01 BFC Kyrgyzstan Agriculture Finance Bulletin

03/2014

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1 K y r gy zsta n Agriculture Finance Bulletin Export of Vegetables and Meat to China to be Facilitated Kyrgyzstan to Receive $20 Million Loan from EurAsECAnti-Crisis Fund ussia to assist Kyrgyzstan with veterinary and Phytosanitary standards within Customs Union Tobacco Cultivation Decreases by 500 Ha Production to be Mechanized

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Agriculture Finance Bulletin Edition #1, March 2014

Contents

State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6)

Export of Vegetables and Meat to China to be Facilitated ............................................................. 2 Farmers Receive Loans Worth 1.3 Billion Soms .............................................................................. 2 Kyrgyzstan to Export Meat and Strawberries to Saudi Arabia ........................................................ 2 Draft Law to Promote Competitiveness of Organic Products ......................................................... 2 Government Plans Creation of Model Agricultural Cooperatives in Each District .......................... 2 Irrigation needs more Funding ........................................................................................................ 2

Foreign Aid ................................................................................................................. 3 7) 8) 9) 10)

Kyrgyzstan to Receive $20 Million Loan from EurAsEC Anti-Crisis Fund ......................................... 3 FAO to Fund Cattle Identification, Registration and Control System .............................................. 3 GIZ Launches Sustainable Forest and Pasture Management Program ........................................... 3 Russia to assist Kyrgyzstan with veterinary and Phytosanitary standards within Customs Union . 3

Private Sector.............................................................................................................. 4 11) 12) 13) 14) 15)

Poultry Farmers Request Import Duty on Eggs ............................................................................... 4 Arable Land Sees Drastic Reduction in Humus Levels ..................................................................... 4 Kadamjai Region to Grow Beans ..................................................................................................... 4 Tobacco Cultivation Decreases by 500 Ha - Production to be Mechanized .................................... 4 Baby Food Cannery to Open in Kyzyl-Kia......................................................................................... 5

Note: The Agriculture Finance Bulletin presents a monthly roundup of headlines and news stories related to investments and financing flows to Kyrgyzstan’s agricultural sector.

This bulletin is prepared by Business & Finance Consulting—a Swiss-based development finance consulting company with a long history of working in Kyrgyzstan. Currently, BFC is implementing the Agricultural Lending Programme for KfW. Read more »

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BFC. Kyrgyz Agriculture Finance Bulletin. Edition #1, March 2014

State Initiatives 1)

Export of Vegetables and Meat to China to be Facilitated

March 29th, 2014, http://kabar.kg/economics/full/73861

To facilitate the export of meat and vegetables to China, the Parliamentary Committee on Agrarian Policy, Ecology and Water Resources recommended that the State Service for Quarantine Security allow Chinese authorities to inspect products.

2)

Farmers Receive Loans Worth 1.3 Billion Soms

March 26th, 2014, http://kabar.kg/economics/full/73636

Farmers, agricultural product processors and livestock breeders received 4288 government-subsidized loans worth 1.3 billion soms. The loans were issued by Ail Bank, RSK Bank, Buckeye Bank, KICB, and Optima Bank via the governmental Financing Agriculture-2 program.

3)

Kyrgyzstan to Export Meat and Strawberries to Saudi Arabia

March 25th, 2014, http://www.timesca.com/index.php?option=com_content&view=article&id=13583:kyrgyzstan-to-exportmeat-and-strawberry-to-saudi-arabia&catid=89:agriculture-a-fisheries&Itemid=577

Agriculture Minister Taalaibek Aidaraliyev and Saudi Ambassador Abdulrahman Al-Jumah reached agreement on the export of strawberries and up to one million cattle per year to Saudi Arabia. The ambassador invited Aidaraliyev to Saudi Arabia to further discuss bilateral cooperation in agriculture.

4)

Draft Law to Promote Competitiveness of Organic Products

March 19th, 2014, http://kabar.kg/kabar/full/73334

The Ministry of Agriculture prepared a draft law on organic farming that aims to promote the performance of Kyrgyz products in the market for organic goods. The law will implement a set of new technical regulations and establish certification centers charged with verifying compliance. Problems addressed by the draft include: low seed quality, breeding weakness and the increasing degradation of agricultural land.

5)

Government Plans Creation of Model Agricultural Cooperatives in Each District

March 18th, 2014, http://www.akipress.com/news:537621/

The government announced its continued support of agricultural cooperatives via the creation of model cooperatives in each district that will benefit from access to land for crop production and support for machinery leasing.

6)

Irrigation needs more Funding Page 2

BFC. Kyrgyz Agriculture Finance Bulletin. Edition #1, March 2014

March 13th, 2014, http://www.timesca.com/index.php?option=com_content&view=article&id=13521:irrigation-needs-morefunding-to-boost-agricultural-production-in-kyrgyzstan&catid=89:agriculture-a-fisheries&Itemid=577

The Ministry of Agriculture and Land Reclamation is to allocate 106 million soms for the reparation of irrigation networks this year (178 million soms in 2013) – 23% of repair works have been completed thus far. According to the National Sustainable Development Strategy for 2013-2017 the government will finance the introduction of 10,000 ha of new irrigated agricultural lands.

The irrigation system has suffered due to a lack of investment over the past 20 years. Disrepair of irrigation systems combined with poor land management have resulted in a drop in yields. Due to the poor condition of irrigation canals, water loss from the catchment to fields totals more than 40%. Water Consumer Associations (WCA) have been created to maintain canals, significantly improving irrigation.

While there has been an increase in WCAs, they cover only just over half of irrigated land.

Foreign Aid 7)

Kyrgyzstan to Receive $20 Million Loan from EurAsEC Anti-Crisis Fund

March 24th, 2014, http://www.timesca.com/index.php?option=com_content&view=article&id=13580:kyrgyzstan-to-receivetwo-loans-from-eurasec-anti-crisis-fund&catid=79&Itemid=567

The Eurasian Development Bank issued Kyrgyzstan with a $20 million loan for the purchase of 4.2 thousand units of agricultural machinery – including tractors and grain harvesters. In the coming two years, the government will purchase the machinery and lease it to farmers. About 10% will be used to build a servicing infrastructure for the machinery. Over the next 20 years, farmers will receive machinery worth $120 million; in addition, the Kyrgyz Finance Ministry will use the leasing commission to create a special fund to continue the leasing program after the loan is repaid, said the bank.

8)

FAO to Fund Cattle Identification, Registration and Control System

March 24th, 2014, http://www.eng.24.kg/community/169582-news24.html

The Food and Agricultural Organization of the UN (FAO) and the Ministry of Agriculture will cooperate on the development cattle identification, registration and control system. According to the FAO, the lack of such a system represents a major barrier for the export of Kyrgyz stockbreeding products – representing an estimated 30% earnings shortfall. The project will be funded by the FAO at a cost of $417,000 and is estimated to take one and half years to complete.

9)

GIZ Launches Sustainable Forest and Pasture Management Program

March 18th, 2014, http://www.akipress.com/news:537620/

The GIZ launched a 5-year project promoting sustainable forest and pasture management in the BazarKorgon district of Jalal-Abad. Financed by the German Federal Ministry for Economic Cooperation and Development, the project aims to protect biodiversity, adapt to climate change and conserve and enhance residents' income in southern Kyrgyzstan.

10) Russia to assist Kyrgyzstan with veterinary and Phytosanitary standards within Customs Union Page 3

BFC. Kyrgyz Agriculture Finance Bulletin. Edition #1, March 2014

March 17th, 2014, http://www.akipress.com/news:537538/

With regard to its envisaged accession to the Customs Union, Russia is to support Kyrgyzstan in the meeting of the Union’s veterinary and phytosanitary standards via the delivery of pharmaceuticals and the provision of expertise via training programs based in Russia.

Private Sector 11) Poultry Farmers Request Import Duty on Eggs March 24th, 2014, http://www.knews.kg/econom/47060_ptitsevodyi_prosyat_vvesti_sezonnuyu_poshlinu_na_import_yaits_v_kyirgyizstan/

In a meeting with the parliamentary Committee on Agrarian Policy, Water Resources, Environment and Regional Development, the Association of Poultry Producers demanded stronger protection of the domestic market. Domestic producers are unable to compete with imported eggs, mainly from Russia – where production costs are much lower due to a favorable market environment. The association requested an import tariff of 65 USD per 1000 eggs be applied in order to protect domestic production.

12) Arable Land Sees Drastic Reduction in Humus Levels March 20th, 2014, http://www.eng.24.kg/community/169545-news24.html

According to scientist Zhamin Akimaliev, arable land is seeing a drastic reduction in humus content.

This is due to the inefficient and variable farming engendered amongst Kyrgyzstan’s 325,000 small farms which are the result of the Akayev-Talgarbekov agrarian reform in the 1990s.

13) Kadamjai Region to Grow Beans March 18th, 2014, http://kabar.kg/regions/full/73270

A pilot bean plantation was launched in the Kadamjai region of Batken oblast with 20 tons of seeds from Talas. Bean-acreage is expected to increase in 2014.

14) Tobacco Cultivation Decreases by 500 Ha - Production to be Mechanized March 17th, 2014, http://www.timesca.com/index.php?option=com_content&view=article&id=13546:area-under-tobaccoshrinking-in-kyrgyzstan&catid=89&Itemid=577

According to Jumabek Asylbekov, director of Food Security and Agro-Marketing at the Ministry of Agriculture, tobacco cultivation will decrease by 500 ha to 3000 ha. To minimize the detrimental effects of hard-labor, the Ministry plans to attract new investors to mechanize the harvest, says Asylbekov.

In 2013, about four thousand children were relieved from work on tobacco fields, according to Asylbek Totgulov, chairman of the Trade Unions Federation of Kyrgyzstan.

Every year the price of raw tobacco increases due to inflation, says Georgy Burnadze of Sunnel Tobacco Company.

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BFC. Kyrgyz Agriculture Finance Bulletin. Edition #1, March 2014

15) Baby Food Cannery to Open in Kyzyl-Kia March 17th, 2014, http://www.knews.kg/econom/46804_v_kyizyilkie_budet_otkryit_konservnyiy_zavod_po_proizvodstvu_detskogo_pitaniya_iz_kostochkovyih_rasteniy/

Agroplast, an agricultural cooperative in Kyzyl-Kia, is to open a factory producing baby food from peaches, cherries and apricots. The company is currently negotiating the acquisition of state-owned equipment.

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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content.

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