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Agricultural lending

At the end of October this year, second-tier banks of the Republic of Kazakhstan lent to agricultural entities in the amount of 257.8 billion tenge (a year earlier - 495.1 billion tenge). The largest amount of loans was provided in Almaty: 123.7 billion tenge, which is almost half (48%) of the total amount of loans. The TOP 3 regions for loans to agriculture also included Akmola (25 billion tenge) and Kostanay (23.1 billion tenge) regions. The TOP 5 regions are completed by Nur-Sultan (16.1 billion tenge) and East Kazakhstan region (13.7 billion tenge). The top five regions consolidated more than 78% of all loans to agriculture.

The reduction in agricultural loans is caused by several factors, including the high average lending rate for second-tier banks (12% and above) and strict requirements for the collateral base of borrowers. It is also worth considering that the largest part of borrowers in agriculture are small enterprises. Thus, at the end of October this year, 97.5% of all operating enterprises in agriculture are small companies, and only 2.1% are large ones. At the same time, 94% of STB loans are issued to legal entities represented by large and medium-sized agricultural producers, only 5.1% of loans are provided to peasant (farm) enterprises, and 0.9% to individuals.

Against the backdrop of a reduction in loans to agriculture, the share of loans issued to peasant (farm) households and individuals increased from 3.1% in 2018 to 6% in 2019. The main reason for the growth is the funding of financial institutions through JSC Agrarian Credit Corporation for subsequent financing of agricultural entities. Thus, in 2018, funding of financial institutions by the corporation increased by 39%, to 132.3 billion tenge, which is 51% of the total volume of loans issued by ACC. Financing through credit partnerships (CT) amounted to 75.3 billion tenge (+47%), through leasing companies - 16.2 billion tenge, through microfinance organizations and regional investment centers (MFOs/RICs) - 5.2 billion tenge. Funding for STBs remained at the level of the previous year and amounted to 35.6 billion tenge.

The main goal of the Agrarian Credit Corporation (ACC) is to promote the sustainable development of the country's agro-industrial complex by creating an accessible and effective financing system through the involvement of private financial institutions. The Corporation implements lending programs in priority areas for the development of agricultural production, defined within the framework of the State Program for the Development of the Agro-Industrial Complex of the Republic of Kazakhstan for 2017–2021.

In general, in 2018, ACC lent to the agricultural sector for a total amount of 258.7 billion tenge, which is 41.8% more than the planned value; annual growth, in turn, amounted to 67.5% (in 2017 - 154 billion tenge). In total, 7.4 thousand agricultural producers were provided with loans. Lending was carried out under seven programs: “Ken Dala”, “Agribusiness”, “Agroexport”, “Isker”, “Agrotechnika”, “Sybaga” and lending to investment areas at the expense of the National Fund of the Republic of Kazakhstan. According to the plan, the amount of loans in 2019 should be 250.2 billion tenge, and by 2026 - 450.9 billion tenge.

The key competitive advantages of ACC compared to other market participants are the lower lending rate for agricultural producers, which is approximately 6–10% per annum, and longer financing terms due to the possibility of attracting government funds to support the agricultural sector.

In 2019, the state allocated 60 billion tenge for lending to agricultural entities under the program for financing spring field and harvesting works. The interest rate for final borrowers is up to 7% per annum. With the help of these loans, more than two thousand agricultural producers replenished their working capital, purchased seeds, and carried out sowing and harvesting work on an area of ​​more than 3.13 million hectares. Direct lending through branches of Agrarian Credit Corporation JSC amounted to 14.0 billion tenge, through CT loans were issued in the amount of 13 billion tenge, through second-tier banks, MFOs and RICs - 33 billion tenge.

According to the State Program for the Development of the Agro-Industrial Complex of the Republic of Kazakhstan for 2017–2021, the labor productivity index in agriculture compared to the level of 2015 should be 118% in 2018, 196% in 2019, 228% in 2020, 2021 - 267%. In 2018, the plan was exceeded. At the end of 2018, labor productivity amounted to 2.1 million tenge, the physical volume index was 112.2% compared to last year (in 2017 - 1.6 million tenge). Based on the results of two quarters of this year, productivity reached 527.5 thousand tenge, in real terms the growth was 4.6% compared to the corresponding period last year (a year earlier - 467.4 thousand tenge).

The physical volume index of gross agricultural output, in turn, in 2018 amounted to 112.1% compared to the 2015 level, with the planned 113%. Gross agricultural output in 2018 reached 4.5 trillion tenge. In January–October 2019, the gross output of agricultural products amounted to 4.5 trillion tenge.

With the help of planned measures to support the agro-industrial complex, within several years the country should be fully provided with all socially important goods in order to eliminate dependence on imports. In 2021, the volume of imports of food products should decrease by 16.2% compared to 2015 and not exceed 2.1 billion tenge. Exports of processed agricultural products, in turn, in 2021 should increase by more than 2.5 times by 2015 and amount to at least 2.4 billion tenge.


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