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Agriculture in Kazakhstan: A success story

IAMO study shows: Agro-boom eradicates rural poverty

Kazakhstan extended its cereal acreage by five million hectares in the past ten years, doubled its added value in the grain sector and eradicated rural poverty as workers were becoming increasingly scarce. These insights emerge from a study of the Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) that was recently presented to the World Bank in Washington, USA. Future productivity increases, however, require continued political reforms in terms of regulation of land and capital markets as well as intensified promotion of education and research.

In view of increasing global demand for basic foodstuffs, export countries with large cultivation areas have a key function for food security. Concerns are being voiced, on the other hand, that worldwide intensification of agricultural production in favour of export products fails to adequately consider the needs of local population groups. Against this background the study presented by IAMO documents the development in Kazakhstan's northern grain region. Previously unpublished statistics and local case studies collected by researchers Martin Petrick, Jürgen Wandel and Katharina Karsten verify the enormous economic upswing achieved by this sparsely populated region in the last ten years.

While the grain acreage was extended by some 50 percent to 15 million hectares, state-of-the-art agricultural machinery and equipment and higher utilisation of mineral fertilizers almost doubled the value added in the agricultural sector between 2001 and 2009. Markedly raised grain prices are a major cause of the observed agro-boom. 'We were amazed to see that farm-worker wages rose at almost double the speed of grain prices', explains the senior researcher of the study, Dr. Martin Petrick. Productivity gains and high cereal prices are typically passed on to employees in this region that is dominated by wage-based agricultural enterprises. The decisive factor for the broad increase in rural income was an incremental scarcity of farm-workers. 'Farm managers unanimously reported difficulties in getting and maintaining qualified employees', Petrick adds. This was especially true to say of skilled workers capable of operating modern, satellite-controlled agricultural machines. This scarcity combined with intensification of agricultural production has highly positive effects for rural populations. The study demonstrates that consumption expenses of rural households doubled within six years, while the percentage of households with below-poverty-line incomes dropped from 40 percent ten years ago to five percent in 2010.

A surge in revenues from oil exports and relative political stability under president Nursultan Nasarbayev, who has been in office for 20 years, furthered the recent agricultural upswing. Current agro-political framework conditions, however, may rather hamper future developments, said Dr. Petrick during presentation of the study to the World Bank in Washington D.C., USA. Capital and land markets in the former Soviet republic are still under heavy government influence. Most land is still in state ownership, under long-term leases and non-transparent assignment procedures and state-controlled leasing rates ensure that not always the best farmers are considered. The state holding 'KazAgro' grants interest-subsidised agricultural credits through its subsidiary 'KazAgro-Finance', commercial banks have largely withdrawn from agricultural business in recent years. The Kazakh government should replace its active interference into capital and land markets by a stepped-up commitment in education, research and further infrastructure extension, said Petrick in Washington. The study was supported by the German-Kazakh Agriculture Policy Dialogue and the Analytical Center of Economic Policy in the Agricultural Sector (ACEPAS) in Astana. It is available as discussion paper for downloading at the IAMO website.

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About IAMO The Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) is an internationally renowned research institution. With more than 60 scientists and in cooperation with further leading research institutions, it is addressing urgent scientific and social issues in agricultural and food economics and rural areas. Main regions under review include Central and Eastern Europe as well as Central and Eastern Asia. Since its foundation in 1994, IAMO has been part of the Leibniz Association, a German community of independent research institutions.

Academic contact Dr. Martin Petrick Tel. +49 345 29 28 120 petrick@iamo.de

Public relations contact Rebekka Honeit Tel. +49 345 29 28 330 honeit@iamo.de

idw :: 27.10.2011