Measures to stabilise food prices considered by Government

Implementation of new approaches to stabilize prices for socially important food products was considered at the Government session chaired by Prime Minister Alikhan Smailov.

Deputy Prime Minister – Minister of Trade and Integration Serik Zhumangarin said that in Jan this year inflation was more than 1%, including food products by 1.4%, non-food products by 0.9% and paid services by 0.7%. The highest food inflation was in Astana and Shymkent (2.2% each), Kyzylorda and North Kazakhstan (1.8%), Aktobe (1.7%) and Ulytau regions (1.5%). 

Price index for socially important food products since the beginning of the year amounted to 1.7%. Weekly dynamics varies at the level of +0.3%/+0.4%. The highest growth rate was noted in Mangistau (3.4%), Ulytau (2.8%) regions and Astana city (2.5%). Specifically, onions rose by 22.5%, rice by 5.2%, cabbage by 4.1%, milk and carrots by 3.1%, potatoes by 3.0%, horns by 2.6%.

The country's price stabilisation instruments have now been revised. For example, the approach to lending under the "revolving scheme" has been reformatted (now directly to producers), and the mechanism for forming stabilisation funds has been changed as well by purchasing products during the harvest period, when prices are competitive on the market, and selling them during the off-season.

In addition, a forward purchase mechanism has been introduced, allowing for the storage of produce from agricultural producers until sale. As of today, the actual reserves under the 2022 harvest contract are as follows: onions at 110%, potatoes at 105%, carrots at 87% and cabbage at 70%. Currently there is an order to start selling onions through commercial facilities.

Serik Zhumangarin added that all major retailers in the country are involved in the work to stabilize prices.

Minister of Agriculture Yerbol Karashukeyev reported more about food stockpiles, head of the National Statistics Bureau Zhandos Shaimardanov reported on food price monitoring. 

Akims of Mangistau region Nurlan Nogaev, of Ulytau region Berik Abdygaliuly, and of Astana city Zhenis Kasymbek reported on measures to stabilize prices in the regions. 

The Prime Minister stressed that one of the main tasks for 2023 is to keep inflation within the 9.5% range, which is achievable if all regions work actively to stabilize food prices, especially during the off-season.

According to him, akimats have been given all the necessary levers, allocated funds, but because of the formal approach to the execution of tasks there are negative results. As an example, the head of the Government cited onion contracting.

"The akims have repeatedly reported that the needs of their regions have been met, but why are onions so expensive? There are enough onions grown in the country, but in order to reduce the rise in price we had to take emergency measures, to impose a ban on export," Prime Minister pointed out.

Prime Minister added that the mechanism of forward purchase in the country has been reformatted to finance primarily producers. However, the akimats continue to allocate funds to suppliers, multiplying intermediaries.

"Regions have been given the opportunity to form reserves in stabilisation funds at favourable prices, but the work is not being done," the Prime Minister said. 

At the same time, he said, since the beginning of the year there have been no facts of detecting violations of the legislation in the sphere of trade activities, although all the akimats were sent algorithms and recommendations to improve the work of the relevant regional commissions. 

"In fact, we have to force the regions to hold these meetings, which still do not yield results. I want to stress once again: stabilization of food prices is the most important task of the Government and local executive bodies. We have already said that in case of a formal approach and lack of results relevant decisions will be taken," Alikhan Smailov said. 

In this connection the Head of Government ordered to take special control of the volumes and prices at which goods are bought and sold. In addition, he demanded from the akimats to sell products from the statutory fund only in trade facilities, which use cash registers.

In addition, the Prime Minister noted the need to permanently hold special fairs covering all districts and to develop a unified format of the forward purchase agreement indicating the mandatory conditions for fixing the price, volume, counter obligations and penalties.

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