What Kazakhstan should do to reach its agricultural potential, according to experts09 july 2014, 13:06
A century ago most Kazakhs who lived off the land were herders rather than farmers.
Collectivization in the 1920s and early 1930s forced them to become cogs in huge agricultural machines, most of which grew grain and other crops.
Those working on the collectives became specialists, each doing a particular job.
That system prevented them from obtaining the insight needed to run a family farm. Such knowledge included what crops to grow to earn the best living, how to get the most productivity out of the land, where to dig wells, how to keep livestock thriving, and on and on.
Kazakhstan’s independence in 1991 shattered the collective system. In its place the government provided rural dwellers with small plots of land. But the new land owners lacked the knowledge to run family farms.
Kazakhstan is still struggling with that legacy, according to Dr. Martin Petrick, a German expert on the agricultural economies of the former Soviet Union.
Take the case of a guy driving a tractor all his life on a collective, said Martin, a researcher at the Leibniz Institute of Agricultural Development in Transition Economies.
Martin Petrick at an Almaty fruit and vegetable stand. Photo courtesy of Martin Petrick
“Then, 15 years ago, the government gives him a plot of land so he can run his own operation – but he doesn’t have the expertise to do it.”
Instead of providing him with training, creating infrastructure such as grain storage facilities, helping him get fodder for his livestock during winter, and making it easier for him to market his products, Kazakhstan has tried to nudge its agricultural sector into the 21st Century by throwing money at farm operations, Martin said.
This has included putting a lot of Western tractors, harvesters and other equipment in the fields, importing purebred Western cattle and providing agricultural operations with hundreds of millions of dollars in subsidized loans.
Operators need know-how, off-farm infrastructure and product-distribution channels more than loans, Martin told me in a recent interview. That’s particularly true of the tens of thousands of family farmers – those with small plots of land and two or three cows, he said.
A dilapidated Soviet-era grain storage facility in northern Kazakhstan. Kazakhstan has an acute shortage of grain elevators. Photo courtesy of Martin Petrick
In fact, most farmers don’t want to borrow money, fearing they won’t be able to repay it, Martin said.
I was surprised to hear this because Kazakhstan farmers I’ve talked with have complained that banks won’t lend them enough, even with government loan subsidies available. I’ve talked mostly with big operators, though – growers who own or lease hundreds of thousands of hectares of wheat, for example.
The difference may be that large operators have connections with bigwigs such as regional governors that would prevent them from going under in tough times. The little guys lack such connections. They figure they’d be out on the street if they were unable to repay a loan – so they don’t apply for one.
I interviewed Martin because I was intrigued about a report his institute issued this month on Kazakhstan’s agricultural situation. You can see the report here.
Martin Petrick, second from left, and other members of the Leibniz institute team interview a farmer near Astana, third from left, to gather information for their report on Kazakhstan agriculture. Photo courtesy of Martin Petrick
The study noted that Kazakhstan has made great strides in agriculture since independence.
As “one of the top 10 global exporters of wheat and flour,” it’s become “a key player on world agricultural markets,” the report said.
It also has “considerable export potential” in beef and dairy products, according to the report.
The Leibniz institute studies economic, social and political change in agriculture in Central Asia, Central, Eastern and Southeastern Europe, and East Asia.
Its reports not only assess the current state of a country’s agriculture, but also offer recommendations for improving operations and rural lifestyles.
A major theme of the Kazakhstan study was that to improve its agricultural sector the country needs to focus less on loan subsidies and more on creating an institutional framework that can help farmers.
That institutional framework would include training for “household farmers, who don’t know best practices,” said Martin, who first came to Kazakhstan as a Ph.D. student in 1999.
The main source of training in developed countries is agricultural extension agents, who visit farms to offer advice to individual operators and who hold seminars to train a number of farmers at a time.
Kazakhstan has extension agents, too, but not enough to visit most farms. “Kazakhstan is a vast country, and farmers typically don’t come in contact with agents on the ground,” said Martin, who has visited the country several times since 2011.
Farmers’ lack of access to off-farm infrastructure “was most evident in 2011, when Kazakhstan had a bumper wheat crop – bigger than in any year since 1954,” Martin said. That was the year that Soviet Premier Nikita Khrushchev ordered vast swaths of Kazakhstan grassland cultivated under the Virgin Lands program.
“In 2011, neither on-farm storage facilities nor the available (rail) cars nor off-farm elevators could handle the crop,” Martin said. “Kazakhstan had to improvise on the storage of grain by putting it in plastic bags, which were left on the ground.”
This, of course, led to grain spoiling and vermin eating it.
The Leibniz institute report said Kazakhstan needs to take a number of other steps to help farmers:
• Change land policy to free up more land for growing wheat in the northern wheat belt. The area contains huge farms but some land sits idle.
• Create more grain storage facilities. Kazakhstan has been building silos, but it’s not happening fast enough.
• Develop a better rail and sea shipping network. Kazakhstan has been adding rail lines, locomotives and rail cars, plus grain-handling facilities on the Caspian Sea and at other countries’ ports. But there is much more to do.
• Come up with a way to provide fodder to livestock owners in winter. Big operations like government-owned KazBeef can grow their own fodder for their livestock, but small operations have too little land to grow both mainstream crops and fodder.
• Create a system that gives small dairy and beef operations access to large processing and marketing operations. Most small operators have to sell their products locally for less money than they could get selling them to cities.
The report also characterized the government-owned Food Contract Corporation as a problem. It didn’t call outright for the corporation to be eliminated, but it suggested that its policies crimp farmers.
The corporation acts as an intermediary between farmers and food distributors. That includes purchasing crops from growers at prices that farmers say are often too low.
“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,” the Leibniz institute report said.
Martin said the good news is that the government has begun making changes in agricultural policy that will address some of the issues that the Leibniz institute report brought up.
For example, it recently introduced a program to make Kazakhstan self-sufficient in dairy products that includes provisions to help both big and small operators. In the past, the focus was only on large operators – perhaps a carryover from the collective-farm mindset, Martin said.
Kazakhstan is addressing its dairy-products shortage with a new package to help both small producers and big operations like this one near Astana. Photo courtesy of Martin Petrick
Government leaders are painfully aware that because of transportation and distribution problems, big cities such as Astana and Almaty have to import much of their dairy products and beef.
Martin said the change Kazakhstan has made in its agricultural landscape that has pleased him the most is the reduction in rural poverty.
In the late 1990s, one of every two households in rural areas had incomes below the poverty line. That figure has fallen to 5 percent, he said.
Another source of hope is that some of Kazakhstan’s small farmers have made a point of learning about the latest in agricultural technology on their own, and using it in their operations.
One of them whom Martin knows is using irrigation and greenhouses to run a successful vegetable-growing operation near Astana.
“You can find a few Western-style entrepreneur farmers who managed to start something from scratch,” he enthused.
Cutting-edge technology adopters like them can only accelerate Kazakhstan’s move into 21st Century agriculture.