Learning to Compete: More Food at Better Prices in Kazakhstan

To raise agriculture's yields and its share of Kazakhstan's economy, President Nazarbayev set a target for the country: to double agricultural productivity by 2014. The ongoing US$83 million Agricultural Competitiveness Project, partly supported by the World Bank, is contributing towards this ambitious goal. Within its scope, it aims to increase the competitiveness of Kazakh farmers and assist them to compete in local and global markets.

There are many ways to make Kazakh farmers and agribusiness sector more competitive, and the project is tackling many of them. By providing grants to farmers and researchers, 636 of which have already been awarded, the project supports increased investments in the development and adoption of new farming technologies. These help farmers make their products more cost-effective, uniform, and compliant with international food safety standards. Supporting small agribusinesses to package products attractively, and funding the modernization of food laboratories, further contributes to the overall competitiveness of Kazakh farm products.

Grant recipient Alexandr Pavlovskiy, shared his experience of diversifying by adopting the method of planting several different crops instead of a single one. "I sow seven crops and have been doing this for several years, so I do not put all my eggs in one basket. In today's market conditions, we should not seek a large crop, but should make a cost-efficient harvest instead."

The same thinking applies on a large scale, too. Until recently, Kazakhstan produced large quantities of wheat without regard to cost or prices on the world market. A number of Kazakh wheat farmers went bankrupt in 2009 because their production costs were high while world prices were low. The Agricultural Competitiveness project is helping to cut production costs by promoting the use of energy efficient tractors, seeders and threshing machines to replace old, inefficient Soviet-era farm machinery. And it is showing big producers that they too, can benefit from growing a variety of crops for export.

As a key complement to the grants, through the project's technical assistance activities, farmers are also trained in improved technologies and production skills. For example, by introducing conservation agriculture in which there is no cultivation of the soil. Diversifying and rotating crops instead of growing the same ones year after year and allowing depleted soil to recover fertility is another example.

Dr. Mekhlis Suleimenov, who evaluates parts of the program, says: "In general, the World Bank project is very useful. Given the fact that Kazakhstan exports a lot of grain, we have to learn to compete in the global market."

Kazakh farmers are improving not just the variety of the crops they grow, but also the quality of their crops. With modern laboratory tests and services, they can increase the protein content of grains and legumes to make them more attractive on the world market. And they are learning to collect, process and analyze agricultural data to develop a marketing information system—a first for Kazakh agribusiness.

Food production regulations are starting to be streamlined and coordinated, and uniform standards are being adopted in some areas. Newly equipped district laboratories are helping farmers to meet those standards. A new National Reference Laboratory with international certification will be designed next year. It will serve as a center of expertise and will improve national diagnostic capabilities. Its operation will allow commercial farmers to verify the results from tests on their products (mainly livestock) conducted by private or regional public laboratories, in case farmers disagree with results of local laboratory tests.

"The development and adoption of new technologies radically changes the approach to the production processes in the agricultural sector. The ability to make the right assessment of new options and opportunities, represents a major factor in the development of efficient strategies to access new markets, and develop comparative advantages," says Michael Carroll, World Bank task manager for the Kazakhstan Agricultural Competitiveness project.

"To a large extent, through the support provided by programs like the Agricultural Competitiveness project, the Kazakh producers have opportunities to realize national capacity on the way to becoming more competitive in the global markets."

Midway through the project, much remains to be done. But small- and medium-sized farmers are already earning more, and interest in farm grants remains high, so more farmers are expected to benefit.