The InBusiness.kz correspondent learned what branches of animal husbandry need additional subsidies and how effective farmers use the funds obtained.
According to the analysis of funds aimed at subsidizing animal husbandry, it turned out that from 2011 to 2019 the state budget of the subsidies amounted to 539 billion tenge (excluding horse breeding, camels, beekeeping and maralovotics). The data obtained suggest that the greatest coverage of animal subsidies demonstrates meat cattle breeding. The volume of subsidies in it was 239 billion tenge out of 539 billion tenge, but at the same time the state support was covered by about 28 thousand subjects. The index of the industry's efficiency was 1.41.
Askar Jews, Executive Director of the Meat Union of Kazakhstan:
- Analysis of subsidies showed that the least effectively subsidies work in dairy cattle breeding. For 9 years, 95 billion tenge was allocated, and GDP growth was only 71 billion tenge, which is quite small in comparison with other large-scale industries. Accordingly, the efficiency index is 0.74. The fastest growing industry is sheep. She has an efficiency index is 2.2 and 46% - the level of coverage by subsidization. Egg poultry farming shows the growth of the industry's GDP in 130%, and the efficiency index is at the level of 1.24. Does subsidize production growth and how affects pricing, found out from the industry association. I think that subsidies in meat cattle breeding work efficiently. In analytics it is clear that the GDP of the industry in 2011-2019. increased 2.5 times, that is, the recipients of subsidies gave the result.
With the implementation of the agribusiness-2020 program, which has been operating since 2011, large agro-industrial enterprises in the field of animal husbandry and farming develop farms began to form in different regions of Kazakhstan. Large breakdrops, meat processing plants, tribal reproductors were introduced. To coordinate the work of the industry, we have created an association and represent the interests of the participants in the industry in tax issues, lending, access to credit and other issues. Many nuances occur when granting subsidies. Through us, the Ministry of Agriculture receives information, that is, data from the fields that we collect and accumulate.
The money invested in animal husbandry is more like stimulating the industry, since the technological chain was not built before the start of system reforms in meat animal husbandry, there was no specialization of enterprises. Thanks to the subsidization there is an improvement in genetics, the quality of livestock is improved. For example, over the years of reforms, thanks to the program of the breed transformation, the average slaughter weight of CRS in the country increased from 154 to 175 kg.
Subsidies help faster mapping invested investments. As for prices, subsidies helps to keep prices for products, but not as much as it would seem. 70% of the cost of meat make up the feed, which are also subsidized, but not completely. Subsidies in the livestock industry act as an incentive to involve people in this business. We have a large pasture area and many undeveloped lands, and, in order to attract people from the city to the village, there must be a certain motivation. We adhere to such a policy that in the future it is better to leave only investment subsidies and maintain a decline in interest rates in banks. This will remove almost all friction.
Maxim Bozhko, head of the Egg Manufacturers Association of Kazakhstan:
- The state program of support for egg poultry farming took more than 10 years ago. At that time, the main paid subsidy was released on finished products, that is, a produced and realized egg. We believe that it was correct to allocate subsidies not to the expenses of the enterprise (raw materials, feed), but on the result. It stimulated the development of the industry. Factories were interested to produce as many eggs as possible to get more subsidies. Due to this, for 10 years, egg poultry farming in Kazakhstan has grown several times and completely closed the needs of the local market. In 2019, we produced more than 5 billion eggs and went to export. Began to ship eggs to Russia, Afghanistan, Kyrgyzstan, Tajikistan. More than 10% of the volume of the egg produced in Kazakhstan was shipped to export. Peak development fell for 2018-2019.
Unfortunately, the positive development of the industry deprived us of state support. The government decided that only the scarce directions should be maintained. It was voiced in December 2019. But it is interesting that substitutions in crop production remained, and as you know, we have a surplus for almost all grain crops. We produce four times more than consuming.
Causes and consequences
After deciding on the abolition of subsidies for egg production, we warned that this would lead to the fact that the industry will become unprofitable and the business will not be interested in developing. Factories will begin to reduce the livestock, which will lead to a decline in production. So it happened. In August 2020, we saw a decline in production by 7%. In September-October, there was a bird flu, which reduced the livestock by another 20%. Today on the market we see a sharp rise in prices for egg products. In addition to the shortage of the livestock, the feed components (by 30-100%), which we use for the production of the feed: it is wheat, barley, peas, sunflower and soy meal, vegetable oil. Government aims accuse us of conspiring prices, indicating that the cost of products has grown at the same time from all manufacturers. We explain that this is due to a one-time increase in cost and reduction of the supply of eggs in the Kazakhstan market.
We also understand that the rise in the price of an egg causes a negative of the population. But the problem is not in manufacturers. This happens not because the egg factories decided to earn super-profile. For the past five years, the egg business has a low profitability that kept at 2-5% per annum. Including this profitability of the factory received due to state support. Previously, subsidies were paid in the amount of from 2 to 3 tenge for the produced and realized egg. In August 2020, the rules changed, and now we get two times less, from 1 to 1.5 tenge. Today, the average cost of production of eggs in Kazakhstan is approximately 350 tenge in a dozen. And, accordingly, subsidies of large factories producing more than 200 million eggs per year are 1.5 tenge. It turns out, the level of subsidies today is 4% of the cost. 10 years ago the cost of eggs was 15 tenge, and the subsidy was 3 tenge. That is, previously subsidies were 20% of the cost, which was a good stimulus for the development of production, so its volumes grew. Now the cost has grown more than 2.5 times, and the state support has been reduced twice, instead of raising it or maintain at the same level.
In search of incentive
We ask the Ministry of Agriculture to return the subsidization of the industry in 3 tenge and pay all the factors equally, regardless of production volumes. It used to be clear that the larger the factory, the smaller the cost, and the Ministry of Agriculture thereby stimulated the increase in production. But now, when the market has been formed in Kazakhstan, there is enough poultry farm, which can produce sufficient eggs, no longer need to stimulate a further increase in production volumes, because there are no markets. For us, an interesting market for export would be China. Every year we ask the Ministry of Agriculture to carry out work on its discovery. But it seems that it is not a priority for them, and it is not clear to us why. The opening of the PRC market would be an incentive for further increasing the volume of egg production in Kazakhstan. In the meantime, we have no stimulus to develop. We provided the domestic market, and this is enough. Now you need to keep the current production volume and do not give it to fall, so we are talking about the return of subsidies. Direct subsidization of agricultural producers is one of the mechanisms for looting prices.
In the near future, there are no prerequisites for further rising prices. The cost of the egg rose sharply in December 2020 - January 2021, after which he stopped. The market is more or less balanced. 350 tenge is now the cost of producing eggs, the selling price from the factory is 400 tenge for a dozen. We believe that it is a balanced and fair price covering the poultry farm costs and giving profitability at the level of 14%. None of the poultry farm receives 50% or 100% profits.
Another of the problems of state support in the egg industry is that in different fields, the akimates allocate different budget. Somewhere poultry farms receive 100% subsidies, somewhere - 10-15%. The egg direction is not a priority for the AIC, therefore it is subsidized by the residual principle.
There is also a problem of seasonality demand. In the warm time, the population consumes less eggs and livestock products. The demand for an egg in summer falls almost twice. In the industrial factories, there is no possibility to regulate production volumes, because the number of hens churls is in the factory for two years, and they can not be scored in the most peak. Therefore, all year round in production is about the same amount of egg, and the demand in the market floats. In addition, we will bring remnants from Russia for dumping prices. It is necessary to tighten the control over the import of eggs. Dumping is detrimental to the development of domestic business, and the Competition Protection Agency should identify such facts and punish importers who violate anti-dumping legislation. Business cannot work with negative profitability, it is a direct path to bankruptcy.
We hope to change the attitude of the Ministry of Agriculture to the Egg industry of Kazakhstan. Namely, the return of abbreviated subsidies, the introduction of major changes to equal access to the state support of all factories, protection against unscrupulous competition from our neighbors and the opening of new export markets for the development of the industry.
Sayat Jetbaev, head of the peasant farm "Zhetyan" in the sheep-produced industry:
- We enter the top three of the leading household farms. Since 2020, subsidies in the shepherd industry have been increased by about 50%, and in some directions, even 100%. For all the time of subsidies of the livestock industry, sheepodia has been given limited attention, but the effectiveness of the shepherd subsidies is very high in comparison with other industries.
We have five areas that are engaged in sheeping on a large scale: it is the Turkestan region, Kyzylorda, Zhambyl, Almaty and East Kazakhstan region. Our lamb is in great demand in the UAE and China. Since there is a demand for it, meat processing complexes are built in Kazakhstan. But for the workload of the meat processing plant lacks the volume of meat. To increase the livestock, the state should motivate farmers, raise subsidies for this industry, then people will be profitably engaged in sheep. Therefore, now subsidies in this industry began to increase, which means that people began to grow.
To hand over the lamb to snap-stick, the state is paying 3 thousand tenge to ordinary peasant farms, which advocates additional help for peasants. Increased subsidies and for breeding work. For example, in 2019 I paid 2.5 thousand tenge per head, and now 4 thousand tenge. The migratory was given 1.5 thousand tenge, and now raised to 2.5 thousand tenge.
Sheepading does not develop a large pace, and many people in this area of animal husbandry ruin. This is because the farmer sells his cattle, as he needs money for the content of the family. The peasants lack working capital. I believe that an agricultural bank is needed, which will give money to the minimum percent. Moreover, in the board of directors of Agrobank should be representatives of the industry, from business or sectoral unions.
In the sheep industry, a big problem with frames - no shepherds, for example. No one wants to go to the mouth of sheep or cattle, because there are no conditions. 12 months they live in trays and yurts, lead a nomadic lifestyle. For the year, the shepherd moves about 4 times, and we cannot create conditions for it. We raised the question to at least somehow interest people to go to this work, give them benefits. The state made it possible to individuals to hire five employees from other countries. And legal entities do not have the right to hire such employees. For the second year we have a jam, and we do not know how to grow further. No one goes to work, even though we set the average salary of 150-200 thousand tenge, which is considered not bad for the village. For the development of the economy, we need workers not only from Kazakhstan, but also from other countries. Then competition will begin and, perhaps, the local population will work.
Maria Galushko
Subscribe to the Telegram channel Atameken Business and the first to get up to date!