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KAZAKHSTAN INTRODUCES NEW SUBSIDIES ON SEED PRODUCTION

09 January 2019
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Starting in January 2019, the Rules for subsidizing the development of seed production came into force in Kazakhstan (registration dated as of October 25, 2018). What changes have occurred in this industry?

What does it look like?

The subsidy mechanism has changed. The new subsidy schemes are developed for types of crops.

It should be noted that the new subsidies will not be provided for hybrids of the first generation of rape, sunflower, corn, cotton, sugar beet, seeds of cotton varieties of the first and second reproduction and elite seedlings of fruit and berry crops and grapes. A partial reimbursement (up to 50%) of the cost of purchase of these crops is provided in new rules.

The new scheme gives a farmer an opportunity to receive a certain rate of elite seeds and primary seeds before spring field work, and pay for the purchased seeds (30% of the cost) after the harvest to the Agrarian Credit Corporation (ACC).

This scheme will help the farmers to renew the seeds and not use less potential seeds than the third generation ones. Time will show if this scheme works. It should be noted that only the farmers who registered their lands and digitized in the subsidy information system (qoldau.kz) can get the subsidies. The same mechanism operates within the framework of the program of subsidizing mineral fertilizers.

Standards and marginal prices of subsidized seeds are approved by the resolution of regional akimats. At the same time, the approved norms should not differ more than two times upward or downward from the norms recommended by the Ministry of Agriculture.

If the actual price of the selling seeds (by the elitsemkhoz, semkhoz or distributor) is lower than the marginal price set by the akimat, then the calculation of subsidies will be based on the actual price. If the actual price of the selling seeds is higher than the marginal price, then the calculation of subsidies will be based on the the marginal price. For example, an elitsemkhoz, semkhoz or distributor set the actual price for wheat seeds at 75 thousand tenge per tonne, but the akimat set a price of 70 thousand tenge per tonne - here the price of 70 thousand tenge will be taken into account.

Subsidy procedure

In order to get a subsidy the agrarian should submit an application and conclude an agreement with the elite-semkhoz, semkhoz or retailer for the purchased seeds. In turn, the elitsemkhoz/semkhoz, or seed distributor submits an application to the regional agricultural department for the payment of subsidies and only then the agrarian must receive the subsidy.

After the conclusion of the contract with the seed-growing farm, the agrarian can obtain seeds in accordance with the approved norms (the norm established by the Ministry of Agriculture of the Republic of Kazakhstan + the norm established by the akimat).

How much seeds can a farmer get on subsidy?

For example, if the farmer’s sown area under spring wheat is 10 thousand hectares, then he may purchase one part of the seed at a rate of 6.612 kg per a hectare, and another part (up to 6.612 kg per a hectare - each region can have its own norm) he can purchase through the regional department of agriculture. Thus, the farmer will be able to purchase up to 132.2 tonne of seeds for an area of 10 thousand hectares and plant with these seeds up to 11% of his sown area at a seeding rate of 120 kg per a hectare.

After harvesting, the farmer should return 30% of the cost of elite seeds or primary seeds to the Agrarian Credit Corporation (ACC). For example, if the cost of one tonne of wheat seeds is 70 thousand tenge, the farmer should return 21 thousand tenge to the ACC. Farmers who do not make this payment by December 1 will not be able to participate in the seed subsidy program next year until they pay their obligations to the Agrarian Credit Corporation.

Recommended norms of the elite seeds and primary seeds

Type of the seed

Norm of elite seeds and primary seeds, kilogram/hectare*

1

Spring wheat

6,612

2

Winter wheat

10,401

3

Barley

9,618

4

Millet

1,830

5

Oats

4,676

6

Winter rye

10,148

7

Triticale

5,567

8

Rice

13,394

9

Buckwheat

2,547

10

Legumes

18,067

11

Soybean

1,314

12

Rape

1,365

13

Safflower

0,957

14

Flax

1,922

15

Sunflower

1,051

16

Mustard, other oilseeds

0,537

17

Potatoes

830,619

18

Annual herbs

10,117

19

Perennial cereal grass **

15,600

20

Perennial legumes **

20,800

Note:

       * when calculating the norm, the insurance fund was taken into account (30%);

       ** taking into account the fact that the minimum period of cultivation of perennial cereal grasses is 10 years, perennial leguminous grasses is 5 years, annual renewal in the amount of 1/10 part (10%) for perennial cereal grasses and 1/5 part (20%) for perennial legumes.

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