Strategic directions and ensuring food security of the Republic of Kazakhstan

Abstract

Object: The agro-industrial complex of Kazakhstan was and remains a complex universal structure formed at the junction of industrial and agricultural production. The complexity of the development of the agro-industrial complex, as one of the potential drivers of macroeconomics, is determined by the uneven functioning of its constituent industries: agriculture, industries producing means of production for agriculture, processing industries, infrastructure industries, which are interconnected. The purpose of this study is that the authors of the article substantiate the problems and complexity of the agro-industrial complex of Kazakhstan in terms of sustainable development and innovation. The characteristics of the agricultural sector of the economy are systematized.

Methods: Review of the works of researchers, analytical, economic and statistical, desk research, systematic approach.

Results: The current situation in the agricultural sector of Kazakhstan is analyzed: The dynamics of exports and imports with the EAEU countries are presented; The growth rates of export and import of agricultural products from Kazakhstan are calculated; The structure of Kazakhstani exports is shown, the export of the most important goods is reflected; The dynamics of investments in the agro-industrial complex by type of economic activity is shown; the growth rate of investments in the agricultural sector of the country is calculated. Macro factors influencing the development of the agro-industrial complex of Kazakhstan are shown. Internal factors of the ineffective development of the agricultural sector are identified. The negative consequences of the long-term implementation of the import substitution policy in our country are reflected. The scenarios of the development of the agro-industrial complex of Kazakhstan are considered and their comparative analysis is given.

Conclusions: Strategic directions for the development of the agro-industrial complex of Kazakhstan have been developed, aimed at reducing the gap between the agro-industrial complex of developed countries. The results of the above study can contribute to expanding the scope of study on the development of the economy of the Republic of Kazakhstan, as well as act as a recommendatory basis for their solution.

Introduction

Sustainable development of the agro-industrial complex, their introduction of innovations and promising technologies form a competitive, self-sufficient, export-oriented agricultural sector that can ensure food security of our country, enhance the openness of the domestic agricultural economy, and increase the environmental component.

At the same time, the problem of increasing the quality of life of the population, general greening of the economy, food security of the population is becoming more acute every year.

Today, a large-scale impact on the development of the agro-industrial complex, solving the problem of reproducing the natural environment, obtaining ecologically safe and at the same time biologically valuable products is unthinkable without an appropriate institutional and legislative framework, social infrastructure, scientific developments of domestic and foreign scientists, significant investments, etc.

Considering the purpose of this study and the previous review of the literature and identified gaps research gaps, we put forward the following hypothesis: The formation and implementation of a new strategy of the agro-industrial complex – “reasonable, sustainable and inclusive growth”, which is based on the effective use of resources and the prevention of population aging, affecting the food security of the Republic of Kazakhstan.

Literature Review

In Kazakhstan, the issue of food security was actively identified in the 1990s due to a sharp decline in the volume of domestic agricultural production, an increase in imports and a negative shift towards foreign food products in the structure of food resources. Theoretical and methodological issues of food security are reflected in the scientific publications of the following foreign and Kazakh scientists: Abalkin L.I., Biryukov A.I., Nikolaeva I.P., Lomakin V.K. (Lomakin, 2014), Balabanov B.C., Esipov V.E., Makhovikova G.A., Zubaraev A.E., Matsenovich I.L., Khodachek A.M., Ivoilova I., Egorova E., Tarasova E., Razinkina E., Kartseva A., Afonina B.M., Satybaldin A.A. (Satybaldin A.A. et al., 2020), Gamarnik G.N., Bimendieva L.A., Eszhanova Zh.Zh. (Lukhmanova, G.K. et al., 2018), Chikunov O.N., Kaigorodtsev A.A., Kazembaeva M.E., Gizzatova A., Zhanbekova Z.Kh.

Nevertheless, questions about the need to determine the priorities for the development of the agrarian economy recognize modern challenges and formulate strategic prospects for the agro-industrial complex have been and remain relevant to the management of Kazakhstan. The scientific and practical significance of the outlined range of issues necessitated their further scientific research.

Methods

The methodological basis of the study was the works of domestic and foreign scientists on the problems of strategic development of the agrosphere, increasing its sustainable development, the level of competitiveness; the use of tools for strategic analysis, assessment of the conditions and results of the activities of the subjects of the agro-industrial complex; digital transformation and promising areas of the agricultural sector.

During this study, we used a variety of methodological tools – analytical, economic and statistical, desk research.

The applied systematic approach was used to substantiate the strategic guidelines for the development of the agro-industrial complex of Kazakhstan.

Results

The goal of all participants in the system of the agro-industrial complex (producers, consumers, intermediaries) is to ensure that end-consumers can freely purchase products in the required quantity, proper quality and at an affordable price.

On the other hand, farmers should make a profit, the size of which would compensate for the costs, as well as direct funds for strategic development, to stimulate entrepreneurial initiative. The agrarian sector determines, on the one hand, the level of quality of life of the population, and on the other, Kazakhstan’s place in the world agricultural market. Table 1 demonstrates the indicators of export and import of agricultural products and food in Kazakhstan. Unfortunately, we can state the fact that our agricultural complex has been import-oriented for a long period. It is necessary to understand that import orientation should not be aimed at a long-term perspective since it will entail a drop in the level of competition in the national market, followed by a decline in the quality of manufactured products, as well as a high degree of influence and control from the state.

Table 1. Export and import of agricultural products and food in Kazakhstan, 2019

In 2019, the export of beef from Belarus to the EAEU countries amounted to 124.7 thousand tons, the producer price was 2762 USD / ton, the export price was 3569 USD / ton, the efficiency level was 29.2%; revenue – 100.713 million USD; poultry meat: export – 147 thousand tons, producer price – 1,412 USD / ton, export price – 1,576 USD / ton, efficiency level – 11.6%; milk – 207.7 thousand tons, producer price – 490 USD / ton, export price – 834 USD / ton, efficiency – 70.2%, revenue – 71 457 thousand USD; butter – 74.136 thousand tons, producer price – 4,524 USD, export price – 5,576 USD, efficiency – 23.3%, revenue – 77,987 thousand USD.

Frozen fish: export from Russia – 39 thousand tons, producer price – 1,094 USD / ton, export price – 1,523 USD / ton, efficiency – 39.2%, revenue – 16.8 million USD.

The largest contribution to the export volumes of agricultural products was made by the city of Almaty (16.8%), as well as Almaty (28.3%), Kostanay (12.3%), Turkestan (8.9%), East Kazakhstan (6, 9%) and the North Kazakhstan (4%) regions, the main importer of agricultural products among the EAEU countries is Russia (65%).

The main volume of exports of agricultural products falls on wheat (26.9%), flour (14.7%), vegetable oil (9%), confectionery (9%), fish fillets (4%), and baby food and dairy products (2%). Also, a lot of cotton fiber and processed feed (cake, bran, waste) are exported. The main regions for the export of grain are the East Kazakhstan, Akmola, Kostanay regions and cities of Nur-Sultan and Almaty. Traditional grain markets are Central Asia, Iran, China, and Afghanistan. Oilseeds are exported to Uzbekistan, European countries, China, Mongolia.

The analysis shows that with the growth of agricultural production and its processing, exports increase. Thus, the volume of product exports in 2018 compared to 2015 increased by 16.8%, incl. crop production – by 14.5%, livestock – by 54.8%, processed products (food) – by 19.0%, in total – by 17.8%.

Calculations demonstrate that the volume of exports of agricultural products and food in 2022 will increase in comparison with 2018 by 31.2%, incl. foodstuffs – by 51% and products – by 31.2%. This will reduce the import of products by 9.5%, i.e. exports will exceed imports in 2022 by $ 1,963 million.

We are of the opinion that innovative technologies, careful control over the quality characteristics of agricultural products, new varieties of plants, new breeds of animals, low dependence on energy resources,

biofertilizers, products with increased nutritional value are one of the strategic directions of development of the agro-industrial complex, a kind of platform for entering export sector of international trade.

The sphere of circulation of the agrarian sector of the economy, its resource component is characterized by a number of features, which we, in particular, include:

• high social significance of the final products of the agricultural sector for the development of the economy of the state in particular and society as a whole;
• a large number of independent producers, from which it follows that an individual farmer is practically unable to influence the price level;
• full compliance of products with standards and regulations;
• limitation of the dominant resource – land suitable for agricultural production;
• the presence of a small number of entry and exit barriers for participants in the agricultural industry;
• weak mobility of the constituent elements of the agro-industrial complex;
• high level of regulation of agricultural markets by the state;
• low sensitivity of demand to market regulation mechanisms under conditions of saturation of demand for food.

The volume of world trade in agri-food products, despite the impact of aggravating conditions (significant climate changes; the consequences of a pandemic, food crisis; the transition to digital technologies for the distribution of food products to places of final consumption, etc.), are actively expanding.

The changes that have taken place in the EAEU’s mutual trade are due to both the situation within the region and external factors. The global economy was slowing amid growing economic uncertainty, a slowdown in trade and industrial production.

Amid increased trade tensions between the world’s largest economies and tightening conditions in credit markets, the International Monetary Fund (IMF) estimated global economic growth for 2019 at 102.9%. According to the World Trade Organization (WTO), world trade in goods decreased compared to 2018 by 3% in value terms and by 0.1% in physical volume (Hassan et al., 2021; Toader & Roman, 2015; Mekonnena et al., 2021; Raymond et al., 2021).

The difficult situation in the world is reflected in the indicators of economic activity in the EAEU region as well. At the end of 2019, the values of gross domestic product (GDP) growth in the Union as a whole, the Russian Federation and the Republic of Belarus lag behind world indicators and decreased compared to 2018. For the rest of the EAEU member states, outstripping results were recorded.

For the Union as a whole, GDP increased by 1.7% in 2019 (in 2018 – by 2.7%). An improvement in the dynamics of economic growth compared to 2018 was noted in the Republic of Armenia – 7.6% (versus 5.2% in 2018), in the Republic of Kazakhstan – 4.5% (4.1%), in the Republic of Kyrgyz – 4.5% (3.8%). The GDP of the Republic of Belarus increased by 1.2% (in 2018 – by 3.1%), the Russian Federation – by 1.3% (by 2.5%).

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Industrial production growth also slowed down in 2019. For the Union as a whole, the indicator was 102.4% (in 2018 -– 103.7%), Belarus – 101% (105.7%), Kazakhstan – 103.8% (104.4%), Russia – 102.3 % (103.5%).

In Armenia and Kyrgyzstan, the situation improved from 104.2% to 109% in 2018 and in 2019, from 105.4% to 106.9%, respectively.

In the field of agricultural production, compared to 2018, the Union as a whole recorded an increase of 3.4% (in 2018, there was a decrease of 0.1%), including in the Republic of Belarus – by 2.9% (a decrease of 3.4%), the Russian Federation – by 4% (a decrease of 0.2%). A slowdown in growth took place in the Republic of Kazakhstan from 103.5% in 2018 to 100.9% in 2019, in the Republic of Kyrgyz – from 102.7% to 102.6%. In the Republic of Armenia, agricultural production decreased by 3.8% in 2019 (in 2018, the decline was more significant – by 7.2%).

The value of food exports in EAEU mutual trade increased by 8.4% in 2019. Prices for these goods increased by 3.4% compared to the level of 2018. The increase in the physical volume of supplies amounted to 0.6%.

Investment activity in the Union as a whole in 2019 increased by 2.6% (in 2018 – by 6.6%). A slowdown in the growth of investments in fixed assets was noted in the Republic of Kazakhstan from 117.5% to 108.8% in 2018, and in 2019, in the Russian Federation – from 105.4% to 101.7%. The indicator in the Republic of Armenia improved in 2018 from 104.5% to 105.1% in 2019, in the Republic of Belarus – from 106% to 106.6%, in the Republic of Kyrgyz – from 103.4% to 105.8%.

The growth in investment activity was accompanied by an increase in the cost of purchasing investment goods in the Union market and third countries. The value of imports of investment goods in mutual trade increased by 6.8% compared to 2018, in foreign trade – by 6.3%.

The slowdown in the dynamics of foreign and mutual trade was one of the factors reducing the growth rates of freight turnover. In the Union as a whole, cargo transportation increased by 0.6% compared to 2018 (versus 3.2% in 2018), the Republic of Kazakhstan – by 2.2% (7.3%), the Republic of Kyrgyz – by 4.8 % (5.2%), the Russian Federation – by 0.6% (2.7%). In the Republic of Belarus, the growth in freight turnover of 4.1% in 2018 was replaced by a decrease of 5.8%. In the Republic of Armenia, an increase in cargo turnover was registered from 103.1% to 108.9% in 2019 (Eurasian Economic Commission, 2019).

Comparison of the main economic characteristics of the EAEU member states for 2019 is presented in the diagram (Figure 2).

The slowdown in economic growth in the EAEU as a whole from 2.5% in 2018 to 1.7% in 2019 determined the dynamics of Russia’s GDP (2.5% in 2018, 1.3% in 2019).

Thus, we can conclude that the export potential in the agro-industrial complex has a place to be, and for its development it is necessary to apply measures (Eurasian Economic Commission, 2019).

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Table 2. Commodity structure of exports and imports of the EAEU member states in foreign trade with countries outside the EAEU

Strategic directions and ensuring...

Table 2 presents Commodity structure of exports and imports of the EAEU member states in foreign trade with countries outside the EAEU.

Discussions

Possessing rich natural resources involved in the economic processes of the agricultural sector, Kazakhstan exports only wheat and aquaculture, i.e., farmers’ economic activity is, by and large, reduced to the exploitation of natural resources.

A qualitative analysis of literary sources on the problems set by the study led us to the following conclusion – the model of the extensive use of natural potential is unpromising. Therefore, the member states of the European Union (EU) have intelligently approached the formation and implementation of a new strategy for the agro-industrial complex – “reasonable, sustainable and inclusive growth” (FAO, IFAD, UNICEF, WFP and WHO, 2021; Elsevier, 2020).

The essence of this strategy is the efficient use of resources and the prevention of population aging. The European Union has set the following complementary priorities in its strategy:

 knowledge and innovation – as the main elements of competitiveness;

 resource-saving, low-carbon, and competitive economy;

 inclusive growth-social orientation, territorial integrity, high employment rate.

We believe that Kazakhstan should consider the positive experience of implementing EU agrarian policy; update the mechanism for implementing the program for the integrated development of rural areas – the core of the agrosphere; apply a competent and balanced approach to the formation of an agricultural policy strategy; to coordinate professionally all levels of development of the agro-industrial complex, so that in the end our agrarians could not only provide the domestic market with high-quality food but also carry out export supplies. From our perspective, the main macro-factors that have a significant impact on the development of the agro-industrial complex of Kazakhstan from a strategic perspective are climatic transformations, natural disasters; actions to combat the pandemic; high growth rates of Asian economies. We attributed microfactors influencing the development of the agricultural industry: average investment in the agricultural sector of the economy; poor technical upgrade of equipment; poor condition of agricultural land; social backwardness of the development of rural areas (loss of jobs, weak deurbanization, low wages, lack of infrastructure, etc.) (Kozlova & Dubrovina, 2021; Ushachev, 2018).

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Figure 3 demonstrates the structure of investments in Kazakhstan. The share of investments in the agricultural sector is 139.2% (Statistical data of the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan) of the total volume of national investments. This is an insufficient amount of investments for a qualitative leap in the Russian agricultural sector of the economy, for the possibility of using innovative technologies, for entering new world markets, and for the opportunity to become an export-oriented agro-industrial complex.

Ushachev I.G. (Ushachev, 2018) considers two ways of strategic development of the agro-industrial complex of the Russian Federation: target and inertial. Today, the government of our country is proposing another third scenario – an innovative and breakthrough one. From the point of view of scientists and politicians, it is the choice of one of the scenarios that will allow the industry of the agro-industrial sector not only to actively develop but also in the future to enter the international market space. Table 3 presents a comparative characteristic of the above scenarios for the development of the agro-industrial complex.

Table 3. Analysis of scenarios for the development of the agro-industrial sector in Kazakhstan

According to Table 3, we can state that the disadvantage of the two development scenarios is a mandatory investment in the agro-industrial complex. Even though the level of investment flows is rather low, the Russian economy will have to make financial investments in the agricultural sector. Otherwise, the agroindustrial complex of our country will lag behind others seriously and for a long time.

Conslusions

Based on the analysis and study of a sufficient number of literary sources, bills and regulations on the problem considered in this article, we have formulated the following strategic vectors or strategic directions that allow us to give a different configuration for the development of the agro-industrial complex of the Republic of Kazakhstan:

 State support and development of legislative norms and programs for the application of the latest technological developments (new agricultural products, new breeds of animals, biofertilizers, highly productive livestock, new types of plant fibers, biofuels, organic farming, etc.).

 Long-term economic incentives (material incentives, preferences, preferential taxation) for the implementation of programs, projects, concepts of innovative development of the agricultural sector.

 Improvement of land relations (transparent, guaranteed rights of farmers are needed).

 Environmental insurance (as a tool to support sustainable production).

 Increasing the awareness of agricultural producers.

 Expansion of access of private household plots (personal subsidiary plots) to large sales markets.

 Stimulating the inflow of investments in the creation of new and modernization of existing agricultural farms.

 Building a multi-level system of cooperation as a fundamental basis for the survival and preservation of the village.

 Support for the diversity of the agricultural sector (for the effective development of the agroeconomy).

 Scientific, technical and technological training of personnel (training of potential personnel, professional retraining and advanced training of personnel directly under the requirements and conditions of the enterprise itself).

 Social support of villages and small towns (active occupancy of rural areas with agricultural production, thereby providing the rural population with jobs, as well as preserving the rural contingent).

 Prevention of climatic challenges and timely provision of necessary actions to preserve agricultural products.

Existing food insecurity forecasting systems may need to be complemented with additional data and methods to capture these novel pathways of food insecurity. So far, evidence on COVID–19’s effects on food demand (e.g., household purchasing power) is mixed. The impact on food supply is limited to certain supply chains for inputs and higher-value, perishable foods. The effects vary strongly by context possibly due to the role of relief packages. More information is required on social protection coverage, including for low-income households and informal workers.

Evidence also suggests that actors in the informal midstream food supply chain played an important role in explaining the resilience of food systems in low- and middle-income countries. However, they are often overlooked in current data collection and research efforts (Feyertag et al., 2019).

This list of strategic directions due to the influence of economic, political, climatic, and other factors can be expanded and supplemented. However, we must understand the main thing – the proposed strategic directions are aimed at reducing the gap between the agro-industrial complex of Kazakhstan and developed countries.

Acknowledgements

The study was carried out based on the preparation of a report on the topic: “Research of the influence of state policy in the agricultural sector on the development of cooperative processes in the agro-industrial complex, sustainable development of rural areas and ensuring food security” under the leadership of Alipbeki O. in the specialized direction “Sustainable development of rural areas”. This research was funded by the Ministry of Agriculture of the Republic of Kazakhstan (BR10764919).

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