17 BFC Kyrgyzstan Agriculture Finance Bulletin

07/2015

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17 K y r gy z s ta n Agriculture Finance Bulletin Veterinary and Phytosanitary Labs Receive International Certification Poland Issues EUR 40 Million Soft Loan for Agricultural Machinery Russian-Kyrgyz Development Fund to Focus on Agriculture Sector Italian Company to Import Kyrgyz Beans

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Agriculture Finance Bulletin Edition #17, July 2015

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

Equipment Leasing Scheme Failure due to Lack of Marketing, Says Prime Minister...................... 2 Prime Minister Requests Turkey Reduce Import Duties on Kyrgyz Beans ...................................... 2 Government to Purchase 20,000 Tons of Wheat ............................................................................ 2 Veterinary and Phytosanitary Labs Receive International Certification ......................................... 2 Preferential Agro-Loans Worth KGS 2.6 Billion Disbursed in 2015 ................................................. 3

Foreign Aid ................................................................................................................. 3 6) 7) 8) 9)

IDB to Fund Sustainable Village Development Project.................................................................... 3 Poland Issues EUR 40 Million Soft Loan for Agricultural Machinery ............................................... 3 Russian-Kyrgyz Development Fund to Focus on Agriculture Sector ............................................... 3 HACCP Procedures Covered at Fruit and Vegetable Food Safety Seminar ..................................... 4

Private Sector.............................................................................................................. 4 10) 11) 12) 13) 14) 15)

Fruit and Vegetable Exports Total 170,900 Tons ............................................................................ 4 Italian Company to Import Kyrgyz Beans ........................................................................................ 4 FAO: Pastureland Damaged by Rapid Privatization and Deterioration of Infrastructure ............... 5 Poland Offered Joint Aquaculture Venture in Kyrgyzstan ............................................................... 5 Food Products to Be Exported to Tinhua, China ............................................................................. 5 About 50,000 Tons of Fuel Needed for Harvesting ......................................................................... 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.

BFC Max-Högger-Strasse 6 CH-8048 Zurich, Switzerland

Phone: +41 44 784 22 22 Fax: +41 44 784 23 23

info@bfconsulting.com www.bfconsulting.com

BFC. Agriculture Finance Bulletin.

State Initiatives 1)

Equipment Leasing Scheme Failure due to Lack of Marketing, Says Prime Minister

July 24th, 2015, http://www.vb.kg/doc/320953_sarpashev_raskritikoval_minselhoz_za_neinformirovannost_fermerov_o_lizinge.html

According to Deputy Minister of Agriculture Janybek Kerimalieva, the mere two leasing applications received for specialized equipment are due to farmers being unable to pay the deposit.

First Deputy Prime Minister Tayirbek Sarpashev, however, dismissed the claim, noting that, during his tours of the country, many farmers were completely unaware of the existence of the scheme.

Sarpashev lambasted the Ministry of Agriculture for its failure to properly market the scheme, noting that, if no one knows about it, no one will apply.

2)

Prime Minister Requests Turkey Reduce Import Duties on Kyrgyz Beans

July 23rd, 2015, http://kabar.kg/eng/economics/full/13598

Having been a major supplier of beans to Turkey until 2014, recent hikes in import duties have rendered the trade unprofitable, said Prime Minister of Kyrgyzstan Temir Sariev.

Sariev met with Turkish Foreign Minister Mevlut Cavusoglu to discuss possible solutions.

The Prime Minister also suggested Turkish businesses invest in the Kyrgyz mining and energy sectors.

3)

Government to Purchase 20,000 Tons of Wheat

July 21st, 2015, http://www.agro.kg/ru/news/7267/

The government will purchase 20,000 tons of domestic grain at 16.5 som/kg to replenish state reserves, said the Ministry of Agriculture.

The price was set by the State Agency for Antimonopoly Regulation. Quality will meet GOST standards, set by the Euro-Asian Council for Standardization, Metrology and Certification (EASC).

Chui wheat quality has improved in recent years and can compete with foreign imports, according to the Ministry, adding that it is taking time for local millers to catch on.

Apart from quality indicators, wheat prices are also subject to gluten, impurity and moisture factors added the Ministry.

4)

Veterinary and Phytosanitary Labs Receive International Certification

July 10th, 2015, http://www.eng.24.kg/community/176404-news24.html ; http://www.eng.24.kg/community/176407news24.html

The Republican Center for Veterinary Diagnosis and the Central Laboratory for Plant Quarantine have received international standard certification, opening the door to global markets.

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BFC. Agriculture Finance Bulletin.

By September 1, the veterinary laboratory will receive additional equipment worth USD 5.9 million, significantly streamlining processes, said Deputy Director Asan Kydyrgychev.

According to Karamat Myrzakulova, Director of the Central Laboratory for Plant Quarantine, a number of laboratories across the country have received international certification.

5)

Preferential Agro-Loans Worth KGS 2.6 Billion Disbursed in 2015

July 9th, 2015, http://www.eng.24.kg/economics/176396-news24.html

To date this year, farmers received preferential loans worth 2.6 billion, reported the Ministry of Finance.

The loan subsidy budget totals 210 million soms for 2015 and 120 million soms for 2016, said the Ministry, adding that total expenditure this year has reached 209.9 million soms already.

The preferential agro-lending program is in its third year.

Foreign Aid 6)

IDB to Fund Sustainable Village Development Project

July 16th, 2015, http://kabar.kg/eng/economics/full/13558

A loan agreement with the Islamic Development Bank (IDB) was signed by President Almazbek Atambayev.

The funds are earmarked for the “Sustainable Development of Villages in the Kyrgyz Republic” project.

7)

Poland Issues EUR 40 Million Soft Loan for Agricultural Machinery

July 13th, 2015, http://www.vb.kg/doc/319772_polsha_vydelila_kyrgyzstany_40_mln_evro_na_razvitie_selskogo_hoziaystva.html

Poland has issued a soft loan of EUR 40 million to be spent on agricultural machinery and rural development, according to the Kyrgyz government press office.

A Polish delegation headed by Deputy Minister of Economy Adjey Dyha met with Prime Minister Temir Sariev to discuss further economic cooperation.

8)

Russian-Kyrgyz Development Fund to Focus on Agriculture Sector

July 7th, 2015, http://www.eng.24.kg/economics/176371-news24.html

Russian-Kyrgyz Development Fund will focus on financing agriculture and agro-processing projects, said its Chair Nursulu Akhmetova.

Specific projects cannot yet be named, said Akhmetova, however, developing exports will be a priority.

Adequate project planning has been a major issue, with only 10 of 50 applications meeting the Fund’s requirements, said Akhmetova.

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BFC. Agriculture Finance Bulletin.

9)

HACCP Procedures Covered at Fruit and Vegetable Food Safety Seminar

July 7th, 2015, http://www.akipress.com/news:561506/

A fruit and vegetable food safety seminar – part of the “Development of the Fruit and Vegetable Processing Sector in Kyrgyzstan and Tajikistan” project – was held at the Tajik Ministry of Economic Development and Trade.

HACCP (Hazard Analysis and Critical Control Points) procedures were among topics covered. The seminar was organized by the National Association of Small and Medium Businesses, NGO “British Expertise” and the Association of Food Industry Enterprises of Kyrgyzstan.

A broad spectrum of fruit and vegetable processing stakeholders attended, including representatives of SMEs (small and medium enterprises), consulting companies, and academic and state institutions.

The project envisages a comprehensive strengthening of the sector on domestic, regional and international markets.

Private Sector 10) Fruit and Vegetable Exports Total 170,900 Tons July 23rd, 2015, http://tazabek.kg/news:393581

To date in 2015, 170,900 tons of fruits and vegetables were exported – a 49.1% increase year-on-year (from 114,600 tons), according to the Ministry of Agriculture.

The Ak-Tilek border crossing sees 50-80 tons of fruit and vegetables per day head for Kazakhstan and Russia, said the Ministry, adding that customs duties have fallen sharply.

Last week, 382 tons of cabbage, 123 tons of red peppers, 48 tons of garlic, 238 tons of beans, 525 tons of apricots, 33 tons of strawberries, 169 tons of peach, 46 tons of watermelon, and 9 tons of potatoes and other fruit and vegetables were exported, reported the Ministry.

11) Italian Company to Import Kyrgyz Beans July 22nd, 2015, http://www.eng.24.kg/economics/176507-news24.html

Agribosco, an Italian company, plans to import Kyrgyz beans, according to Chairman of the Kyrgyz Chamber of Commerce Marat Sharshekeev. Meetings were held at a Kyrgyz-Italian business forum in Bishkek.

Kyrgyz beans are already being sold on the Italian market after passing through several intermediaries, said the Chairman, explaining the Agribosco’s rationale.

Italian packaging companies expressed interest in Kyrgyz soft drinks, while Kyrgyz businesses expressed interest in Italian meat and cheese technologies.

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BFC. Agriculture Finance Bulletin.

12) FAO: Pastureland Damaged by Rapid Privatization and Deterioration of Infrastructure July 20th, 2015, http://www.agro.kg/ru/news/7254/

The transfer of pasturelands to private ownership following the collapse of the Soviet Union has damaged agriculture in Kyrgyzstan, according to a UN Food and Agriculture Organization (FAO) report.

Prior to the collapse, the livestock sector received significant human resources and financial, scientific and technical support, with 9 million hectares of pastures – 88% of total agricultural land – maintained in good condition, said the report.

Following independence, Kyrgyzstan undertook major reforms, with collective farms distributed amongst farmers. Investment dried up and infrastructure fell into disrepair. The situation was exacerbated by a decrease in nomadism, leading to over-grazing, concluded the report.

The FAO recommends improving farmer education and strengthening cooperation with local authorities and private investors to rebuild roads, bridges and irrigation systems.

13) Poland Offered Joint Aquaculture Venture in Kyrgyzstan July 13th, 2015, http://www.knews.kg/econom/66691_kyirgyizstan_predlagaet_polshe_sozdat_sp_po_vyiraschivaniyu_ryibyi/

At a bilateral business forum held in Bishkek, Poland was offered the opportunity to take part in a joint fish farming venture in Kyrgyzstan.

The sides agreed to exchange expertise on cereal, herb and feed cultivation, domestic and imported phytosanitary control mechanisms, as well as diagnosis and destruction of harmful organisms.

Kyrgyzstan requested technical assistance in milk, meat, fruit and vegetable processing.

14) Food Products to Be Exported to Tinhua, China July 2nd, 2015, http://kabar.kg/eng/economics/full/13428

Kyrgyz meat, fruit and vegetables will be exported to Tinhua, Zhejiang province, said Director of Investment Promotion Agency Almaz Sazbakov.

To facilitate exports to China, Tinhua representatives also expressed interest cooperating on the construction of processing plants in Kyrgyzstan, said Sazbakov.

The Investment Promotion Agency is a department of the Ministry of Economy.

15) About 50,000 Tons of Fuel Needed for Harvesting July 1st, 2015, http://www.eng.24.kg/economics/176327-news24.html

As of early June, farming activities required 50,200 tons of fuel, according to the Association of Oil Traders. No problems with supply and delivery were recorded, it added.

Preparations are underway to meet requirements for the rest of the year. Demand during harvest reaches 50,800 tons of fuel, including 41,200 tons of gasoline and 9,600 tons of diesel, said the Ministry of Agriculture. As of June 26, 43% of the fuel was secured, said the Ministry.

Traders continue to provide fuel requirements on time, assured the Association.

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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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