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A policy agenda for agricultural development in Kazakhstan

06.05.2014 - (idw) Leibniz-Institut für Agrarentwicklung in Transformationsökonomien (IAMO)

IAMO Policy Brief 15 summarises constraints to further development and gives recommendations for political decision makers Kazakhstan is now widely regarded as a key player on world agricultural markets, with considerable export potential in the wheat, beef and dairy sectors. Based on unique farm-level data the now released IAMO Policy Brief 15 offers new insights into the constraints that hamper further economic growth and provide an assessment of the Kazakhstani governments agricultural development strategy. The authors recommend political decision makers to establish measures which improve the local institutional environment instead of focusing on the provision of subsidised capital.

Kazakhstan has gained an internationally recognised position among the post-Soviet countries. While much of the economic growth is driven by Kazakhstans oil and gas sectors, the country has also become one of the top ten global exporters of wheat and flour. International observers see the agribusiness sector as a key investment target, deriving its attractiveness from the countrys extensive arable land resources, positive demand prospects in neighbouring countries, growing domestic consumption, and a relatively liberal trade regime.

At the moment subsidised credit is one of the main instruments employed by the Kazakhstani government to stimulate farm investments. But farmers are hesitant to take loans. Their reluctance to invest also results from deficient managerial skills, explains agricultural economist Martin Petrick, one of the authors. Regarding the wheat sector producers face a lack of land supply in the northern wheat region of Kazakhstan and are further restrained by the market power of elevator companies, the vagaries of trading over long distances in an underdeveloped rail and seaport infrastructure, and the intervention activities of the state-mandated Food Contract Corporation (FCC). The beef and dairy sector suffer from atomised production structures. Producers here have significant problems to provide year-round fodder. Both beef and dairy value chains are subject to a problematic bifurcation that prevents small-scale producers from integrating with high-value processing and outlets.

The authors therefore recommend the Kazakhstani government to coordinate and monitor the modernization process of agribusiness. Successful agribusiness entrepreneurs require more or even something else than cheap access to inputs and capital, namely effective institutional arrangements at the local level, emphasises Petrick. For instance the know-how of individual farmers should be improved, the land market liberalized and private storage capacity extended. Moreover, local governments should play a facilitating role in the sustainable management of public grazing land, and food quality and safety standards should be gradually tightened.

All the insights and recommendations of the researchers are presented in detail in IAMO Policy Brief 15 which is available on the webpage at: http://www.iamo.de/dok/IAMOPolicyBrief15.pdf. For more information on the topic please also see IAMO Discussion Paper 145 Kazakhstans wheat, beef and dairy sectors: An assessment of their development constraints and recent policy responses: http://www.iamo.de/dok/dp145.pdf.

Martin Petrick presented the findings on Kazakhstans agribusiness at the Regional Research Conference: Agricultural Transformation and Food Security in Central Asia in Bishkek, Kyrgyzstan. The conference hosted by the International Food Policy Research Institute (IFPRI) and the University of Central Asia took place on 8 and 9 April 2014. For more information see here http://resakss-asia.org/events/policy-research-conference-agricultural-transform...

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Further information
Petrick, Martin; Gramzow, Andreas; Oshakbaev, Dauren; Wandel, Jürgen (2014). A policy agenda for agricultural development in Kazakhstan. IAMO Policy Brief No. 15, Halle (Saale) http://www.iamo.de/dok/IAMOPolicyBrief15.pdf

Petrick, Martin; Oshakbaev, Dauren; Wandel, Jürgen (2014). Kazakhstans wheat, beef and dairy sectors: An assessment of their development constraints and recent policy responses. IAMO Discussion Paper No. 145, Halle (Saale) http://www.iamo.de/dok/dp145.pdf

IAMO Policy Briefs
The publication series IAMO Policy Brief is published at irregular intervals and provides a platform for research findings and outcomes of the Leibniz Institute of Agricultural Development in Transition Economies (IAMO) with social relevance to be communicated accessibly to a broad audience. Key target groups include political decision-makers, mass media representatives and the general public.

About IAMO
The Leibniz Institute of Agricultural Development in Transition Economies (IAMO) analyses economic, social and political processes of change in the agricultural and food sector, and in rural areas. The geographic focus covers the enlarging EU, transitional regions in Central, Eastern and South Eastern Europe, as well as Central and Eastern Asia. IAMO is making a contribution towards enhancing understanding of institutional, structural and technological changes. Moreover, IAMO is studying the resulting impacts on the agricultural and food sector as well as the living conditions of rural populations. The outcomes of our work are used to derive and analyse strategies and options for enterprises, agricultural markets and politics. Since its foundation in 1994, IAMO has been part of the Leibniz Association, a German community of independent research institutes.

Please note that the Leibniz Institute of Agricultural Development in Central and Eastern Europe was renamed Leibniz Institute of Agricultural Development in Transition Economies in January 2014. The acronym IAMO is still valid.

Contact
Prof. Dr. Martin Petrick
Tel.: +49 345 2928-120
Fax: +49 345 2928-199
petrick@iamo.de

Media contact

Britta Paasche
Public Relations
Tel.: +49 345 2928-329
Fax: +49 345 2928-499
presse@iamo.de
www.iamo.de Weitere Informationen:http://www.iamo.de/dok/IAMOPolicyBrief15.pdf - IAMO Policy Brief 15http://www.iamo.de/dok/dp145.pdf - IAMO Discussion Paper 145http://www.iamo.de/en/iamo-links/home.html - IAMO Anhang
Press Release: Policy Brief 15_Policy agenda for agricultural development in Kazakhstan
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