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Summary of Remarks by Minister of Agriculture of the Republic of Kazakhstan at the briefing CBFV under the President

Dear colleagues!

Let me tell you about the measures taken by States to support agribusiness in the context of the current global economic situation.
In these difficult times especially important is the timely support of agriculture, ensuring social stability (the number of employed in agriculture population is 25% of the employed in the economy) and a positive synergistic effect on the development of industries related to the agro-industrial complex.
As you know, in 2013 the program “Agribusiness 2020”, which contains a whole range of financial and non-financial mechanisms to support the agricultural sector.
In 2015, the subsidies amounted to 177.3 billion. tenge, almost 2 times more than in 2013 (87.2 bln.).
Now we can talk about the first results of the program “Agribusiness 2020”.
The volume of gross agricultural output in 2014 amounted to 2.5 trillion. tenge, which is more than in the previous year by 0.8%. (in livestock grew by 3.8%, in crop production – 98.4%).
In 2.9% increase in food production for 2014 (1 042.4 billion. tenge).
Due to the introduction for the first time last year, the support mechanism – investment subsidies in 2014 increased by 14.4%, investment in fixed capital in agriculture and made 166.4 billion. m.
In addition to the 16.5% increase investments in fixed capital in the production of food and $ 40, 8 billion. m.
Despite the decline in 2014 by 6.2% of total exports of agro-industrial complex (2.6 bln. USD), it should be noted that for the first time last year, are actively exported meat and meat products, the export of which at the end of 2014 amounted to 12.3 thous. tons, including exports of “red meat” was 7.5 thousand. tons of beef – 6.3 thous. tons. At the same time, there is a decrease in imports of agricultural products by 6% (4,2 bln.).
At the same time, the current economic situation requires additional state participation in the agricultural sector of the country, which is especially important in the conditions of the Customs Union, where growth in the economy of the Russian Federation have its influence on the economy of Kazakhstan.
Moreover, the partner countries of the EAEC, is also experiencing the negative impact of global market conditions increase the amount of state support of agriculture, which are still outperformed Kazakhstan.
(Reference: Government of the Russian Federation in December last year announced an increase in measures of state APK support up to 2020 from 1.4 to 2.1 trillion. Russian rubles almost 700 billion. RR, ie by 50%.)
In the course of an extended meeting of the Government with the participation of the Head of State, February 11 tons z. Special attention was paid to support and further development of agro-industrial complex. There was also a need to include these measures in the infrastructural development of the State program “Nurly Zhol” on 2015-2019 years “.
So, in 2015, provided additional funding from the National Endowment agribusiness entities in the amount of 20 bn., Including:
1 .Subsidirovanie interest rates on credit and leasing obligations under financial rehabilitation – 7.0 bln. tenge (in 2015 laid the budget 13.0 bln.).
The funds of the National Fund will further extend the obligation agribusiness entities in the amount of 188 billion. tenge. As a result, the total amount of liabilities amounted to 500.0 heals bln. Tenge.
These measures will improve the solvency, to minimize the risks of bankruptcy, increase financial stability and competitiveness of the agribusiness entities, as well as reduce their credit load in a special economic period.
2. Compensation for interest rates on loans (leasing) to support agriculture – 1.5 bln. Tenge. (in the budget in 2015 laid 1.9 billion. tenge, plus 1.9 billion. tenge ext. RB).
Currently, a stable reference agribusiness agribusiness entities necessary funds to purchase fixed and current assets, which are mainly attracted by leveraged financial institutions that for the subjects of agrarian and industrial complex have high interest rates.
In this regard, carried out subsidizing interest rates on loans for the completion of fixed and current assets, including the leasing of agricultural machinery and technological equipment.
This will further involve the industry in 2015 about 60 , 0 bln. tenge of private investments.
3. To subsidize the development of livestock breeding, increasing the productivity and quality of livestock products provided – 11.5 billion. Tenge
Taking into account the previously allocated funds for these purposes from the local budget of around 53.0 bn., The total will be more than 64.0 billion. tenge.
The funds will be used to:
– increase the competitiveness of domestic livestock and poultry enterprises in the EAEC,
– preservation of the growth of livestock and poultry production in agricultural companies, including: milk – 15%, meat – 10%, eggs – 10% ;
– the preservation of jobs in the poultry farms, which employs more than 12 thousand. people.
In addition to increasing the volume of financial recovery to 500 bln., we propose to expand the range of its instruments, by providing:
1) refinancing of liabilities on bonds;
2) subsidies coupon rate on the bonds;
3) the ability to transition borrowers, previously supported by other government support programs without returning previously provided subsidies.
This will require the funding of the Holding “KazAgro” means ENPF of $ 89 billion. m.
In addition, you must provide the individual measures in relation to major agricultural holdings are not included in the program of financial recovery and are in the verge of bankruptcy.
In this connection, depending on the difference between the position of the subject features
1) a restructuring of the rehabilitation program as part of Holding “Baiterek” (SC “Bogvi”).
2) A bankruptcy proceedings and implementation of more effective owners of mortgages (SC “Transavto”, LLP “Basco”).
3) purchase of assets maturing debt to creditor banks by NMH KazAgro to further sale to potential investors and / or a public offering IPO (ie initially preparing a way out of the project). This will save a single production mechanism in order to ensure continuity of production processes and maintain social stability in the countryside.
For in 2015, uninterrupted funding agriculture now addressed the issue of funding KazAgro in the amount of not less than 80 bln. At the expense of ENPF.
For its the Ministry together with JSC “NMH” KazAgro “programs have been lending to small and medium-sized businesses and identifies indicative plans for the establishment of farms in sheep breeding and horse breeding, dairy farms up to 50 and 100 goals, provides unsecured loans to the creation of family gardens to 5 ha.
In general, due to the implementation of these measures, according to preliminary estimates in 2015 alone can provide employment to about 30 thousand. people.
In accordance with the amendments to the Tax Code in the current year provided a solution, so-called “first-VAT” for processing plants and procurement organizations.
So now VAT on procurement organizations will be calculated in the normal manner, with the amount of VAT paid will be returned to them in the form of subsidies, provided that not less than 90 per cent of the total annual income of such an organization will constitute income resulting from sale of agricultural products on the established list.
This measure would solve the issues of capacity utilization of processing agricultural enterprises and provide SKHTP sales of products at fair value.
In conclusion, it should be noted that the measures envisaged to support the agro-industrial complex will ensure the competitiveness of domestic agribusiness entities in the “special period” of development the state’s economy.

Thank you for attention!

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