The role and importance of the agrarian sector in the development of the national economy

The purpose of the research is to substantiate the macroeconomic importance of the agricultural sector of Kazakhstan in the development of the national economy, both from a theoretical and from a practical point of view. In the article current issues and problems of development of the agrarian sector of Kazakhstan in the modern conditions of the functioning of the national economy as a whole are considered. The macroeconomic role and importance of the agrarian sector and the agro-industrial complex of the Republic of Kazakhstan are substantiated; the features of agrarian production are studied. The measures and methods of state support of the agrarian sector in the framework of government programs implemented in the country are considered. Priority areas of state regulation of this sphere in the implementation of agricultural policy are identified. Also, the article touched upon the issues of crediting and subsidizing of business entities. As we know, the agrarian sector occupies a special place in the economy of any country. In the future, in many positions of the agro-industrial complex of Kazakhstan can become one of the world's largest producers of agrarian export products. New global economic challenges and the instability of the conjuncture in the commodity markets dictate the need to address the primary task - the diversification of the economy. In achieving this objective, the key role is played by the agrarian sector, which is considered as one of the drivers of structural reforms of the economy and its growth.

The national economy is a historically established system of social reproduction of the country, an interrelated system of industries and types of production, embracing the forms of social labor existing in the national economy. The national economy consists of a number of large spheres: material and non-material production, non-productive sphere. Any national economy consists of industries. Industry is a group of related economic activities, centered around the products and services it produces. Industry classification group goods based on materials and components, as well as production processes. Macroeconomic classifications are used for macroeconomic analysis and planning purposes.

The agro-industrial complex represents a set of branches of the national economy engaged in the production of agricultural products, its storage, processing and delivery to the consumer. The development of agrarian production, the improvement of the sectorial and territorial structure of the agro-industrial complex contribute to a more rational allocation of production in general, to the comprehensive and efficient use of resources, to improve the final results of the functioning of the agrarian sector and to the country's food security. The increase in the living standards of the population and the development of domestic production of food products largely depend on the scale of the agro-industrial complex, the development and improvement of its structure and the efficiency of its functioning.

The most important component of the national economy is a material production, in which the means of production and consumer goods necessary for life and development of society are created. The material production includes such industries as industry, agriculture, construction, transport, trade, and communications. The largest branch of material production is the industry, which consists of two groups of industries - mining and processing.

In the Message of the President of the Republic of Kazakhstan N.A. Nazarbayev to the people of Kazakhstan «The Third Modernization of Kazakhstan: Global Competitiveness» of January 31, 2017, the need to create a new model of economic growth that will ensure global competitiveness of the country is outlined. According to the President of our country, the agrarian sector should become a new driver of the economy. The agro-industrial complex of Kazakhstan has a promising future. In many respects, Kazakhstan can be one of the world's largest producers of agrarian export products, especially for the production of environmentally friendly food products and the brand «made in Kazakhstan» should become a standard of such products. At the same time, as the Head of State underlined, we must become the so-called «bread basket» for the production of grain throughout the Eurasian continent and we need to ensure a transition from raw materialsproduction to the production of quality, processed products. Only then we can compete in international markets.

The agro-industrial complex is the largest interdisciplinary complex, uniting several sectors of the economy, aimed at the production and processing of agricultural raw materials and the manufacturing of products from it, brought to the final consumer. This is a set of sectors of the country's economy, including agriculture and industries that are closely related to agricultural production, transport, store, process agricultural products, supply it to consumers, provide agriculture with machinery, chemicals and fertilizers, serving agricultural production [1; 128].

The agro-industrial sector is one of the key sectors of the national economy and the level of its food security depends entirely on the level of its development. The production of food products is one of the most important branches of the economy of Kazakhstan and an intensively developing sector in the manufacturing industry. At present, the AIC of Kazakhstan is one of the main reproductive branches of the country's economy; it produces about 1/3 of the national income. Support for the agricultural sector, and in particular the food market, is one of the most important tasks of the state. In all developed countries, agriculture is largely supported by the state. This branch of the national economy is least adapted to the market and competition.

The national economy of the country is an open, integrated socio-economic system consisting of organically interrelated structure-forming elements, the functioning of which mutually encourages the development of the remaining elements and the entire system as a whole. The place of any structure-forming element in the national economy of a country is determined by the functional load that each of them carries in social reproduction and the social division of labor [2; 61].

When disclosing the essence of the agrarian market, a significant number of authors dealing with the problems of economic theory consider it a subsystem of the agro-industrial complex and characterize both the aggregate of socio-economic relations between producers and consumers of agricultural products in the sphere of exchange through which sales and purchase of goods are carried out. In this regard, it seems reasonable to consider the agrarian market as a system of production relations, including organizational and legal, arising among people about the production of agricultural products and their bringing to the place of consumption.

One of the modern directions of sustainable development of the country's agro-industrial complex is digitalization. In a report dated September 29, 2018, the First Vice Minister of Agriculture of Kazakhstan A. Evniev at the Government meeting announced the following data: In accordance with the instructions of the President of the Republic of Kazakhstan — the leader of the Nation N. Nazarbayev, an increase in five years of labor productivity in the agro-industrial complex and the export of processed agricultural products at least 2.5 times will be provided to a greater extent by digitization of the agro-industrial complex.

As part of the digitalization of the agro-industrial complex, at least 20 digital farms and 4,000 advanced farms throughout the country will be created and 100 % automation of processes and public services will be provided. Digitalization will be focused on the farmer and the simplification of its activities from the beginning to the sale.

One of the first stages of the digitalization of the agro-industrial complex is the «Online Training and Online Consultation». The development of online training will allow the farmer to undergo training with a choice of teacher, courses and without arriving at the training center, as in the case of the Uber model, and will reduce the time and transport costs of farmers. The launch of online training with the involvement of private IT companies is planned from 2020. The introduction of online consultations will allow the farmer to receive the necessary advice on entrepreneurship, farming, agronomy, seed production, animal husbandry and others, as well as reduce the costs of finding and attracting specialists.

S. Seifullin Kazakh Agrotechnical University in a pilot mode free-of-charge provided remote consultations to 200 subjects of the agro-industrial complex. The launch of the online consultation will be fully implemented with the involvement of IT companies from 2020. In accordance with the State Program of the Agrarian and Industrial Complex, at the expense of measures, it is planned to increase the GDP over 3 trillion tenge, in which the effect of digitization of the agro-industrial complex will be 30 % or about 1 trillion tenge (

Within the framework of a market economy, the agrarian market is a technologically closed system that is open to use conditions that increase systemic efficiency. This system includes the following components: agrarian products market, labor market, land market, capital goods and finance market.

The market of agrarian products is the sphere of the exchange of agrarian products between producers and consumers, formed on the basis of the division of labor. The agrarian market is characterized by certain features arising from the characteristics of the agricultural production itself:

  1. the dependence of the supply of agrarian products on weather conditions, which limit the possibility of control by the peasant economy for the quantity and quality of products;
  2. the guaranteed demand for agrarian products, which is due to its ability to meet the needs of the population in food products;
  3. the large volume and perishable nature of the product necessitates, on the one hand, the availability of its storage facilities, and on the other hand, the farmer's desire to realize such products as soon as possible;
  4. the concentration of consumption of agricultural products in cities, which causes the need for its sale, mainly through various intermediaries;
  5. the persistence of the functioning of the agrarian products market, conditioned by the constant consumption of food by the population for the purpose of the continuity of the production of labor [3; 54].

State regulation of the agro-industrial complex is the economic impact of the state on the production, processing and sale of agricultural products, raw materials, foodstuffs, as well as on the production and technical services and material and technical supply of the agro-industrial production. Support for the agricultural industry, and in particular, the food market, is one of the most important tasks of the state. In all developed countries, agriculture is largely supported by the state. This branch of the national economy is least adapted to the market and competition.

The need for the state regulation of the agro-industrial complex is caused by a number of circumstances, including such as:

  • the impact of agro-industrial and commodity markets on the macroeconomic situation;
  • the market failures in the area of ensuring an economically fair income distribution;
  • the influence of natural factors on the efficiency of agricultural production;
  • the demographic role of rural areas, etc.

In this case, the following are highlighted as the main tasks of state regulation of the agro-industrial complex:

  • sustainable development and state support for agro-industrial production;
  • ensuring food security of the country;
  • regulation of food markets;
  • maintaining economic parity between agriculture and other sectors of the national economy;
  • the creation of food belts and food stocks;
  • ensuring an effective system of management of the agricultural sector of the economy;
  • further development of agrarian science;
  • protection of domestic producers of agricultural products, etc [4; 45].

An effectively functioning integrated market in the agrarian sector is a set of its above-mentioned components. The absence or insufficient development of any of these markets will lead to a decrease in the effectiveness of market relations.

The main means of production in agriculture is a land, which differs radically from other means of production (for example, machines, buildings, equipment) by the fact that with its proper use, a high crop culture, soil fertility not only does not decrease, but also increases continuously. Some means of production in the agricultural sector are used only for a short time, and not all-the-year-round. Many production processes in agriculture, especially in crop production, depend on the season, which leads to a seasonal nature of agricultural production. In these conditions, the time factor, which requires the fulfillment of production processes in the optimal terms, acquires special significance [1; 174].

Factors and peculiarities of agro-industrial production in the RK include the following:

  • less favorable natural and climatic conditions of agriculture in comparison with the most important countries-exporters;
  • low utilization of production capacities of processing enterprises due to small-scale raw materials sources;
  • the unresolved consequences of the protracted systemic crisis of the 1990s;
  • weak development of the industrial and market infrastructure in the agro-industrial complex and the APC;
  • low science-intensive domestic agriculture;
  • the paramount political importance of the agrarian sector as a guarantor of national food security and development of export potential;
  • an important social and territorially-forming function of agricultural production.

Factors restraining the development of food production include:

  • the low level of industrial processing;
  • the low level of access of agricultural producers to credit resources;
  • the underdevelopment of the social sphere in rural areas;
  • the acute problem of staffing (

Insufficiency of production and non-competitiveness of many types of domestic food products determine the expansion of food products from foreign countries and exacerbate the problem of selling agricultural products. Part of the income created in the agricultural sector of the economy is redistributed and realized in other sectors. Due to the specific nature of the functioning of agro-industrial production in market conditions, it needs state support.

State regulation of the activities of the subjects of agriculture and agro-industrial complex in the Republic of Kazakhstan is based on legislative and regulatory acts, Resolutions of the Government of the RK, Resolutions of the Ministry of Agriculture of the Republic of Kazakhstan. Regulation of the agricultural sector should be considered in a comprehensive manner, taking into account the entire system of agribusiness. Since gaining independence, Kazakhstan, like other post-Soviet states, has embarked on modernizing the economy and reforming all sectors of the economy. In the market economy, the agrarian sphere requires an optimal combination of state regulation and market levers, the necessities of which the development of a theory of stabilization and improvement of the practice of state influence on macro- and micro-economic processes in agriculture and related industries.

Kazakhstan is one of the few countries that can provide for itself, and develop exports of agricultural products. Therefore, the development of the agricultural market is one of the most promising priorities of many state programs. Program planning and forecasting of the development of the agricultural sector are a combination of the processes of determination of the main production indicators in the sectorial and territorial context, the development of social infrastructure and the formation of a system of economic regulation.

The world has developed a variety of forms of planning. They are usually classified taking into account the aspect and the operational level of management. By the level of management, the plans are global, national, interstate, regional, sectorial, local and at the level of economic entities, their associations. Depending on the setting of goals, tactical and strategic planning is distinguished. Planning is characterized by multidimensionality: social, scientific and technical, environmental, production, financial and other types. Planning can be programmatic and goal-oriented [2; 85].

The form of directing planning is also important, which is expressed in the regulation of taxes, credits, prices, state orders, quotas, etc. In the APC this form can be expressed in the intervention of the state in the economic relations between the main spheres of the complex. This, in turn, is due to the following circumstances:

  • a sufficiently high dependence of the agricultural sphere of the agro-industrial complex on natural conditions;
  • a low elasticity of demand for food;
  • a low speed of turnover of circulating assets;
  • different levels of monopolization in the main spheres of the agro-industrial complex;
  • an insignificant level of profitableness;
  • a high need for modernization of production and social structures [4; 88].

With regard to investment activities in the agricultural sector of Kazakhstan, it should be noted that the most urgent problem and task is the renewal of the machinery and tractor fleet of agricultural production. But it is not possible to update agricultural machinery and equipment in the required volumes. This is due to the low effective demand of the agriculture manufacturers, the high cost of machinery and equipment, the disparity of prices for agricultural and machine-building products, and a number of other reasons.

The strategy of Kazakhstan entry into the list of 50 competitive states of the world presupposes the need to constantly increase the volume of investments and bring its growth rates closer to the rate of development of the national GDP, since scientific and technical activity is a decisive factor in the economic development of the country.

The depreciation rates of a technical park in agriculture are the proof of the need for investment processes in the agricultural sector. The needs of Kazakhstan in agricultural equipment are mainly met throughimports and do not have a positive impact on the technical equipment of the agricultural sector of the economy. In Kazakhstan, the Minsk Tractor Works dealer network is well developed, despite the fact that there is a high competition of agricultural machinery.

The country currently employs more than 100 repair and manufacturing enterprises that produce spare parts and agricultural equipment. The volume of their production is about 970 — 1,125 million tenge of products, their share in the market is 6 % — 6.5 %. Characteristics of demand for agricultural machinery depend on the geographical region, climatic conditions, farm size. The main buyers are large grain companies — 45 %; agriculture manufacturers — 40 %; intermediary sellers — 15 %. Agriculture needs efficient means of production, their constant maintenance, modern service. On average, over the past five years, the largest share of investment in agriculture in the regions falls to North Kazakhstan (20.7 %), Kostanay (19.8 %) and Akmola region (17.5 %).

Since Kazakhstan agriculture is mostly privately owned, more than 87 % of investments for the development of crop and livestock sector are invested by the private sector. The bulk of foreign investment falls on the provision of services in the field of crop production and livestock. It should be noted that the effective agricultural producers have certain possibilities for upgrading the technology park, but this situation is not typical for most farms (

The food security of the Republic of Kazakhstan is one of the main conditions to ensure national security of the country and the formation of a strong state, its successful long-term development and economic growth. In the Message of the President of the Republic of Kazakhstan — Leader of the Nation N.A. Nazarbayev to people of Kazakhstan «Strategy «Kazakhstan-2050» — a new policy of the established state» a threat to global food security is defined as one of the ten global challenges of XXI century for the Republic of Kazakhstan. In the Article 22 of the «Provision of Economic Security» Law «About the National Security of the Republic of Kazakhstan», dated by 6 January 2012 №527-IV of Legislation of the Republic of Kazakhstan (as amended and supplemented by 06.04.2016) is written that economic security includes finance, food, energy and transport security. This article gives a definition of food security which foresees the state of protection of the economy, including agro-industrial complex, in which the state is able to provide the physical and economic availability of quality and safe food products for the population which are sufficient to satisfy the physiological norms of consumption and demographic growth.

The note, that agrarian policy is a deliberate system of the actions of the state in the field of agricultural production, distribution, exchange and consumption of agricultural products. It is designed to reflect the interests of society, of all social groups and is aimed at the reinforce of the national economy. The scope of the implementation of agricultural policy is agrarian economy, which is an integral and very important part of the national economy.

The food safety is a state of the economy, including its agricultural sector, whereby it becomes possible to stable supply of the domestic production of basic foodstuffs of the country's population with the necessary priority to the most vulnerable, the poor, and it is a subject to physical and economic access to food in a quantity and quality that are required for the preservation and maintenance of life and the capacity of people full and maximum possible independence of the state from external food sources [5].

Currently, the agro-industrial complex (AIC) of Kazakhstan is one of the most important, strategic and developing sectors of the national economy. The state is taking all necessary steps to ensure a favorable investment climate in the agrarian sector, to support agricultural producers, to create conditions for increasing the competitiveness of agricultural products, improve the financial condition of agrarian entities, as well as to develop land relations and improve the social sphere of rural areas. However, a major obstacle to the implementation of the accommodation function of the labor market and increasing in the number of rural residents is the low level of social infrastructure development, the partial absence of the housing market, poor working conditions in agriculture and its poor motivation.

In general, the study shows that the formation of labor resources in agriculture is becoming more difficult in market conditions, and employment in agriculture is connected not only with demographic and migration processes, but also with the level of employment in agricultural enterprises. According to the results of the study, it was determined that external and internal migration has a great influence on the change in rural labor resources. The largest outflow of the population as a result of migration occurs in those areas where the development of many forms of economic activity has fully or partially stopped, and in this connection there has been an increase in the level of unemployment. It is revealed that there is a close relationship between migration and the outflow of labor force. State support for employment, stimulation of labor, and receivingacceptable incomes are a priority for the partial prevention of the regional migration mobility of the rural population.

Thus, demographic processes and changes in the ratio of the numbers entering and leaving the working age in the rural labor market have a strong influence on certain structural changes. At present, the problem of rural unemployment is particularly relevant, since a very large percentage of the unemployed are among the rural population. Due to development problems in the agricultural sector, the unemployed migrate to larger population centers, in the hope of city-provided employment opportunities [6].

The report of the First Vice-Minister of Agriculture of Kazakhstan A. Evniev on the issue of the Program for the development of productive employment and mass entrepreneurship for 2017–2021 «Enbek», announced on 30.10.2018 at the Government meeting of the Republic of Kazakhstan, noted the following: «Enbek» programs of the Ministry, through subsidiaries of «KazAgro», works to provide loans / micro loans for business projects in rural areas and small towns. For these purposes in 2018 a budget loan was allocated in the amount of 44.7 billion tenge, including 13.9 billion tenge of additional funds allocated in the framework of the fourth initiative «Five Social Initiatives of the President». The budget loan is allocated to the City Halls of the regions, which distribute them between «Agrarian Credit Organization» JSC and «Agrarian Financial Support Fund» JSC.

Loans are granted to unemployed, self-employed, budding entrepreneurs, agricultural cooperatives, participants of anchor cooperatives. Also, the Ministry, in the framework of the «Enbek» (Labor) program, is implementing the «Bastau Business» project on business skills training for start-up entrepreneurs. Education is free with the provision of scholarships during training. At the expense of funds allocated in 2018, it is planned to issue 11,000 microloans, including 2,200 microloans to start-up projects. As of 10.26.2018, development in the republic is 30.9 billion tenge (or 69 %) with the issuance of 8778 micro credits (or 80 % of the planned figure) (

Kazakhstan accession to the WTO will largely affect the development of agriculture, as competition in the domestic market will intensify. It is also obvious that at present domestic agricultural machinery enterprises cannot fully solve the problems of technical re-equipment of the agrarian sector and increase its competitiveness when joining the WTO. In our opinion, the Eurasian Economic Union of Kazakhstan, Russia, Belarus, Kyrgyzstan and Armenia will dramatically improve the situation in trade and economic cooperation, including in the field of agriculture.

In order to implement the fourth direction of the President's Message «The Third Modernization of Kazakhstan: Global Competitiveness», according to which the agrarian sector should become the new driver of the economy, the President of the country in this connection instructed the Government and City Hall:

  • firstly, it is necessary to revise the principles of subsidies and gradually switch to product insurance;
  • secondly, within 5 years it is necessary to create all conditions for the unification of more than 500,000 households and small farmers in cooperatives;
  • thirdly, it is necessary to raise the level of processing of products, create an effective system of storage, transportation and sale of goods;
  • fourthly, it is necessary to increase the level of labor productivity and reduce production costs;
  • fifthly, we must improve the efficiency of land use. Within 5 years, it is necessary to increase the area of irrigated land by 40 %, thereby bringing to 2 million hectares;
  • sixthly, it is necessary to increase the volume of investments in agrarian scientific research, which will be in demand in production.

Also, the President of the country instructed to increase the export of food products by 40 % by 2021 through the diversification of agricultural production. These tasks should be implemented within the framework of the new state program for the development of the agro-industrial complex.

Nowadays, the agrarian sector is one of the most significant, strategically important and priority sectors of the national economy. The expedient and efficient use of labor resources at the stage of industrial- innovative growth of the economy and diversification of the agro-industrial complex of Kazakhstan is the primary factor in increasing the employment of the rural population. The labor market in the agrarian sphere is a wider range of topical issues of socio-economic relations, which involves the growth in efficiency of agro-industrial production and researching the labor potential of rural areas. State support of employment in the agrarian sector is one of the most crucial priorities in economic policy.

Currently, state programs aimed at improving the employment system of the population of the Republic of Kazakhstan, as well as preventing unemployment, promoting the growth of productive employment, improving the quality of the workforce and protecting the national labor market, continue to be implemented.Among them, it is important to note the Employment and Retraining Strategy of the «Employment - 2020» Program, aimed at providing employment, preventing substantial growth in unemployment, and preserving and creating new jobs. The goal of this Program is to increase the income level of the population by promoting sustainable and productive employment [7].

Lending to the agricultural sector, despite the characteristic features, is a subject to the general principles of centuries-old practice, such as efficiency, purposefulness, pay-ability, urgency, financial security of the loan and repayment. Sectorial and intra-sectorial features of agriculture that affect the organization of its lending can be summarized in a concentrated form to such important characteristics for banks that determine the access of organizations to credit resources, such as the level of credit worthiness of agricultural organizations and the degree of collateral of the loan.

The state regulation of the credit system in agriculture is understood as the organizational, economic and legal impact of the state on the procedure for the formation and functioning of institutional forms of credit support for agricultural producers, which provides returnable sources of financing for the production of agricultural products and the reproduction of public goods. All forms of state participation in agricultural lending are in one way or another subordinated to the task of implementing the developed state programs for the development of the agro-industrial complex and lead to both positive and negative results [8; 63].

In our country, the state has created more simplified conditions and reduced the registration procedures, set the time limits, frequency and sequence of control checks by various bodies and structures. In addition, the President of the country has repeatedly declared a moratorium on inspections of business entities by various bodies for a certain period of time. State support in the field of subsidizing of the agrarian and industrial complex in recent years amounted to over 25628 billion tenge, lending was in the amount of over 32217 billion tenge.

The experience of countries with developed economies shows that science, high technologies, active innovation activity are the initial driving force of the economic life of the agro-industrial complex, and the primary growth of agricultural production is provided through the implementation of scientific and technological achievements. At the same time, the «Agrobusiness-2020» Program noted a number of systemic problems that hamper the further development of agricultural science as a factor in increasing the productivity and competitiveness of the country agro-industrial complex. The main ones are:

  1. insufficient funding — a multiple difference in the amount of financing in comparison with the countries - leading exporters of agricultural products;
  2. the shortage of highly skilled young personnel — researchers, support and technical personnel;
  3. moral and physical deterioration of the infrastructure — the share of research equipment used for more than 20 years is 28 %, agricultural machinery and motor vehicles — 41 %, operated for more than 20 years without major repairs of buildings — 95 %;
  4. undeveloped tools for introducing scientific developments and interaction with business;
  5. insufficient level of integration of domestic agrarian science into the world scientific system (

At the same time, the government pays great attention to the development of other priority sectors of agriculture, and in general, to improve the competitiveness of agriculture and food security of the country. It should be noted that before recently, the implementation of this measure was hampered by the lack of legislation. Currently, the relevant amendments to the legislation have been introduced. Besides that, the subsidies of interest rates on loans taken to finance working capital, including, in the purchase of raw materials are planned in all priority areas. The problem of physical and moral depreciation of production equipment processing enterprises will be solved by allocating investment subsidies and subsidizing interest rates on loans.

The subsidies of construction of 5 meat processing plants, upgrading and reconstruction of 135 milk processing enterprises, 56 meat processing enterprises, 5 enterprises for processing fruits and vegetables, 7 sugar factories, 7 oil and fat enterprises, 7 enterprises for the production of pasta and 35 cereal-producing companies will be provided by the state until 2020.

All government actions will help, firstly, to reduce the cost of production, and secondly, to improve the quality and enhance the competitiveness of rural-agricultural products.

Macro-economic and social effects of the implementation of the program «Agribusiness-2020» are predicted in the following terms:

  1. an increase in the physical volume of agricultural production by 1.5 times;
  2. a provision of food independence of basic food products at 80 % of the domestic market;
  3. an increase in labor productivity per person employed in agriculture by 3 times;
  4. an increase in export earnings from the sale of agricultural products by 20 %;
  5. an attraction more than 10 billion tenge of private funds into the sector [5].

In this regard, it is necessary to reform the agrarian science in order to improve the accessibility of educational and consulting services for agricultural manufacturers. Therefore, stabilization and further accelerated development of the agro-industrial complex of our republic is impossible without the reproduction of new knowledge, the replication of the achievements of agrarian science, and their accelerated diffusion into agrarian production. The indicated directions of activity should be provided by expanding the scope of R&D, increasing the need for highly qualified scientific and engineering personnel, financing research and development at a rate exceeding the economic growth rates, which in turn will lead to further growth of the science intensity of our country's GDP.

State subsidies in the sphere of agriculture and the agro-industrial complex as a whole, in the first place, should be directed to the creation and stimulation of the introduction of advanced technologies for the intensification of production (scientific research, selection, elite seed production, livestock breeding, biotechnology, etc.). Another topical direction is the implementation of investment projects to maintain and develop large engineering factors of production (irrigation and melioration systems, etc.). At present, in the depressed and inefficient agricultural regions of Kazakhstan, the state provides microcrediting of the rural population, including those aimed at the development of all forms of employment (for specific projects). The implementation of the above measures to increase the competitiveness of the agricultural sector contributed to the successful entry of Kazakhstan into the World Trade Organization and the implementation of our country's strategic goal of becoming one of the 30 most competitive countries in the world (

An important component of sustainable development of the agrarian sector is the formation and implementation of cluster initiatives in the most competitive sectors of the agro-industrial complex, which entails an increase in the level of agricultural technologies and the quality of manufactured food products, an increase in the added value and incomes of the agro-industrial complex.

State support of agriculture is a characteristic of most countries of the world community, depending on the specific conditions, its purposes vary. For example, countries with industrial economies that have attained a high income and standard of living, tend thus to support comparative effectiveness and competitiveness of domestic food products, the necessary dynamics of technical and technological modernization of production, sustainability of rural areas, i.e. to solve problems that the market self-regulation could not provide the required performance. Countries with transformational economy pose challenges of restructuring and accelerated modernization of production to adapt to requirements of global market and ensure economic, food availability for population [9; 315].

With a view of activation of work in this branch, the Ministry of Agriculture of the Republic of Kazakhstan analyzed the potential of import substitution and export. As a result, the following 10 priorities for the processing of agricultural products are identified: milk processing; meat processing; production of oil and fat products; deep processing of grain; processing of fruits and vegetables; production of confectionery; fish processing; primary processing of skins of agricultural animals; sugar production; primary processing of wool. These priorities are regionalized according to the scheme of agricultural specialization.

Thus, the state regulation of the agro-industrial complex is the economic impact of the state on the production, processing and sale of agricultural products, raw materials, food, as well as production and technical maintenance and logistics of agro-industrial production. The need for state regulation of the agro-industrial complex is due to a number of circumstances, among which we can designate:

  • the impact of agro-industrial and commodity markets on the macroeconomic situation;
  • the market failures in the sphere of ensuring an economically fair distribution of income;
  • the influence of natural factors on the efficiency of agricultural production;
  • the demographic role of rural areas.

The main directions of state regulation of agro-industrial production in Kazakhstan are the following:

  1. the formation and functioning of the market of agricultural products, raw materials and food;
  2. the financing, crediting, insurance, preferential taxation;
  3. the protection of interests of domestic commodity producers in the course of foreign economic activity;
  4. the development of science and the implementation of scientific activities in the field of agroindustrial production;
  5. the development of the social sphere of the village;
  6. other directions defined by the legislation of the Republic of Kazakhstan.

The state provides financing for the agro-industrial complex and agro-industrial production at the expense of budgetary funds, budgets of the subjects of the Republic of Kazakhstan and extra-budgetary sources. The main tasks of state regulation of the agro-industrial complex are the development of agroindustrial production, ensuring food security, regulating markets and maintaining economic parity between agriculture and other sectors of the economy, creating an effective system for managing the agrarian sector of the economy and implementing a unified scientific and technical policy in the sector, protection of domestic producers and others [6].

First of all, agriculture in developed countries is a classic example of a completely competitive industry, since agricultural production is conducted by a large number of sellers, each of which does not have a sufficient supply volume to influence prices, the product is practically not diversified, and besides, there are practically no entry barriers and exit from the market. The resulting trend is the relative drop in farm incomes. In the long run, farm incomes always lag behind incomes in non-farm sectors of the economy. Since agriculture is a highly competitive industry, it would seem that, by virtue of the laws of the market, in parallel with the fall in income, there should be an outflow of farmers from this industry to more profitable areas of activity. However, in practice this does not happen. The immobility of resources in agriculture leads to the aggravation of the long-term farming problem. The peculiarity of the rural resident and the rural worker is expressed in its special attachment to the foundations of life and work and determines the special social conservatism of this part of the population [10; 533].

According to the Ministry of Agriculture of the Republic of Kazakhstan, in accordance with the state program «Agrobusiness-2020», since 2012, the state support of the agro-industrial complex has increased from 68.1 billion KZT to 176 billion KZT in 2016 or 2.6 times. At the same time, it is necessary to note a significant increase in the share of expenditures on the agro-industrial complex transferred to the budget of local executive bodies (from 32 billion KZT in 2012 to 155.2 billion KZT in 2016, or 4.9 times). New instruments of state support are introduced, standards for effective types of subsidies are raised, and standards are ineffective.

This is especially necessary at the present time, when Kazakhstan, having joined the EEA and the WTO, assumed a number of obligations, including agriculture. When Kazakhstan joined the WTO, it was agreed to apply measures of state support to agriculture, in the form of direct subsidies – a «yellow basket» at 8.5 % of gross agricultural output. For comparison, recently entered countries such as Russia, Ukraine, Kyrgyzstan, Moldova, Croatia, Georgia, after negotiations, were given the right to support the «yellow bas- ket» in the amount of 5 %. The accession of Kazakhstan to the WTO imposes certain obligations on the country.

The legal framework for making commitments in the field of agriculture is the WTO Agreement on Agriculture. Support that has a distorting effect on international trade in agricultural commodities under the WTO is subject to reduction. It should be noted that for Kazakhstan 8.5 % is a real opportunity to provide measures of state support to agriculture in volumes necessary for the development of the industry, since subsidies are directly proportional to the value of gross agricultural output. And as the experience of the last years shows, the gross output of agriculture is doubled every five years, which means that the maximum allowable levels of state support will also increase at the same rate.

Thus, in the development of the agricultural sector of Kazakhstan in the national economy and state regulation of agriculture in general, the state and state support play a crucial role. At the moment, the basic act of legislation in this area is the Basic Law of the Republic of Kazakhstan «On State Regulation of the Development of the Agro-industrial Complex and Rural Territories» (as amended on April 28, 16, No. 506-V), which defines both legal and economic bases for the implementation of the state Regulation of the country's agricultural sector.

President Nursultan Nazarbayev in the next Message to the people of Kazakhstan «Growing Kazakhstan Welfare: rising income and quality of Life» dated October 5, 2018, noted that it is important to radically reorient the entire agro-industrial complex to a cardinal increase in labor productivity and export the growth of processed agricultural products. In the Message, the President instructed to increase labor productivity in the AIC and the export of recycled rewritten agricultural products at least 2.5 times over the course of five years.

Government regulation and support of employment in the agrarian sector presupposes, in economic terms, an increase in productive employment, an increase in labor productivity and wages, and in the social sector, a decrease in unemployment, an increase in labor activity and the development of human potential.

In the future, the agro-industrial complex of Kazakhstan in many respects can become one of the world's largest producers of agricultural exports. New global economic challenges and the instability of the conjuncture in the commodity markets dictate the need to address the primary task - the diversification of the economy. In achieving this objective, the key role is played by the agrarian sector, which is considered as one of the drivers of structural reforms of the economy and its growth.



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Year: 2019
City: Karaganda
Category: Economy