Economist Ivan Shinkarev told about it in conversation with inbusiness.kz.
According to him, the classical macroeconomic model suggests that investment in the industry should trigger growth in production, GDP and related areas of the economy. However, in Kazakhstan’s agro-industry this mechanism does not always work.
“We can place investments on one axis, on the other – the volume of agricultural products. And there is sometimes an abnormal situation: in addition to the districts of the region, where high investments give high output, there are those where investments end up with a weak increase in production. Moreover, there are some districts that provide good production, but at the same time their investments are low,” Shinkarev noted.
In his opinion, one of the reasons is too long payback period of agrarian projects. This is especially true for meat and dairy cattle breeding, where profit appears only two or three years after investment. In addition, investments may go not into production capacity, but into secondary costs. In this case, the growth of production is delayed.
Separately, the economist pointed to corruption risks and “formal approach to state support”. According to him, some enterprises purchased livestock solely for the sake of subsidies or “transferred” herds between farms to formally show the presence of livestock.
The economist also noted that the profitability of grain production in recent years has decreased so much that agrarians often only cover their own expenses. At the same time, the most profitable crops are now rape and flax.
“The reasons are a short cycle, high demand in the domestic and foreign markets, and this is a guarantor of a quick return on investment. Now, in principle, the profit from rapeseed can easily cover losses on other crops,” Shinkarev summarized.
