ADB to support Kazakhstan’s agriculture infrastructure development

ADB to support Kazakhstan’s agriculture infrastructure development

BAKU, Azerbaijan, Feb. 20

By Nargiz Sadikhova - Trend:

Asian Development Bank (ADB) has proposed a project on Kazakhstan’s agriculture infrastructure development which is expected to modernize the level of agriculture infrastructure in the country, putting Kazakhstan on a map of progressive countries, ADB representative told Trend.

The official said that about two years ago, Kazakhstan’s Ministry of Agriculture requested the ADB to work on a project aimed at improving agricultural infrastructure by creating agri-logistics centers and wholesale markets for horticulture (primarily fruit and vegetables), dairy products, meat, and fish.

“We mobilized a large regional technical assistance grant and produced a detailed masterplan reviewing the international experience and explaining the benefits for Kazakhstan to invest in the modernizing of such infrastructure,” the official said.

ADB representative noted that the bank has been engaging with the modernization of wholesale agriculture markets and the creation of agri-logistic centers in many Asian countries. Typically, after a detailed review of the ongoing local situation, we design and implement projects covering various areas. Eventually, the gradual transfer, over the years, of the physical assets and operations’ management to market users can also be considered.

“As we know, Kazakhstan’s agriculture sector requires deep structural reforms. Agriculture commodity prices have been highly volatile over the years, posing serious risks to both local producers and consumers. Post-harvest losses at 40 percent or more of total outputs are among the highest in Central Asia. Prices trickled town to local producers are negligible. Production associations and contract farming remain underdeveloped, and traceability systems are not yet in place. These factors are among key binding constraints in ensuring domestic food security and catching up with international food safety standards for export promotion,” the official said.

The representative said that the international experience suggests that the creation of modern, well-functioning wholesale agriculture markets and agri-logistics centers through vertical and horizontal supply chain integration can help address these problems, expand agriculture production and export, and generate large benefits for the farmers, increasing well-being and income of a large part of the rural population.

“By improving access to storage facilities and providing basic packaging services in agri-logistics centers, inter-seasonal price volatility can be drastically reduced. Moreover, a sharp reduction in post-harvest losses and use of modern traceability systems help increase agriculture production and export, allowing farmers to generate extra income, which is typically used to expand production and productivity. Last, but not least, the separation of wholesale from retail businesses is a major factor to improve market efficiency and eventually reduce the price of agriculture products for consumers, while modern wholesale markets help generate new ancillary industries to complement the service provided to retailers,” the official said.

For Kazakhstan, ADB has already mobilized a $1 million technical assistance grant to prepare the project’s feasibility study, the representative said.

“Our initial estimate is that the project will be of approximately $160 million, which ADB is ready to finance in local currency under a sovereign guarantee by the Ministry of Finance,” the official said.

The representative continued by saying that the first thing to be done together with the Ministry of Agriculture is preparing a detailed inventory mapping of existing facilities, product flows, and carefully planning in which locations of new infrastructure are needed - and of which size. Another important assessment that needs to be done is understanding to what extent farmers are using the existing facilities, and what are the constraints to improved utilization.

“In parallel with the physical construction of new infrastructure, we need to largely strengthen the regulatory framework on wholesale agriculture markets and agri-logistics centers to make sure that the project’s final impact on farmers and final consumers of agriculture products is largely positive. To generate such a large and positive impact, these new assets need to be managed by professional and experienced operators, to be selected through a proper tender process,” the official said.

He added that the ADB Board expected to approve the loan after the summer.

“ADB believes the realization of this project to modernize agriculture infrastructure will greatly help diversify the economy, increase sector efficiency, and generate income and a large amount of jobs both in rural and urban areas,” the official said.


Follow the author on twitter: @nargiz_sadikh

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