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Accredited in the Ministry of Agriculture of the Republic of Kazakhstan
Accredited in the National chamber of entrepreneurs "Atameken" of the Republic of Kazakhstan
Farmers in Kazakhstan will be deprived of subsidies for imported agricultural machinery 28.02.2024 в 12:32 95 просмотров

I may deprive farmers of Kazakhstan of the right to choose which agricultural machinery to work with. For local assembly plants, the administrative barrier in the form of extortionate disposal fees is no longer enough; they are lobbying for the direction of all state support only for the purchase of “locally” produced products.

The government of Kazakhstan is preparing to completely abandon subsidies for imported agricultural machinery. Currently the subsidy is 15%, but they want to systematically bring it to zero. True, the plans stipulate that this will happen only if “production” (in fact, screwdriver assembly) of analogues to imported agricultural machines is established in Kazakhstan.

Interestingly, it is also planned to change the subsidy system itself: funds will be sent directly to domestic assembly plants. And they will immediately offer farmers agricultural equipment at a reduced price, fixed for the year in advance.

Another government proposal is to leave preferential leasing mainly only for agricultural machinery assembled in Kazakhstan. That is, when leasing imported combines and tractors, it is assumed that the remuneration rate should be kept at 15%, while for domestic agricultural machinery it will be reduced to 6%.

Arguments of "collectors"
According to an analysis of the results of 2023, of the 74 billion tenge allocated in 2023 for subsidies for the purchase of agricultural machinery, the majority, 41 billion tenge, was spent on imported tractors and combines.

As for subsidizing the leasing interest rate, out of the 86 billion tenge allocated for these tasks in 2023, 68.8 billion tenge were spent on supporting imports.

The authorities pay attention to the difference in price: if an imported tractor costs 369 million tenge, then a domestically assembled tractor of similar power costs 75 million tenge. At the same time, the state spends 31 million tenge on subsidizing the purchase of an imported tractor according to current standards, and 22.5 million tenge on subsidizing a domestic one.

The difference is even greater when subsidizing the interest rate: the state spends 29.5 million tenge on an imported tractor, and 6 million tenge on a Kazakh one.

The government's logic is that if subsidies and leasing benefits for imported equipment are abandoned, the purchase of more domestically assembled agricultural machinery can be supported. Thus, the authorities expect to increase the rate of renewal of the agricultural machinery fleet to 10% per year from the current 4-6%. Another task is to increase the production of Kazakh agricultural machinery by 35% by the end of 2024 compared to 2023 (326 billion tenge versus 251 billion in 2023).

There is an even more radical proposal - 450 billion tenge allocated to KazAgroFinance for 2024 for preferential leasing should be used exclusively to finance the leasing of Kazakhstan-assembled equipment. This proposal is still being studied.

Ministry of Agriculture is against
Let us note that within the government itself there is no unity of views on the proposed measures. If the Ministry of Industry is in favor, lobbying the interests of several assembly plants (for obvious reasons), then the Ministry of Agriculture of the Republic of Kazakhstan does not agree with this.

And that's why. Firstly, everyone understands perfectly well that no domestic agricultural machinery exists in nature. Assembly plants are simply warehouses where ready-made tractors and combines are received. Localization of the “assembly” is minimal - screw on the wheels, hang the mirrors.

At the same time, such “enterprises” already enjoy maximum preferences from the government - their products are exempt from recycling fees, VAT, and so on.

Secondly, the Ministry of Agriculture of the Republic of Kazakhstan clearly sees the contradiction between plans to refuse to support the import of agricultural machinery and the task of increasing labor productivity. It is clear that one modern American or European combine with digital assistants can thresh the same field in a day, which requires four “domestic” combines to work on.

In addition, a modern seeding complex, for example, can simultaneously carry out several operations at once - not only introducing seeds into the soil (differentiated, taking into account the potential of each individual section of the field), but also adding fertilizer to the row. This reduces the number of operations in the field, saving fuel and labor costs.

Will farmers be robbed again?
It was to these points that the Grain Union of Kazakhstan drew attention when commenting on the government’s initiatives. The association, which unites the country's largest farmers, asks not to cut the state budget, but to conduct an in-depth analysis of the proposals. The main thing is to understand what range of agricultural machinery is produced (assembled) in the country today, and whether it will be sufficient to meet the demand of farmers. In addition, it is necessary to eliminate the risk that by “removing” competitors from the market with an administrative resource, domestic “manufacturers” will simply will not raise prices for their products. And as a result, farmers will once again become hostages to the desire of input suppliers to skim off the cream of their labor. As has happened more than once in the past.

And in general, such initiatives will lead to the degradation of the country’s agricultural sector, which is currently already in a difficult situation due to the pressure of importing agricultural products from Russia.

Taking all this into account, the Union of Industry Associations of the Agro-Industrial Complex addressed a letter to the head of government, Olzhas Bektenov, to give the business community time to study the initiative and analyze the risks that a change in the state’s approaches to supporting the renewal of the machine and tractor fleet could cause.

 

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