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How to provide Astana with agricultural products?

10 February 2017
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Deputy Chairman of NCE RK Nurzhan Altaev spoke about the possibilities of direct deliveries of agricultural products to the markets of Astana at the annual conference of entrepreneurs

According to him, the chain of movement of agricultural products hampers the development of agriculture and trade.

"Food security is one of the priorities of state policy. The Head of State in this address noted that agro-industrial complex of Kazakhstan should become the new driver of the economy of Kazakhstan, it is necessary to create an effective storage, transportation and distribution of goods", - said Nurzhan Altaev.

According to the deputy chairman of NCE, the main type of agricultural products, in respect of which Kazakhstan is historically self-sufficient, there is a certain proportion of imports: beef worth more than 36 million US dollars; lamb for 300 thousand US dollars.; honey imported for half a million of US dollars; as a grain country, on average, over the last 5 years we import pasta for 50 million US dollars. The same situation with the fruit and vegetable group: onions and garlic are imported worth 35 million US dollars;. on average over the last 5 years, each year we import potatoes for 16 million US dollars, while grow potatoes in surplus of the need of Kazakhstan in it; tomatoes worth almost 70 million US dollars, cabbage worth more than 14 million US dollars.

"On average, we import products for three billion US dollars, two billion of which is spent on items, which we ourselves can produce. Potatoes in the off-season we import from Pakistan. Now they sell it at the markets under the brand name "Makinsk" or "Pavlodar". Export of potatoes is small, i.e. we buy more than we sell", - said Nurzhan Altana.

Deputy Chairman of the Board of NCE explained the situation by the fact that small producers can’t provide cyclical supply in the off-season, especially in winter, and this accounts for the peak of price growth, making these huge sums.

According to Altaev, today Kazakhstani farmers do not have access to modern storage facilities, where it is possible to store products, and gradually sell, building a stable relationship with the retail link. That is, domestic agricultural producers, even growing high-quality products, are not able to store it, to adjust to the requirements of the retail trade and to offer it to a buyer. Ultimately, this reduces the attractiveness and demand for the products produced by our farmers, while the shelves of shops are filled with products of foreign manufacture. He noted that the current chain for movement of production hinders the development of the sector of agriculture and trade, as well as has a negative impact on attractiveness of local agricultural products for Kazakhstani citizens.

"Last year in Almaty, we discussed the topic of the development of the direct marketing of agricultural products produced by farmers in the trading network. As a result, an agreement was signed on cooperation between the retail chains, agricultural producers and the National Chamber. Such major trade networks of  Almaty as "Magnum", "Metro", "Carrefour", "Arzan", "Ramstore" and "Alma"  actively supported us in this issue, but no cooperative was unable to withstand the requirements of the retailers on the regular supply, whereas as for the price and quality, they were quite competitive compared to imported products. Lack of a facility in the form of a wholesale and distribution center has played a key role in the integration process of direct relations between producers and retailers ", - said Altaev.

"We have become hostages of artificial schemes of circulation of products in which the farmers sell cheap the harvest to "gray dealers" and sell these products at a high price on the markets of Almaty, in neighboring countries", - he added.

According to the deputy chairman of the board of NCE, it is unprofitable for farmers to supply products in small quantities, they do not have storage space where they can store and daily, weekly supply their products to the retailers. "In this connection it is necessary to use the full potential of existing retail and warehouse premises, which are not loaded yet. We already have a number of partners, willing to take on the role of the hub, for example, the market "Alai", as well as trade and logistics center "Continental Logistics", - he added.

Nurzhan Altaev said that in recent years the Government pays great attention to this issue, it is working on the preparation of the trade development program, which will include a separate set of questions for the development of wholesale and distribution centers, as without this link farmers will not be able to sell their products. "We took into account during the preparation of proposals for a new program", - he stressed.

Deputy Chairman of the Board cited the example of the recently opened in the city of Almaty Logistics center of wholesale and retail trade for agricultural products "Mizam" with an area of retail space 50,000 square meters, where will be created 2000 sales jobs. Total financing facility amounted to 2.7 billion tenge, it is designed by the well-known French company "Ranzhis".

"It is necessary to start this work in Astana now, because this year there is a big challenge to ensure food security in the framework of the international exhibition "EXPO - 2017", to which, according to preliminary estimates, will come about 2 million people" , - he said.

Altaev has cited the data of socio-entrepreneurial corporation "Astana", according to which a high probability that the following items will be in shortage in the city during the exhibition: rice, buckwheat, sugar, mineral water and meat. "But, in our opinion, Aset Orentayevich, the likelihood of shortages of goods on the positions of the goods is much wider. Some of these products can safely include all fruits and fruit group, poultry, meat products, "- he addressed to the akim

Deputy Chairman of the Board of NCE noted that SEC proposes to allocate an additional budget of 2 billion tenge for the purchase, including foreign products, and to provide a green corridor for import of the imported products in Astana. "We can’t make "Mercedes", produce "Samsung", but we can produce agricultural products, which can be competitive to foreign analogues. Food security in the framework of the "Expo", and on a regular basis, can be ensured through construction of storage and logistics facilities together with local producers", - he said.

Summing up his speech, Nurzhan Altaev announced the main directions in which NCE is ready together with the Akimat of Astana to start work now. "Frankly speaking, today most of manufacturers see one of the priorities of sale of its products through modern trade format - through the trade networks. Therefore, with the program of working capital replenishment through the program "Regional targeted financing" we need to identify the main clear rules for existing wholesale and distribution centers on important points, such as: entry of food products through a single gate in the city of Astana, through the organization of proper phytosanitary and veterinary control; purchase of domestic products only on the funds that SEC of the city of Astana plans to allocate; preparation of all the regulatory framework for the full operation of the system of wholesale and distribution centers in Kazakhstan ", - he said.

The deputy chairman of the Board also noted that it is necessary to oblige the socio-entrepreneurial corporation "Astana" to buy the products for the needs in the framework of the "EXPO" exclusively from domestic agricultural producers, as well as from food suppliers, made in Kazakhstan. "We have already started to work in this direction. More than 80 manufacturers from nine regions of Kazakhstan expressed their full readiness to supply products on the shelves of the capital. They are ready to expand sales channels, to carry out the task of ensuring the food security of the capital. These are the producers, who earlier have not supplied their products to the capital's commercial networks. Regional entrepreneurs are willing to offer a diverse range of products, ranging from honey, confectionery, to ready-to-eat meat products. As you can see on the slide, these manufacturers are ready to close the deficit positions in the framework of "Expo", - he said

In addition, Altaev commented on the need to include representatives of public sector organizations, the Committee of agro-industrial complex of the Presidium of NCE in all the Commissions on commodity procurement. "Also, Aset Orentayevich, I want to inform you that in the first quarter of this year we plan to hold a separate large event for entrepreneurs of agrarian business on access to the market of Astana, of course, with your direct participation, to which we will invite the producers of agricultural and food industry, retail chains, and we will discuss in detail how we can deal with the negative balance that are established for traditional types of products, as well as to ensure uninterrupted supply of agricultural products in Astana during the "Expo", - he added.


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