ASTANA – The Kazakh Ministry of Agriculture has developed a map of its agro processing enterprise locations in order to boost the sector’s growth and increase import substitution, according to the statement of Deputy Prime Minister and Minister of Agriculture Askar Myrzakhmetov at a July 25 government meeting. The project requires 112.1 billion tenge (US$343.1 million).
Agricultural efficiency depends on agro processing, as it forms demand for agricultural products and increases its added value, he said. Developing this sphere will ensure achieving a given average annual gross output growth rate of 5.3 percent within the third modernisation of the economy.
“Taking into account the high share of imports, under-loaded capacities and raw materials potential, nine priority types of processing are identified which are represented by 435 enterprises. Those are processing milk, meat, skins and wool, oilseeds and grain crops, fruits and vegetables, sugar beets and potatoes, for which a clear map of the location of agro processing enterprises was developed, including for each region in the context of districts,” said Myrzakhmetov.
Agro processing will contribute 50 percent to the average annual gross output growth. At the same time, processing agricultural products will contribute 1.4 percent to the growth of crop production, as well as 1.2 percent to livestock products. Agro processing will increase labour productivity in the agro-industrial complex to the 18.6 percent achieved in 2016 and reduce imports from 32 percent to 25 percent.
New enterprise construction is planned mainly in the South Kazakhstan, Almaty, Pavlodar, West Kazakhstan and Aktobe regions, since these regions have raw material potential and existing plants. Due to their loading, however, they are not able to provide the required processing level.
“According to our calculations, taking into account the minimisation of all expenses, the total need for state support for the implementation of the map for four years will amount to 112.1 billion tenge (US$343.1 million). To implement the programmes of subsidising interest rates, the structural unit of KazAgro, KazAgroGarant, was defined as a single operator which will coordinate all issues of interaction with financial institutions. And for investment subsidies, the implementation of programmes will be carried out within the existing rules through akimats (regional administrations). If necessary, the existing mechanism of the regional coordinating councils will be used to consider and justify agro processing projects,” said Myrzakhmetov.
Funding to implement the map will be provided through investment subsidies, as well as subsidising interest rates on loans for fixed and working capital. As a result, implementing the map will increase the gross production of processed products from 1.9 trillion tenge (US$5.8 billion) to 3 trillion tenge (US$9.1 billion) and create 7,000 jobs, he added.
The project has three consecutive principles, including loading the existing capacities of the 435 enterprises by providing access to loans to replenish current assets, as well as organising the collection of raw materials through cooperatives and modernising 80 operating enterprises to increase competitiveness and for the effective use of existing production facilities. In addition, 79 processing enterprises, mostly small, will be constructed in those regions where there are raw materials and existing processing enterprises are too remote.