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Forward purchasing, state of crops and food stocks — development of agro-industrial sector of Kazakhstan

Friday, 10 July 2020, 23:55:33

Development of the country's agro-industrial complex is one of the main issues in ensuring food security for Kazakh. Today, the country's farmers are given maximum support. During the state of emergency due to the coronavirus pandemic in Kazakhstan, the necessary list of socially significant goods was approved, according to which state price regulation is carried out. The Head of State Kassym-Jomart Tokayev in his Address dated March 31, 2020, instructed the government to establish a mechanism for guaranteed forward purchase of products from domestic agricultural enterprises.

 

How guaranteed forward purchase mechanism work in Kazakhstan?

The guaranteed forward purchase mechanism was developed and approved at a meeting of the State Commission on Ensuring the State of Emergency under the President of the Republic of Kazakhstan on April 17, 2020.

Further, the issue of allocating funds from the republican budget in the amount of 24.5 billion tenge was approved by the decision of the Republican Budget Commission. May 18, 2020, by order of the Minister of Agriculture, the Rules for Forward Purchase of Agricultural Products for 2020 were approved, agreed with relevant state bodies and akimats of the regions.

As of July 2, 2020, under the forward purchase program, JS NC Food Corporation received 368 applications for 24.4 billion tenge, of which guarantees were accepted and 359 contracts worth 24 billion tenge were sent for payment. Nine applications are undergoing the process of obtaining guarantees from second tier banks and social entrepreneurship corporations.

The main objective of the forward purchase is financing agricultural producers to carry out the spring field works in order to ensure guaranteed and uninterrupted supplies of agricultural products to the domestic market, as well as ensuring the country's food security.

Forward purchase involves the purchase of agricultural products on a pre-paid basis, after providing collateral and an additional payment after the delivery of agricultural products in the autumn at the market price prevailing at the time of delivery, without applying a discount to the purchase price and charging interest rates for the use of funds by agricultural producers. Forward procurement is carried out on the basis of the approved Rules, which determine the general provisions, basic conditions and the mechanism for the implementation of forward procurement.

The main conditions for the implementation of forward purchase of agricultural products are:

  • compliance of the quality indicators of purchased agricultural products with the requirements established by national standards;
  • advance payment - up to 75% of the forecast purchase price;
  • deadline for the fulfillment of obligations of the agro-industrial complex is Nov. 15, 2020;
  • terms of delivery – EXW ex-factory (Incoterms-2020) to grain receiving enterprises defined by the Corporation.

The forward purchase mechanism includes the following steps:

  • placing information about the beginning of forward procurement on the Internet resources of the Ministry of Agriculture of the Republic of Kazakhstan www.gov.kz, Kazagro NMH www.kazagro.kz and the Corporation www.fcc.kz .;
  • Receiving applications from agricultural producers for participation in forward procurement with a list of documents provided, in electronic form on the Corporation’s website, or in paper form to the regional representative offices of the Corporation;
  • In accordance with the established requirements of the Rules, the Corporation compiles a list of agricultural producers and submits it for consideration and approval to the Coordinating Council of the relevant field;
  • Coordinating Council approves the lists of agricultural producers of the region indicating agricultural products and the supply volume of the total sown area within the volumes and sends the approved list with the decision to the Corporation;
  • After receiving the decision of the coordination council, the Corporation starts forward purchase agreements with agricultural producer;
  • Agricultural producer provides collateral in the form approved by the Corporation within the time periods established by the forward purchase agreement;
  • After the provision by agricultural producer, the Corporation makes an advance payment;
  • After submitting reports to the statistical authorities, the agro-industrial complex provides documents to the Corporation confirming the implementation of agricultural work;
  • Making an additional payment after the delivery of agricultural products in the autumn period at the market price prevailing at the time of delivery.

It should be noted that 24.5 billion tenge were allocated for forward purchase of agricultural products for 2020 at the expense of the republican budget. As part of the purchase, it is planned to purchase wheat, barley, oilseeds and buckwheat.

 

Implementation of pilot project “From Field to Counter”

The Head of State set the task of launching a pilot project in several regions on the development of the cooperative chain in the village “from field to counter,” establishing a system of constant purchase and marketing of agricultural products, training and raising agricultural competencies with the further development of a full-fledged program by July 2021.

The pilot project is planned for implementation in Almaty, Zhambyl and Turkistan regions in 2020. Under the project, it is planned to lend to domestic trade entities to ensure the purchase and sale of agricultural products.

One of the main conditions for the purchase of products from domestic manufacturers will be to ensure price stability throughout the entire period of its implementation. Thus, the implementation of the project will improve the social situation in the regions by ensuring the stable operation of small and medium agricultural producers, increasing the level of provision of regional markets with domestic products at fixed prices.

 

Flour production increased in Kazakhstan during 5 months 2020

For the period January-May 2020, the country produced food products in monetary terms for 743.3 billion tenge, which amounted to 101.6% by the corresponding period of the previous year. The share of products of the milling industry, starches and starch products is 20% (148.3 billion tenge), bakery and flour products - 13.9% (103 billion tenge), vegetable oils and fats in the total gross food production - 9.8 % (73 billion tenge), processed and canned fruits and vegetables - 4.2% (31.4 billion tenge).

According to the operational data of the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, in the republic for the period January-May 2020, compared to the same period last year, production of the following products increased:

  • flour - by 6.6% (from 1,293.9 thousand tons to 1,379.3 thousand tons), pasta - by 16.1% (from 66.8 thousand to 77.6 thousand tons), margarine - by 6.7% (from 26.2 thousand to 27.9 thousand tons),
  • cereals - by 13.5% (from 32.7 thousand to 37.2 thousand tons),
  • refined and unrefined vegetable oil - by 5.3% (from 187.9 thousand to 197.9 thousand tons),
  • processed rice - by 89.4% (from 48.7 thousand to 92.2 thousand tons), processed and canned fruits and vegetables - by 63.4% (from 5.5 thousand tons to 9.0 thousand tons)
  • crackers and biscuits, confectionery and pastries for long-term storage - by 6% (from 43.9 thousand tons to 46.6 thousand tons),
  • chocolate, chocolate and sugar confectionery products - by 6% (from 38.1 thousand tons to 40.4 thousand tons).

At the level of last year, fresh bread in the amount of 292.8 thousand tons was produced.

At the same time, there is a decrease in the production of cane sugar by 70.5% (from 90.8 thousand to 26.7 thousand tons), fruit and vegetable juices - by 3% (from 26.6 million to 25.8 million liters)

 

As of July 2, 2020, 760.8 thousand tons of various food products in the country

The total sown area of ​​crops in 2020 amounted to 22.5 million ha, while the area of ​​spring sowing is 19.1 million ha.

So, according to the latest information from the regional akimats, the area of ​​spring grain crops in the republic amounted to 14.5 million ha, oilseeds - 3 million ha, vegetables - 164 thousand ha, melons - 107 thousand ha, potatoes - 193.7 thousand ha, cotton - 127.4 thousand ha, sugar beets - 20.5 thousand ha.

It should be noted that the sowing campaign was carried out in optimal agricultural terms.

According to the operational data of the regions, as of July 2, 2020, the republic has reserves in the total volume of 760.8 thousand tons of various food products, including 40 thousand tons in stabilization funds, and 273.1 thousand tons at manufacturing enterprises, in warehouses - 135.7 thousand tons, in retail chains - 322.3 thousand tons. In addition, there are 413 million eggs and 2.4 million tons of food wheat.

The availability of food stocks for actual consumption for different types of products ranges from a week to several months. At the same time, their stocks are constantly replenished and therefore a deficit in them is not expected.

At the same time, in a market economy, prices for products, as for all other types of goods, are set by entrepreneurs independently, taking into account the costs incurred in the production, storage and transportation, as well as on the basis of the balance of supply and demand.

Security for the main types of food products is 80% or more

For the main types of food products, security from own production is 80% or more, and for some more than 100%. So, for 10 products the saturation of the domestic market was achieved at 100% and higher (potatoes, cucumbers, beets, lamb, rice, buckwheat, chicken eggs, wheat flour, pasta, salt). For 13 products, the saturation is up to 80% (tomatoes, carrots, cabbage, onions, peppers, beef, pork, horse meat, dairy products.)

The exception is 6 products: apples (62.9%), fish (60.8%), sausages (62.0%), cheeses and cottage cheese (57.0%), sugar (46.6%) and poultry (58.3%), for which there is still import dependence.

For these products, the ministry is working on the development of production and import substitution. By 2024, the level of security for poultry meat, apples, sausages, cheese and cottage cheese is expected to reach 100%, and for fish and sugar by 80%.

 

Harvest preparation

According to the Ministry of Agriculture, spring-field work in 2020 in Kazakhstan was carried out efficiently and on time. Despite the restrictions due to the coronovirus pandemic, farmers were timely provided with preferential fuel, quality seeds, fertilizers and equipment. In total, as previously reported, 22.5 million hectares were sown in the republic.

It should be noted that due to the increased volume of state support in the Ministry of Agriculture, the best results on the use of mineral fertilizers have been achieved. This year, farmers brought about 450 thousand tons of additives to the soil.

According to the akimat’s current data, today the state of crops of grain and leguminous crops is assessed as good (48% of the area), satisfactory (49%) and unsatisfactory (3%). The main part of cereal crops is in the phase of tillering (31%), exit to the tube (55%) and heading (12%).

At the same time, the general condition of crops in the future will depend on the natural and climatic conditions and timely processing.

Currently, the Ministry of Agriculture considers it important to ensure reliable protection of crops, especially from locust pests. In 2020, more than 1.5 billion tenge was allocated from the republican and local budgets for pest control. More than a thousand specialists were involved to identify foci of insect distribution. Using GPS navigators and trackers, they survey about 40 million hectares of agricultural land. About 150 pieces of special equipment are also involved in chemical treatments - aircraft and ultralight aircraft, ground sprayers and aerosol gas generators.

Currently, chemical treatments against Moroccan locusts have been completed in the Zhambyl and Turkistan regions, and destruction of the Italian prus, Asian locust, and non-livestock pests is being completed.

Chemical processing is carried out in optimal time with high biological efficiency. As a result of timely preparation of material resources and effective coordination of the work of specialists, defeat of crops, as well as migration of locust pests in the territory of neighboring states at the moment is not observed.

Meanwhile, work has already begun on the preparation of elevators and granaries. There are 189 licensed grain-receiving enterprises in the republic with a total storage capacity of about 12.4 million tons.

In addition, agricultural producers have capacities to store 14.7 million tons of grain. Thus, the total volume of available grain storage capacities exceeds 27 million tons.

At the moment, all licensed grain receiving enterprises have begun preparing the material and technical base of elevators. Particular attention is paid to the readiness of grain cleaning machines, grain drying equipment and the implementation of measures for disinfection from barn pests.

In addition, the southern regions of the country have already begun to harvest new crops. Potatoes, vegetables, melons and winter crops are being harvested. Already threshed 93 thousand tons of wheat and 26 thousand tons of barley.

 

For 6 months of 2020, 211 billion tenge were allocated for agricultural lending

In particular, 82 billion tenge was allocated for lending to spring field and harvesting works, and 48 billion for updating agricultural machinery. In addition, 10 large investment projects with a total value of 5.8 billion tenge were introduced.

Within the framework of the Enbek State Program, more than 4 thousand microloans worth 17 billion tenge were issued, half of which were received by beginning rural entrepreneurs.

As a result of the activities of the Kazagro Holding in the first half of the year, 3.8 thousand jobs were created in the villages.

At the same time, on behalf of the Head of State, the Holding is actively working to optimize its activities: the number of subsidiaries has been reduced from seven to three.

Also, at the request of farmers, the requirements for collateral policy have been improved. Now their collateral will be evaluated at the highest possible liquidity ratio. At the same time, the Agricultural Financial Support Fund has increased liquidity ratios for pledged lands and other property, and will also accept pledged property that will become the property of the borrower in the future.

Borrowers affected by the pandemic are granted a deferred payment. A deferral for 3,378 borrowers worth 9.5 billion tenge has already been approved. This allowed to save over 9 thousand jobs in the countryside.

In addition, the holding is taking measures to stimulate bank lending to agriculture. A new support mechanism is being introduced - guaranteeing bank loans in agriculture.

Guarantees will allow farmers with a shortage of collateral to obtain loans from second-tier banks. The guarantee operator will be the Agricultural Financial Support Fund. The guarantee amount will be up to 85% of the loan amount. This tool will be primarily aimed at financing priority projects for dairy and meat cattle breeding, gardening, greenhouses.

In general, this year the Holding will continue work to increase the availability of financing, stimulate growth in the production of domestic agricultural products and food products, and create new jobs in rural areas.

 

Control of locust and quarantine pests

Eleven types of especially dangerous, five types of pests and 14 types of quarantine objects are widespread in the republic. Particular attention is paid to locust control.

In the current year, herd locusts are spread over an area of ​​554 thousand ha, including Italian timber - 295.9 thousand ha, Asian locust - 164.2 thousand ha, and Locust - 93.9 thousand ha. In addition, non-stock locust pests in the area - 266.8 thousand ha.

For the fight against locusts, 1.5 billion tenge were allocated from the republican and local budgets.

Funds allowed the purchase of pesticides and chemical treatment services for the entire projected area. The necessary stock of pesticides was also created on an area of ​​525.3 thousand ha, which is 95% of the forecast for the spread of herd locust pests.

Together with regional akimats, operational headquarters were created in the regions, headed by deputy regional akims, and work plans for the organization of monitoring and chemical treatment work were approved.

To identify foci of herd locust pests, 38.3 million hectares are examined, with the involvement of 570 units. vehicles and 1224 surveyors using GPS navigators, GPS trackers, tablets.

At present, chemical treatments against Moroccan locusts in Turkistan and Zhambyl regions have been completed; all treatments against Moroccan locusts have been carried out on an area of ​​67.7 thousand ha.

Processing against Italian Prus and Asian locusts is nearing completion. To date, chemical treatments against Italian prus have been carried out on an area of ​​284.6 thousand ha, against Asian locusts on an area of ​​128.2 thousand ha.

In carrying out chemical treatments against herd locusts, 148 units of special spraying equipment are involved.

In addition, treatments against non-herd locust pests are being completed, to date, all treatments have been conducted on an area of ​​165.8 thousand ha.

Processing is carried out in a timely manner and with high efficiency. In order to exclude locust migration from the territory of neighboring states in the border areas with China, the Russian Federation, and RU, joint surveys are conducted to identify locust pests.

As a result of the measures taken, to date, no damage to crops of crops, as well as migration of locust pests to adjacent territories of neighboring states is observed.

In general, due to timely phytosanitary measures, it was possible to reduce the area of ​​locust distribution from 1.7 million hectares in 2018 to 554 thousand hectares in 2020.

For harmful weeds this year, the survey area was - 8.8 million hectares. Chemical weeding against weeds is planned to be carried out on an area of ​​11.3 million hectares, including 10.97 million hectares on cereals. 10.6 million ha will be processed with ground sprayers and 945.5 thousand ha by air.

As of June 8 of this year, chemical weeding was carried out on an area of ​​8.9 million hectares, including 5,817.648 thousand hectares being processed on grain crops. Spread over highly hazardous pests is expected to reach 3.2 million ha. For all these facilities on the territory of the republic there is the necessary amount of pesticides in sufficient quantity and a diverse assortment. There are 1,160 drugs registered in all types of facilities in the republic.


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