18 BFC Kyrgyzstan Agriculture Finance Bulletin

08/2015

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18 K y r gy z s ta n Agriculture Finance Bulletin USD 2 Million Logistics Center to Boost Fruit and Vegetable Exports Russia Provides USD 6 Million to FAO for Strengthening of Food Security in Armenia, Kyrgyzstan and Tajikistan Fruit Juice Imports Total more than USD 1 Million From January to June, Agricultural Exports Total USD 67 Million

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Agriculture Finance Bulletin Edition #18, August 2015

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

EEU’s Phytosanitary and Veterinary Safety Requirements Met...................................................... 2 Kazakhstan Opposes Removal of Kyrgyz Veterinary Border Controls ............................................. 2 Russian Khabarovsk Territory to Import Kyrgyz Fruits and Vegetables .......................................... 2 State to Purchase 20,000 tons of Wheat – Infestations Rise .......................................................... 2 USD 2 Million Logistics Center to Boost Fruit and Vegetable Exports ............................................ 3 Law on Foreign Financial Institution Ownership of Agricultural Land Amended ............................ 3

Foreign Aid ................................................................................................................. 3 7) 8)

Russian-Kyrgyz Development Fund Receives 114 Applications Worth USD 940 Million ................ 3 Russia Provides USD 6 Million to FAO for Strengthening of Food Security in Armenia, Kyrgyzstan and Tajikistan................................................................................................................................... 3

Private Sector.............................................................................................................. 4 9) Fruit Juice Imports Total more than USD 1 Million ......................................................................... 4 10) 25% of Fruit and Vegetable Crop Lost due to Lack of Investment in Logistics Centers and the Processing Sector............................................................................................................................. 4 11) Agricultural Output Totals KGS 10.29 Billion in First Half of 2015 .................................................. 4 12) Cultivated Area Totals 1.19 Million Hectares .................................................................................. 5 13) Fruits and Vegetable Processing Falls by 22% ................................................................................. 5 14) From January to June, Agricultural Exports Total USD 67 Million ................................................... 5 15) Wheat Harvest Increases to 435 Million Tons ................................................................................. 6

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 »

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

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State Initiatives 1)

EEU’s Phytosanitary and Veterinary Safety Requirements Met

August 24th, 2015, http://www.akipress.com/news:564024/

With two veterinary and phytosanitary laboratories receiving the necessary accreditation, and legal and road regulation concerns raised by Eurasian Economic Union (EEU) experts addressed, Kyrgyzstan now meets the safety standards set by the organization, said Deputy Director of the State Inspectorate for Veterinary and Phytosanitary Security Ruslan Beishenkulov.

Kyrgyzstan’s agricultural products are ready for export to the EEU, he added.

2)

Kazakhstan Opposes Removal of Kyrgyz Veterinary Border Controls

August 24th, 2015, http://www.akipress.com/news:564000/

Saktash Khasenov, Chairman of the Kazakh Veterinary Control and Supervision Committee, has opposed the early removal of veterinary controls on its border with Kyrgyzstan.

The International Epizootic Bureau recommends that border inspections not be removed before a country has been declared disease-free for at least two years – especially in the case of FMD, said the Chairman. Since Kyrgyzstan’s last outbreak of Foot and Mouth Disease (FMD) was recorded in August 2014, it is not appropriate to remove inspections at this time, argued Khasenov.

Moreover, following border inspections conducted by the Committee, it was concluded that Kyrgyzstan lacks the necessary veterinary inspection equipment, added the Chairman.

Meanwhile, Kazakhstan continues to import milk from seven licensed dairies in southern Kyrgyzstan.

3)

Russian Khabarovsk Territory to Import Kyrgyz Fruits and Vegetables

August 23rd, 2015, http://www.vb.kg/doc/323628_kyrgyzstan_stanet_eksportirovat_selhozprodykciu_v_habarovskiy_kray.html

The Russian territory of Khabarovsk is interested in importing Kyrgyz fruits and vegetables, according to Kadyrbek Myrzabaev, Honorary Consul of the Kyrgyz Republic in Khabarovsk.

The Ministries of Agriculture of both parties are interested in reaching an agreement, after which export volumes will be determined, added the consul. The goods are likely to be transported by truck.

4)

State to Purchase 20,000 tons of Wheat – Infestations Rise

August 17th, 2015, http://www.vb.kg/doc/323160_minselhoz_ykazal_na_rost_zarajennosti_pshenicy_vrediteliami_i_bolezniami.html

This year, the state will purchase 20,000 tons of domestic wheat, with 7,000 tons already acquired, reported the Ministry of Agriculture. More than 30% of the total wheat crop has been harvested, reaching 50% in the Chui and Jalal-Abad regions.

Each industrial bakery has wheat quality testing equipment capable of detecting pest infestation and gluten levels. This year has seen an increase in beetle, weevil, kernel smudge and loose smut infestations, reported the Ministry.

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5)

USD 2 Million Logistics Center to Boost Fruit and Vegetable Exports

August 17th, 2015, http://www.timesca.com/news/15643-kyrgyzstan-building-logistics-centers-to-boost-agricultural-export

A 2,700 square meter, USD 2 million, pilot logistics center under construction in the Sokuluk district will have automated temperature control systems and its modern, Dutch technology will meet European standards, according to Deputy Prime Minister Valery Dill. The center will be capable of storing up to 30,000 tons of fruits and vegetables, he added.

The first of many such centers, it will help fruit and vegetable producers meet the Eurasian Economic Union’s (EEU) sanitary requirements, facilitating exports, said the Minister.

The continued explanation of cooperatives will help boost efficiency and quality standards, increasing competitiveness, said the Minister.

Kyrgyzstan became a full member of the EEU last week.

6)

Law on Foreign Financial Institution Ownership of Agricultural Land Amended

August 3rd, 2015, http://www.vb.kg/doc/321914_sokratilsia_srok_peredavaemyh_v_arendy_inostrancam_selhozzemel.html

President Almazbek Atambayev signed into law an amendment on foreign land ownership. With regards to agricultural land, the duration of temporary ownership contracts for foreign financial institutions has been reduced, while the rules governing extensions have also been amended. As for existing temporary ownership contracts, the changes will come into effect once they expire.

The law comes into effect 15 days after publication.

Foreign Aid 7)

Russian-Kyrgyz Development Fund Receives 114 Applications Worth USD 940 Million

August 18th, 2015, http://ru.sputnik.kg/economy/20150818/1017491196.html

The Russian-Kyrgyz Development Fund received 114 applications worth USD 940 million, said Chairwoman Nursulu Akhmetova.

Eight projects worth USD 56 million have already been accepted, added Akhmetova.

Kyrgyz Prime Minister Temir Sariev said selected projects will be launched starting September, notably the construction of greenhouses, an agro-industrial complex, and a hydropower plant.

8)

Russia Provides USD 6 Million to FAO for Strengthening of Food Security in Armenia, Kyrgyzstan and Tajikistan

August 4th, 2015, http://arka.am/en/news/economy/russia_to_provide_6_million_to_fao_for_food_security_of_armenia_kyrgyzstan_and_tajikis tan/

Russia has contributed USD 6 million to the UN Food and Agriculture Organization (FAO) to support its efforts strengthening food security and sustainable agricultural development in Armenia, Kyrgyzstan and Page 3

BFC. Agriculture Finance Bulletin.

Tajikistan, according to Vladimir Rakhmanin, FAO Deputy General Director and Regional Representative for Europe and Central Asia.

The funds can be used to increase food security via state capacity building, investment planning and software development, according to Kostas Stamoulis, the FAO’s Head of Agricultural Development Economics.

Despite considerable economic and household earnings growth in recent years, the countries remain highly sensitive to macroeconomic and climatic shocks, according to the FAO. Agriculture remains an important sector in all three countries, accounting for 20% and 27% of Kyrgyzstan’s and Tajikistan’s GDP, respectively. In Armenia, 40% of the workforce is engaged in agriculture, while the figures are 60% in Tajikistan and 33% in Kyrgyzstan.

The landlocked countries’ food security is largely dependent on imports and remittances from neighboring countries, according to the FAO.

Private Sector 9)

Fruit Juice Imports Total more than USD 1 Million

August 24th, 2015, http://www.akipress.com/news:563983/

From January to May 2015, 1,100 tons of fruit juice worth USD 1,007,900 were imported from 12 countries – a year-on-year increase of 78.4% and 73.4% respectively. The products were sent from Austria, Brazil, the U.S., Saudi Arabia, Germany, Spain, Italy, China, Lebanon, the Netherlands, Poland and Uzbekistan.

10) 25% of Fruit and Vegetable Crop Lost due to Lack of Investment in Logistics Centers and the Processing Sector August 18th, 2015, http://www.aif.kg/novosti/obschestvo/13600-po-2-tys-tonn-ovoschey-ezhednevno-uhodit-v-kazahstan-irossiyu-posle-vstupleniya-kr-v-tamozhennyy-soyuz.html

While daily fruit and vegetable exports to Russia and Kazakhstan total 2,000 tons, fresh produce cannot be stored due to lack of logistics centers and refrigeration systems, resulting in a significant drop in exports during colder months, said Minister of Agriculture Talaibek Aidaraliyev. Farmers are trying to sell produce as quickly as they can.

Significant investment in logistics centers and the processing sector are required, as there is only enough time to process 25% of the fruit and vegetable crop, while 25-30% is lost altogether, said the Minister.

11) Agricultural Output Totals KGS 10.29 Billion in First Half of 2015 August 7th, 2015, http://www.vb.kg/doc/322405_v_sfere_pererabotki_selhozprodykcii_otmecheno_snijenie_proizvodstva.html

Agricultural output for the first half of 2015 totaled KGS 10.29 billion, reported Deputy Minister of Agriculture Zhanybek Kerimaliev Alimentary products, including beverages and tobacco, totaled KGS 10.19 billion over the same period.

Beverage production increased by 10% year-on-year; meat by 8.5%; pasta by 22.1%; fat and oil by 37.9%; and cotton wool by 50%, added the Minister.

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In the Chui region, which produces 39% of all alimentary products, output increased by 10.3%; in JalalAbad by 11 %; in Osh region by 1.7%; and in Osh city by 23.8%. In Bishkek production decreased by 26%; in Issyk-Kul region by 6.7%; in the Batken region by 0.5 %; in the Naryn region by 3.8%; and in the Tallas region by 9.6%.

Production decreases were mainly due to a fall in milk and flour outputs, which amount to 19.2% and 15.7% of total agricultural output, respectively.

12) Cultivated Area Totals 1.19 Million Hectares August 9th, 2015, http://www.timesca.com/news/26-opinion-head/15618-central-asia-s-agro-potential-can-attractinvestments

This year, due to favorable soil and climatic conditions, Kyrgyzstan is the first Central Asian country to complete its grain harvest. The country currently has 1.19 million hectares of cultivated land, including 84,000 hectares of potatoes, 51,000 hectares of vegetables, 42,900 hectares of sunflowers and 5,000 hectares of sugar beets, according to the CIS Interstate Statistics Committee (ISC).

Cultivated land could be increased to over 2 million hectares, according to ISC estimates – however, this would mostly be at the expense of pastureland, essential to Kyrgyzstan’s livestock. The latter are responsible for extensive damage to the country’s crops, entering farmland and devouring crops.

Figures are not as bright in other Central Asian countries. Despite its relative success, Kyrgyzstan still imports 500,000 tons of cereals – mainly wheat – for fodder and human consumption.

Central Asian countries’ agro-sectors remain heavily undercapitalized, with heavy state subsidies and soft loans maintaining cash flows, while margins remain thin.

13) Fruits and Vegetable Processing Falls by 22% August 7th, 2015, http://www.vb.kg/doc/322429_v_kyrgyzstane_sokratilas_pererabotka_ovoshey_i_fryktov.html

Due to a lack of investment in the processing sector, fruit and vegetable production decreased 22% in the first half of 2015, according to Deputy Minister of Agriculture Zhanybek Kerimaliev.

During the same period, fruit and vegetable juice production totaled 162,100 liters – an 83.5% increase year-on-year. Meanwhile, 7400 tons of raw oils and 288.5 tons of refined oils were produced – a 9.6% and 98.7% increase respectively, said Kerimaliev.

14) From January to June, Agricultural Exports Total USD 67 Million August 5th, 2015, http://www.tazabek.kg/news:394118

Agricultural exports totaled USD 67 million in the first 5 months of 2015, said the Ministry of Agriculture.

The largest export markets were Kazakhstan, Uzbekistan, Russia, Turkey and the Balkans. Exports consisted mainly of fruits and vegetables, with milk and dairy products, soft drinks, hides and leather making up the rest.

Having recently acceded to the Eurasian Economic Union (EEU), Kyrgyzstan has benefited from a grace period to adopt the relevant standards and regulations.

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15) Wheat Harvest Increases to 435 Million Tons August 3rd, 2015, http://www.agro.kg/ru/news/7341/

With harvesting completed, this year’s wheat crop totaled 435 million tons, up 140,000 tons year-onyear, while the barley harvest totaled 231,000 tons, according to the Ministry of Agriculture.

Wheat yields were higher in all parts of the country, the Ministry added.

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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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