Problems and perspectives of development of agro-industrial complex of Kazakhstan and mongolia at the current stage

Problems and perspectives of development of agro-industrial complex of Kazakhstan and Mongolia at the present stage are considered in the article. Key parameters of development of agricultural industry of two countries in the directions of crop production and livestock production are analyzed. It is established that conditions of development of agro-industrial complexes of Mongolia and Kazakhstan on main points are identical, climatic conditions of two countries are similar, their variety is caused by considerable potential opportunities for development of livestock production. However there is a number of factors which adversely affect on development of agro-industrial complex of two countries. First of all, it is problems of institutional nature which create unequal conditions of border relations of two countries. It should be noted the most developed state institutes of development of agro-industrial complex of Kazakhstan on behalf of Holding "KazAgro", which experience of functioning will be useful to institutional development of agrarian and industrial complex of Mongolia.

Modern agro-industrial complex (AIC) - the largest cross-industry complex uniting more than 10 industries of economy, directed to obtaining and conversion of agricultural raw materials.

The AIC includes 4 fields of activity:

  • - agricultural industry - kernel of AIC which includes crop production, livestock production, farms, personal subsidiary farms, etc.;
  • - industries and services providing agricultural industry with means of production and material resources: tractor and agricultural mechanical engineering, production of mineral fertilizers, chemicals, etc.;
  • - industries which are engaged in conversion of agricultural raw materials: the food industry, industries on primary conversion of raw materials for light industry;
  • - infrastructure block - productions which are engaged in procurement of agricultural raw materials, transportation, storage, trade in consumer goods, training for agricultural industry, construction in industries of AIC.

The sources and methods of financing of investment investments are changed with development of the market relations. Now investments into AIC are financed by means of:

  • - own financial resources and intraeconomic reserves of investors (profit, depreciation charges, savings of citizens and legal entities, insurance indemnities);
  • - borrowed financial resources of investors (bank and budget credits, bonded loans);
  • - raised financial resources (the means received from sale of shares, share and other fees of members of labor collectives, citizens, legal entities);
  • - investment assignments from the government budget,
  • - local budgets and off-budget funds [1].

The main source of financing of investments in industries of AIC so far are own means of the entities - profit and depreciation charges in spite of the fact that in recent years the state investments into the AIC sphere became more active, but also they are generally put in the financial and steady agricultural enterprises having own investments for joint financing of investment projects.

At the present stage, determination of mechanisms of investment attraction became a key problem of development of investment process in AIC in the conditions of deepening of market transformations. We will understand the set of types of activity and corresponding legislative and regulatory framework, allowing an economic entity to perform investment process as the mechanism of investment attraction. From our point of view, mechanisms of investment attraction may be subdivided on:

  • - internal mechanisms directed to use for the investment purposes of own enterprise assets (profit and depreciation);
  • - administrative mechanisms assuming non-paid provision of investment resources to economic entities;
  • - market mechanisms assuming provision of investment resources on a paid basis. Their formation and functioning requires development of the corresponding regulatory framework [2].

The traditional orientation to budgetary mechanisms remained in the conditions of deepening of market transformations at the majority of economic entities. Not accidentally the problem of transfers (a part of which shall be for investments) so sharply concerns regional authorities. At the same time certain regions begin to use actively the created market mechanisms. In this regard, for the comparative analysis of institutional conditions of development of AIC of Kazakhstan and Mongolia, it is necessary to consider key parameters of development of agricultural industry of two countries in recent times.

Kazakhstan. Today Kazakhstan takes the 3rd place on production of grain in the CIS after Russia and Ukraine, and also enters the first 10 of the countries of world exporters of wheat and flour, also considerable share in total exports of agricultural products of the country is taken by cotton (15%), leather and wool (25%).

Availability of huge land fund with extensive areas of agricultural land uses where the arable lands, pastures are in the list, is a major factor of successful development of an industry of agricultural industry in Kazakhstan.

The territory of the Republic of Kazakhstan makes 272,49 million hectares, from them the area of agricultural land uses makes - 222,24 million hectares (82%), including pastures - 187,55 million hectares, arable land - 29,41 million hectares, long-term plantings - 0,12 million hectares, haymakings - 5,16 million hectares.

Amounts of gross output of AIC Kazakhstan show a steady tendency of growth. For the last 6 years the amount of gross output increased more than by 1,5 time, including crop production products by 1,4 times, livestock production products almost by 1,7 times (Picture 1).

The main industry of agriculture of Kazakhstan is - grain farm. In recent years general grain crops on average occupy 80% of cultivated area of crops. According to the Committee on statistics of the Ministry of National Economy of the Republic of Kazakhstan (MNE RK) the total specified cultivated area of the main crops in 2014 made 21 462,5 thousand hectares having increased by 191,5 thousand hectares (or for 0,9%) in comparison with 2013. From them: 15 302,5 thousand hectares or 71,3% of total area of crops are for grain and bean crops (including rice), 3 316,3 thousand hectares (15,5%) are for feeding crops, 2 300,4 thousand hectares (10,7%) are for oil-bearing crops. From 13,5 to 20,1 million tons of grain are made on average in the republic. Average productivity of grain makes 10-16 centners from hectare.

The main regions of cultivation of wheat are Akmola, Kostanay and North Kazakhstan regions to which share over 80% of the acreage reserved for wheat fall. Acreage of grain and bean crops (including rice) in 2014 in comparison with last year decreased by 575,1 thousand hectares (or for 3,6%) and made 15 302,5 thousand hectares. In 2013 the acreage of grain made 15 877,6 thousand hectares. For the last 5 years annual reducing acreage of grain and bean crops averaged 2,2% that is caused by the pursued state policy on diversification in crop production and increase in the areas under oilbearing and feeding crops.

17 162,2 thousand tons of grain (including rice) and bean cultures were collected in 2014. Gross collection of wheat made 12 996,9 thousand tons. Average productivity of grain (including beans) made 11,7 centners from hectare, including productivity of wheat made 10,9 centners from hectare.

Development of livestock production in Kazakhstan is promoted by availability of strong country competitive advantages:

  • - huge pasturable lands, more than 180 million hectares;
  • - profitable geographical settlement and participation in the Customs union;
  • - distant-pasture cattle breeding historically is a traditional industry of Kazakhstan.

According to the Committee on statistics of MNE RK in 2014 the livestock of the cattle made: cattle - 5,9 million heads, sheep and goats - 17,7 million heads, horses - 1,82 million heads, pigs - 0,84 million heads, birds - 35,2 million heads.

In all categories of farms following the results of 2014 it is killed and realized on slaughter of 1,6 tons of the cattle and bird in live weight, 5,02 million tons of milk are made; 4,27 million pieces of eggs; 10,2 million tons of leather of cattle and small cattle; 36,4 tons of wool are clipped. The average yield of milk on one cow on the republic averaged 2 335 kg a year. An average yield of eggs to one chicken layer is 153 eggs in a year.

Mongolia. The agricultural industry at the present stage acts as one of priority industries of national economy of Mongolia and provides proper economic and export development of the country in the conditions of globalization. Transition to the market relations since the beginning of the 90th in Mongolia except certain transformational processes in political system allowed using the market mechanisms for forming of national agro-industrial complex as key factor of social and economic development of the country. As the first important steps of market transformations there was a step-by-step privatization of a state-owned property in agro-industrial complex of the country where at the initial stage the cattle was transferred to a private property, and at the next stage they privatized such assets as buildings and constructions, agricultural machinery and equipment, etc. [5]. As a result at the present stage based on the former state agricultural enterprises the private agricultural enterprises of various organizational forms and separate personal subsidiary farms which own more than 85% of a livestock of the cattle in the country function.

As for development of the main directions of development of agricultural industry, the sphere of crop production in Mongolia is developed rather less than livestock production which is a primary branch of specialization of AIC. Till 1990th Mongolia completely provided the needs for crop production products due to internal production, however as a result of the market reforms which led to privatization of large state agricultural producers and emergence on their base of small private agricultural enterprises the situation in the sphere of agriculture sharply worsened. Target state programs "Revival of agricultural production", "Green revolution" "A travel on a virgin soil ІІІ", etc. [6] are developed and implemented for the solution of this problem in the agro-industrial complex of the country. As a result since 2005 the indicators of production of grain began to grow steadily, and since 2009 growth rates of production of grain sharply accelerated (Table

  1. . For the researched period it is possible to note prevalence of an upward tendency of grain productivity, and also grain and potatoes collection.
 

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Grain production, thousand t.

76,7

138,6

114,8

212,9

391,7

355,0

445,5

479,3

387,0

518,8

Grain planting

areas,

thousand hectares

172,6

159,4

126,2

121,8

154,0

252,4

259,1

300,0

305,5

287,0

Grain productivity, centner/hectare

8,0

4,8

11,0

9,4

13,8

15,5

13,7

14,8

15,6

13,4

Potato production, thousand t.

82,7

109,0

114,5

134,8

151,2

168,0

201,7

246,0

191,7

161,5

Remark: Source [7]

T able 1 - Dynamics of the main indicators of crop production of Mongolia

In 2016 according to Ministry of Food, agricultural industry and light industry of Mongolia, the Fund of support of agriculture bought 65 thousand tons of food wheat, flour-grinding plants - 220 thousand tons, distilling plants - 10 thousand tons, producers of forages - 14,2 thousand tons. If to calculate that annual consumption of food wheat of Mongolia will make 320 thousand tons, then from this it is visible that from 30 to 40 thousand tons are in excess. This excessive wheat is stored in warehouses of economic entities. According to preliminary data, in 2016 agrarians of Mongolia collected 460,7 thousand tons of wheat, 153,7 thousand tons of potatoes, and 93,5 thousand tons of food vegetables. Thus, in 2016 Mongolia completely provided the internal need for food wheat and more than 50% for food vegetables. In Mongolia from olden times the traditional economy is the pasturable livestock production. Today Mongolia is in number of the leading countries of the world on a cattle livestock per capita. Now 79% of general agricultural production are the share of livestock production, more than 30% of the population of the country are engaged in this industry and on a cattle livestock per capita Mongolia takes the 3rd place in the world after Australia and New Zealand. According to the National statistical administration of Mongolia the country has an opportunity to make for export 100 thousand tons of meat a year, but uses the capacities in this sphere only for 15% so far. Therefore the Government of Mongolia sets the task on ensuring growth of productivity of livestock production and increase in export deliveries of meat at the expense of which it is possible to improve national economy and level of living of cattle-farmers considerably. The need of the population of Mongolia for meat makes 260 thousand tons, and more than 320 thousand tons per year are prepared. In the world average consumption of meat per capita makes 41,8 kg a year, in developed countries - 80,7 kg a year, in developing countries - 31,8 kg a year, and in Mongolia - 74,6 kg a year.

Over the last 5 years the quantity of the Mongolian cattle steadily grew and by the end of 2015 the cattle livestock in Mongolia has made more than 50 million heads. At the same time, a livestock of horses - more than 2,9 million units, cows - 3,7 million, camels - 0,38 million, sheep - 24,0 million and goats - 21,2 million heads (Picture 2). As it is noted in statistical office of Mongolia, the total of the cattle in a year has increased by 4,4 million heads, or 10,3%. Most of all in percentage expression the livestock of horses (12,4%), cows (12,5%), sheep (10,6%), goats (9,5%) has increased. The livestock of camels - has least of all increased by 5,1%, or by only 15 thousand heads. As a result almost about one cow or a bull, on 0,89 horses, almost on seven sheep and on 6,5 goats is the share of each resident of Mongolia, including babies and aged residents of the country. For January 1, 2014 the population of Mongolia has made 2,93 million people. In comparison with previous year the general livestock of the cattle has increased by 12,6%, i.e. by 4,6 million heads. It should be noted that the neighboring countries of Mongolia are largest "meat importers" as China and Russia. Thus, Mongolia has all opportunities to increase export of meat of the country.

If to compare conditions of development of agroindustrial complexes of Mongolia and Kazakhstan, then it should be noted that first of all, an environment of two countries, their variety cause considerable potential opportunities for development of livestock production. Both in Mongolia and in Kazakhstan traditionally people are engaged in sheep breeding, horse breeding, camel husbandry, cultivation of cattle. However there is a number of factors which adversely affect on development of agro-industrial complex of our countries. First of all, it is problems of institutional nature which create unequal conditions of border relations of two countries. The proximity, historical traditions and style of life of the population create a basis for a cooperation. So, a kernel of economy of both the Kazakh, and Mongolian people since ancient times was the nomadic cattle breeding. Agriculture played a supporting role. Development of livestock production was promoted by an environment, historically developed traditions and style of life of native-born population. The main specialization was the distant-pasture livestock production in case of the leading role of sheep breeding.

The agro-industrial complex is the leading industry of economy of the Republic of Kazakhstan and Mongolia which main task is cultivation of crops and cultivation of farm animals for product receipt of crop production and livestock production. In the Republic of Kazakhstan specialization of crop production is provided generally by grain production. Grain, feeding, vegetable-melon and commercial crops are grown up on rather fertile lands. Mongolia is the agrarian-industrial country which economic activity traditionally was based on agricultural industry and livestock production. In the conditions of transition to market economy the value of agricultural industry in which more than 30% of the population of Mongolia are engaged considerably increases. So, the

agricultural industry of Mongolia till 2009 on average gave about 20% of GDP of the country, and in Kazakhstan on average only about 6% (Picture 3). A share of agricultural industry in structure of GDP in 2014 in Mongolia made 15,75%, and in the Republic of Kazakhstan only - 4,69%, and has a downward tendency. Despite growth of the actual indicators of production of agricultural industry both in Mongolia, and in Kazakhstan, decrease in a share of agricultural industry is connected with growth of total amount of GDP, and including significant growth in industries in recent years. But, despite it, both Kazakhstan, and Mongolia gives a huge value to a priority of development of agricultural industry.

Despite rather low share of agricultural industry in GDP, capacity of Kazakhstan allows to provide completely stability of the domestic food market, the guaranteed saturation with main products of food and entry into foreign markets with environmentally friendly products. But, in spite of the fact that in the country the steady basis for providing the population with agricultural products and achievements of food security of the country is created, problems of diversification and innovative technology development of agroindustrial complex of Kazakhstan which require development of adequate investment policy and implementation of a critical mass of highly effective and competitive investment projects are still unresolved.

Thanks to reforms and investment of the state investments in agrarian sector of Kazakhstan the structural adjustment of agricultural production is continued. Process of privatization and agrarian reforms promoted increase in country farms, however this growth doesn't correspond to full formation of a class of the effective owners on the earth who are most interested in result of the work yet. Despite basic changes in economy of agro-industrial complex made by agrarian reforms of the last years the level of investment providing remains still low. Present level of investment providing agro-industrial complex is designed to support only simple reproduction in agricultural industry.

Today in Kazakhstan global agricultural reforms are implemented. The main goal of the happening transformations - to remove agrarian sector of the republic on qualitatively higher level, to provide its dynamic development. An important role in the solution of objectives is played by activities of JSC National Managing Holding "KazAgro" (JSC NMH "KazAgro") - the leading institute of development in domestic agroindustrial complex.

JSC NMH "KazAgro" is created according to the Decree of President of the Republic of Kazakhstan of December 11, 2006 No. 220 "About some questions of development of agro-industrial complex" [9] and the order of the Government of the Republic of Kazakhstan of December 23, 2006 No. 1247 "About measures for implementation of the Decree of President of the Republic of Kazakhstan of December 11, 2006 No. 220" [10].

Main objective of creation of Holding is implementation of state policy on forming and development of competitive and export-oriented agroindustrial complex [11].

Object of activity of Holding is stimulation of development of agro-industrial complex of the Republic of Kazakhstan by effective management of affiliated joint-stock companies.

It should be noted that essential difference of Holding from banks of the second level is that the Holding considers specifics of agrobusiness and industry risks inherent in agricultural industry. Specially under needs of villagers the preferential credit programs are created: financing of credit partnerships, microcredit, financing of the sowing and harvest companies,

 

"Sybaga", "Yrys", "Altyn Asyk", Kulan, rural consumer cooperatives. Competitive advantages of financial services of subsidiary companies of Holding are:

  • acceptable rates of crediting (leasing);
  • long term of financing;
  • possibility of exposure as mortgage providing property and the equipment in the rural zone which isn't considered by banks of the second level as acceptable mortgage providing.Strong points of activities of group of companies of Holding is availability of the acquired experience of support of agrarian and industrial complex within specific activities, and also availability of regional networks and the created infrastructure on rendering financial and other services to subjects of agrarian and industrial complex.

The holding has no possibility of increase in profitability due to increase in loan interest rates and to leasing, and also restrictions for concentration of a credit portfolio in less risk industry segments. It is connected with the institutional role of Holding causing need of support of industries of agricultural industry, priority from the point of view of questions of food security and the export potential.

In general, positive experience of Kazakhstan in institutional support of the sphere of agrarian and industrial complex through functioning of National Holding "KazAgro" will allow to apply them to the problem resolution of agricultural industry of Mongolia in the following directions:

  1. Despite consequences of financial and economic crisis in world economy the investment potential of Holding doesn't decrease, and tends to increase that will have a positive impact on financial and investment providing the sphere of agrarian and industrial complex and will allow in such conditions to increase a perspective backlog on the future;
  2. Creation of the state institute of development in the form of Holding will allow to expand tool kit and the directions of an investment of financial and investment resources to the sphere of agrarian and industrial complex of the country;
  3. The holding form of institutional support of the sphere of agrarian and industrial complex will allow to increase a level of responsibility of officials via the mechanism of corporate management, and also to provide transparency and efficiency of use of the limited budget financial and investment resources directed to support of agricultural producers.

 

References:

  1. Zlobin E.F. Market economy of agrarian and industrial complex. The education guidance for higher education institutions. - Orel: OGSHA publishing house, 1999. - 479 pages.
  2. Zlobin E.F. Agro-industrial integration in the conditions of market economy. - M.: Agropress, 2003. - 363 pages.
  3. JSC National Managing Holding "KazAgro". The annual statement for 2015. - Astana, 2016. - 54 pages.
  4. Rural, forest and fish industry of Kazakhstan. Statistical collection. / Committee on the statistics of MNE RK. Astana, 2016. - [Electronic resource]. - URL: http://www.stat.gov.kz
  5. Damdyn O.S., Mundagbaatar M. Condition and development of cattle breeding, and its role in economy of Mongolia. -//Young scientist. - 2010. - No. 11. - Page 137-139.
  6. Damdyn O.S., Dabiyev F., Lebedev V.I. The main directions and prospects of a frontier cooperation of Russia and Mongolia on macro - and meso-level (on the example of the Republic of Tyva). -//Problems of modern economy. - 2011. - No. 3(39). - [Electronic resource]. - URL: http://m-economy.ru/art.php?nArtId=3733
  7. actualitix.com - Data and statistics on the world: Mongolia. - [Electronic resource]. - URL: http:// ru.actualitix.com/country/mng/ru-statistics-agriculture- mongolia.php
  8. actualitix.com - Data and statistics on the world: Kazakhstan. - [Electronic resource]. - URL: http:// ru.actualitix.com/country/kaz/ru-statistics-agriculture- kazakhstan.php
  9. The Decree of President of the Republic of Kazakhstan of December 11, 2006 No. 220 "About some questions of development of agro-industrial complex". - [Electronic resource]. - URL: http://adilet.zan.kz
  10. The Order of the Government of the Republic of Kazakhstan of December 23, 2006 No. 1247 "About measures for implementation of the Decree of President of the Republic of Kazakhstan of December 11, 2006 No. 220". - [Electronic resource]. - URL: http://adilet.zan.kz
  11. The development strategy of joint-stock company "National managing holding "KazAgro" for 2011-2020. - / Order of the Government of the Republic of Kazakhstan of January 31, 2011 No. 52. - [Electronic resource]. - URL: http://adilet.zan.kz
Year: 2016
City: Karaganda
Category: Economy