BISHKEK (TCA) — Weather forecasters predict a dry summer in Kyrgyzstan. Due to the unusually warm winter and early spring this year, field works will start before the planned time. The Government reported that there will be no risks for the harvest in 2016 because there is enough water in reservoirs and “everything is under control”.
Favorable weather conditions in 2015 allowed receiving high yields. This year, the Agriculture Ministry also expects a good harvest, as the reservoirs have accumulated 1.3 billion cubic meters of water, 310 million cubic meters more than last year.
Leasing and credits
According to the Ministry, the number of leased agricultural machinery will increase to 300 units this year compared to 200 in 2015. Taking into account the interests of farmers, the Government has reduced the primary personal contribution from 30% to 10%. Machinery stations will be created due to machinery leasing.
The Government also plans to create an enterprise to assemble agricultural machinery in Kyrgyzstan.
To provide state support to businesses and individuals and develop animal husbandry and crop production, the Government has approved its fourth Financing Agriculture project.
Commercial bank will allocate loans to rural producers on more favorable terms, such as 10% interest rate per annum and repayment period of up to three years. Credits up to 100 thousand soms for individual loans may be granted without collateral for up to 12 months.
The circle of recipients of preferential credit has been expanded. Previously mainly farmers engaged in the livestock industry obtained credit funds. The new project will also allocate loans to the processing sector including businesses involved in the processing of agricultural products and services in agriculture (greenhouses, slaughterhouses, and logistics centers).
The amount of agricultural loans will be increased to 10 billion soms this year compared to 5 billion soms last year. The terms of the loans have changed. Previously, preferential loans were issued for two years, and now the repayment period has been increased to three years.
Granting of loans has been launched through the Russian-Kyrgyz Development Fund for five years at 12% with a grace period for repayment of the principal amount of the debt up to one year.
Five banks have confirmed their participation in the project with a total credit of 2.7 billion soms including state owned Aiyl (Agricultural) Bank and RSK Bank, as well as commercial banks KICB, Bank of Kyrgyzstan and Bakai Bank.
According to MP Akylbek Japarov, only 9.6 thousand of 347 thousand farmers received loans last year. So, less than 3% of the farmers have access to state financial resources. Moreover, these people are the wealthier farmers who stand on their own feet, have collateral, and can make a business plan and get the money. But the country needs a system of state support that could provide access to funding for at least 50% of farmers, the MP believes.
Expectations not fulfilled
Not all of the Government’s forecasts have come true. Last year, after the EU had imposed sanctions against Russia, the Kyrgyz Government promised that local farmers could take advantage of the situation and start supplying their products to Russia. The Economy Ministry of Kyrgyzstan held a roundtable with Russian and Kyrgyz entrepreneurs who process agricultural products. Then it was announced that Russia was ready to accept proposals for the supply of agricultural products from Kyrgyzstan but that initiative has not been realized.
The Kyrgyz side was unable to provide the necessary amount of production required by Russia. Besides, technical and quality certification documents of the Kyrgyz side did not meet the Eurasian Economic Union (EEU) requirements. There are still restrictions on the import of Kyrgyz dairy products. Russian retail chains had their own reserves of vegetable production and a well-established chain of suppliers. For example, Russia introduced sanctions against Turkey for the supply of fruit and Armenia replaced Turkey by increasing the supply of its products to Russia.
According to Kyrgyzstan’s JerAzygy Agro-business Association, the export of agricultural products from southern Kyrgyzstan to the north of Russia remains the same as before Kyrgyzstan’s joining the EEU. The south of Kyrgyzstan has traded with the north of Russia for many years and expected a significant growth of exports of vegetables within the EEU. But due to small land plots owned by Kyrgyz farmers their production is small while Russia requires large supply of products.