Business preferences in exchange for counter obligations

First Vice-Minister of Trade and Integration of the Republic of Kazakhstan Arman Shakkaliyev met with representatives of the business community of Astana and answered questions from entrepreneurs.

At the meeting, the First Vice Minister spoke about the measures that the government is taking to stabilize prices for socially important products, and new approaches to solving sensitive issues of the population and business.

Arman Shakkaliyev confirmed that the unprecedented increase in inflation that occurred this year is a global trend, characteristic not only for Kazakhstan, but also for most developing and developed countries. As a result of the ongoing geopolitical processes, the usual trade chains around the world have been disrupted. Commodity producers faced a shortage of raw materials, which in turn affected the prices of final products and services.

In order to minimize risks and fix the cost of socially significant food products, the Ministry of Trade and Integration of the Republic of Kazakhstan together with the Ministry of Agriculture of the Republic of Kazakhstan have amended the legislation.

"We have moved away from financing retail chains using revolving schemes and will finance manufacturers directly. Starting next year, domestic agricultural producers will receive funds until February 2023 for the autumn harvest of 2023. Forward money will allow agricultural enterprises to conclude contracts in advance and provide 30% of the volume of production from the three-month demand of the region for vegetables, for example. That is, the manufacturer will have counter obligations to supply vegetables and fruits to the domestic market," Arman Shakkaliyev explained.

Another task is to ensure the purchase of early vegetables, their timely purchase will help avoid sharp price fluctuations in the off–season. According to the Vice Minister, preliminary agreements on the supply of onions, carrots and cabbage from Tajikistan and Uzbekistan have already been concluded. The issue of importing vegetables from Iran and Pakistan is also being worked out.

Regional stabilization funds will saturate the market with vegetables in the period from April to June, their main task will be to prevent seasonal fluctuations in prices.

In addition, to stabilize sugar prices, direct contracts have been concluded between the akimats of Astana and 4 sugar factories.

Currently, a list of 19 socially significant food products has been identified, the production volumes of which do not cover the needs of the population. This, in particular, includes milk and dairy products, as well as chicken meat.

According to Arman Shakkaliyev, in 2023, after clarifying the republican budget, it is planned to allocate about 400 billion tenge to increase the production of large-commodity dairy farms and chicken meat. At the same time, the funds will be sent to the address. The recipients of state subsidies will be experienced commodity producers who have high labor productivity and traceability of goods turnover. Mandatory requirement – all products must be supplied only to the domestic market of the country.

Addressing the representatives of retail chains, the First Vice Minister noted that the state creates all conditions so that "you receive high-quality products and can sell them. The only request is to comply with the counter obligations for a socially responsible, reasonable trade premium, which should not exceed 10%."  

The Ministry is also working on the creation of a modern trading infrastructure, which directly affects the increase in trade turnover, the number of manufacturers and the hit of goods on the shelves. A program for financing shopping centers with an area of 3 to 50 thousand squares is being developed. Within the framework of the program, it is proposed to issue loans up to 5 billion tenge from 2023 and subsidize interest rates for business - at 6% per annum. At the first stage, about 20 billion tenge will be allocated for these purposes.

According to the calculations of the MTI RK, the optimal share of civilized trade formats is 75%. The presence of such a large number of modern shopping centers will solve the problem of shadow turnover of goods.

At the end of the meeting, Arman Shakkaliyev answered questions from the business community. Entrepreneurs were interested in licensing the export of flour, tariff quotas for the import of some agricultural products. Also, business representatives voiced the problem of unfair trade of stores at home and offered to subsidize the cost of storing vegetable products.