REPORT TO THE FORUM FOR AGROINDUSTRY

PARTICIPANTS

Henrik Curtz, Agricultural Counsellor

PURPOSE OF MISSION

To collect information about Kazakhstan agriculture and establish contacts with key persons in Kazakhstan administration in order to define possible areas of co-operation with Danish producers and manufacturers and to assess the market potential for agro-industrial machinery, food processing equipment and food products.

Meeting at Ministry of Agriculture

Visit to retail outlets (supermarkets and markets)

Two meetings with Governor (Akim) of West-Kazakhstan region Mr. Krumbek J. Kusherbajev

Two meetings with deputy Akim and responsible for agricultural matters, Mr. Abat Esengalijev

Visit to dairy plant

Visit to dairy plant

We had the occasion to talk to journalists of two newspapers in Aksai, and a TV interview of approximately 10 minutes was given to a major Uralsk region TV station.

Akim of West-Kazakhstan region (Uralsk)

Deputy Akim of Uralsk responsible for finance and budgetary matters.

Deputy Akim of Uralsk responsible for agriculture, Mr. Abat Esengaliev

Deputy Akim of Aksai, Mr. V. Philimonov

Head of financial department of department of Agriculture in Uralsk, Mrs. Asisa Kurmanova

Deputy head of international department, Ministry of Agriculture, Astana, Mr. Mejram Akchulov

Specialist in animal husbandry, Ministry of Agriculture, Astana, Mr. Kanat Udrisov

Specialist in food processing industry, Ministry of Agriculture, Astana, Ms. Rakhima Samzhanova

Owner of dairy plant "Bereke", Uralsk, Mr. Kymbatbek Ajdarov

Owner of dairy plant of Aksai, Mr. B. Edgeev

Head of agricultural department, Aksai, Mr. V.Philimonov

Based upon a very short and geographically limited visit, Kazakhstan surprised by the cleanliness of its cities, the attention paid to Kazakhstan cultural heritage and architecture, the seemingly well organized administration, its friendly people, its clear policies in the field of agriculture, and its desire to co-operate with foreign partners.

Astana being a new city is characterized by extreme construction activity and an already well-developed infrastructure.

Kazakh agriculture has suffered a serious decline in recent years, this being due to both transition from state ownership under communist rule to private ownership, and also to six years of consecutive severe droughts in the late nineties. In the oblasts visited the decline in animal production was close to 90%, and in Uralsk there has been a considerable reduction of ploughed areas from almost 1,5 million ha in 1996 to around 550.000 ha in 2000. This has resulted in an increase in fallow lands, now amounting to approximately 1,2 million ha.

Kazakhstan is a country where the influence from central political forces is felt in all parts of administration. Oblast Governors Akims – hugely influential locally - are appointed by President Nazarbajev for an indefinite period of time and not elected. This allows for speed and efficiency in the application of policies, and the need and desire for obtaining immediate and visible results was clearly felt at our meetings with high-level representatives.

Co-ordination between various parts of government seems to be given high priority. Serious problems of an environmental nature were mentioned several times at our meetings, and severe pollution from the oil and gas industry has stressed the importance of maintaining a pollution-free agricultural sector despite the need for progress in the production of foodstuffs.

The president has thus emphasized the need for well co-ordinated policies with the aim of ensuring a balanced development in all major productive sectors in Kazakhstan.

The above highly facilitates our task as to establishing platforms for a strengthened Danish presence in the shaping of Kazakhstan agriculture. To this should be added that we were met with a high degree of openness, and it seemed obvious that the experts met were both well qualified and highly dedicated to their tasks. In particular the top political officials in the Uralsk Region demonstrated a degree of interest and friendliness at the personal level, which must be considered as very promising for possible common activities. During a four-hour flight from Astana to Uralsk and at a meeting at his office the following day, efforts to establish closer links at a personal level with the Akim seem to have been quite successful.

There seems to be a well-defined agricultural policy aiming at a balanced development of the primary and the food-manufacturing sector. The decline in agricultural output through the nineties entailed a similar catastrophic development in the food-manufacturing sector, so that today in the Uralsk Region no major meat manufacturing plant has survived and only two dairies have managed to maintain a certain production, however far below capacity.

The presence of the agricultural sector in Kazakhstan economy is not very big, but President Nazarbajev has publicly defined the development of rural areas in general and the agricultural sector in particular as the country’s major priority for the coming three years.

A program of rural development has been put into force, and the budget envisages allotting about 40 billion tenge (TG) per year (corresponding to 2 billion DKK) for this purpose and 55 billion after 2005.

The privatisation of agricultural land has taken place through long-term renting systems, up to 99 years. A new piece of legislation was approved two weeks ago, allowing for agricultural land to be privately owned and freely traded. According to information received during the mission, this law was met by stiff resistance in the Mazhilis Parliament and was approved only after direct personal intervention from the President.

Special policies aimed at attracting foreign investment into agriculture have been implemented, and a specially authorised government body has been charged with providing state investment support. Preferential tax treatments and state grants in kind are parts of this policy.

Agricultural production is not confined to one particular area of Kazakhstan. Grain farming and cattle production are located mainly in Northern and Eastern regions, while sheep farming and corresponding wool production is located in the deserts and semi-deserts of Central Kazakhstan. Fruit production takes place mainly in the Southern regions of the country.

The share of agricultural production in GNP is about 9%. 42% of the population lives in rural areas.

Kazakhstan is among the six major exporters of grain in the World. Special measures aimed at supporting wheat production are being implemented and include: A government purchase programme, the establishment of national seed stock reserves, grain storage regulations through licensing procedures for the grain elevator business, agricultural machinery leasing, the establishment of state owned machine stations, and budget financing of pedigree seed farming.

The traditional animal farming of Kazakhstan comprises horses, sheep, camels, and cattle, and horsemeat has kept its importance in Kazakhstan. Pig farming, although also in decline, is given priority in many areas, also in the Uralsk Region.

Our ideas regarding possible co-operation with Danish agro-industrial companies were met with enthusiasm at all levels. We had the occasion to inform the Akim of Uralsk in considerable detail about our plans, and he has instructed his department of agriculture to initiate this co-operation with Denmark as a matter of urgency. It should be mentioned that no other foreign country has up till now taken any interest in the development of the agricultural sector in the Uralsk Region.

The timing of our planned activities in Uralsk is close to perfect, as it fits with the recently approved three-year program for the development of rural areas. It was stressed several times at our meetings, also with the Akim, that no state or other funds would be involved from Danish side. The high-level response to this was clear: Kazakhstan does not need money; it needs know-how, management assistance, equipment and consultancy to ensure a balanced and correct development of the sector.

At the conclusive meeting with the Deputy Akim responsible for agriculture it was agreed as follows:

1. Within the next few weeks the Uralsk Department of Agriculture would present to the Embassy its suggestions as to how and within which areas a co-operation with Denmark could be envisaged.
2. On that basis a further mission to Kazakhstan would be organised with the participation of a representative of the Danish companies. This mission could take place any time during the next three months. During this mission the technical aspects of the further co-operations should be agreed upon.
3. During the month of October after harvest a seminar should be organised in Uralsk with the participation of interested Danish companies. The Department of Agriculture would be responsible for inviting the relevant local authorities, farm managers etc.

The Deputy Akim underlined that government and administration representatives would act as mediators only in the further development of contacts at private level. Full support of the official systems was naturally ensured, but the follow up had to be left to the private parties.

As for the possibility of organising a seminar for the Forum for Agro Industry along the lines known from similar regional events in Russia it is the conclusion of the Embassy mission that the basis for the proposed follow-up mentioned above under point 2 exist.

Once the comments of the Uralsk Department of Agriculture have been received, it is therefore the recommendation of the Embassy that a joint Embassy/Forum mission be organised after the summer holidays with the purpose of establishing, whether a seminar could be organised during October 2003.

A report on the agricultural sector in Kazakhstan will follow.

Moscow June 6^th 2003

Henrik Curtz