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John Deere to launch production of agricultural vehicles in Kazakhstan

01 march 2013, 18:26
0
John Deere combine harvester. Photo courtesy of agro-new.ru
John Deere combine harvester. Photo courtesy of agro-new.ru
Vice-Minister of Agriculture Marat Tolibayev. Photo courtesy of primeminister.kz
Vice-Minister of Agriculture Marat Tolibayev. Photo courtesy of primeminister.kz
American company John Deere may launch agricultural vehicles production in Kazakhstan. However, the Agriculture Ministry cannot give any exact dates of the project's implementation yet, Tengrinews.kz reports citing Kazakhstan Vice-Minister of Agriculture Marat Tolibayev.

“The work group involving the Agriculture Minister and the Minister of Industry and New Technologies is currently in talks with the American company John Deere about setting up the assembling facility in Kazakhstan. But there are some complications in the talks. John Deere is setting a condition that a specified number of combine harvesters are produced and sold. This number is overly large for Kazakhstan. We and John Deere company have not yet come to a common opinion on the further implementation of the project because of the small size of Kazakhstan market. We have decided to work this issue out more carefully,” the Vice-Minister of Agriculture said.

The negotiations have been in process for 1.5 years. According to Tolibayev, another factor effecting the talks is that all the customs and tax deductions the producers have today are provided under the Customs Union until 2017. In particular, this is all part of the 'free storage' regime.

“After 2017 the producers will have to work under less favorable conditions like everyone else. John Deere says that the deterioration in the tax climate has never been part of their plans. This issue has also become our stumbling block. The talks will be continued considering all these details,” he assured.

Meanwhile, the American company already has its own production facilities in Kokshetau. According to the Vice-Minister, the further plan is to possibly transfer the production facilities to Astana. However, this issue is undecided yet.

According to the Agriculture Ministry, no investments are planned from Kazakhstan side. “The only things they are asking from Kazakhstan is good investment climate and compliance with specific conditions,” Marat Tolibayev said.

“The customs duties are currently equal to 32.5 percent for John Deere combined harvester produced abroad and imported to Kazakhstan. Of course, Kazakhstan-made harvesters will be cheaper. We have to keep in mind that John Deere combine harvesters are high-class vehicles. They have high efficiency and excellent technical equipment. That’s why they are much more expensive than their Russian and Belarus equivalents. They cost around 250-300 thousand Euro,” the Vice-Minister said.

Meanwhile, speaking of Kazakh content, Tolibayev noted that the company promised to have at least 20 percent of local content at the first stage, i.e. around 20 percent in the assembled combined harvester will be produced or assembled in Kazakhstan. The plan is to take the local content to 80-90 percent in future.

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