Kazakhstan can boost farm sector with investment in infrastructure and innovation, says OECD
Greater investment in transport infrastructure, agricultural research and food safety systems is needed to help Kazakhstan boost the long-term competitiveness of its farm sector and meet wider economic diversification objectives, according to a new OECD report.
OECD Review of Agricultural Policies: Kazakhstan 2013 reviews progress over the past two decades, since the farm sector transitioned from a planned to a market economy, and proposes policy reforms that will enable the country to take full advantage of its vast agricultural potential.
“Kazakhstan’s farm sector offers tremendous opportunities, but realizing this potential requires a new policy approach,” said OECD Trade and Agriculture Director Ken Ash, during a public presentation in Astana. “Public investments in people, through education, training and advisory services, in innovation systems, in transportation infrastructure, and in human, animal, and plant health protection systems can make a huge difference,” Mr. Ash said.
The OECD report details how weaknesses in supply chains, such as poor rural roads and impeded access to Caspian Sea port facilities, are discouraging trade and distribution, increasing transaction costs for producers and hindering agricultural development. An example is the meat and dairy sector, where a shortage of modern cold storage and transportation is preventing the sale of products beyond the local market.
The report also finds that increased investment in modern phytosanitary, veterinary and food safety systems would reduce producer risks and support more efficient agro-food supply chains. Greater resources for agricultural education and research and development (R&D) would make the sector more attractive, address Kazakhstan’s shortage of skilled labour in agriculture and help drive innovation.
The OECD report also highlights the need for reforms for Kazakhstan’s state agencies in agriculture, whose commercial operations and dominant market position crowd out private business and inhibit the development of competitive markets. Helping farmers to manage risks and strengthening their incentives to use agricultural resources sustainably should become priorities, the report said.
After the dissolution of the USSR in 1991, agriculture in Kazakhstan experienced a difficult transition from a planned to a market economy. A gradual recovery began in the early 2000s, followed by a rise in Kazakhstan’s total trade in agro-food products in the second half of that decade, when it became one of the world’s top grain exporters:
Government support to agriculture in Kazakhstan over the 2009-11 period, measured by the OECD Producer Support Estimate, was KZT 200 billion (USD 1.36 billion) per year. This represents an average 11% of farmers’ gross receipts, which is below the average for OECD economies. However, 82% of state support comprises production and price linked measures that isolate producers from markets and distort their production decisions. The OECD recommends that Kazakhstan shift efforts away from these types of policies toward public investments in strengthening the productivity, competitiveness and sustainability of farm households.
Source: OECD
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