#36 Kyrgyzstan Agriculture Bulletin, BFC

02/2017

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36 K y r gy zsta n Agriculture Bulletin The Guarantee Funds issues KGS 11 million in guarantees Kyrgyzstan seeks investors for irrigation development EU provides EUR 23 million for continued development 2017 agricultural exports projected at 500,000 tons

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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8)

The Guarantee Funds issues KGS 11 million in guarantees............................................................. 2 Kyrgyz MoA plans purchase of agricultural equipment .................................................................. 2 Deputy proposes analysis of agricultural projects .......................................................................... 2 Only 3% of farmers received preferential loans in 2016 ................................................................. 2 Kyrgyzstan seeks investors for irrigation development .................................................................. 3 MoA proposes moving away from grain to other crops ................................................................. 3 Loan rates for farmers in Kyrgyzstan to be reduced ....................................................................... 3 EEC approves necessary agribusiness database measure ............................................................... 3

Foreign Aid ................................................................................................................. 4 9) 10) 11) 12)

Community seed project funding approved for 2017 ..................................................................... 4 EU experts assess Kyrgyz testing laboratories................................................................................. 4 EU provides EUR 23 million for continued development ................................................................ 4 Minister Murashev talks priority directions with donors ................................................................ 5

Private Sector.............................................................................................................. 5 13) 2017 agricultural exports projected at 500,000 tons ...................................................................... 5 14) Kyrgyz meat exports to Iran to top 350 tons in 2017 ...................................................................... 5 15) Kyrgyzstan to satisfy domestic sugar demand in 2017 ................................................................... 6

Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related 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 Agriculture Bulletin

State Initiatives 1)

The Guarantee Funds issues KGS 11 million in guarantees

February 21st, 2017, http://www.vb.kg/doc/355778_za_korotkiy_srok_garantiynyy_fond_vydal_garantiy_na_symmy_11_mln_somov.html

The Guarantee Fund has issued 16 new guarantees, amounting to KGS 11 million. The Guarantee Fund was established in 2016 as an anti-crisis measure of the government to ensure access to finance for small- and medium-sized enterprises and their development. The Fund currently has KGS 282 million available for use in providing guarantees. Priority directions of the Guarantee Fund are: agricultural production and processing, manufacturing, construction and the services sector. The Fund also has plans to focus on women's entrepreneurship.

2)

Kyrgyz MoA plans purchase of agricultural equipment

February 14th, 2017, http://kyrtag.kg/economy/minselkhoz-kr-v-2017-godu-planiruet-priobresti-260-edinits-tekhniki

The Ministry of Agriculture has announced plans to purchase 260 additional units of agricultural equipment to lease to Kyrgyz farmers this year. Since 2011, more than 1,800 pieces of agricultural equipment have been leased to farmers to help develop the agricultural sector of the country. It is expected that the additional equipment will lead to an increase in harvest for melons, fruit crops, sugar beets and rice.

3)

Deputy proposes analysis of agricultural projects

February 13th, 2017, http://www.vb.kg/doc/355291_depytat_predlagaet_provesti_analiz_proektov_selskogo_hoziaystva.html

Deputy Murad Mademinov has proposed the government conduct an analysis of funding used for agricultural projects, saying that it was necessary to examine the cost-effectiveness of preferential agricultural loans. In calling for the analysis, the deputy noted that this year is the fifth ‘Financing of Agriculture’ project and that it is necessary to ensure that the funds are being used for the 60% of Kyrgyz citizens who live in rural areas and depend on agriculture and not simply to enrich banks.

In addressing Deputy Mademinov’s call, Finance Minister Adylbek Kasymaliev said that the previous year’s analysis should have been completed by the National Statistics Committee but that a tripartite agreement was made between the banks, the Ministry of Finance and Ministry of Economy this year, with the Ministry of Economy responsible for carrying out a deep analysis of the profitability of the project for financing agriculture under the agreement.

4)

Only 3% of farmers received preferential loans in 2016

February 13th, 2017, http://kyrtag.kg/economy/lish-3-fermerov-poluchili-lgotnye-kredity-v-2016-godu-minselkhoz-

Speaking at a meeting of the Committee on Budget and Finance, Agriculture Minister Nurbek Murashev reported that only 13,000 of the country’s 400,000 farmers (3%) took advantage of preferential loans in 2016. The Minister admitted that farmers mostly take the loans to support family budgets and not to create jobs or businesses. Deputies then called for the Cabinet to simplify the procedure for granting the preferential loans and reduce the interest rates in order to increase the number of farmers taking the preferential loans to expand business opportunities.

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5)

Kyrgyzstan seeks investors for irrigation development

February 7th, 2017, http://knews.kg/2017/02/pravitelstvo-ishhet-investorov-na-realizatsiyu-gosprogrammy-razvitiya-irrigatsii/

Prime Minister Sooronbai Jeenbekov held a working meeting regarding the Irrigation Development Program of the Kyrgyz Republic for 2017-2026. The program aims to provide new irrigated lands for villagers to cultivate, improve the socio-economic situation and development of all regions in the country, resolve food security issues and reduce poverty. More specifically, the program seeks to irrigate 65,500 hectares of land, increase water availability on 51,000 hectares, improve the state of another 50,000 hectares and upgrade another 9,500 hectares from machine to gravity irrigation. The plan would improve the lives of an estimated 242,000 people and could generate up to KGS 1.5 billion annually in rent.

Minister Jeenbekov has called on government officials to seek investors for the project so as not to create a burden on the state budget. The project will be submitted to the government soon for approval.

6)

MoA proposes moving away from grain to other crops

February 6th, 2017, http://www.vb.kg/doc/354905_minselhoz_predlagaet_pereyti_ot_vyrashivaniia_zerna_k_drygim_kyltyram.html

Kyrgyz grain growers are struggling due to the income from grain growing being below the needs of farmers. The Ministry of Agriculture has announced that it is working with the farmers to either increase the yield per hectare or help the farmers switch to the cultivation of other, more lucrative crops such as fruits.

Kyrgyzstan saw a drop in total hectares used for grains last year and is expecting that number to drop further this year. Despite this, the Ministry is working to maintain the total volume of domestic grain produced, even while understanding the necessity farmers face in needing more revenue to survive.

7)

Loan rates for farmers in Kyrgyzstan to be reduced

February 3rd, 2017, http://eng.24.kg/economics/184022-news24.html

Beginning this year, loan rates for Kyrgyz farmers involved in the treatment and processing of agricultural products as well as those engaged in export-oriented agricultural production will be issued at 6% per annum for up to a three-year period. This represents a change from the state’s previous subsidy program which provided farmers engaged in these activities with loans at 10% per annum.

Since 2013, 53,590 preferential loans worth KGS 17.1 billion have been issued under the state’s preferential loan program. In 2017, KGS 7 billion has been allocated from the state budget for the program’s continued effort to aid farmers and develop Kyrgyzstan’s agricultural sector.

8)

EEC approves necessary agribusiness database measure

February 1st, 2017, http://knews.kg/2017/02/v-ramkah-eaes-sozdadut-7-obshhih-internet-resursov-vklyuchaya-edinyj-reestrsortov-agrokultur/

As part of the creation of the integrated information system of the Eurasian Economic Union (EEU), the board of the Eurasian Economic Commission (EEC) has approved the requirements necessary for the creation of a unified agribusiness database. Once completed, the integrated information system will Page 3

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include a registry of the varieties of agricultural plants being produced in the Union, a database of breeding animals and livestock breeding achievements and a comprehensive list of research activities.

Users will then be able to model production Union-wide and account for changes in the supply and demand of goods and services to better serve Union markets and address food security needs.

Foreign Aid 9)

Community seed project funding approved for 2017

February 27th, 2017, http://www.agroprod.kg/index.php?newsID=275

At a meeting of the supervisory board of the World Bank’s ‘Support to Community Seed Funds’ project, Almaz Dormbaev, director of the Agribusiness Competitiveness Center, presented the results of the project in 2016 and outlined the plan and budget for 2017. As a result of the project, the certification of quality seeds in Kyrgyzstan has increased, allowing small farmers to increase their overall productivity and income. The project’s 2016 annual progress report and 2017 budget were also approved at the same meeting.

10) EU experts assess Kyrgyz testing laboratories February 24th, 2017, http://kabar.kg/eng/news/eu-technical-mission-on-gsp-completed-its-work-in-kyrgyzstan/

In February of this year, two experts from the European Union (EU) arrived in Kyrgyzstan to assess the current state of Kyrgyz testing laboratories, specifically those having international certification to approve the quality of products being exported to EU member states. The experts also assessed the capacities and know-how of phytosanitary and customs agencies charged with ensuring compliance with GSP+ provisions and EU rules of origin requirements. The experts visited nine laboratories in Bishkek and Osh as well as a number of private enterprises and held a series of meetings with local business associations, state officials in charge of export policies and representatives of international organizations.

The results of the visit were presented at a meeting with the Ministry of Economy on February 22, 2017.

The experts’ presentation highlighted the current shortcomings that prevent Kyrgyzstan from exporting its products to the EU and provided recommendations to resolve the issues. Among the recommendations were suggestions to modernize laboratories to be in line with international standards, enhance coordination between state agencies, focus on specific products to be exported to the EU, and conduct trainings for laboratory personnel and local experts. A more comprehensive and detailed report of the findings is being prepared and will be shared with both the government of Kyrgyzstan and the European Union.

11) EU provides EUR 23 million for continued development February 18th, 2017, http://www.timesca.com/index.php/news/17694-eu-supports-rule-of-law-and-rural-development-inkyrgyzstan-with-23-million

The European Commission has allocated more support to the Kyrgyz Republic for strengthening the rule of law (EUR 13 million) and rural development (EUR 10 million). The contributions come as part of the EUR 184 million ‘2014-2020 Multiannual Indicative Program for the Kyrgyz Republic’ and are seen as a clear sign of the European Union's commitment to the ongoing reform efforts necessary for sustainable and inclusive growth in Kyrgyzstan.

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The first program, focusing on the rule of law, aims at modernizing the legislative process in Kyrgyzstan.

The second program will support rural income-generating activities to stimulate local economies and human development. The program aims at reducing poverty, especially among women, children and the most vulnerable segments of the population in rural areas (specifically in the Jalalabad region). It will promote rural small enterprises, female entrepreneurship and access to microfinance as well as help develop capacities and services for fruit and vegetable production and ecotourism.

12) Minister Murashev talks priority directions with donors February 11th, 2017, http://knews.kg/2017/02/glava-minselhoza-rasskazal-donoram-o-prioritetnyh-napravleniyahagrokompleksa/

Representatives of 24 donor organizations and foundations involved in agricultural land projects met with Agriculture Minister Murashev and were presented with Kyrgyzstan’s priority directions for the development of agriculture, new Ministry functions for the upcoming year and achievements already made in agricultural development. The organizations then presented their current project activities and results.

At the end of the meeting, all parties agreed to form a working group which will coordinate the implementation of projects in order to maximize efforts and results going forward.

Private Sector 13) 2017 agricultural exports projected at 500,000 tons February 14th, 2017, http://kabar.kg/eng/news/in-2017-kyrgyzstan-to-export-more-than-500-thousand-tons-of-agriculturalproducts/

In 2016, Kyrgyzstan exported 450,000 tons of agricultural products and is projected to export more than 500,000 tons this year. Kyrgyzstan’s Ministry of Agriculture has been monitoring sewing and advising farmers on the best crops to sow to help achieve this. This year, increased domestic and international demand has led the Ministry to recommend increasing the acreage used for growing rice.

Kyrgyzstan has stable export outlets for dairy, fruit and vegetable products in the Eurasian Economic Union (EEU) as well as a reliable export outlet for dried fruit products in European markets.

14) Kyrgyz meat exports to Iran to top 350 tons in 2017 February 14th, 2017, http://kabar.kg/eng/news/kyrgyzstan-to-export-more-than-350-tons-of-meat-to-iran/

In order to promote trade and economic cooperation between Kyrgyzstan and Iran, the State Agency for Investment Promotion and Export has been actively working to export domestic agricultural products to Iran. In July 2016, two representatives from Iran’s veterinary services visited Bishkek to conduct health and administrative measures aimed at preventing the spread of quarantined infectious diseases.

Following this, exports of Kyrgyz lamb to Iran began. To date, the total volume of exported meat from Kyrgyzstan to Iran is 150 tons, with more than 350 tons being expected to be exported in 2017.

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15) Kyrgyzstan to satisfy domestic sugar demand in 2017 February 14th, 2017, http://kabar.kg/eng/news/in-2017-kyrgyzstan-will-be-able-to-fully-provide-itself-with-sugar/

Current projections from the Ministry of Agriculture foresee more than 1 million tons of sugar beet being produced in the country. This, coupled with the Koshoy sugar factory being put into production, means that Kyrgyzstan should be able to fully meet its domestic sugar demand in 2017. Sugar beet will be planted on approximately 15,000 hectares this year, an increase of 3,500 hectares over last year.

Last year’s sugar beet harvest amounted to 704,000 tons.

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