Agribusiness Kazakhstan’s economy driver

Food Corporation financed agrarians for KZT 300 mln for sowing campaign

This year, as a part of financing of the sowing campaign, JSC "National Company Food Contract Corporation" (Food Corporation), since the end of February has been implementing a program of forward grain purchase from agricultural producers under the guarantees of second-tier banks, KazAgro Holding reports.
Kazakhstan25 April , 19:16

"As of April 24, 2017, under this program, agreements were concluded with 14 agricultural producers for the amount of over 640 million tenge. Of them, under the guarantees of banks, 4 agricultural producers for the amount of 333 million tenge were financed," the message says.

It is to be recalled that during spring and summer period, Food Corporation implements agrarians a preliminary payment for the declared volumes of agricultural products. The amount of prepayment per 1 ton of grain is 20 thousand tenge for soft wheat, 25 thousand tenge for hard wheat, 15 000 tenge for barley, 45 thousand tenge for sunflower, 50 thousand tenge for soybean, etc. In total 15 types of leguminous and oilseeds. The commission is 5% of the amount of advance payment.

The received funds of agricultural producers are at their discretion sent to the sowing works. In autumn, after harvesting, the agrarians must deliver appropriate products at market prices prevailing for that period to Food Corporation. At the same time, if the market price for a particular crop is higher than the price at which the preliminary payment was made, Food Corporation will pay extra the difference.

It should also be recalled that in the current year Food Corporation doesn’t implement a program of forward grain purchase from agricultural producers under the guarantees of social-entrepreneurship corporations (SEC).

This decision was due to several reasons, one of which is the debt of grain producers. Annually by the date of fulfillment of obligations under concluded contracts, the debt on the part of agricultural producers amounted to 2-5 billion tenge. At the same time, the farms returned the money received mainly with money, the share of which in 2016 amounted to 88% of the total amount of financing, which contradicts the program of the forward purchase.

Guarantees of SECs aren’t secured by hard collaterals, which makes it difficult to pay their debts to Food Corporation.

The Ministry of National Economy of Kazakhstan adheres to the position on the need of termination of the guarantee of obligations as a non-core and loss-making line of activity of the SEC. As a result, last year the Government decided to complete work on the participation of SECs in providing guarantees until January 1, 2017.