Together they were able to obtain the highest possible yields of soybeans, vitreous wheat, corn and alfalfa. «Bayserke-Agro» provided 3.5 thousand hectares for the elaboration. High crop yield was made possible by modern technology and innovations, including domestic developments in the form of biologically active substances and biological products, for example, the drug «Akpinol-alpha», which gives 50 % increases in productivity, and many others. [7]

In addition, Ministry of Agriculture opens extension service centers in all areas with large farms, the essence of which is to become a source of useful knowledge to farmers. In addition to the «bare» theory in practice listeners will be able to see its application, in other words, hold in their hands the same cast grain grown on an intensive program. In «Bayserke-Agro» such training center is the first project of public-private partnership, where the state involved co-financing the purchase of equipment for classrooms, program development workshops, as well as paying for accommodation for farmers who came to study, and lectures. In addition, each training center will have its own profile.

Today society comes to the understanding that agriculture is not only profitable, but also fun to work, in other words, farming becomes prestigious. Moreover, this requires deep knowledge; otherwise, for example, not any mechanizer will get behind the instrumental board of modern computerized tractor. The same situation is in the dairy shop where not milkmaids work but robots, which juice well without human participation, fatmilk and «read» the state of cows’ health. There are also robots-wipers which are involved in cleaning the livestock departments, and the floor in rooms is specially made with a barely noticeable slope to help machines. Today's farmers are happy to come to work on such farms, where even the ventilators are installed under special mathematically defined degree to give animals the maximum coolness.

Map regionalization of Kazakhstan is published on the website of the Ministry. There are directions specified in this Map (taking into account all the nuances — amount of food, grazing lands, water resources, the number of specialists and many other things), indicating in which region it is better to develop one or the other agricultural business. Moreover, there is a subsidy program «tied» to the regionalization map, the goal of which is to get people interested in priority area. Therefore, a farmer who has chosen the right priority will receive the full state support, including scientific support.

It is worth noting that there are three new cheap loan products for the villagers. They started in Kazakhstan in 2014. JSC «Agrarian Credit Corporation» starting in 2014 began to implement three new programs, under which loans will be issued for the purchase of sheep on the program «Altyn asyk», for the development of horse breeding program «Kulan» and the construction of infrastructure for flooding of pastures. [8] As part of these programs it is expected to allocate credits at a rate of 14 % per annum (subject to subsidy from 4 % to 7 % per annum, depending on the purpose of the loan), which are issued for the purchase of breeding stock of sheep and goats, horses and sires, as well as purchase and repair of fixed assets and working capital financing. At the same time credit program for development of family farms in the dairy farming «Yrys» will be implemented through JSC «Fund for Financial Support of Agriculture» and «KazAgroFinance». [9] According to the data of Ministry of Agriculture, in the framework of this program loans for the purchase of pedigree breeding stock of dairy cattle breed and acquire the necessary machines and equipment will be issued at the rate of 11 % (including subsidy of up to 7 %) for up to 84 months. The main objective of this program is to stimulate the activity of family dairy farms with a capacity of 50, 100 and 200 animals. In addition, in the agricultural department they remind that starting in 2014 farmers can receive subsidies to compensate 50 % of the investment for the purchase of machinery and equipment, construction of feedlots, multiplication farms, poultry farms, meat processing plants, and feed mills.

Thus, under the state program of agriculture development in Kazakhstan there are 217 applications received from subjects of agriculture sector to reduce loan debt burden. The program provides a mechanism for financial recovery of agribusiness entities, the essence of which is the reduction of the cost and extending the old loan payables. At the moment loan payables were approved in the amount of 167 billion tenge 217 applications of agribusiness entities. Until the end of 2014 it was projected to use a budget of 300 billion according to the program. Existing loans have been facilitated on that amount. [10]

In conclusion, the remarkable thing is that there is a number of programs, the main of which is the program for the agriculture development in the Republic of Kazakhstan for the period of 2013–2020 «Agribusiness 2020", in order to increase productivity and improve business conditions in the agricultural sector. Today, in the context of the WTO not only opportunities have opened for Kazakhstan, but also the hard realities of competition. Under these conditions, new aid instruments will help to mitigate the period of adaptation for Kazakh agribusiness. It is necessary to continue implementing such programs to make each landowner be able to participate in these programs. Each of the instruments of state support should act functionally and addressed, to work together as one harmonious mechanism.

References:

1.                  Program for agroindustrial complex development in the Republic of Kazakhstan for the period of 2013–2020 «Agribusiness — 2020»

2.                  Official site of the Statistics Agency of the Republic of Kazakhstan

3.                  The «Eurasian Economic Club of Scientists» communicative Internet platform «G-global» on www.group-global.org site

4.                  National Scientific Portal of the Republic of Kazakhstan on http://www.nauka.kz/page.php?page_id=172&lang=1&article_id=72

5.                  Joint National Executive Holding company «KazAgro» http://www.kazagro.kz/ru/

6.                  Ministry of Agriculture of the Republic of Kazakhstan www.mgov.kz

7.                  The newspaper «Kazakhstanskaya pravda» http://www.kazpravda.kz/

8.                  International Information Agency «Novosti-Kazakhstan» http://www.newskaz.ru/economy/20140627/6655544.html

9.                  Financial Support Fund of agriculture http://www.kazagro.kz/web/fond

10.              International Informational agency «Kazinform» http://ns1.inform.kz/rus/article/2673733