At the regular Government session chaired by Prime Minister Alikhan Smailov, the issue of sugar industry development was discussed. The Acting Minister of Agriculture Abulkhair Tamabek reported on the current situation in Kazakhstan with the supply of sugar and what is being done to solve problems with the supply in the future.

"The issue of development of sugar industry due to high import dependence is urgent," Tamabek started his speech.

Lack of domestic raw materials in view of small size of farms, high cost of imported seeds, low technical equipment of farmers and problems with water supply for irrigation are the main factors of decrease of cultivated area from 85 thousand ha in the 1990s to 11,6 thousand ha this year.

As the analysis shows, the profitability of growing other crops (potatoes, corn) is several times higher than that of sugar beet. With the consumption of sugar in the republic in the amount of 532 thousand tons per year, the provision at the expense of domestic raw materials was 7%, due to the processing of raw cane by domestic factories was 35%, sugar imports was 58%.

"The country has key factors for successful development of the branch: availability of irrigated lands, large capacity of domestic market, not used capacities of four operating factories, which are able to meet the demand of domestic market and manpower. However, due to the high depreciation of technological equipment, lack of credit and working capital, and price dumping by neighboring countries, the capacity utilization of domestic factories remains at a low level. Restrictive measures on sugar exports by major exporting countries have led to excitement in the domestic market," the Acting Minister of Agriculture explained.

Based on the analysis of cultivated areas, crop yields, the required volume of raw materials in relation to the available capacity and plans for the expansion of sugar refineries, the industry indicators until 2026, which are aimed at increasing domestic production. The required area, taking into account crop rotation for sugar production in the amount of 250 thousand tons, as well as the planned activities to expand the sowing areas are agreed with the regional akimats.

In accordance with the instruction of the Head of State, a Comprehensive Plan on development of sugar industry until 2026 was developed, which includes 4 main sections, consisting of 33 measures. The Comprehensive Plan provides for increase of raw material base by means of expansion of cultivated areas of sugar beet, introduction of new irrigated lands, implementation of water saving technologies of irrigation, development of seed production, as well as technical and technological re-equipment of existing facilities for processing of sugar beet, construction of new innovation factory.

In accordance with Article 411 of the Tax Code of the Republic of Kazakhstan, until Jan.1, 2023, tax incentives for sugar beet production are provided, reducing VAT up to 70%. A comprehensive plan provides for the extension of preferences, as well as the addition of cane sugar to the list. In addition, the issues of introducing minimum price level for sugar, improvement of mechanism of state support measures will be worked out, including increase of norms of subsidizing of sugar beet delivery for processing and norms of subsidizing of seed production, taking into account increase of prices for seeds and hybrids.

"As a whole total volume of investments for development of raw material base will be about 495 billion tenge. The required volume of subsidies for material and technical assets amounts to 168 billion tenge, including subsidies for replenishment of fixed and circulating assets of sugar factories is 39,3 billion tenge," Tamabek said.

Also, according to him, the implementation of the Comprehensive Plan in the next 5 years will increase the production of sugar from domestic raw materials to 250 thousand tons per year. In this case, by 2026, compared to 2021, the share of imports will be reduced from 58% to 17%, the provision through processing of domestic raw materials will increase from 7% to 43%.

The akim Beibit Isabayev reported on the situation in the newly formed Zhetysu region. For example, this year the region's sugar beet crops amounted to 6 thousand hectares, it is planned to collect 210 thousand tons of harvest.

"Sugar production in the two operating sugar factories by last year will increase from 57 thousand to 85 thousand tons, including 25 thousand tons of beet sugar and 60 thousand tons of cane sugar. In perspective, by 2026, we plan to increase cultivated area to 15 thousand hectares, gross yield to 525 thousand tons," Isabayev said.

There are plans to modernize sugar mills, the Koksu sugar refinery will increase its beet processing capacity by 2, the Aksu sugar refinery will install a sugar cane processing line and build storage facilities. As a result, sugar production will increase to 190 thousand tons.

In addition, due to the modernization of Zharkent starch plant, production of syrup used for industrial purposes will increase from 75 to 150 thousand tons.

As a whole branch is comprehensively supported by the state, namely 19 service and procurement centers are created which are equipped with 420 units of agricultural machinery. Mechanism of delivery of seeds of foreign selection and domestic production was set up.

Koksu sugar factory on the basis of futures contract provided financial support to beet growers for conduction of spring field works. Purchase price for the delivered beet was increased from 22 to 30 thousand tenge per ton.

Certain measures are being taken to develop the sugar industry, in particular:

• 38.5 thousand hectares of irrigated land are being rehabilitated through reconstruction of irrigation networks; water supply has been improved on almost 8 thousand hectares;
• expansion of application of water-saving technologies on 5 thousand ha;
• application of necessary volume of mineral fertilizers to increase crop yields;

This year 17.6 thousand tons of fertilizers worth 1.5 billion tenge were subsidized. As a whole, the need for financial resources to subsidize mineral fertilizers in 2023 is 2.5 billion tenge, in 2024 - 3.8 billion tenge and in 2025 - 5.0 billion tenge.

At the same time, in order to increase availability of mineral fertilizers for business entities, it is necessary to keep permanent control over pricing issues.

Abylkair Skakov, the Akim of the region, also told about the potential of the sugar industry in Pavlodar region.

So, first of all, according to him, the region has 137 thousand hectares of irrigated land with the possibility of doubling the area of irrigated land in the near future.

Second. The region has the largest volume of vegetable storage facilities in the country amounting to 450 thousand tons, which are increased by 10% annually. Thus, only in the last 2 years, the volume of vegetable storage increased by 70 thousand tons.

Third. For two years, experimental sowing of sugar beet was carried out, which showed a yield of 50 tons per hectare.

Fourth. Based on this potential, started the development of  the Construction of a Sugar Factory in Aksu project . The feasibility study of the sugar factory has been developed. The cost of the project is 134 billion tenge. Design and estimate documentation was sent for state expertise which is expected in December this year.

"At the same time we are searching for an investor from neighboring countries with competence and experience in sugar production. The corresponding road map for the construction of a sugar factory and state support measures was sent by the region to the Ministry of Agriculture. Thus, in case state support measures are approved and a specific investor is determined, there are all necessary conditions for location of the plant in the Pavlodar region," Skakov said.

The plant is estimated to produce 150,000 tons of sugar, which will cover another 30% of the domestic market's demand, given its rated capacity of 960,000 tons. The realization of the project will also allow to create over 400 jobs in the plant and over 1.5 thousand jobs in related sectors of agro-industrial complex, while the forage base will be increased by 1.5 times.