BISHKEK (TCA) — On December 21, the Kyrgyz Parliament approved amendments to the Land Code and the Law on the Agricultural Land Management. The bills aim to develop a unified state policy in the agricultural cooperatives movement and create an enabling legal framework for it.
The improvement of the cooperatives system will help strengthen the economic potential and competitiveness of agricultural producers, improving business conditions, solving food security problems and creating incentives for the growth of commodity output, the documents say.
The bills provide for equal conditions for agricultural cooperatives and smallholder farms, when allocating agricultural land for use.
Taxation is among the main problems the cooperatives currently face in Kyrgyzstan. The lack of a clear system of charging taxes and inequality in taxation between cooperatives and farms, as well as between different types of cooperatives, hampers the development of cooperatives.
Background
The first agricultural cooperatives in Kyrgyzstan were established during the land and agrarian reform in 1992. The government created agricultural cooperatives on the basis of unprofitable state farms by privatizing the state property.
The state policy aimed to create new cooperatives, but it was difficult to ensure their sustainability and development. In 2008, about 4,000 cooperatives were created through administrative levers, which improved the statistics only, but not agriculture or the cooperative movement.
According to the National Statistics Committee of Kyrgyzstan, the number of operating agricultural cooperatives decreased threefold in 2016 compared to 2006.
The distribution of land on a share basis led to the development of small-scale production and domination of smallholder farms with low incomes. Such farms are limited in obtaining technical, commodity and financial resources, which is the main obstacle to their development.
Small land plots do not allow to effectively use crop rotation, which leads to irrational use of irrigation water, equipment and financial resources.
Benefits and limitations
Cooperatives allow small farmers to increase production and compete with large market players, as well as to save time and reduce production and transportation costs when working together.
Moreover, cooperation provides an opportunity to enter new markets, strengthen their positions, reduce purchase costs for services and equipment, and hence increase profits.
In addition, it is more convenient for cooperatives to receive grants and other financial assistance participating in state and donor projects.
The Union of Cooperatives of Kyrgyzstan unites 220 commodity-service cooperatives operating in all regions of the country. The association helps its members implement large orders and assists in selling products and establishing contacts. Small and large cooperatives grow crops (rice, potatoes, beans, vegetables and fruits), process agricultural products, provide services to farmers, and are engaged in livestock and poultry production.
Cooperation also has negative sides, experts say. For instance, the decision-making takes a long time. Cooperative members have to participate in all meetings, which creates inconvenience. When working together, it is necessary to keep an extensive record.
Another problem that sometimes arises in cooperatives is disagreements between their members, which creates instability and uncertainty for the whole cooperative.
Successful cases of agricultural cooperatives
The Nukok cooperative established in 2002 unites 267 farmers in the Nookat district of the Osh region in the south of Kyrgyzstan. Nukok grows potato and provides farmers with high quality potato seeds. The fixed assets of the cooperative have increased fourfold since 2002, and the farmers’ incomes have tripled. The volume of grown potatoes has increased threefold.
The Tushum agricultural cooperative, established in the Batken region with the support of Germany’s GIZ, was the first to open a vegetable and fruit processing facility. Tushum also processes the Batken rice, famous for its high taste, according to international standards, and currently delivers it to foreign shops.
The Issyk-Kul Organica agricultural commodity and service cooperative was the first in Kyrgyzstan to receive the IMO certificate (Institute for Marketecology, Switzerland) for the production of organic products. IMO is the leading provider for international inspection and certification services for recognized organic, ecological and social standards. In 2013, the cooperative started growing, drying and selling medicinal herbs and began to supply its products to Germany. The cooperative also grows and sells organic fruits (apples and pears) and vegetables (garlic and potatoes).
Planned approach needed
For full-scale development, the Union of Cooperatives of Kyrgyzstan proposed to change the structure of the Agriculture Ministry and to create a cooperatives development department. The Union members who visited Japan through JICA programs advised to use the experience of this country. The Japanese model of agricultural cooperatives works very efficiently. The cluster approach includes a complete chain of products from the producer to the market. In Japan, broadly developed agricultural clusters also resolve issues of financing and the introduction of innovative methods.
While understanding the importance of cooperation, the Kyrgyz government has not developed tools for cooperatives’ development. Meanwhile, a program approach would ensure a planned approach to the development of rural areas, streamline the existing regulatory framework, and attract the attention of the public and international partners to cooperatives.
In the conditions of the Eurasian Economic Union, the issues of marketing and sales of products are especially important. The State should support the agrarian sector, granting preferences to agricultural cooperatives which guarantee stable production and job creation.
TCA
