In 2019, the indicator of export of live cattle in comparison with 2018 grew practically 3 times and reached 156 thousand heads of cattle and export of live small cattle in 7 times - 263 thousand heads. At the same time, Kazakhstan's meat processing plants are loaded by 45-50%, while the prices for meat products are growing. In this situation, the Ministry of Agriculture imposes a ban on the export of live cattle.

The Atameken NCE RK agrees to the ban on the export of live cattle for 6 months, and at the same time considers it necessary to work out a mechanism to maintain a competitive price in the domestic market for farmers through the introduction of incentive measures for processors.

Is Uzbekistan a new meat hub?

Grants are provided for the purchase of breeding cattle - KZT 150,000 (for the purchase of local breeding cattle) and KZT 225,000 (for the purchase of imported breeding cattle).

And if we export live breeding cattle, then it turns out that we subsidize Uzbekistan from KZT 150 thousand to 225 thousand per head.

If the feeding farm sells cattle to Uzbeks, the subsidy to Uzbekistan will be about KZT 20,000-30,000 per head at the rate of KZT 200 per kg of weight.

As you know, Uzbekistan approved its program for implementation of the Development of the livestock sector in Uzbekistan project with the participation of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

Under this program, Uzbekistan received long-term loans from IBRD and IDA up to 2042 with a grace period of 5 years and will additionally invest its funds. The total value of the Program is USD 227.8 million. The total value of the programme is USD 227.8 million.

"We see that in 2 years Uzbeks exported live cattle from Kazakhstan for 105 million USD.  We can predict how much more they can take out, according to their financial balance, which is about USD 120.0 million. Uzbekistan can take out as many more cattle as they can! This means increasing its livestock, not slaughtering it", Eldar Zhumagaziyev, First Deputy Chairman of the Board of Atameken, said.

Strengthening control at the border

Because the breeding stock is being exported, and this is strategically disadvantageous for Kazakhstan, given the neighbor's policy. The multibillion-dollar state support, which is provided to increase the number of breeding stock, will be reduced to zero.

In addition, there is a need to properly control the export of the breeding stock, in general, the movement of livestock.

One solution could be the integration of the Information Automated Control System for the issuance of the Veterinary Certificate, livestock identification by gender, ASTANA-1 system for customs procedures and operations, which would also enable the implementation of a risk management system.

Global experience

For example, Australia is one of the world's leaders in the export of cattle. On average, Australia exports USD 6.4 billion worth of GOOD annually. On average, Australia exports $6.4 billion worth of GOOD annually and $1.0 billion worth of LIVE VISION. In LIVING VIDE - $1.0 billion, where mainly tribal cattle with high value or 13.5% of the total volume.

For example, Australia is one of the world's leading cattle exporters. On average, Australia exports $6.4 billion worth of beef and $1.0 billion worth of live cattle annually, mainly breeding cattle with high value or 13.5% of the total.

Brazil exports USD 5.4 billion worth of beef and USD 0.5 billion worth of live cattle. The ratio is 1 to 10.

In Kazakhstan, the situation is the opposite. In 2019, the live cattle exported for $74 million, while the beef exported for only $16.6 million.

Subsidies

We do not have a specific methodology for determining the types and amounts of subsidies. Who and how much are subsidies to be given to?

As a result, the last Agro-Industrial Complex Development State Program was conceptually changed 3 times, and the existing rules of subsidizing changed 47 times for the last 5 years.

For example, according to scientifically grounded calculations, the cost of 1 kg of live cattle from growing to fattening is about 560 tenge. Considering the minimum established norms of state support of meat cattle, the share of subsidies makes from 200 to 300 tenge per 1 kg, depending on the origin of livestock (local or imported).

"The subsidies cover 30 to 55 per cent of the cost of keeping and feeding the cattle. This is the most subsidized area of agriculture in the country. For the sake of comparison, the share of basic subsidies for grains, legumes, and oilseeds does not exceed 17-20% of the cost.

 To change the situation, it is necessary to develop and approve at the legislative level the methodology for granting subsidies in the field of agriculture, on the experience of developed countries.

For example, the main task of government support measures in developed countries is to ensure the necessary level of profitability of farmers, taking into account the market value of products produced. For example, in the USA there is a Stabilization of farmers' incomes program.

There is a concept of a guaranteed price, which is set for the most important agricultural products. When a farmer sells at a price lower than a guaranteed price, he receives a difference from the state at the end of the year in the form of subsidies.

In addition, there is a collateralized (fixed) price at which a farmer submits his produce to the Commodity Credit Corporation (CCC) if the market prices are below the collateralized price. This ensures guaranteed sales and a guaranteed level of profitability for the farmer.

"When agreeing on an export ban, the Atameken NCE RK focused on paying the difference in the form of subsidies to farmers at high prices for meat or live cattle in neighboring countries' markets. First, it will stabilise the domestic market and solve the issue of overflow, and most importantly, it will ensure farmers' profitability," the First Deputy Chairman of the Board said.

And only an additional measure to ensure the profitability of farmers should be the ability to export live cattle.

Only if there is a full load of meat processing stations and a surplus stock a quota should be established for the export of live cattle of the entire export volume of beef.

CONCLUSIONS

During the ban, we need to address the following key issues:

Develop a methodology for subsidy regulations;

Review the veterinary inspection system and the traceability of live cattle;

We need to ensure the effective monitoring of live cattle exports.

Given the limited duration of the ban and the reluctance to renew it, government agencies led by the Agricultural Ministry together with the Atameken NCE RK and industry associations, need to develop coherent approaches to address the above issues.

The Atameken NCE RK is ready to discuss this issue and the next meeting of the AIC Committee under the Presidium of the Atameken NCE RK will be dedicated to livestock issues.