ASTANA – The Mazhilis (lower house of Parliament) held Nov. 9 a governmental hour on the topic of improving the efficiency of subsidisation in the agricultural complex.
Minister of Agriculture Assylzhan Mamytbekov declared the need to strengthen measures of protecting the internal market.
“We consider deregulating prices for food necessary. Unfortunately, today we force agricultural commodity producers to hold prices at the same level for various reasons, although the market there is quite competitive and we completely do not regulate import and trade,” the minister said. “As a result, an egg that came out of a factory costing 10-12 tenge (US$0.03-0.04) is sold for 20-25 tenge (US$0.06-0.08) in the store, meaning difference in trade reaches 100 percent and an agricultural commodity producer, having invested so much in labour, has profitability of maximum one tenge (US$0.003) from a single egg.”
As a result, Mamytbekov informed that the country needs amplification measures to protect the domestic market, including control and counteraction of counterfeit and forged food products.
The minister declared that one of the key reasons for weak growth is that most of the subsidies – more than 70 billion tenge (US$227 million) – do not directly stimulate agricultural commodity producers to improve their efficiency and profitability, as high proportion of those subsidies compensate for the lost profits of agricultural commodities producers at prime cost.
Also, incentive measures have been identified, including the development of agricultural cooperation, promoting effective land tenure and new approaches to financing the infrastructure of agriculture sphere including water infrastructures, the establishment of market tariffs for water and attracting investment to the Public-Private Partnership (PPP) Concessions programme.
In addition, Deputy Chairman of the Agrarian Committee of the Mazhilis Romin Madinov stated the need to conserve the mechanism of per hectare subsidisation in the agricultural complex.
“The one question that is now being considered is about changing the system of subsidising. I still think it is necessary for the government and the deputies to carefully consider again: Do we need to abandon the subsidisation per hectare today?” Madinov said.
The deputy noted that in order to resolve these problems there is a need to explore the possibility of attracting insurance companies for controlling the distribution of subsidies in agriculture.