#46 Kyrgyzstan Agriculture Bulletin, BFC

12/2017

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46 K y r gy zsta n Agriculture Bulletin Russia and Kyrgyzstan increasing economic ties Preferential loans to farmers amount to KGS 6.3 billion New FAO USD 50 million program Russia helping Issyk-Kul realize its economic potential

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

Russia and Kyrgyzstan increasing economic ties ............................................................................. 2 Draft amendments approved for land use and sale ........................................................................ 2 Preferential loans to farmers amount to KGS 6.3 billion ................................................................ 2 New agency for plant production insurance proposed ................................................................... 2

Foreign Aid ................................................................................................................. 3 5) 6) 7) 8) 9)

New FAO USD 50 million program .................................................................................................. 3 EBRD and KICB provide USD 2 million loan to Kaindy-Kant ............................................................ 3 ‘One Village, One Product’ project expands in Kyrgyzstan ............................................................. 3 New fruit processing center opened in Kadamjai ........................................................................... 4 “Agriculture 4.0” revolutionizing technology in farming ................................................................ 4

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

Russia helping Issyk-Kul realize its economic potential .................................................................. 4 New smartphone application for sugar beet growers .................................................................... 4 Association of green businesses formed ......................................................................................... 5 Tomato farmers ask for increased border control efforts .............................................................. 5 Deliveries of Kazakh wheat grain down .......................................................................................... 5

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

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

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BFC Agriculture Bulletin

State Initiatives 1)

Russia and Kyrgyzstan increasing economic ties

December 17th, 2017, https://kyrtag.kg/economy/20-kyrgyzskogo-eksporta-v-rossiyu-sostavlyaet-molochnaya-produktsiyaminekonomiki

Enhancing economic cooperation and increasing trade growth between Kyrgyzstan and the Russian Federation is seen as important for the continued development of the Kyrgyz economy. To this end, Kyrgyzstan and Russia have signed agreements on bilateral cooperation at the Russian-Kyrgyz interregional conference held in early December, including a memorandum of cooperation between Mechel Steel Management Company and Kyrgyz Temir Jolu SE and a loan agreement between Roseximbank and the Russian-Kyrgyz Development Fund.

The trade turnover between the two countries for the first ten months of this year has exceeded last year's level of trade of about USD 1 billion. About USD 200 million (20%) of this is Kyrgyz exports to Russian markets. Over the first ten months of this year, exports to Russia have increased as follows: dairy products by 1.7 times; fruits and nuts by 2.3 times; clothes made of textile and knitted fabrics by 2.5 times; footwear by 2.4 times; glass and glass products by 2.4 times; and vehicle parts by almost 16 times. The main export items from Kyrgyzstan to Russia are agricultural products and textiles, with 20% of Kyrgyz exports to Russia being dairy products.

2)

Draft amendments approved for land use and sale

December 11th, 2017, http://www.tazabek.kg/news:1420436

The Committee on Agrarian Policy, Water Resources, Ecology and Regional Development has approved draft legislation that will amend the ‘Law on the Land Code of the Kyrgyz Republic’ and the ‘Law on Agricultural Land Management of the Kyrgyz Republic’. The amendments are aimed at providing equal conditions for land use and the sale of land. Deputy Agriculture Minister Erkinbek Choduyev also announced that a draft law on agricultural cooperatives is also expected to be introduced soon.

3)

Preferential loans to farmers amount to KGS 6.3 billion

December 11th, 2017, http://www.minfin.kg/ru/novosti/novosti/v-ramkakh-proekta-fskh--5-selskim-tovaroproizvodit4539.html

Within the framework of the ‘Financing Agriculture 5’ project, 14,600 Kyrgyz farmers have been granted KGS 6.3 billion in preferential loans. KGS 4 billion of that amount was granted to cattle breeders, and KGS 1 billion was granted for crop production and processing. By region, loans were distributed as follows: Chui — KGS 2 billion; Jalal-Abad — KGS 1.1 billion; Osh — KGS 836 million; Issyk-Kul — KGS 754 million; Naryn — KGS 598 million; Talas — KGS 552 million; and Batken — KGS 345 million.

4)

New agency for plant production insurance proposed

December 5th, 2017, http://www.tazabek.kg/news:1419559

The Ministry of Agriculture has proposed the establishment of a state agency to support plant production insurance. The new agency would distribute funds to support crop production insurance and would be a legal entity that is 100% managed by the state. Under the proposal, payment for the agency’s services would come from the budget of the State Agricultural Insurance Fund. All agency activities would be monitored and supervised by the Ministry of Agriculture.

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BFC Agriculture Bulletin

Foreign Aid 5)

New FAO USD 50 million program

December 21st, 2017, http://www.agroprod.kg/index.php?newsID=599

Kyrgyzstan and the Food and Agriculture Organization of the United Nations (FAO) have signed a cooperation agreement for the implementation of a USD 50 million five-year program. The central themes of the agreement are: improved nutrition, poverty reduction in rural areas, sustainable management of natural resources and adaptation to climate change. FAO envisages mostly providing technical and advisory assistance; however, they are also committed to ensuring everything is present for the successful development of agriculture.

6)

EBRD and KICB provide USD 2 million loan to Kaindy-Kant

December 20th, 2017, http://www.ebrd.com/news/2017/ebrd-and-kyrgyz-investment-and-credit-bank-support-sugar-producerkaindykant.html

The European Bank for Reconstruction and Development (EBRD) and the Kyrgyz Investment and Credit Bank (KICB) are providing a loan of USD 2 million to Kyrgyzstan’s leading sugar producer, Kaindy-Kant.

The funds will provide Kaindy-Kant with working capital related to the procurement and subsequent storage, transportation and processing of sugar beet.

The cooperation with the EBRD and the EU Investment Facility for Central Asia will allow KICB to introduce innovative financing instruments (including risk-sharing and lending to medium-sized corporate firms) that provide local companies with more finance at better rates.

7)

‘One Village, One Product’ project expands in Kyrgyzstan

December 14th, 2017, http://www.tazabek.kg/news:1421222

The second meeting of the joint coordinating committee for the ‘One Village, One Product’ (OVOP) project was held and focused on the interim results of disseminating the model used in the Issyk-Kul region to other regions of the country. It was announced that, with the technical support of the Japan International Cooperation Agency (JICA), field studies have been conducted in the regions. Additionally, an OVOP center has been opened in Bishkek that provides local producers with products to improve locally-produced goods as well as consulting and information services. The center also assists in developing products, organizing retail sales and establishing business ties.

The dissemination of the OVOP experience to other regions was reflected in the Concept of the Regional Policy of the Kyrgyz Republic for 2018-2022 following the successful implementation of the project in Issyk-Kul, which helped create small businesses and saw total sales in the first eleven months of 2017 increase 35% compared with total sales in 2016. In the process of implementing the project, local communities not only develop products from local raw materials but also gain invaluable experience in promoting products, both on the domestic and foreign markets.

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BFC Agriculture Bulletin

8)

New fruit processing center opened in Kadamjai

December 7th, 2017, https://www.usaid.gov/kyrgyz-republic/news-information/press-releases

A new fresh fruit consolidation and packaging center has opened in Kadamjai (Batken region) with the support of the ‘Agro Horizon’ project of United States Agency for International Development (USAID) and AgroProduct Asia. The facility will help farmers in southern Kyrgyzstan increase the quality and competitiveness of their products in local and export markets.

The new facility is capable of storing 6,435 cubic meters of fresh fruits and packaging and sorting up to 500 tons of fruit per day. In its first year of operations, the center is expected to buy 2,500 tons of fruits from at least 2,000 farmers.

9)

“Agriculture 4.0” revolutionizing technology in farming

December 7th, 2017, https://www.tazabek.kg/news:1419860?from=rss

Olga Memedovich, project manager of a United Nations Industrial Development Organization (UNIDO) project aiming to develop production industries and strengthen their relationships with the tourism sector in the Issyk-Kul region, has noted that “Agriculture 4.0” is revolutionizing the role of technology in the agro-food industry and is important for economic and regional development in Kyrgyzstan. For example, these new technologies employ the use of drones to help farmers know where and how to sow crops as well as to learn about weather conditions.

Private Sector 10) Russia helping Issyk-Kul realize its economic potential December 15th, 2017, http://kabar.kg/news/issyk-kul-skaia-oblast-imeet-potentcial-eksporta

The relationship between the Russian Federation and the Issyk-Kul region of Kyrgyzstan is important as Russia is the main trade and economic partner of the region. The main Kyrgyz products on the Russian market are agricultural products such as juices and fresh fruit. In turn, Russia is helping the region to develop, mostly via 78 projects being implemented by the Russian-Kyrgyz Development Fund. These projects include the reconstruction of the Issyk-Kul airport (at a cost of USD 12 million) and the construction of a logistics center (at a cost of USD 4.5 million).

With the help of Russian development efforts, it has been estimated that the Issyk-Kul region has an export potential of 5,000 tons of processed fruit and berry products. One Kyrgyz-Russian company is already working in this direction and exported 500 tons of processed apple products this year. They are also exploring opportunities to cooperate on meat and dairy products, which have an estimated annual output of 150 tons.

11) New smartphone application for sugar beet growers December 13th, 2017, http://slovo.kg/?p=94883

The sugar beet industry in Kyrgyzstan demonstrated continued growth this year, with this year’s harvest averaging a 50-ton yield per hectare (as compared to 20 tons per hectare in 2012). Moreover, sugar beet farmers are increasing their awareness of innovative methods of cultivation as well as their knowledge of agricultural technology, plant protection products, fertilizers and other equipment.

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BFC Agriculture Bulletin

Now, they will also be able to receive information via mobile devices thanks to a special program developed by computer students at the American University of Central Asia. The ‘Kant Kyzylcha’ application allows users to: calculate, in advance, the return of funds invested by entrepreneurs per hectare; plan a budget; access advice on sowing and harvesting; and monitor prices and demand in sugar markets around the world. The application also allows users to communicate with suppliers of hybrid seeds, equipment and pesticides as well as talk with other farmers from around the world.

12) Association of green businesses formed December 9th, 2017, https://kyrtag.kg/economy/v-kyrgyzstane-sozdali-assotsiatsiyu-zelenogo-biznesa-

An association of green businesses has been created in Kyrgyzstan and includes 25 companies that operate in the green economy. Members of the association produce goods using green technologies or are distributors who have so-called “green passports”. There has also been a proposal to create a green zone that will demonstrate the benefits of a green economy to the Kyrgyz population at large.

13) Tomato farmers ask for increased border control efforts December 8th, 2017, https://kyrtag.kg/economy/tolko-10-pomidorov-proizvodit-kyrgyzstan-dlya-svoikh-nuzhd-

Kyrgyz tomato producers are calling on the government to step up control efforts regarding imported tomatoes. They say that, due to improper phytosanitary control, a tomato moth has been smuggled into Kyrgyzstan and is rapidly multiplying and spoiling all products. In fact, Kyrgyz farmers are now only producing at a level of 10% of domestic demand.

Increased control efforts are especially important as there are a large number of people in Kyrgyzstan focused on tomatoes, including greenhouse businesses. Additionally, there are many farmers that are now unable to repay loans because their harvest is not as robust as expected due to damage caused by the pest.

14) Deliveries of Kazakh wheat grain down December 6th, 2017, https://ru.sputnik.kg/economy/20171206/1036685268/postavki-zerna-iz-rk-uvelichilis-vdvoe-no-ehto-60zakaza.html

Supplies of wheat grain from the Republic of Kazakhstan, which typically arrive by freight train, were down recently and represented only 20-30% of the ordered and prepaid grain to be delivered. The shortage was mostly due to hoppers being used in Russia, where there was a record cereal harvest.

However, as of late November, more hoppers have become available and deliveries have doubled to around 50-60% of the ordered raw product.

It should be noted that the temporary reduction in raw materials received is not expected to cause a serious problem for Kyrgyz millers unless it persists for more than a month and a half.

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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com Articles are taken directly from local sources without any fact-checking; they are provided as a convenience and for informational purposes only. Business & Finance Consulting (BFC)’s editing is limited to providing a short summary in English of the texts, highlighting the main points of the original articles.

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