英文 087295.2003.26.3.6　作業；清田

THE KYRGYZ REPUBLICDATA COLLECTION SURVEY ON

AGRICULTURAL MECHANIZATION

FINAL REPORT

March 2014

JAPAN INTERNATIONAL COOPERATION AGENCY(JICA)

TASK CO., LTD.KATAHIRA & ENGINEERS INTERNATIONAL

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March 2014

THE KYRGYZ REPUBLIC

KGJR

13-008

i

Maps of Study Areas

ii

Photos

Plow (3-row)

Osh province, Karasuu district, Tashirova Machine Station

Plow (4-row) Talas province, Talas district, private farmer

Disc harrow Chisel plow and tooth harrow Chui province, Alamedin district, Adogine Machine Station

Tooth harrow Talas province, Karabura district, private farmer

Seeder (24-row) Osh province, Karasuu district,

Tashirova Machine Station

iii

Seeder (4-row for beans)

Talas province, Bakayata district, private farmer

Seeder (6-row) Osh province, Nookat district, Machine Station

Cultivator

Osh province, Karasuu district, Tashirova Machine Station

Boom sprayer Talas province, Bakayata district, private farmer

Cultivator Broadcaster Osh province, Nookat district, farm

iv

Bean thresher

Made in Turkey, Production year is unknown Talas province, Bakayata district, private farmer

Combine harvester, 1999 (by 2KR) Osh province, Karasuu district,

Tashirova Machine Station

Combine harvester, Ukraine 1989

Osh province, Uzgen district, Tameka Machine StationSeed sorter (for wheat, barley)

Chui province, ZhAiyl district, Reimbek Machine Station

Oil squeezer (electric) Talas province, Bakayata district,

private farmer

Forage harvester Osh province, Nookat district, farm

v

Mower, made in Germany, year unknown, purchased 20 years ago

Osh province, Uzgen district, Tameka Machine Station

Rake Mower (reciprocating type) Chui province, Alamedin district, Adogine Machine Station

Baler, Production year is unknown Talas province, Talas district, private farmer

vi

Trailer Osh province, Nookat district, Farmers cooperative

Mobile workshop Talas province, Talas district, Machine Station

Educational and scientific organization for mechanization

Disassembling tractor engines in practical room Training workshop Vocational school in Talas

(Used textbooks from the Soviet period; most are not updated)

Incised tractor model (the Soviet model) Parts of agricultural machinery,

classroom with diagrams Tokmok technical college

(The agricultural mechanization course at this school closed two years ago due to declining enrollments and government budget cuts.)

vii

CONTENTS Maps of Study Areas

Photos

Contents

List of Figures and Tables

Abbreviations / Units of Measurement

Summary……………………………………………………………………………………………….S1

Pages 1. Collecting Information and Study Summary ................................................................................... 1

1.1 Background of the Study .......................................................................................................... 1

1.2 Purpose of the Study ................................................................................................................ 3

1.3 Research Methodology............................................................................................................. 3

1.4 The Team Members and Study Schedule ................................................................................. 5

2. Overview of the Agricultural Sector in the Kyrgyz Republic ......................................................... 6

2.1 Ecological Conditions .............................................................................................................. 6

2.2 Orientation of Agricultural Sector ........................................................................................... 7

2.2.1 Trend in the Agricultural Sector ............................................................................................ 7

2.2.2 Trend in Agricultural Production .......................................................................................... 9

2.3 National Policy of the Agricultural Sector ............................................................................. 13

2.4 Structure and Role of Agrarian Sector ................................................................................... 14

3. Present Agricultural Mechanization and Problems ....................................................................... 17

3.1 Utilization of Agricultural Machinery ................................................................................... 17

3.1.1 The Number of Agricultural Machinery .............................................................................. 17

3.1.2 Agricultural Machinery Services ........................................................................................ 19

3.2 Agricultural Machinery Market ............................................................................................. 21

3.2.1 Import and Export of Agricultural Machinery, and the Domestic Market .......................... 21

3.2.2 Spare-Parts Supply .............................................................................................................. 32

3.2.3 Import Procedure and Standards ......................................................................................... 33

3.2.4 Agricultural Machinery Market in Kazakhstan ................................................................... 34

3.3 Maintenance of Agricultural machinery ................................................................................ 38

3.3.1 Maintenance Situation of Agricultural Machinery Before Independence ........................... 38

3.3.2 The Present Maintenance Situation of Agricultural Machinery .......................................... 39

3.3.3 Persons In-Charge of Maintenance and Training ................................................................ 43

3.4 Financing System for Agricultural Mechanization ................................................................ 44

3.4.1 Government Finance Institutions .......................................................................................... 45

3.4.2 Other Finance Institutions..................................................................................................... 54

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3.5 Customs Union ....................................................................................................................... 57

3.5.1 Background and Summary of the Customs Union .............................................................. 57

3.5.2 Impact on Agriculture and Agricultural Mechanization...................................................... 61

4. Analysis of Obstacle Factors to Agricultural Mechanization ........................................................ 63

4.1 Problems of Each Stakeholder ............................................................................................... 63

4.1.1 Ministry of Agriculture and Land Reclamation (MA & LR), Department of Agricultural

Mechanization and Electrical Supply .................................................................................. 63

4.1.2 Kyrgyz National Agrarian University, Faculty of Engineering and Technology ................ 63

4.1.3 Technical Colleges and Vocation Schools (agricultural machinery courses) ..................... 63

4.1.4 Agricultural Machinery Suppliers ....................................................................................... 64

4.1.5 Repair Engineers for Agricultural Machinery ..................................................................... 65

4.1.6 Aiyl Bank ............................................................................................................................ 66

4.1.7 Farmers ................................................................................................................................ 69

4.1.8 Agricultural Machinery Service Agencies .......................................................................... 71

4.2 Problems of the Agricultural Machinery Market ................................................................... 71

4.3 Problems of Maintenance of Agricultural Machinery ............................................................ 72

4.4 Problems of Financing for Agricultural Mechanization ........................................................ 73

4.5 Causal Relationship of Subjects Concerning All of Agricultural Mechanization .................. 75

Current Status of the Government and Donors Against the Issues of Agricultural Mechanization

....................................................................................................................................................... 78

Investigation of the Kyrgyz Government and Donors ........................................................... 78

Kyrgyz Government ............................................................................................................ 78

Major Donors ...................................................................................................................... 78

Other donors (Turkey, China, Eurasian Development Bank) ............................................. 80

Intervention of the Japanese Government .............................................................................. 82

Non-Project Type Grant Aid and Grant Assistance for Underprivileged Farmers (2KR) .. 82

JICA Training ...................................................................................................................... 83

Consideration of Directions and Fields for Support Programs for Agricultural Mechanization ... 85

Approach for Promotion of Agriculture Mechanization ........................................................ 85

Fields and Direction of Japanese Government Support on Agriculture Mechanization ........ 88

Possibility of Business Expansion of Japanese Agricultural Machinery Manufacturers ....... 90

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Attachment Attachment 1: List of Interviewees

Attachment 2: Number of Tractors and Combine Harvesters in Each Province

Attachment 3: Brochure of Manufacturers

Attachment 4: Financial Status of Aiyl Bank

Attachment 5: Results of Questionnaire Survey

Attachment 6: Crop Calendar of Main Crop

Attachment 7: Analysis of the Farmhouses that Procured Tractors

List of Figures and Tables

Figure 1-1 The Work Flow of the Research ............................................................................... 3

Figure 2-1 Proportion of Each Industry in GDP ........................................................................ 8

Figure 2-2 The Organizational Structure of the Ministry of Agriculture ................................. 15

Figure 2-3 Departments of Agricultural Mechanization and Electrical Supply ....................... 16

Figure 3-1 Number of Tractors and Combine Harvesters In Operation in Kyrgyz .................. 19

Figure 3-2 Aiyl Bank Leasing Procedure ................................................................................. 53

Figure 4-1 Issues Relevant to Agricultural Producers .............................................................. 69

Figure 4-2 Index of Retail Prices for Fuel, Flour, Lamb .......................................................... 70

Figure 4-3 Conditions for Selection for Agricultural Machinery Purchases ............................ 71

Figure 4-4 Schematic Analysis of the Problems on Agricultural Mechanization (1) ............... 76

Figure 4-5 Schematic Analysis of the Problems on Agricultural Mechanization (2) ............... 77

Figure 6-1 Direction of Promotion of Agriculture Machinery and the Assistance of Japan .... 90

Table 2-1 Land Use by Province ................................................................................................ 7

Table 2-2 GNI Per Capita and Comparison with Other Neighboring Countries ........................ 8

Table 2-3 Percentage of Employment by Industry ..................................................................... 9

Table 2-4 Export and Import of Agricultural Products and Foodstuffs.................................... 10

Table 2-5 Comparison of Fundamental Indicators by Province ............................................... 12

Table 2-6 Information on the Production of the Main Types of Farming by Region .............. 12

Table 3-1 Number of Agricultural Machinery and the Deficient Number for 2013 ................ 17

Table 3-2 Number of Agricultural Machinery and Implements by Province in 2013 .............. 17

Table 3-3 Number of Combine Harvesters per 1,000 ha of Cereals Planted Area ................... 18

Table 3-4 Tariff of Agricultural Machinery Services by Region ............................................. 20

Table 3-5 Main Suppliers of Imported Agricultural Machinery .............................................. 25

Table 3-6 The Number of Tractors and Combine Harvesters in Kyrgyz in 2013 .................... 28

Table 3-7 Retail Prices of Agricultural Machinery (1)............................................................. 29

Table 3-8 Retail Prices of Agricultural Machinery (2)............................................................. 30

Table 3-9 Annual Planted Area and the Number of Agricultural Machinery in Kyrgyz and

Kazakhstan .............................................................................................................. 35

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Table 3-10 The Number of Tractors Sold in Kazakhstan in 2013 .............................................. 36

Table 3-11 The Number of Combine harvesters Sold in Kazakhstan in 2013 ........................... 37

Table 3-12 Disbursement of Counterpart Fund Accumulated from Non-project Grant and 2KR

................................................................................................................................. 45

Table 3-13 List of Loan Products for Supporting Agriculture ................................................... 47

Table 3-14 List of Leasing Products for Supporting Agricultural Mechanization ..................... 48

Table 3-15 Amount of Aiyl Bank Leasing by Agricultural Machinery ..................................... 50

Table 3-16 Amount of Aiyl Bank Leasing by Year ................................................................... 50

Table 3-17 Amount of Aiyl Bank Leasing by Province ............................................................. 51

Table 3-18 Agricultural Financing Products available in Private Banks ................................... 54

Table 3-19 Leasing Performance of Private Banks in 2013 ....................................................... 55

Table 3-20 Overview of Customs Union Member Countries and the Kyrgyz ........................... 58

Table 3-21 Possible Effects of Kyrgyz Accession to the Customs Union ................................. 58

Table 3-22 Trade Between Kyrgyz and CU Countries, and % of Total Kyrgyz Exports and

Imports with each CU Member ............................................................................... 60

Table 3-23 Main Trade Between Kyrgyz and CU Members by Category ................................. 60

Table 3-24 Changes in Duties Due on Adoption of Common External Tariffs, non CIS Imports

................................................................................................................................. 61

Table 4-1 Assets of Aiyl Bank ................................................................................................. 66

Table 5-1 Results of Non-project type Grant Aid and 2KR ..................................................... 84

Table 6-1 Problems and Countermeasures for Agricultural Mechanization in Kyrgyzstan ..... 93

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Abbreviations

Abbreviations Official titles

ADB Asian Development Bank

CIS Commonwealth of Independent States

EBRD European Bank for Reconstruction and Development

EU European Union

FAO Food and Agriculture Organization

FOB Free On Board

GDP Gross Domestic Product

GNI Gross national Income

GOST State Standards of the Soviet Union

GOST-R State Standards of the Russia

ISO/IEC International Organization for Standardization / International Electrotechnical

Commission

JICA Japan International Cooperation Agency

KICB Kyrgyz Investment and Credit Bank

MA & LR Ministry of Agriculture and Land Reclamation

MTZ Open Joint Stock Company “Minsk Tractor Works”

NGO Non-Governmental Organization

ODA Official Development Assistance

PPP Public-Private Partnership

UNDP United Nations Development Programme

USAID The United States Agency for International Development

VAT Value Added Tax

WTO World Trade Organization

WB World Bank

2KR Second Kennedy Round: Grant Assistance for Underprivileged Farmers (Former Grant Aid for the Increase of Food Production)

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Units of Measurement

Units Title Description

＜Area＞

ha hectare 1 ha=100 m2

m2 square meter 1 m2=0.01 ha

＜Power＞

hp Horse power

kWt kilowatt 1 kWt = 1.34102 hp

＜Currency＞

USD U.S. Dollar 1 USD=50 som=102 Yen (Feb. 2014)

Som Kyrgyz som 1 som = 2 Yen (Feb. 2014)

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Summary

1. Background and Objectives of the Study

The agricultural sector occupies the largest part of the economy in the Kyrgyz Republic

(hereinafter Kyrgyz). In Kyrgyz, 66% of the total population lives in rural areas, and half of the

labor force in the country is engaged in agriculture. Agriculture plays an important role in the

sustainable development of the economy.

As most of the agricultural machinery in Kyrgyz has been used for more than 20 years, it

seems as if the available machines will decline over the years because they are decrepit.

Inasmuch as deficit agricultural machinery causes the loss of opportunities to harvest crops

during harvest season, installation of new agricultural machines is significant as a measure to

increase agricultural profit. The Ministry of Agriculture and Land Reclamation (hereinafter MA

& LR) decided on a agricultural mechanization policy as one of the main agricultural

development strategies, and established an agricultural loan program to purchase agricultural

machinery for farmers at low interest rates through state commercial banks in recent years.

Therefore, the promotion of agricultural mechanization is expected to be income generating for

farmers by increasing agricultural production, and thereby stimulate the economy through the

encouragement of agricultural exports.

Regarding the situation described above, this study will investigate to reveal the state of the

agricultural mechanization policy and its current status and problems, the situation of farmers’

access to agricultural machinery (in particular, the financial system such as loans for

agricultural machinery to farmers by government agencies), and the present condition of the

agricultural machinery market and maintenance. It will also analyze the possibility of Japanese

agricultural machinery manufacturers to expand business in Kyrgyz and its challenges.

Throughout this investigation, this study aims to collect basic information to analyze the

challenges of implementing policies and systems aimed at the development of agricultural

mechanization, and to contribute to define a direction for JICA’s cooperation strategy with

Kyrgyz.

2. Brief Description of Research Results

The following describes the challenges and problems in each field:

During the research in Kyrgyz, a general policy to increase the level of mechanization of

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agriculture had not been determined. Since January 2014, the new minister of agriculture

has acceded, and at the present day, preparatory work for the new mechanization policy

has been executed. Only in a description of agricultural sector strategy, is the promotion of

machinery leasing explicitly stated in national development strategy as a strategy of

agricultural development.

For over 20 years after independence in 1991, the number of agricultural machinery has

been decreasing. In particular, the number of tractors declined from 30 thousand to 20

thousand units.

Agricultural machines are purchased in cash, by leasing and loans. Popular machines

among farmers are Belarusian tractors (80 hp, price approx. 1 million Kyrgyz soms) and

Chinese tractors (90 hp, price approx. 1.1 million Kyrgyz soms), which are selected by

price, performance, availability of parts and ease of operation. Also, in small numbers,

large-scale farmers acquire European and American tractors (220 hp, price approx. 8

million Kyrgyz soms) which have high power for large farmlands.

Due to a lag in agricultural machinery renewal and the low level of machines’ liquidity,

supplies for secondary markets are not sufficient and the price of them remains high.

Individual farmers who have limited land area do not have enough information on

agricultural machines for rice, for example.

Since 2011, the state bank "Aiyl Bank" started to provide low-interest leases to farmers for

the purchase of agricultural machinery, and since then the sales of machines has been

increasing. However as of January 2014, due to the lack of financial resources of the bank,

approximately 150 farmers who passed leasing probation have been waiting and still

cannot obtain the machines in a timely manner.

Despite the high combine harvester price, which is 4 times more expensive than the tractor,

their leasing conditions are the same as the tractor. This severe condition leads to a low

level of combine leasing.

In recent years, some large-scale farmers who are able to purchase machines in cash are

emerging.

Regarding the procedure for the leasing probation, the bank paid much more attention to

farmers’ existing capital and financial situation rather than to future capacity of income

generation by installation of agricultural machinery, such as additional income growth of

agricultural machine services and the decrease of harvest losses due to appropriate

harvesting.

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Suppliers of agricultural machinery in Bishkek provide repair services to customers across

the country by using mobile workshops and spare parts inventory.

Farmers can purchase Belarusian and Chinese tractors’ spare parts not only of the regular

dealer brand, but also from outside normal channels such as spare parts shops at the bazaar

where farmers can buy genuine parts and cheap imitation parts.

Most farmers are engaged in repair, maintenance and dismantling of agricultural

machinery by themselves. This led to causing the possibility of down-skilling by

inappropriate operation.

Farmers do not have sufficient knowledge, skills and experience in agricultural machines,

farm management and cultivation techniques.

Because 30 percent of harvested crops are lost by using obsolete harvesting machines,

already-low yield by low-productivity became much lower.

Due to the lack of equipment for postharvest treatment, processing and crop warehouse,

there is no opportunity to increase value-added products.

There are some farmers who cannot access agricultural machinery services due to its high

service fees and the decrease in the total number of machines.

In regional vocational schools and colleges, there are cases of student shortages and the

closing of courses on agriculture, because of obsolete training equipment and outdated

facilities for students.

Irrigation infrastructures were built during the Soviet era, therefore many of them are not

working well due to their decrepit state. As a result of this situation, farmers’ income

became more unstable because farmers have to depend on unpredictable rainfall for their

cultivation.

3. Directions of Agricultural Mechanization

Based on the above challenges, the direction of development of agricultural mechanization in

Kyrgyz can be defined as follows, "Improving the quality of agricultural machinery

(performance), and increasing agricultural productivity by increasing the number of machines".

In other words, "An increase in agricultural productivity by renewal of the outdated agricultural

machinery, as well as to accelerate the process of installation of new machines to cover the lack

of mechanized operations". By achieving the direction of agricultural mechanization, the

reduction tendency of the machinery numbers will be stopped, and furthermore, appropriate

timing cultivation, reduction of harvesting losses and expansion of cultivated land areas will be

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improved. These transfigurations can contribute to the final sector targets, “Increasing

agricultural production”; “Improvement of productive efficiency”; and “Settlement of social

issues of small-scale farmers”.

Currently, a leasing program is one of the main sources of agricultural machinery renewal

and new purchases except for large scale-farmers, and this significant role of the program is

expected to continue. However, since the current scale of the program is not sufficient to supply

enough machines, the program needed to be scaled up. In addition, there are some challenges

not only in the leasing program itself, but also with MA & LR, farmers and financial agencies.

The following describes some of the tasks and countermeasures according to the degree of

priority and importance.

Strengthening Structures and Systems to Enhance Agricultural Mechanization

No description about priority measures and policies for improving the situation of agricultural

mechanization had been clearly mentioned in a policy paper when the study team investigated

in the country except for the promotion of a leasing program and public-private partnerships:

PPPs. From now on, basic policy making is a prerequisite to promote agricultural

mechanization by providing notification of the procedure of the mechanization strategy:

determine to whom, when and how to act, towards other government agencies, private sectors,

international donors, NGOs and others stakeholders, in order to promote their cooperation.

Additionally, the government also has to develop an organizational structure, in particular,

strengthening human resources development.

Agricultural machinery and equipment are just one part of agricultural inputs, therefore it is

also necessary to pay attention to the availability of other inputs such as seeds, fertilizers and

pesticides, the interaction between other departments of the Ministry, i.e. about the diffusion of

new cultivation techniques and improvement of agricultural management, and the development

of cooperation with other agencies for training.

Strengthening the Leasing Program

Since the leasing program that aims to purchase agricultural machinery has begun by the state

agricultural bank, Aiyl Bank in 2011, renewal of agricultural machinery has been proceeding

steadily. But there are some obstacles to the development of leasing activity, such as a lack of

underlying assets, lack of human resources, strict leasing conditions and procedures for leasing

probation. As of January 2014, approximately 150 farmers who finished and passed leasing

probation are still waiting to receive new machines because the bank does not have enough

S-5

underlying assets for new machines. At present, most of the leasing machines are tractors which

are cheaper than combine harvesters, but still only a limited number of farmers can afford to

buy these machines. Hence, it is necessary to rethink the condition for leasing and procedure for

leasing probation in order to expand targeted beneficiaries, without decreasing the collection

rate.

In the future, the demand for agricultural machinery is expected to shift from tractors to

combine harvesters. There are still difficulties in increasing the numbers of combine leasing due

to its strict leasing condition which is the same as the tractor, even though combines are much

more expensive than tractors. Thus, the leasing conditions of combine harvesters also need to be

reconsidered for further development of the leasing program. Moreover, the government needs

to regard the creation of accessibility to machinery services for small-scale farmers by providing

incentives such as tax benefits, especially in a small density farmland area like the southern part

of the country.

In Kyrgyz, there is approximately a demand for 25,000 tractors for renewal or additional

purchase which counts in the total deficient numbers and more than 20 year old tractors. 2,500

tractors leased per a year will be needed to fulfill these demands within the decade, but only

about 650 tractors (totaling 13 million USD) were leased by Aiyl Bank in 2013. In order to

introduce 2,500 units a year just through leasing by Aiyl Bank, the bank will need to increase

funding and the number of staff needs to be quadrupled. Although private banks have also

engaged in leasing programs, annual interest rates are about 15 percent higher than the Aiyl

Bank’s one. So users of other commercial banks’ loan are quite limited currently. In order to

expand the leasing programs of private banks to leverage funds and human resources of private

commercial banks, the government should also consider at least setting equal leasing conditions

by interest subsidy. Fostering human resources that are related to leasing probation for state

banks and private commercial banks and increasing capital with low interest rates from donors

are necessary for development. Additionally, banks should reconsider criteria for leasing

probation which is currently neglected in the management plan after investment, such as cost

reduction by installation of agricultural machinery, decrease in opportunity cost by appropriate

timing cultivation, and income generation by machinery service. As a result of this

transformation of leasing probation, more farmers can afford the leasing programs.

From other aspects, the banks should support farmers through development and the provision

of agricultural insurance as a financial product for farmers who rely on unstable rain-fed

cultivation.

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Increasing the Capacity of Farmers

As for leasing from Aiyl Bank, the last 3 financial years should result in profitable operations.

And if farmers pay 30% of the total machinery costs in advance, farmers are not required to

provide collateral for leasing services. Although a certain number of farmers cannot meet the

current terms of the lease like the above conditions, there are possibilities for a favorable

financial status for leasing, by improving cultivation technology, the selection of cultivated

crops, and improving management practices. It is necessary to introduce cultivation technology

and improve farm management skills of these farmers to increase the number of leasing users.

In most cases, farmers who have agricultural machines purchase spare parts, conduct repair and

maintenance themselves, sometimes including engine overhaul. Without having enough

knowledge, skills, experience and the appropriate tools, there is the likelihood that the operation

will lead to deterioration in functioning. Therefore, farmers should be trained to correct their

operations, the manner of repair and the methods of maintenance. If so, farmers can continue to

use their agricultural machines more efficiently by maintaining existing performance levels.

Although there is no public agricultural extension service in Kyrgyz, there are many vocational

training schools of agriculture and technical colleges around the country. At these schools and

colleges, students can study about cultivation techniques, agricultural machinery operation,

repair and maintenance by using actual machines. It is significant to the encourage capacity

building of these organizations. The government should consider establishing short term courses

for farmers during agricultural off-season to improve cultivation technologies, repair and

maintenance techniques of agricultural machinery, and agricultural management skills.

Improving Infrastructure to Ensure Stable Production

The decrepit state of irrigation facilities leads to a decline in the function and efficiency of them,

thus farmers have tended to choose rain-fed cultivation in recent years. To ensure agricultural

income generation and the improvement of income stability, it is imperative that there is proper

maintenance and rehabilitation of decrepit infrastructures.

3.1 Directions of Japanese ODA

Basically, Japanese cooperation should be conducted with the above described development

directions. Despite the existing problems about resources in the host country, the following

describes the scope of possible cooperation:

(1) Technical cooperation for the development of agricultural mechanization strategies and

institutions (experts and trainings)

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(2) Increase in leasing capital and advice for the leasing institution (loan, experts and

trainings)

(3) Provision of 2KR agricultural machinery for the leasing program

(4) Supports for agricultural finance and agricultural insurance institutions except for leasing

(experts and trainings)

(5) Supports for improvement of farming practice (agricultural technologies, management

skills) (technical cooperation project)

(6) Renewal of training equipment (agricultural machinery, tools, textbooks, repair facilities)

in vocational training schools and technical colleges (grant assistance for grassroots

projects)

(7) Supports for the provision of maintenance equipment of irrigation infrastructures, or

rehabilitation of irrigation facilities (loan and grant)

Schematic Description of Japan's Cooperation for the Promotion of Agricultural Mechanization

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Description of Japanese Cooperation

Scope of cooperation Method Contents Consultations on agricultural policy

Dispatch of experts

Consultation on formulation of agricultural policy, including measures for agricultural mechanization

Promoting a greater understanding for Japanese development assistance

Analysis and consultation on the proposals for cooperation with Japan

PR activities of Japanese cooperation in the agricultural sector

Improvement of cultivation technologies and farm management

Technical cooperation, Dispatch of experts, Trainings

Investigation of cultivation methods, method of treatment after harvesting and storage technologies (identifying issues and consideration of measures)

Research methods of management and the financial conditions of farmers (identifying issues and consideration of measures)

Investigation of the agricultural market (by region, province, city and country)

Instruction in writing business plans and setting of business objectives against farmers (target markets, product selection (crops), sales methods, required equipment, investment analysis, etc.)

Instruction of various records (cultivation record, account book, etc.)

Instruction of cultivation technologies and farming management

Consultations on financial policy

Dispatch of experts, Trainings

Consultation for agricultural machinery leasing which suits the actual situation of farming management (appropriate leasing conditions, contents of preferential treatment for machinery services, contents and standards of leasing probation)

Installation consulting leasing conditions in accordance with the state of the farm, the priority measures to increase services technology, standards and content expertise

Consulting and development of agricultural financial services

Dispatch of experts, Trainings

Development and improvement of agricultural insurance and agricultural loan

Provision and upgrading of training equipment in vocational technical schools

Grassroots projects

Provision and upgrading of training equipment in vocational technical schools (hand and specialty tools, measuring instruments, welder and other primary repair and maintenance equipment)

Equipment provision for the maintenance and management of irrigation facilities

Grant projects Provision of equipment including construction machines for maintenance and operation of irrigation facilities

Rehabilitation of decrepit irrigation facilities Rehabilitation of irrigation facilities

Loan and grant projects

Rehabilitation of decrepit irrigation facilities

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3.2 Possibilities of Japanese Manufacturers to Expand Business in Kyrgyz

Regardless of the types of agricultural machinery and equipment supplied to the Kyrgyz

market, the market size of Kyrgyz is quite limited due to its population. Therefore it is difficult

to expect the sufficient return on investment (marketing costs, formulation of dealer channels,

spare parts provisioning, after-sales service, etc.). The Kyrgyz market should be considered in

the complex neighboring countries such as Kazakhstan and others.

In order to verify and demonstrate machinery performance (accuracy and efficiency of

operations, fuel consumption, and so on), the manufacturer should try to examine their

machines under the on-site farming condition by using opportunities to test their machines in

Kyrgyz, like participating in agricultural machinery exhibitions. The government of Japan can

partially support these types of efforts by the private sector of Japanese manufacturers by

offering an incentive for expanding business into Kyrgyz.

1

1. Collecting Information and Study Summary

1.1 Background of the Study

The agricultural sector occupies the largest part of the economy in the Kyrgyz Republic

(hereinafter Kyrgyz). The sector accounts for 22.1% of the total gross domestic product and

approximately 14 % (213 million U.S. dollars) of the total export value in 2011. In Kyrgyz,

66% of the total population lives in rural areas, and half of the labor force in the country is

engaged in agriculture. Agriculture plays an important role in the sustainable development of

the economy. Despite this situation, the income of farmers remains at a low level, which is

approximately 35 % to 50 % compared with other industries. As a result, most of the rural

population lives in conditions below the poverty line level. Therefore, the reduction of poverty

in rural areas is considered one of the most important tasks.

In Kyrgyz, after the collapse of the Soviet Union in 1991, collective farms (kolkhoz) and

state farms (sovkhoz) were dismantled, and land was distributed to individual farmers who own

land as small segmentalized farms, depending on the number of persons in a household. This

agrarian reform caused some negative effects such as the loss of efficient market access due to

the elimination of the national buyback program, high-cost structures, loss of financial access,

and the decline of agricultural inputs. As a result of this transformation, inefficient small-scale

farming became mainstream in agriculture in Kyrgyz.

According to the statistical data of the Ministry of Agriculture and Land Reclamation

(hereinafter MA & LR) in 2013, 87% of agricultural machinery in Kyrgyz is over 20 years old.

In Kyrgyz, there are approximately 20,000 units of tractors. Of these, 17,000 tractors are over

20 years old, and others are comparatively new including 842 units supplied by Japanese

non-project grants and Japan Second Kennedy Round (hereinafter 2KR) grant aid programs, and

also supplied by approximately 2,500 units by Chinese grant aid which matters. According to

the FAO’s survey data, 30% of harvested crops are lost due to shortages in agricultural

machinery and this caused opportunities lost to the timely harvest of crops. Hence, expansion of

agricultural machinery is significant as a way to increase agricultural production. According to

the MA & LR, the total number of agricultural machinery supplied from 1995 to 2009, was

5,252 units (including implements), of these 2,870 tractors. Financial assistance for agricultural

machinery from international donors are: first place, Chinese grants and second place, Japan;

others are the World Bank, the USA, and Turkey. Most of the machinery supplied are

Belarusian and Polish products, but in recent years German and American machinery is

2

increasing through the USAID program. The machinery from these countries represents

approximately 10 % of the required number of tractors. Although the majority of currently used

machines are from the former Soviet Union, it is assumed that the number of machinery in

working condition will be reduced from year to year as a result of further their decrepit

condition.

In the field of agricultural development of Kyrgyz, JICA has been working on the following

projects, “The study on effective management of agriculture and the processing industry in the

Kyrgyz Republic” (2004-2007), “The Project for The Support for The Dissemination of Biogas

Technologies” (2007-2011), Regional Training “Agricultural Mechanization for Central

Asia and Caucasus” (2009-2013), “Project for promotion of exportable vegetable seed

production” (2013-present), “Dissemination of organic farming in Kyrgyzstan” (Grass-roots

cooperation project) (2013 - present).

Japanese assistance totals approximately 10 billion Japanese yen for the provision of

agricultural machinery, fuels and fertilizers through “Non-Project Grant Aid for Structural

Adjustment Support” from 1994 to 2002, and “Grant Assistance for Underprivileged Farmers

(former Food Aid)” from 1996 to 2005. However, currently these programs have stopped due to

a low execution rate of counterpart funds in Kyrgyz.

The MA & LR decided on an agricultural mechanization policy which was supported by

FAO as one of the main agricultural development strategies, and established an agricultural loan

program which was operated by MA & LR previously, to purchase agricultural machinery for

farmers at low interest rates through state the commercial bank, Aiyl bank, in recent years.

(Japanese 2KR’s counterpart fund also was utilized for this program.)

Under these circumstances, the promotion of agricultural mechanization in Kyrgyz is

expected to generate income growth for farmers by increasing agricultural production, and

thereby stimulate the economy through the encouragement of agricultural exports. This future

expectation matches JICA’s direction of Kyrgyz assistance (promotion of agriculture and

business for fostering exporting industry which targeted mainly agriculture and related

industries).

In addition, by collecting basic information such as the government’s policies which relates

to agricultural mechanization, the overall policy direction, institutional validity of agricultural

machinery’s provision and leasing, and the current situation of rural areas, and analyzing them,

it can be expected to encourage the consideration of future cooperation approaches more

efficiently.

3

1.2 Purpose of the Study

A main purpose of this study is basic data collection for the mechanization of agriculture in

Kyrgyz. In order to conduct data collection and the development of directions, it is necessary to

consider the contents of the previous chapter, “1.1 Background of the study”. It is also

necessary to clarify the situation of farmers’ accessibility to agricultural machinery (especially

in the accessibility of financial institutions such as the loan or leasing system to purchase

agricultural machines by the government), agricultural machinery markets and the current

situation of the maintenance of machines, and the possibility of the Japanese agricultural

machinery manufacturer (hereinafter “Japanese manufacturer”) to expand business into Kyrgyz

and its challenges.

This study aims to analyze issues of obstacle factors for policies, institutions and

implementations to promote agricultural mechanization in Kyrgyz, and basic data collection for

the development of the JICA’s cooperation directions.

1.3 Research Methodology

The below figure is the work flow of the research. This research used a combination of

several approaches based on the below work flow. First, the team investigated the current

situation in Kyrgyz. Second, it analyzed identified issues, and examined countermeasures by

considering the current situation of the government, donors and private sectors. Lastly, the team

investigated the direction of agricultural mechanization development on the basis of Kyrgyz

agricultural development strategies.

Figure 1-1 The Work Flow of the Research

Confirmation of current situation

Identify issues and analysis

Consideration of countermeasures

Directions of development

Agricultural development strategies of the government

Situation of the government, donors, private sectors against the issues

Circumstances of agriculture and mechanization (statistics, reports, interviews, questionnaires)

4

(1) Literature research, basic information and existing data analysis

The JICA study team visited the MA & LR, the Ministry of Finance, the Ministry of

Education and Science, the Ministry of Work, Migration and Youth, the Kyrgyz National

Agrarian University, other donor agencies, banks, agricultural machinery dealers, and spare

parts shops. By visiting these places, the team collected various types of reports, plans,

regulations, statistical data, price information and so on. After that, the team reviewed and

analyzed this information and other literature and data.

(2) Field research

In addition to reviewing and analyzing the above literature and data, the JICA team

conducted interviews in order to understand the actual situation of agricultural mechanization.

During the field research, the team visited the Department of Agricultural Development,

corporate farms and agricultural cooperatives in Talas province, Chui province and Osh

province. Interview contents focused on the situation of cultivation, information about holding

machines, the usage situation of machines, the situation of maintenance, the circumstances of

machinery services to other farmers and the availability of spare parts and so on.

(3) Field questionnaire research by local consultants

Local consultants researched a total of 72 units of farmers in 7 provinces (10 to 12 units in

each province), including the areas that the JICA team could not visit to collect the information,

about the situation of cultivation, the information about holding machines, the usage situation of

machines, the situation of maintenance, the circumstances of machinery services to other

farmers, the availability of spare parts and the possibility of future machinery purchase by the

questionnaire. From among the range of middle and small-scale farmers in those areas,

interview objects were selected by farmers who have agricultural machinery, recipient farmers

of machinery services and farmers who cultivate without machines with the cooperation of

stakeholders in the districts and villages. Regarding large-scale farmers, the JICA team

conducted interviews during the field research.

(4) Data arrangement and analysis

Collected basic information and the research results based on the above methodologies were

analyzed in three sub-sectors: the market, maintenance and finance, and also analyzed according

to each stakeholder who relates to mechanization, and then identified issues of mechanization.

Afterwards, the JICA team considered suitable countermeasures for each challenge in

5

accordance with Kyrgyz government’s directions of agricultural development. As a result of this

procedure, the team coordinated the direction of Japanese cooperation and assistance.

1.4 The Team Members and Study Schedule

The JICA team was organized by 6 members. The following are the study team members and

their assigned areas.

Mr. Yasunobu Kudo (TASK Co., Ltd.)

Leader/Agricultural Policy

Mr. Kiyohito Kobayashi (Katahira & Engineers International)

Market research of Agricultural machinery

Mr. Koji Yamaguchi (TASK Co., Ltd.)

Maintenance of Agricultural machinery

Ms. Masako Suzuki (Katahira & Engineers International)

Financial institution

Mr. Mamoru Hatano (TASK Co., Ltd.)

Social research in rural areas/Project coordinator

Mr. Rasul Abdukadirov (Katahira & Engineers International)

Translator (Russian)

The field research was scheduled for 50 days, from January 9, 2014 to February 27, in

Bishkek, Chui province, Talas province, Osh province for field research (farms, farmers’

cooperatives, agricultural machinery dealers, banks, etc.), and field questionnaire research by

local consultants in all 7 provinces (10 to 12 units in each province). Additionally, the team

visited the capital city of a neighboring country, Almaty in Kazakhstan to collect related

information from agricultural machinery dealers and Japanese trading companies.

6

2. Overview of the Agricultural Sector in the Kyrgyz Republic

2.1 Ecological Conditions

Kyrgyz lies in the northern latitude, 39 degrees and 44 degrees, and to the eastern longitude,

69 degrees and 81 degrees. Kyrgyz is a landlocked country which is surrounded by China (east),

Kazakhstan (north), Uzbekistan (west), and Tajikistan (south-west). It has a total area of

199,000 square kilometers (approximately half the size of the Japanese land area). Kyrgyz is a

mountain country where 94% of the total land area is at an altitude over 1,000 meters, and 40%

is at an altitude over 3,000 meters. Only one-sixth of the land area is at an altitude below 1,500

meters and these areas are mainly the outskirts of the northern mountain area, a moisture-laden

windy area, and the southwest Fergana Basin peripheral area. In Kyrgyz, forest areas are just

only 3% of the land area.

Climate of Kyrgyz

The country’s climate is wholly a continental arid climate, with low precipitation, annual and

daily temperature ranges are wide. Due to climate conditions, it will have high temperatures

during the summer season and have harsh cold winters. Below altitudes of 2,000 meters are

semi-desert or steppe, and above altitudes, a subalpine zone. Moreover, above 3,000 meters is

the vegetation zone, alpine meadow. As mentioned before, most of the land areas in Kyrgyz are

at an altitude over 1,000 meters, and there are Pamir mountains and Altai mountains. Therefore,

the temperature difference is extreme by area too.

Although the country’s annual average precipitation is 553 mm, real differences are

significant, like in temperature. The differences vary from approximately 150 mm in the

Fergana Basin area to 1,000 mm in the mountainous areas. From a perspective of the differences

by province, in Chui province, Talas province and Osh province, rainfall mainly occurs during

the spring season from February to May, and summer season is generally dry season.

Meanwhile, in Yssyk-kul province and Naryn province, mainly mountainous areas, rainy reason

is generally from spring to summer, and dry season is from November to February, during

winter season. This kind of reverse phenomenon is one of the main characteristics of an alpine

climate, and by utilizing this characteristic it is popular for livestock pasturing in the highland

areas during summer season, which is generally cool and rainy. In terms of agriculture in

Kyrgyz, rainfall is limited to certain terms in each province, so there are severe limitations for

rain-fed cultivation.

7

Land Use in Kyrgyz

The current situation of land use in Kyrgyz is shown in Table 2-1. The total land area is

199,900 square kilometers (19,990,000ha) and of this arable land area, including fallow land

and uncultivated land, is 1,276,800 ha, which accounts for 6.4% of the total land mass.

Regarding land area and sown land area by province, since most of the land areas in Naryn

province and Yssyk-kul province are mountainous areas, there is limited arable land in the

province. Therefore the provinces have lower proportions of sown areas against a high

proportion of land areas, than other provinces. On the other hand, Chui province has just 10% of

the total land area, but sown area is more than 30% of the nation. As shown by these numbers,

Chui province has a larger scale of sown area per capita compared to the southern area and

mountain area, and comparatively large-scale land use. However, as mentioned above, most

land in Kyrgyz is mountainous area, hence there are limited flatlands for large-scale cultivation.

Table 2-1 Land Use by Province (2013)

Source: MA & LR

2.2 Orientation of Agricultural Sector

2.2.1 Trend in the Agricultural Sector

Gross National Income (GNI) per capita in the country is 2,230 USD (2012) and has

increased steadily in recent years. However, compared to other Central Asian countries, the

figures are still the second lowest after Tajikistan (See Table 2-2). The United Nations indicated

Kyrgyz as a Landlocked Developing Country (LLDC), disconnected from the ocean, so the

country is geologically unfavorable from a perspective of transportation, and has special needs

for development. In 2011, 5.0 % of the total population in Kyrgyz lived under the poverty line

(1.25 USD per day constitutes the poverty line), and 21.6 % of the population lives with less

than 2 USD a day. Although the current figures are dramatically improving compared to 22.9 %

(1000ha)% of the

nation(1000ha)

% of thenation

(1000ha)% of thenation

(1000ha)% of thenation

(1000ha)% of the

nation(1000ha)

% of thenation

The Kyrgyz Republic 19,990 1,276.8 1,170.4 4.4 2.8 100.4

Chui 2,020 10.1% 419.4 32.8% 406.2 34.7% 1.2 27.5% 2.0 71.4% 10.1 10.1%

Talas 1,140 5.7% 117.5 9.2% 103.4 8.8% 0.0 0.2% 0.4 14.3% 14.0 13.9%

Yssyk-kul 4,310 21.6% 191.3 15.0% 176.3 15.1% 0.5 11.4% 0.04 1.4% 14.5 14.4%

Naryn 4,520 22.6% 121.0 9.5% 102.4 8.7% - - 0.1 3.6% 18.5 18.4%

Osh 2,900 14.5% 188.5 14.8% 175.1 15.0% 2.0 45.5% 0.2 5.4% 9.6 9.6%

Jalal-abad 3,370 16.9% 165.5 13.0% 146.3 12.5% - - 0.04 1.4% 19.5 19.4%

Batken 1,700 8.5% 73.6 5.8% 60.7 5.2% 0.7 15.9% 0.03 1.1% 14.3 14.2%

Abandoned farmlandLandarea Sown area Planted area Fallow land Perennial grass land

8

(below 1.25 USD a day) and 45.8 % (below 2 USD a day) in 1995, almost one-fifth of the

population still lives in poverty. Especially, in the rural areas, 40.4 % of people live under the

rural poverty line (percentage of the rural population living below the national rural poverty

line), which means that poverty in Kyrgyz is not equally distributed around the country, but

concentrated in the rural areas. 1

Table 2-2 GNI Per Capita and Comparison with Other Neighboring Countries

(Unit: USD)

Country 2004 2005 2006 2007 2008 2009 2010 2011 2012

Kyrgyz 1,610 1,660 1,780 1,970 2,110 2,150 2,070 2,180 2,230

Kazakhstan 7,240 7,850 8,690 9,510 9,650 10,010 10,440 11,070 11,780

Uzbekistan 1,830 2,000 2,170 2,520 2,810 2,930 3,120 3,390 3,670

Tajikistan 1,270 1,370 1,480 1,630 1,770 1,800 1,890 2,040 2,180

Turkmenistan 4,060 4,430 5,230 5,890 6,630 6,940 7,390 8,260 9,070

Source: World Bank, “World Development Indicator”

As shown in Figure 2-1, the proportion of the agricultural sector contributing to the GDP has

tended to decrease recently from 30 % in 1990 and 40 % in 1995 to 19 % in 2010. However,

from a perspective of the labor population, 34 % of the population is still engaged in the

agricultural sector (Table 2-3). As the sector has high employment capacity, the agricultural

sector is still a basic country industry.

Source: World Bank, “World Development Indicator”

Figure 2-1 Proportion of Each Industry in GDP (%)

1 World Bank, “World Development Indicator”

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 1995 2000 2005 2010

Service

Industry

Agriculture

9

Table 2-3 Percentage of Employment by Industry (%)

1990 1995 2000 2005 2008

Agriculture 32.7 47.2 53.1 38.5 34.0

Industry 27.9 16.7 10.5 17.6 20.6

Service 39.4 36.1 36.5 43.9 45.3

Source: World Bank, “World Development Indicator”

2.2.2 Trend in Agricultural Production

Since most of Kyrgyz land areas are mountainous and steppe, Kyrgyz has a long history with

livestock pasturing. After the independence from the former Soviet Union, the government has

encouraged wheat production at lower altitude areas in order to encourage the ratio of national

food self-sufficiency and to prevent destruction of the environment through overgrazing. After

the production drop due to disruption resulting from independence in early 1990s, food

production has shown the tendency to steadily increase. However in the latter 1990s,

agricultural production gradually decreased due to structural issues caused by land reform and

the structural transformation from large-scale farming to small peasant farming. Along with the

increase in wheat production, shifting from wheat production to more profitable crops, such as

barley and maize, increased gradually. Also in the cultivation area for cash crops such as cotton,

beat and tobacco, crop changes from cash crops to vegetables and fruits have been encouraged

due to a decrease in purchase price and an increase in agricultural inputs prices, including

fertilizer, in recent years.

Since 2002, agricultural production in Kyrgyz has stagnated, and the proportion of the

agricultural sector contributing to the GDP has decreased from 34% in 2000 to below 20% in

2010 (Table 2-1). While agriculture is the basic industry in Kyrgyz, supply of agricultural

products by domestic production is not sufficient to fulfill national demands for agricultural

products. Most agricultural product consumption exceeds its national production. Therefore,

national consumption depends on imports from other countries (Table 2-4).

Food imports are increasing and along with the rise in food demand, Kyrgyz imports wheat

and its flour from Kazakhstan, fruits from China and milk and dairy products from Russia.

Grain production, which occupies more than 60% of the arable land area, has been decreasing

by 18% in production since 2004, due to the inflow of cheap wheat to Kyrgyz, mainly from

10

Kazakhstan, and their quantities are increasing in recent years2. Regarding the current tendency

of agricultural exports, vegetables and fruits from Russia, and milk and dairy products from

Kazakhstan are increasing. In the former Soviet Union, cotton cultivation was encouraged in the

Fergana Basin peripheral area and cotton was the main agricultural export product until 2003,

but recently it has shown a dramatic decline. Although beef cattle and poultry were also former

major export products of Russia and Kazakhstan, export quantities were considerably

diminished because of the establishment of sanitation requirements for Kyrgyz’s products in

these countries. However, there is a generous amount of border trade that occurs with China and

Kazakhstan, invisible in statistical data; these restricted items also are distributed and it is

expected to increase several fold the agricultural products and food trading scale, as shown in

Table 2-4.

Table 2-4 Export and Import of Agricultural Products and Foodstuffs

（100 million USD）

2007 2008 2009 2010

Exports 201.2 218.6 188.2 165.1

Imports 376.5 538.7 506.6 426.2

Balance -175.3 -320.1 -318.4 -261.1

Source: FAO, 2011, “The Kyrgyz Republic opportunities and challenges to agricultural growth”

Trend in agricultural production by province

Kyrgyz consists of seven provinces and two municipalities. The following is an overview of

agricultural production by province (see Table 2-5, 2-6).

Chui province is the most popular area of agricultural production in Kyrgyz, using the border

plain field area near Kazakhstan. Production volume of wheat, barley, maize and vegetables are

the biggest in the country, and yields of main agricultural products are at a higher level than

other provinces. Although the sown area accounts for 32% of the nation, farm households are

just 17% of the total number in Chui province. This means that farmland per one farm

household is comparatively larger than other provinces, and larger scale farming is implemented

in this province. Also, livestock farming, especially beef cattle and yak are popular in this area

against a background of demand for dairy products in Bishkek city and Kazakhstan.

In Talas province, wheat, beet, potato, vegetable, tobacco and pasturage are main products. In

recent years, especially, the cultivation of white haricot beans is growing and many farmers

2 FAO, 2009, “The Kyrgyz Republic, farm mechanization and agricultural productivity”

11

have a willingness to cultivate the crop due to higher cash income compared to staple food like

wheat. Additionally, potato production is the second largest in the country and its yield is also at

a high level.

In Yssyk-kul province, wheat, potato, beet, vegetable and apple are the major crops of this

area. This province has a relatively high altitude area like Naryn province, hence the agricultural

style tends to be wheat, barley and potato production and stockbreeding, suitable for the

highland area. In particular, potato cultivation occurs in an overwhelming majority of the nation,

which is the top production and on sown land, in addition to producing a high yield level.

In Naryn province, farmers generally cultivate wheat, potato and vegetable. Since this

province is located in the highland area, there are climate and farmland limitations. Due to the

limitation of arable land, livestock, including horses, sheep and goats are popular here.

Therefore wool and meat are signature agricultural products in this province. Besides barley

cultivation, feedings stuffs are also comparatively popular in this province.

In the south provinces, cultivation items vary from the northern areas and include wheat,

cotton, tobacco, vegetable, fruits (apple, berries) and rice. Maize, which is not appropriate for

the highland area, is third in production and cultivation in this area of the country, and yield is

relatively higher than other provinces. While this province includes the highly populated Osh

city, and market accessibility is favorable, agricultural machinery holding numbers are the

second highest after Chui province.

Wheat, cotton, tobacco, potato, vegetable, grape, and oilseed are cultivated in Jalal-abad

province and livestock (especially sheep, goat, cattle) are also popular here. The province is

located in Fergana Basin and the peripheral area; vegetables and fruits have been cultivated here

in recent years against a background of a warm climate. Although the cultivated area accounts

for just 13% of the nation, the number of farm households constitutes 25% of the country.

Farmland per person is relatively smaller than other provinces, and small-scale farmers are a

majority in this province.

In Batken province, tobacco, cotton, maize, rice, grape, apricot and wheat are cultivated. In

particular, fruit production is the highest in the country. This province has the smallest farmland

per capita, although, some specific crops, such as fruit, are popular by utilizing the limited

farmland space and the favorable climate in this province.

12

Table 2-5 Comparison of Fundamental Indicators by Province

Note: The data of Chui includes the data of Chui city and the data of Osh includes the data of Bishkek city. Source: National Statistics Committee, MA & LR

Table 2-6 Information on the Production of the Main Types of Farming by Region

(production, crop area, yield)

Note: The data of Chui includes the data of Chui city and the data of Osh includes the data of Bishkek city. Source: National Statistics Committee, MA & LR

2012

Povertyrate

(people) （％）(Number

of houses)（％） (1000ha) （％） (1000ha)

（％）（％）

The Kyrgyz Republic 5,663,100 100% 357,127 100% 19,995 100.0% 1,170.4 100.0% 37%

Chui Northmiddle 1,733,000 30.6% 58,824 16% 2,030 10.2% 406.2 34.7% 17%

Talas Northwest 239,500 4.2% 21,620 6% 1,140 5.7% 103.4 8.8% 40%

Yssyk-kul East 453,400 8.0% 31,796 9% 4,310 21.6% 176.3 15.1% 28%

Naryn Southwest 268,000 4.7% 38,391 11% 4,520 22.6% 102.4 8.7% 40%

Osh Southeast 1,434,500 25.3% 82,146 23% 2,920 14.6% 175.1 15.0% 51%

Jalal-abad Middlewest 1,076,700 19.0% 89,430 25% 3,370 16.9% 146.3 12.5% 51%

Batken Southwest 458,000 8.1% 34,960 10% 1,700 8.5% 60.7 5.2% 34%

Province Area

2013 2013Total landarea

2013

PopulationNumber of farm

householdCultivation area

Production(ton)

Planted area(ha)

Yield(Mt/ha)

Production(ton)

Planted area(ha)

Yield(Mt/ha)

Production(ton)

Planted area(ha)

Yield(Mt/ha)

Production(ton)

Planted area(ha)

Yield(Mt/ha)

The Kyrgyz Republic 799,800 377,424 2.119 233,800 123,287 1.896 446,400 74,451 5.996 1,379,200 84,880 16.249

Chui 366,800 150,867 2.431 154,700 71,633 2.160 139,100 22,555 6.167 34,400 2,526 13.618

Talas 25,600 12,064 2.122 2,400 1,556 1.542 34,500 5,675 6.079 102,500 7,314 14.014

Yssyk-kul 136,900 71,595 1.912 38,700 22,559 1.716 － － － 552,800 32,416 17.053

Naryn 36,200 17,978 2.014 19,600 10,131 1.935 500 94 5.319 80,900 5,762 14.040

Osh 139,100 67,463 2.062 9,800 6,876 1.425 108,400 16,239 6.675 164,100 10,788 15.211

Jalal-abad 62,000 34,755 1.784 2,700 2,896 0.932 125,900 23,234 5.419 267,600 15,673 17.074

Batken 33,100 22,702 1.458 5,900 7,636 0.773 38,000 6,654 5.711 176,900 10,401 17.008

Beef cattle Dairy cattle Swine Sheep,Goat Horse Livestock

Production(ton)

Planted area(ha)

Yield(Mt/ha)

(head) (head) (head) (head) (head) (head)

The Kyrgyz Republic 820,900 42,793 19.183 1,032,472 534,740 10,130 4,260,446 318,014 2,921,587

Chui 338,600 18,038 18.771 249,939 120,227 48,536 563,647 47,923 1,709,179

Talas 76,800 3,798 20.221 65,353 33,107 789 487,388 23,513 271,319

Yssyk-kul 44,800 2,690 16.654 184,907 93,667 9,015 771,457 81,096 790,532

Naryn 5,700 491 11.609 133,518 70,925 0 916,046 93,232 171,800

Osh 116,500 6,572 17.727 317,534 161,392 329 988,525 82,862 795,740

Jalal-abad 203,300 9,136 22.253 266,614 142,686 374 1,090,140 53,857 848,268

Batken 35,200 2,068 17.021 119,800 61,690 37 473,993 6,257 256,793

ProvinceVegetable

ProvinceWheat Barley Maize Potato

13

2.3 National Policy of the Agricultural Sector

During the Kyrgyz research, a general policy to increase the level of mechanization of

agriculture had not yet been determined. According to the “National Sustainable Development

Strategy 2013-2017” the National Committee formulated as a development strategy principle

for the national level and “The Government’s Program and Plan on Transition of Kyrgyz

Republic to Sustainable Development 2013-2017” also formulated by the government, the four

targets for the agricultural sectors, which are below:

- Increase the output of the agricultural complex, improve the product quality and ensure

food security in the country

- Improve the efficiency of agricultural production and the competitiveness of products

for the entire agricultural complex

- Improve the fiscal return on the agricultural complex

- Solve the social issues of peasants

Furthermore, in the “National Sustainable Development Strategy 2013-2017”, there are eight

specific objectives describing these four goals. Regarding agricultural mechanization, in the

section of second objectives, “improve the quality of servicing and technical services for

agriculture, creating conditions for technical and technological modernization of agricultural

production”, the strategy describes policy measures such as “increase the availability of

agricultural equipment through the expansion of networks and improve the quality of services

of major agricultural equipment providers, created under principles of public-private partnership

with the subsequent transfer of the state to the private sector”.

Also, in “The Government’s Program and Plan on Transition of the Kyrgyz Republic to

Sustainable Development 2013-2017”, “provision of services and market infrastructure for

agricultural production” is indicated as a field target. In this field, “establishment of loan

institutions for purchase of agricultural machinery and machine stations, and encourage

agricultural management by public private partnership” is described as a specific measure, as

well as being in common with previous strategy.

According to the plan for agricultural investment projects, twenty four projects are planned

for 2013 to 2017. Of these two projects, are aims for agricultural mechanization, such as

“funding for financial leasing of agricultural equipment” and 2.5 million USD are calculated for

the budget of 2013 to 2014, as an estimated cost.

There are no specific descriptions of government strategies about the agricultural

14

mechanization except for the above plans. Although MA & LR designed development policy

about agricultural sector by cooperating with FAO in 2012, the government did not approve of

the policy plan due to the lack of concreteness of the investment plan. Currently, MA & LR is

working on preparing agricultural development policy-making, including agricultural

mechanization policy again under the supervision of the new Farm ministry who was assigned

in January 2014, but the specific planning calendar for approval has not been decided yet.

2.4 Structure and Role of Agrarian Sector

Figure 2-2 and 2-3 are the organizational structures of the Ministry of Agriculture and the

Departments of Agricultural Mechanization and Electrical supply (hereinafter Mechanization

Department). The total numbers of MA & LR staffs are 70. Of this total, the Mechanization

Department has only four staff members in the central office. Furthermore, 24 members also

belong to the Mechanization Department who are dispatched to local offices, and they cover all

seven provinces, including 40 districts.

The Mechanization Department originally worked on registration and inspection of

agricultural machinery as its main function. The department changed as a Mechanization

Department after the organizational change in 2012. Its current work functions are below:

• Implementation of agricultural mechanization policies, policy-making in related fields

• Research the current situation of agricultural machinery and demands

• Project planning by issue and apply for assistance from donor agencies

• Education and training for agricultural machinery experts (cooperate with university

and colleges to foster mechanics and operations)

• Electrification in rural areas (provide small electricity stations: water power, solar

power, wind power, biogas)

• Apply for assistance from donor agencies in terms of agricultural mechanization,

adjustment of assistance from donors

• Provision of agricultural machinery information to dealers and farmers

• Inspection of new agricultural machinery, cooperate with suppliers (manufacturer,

dealer)

The work functions of the Mechanization Department vary as described above, but there are

limitations regarding the staff and the budgets. Therefore, the above work functions are not

sufficiently implemented.

When the organizational change occurred in 2012, registration work for agricultural

15

machinery was transferred to the State Registry Agency, which was placed under the Interior

Ministry with some staff members from the Mechanization Department. Since there is no

facility for machinery inspection, MA & LR is not working on it.

Currently, MA & LR is mainly working on the promotion of the agricultural machinery

leasing project as an implementation policy (monitoring, publication to farmers), survey for

types and numbers of national machinery demands, statistical data collecting and assistance

requests to donors, including assistance for underlying assets (preparing the requests for South

Korea and Poland) and assistance for equipment (preparing the requests for Japan 2KR). In

addition, they are also providing information of agricultural machinery to farmers and dealers

based on agricultural manufacturers’ information about their products.

Source: MA & LR

Figure 2-2 The Organizational Structure of the Ministry of Agriculture

16

Source: MA & LR

Figure 2-3 Departments of Agricultural Mechanization and Electrical Supply

17

3. Present Agricultural Mechanization and Problems

3.1 Utilization of Agricultural Machinery

3.1.1 The Number of Agricultural Machinery

Table 3-1 shows the number of major agricultural machinery and the number it is deficient, in

Kyrgyz. About 90% of agricultural machinery used at present has been in use for more than 20

years, since before independence. Since a substantial number of obsolete agricultural machinery

is included in Table 3-1, the actual deficient number is larger than the number included in the

table.

Table 3-1 Number of Agricultural Machinery and the Deficient Number for 2013

Machinery Total Age:

≧20yearsAge:

＜20yearsRequired Deficient

Tractor 20,369 17,722 2,647 27,953 7,584Combine harvester 2,359 1,882 477 4,830 2,471Corn harvester 99 99 - 510 411Forage harvester 454 454 - 1,463 1,009Seeder 2,530 2,430 100 4,123 1,593Tooth harrow 1,770 1,770 - 78,274 76,504Cultivator 2,272 2,272 - 7,739 5,467Plow 7,239 5,646 1,593 5,479 - Disk harrow 191 191 - 2,124 -1,933Trailer 8,736 8,561 175 16,773 -8,037Mower 1,882 1,882 - 2,294 -412Rake 617 617 - 1,293 -676Baler 1,054 1,054 - 1,147 -93

Total 49,572 44,579 4,992 154,002 106,190Source: MA & LR (the Department of Mechanization estimates the required number)

Table 3-2 shows the number of major agricultural machinery and implements by province.

They are distributed according to the cultivated area of each province. Almost all of the

agricultural machinery was distributed to the provinces when Kolkhoz and Sovkhoz were

dissolved before independence, and have been used in the same areas for more than 20 years.

Table 3-2 Number of Agricultural Machinery and Implements by Province in 2013

Kyrgyz (Total)

Chui Talas Issyk -Kul

Naryn Osh Jalal- abad

Batken

Cultivated area (1,000ha)

1170.4 406.2 103.4 176.3 102.4 175.1 146.3 60.7

Tractor 20,369 6,099 1,574 3,477 1,692 3,498 2,914 1,124

Less than 100 hp 5,379 2,796 3,034 1,662 3,212 More than 100 hp 754 118 443 30 277

Tooth harrow 17,700 6,675 317 1,376 1,405 3,900 3,668 59Plow 7,239 1,947 656 1,592 704 868 1,072 400

18

Kyrgyz (Total)

Chui Talas Issyk -Kul

Naryn Osh Jalal- abad

Batken

Seeder 2,530 1,058 153 431 224 376 241 47Cultivator 2,272 579 291 275 - 473 570 84Broadcaster 286 154 32 38 20 - 27 15Sprayer 429 240 39 96 14 14 26 -Trans-planter 510 301 39 105 - 31 15 19Rake 617 219 48 106 126 81 37 -Baler 1,054 515 34 170 123 72 48Forage harvester 454 396 23 33 - - -Trailer 8,736 2,966 647 1,358 910 1,286 515Combine harvester 2,359 889 149 553 269 206 54Potato digger 403 43 31 310 8 - 3Seed cleaner 462 19 119 43 29 12

Source: MA & LR

Table 3-3 shows the number of combine harvesters and the planted area of wheat and barley.

The cultivated area may be the target area of combine harvesters. In case the harvesting

performance of the combine harvester is set for 250ha/month/unit and the harvesting time is set

for only 1 month, the required number of combine harvesters will be 4 unit/1,000ha.

Considering the required number, Osh province has a slight shortage of combine harvesters and

the deficit number in Batken province is more than 50%, while other provinces have a sufficient

number. However, the JICA Study Team assumes that the number of actual working combine

harvesters is less than the number in Table 3-33, according to its interview surveys of farmers

and concerned people in the agricultural sector, and the questionnaire survey in the provinces.

Table 3-3 Number of Combine Harvesters per 1,000 ha of Cereals Planted Area

Chui Talas Issyk -Kul

Naryn Osh Jalal- abad Batken

Wheat area (1,000ha) 151 12 72 18 68 35 23Barley area (1,000ha) 72 2 23 10 7 3 8Total area (1,000ha) 223 14 94 28 74 38 30The number (unit/1000ha) 4.00 10.88 5.87 9.57 3.22 5.46 1.78

Source: The JICA Study Team, based on data provided by MA & LR

Figure 3-1 shows the number of tractors and combines harvesters in use in 1999 – 2013.

After 2011, the number has been reduced every year. This is because MA & LR has urged

owners to deregister obsolete machinery since 2011, in order to know the actual number of

machinery that is in working condition. Before that, most obsolete machinery used to be

3 A farmer in Osh province said that only 2 out of 8 combine harvesters are in working condition in his area.

19

registered. The registration campaign is still in progress. Although the number of registered

machinery is getting closer to the actual number of working machinery in the last 3 years, the

number gap is still wide. The number of farmers procuring agricultural machinery by lease has

been increasing due to the progress of the Aiyl Bank leasing scheme which began in 2011.

Statistical data shows that about a thousand units of machinery were leased in 2013. It is,

therefore, believed that the number of actual obsolete machinery might be larger than the

number reported in the statistics. Since independence in 1991, the number of tractors, according

to the statistics, has reduced by about 30%, from about 30 thousand units to about 20 thousand

units; the actual situation is assumed to be worse. Kyrgyz agriculture is confronted with a

critical situation.

Source: MA & LR

Figure 3-1 Number of Tractors and Combine Harvesters In Operation

in Kyrgyz (1991 - 2013)

3.1.2 Agricultural Machinery Services

Field work services by agricultural machinery (agricultural machinery services) are provided

across the country to farmers who do not have their own machinery. Major service-providers are

individual farmers, corporate farms and agricultural cooperatives, while a few company or

cooperatives specializing in services also provide services. The services include various types of

works, such as plowing, harrowing, leveling, seeding, inter-cultivation, fertilizer application,

pesticide spraying, harvesting, forage harvesting and packing, bean threshing, etc. Since farmers

do not have every type of machinery, the farmers exchange possible services with one another.

0

5000

10000

15000

20000

25000

30000

35000

1991 92 93 94 95 96 97 98 99

2000 01 02 03 04 05 06 07 08 09 10 11 12 13

Tractor

Combine

20

Table 3-4 shows the tariff of agricultural machinery services by region. While the

information in the table is collected from a limited number of reliable respondents in the study’s

questionnaire survey, the statistical reliability of the data is inadequate. However, it may

represent a rough trend in the service charges in Kyrgyz. Table 3-4 shows that the service

charges in the southern region (Jalala-bad, Osh and Batken provinces) are generally higher than

in the northern region (Chi, Talace, Issyk-Kul and Naryn provinces). While the charges are

settled by cash for tractor services, some farmers pay in-kind for harvested crops per ha for

combine harvester services. There are 2 types of service charges: included fuel or excluded fuel.

Even the charge of included fuel is determined in accordance with the current fuel price.

On the other hand, human power is still mainly used for weeding (beets, maize, white haricot

beans, potatoes and vegetables), harvesting (rice, beans, cotton, potatoes, sunflower and cereals)

and water management in the field. Although there are several works that can be done by

machinery among the above works, the mechanization is not well advanced, because most

farmland is too small to operate machinery efficiently or many farmers do not have access to the

services due to lack of service providers nearby.

Table 3-4 Tariff of Agricultural Machinery Services by Region (included Fuel)

（Kyrgyz som/ha）

Work Region Minimum Maximum Average Fuel (L) Number of

data Plowing Northern Region 1,000 3,200 1,742 25 16

Southern Region 600 3,280 2,074 25 24

Total 600 3,280 1,875 25 40 Harrowing Northern Region 700 1,200 1,000 10 6

Southern Region 1,500 1,500 1,500 10 1

Total 700 1,500 1,021 10 7 Seeding Northern Region 650 4,000 1,411 10-15 14

Southern Region 700 3,000 1,650 10-15 4

Total 650 4,000 1,464 10-15 18 Harvesting Northern Region 800 5,500 2,244 25 18

Southern Region 1,500 3,000 2,400 25 5

Total 800 5,500 2,150 25 23 Hay harvesting

Northern Region 1,000 3,000 1,564 30 11

Southern Region 2,000 2,000 2,000 30 1

Total 1,000 3,000 1,600 30 12

Note: Fuel price is 40 Kyrgyz som/L (as of January 2014)

Source: The JICA Study Team’s questionnaire survey

21

3.2 Agricultural Machinery Market

3.2.1 Import and Export of Agricultural Machinery, and the Domestic Market

(1) Tractors and combine harvesters

Kyrgyz Avtomash Radiator Company（Kyrgyzavtomash）in Bishkek city had assembled

tractors under an agreement with the Belarusian manufacturer (MTZ：Minsk Tractor Works）in

2008-2009. Kyrgyzavtomash, however, has suspended the assembly since 2010 because MTZ

tractors imported directly from Belarus became cheaper than the assembled tractors by the

company. Thereafter, Kyrgyzavtomash became the sole sales agent of MTZ in Kyrgyz.

Presently, there is no manufacturer producing agricultural tractors and combine harvesters in

Kyrgyz.

Agricultural machinery importers in Kyrgyz are based in Bishkek or the suburbs of Bishkek.

They usually have a machinery parking area and spare-parts storage attached to their sales

shops.

Tractors and combine harvesters which were imported from Belarus before independence in

1991 are still widely used among individual farmers. Since farmers have been using them since

the Soviet era and their basic design has not changed in a long time, the farmers themselves

usually undertake the machinery maintenance and repair work. The basic design of MTZ

machinery exported to Kyrgyz has not changed much since the Soviet era4. The old-fashioned

design results in poor fuel efficiency of MTZ machinery that may be 10-20% less efficient than

other manufacturers’ products. Several farmers also complain that the actual output power of

MTZ machinery is less than what is nominal, indicated in specifications. Kyrgyzavtomash has

started to provide operational training and maintenance services to its customers as the sales

agent of MTZ since 2010.

1,200 units of small Chinese tractors granted by the Chinese Government in 2006 were leased

to farmers through the Kyrgyz Aiyl Service. The tractors were not utilized well due to the

following reasons, and the lease project failed since many farmers could not pay off their lease5.

• The size of the tractors did not meet the requirements of many farmers who took the lease

• It was difficult to find spare-parts to fix tractor mechanical problems

In 2011, 267 units of Chinese tractors（YTO-904）procured by China’s official assistance

4 MTZ exports newly designed machinery which fulfills the EU emission regulations in European countries 5 Reference: Farm mechanization and agricultural productivity in the Kyrgyz Republic, FAO (2009).

22

were again leased to farmers through Aiyl Bank. Thereafter and at present, YTO tractors are

also sold by YTO Trade Expo, which is an overseas outlet of YTO6 and other sales agents. In

recent years, Chinese tractors have a good reputation because of their improved quality and

organized after-service and spare-parts supply system of the YTO Trade Expo. Moreover,

Chinese made non-genuine spare-parts are more accessible to customers in various markets in

Kyrgyz. The number of farmers, who appreciate the performance of YTO tractors more than

MTZ tractors, is increasing in Kyrgyz.

The Eurasia Group KG who is an importer and seller of John Deere tractors started its

business since 2007. John Deere tractors have become popular among large-scale corporate

farms since then. Some large-scale farms that manage more than 100 ha have started to

introduce large-sized and high-efficiency tractors, i.e. John Deere tractors or other tractors made

by Europe and United States manufacturers, because they are very concerned with working

quality and efficiency and fuel consumption when they choose tractors. German tractors and

combine harvesters and Russian combine harvesters are also sold in Kyrgyz, although the unit

sales are still not very high.

(2) Implements

While old implements introduced during the Soviet

era used to be replaced by Russian or Belarusian

implements, European products have been popular since

the late 2000s. Initially, the European products were

imported and sold mainly by small traders who did not

have a proper after-sales system. Since 2010, traders

who can provide a full-scale after-sales system, such as

repairing services and storing spare-parts, have entered

the sales business. In recent years, many traders have

started to sell Turkish products. They have a similar performance as the European products,

even though the prices are cheaper and have a wider variety of products. The Chinese products,

mainly the plow and seeder, are usually sold together with YTO tractors.

(3) The market in the northern region (Chui and Talas Provinces)

Agricultural machinery dealers in Bishkek pay the most serious attention to the market in the

6 YTO Group Corporation

Implements from Turkish Manufacturers Plow, Seeder, Potato-planter, etc.

23

northern region. The number of corporate farms in

Chui province is larger than the number in other

provinces, and the management size of the corporate

farms is also relatively large. Since 2010, the corporate

farms have started to introduce John Deere tractors and

combine harvesters since the corporate farms are very

concerned with the higher performance (working

quality and efficiency) of these machinery. Major crops

grown on the farms are wheat, barley, maize and potatoes.

The percentage of corporate farms and individual farmers that have combine harvesters is

high, if their management size is large. They also provide agricultural machinery hire services

along with tractors and combine harvesters. Surrounding farmers who do not have the

machinery are able to enjoy the services by bearing the necessary costs. MTZ or YTO tractors

have been popular among individual farmers since 2011. They have been leased by the Aiyl

Bank leasing scheme.

While many farmers grow white haricot for exporting

to Turkey and Bulgaria in Talas Province, high

profitability of the crop contributes to higher income for

farmers. The number of farmers who buy agricultural

machinery by their own funds instead of from the Aiyl

Bank leasing scheme has increased in recent years,

because of the high profitability.

White haricot is harvested manually, and shelled by a

bean thresher after drying. Many of the threshers are

home-built and have become old. This situation causes

low quality products, such as broken beans, after threshing. White haricot is often grown by

crop rotation combined with alfalfa.

(4) The market in the southern region (Osh Province)

The management size of farmers in the southern region is smaller than the size in the northern

region. Since the number of agricultural machinery per farmer is insufficient, the hiring service

schedule is jointly arranged by district (rion) and village (aiylokmotu) administrations in order

to use the existing tractors efficiently.

John Deere corn harvester working in a corporate farm in Chui Province

Home-built Bean Thresher owned by an individual farmer in Talas Province

24

Even though there are corporate farms and

individual farmers who provide the agricultural

machinery hiring services, a small number of service

providers cannot fulfill the demand from the large

number of farmers in the region. This situation may

cause a late sowing or harvesting, and eventually a

low crop productivity. While a combine harvester

service from Uzbekistan used to be available before

the closure of the border with Uzbekistan in 2010, the

service has been beyond the reach of farmers since then.

High demand for small-sized (4-rows) combine harvesters, instead of the 6-rows which are

popular in Kyrgyz, is confirmed in the region, since many farmers manage less than 1 ha of

farmland. The total number of combine harvesters is too small to fulfill the actual demand of

farmers.

In the Uzgen area, paddy rice is widely grown. There may be a demand for the rice combine

harvester since farmers manually harvest the rice presently. When a trial operation with the

Chinese combine harvester was carried out, many stones in the paddy field disturbed the smooth

operation. The combine harvester has not been used after the trial.

Osh province is a center of cotton production as the

TTZ 3-wheel tractors made in Uzbekistan, developed for

cotton production during the Soviet era, are still used in

Osh province. They have become old since they were

produced more than 30 years ago.

The southern region borders China, and YTO tractors

are more popular among farmers than in the northern

region. The YTO tractors, brand-new and used, are

imported not only by the authorized dealers in Bishkek,

but also by unauthorized dealers or individuals.

(5) Main suppliers of imported agricultural machinery

The main suppliers of imported agricultural machinery in Kyrgyz are shown in Table 3-5

Tractor (YTO904, 80hp) owned by individual farmer in Osh Province

A 3-wheel tractor developed for cotton production during the Soviet era

25

Table 3-5 Main Suppliers of Imported Agricultural Machinery

Suppliers Agricultural Machinery Sold

Machinery Manufacturer Country of Origin

Kyrgyz Avtomash Radiator (Kyrgyzavtomash)

Tractor MTZ Belarus

Combine harvester GOMSELMASH Belarus

Implements* Europe (German, Italy, Poland, etc.), Turkey, Russia, etc.

Eurasia Group KG (Head office in Switzerland)

Tractor JOHN DEERE

USA (200hp or more) German (80－199hp) China (Up to 79hp)

Combine harvester USA

Implements JOHN DEERE USA

KUHN France

YTO Trade Expo Tractor

YTO China Implements

Atalyk Group

Tractor

ROSTSELMASH Russia Combine harvester

Implements

Kyrgyz Agro Market Tractor SAME

DEUTZ-FAHR

German (Medium and Large) Italy (Medium) Turkey (Small and Medium)

Implements BOZKURT AGRO KFT Turkey

Farmani Company (having affiliation with the “Kyrgyz Agro Market”)

Tractor SAME DEUTZ-FAHR

German (Medium and Large) Italy (Medium) Turkey (Small and Medium)

Combine harvester KRONE German

Implements AMAZONE German

KRONE German and others

Central Asia Machinery (Head office in Kazakhstan, Turkuazmachinery)

Tractor NEW HOLLAND

USA and UK (Large) Turkey and China (Medium) Uzbekistan (Standard)

Combine harvester Poland

Implements various Turkey

K.O. Standart Agroservice

Tractor CLASS

German Combine harvester

Implements LEMKEN

Note: *Operated by the tractor’s power for plowing, seeding, fertilizer application, harvesting, hay pressing, etc.

Source: The JICA Study Team

Kyrgyz Avtomash Radiator (Kyrgyzavtomash)

Kyrgyzavtomash is the biggest agricultural machinery

supplier in Kyrgyz. While it was a state agricultural

machinery factory during the Soviet era, it was

Tractor-park attached to a dealer’s office MTZ82.1（80hp）

26

privatized after independence. The present owner acquired it in 2007. Kyrgyzavtomash mainly

produced radiators for trucks and tractors, and air-conditioners when it was acquired. Although

Kyrgyzavtomash started to assemble MTZ tractors in 2008, it has changed its business model

from assembling to importing MTZ tractors and combine harvesters since 2010. As for radiators,

Kyrgyzavtomash still produces them for exporting to MTZ and GOSELMASH in Belarus and a

truck manufacturer in Russia. Its importing business continued to expand after 2011, and the

sales of the importing business and the radiator production was almost equal (about 25million

USD each) to 2013. While Kyrgyzavtomash has increased its sales items of tractor implements

since 2013, Turkish made items have increased their share due to a reasonable balance between

price and quality and performance.

Among the sales of imported agricultural machinery in 2013, sales through the Aiyl Bank

leasing scheme made up about 40 % of the total sales, while the % through the other private

banks’ leasing scheme was about 5% and the % of general sales, but the owned supply-chain

was about 55% of the total sales. Kyrgyzavtomash has its own favorable leasing scheme like the

Aiyl Bank scheme, targeting good customers. Among agricultural machinery suppliers in

Kyrgyz, only Kyrgyzavtomash maintains preferable treatment for good customers. The lease

conditions vary according to the customers as follows:

Interest rate: 0 – 7 % per year

Repayment term: 1 – 5 years

Since Kyrgyzavtomash is the exclusive distributor of MTZ in Kyrgyz, it can set prices of

MTZ machinery at its own discretion. Actually, it usually pays close attention to the prices in

Kazakhstan.

Kyrgyzavtomash has a workshop and 16 mechanics

attached to its head office. It has also 2 mobile workshop

vehicles. The vehicles can reach to any place in Kyrgyz

within 1 day, 2 – 3 days during the peak season, after

receiving an offer. An additional workshop vehicle may be

deployed in 2014. Kyrgyzavtomash has 2 branch offices in

Osh Province with 1 staff and at the Talas office (2 staff).

Sales promotion, spare-parts supply and after-sales

services are their main business activities. A stock of

spare-parts imported from Belarus equivalent to 700 thousand USD in its warehouse allows

Kyrgyzavtomash to quickly response to costumer’s request for spare-parts.

Pre-shipment inspection and adjustment of a combine–harvester (MTZ 82.1) by

Kyrgyzavtomash mechanics

27

Eurasia Group KG

Eurasia Group KG, has a head office in Switzerland,

established in 2009 as a branch office in Kyrgyz. It has 9

staff, including 3 mechanics, and sells John Deere tractors

and combine harvesters, and KUHN implements. While

Eurasia Group KG sells agricultural machinery mainly in

the northern region (Chui, Talas and Naryn Provinces), it

has a plan to establish a sales office in Osh Province in

2014 as a business base in the southern region. The sales

through the Aiyl Bank leasing scheme makes up about only

10 % of the total sales, while the % of general sales by its supply-chain in cash or by loan is

about 90%.

Eurasia Group KG has 2 mobile workshop vehicles, and keeps a stock of about 3,000 items,

of spare-parts, equivalent to 1 million US$. The stock is managed by a database system, and

supplementary parts are ordered by the company’s branch offices in Kazakhstan and Europe.

Eurasia Group KG runs a farming business on its own farm. The planted area was about 120

ha in 2013. The company also carries out adaptability tests of agricultural machinery for

farming conditions in Kyrgyz, i.e. weather, soil and crops, as well as demonstrations for local

farmers on the farm. It has a plan to start the same business activity in the southern region.

YTO Trade Expo

YTO Trade Expo was established in 2006 as an

overseas outlet of YTO, when 1,200 units of YTO tractors

were distributed by a Chinese cooperation scheme. It has

3 staff, including 1 mechanic, and sells YTO tractors and

implements. It covers all parts of the country, although it

does not do much business in the southern region7. While

the tractor itself is sold only in US$, it is possible to buy

spare-parts in Kyrgyz som. The YTO Trade Expo has a

warehouse to stock spare-parts and consumables, such as

V-belt, filters, tire, etc.

7 Many YTO tractors are directly imported by local dealers or individuals in Osh Province in the southern region.

John Deere tractor（220hp）owned by the Chui State Agricultural Corporation

Tractor garage attached to the sales office YTO904 (90hp) on the right hand side

and YTO954 (95hp) on the left hand side

28

Atalyk Group

Atalyk Group is a dealer of Rostselmash tractors,

combine harvesters and implements. It is actually a

corporate farm privatized in 1994 after the dissolution of

kolkhoz, and manages 3,000 ha of farms and dairy farms.

It received agricultural machinery, such as tractors,

roll-balers, etc. from USAID for supporting dairy farming

in 2013. It also brews wine and beer. Sales of agricultural

machinery are still minimal at present.

Rostselmash tractors compete directly with John Deere tractors because their horsepower is

almost similar each other. Due to this, Atalyk Group is not diligent in the tractor business. As

for combine-harvesters, Rostselmash products have an advantage over the engine quality, which

is less-trouble at the initial stage, compared to products in Belarus, although the former is 10 –

20 % more expensive than the latter. Atalyk Group has a business plan to promote the sales of

implements in 2014.

Table 3-6 shows the number of tractors and combine-harvesters sold in Kyrgyz in 2013 by

major suppliers.

Table 3-6 The Number of Tractors and Combine Harvesters in Kyrgyz in 2013

Dealerships Machinery Manufacturer Number

(unit) Remarks

Kyrgyz Avtomash Radiator

(Kyrgyzavtomash) Tractor MTZ 860

Including 691 units of MTZ82.1(81hp)

Combine-harvester GOMSELMASH 40

Eurasia Group KG Tractor JOHN DEERE

－※1 No data available. Total sales amount is 250 million USD Combine harvester －※2

YTO Trade Expo Tractor YTO 120※3

Mainly YTO904 (90hp) and YTO954 (95hp)

Atalyk Group Tractor ROSTSELMASH

1 280hp (for own use)

Combine harvester 14

Farmani Company Tractor DEUTZ-FAHR 5 150hp

Central Asia Machinery Tractor NEW HOLLAND

7 130-210hp

Combine harvester 3

Total Tractor 993

Combine harvester 57

※1：Estimated, about 8 units based on the sales amount (not counted) ※2：Estimated, about 3 units based on the sales amount (not counted) ※3：It does not count the imported YTO tractors by local dealers or individuals in Osh and other provinces Source：The JICA Study Team

Machinery Park attached to the office Combine-harvester (NIVA)

29

Table 3-7 and 3-8 show the retail prices of agricultural machinery sold in Kyrgyz.

Table 3-7 Retail Prices of Agricultural Machinery (1)

Machinery Manufacturer Model Power

（hp）

Price

（1 USD = 50 som）

Tractor

MTZ

320.4 33.5 672,000 som

82.1 81 1,020,000 som

892 89 1,175,000 som

1523 150 2,736,000 som

JOHN DEERE

6150 150 110,000 USD

7930 220 160,000 USD

8345RT 330 240,000 USD

YTO

250 25 6,500 USD

450 45 10,600 USD

904 90 22,000 USD

954 95 24,000 USD

ROSTSELMASH 280 280 129,000 USD

DEUTZ-FAHR

55 55 34,000 USD

65 65 42,000 USD

75 75 50,000 USD

85 85 60,000 USD

120 118 90,000 USD

150 148 112,000 USD

NEW HOLLAND

T6.160 131 105,000 USD

T7.200 155 125,000 USD

T7.260 215 175,000 USD

CLAAS 530 140 86,000 USD

Combine harvester

ROSTSELMASH NIVA 155 85,000 USD

VECTOR410 207 168,000 USD

GOMSELMASH GS812 210 4,000,000 som

JOHN DEERE 9770STS 360 385,000 USD

NEW HOLLAND TC5050 170 120,000 USD

CLAAS 150 158 123,000 USD

KRONE BIGX500 500 408,000 USD Note: the prices were collected in February 2014. The prices vary according to the options and the exchange rate

Source：The JICA Study Team

30

Table 3-8 Retail Prices of Agricultural Machinery (2)

Manufacturer Implements Spec. Price

（1 USD = 50 som）

TD ALMAZ (Russia）

Plow 3line 1,800 USD

Plow 4line 2,500 USD

Plow 5line 3,500 USD

UMANFERMMASH(Ukraine) Disk harrow 3m 5,800 USD

KOMPOZIT-GROUP (Ukraine)

Seeder with fertilizer 28line 13,500 USD

Chisel plow 4.2m 7,500 USD

Agrichemical sprayer 12-18m

1,000litter 3,500 USD

Agrichemical sprayer 8-18m

2,000litter 5,000 USD

Rotary mower 125cm 2,500 USD

Rotary mower 190cm 3,600 USD

Wheel-finger side rake 4m 1,300 USD

Wheel-finger side rake 4m 4,100 USD

Potato digger － 5,500 USD

PLOTSK PLANT (Belarus) Disk mineral fertilizer broadcaster 0.7ton 5,200 USD

SAZHATEL KARTOFELYA (Ukraine) Potato planter 2line 2,400 USD

GOMSELMASH (Belarus)

Pull-type forageharvesting combine 2.6m 34,000 USD

Pull-type mower-crusher 4.2 14,500 USD

Mower chopper 1.5 7,000 USD

Package baler 5-8ton/h 14,500 USD

Potato harvester 0.84-1ha/h 72,000 USD

Corn harvester － 37,000 USD

PHM (Turkey) Beet harvester Hopper Cap.2,000kg 28,000 USD

KOSTKA (Poland) Package baler 5-8ton/h 14,500 USD

SIPMA (Poland) Package baler 5-8ton/h 12,000 USD

YTO (China) Plow 3line 1,500 USD

BOZKURT AGRO KFT (Turkey)

Seeder 24line 12,500 USD

Seeder 26line 13,500 USD Pneumatic Seeder with fertilizer 4line 12,500 USD

Corn harvester － 6,750 USD

Agrichemical sprayer 10m

600litter 2,400 USD

Potato planter 2line 6,750 USD

Potato planter 1line 4,750 USD

Rotor rake － 3,700 USD

Rake 5line 1,000 USD

Rotor mower 125cm 2,750 USD

Rotor mower 185cm 3,000 USD

31

Manufacturer Implements Spec. Price

（1 USD = 50 som）

BOZKURT AGRO KFT (Turkey)

Rotor mower 250cm 4,500 USD

Tooth harrow 70tooth 4,000 USD

Disk harrow 28line 5,400 USD

Fertilizer spreader 500litter 1,500 USD

Standard plow 4line 4,000 USD

Beet harvester － 31,000 USD

Corn harvester － 6,750 USD

KRONE (Germany)

Forage and dischargeWagon 95m3 70,000 USD

Disk mower 4m 10,500 USD

Roll baler － 24,700 USD

AMAZONE (Germany) Seeder with rotary harrow 3m 50,700 USD Note）The prices were collected in February 2014. The prices vary according to the options and the exchange rate

Source：The JICA Study Team

Used agricultural machinery market

There is no sales shop exclusively for used agricultural

machinery in Kyrgyz. A big bazaar for used agricultural

machinery sales (Kudaibergen Bazaar) is, however, open

every week from Friday to Sunday in a suburb of Bishkek

city, and individual owners bring their used agricultural

machinery to be sold. Tractors are mainly sold at the bazaar.

A weekly paper for used cars (Avtogid) published

every Wednesday provides information about used

agricultural machinery sold.

While the retail price of the latest model of Belarus tractor, MTZ-82.1 (80hp), which is the

most popular tractor in Kyrgyz is about 1.1 million Kyrgyz som for a brand-new tractor, the

price of a used MTZ-82 produced in 1990, the equivalent model to MTZ-82.1, is about 450

thousand Kyrgyz som and the price of a used MTZ-80 produced in 1986, also the equivalent

model to MTZ-82.1, is about 330 thousand som. These prices suggest that a 24 year old tractor

still maintains about 40 % of the original value, and even a 28 year old tractor still maintains

about 30 % of the original value. It implies that tractors, even the used tractors, are in very short

supply in Kyrgyz. In general, all machinery loses its original performance ability, and requires

additional maintenance as it get older. It is, therefore, necessary to evaluate the residual

economic value of machinery based on its performance and necessary maintenance costs. As for

An article in a weekly paper (Avtogid) on Jan. 22, 2014 advertises that a MTZ-80（produced in 1989）is 6,500

32

tractors, the performance loss over the years is smaller than that of combine harvesters and other

agricultural machinery, and the maintenance costs are relatively small due to availability of

cheaper spare-parts and easy maintenance usually done by the owner. This allows tractors to be

used that have a light economic burden even after 20 years of age, although their working

efficiency decreases. The short supply of tractors and the above conditions must be major

reasons for the high price of used tractors on the Kyrgyz market.

3.2.2 Spare-Parts Supply

Most agricultural machinery suppliers in Kyrgyz have a stock of spare-parts, mainly

consumable parts. They can also supply un-stocked spare-parts within several days to 1 week

after an order.

Also many shops in bazaars sell spare-parts of

agricultural machinery made in Belarus, Russia and China.

While Bishkek and major local cities have an auto-parts

bazaar in their suburb areas, the shops that sell spare-parts

of agricultural machinery are usually adjacent to the

auto-parts bazaar. Almost all spare-parts sold in such shops

are non-genuine parts produced in China. Although the

quality is inferior to genuine-parts, many individual farmers

and corporate farms who repair their own machinery

themselves buy the non-genuine parts because of their cheaper price. The shops also sell some

disassembled parts of old machinery produced during the Soviet era. Some simple and

consumable spare-parts like the cutting edge of a plow and a cutting knife of a combine

harvester are produced in Kyrgyz. If spare-parts are not available in the local market, farmers go

to Bishkek bazaar to find the required spare-parts.

In bazaars, there are specialized shops to repair alternator and fuel pumps that cannot be fixed

by farmers themselves. The shops are further specialized by origin countries of the products,

such as Belarus, Russia, Europe, etc.

Almost all spare-parts for agricultural machinery presently used in Kyrgyz are available in

domestic markets. In other words, only agricultural machinery that has a smooth spare-parts

supply system can survive, since such a supply system is a fundamental condition for the

efficient operation at a lower cost.

A shop selling spare-parts of agricultural machinery in a suburb of Bishkek city

33

3.2.3 Import Procedure and Standards

(1) Import procedure

The State Custom Service8 is responsible for custom clearance. It has 10 custom posts under

6 custom offices covering the entire country. Customs inspection for almost all imported

agricultural machinery are done by the Bishkek custom post, while some mainly from China

through Osh Province are inspected by the Osh custom post. The inspection consists of a

documentary examination and a visual examination. All custom procedures are completed

within 1 – 2 days after arrival, and then a consignee picks up the imported commodity. The

consignee should bear the custom fee, 0.15% of the commodity value, while all agricultural

machinery and the spare-parts are exempted from customs duty. Individual farmers or corporate

farms who import agricultural machinery for their own use are also exempt from VAT, although

the suppliers should bear the VAT, 12% of the commodity value. Some suppliers like

Kyrgyzavtomash and Eurasia Group KG have a bonded warehouse. If a customer of the

suppliers directly takes the imported machinery from the bonded warehouse, the customer can

be exempted from VAT. In this case, the custom procedures are taken one commodity at a time.

It takes a long time, more than 3 days for the procedures to be completed, if many customers

rush to the bonded warehouse at the same time.

Currently, the Kyrgyz Government has declared accession to the Customs Union (hereinafter

the CU). Agricultural machinery imported from non-member countries of the Customs Union

shall be liable to a customs duty, 15% of the value for machinery with power more than 18kW

(about 24 hp) and 5% of the value for machinery with power less than 18kW after the accession.

(2) Technical standards

During the Soviet era, newly developed agricultural machinery used to be tested in 33

agricultural mechanization research stations, covering all the Soviet Union in order to confirm

the adaptability to various crops and growing conditions. In Kyrgyz, the research station in Kant

carried out the adaptability test. The research station has stopped its research activity since it

was transformed to a corporate farm after independence.

Officially, Kyrgyz standards have replaced the old Soviet standards, the GOST standards,

although some modification in accordance to the local conditions is allowed. In the case of

tractors, the technical specifications such as, minimum height, maximum operational speed, fuel

8 The State Custom Service website：http://www.customs.kg/index.php?lang=ru

34

tank capacity, guarantee period, etc. are stipulated in GOST 19677-8. However, the standards

system actually loses substance. The Kyrgyz Government established the Center for

Standardization and Metrology under the Ministry of Economy, and the Center carries out the

transition from the GOST standards to the new standards compatible to ISO/IEC in accordance

with WTO TBT (Technical Barriers to Trade).

Upon the accession to the CU, all equipment and machinery had to be issued a certificate or a

conformity declaration which proves conformity with the technical regulations stipulated in

No.823 TR CU 010/2011 of the Resolution of the Committee of the Customs Union. An

additional certificate may be required according to the type of equipment or machinery. While

the procedures are complicated, Japanese exporters can contact a private certification body in

Japan for the proxy application9.

3.2.4 Agricultural Machinery Market in Kazakhstan

(1) Agriculture

The JICA Study Team conducted a brief study in Kazakhstan in order to the understand the

agricultural machinery market in a neighboring country.

Out of 1.6 million ha of cereals in the cropped area in Kazakhstan, wheat is grown in 1.3

million ha. Wheat is mainly grown in Akmola, Kostanai and North Kazakhstan Provinces.

Those 3 provinces are the wheat production centers of the country and produce about 80% of

the national production. Agricultural producers are divided into the following 3 categories.

Farms owned by a stock company (large-scale management by corporation)

Farms owned by a limited company (medium-scale management by individual)

Individual farmers (small-scale)

The Kazakhstan Government has started an agricultural development loan scheme to support

private producers since 2000. Since the borrowers of the loan are concentrating on large-scale

producers, the loan consequently promoted the centralization of farmland. While the number of

the borrowers is about 200 in total, only the top 10 – 20 borrowers occupy about 60 % of

national farmland.

The Kazakhstan Government has launched the Program for the Development of Agriculture

in the Republic of Kazakhstan for the years 2013 – 2020, “Agribusiness 2020” in 2013.

According to the program, the Government intends to reduce the wheat area and to promote

9 JETRO website：https://www.jetro.go.jp/world/russia_cis/ru/qa/01/04J-110101

35

crop diversification, especially by promoting oil seeds. A bumper harvest of wheat in 2011/12

might be a major factor causing the crop diversification policy. The Government spent

considerable amount of subsidy on wheat transportation during the year in order to address the

shortage of storage facilities in the country. While Kazakhstan exports its wheat surplus mainly

to neighboring countries in Central Asia, their market size is not very big. Export to Europe or

other Asian countries is, however, not feasible due to high transportation costs. The

Government aims to establish a subsidy-free agri-business structure by promoting crop

diversification instead of wheat production with a heavy subsidy10.

(2) Agricultural machinery market

Renewal of agricultural machinery is an urgent issue in Kazakhstan, since the age of 80 % of

tractors and combine harvesters exceed the durable years, 13 – 14 years in general. The

Government promotes an agricultural machinery leasing program in order to accelerate the

renewal. Table 3-9 shows the annual planted area, and the number of tractors and combine

harvesters in Kyrgyz and Kazakhstan.

Table 3-9 Annual Planted Area and the Number of Agricultural Machinery in Kyrgyz and Kazakhstan

Kyrgyz 2010 2011 2012 2013

Planted Area (thousand ha) 1,146 1,159 1,166 1,170

Tractor unit 23,835 22,662 21,104 20,369

unit/thousand ha 20.8 22.9 18.1 17.4

Combine

Harvester

unit 2,979 2,694 2,636 2,359

unit/thousand ha 2.6 2.5 2.3 2.0

Kazakhstan 2009 2010 2011

Planted Area (thousand ha) 21,425 21,439 21,083

Tractor unit 156,037 156,656 155,580

unit/thousand ha 7.3 7.3 7.4

Combine

Harvester

unit 48,032 49,503 46,997

unit/thousand ha 2.2 2.3 2.2

Source: The JICA Study Team based on information from official statistics in Kyrgyz and Kazakhstan

10 Present Situation and Prospects of Agriculture in the Republic of Kazakhstan, Report on Food Balance in Foreign Countries, October 2013, the Ministry of Agriculture, Forestry and Fisheries, Japan.

36

The total annual planted area in Kazakhstan is about 18 times of that of Kyrgyz. Out of the

area, cereals are grown in about 1.6 million ha. Since the top 20 large-scale farms occupy about

60 % of the total farmland, the average size of cereals planted area on the large farms might be

48,000 ha with a simple calculation. The figure implies that a concentration of farmland limited

to producers has progressed a lot compared to the situation in Kyrgyz.

As for the number of tractors per unit area in 2011, there is only 7.4 units/thousand ha in

Kazakhstan, while there are 22.9 units/thousand ha in Kyrgyz. These figures suggest that the

working efficiency of tractors in Kazakhstan is 3 times better than the efficiency in Kyrgyz.

However, the number of combine harvesters per unit area is almost the same in both countries,

2.2 units/thousand ha in Kazakhstan and 2.5 units/thousand ha in Kyrgyz. It is estimated that the

working efficiency of combine harvesters in Kazakhstan is also higher than that of Kyrgyz, the

same as the tractors, considering the inefficient operation on small farmland and the time loss of

frequent transportation to other farmland in Kyrgyz. Such inefficient operation may cause an

actual shortage of combine harvesters in Kyrgyz, and raise the problem of a late-harvest.

While agricultural machinery made in CIS countries, such as Russia, Belarus, Ukraine, is

popular in Kazakhstan, the machinery made in USA or Europe is expanding the market share in

recent years.

Table 3-10, 3-11 show the number of tractors and combine harvesters sold in Kazakhstan in

2013.

Table 3-10 The Number of Tractors Sold in Kazakhstan in 2013

Manufacturer Origin Country Model Number (unit) Sub-total Total

MTZ Belarus 80,82,920,952 1,300

1,550 1221,1025,2121 250

VERSATILE Canada － － 89

JOHN DEERE USA, EU, Asia － － 68

XTZ Ukraine

150K-09 22

54 17221 27 150,220-10 4 200 1

KIROVETS Russia K-700、K-744P － 30

CASE Italy － － 21

FOTON China － － 16

CLAAS Germany － － 11

NEW HOLLAND USA, UK, Turkey － － 7

CHALLENGER USA, EU, Brazil － － 6

Others － － － 5

Total － － － 1,857

Source: The JICA Study Team

37

The number of tractors sold in 2013 in Kazakhstan is 1,857 in total. While the number of

Belarus MTZ tractors with 80 – 90 hp is 1,300; the number is about 70 % of the total number.

The number of USA and Europe tractors with more than 200 hp is 202, which is equivalent to

only about 11%. Since an agricultural development loan program has been provided mainly to

large-scale corporate farms after 2000 in Kazakhstan, the demand for big sized tractors has

almost saturated the market in recent years. It is estimated that the present demand for the

tractors is coming from relatively small-scale individual farmers. The number of sold tractors in

2013 is only 1.2 % of the total number in Kazakhstan. The % is even smaller than the % in

Kyrgyz, 3.8%. An insufficient number of tractors are renewed in Kazakhstan, the same as in

Kyrgyz11.

Table 3-11 The Number of Combine harvesters Sold in Kazakhstan in 2013

Manufacturer Origin Country Model Number (unit)

Sub-total Total

ROSSELMASH Russia

VECTOR 273

401 AKROS 92 CK-5A NIVA,NIVA-Effect

36

AGROMASHHOLDING Kazakhstan ESSIL

－ 320 GOMSELMASH Belarus

PALESSE

LIDAGROPROMMASH LIDA

CLAAS Germany － － 103

JOHN DEERE USA, EU － － 102

AGROMASH Russia

YENISEI-1200 87

98 YENISEI-1200PM 7

YENISEI-950Ruslan 4

CASE Italy － － 15

NEW HOLLAND USA － － 11

CHALLENGER USA － － 9

SAMPO Finland － － 1

Total － － － 1,060

Source: The JICA Study Team

The number of combine harvesters in 2013 in Kazakhstan is 1,060 in total. Out of the total,

there are 819 units of combine harvesters, equivalent to 77 % of the total, made in Russia and

Belarus. All the remaining combine harvesters are products made in Europe and the USA.

While the number of sold combine harvesters in 2013 is only 2.3 % of the total number in

11 6.7% of the total number of tractors should be renewed annually, if all the existing tractors are renewed at 15 years of age, which may be a reasonable number of durable years for tractors.

38

Kazakhstan, the % is almost similar to Kyrgyz, 1.9 %. As with the tractors, an insufficient

number of combine harvesters has been renewed in Kazakhstan. As for the implements, Turkish,

European and USA products are becoming popular in addition to products in Russia, Belarus

and Ukraine, just like the market in Kyrgyz.

3.3 Maintenance of Agricultural machinery

3.3.1 Maintenance Situation of Agricultural Machinery Before Independence

The agricultural policy of the former Soviet Union Government increased food production

based on the Kolkhoz and the Sovkhoz farming system. The utilization of agricultural

machinery played an important role in conducting farming practices effectively. As such, both

the farming systems had a good plan for the maintenance and repair services of agricultural

machinery use, in order to avoid the machinery breakdown that occurred chiefly during a busy

farming season.

At that time, the Government supplied spare parts and materials needed for agricultural machinery

to implement maintenance and repair services smoothly in accordance with the proper plans, and

agricultural machinery was periodically renewed around every ten years. Moreover, the Government

constructed the following three facilities to implement maintenance and repair of agricultural

machinery.

(1) A large-scale facility that has machine tools for the overhaul of agricultural machinery and

production farm implements and spare parts.

(2) A medium-scale facility that has machine tools to implement maintenance of agricultural

machinery and the production farm implements and spare parts.

(3) A small-scale facility that has basic machine tools to implement maintenance and repair of

agricultural machinery.

The three facilities mentioned above were established in the strategic farm areas of (1) Provinces,

(2) Districts and (3) Villages. Currently, these facilities are generally called a ‘Machine Station’

and/or ‘Machine Center’ since the purpose of the facilities is to implement the maintenance and

repair services of agricultural machinery. In this report, these facilities are called machine stations.

The machine stations of (1) and (2) have machine tools such as a lathe machine, milling machine,

arc welding, drilling machine, hydraulic press, chain block (electric/manual), forging equipment,

fuel injection and nozzle testers and other measuring instruments, hand tools, and storage facilities

for spare parts and iron materials for agricultural machinery. Moreover, both machine stations have a

39

mobile workshop to implement maintenance and repair, chiefly during a busy farming season in the

field. In the case of the machine station (3), the farming areas are relatively small and a small

number have agricultural machinery; the station has an arc welding, grinding machine, and drilling

machine etc. to conduct daily maintenance services.

At the time, agricultural machinery were introduced at machine stations, as well as engineers were

posted to operate the stations’ activities adequately. It was imposed on the workers to study the

operation and maintenance of agricultural machinery at a special educational institute, to work in

these stations, and workers after graduating from the institute, had learned on-the-job training

methods from skilled engineers at the stations. In addition, experts of agricultural machinery were

dispatched from Russia and other countries to the machine stations to further train workers on the

use of high level technology.

There was agricultural machinery maintenance before independence. It can be said that Personnel

Training education for operators and engineers was implemented sufficiently at the time. After

independence, engineers who had been working at the stations, were indispensable to currently

implement the operation, maintenance and repair of agricultural machinery in Kyrgyz.

3.3.2 The Present Maintenance Situation of Agricultural Machinery

After independence, large-scale farmland was divided into individual farmland depending on the

number of family members, and the agricultural machinery, equipment and buildings of machine

stations controlled by the Government were sold, according to the privatization policy. Therefore,

presently there are no public maintenance and repair services of agricultural machinery.

In this study, it was confirmed that many agricultural machinery introduced in the former Soviet

Union period are still utilized, but this does not mean they work efficiency. Some decrepit machines

are used by assembling parts collected from several agricultural machines. Such repair methods are

seen in many developing countries. In the case of the MTZ tractors made in Belarus, which were

introduced to Kyrgyz before independence, these tractors have compatible parts to tractors that are

presently produced and sold on the market, and repair and maintenance are relatively easy to do

since the machinery mechanism is very simple.

Currently, several agricultural machinery parts, introduced before independence, are still available

in markets. According to an agricultural machinery parts supplier, the Chinese are selling parts that

are produced in their country for Kyrgyz due to high demand for agricultural machinery. It can be

said that there are certain levels of techniques for repair and maintenance of agricultural machinery,

since the old-model of agricultural machinery is still being utilized.

40

(1) The situation of machine stations

Machine stations have already been privatized and incorporated as private companies since

independence. As mentioned above, machine stations have enough equipment and machine

tools for maintenance, repair services, fabrication of spare parts and steel-metal marking of

agricultural machinery. However, the facilities and machine tools at machine stations are old

since they have been utilized since the Soviet Union period. Therefore, proper maintenance

continuance and/or renewal of facilities and machine tools are issues that will resolve future

problems. In addition, the skilled-engineers have been working at the stations since the Soviet

Union period. Since it has been 23 years, most of them are an aging population. Currently,

skilled-engineers are teaching their agricultural machinery techniques and know-how of

maintenance to the younger generations.

Repair of the transmission The tractor was introduced in 1970’s

Forging equipment (An electric blower and an anvil. There is a grinding machine at the center)

Kara-suu District, Osh Province: Tashirova machine station (founded in 1995)

Maintenance of a tractor, Purchased for 700,000som in 2013, YTO904 Made in China

Cultivator (the cutting edges of the ridger were made of recycled car leaf spring)

The machine station in Nookat District, Osh Province

41

Left: Fuel injection tester Right: Fuel nozzle tester

Lathe machine: Made in Russia The manufacturing year is unknown.

Alamedin District, Chui Province: Adygene machine station (funded in 2006)

(2) The situation of individual farmers

Farmers are operating and repairing agricultural machinery themselves. Most of them have

hand tools, and some of them have machine tools, such as arc welding machines, grinding

machines, drilling machines and so on, for the maintenance of agricultural machinery. On the

farms, although they do not have measuring tools such as a torque-wrench, a cylinder gauge and

so on, they do repair machinery engines as overhaul work. Such farmers have learned repair

techniques not only during the Soviet Union period, but also when they studied the techniques

themselves and/or when they studied at vocational training schools. However, machinery

repaired by farmers are not performing properly for farm work. It may be that these agricultural

machines have a lower power output and breakdown frequently since repair is conducted

without proper measuring tools in outside dusty conditions. This farmer’s work is one issue that

needs to be improved for proper repair and maintenance of agricultural machinery.

Repairing spear parts of a combine harvester. The cylinder-head is put directly on the ground. A farmer in Talas District, Talas Province.

Maintenance of a 1970s model year tractor. The farmer worked as an engineer at a machine station.

In Talas District, Talas Province.

42

Maintenance of a tractor (oil change etc.) A farmer in Kara-suu district, Osh Province

Spare parts at a farmer’s house basement storage in Uzgen district, Osh province.

Farmers seldom have spare parts.

(3) The situation of the private sector

In this study, there were no private sector repair shops, chiefly for agricultural machinery.

Some of the suppliers have their own workshops. Regarding the situation of the private sector,

private repair engineers who do not have their own workshops, visit a farmer’s house directly

and/or farming fields to implement repair and maintenance of agricultural machinery.

Most of the repair engineers had worked at machinery stations. They engage in contract

overhaul work, mostly of Belarus made tractors. The necessary parts should be basically bought

by the farmers. The repair engineer provides advice as consulting services for the selection of

necessary parts. The price of overhauling a tractor is about 10,000som. There are repair

engineers in several areas of the country.

In the case of repair and to test fuel injection pumps and injection nozzles, farmers ask private

workshops. In the markets of Bishkek city, there are workshops for repairs. Farmers should also

buy the necessary parts. The repair charge is about 2,500 to 3,000som, except the cost of

necessary parts. The surveyors visited a workshop adjacent to a spear shop for agricultural

machinery in the market of Bishkek city. The workshop had two fuel injection pump testers.

One of the two was a used tester made in Russia and the other was new, made in China.

43

A fuel injection pump tester, made in China A fuel nozzle tester, made in Russia (second hand)

A repair shop adjacent to spear shops of agricultural machinery in Bishkek city

3.3.3 Persons In-Charge of Maintenance and Training

The old agricultural machinery introduced during the Soviet Union period are presently being

utilized in Kyrgyz. Engineers who have been working at the machine stations have a very

important role in maintenance. However, 23 years have passed since independence. Even

though engineers have skilled techniques and knowledge of maintenance work, this knowledge

is outdated. As such, engineers are teaching their skilled know-how to the younger generations.

For training personnel in the field of agricultural mechanization, there are two training courses

that are being conducted by the Ministry of Education and Science, and the Ministry of Labor,

Migration and Youth. Students can enroll in the training courses after a 9-year compulsory

education and they can obtain a high-school certificate after the completion of the training

courses. The training courses have problems, such as educational budget issues, old text-books

and practical materials, and so on, that do not meet the demands of students. Therefore, the

number of students has been decreasing. The outline of the training courses is as follows.

3-year agricultural machinery course at the technical colleges under the Ministry of Education

and Science

There are 9 colleges in the country and there are several training courses, such as economic

science, electrical engineering, environment conservation, agrarian economy and so on. There

are only two colleges that have an agricultural machinery course in the cities of Osh and

Bishkek. There was an agricultural machinery course in Tokmok of Chui province but the

course was closed two years ago due to the lack of a budget and the decreasing number of

enrolled students. In the first and second years of study, the students have a general education

and study agricultural machinery. In the third year, they specifically study agricultural

44

machinery. Upon the completion of the 3-year curriculum, they obtain jobs as assistant teachers

of the college and vocational school (as mentioned below) and farms (corporation and/or as a

successor), and some of them go on to universities.

3-year agricultural course at the vocational schools under the Ministry of Labor, Migration and

Youth

There are 65 vocation schools in the country and there are several training courses, such as an

electrical engineering, information-communication, industrial technology, service industry,

agriculture course and so on. Agricultural machinery is one of the subjects of the agricultural

training course. In the first and second years of study, the students have general education

subjects, the same as the technical college. There are many agricultural course subjects, such as

horticulture, livestock, orchard, veterinary and so on. On the subject of agricultural machinery,

students study the basic structure of machinery, the operation of a tractor with implements, and

maintenance of machinery. The students obtain a tractor’s driving license after completing the

course.

The vocational schools conduct a 6-month course in agricultural machinery as short-term

training. The training schedule is arranged accordingly. The course subjects are not only for

studying the mechanism of machines and operation techniques, but also so students can obtain a

tractor’s driving license. Therefore, there are many students taking the short-term training

course for the purpose of obtaining the license. (The categories of the license have changed into

three since last year. A: less than 40hp, B: 40 to 70hp, C: more than 70hp.) Upon the completion

of the 3-year curriculum, students obtain jobs as successors to farms, corporate farms,

agro-processing industries, and some go on to attend university. The following two projects

have been implemented at the vocational schools.

‘Dissemination of Organic Farming’ is an on-going project at the 43rd vocational school,

implemented by grant assistance for the grass-roots project of JICA.

ADB assisted the vocational schools for the improvement of educational materials from

2009 to 2013. In this program, 10 tractors made in China (FORTON) were introduced at

the schools.

3.4 Financing System for Agricultural Mechanization

Agricultural finance is a monetary method to support farmers and agribusiness. The financing

system includes various types of loan schemes provided by the government and private

institutions, as well as small-scale financial services, such as microfinance targeting low-income

45

and needy people. Agricultural insurance is a component of the system.

Agricultural finance services are provided by the Government institutions, as well as by the

private institutions including microfinance institutions in Kyrgyz. Both the Government sector

and the private sector do not have an agricultural insurance product.

3.4.1 Government Finance Institutions

(1) The State Fund for Economic Development

The State Fund for Economic Development was established under the Ministry of Finance. It

is engaged in financing social and economic development projects by managing the

Government and international-donor funds, and in managing repayment of donor loans.

Although it is not a financing institute exclusively for agriculture, a part of the fund is disbursed

to agricultural supporting projects. While China is the biggest donor to Kyrgyz at present, the

share is 50 % of the fund managed by The State Fund for Economic Development. The other

donors to Kyrgyz are the World Bank, ADB, Russia, Japan (counterpart-funds of Non-project

Grant and 2KR), Sweden, the Islamic Development Bank, and Netherlands and Pakistan, even

in small monetary amounts. The State Fund employees 172 staff, and it has a nationwide branch

network covering 40 districts and 7 provincial capitals.

While the Kyrgyz Government used to procure agricultural machinery by a Japanese

Non-project Grant and 2KR, agricultural machinery was sold to farmers with an interest-free

loan. Since 2000, the Government has started to recover the counterpart-funds of both Japanese

grants, and the State Fund for Economic Development has been engaged in managing the funds.

The accumulated money was disbursed 4 times as shown in Table 3-12. While it has started

financing Aiyl Bank for supporting the agricultural machinery loans and the agricultural

machinery leasing scheme since 2010, 115 million Kyrgyz som (equivalent to 23 million

Japanese yen) was released for the leasing scheme from the 2KR counterpart fund in 2012.

Table 3-12 Disbursement of Counterpart Fund Accumulated from Non-project Grant and 2KR

Year Disbursement Item UnitAmount Exchange

Rate (thousand som) (UAD)

2002 Tractor（MTZ） 63 36,430 790,326 46.0949

2007 Combine harvester

（Niva） 70 124,531

3,508,034 35.4988

2008

Tractor（LTZ60A） 306 168,844 4,283,413

39.4181 Plow 306 11,047 280,252

Trailer 102 20,109 510,146

46

Year Disbursement Item UnitAmount Exchange

Rate (thousand som) (UAD)

2012 Aiyl Bank Leasing

Scheme - 115,000

2,426,099 47.4012

Total 847 475,961 11,798,270

Source: The State Fund for Economic Development

(2) Aiyl Bank

Aiyl Bank is a state bank, established in December 2006, aimed at the development of

agriculture. The precursor of the bank is Kyrgyz Agricultural Financial Corporation (KAFC)

which was established by the Kyrgyz Government in 1997 with cooperation from the World

Bank. The bank has 29 branches, 19 regional offices, 48 village stations, 46 deposit counters

and 9 mobile cash desks across the country. It is engaged in almost all financial-support projects

for agricultural development supported by the Government and international donors. The major

donors are the World Bank, ADB, EBRD, Reiffeisen Fun and UNDP.

The total financed amount of Aiyl Bank is 3,264.32million Kyrgyz som as of the end of 2012.

Out of the total, 2,467.1 million Kyrgyz som, about 76% of the total, is financed for the

agricultural sector. The Aiyl Bank’s finance scheme is mainly divided into two components.

One is a loan scheme and the other is a leasing scheme.

1) Loan scheme

Various types of loan products for supporting crop production, livestock, horticulture, inland

fish cultivation, forestry, agribusiness, etc. are provided by Aiyl Bank. While the major target

clients are corporate farms and individual farmers, some loan products are channeled to women

and poverty groups. Most loan products are supported by Government subsidies or international

donor funds. The interest rate is 10 – 25 % a year and the maximum repayment term is 10 years.

Among the loan products in Table 3-13, “plant growing” is available for procurement of

spare-parts of agricultural machinery and the “Raifizen Foundation for cooperative development

in Kyrgyzstan”, the “procurement of agricultural machinery, construction and reconstruction of

production facilities” and the “agro business and marketing” available for procurement of

agricultural machinery, including used machinery.

47

Table 3-13 List of Loan Products for Supporting Agriculture

For corporate farms12

AGRICULTURAL LOANS

Name of Loan Product Currency Annual Interest Repayment Term

Plant growing Som 10% 2 ~ 10 years Raifizen Foundation for cooperative development in Kyrgyzstan Som 18% ~ 19% 2 ~ 10 years

Rural finance project – 2 (financed by International Development Association (IDA) through MoF)

Som 10%Max. 7 years

USD 10%

Mal Charba Nasyyasa Som 10%

Max. 7years USD 10%

Procurement of agricultural machinery, construction and reconstruction of production facilities

Som 18%Max. 7 years

USD 16%

Promoting agricultural productivity Som 10% 2~5 years

SPECIAL AGRO LOANS

Name of Loan Product Currency Annual Interest Repayment Term

ADB loan product Som 10%

Max. 10 years USD 10%

Financing cooperatives - members of the Union of Cooperatives in Kyrgyzstan Som The Bank’s Rate Max. 3 years

SOCIAL AGRO LOANS

Name of Loan Product Currency Annual Interest Repayment Term

Kumtor Ton Som 12% Max. 3 yearsUNDP Summary Som 12% Max. 5 yearsTalas Loans (financed by Public Fund Social Development in Talas Oblast) Som 12% Max. 2 years

New Zealand – Naryn (financed by Kyrgyzstan New Zealand Rural Trust Fund) Som 12% Max. 2years

BUSINESS LOANS

Name of Loan Product Currency Annual Interest RepaymentTerm

Support and development business women (ADB)

Som 20%2~4 years

USD 18%Agro Business and marketing (financed by International Development Association (IDA) through MoF)

Som 10%-21%2~10 years

USD 16%-19%

Support of small and medium business development – production and processing – Ondurush nasyyasay

Som 18%Max. 5 years

USD 16%

Support of small and medium business development – livestock breeding and sale, agricultural purchase – Kamdoo nasyyasy

Som 21%-25% Max. 3years

USD 20%-22%

For individual farmers13

12 Aiyl Bank official website : http://www.ab.kg/ru/bankovskie-uslugi-uridicheskim-licam/krediti 13 Aiyl Bank official website : http://www.ab.kg/ru/bankovskie-uslugi-chastnim-lisam/krediti

48

AGRO LOANS

Name of Loan Product Currency Annual Interest Repayment Term

Kumtor-Chakan Loan Som 20% Max. 2 years

Group loans Som 10%

Max. 2 years USD 10%

Source: Aiyl Bank

2) Leasing scheme

The Kyrgyz Government has a policy to promote leasing of agricultural machinery in order to

accelerate the renewal of machinery. In recent years, the leasing schemes are becoming popular

as a financial tool for supporting agricultural mechanization. Aiyl Bank has been engaged in the

government leasing scheme for agricultural machinery since 2011. The amount of the lease

from Aiyl Bank in 2012 occupied 99 % of the total lease amount including the amount from

other financial institutions. While Table-3-14 shows lease products for agricultural

mechanization, the major target customers are individual farmers, agricultural cooperatives and

corporate farms.

Table 3-14 List of Leasing Products for Supporting Agricultural Mechanization

Name of Product Currency Annual Interest

(down payment)Repayment

Term Target Machinery Financial Source

State lease-1 Som 6% (30%) 7% (20-29%) 9% (10~19%)

Max. 7 years

Phase-1 ： Chinese tractor (YTO904) Phase-2： Agricultural Machinery (exclusively for combine harvester from 2013)

Phase-1 ： Chinese grant (30 milion CNY = 4.66 million USD） Phase-2 ：Counterpart fund of Phase-1 Decree No.382, July 11, 2011

State lease-2

Som

8% (30%) 9% (20~29.9%)11% (10~19.9%)

Max. 7 years

Agricultural Machinery

Counterpart funds of Japanese Non-project grant and 2KR: 115 million Kyrgyz somCounterpart fund of Chinese grant: 80 million Kyrgyz som om Total ： 3.9 million USD Decree No.487, July 13, 2012

State lease-3

Turkish grant (about 5million USD) Decree No.88, Feb. 19, 2013

49

Name of Product Currency Annual Interest

(down payment)Repayment

Term Target Machinery Financial Source

Leasing of State Development Bank of China

USD 15% (30%) 16% (20~29%) 17% (10~19%)

Max 5 years

Agricultural Machinery (exclusively for YTO models)

Loan from the China Development Bank 3 million USD

Agro business and marketing Program of support of agricultural cooperatives

Som

18% (30%)19% (20~29.9%) 20% (10~19.9%) 2.5~5

years

Agricultural Machinery, Storage Facility, Agricultural Structure, etc.

The World Bank (This project is closed-out) ・Granted 30% of the total price (Up to 50 thousand USD） ・Max. lease amount: 0.5million USD USD

12% (30%)13% (20~29.9%) 14% (10~19.9%)

Source：The JICA Study Team, conducted based on the Aiyl Bank official website14, Financial Statement 2012 and

concerned government decrees

a. General conditions of the lease (not applied to the World Bank program)

Down-payment: Not less than 10%, depending on the total value

Mortgage: Not necessary, in case the down-payment is more than 30% of the total

value.

Necessary, in case the down-payment is less than 30% of the total value

(should be real estate like houses; however land is excluded)

Repayment term: Original principal: 2 times/year, Interest: quarterly payment

Grace period: Original principal: 9 months, Interest: 3 - 6 months

(depending on cropping/production season by target commodity)

Insurance: All clients have been liable for insurance at the expense of the clients since

Jan. 2013. The clients must choose an insurance company from 3 affiliated

companies of the Aiyl Bank.

2.4% of the total value for covering the damage of machinery. Single

payment at the time of contract.

Mechanization

services

“State leasing 3” targets mechanization service providers, such as Machine

Technical Stations. Clients of the lease are obliged to provide a certificate

from the relevant Aiylokmotu (village) to confirm that the client is

providing mechanization services in the area.

VAT & Sales tax: Exempted if the amount of the lease is more than 0.2 million Kyrgyz som.

14 Aiyl Bank official website : http://www.ab.kg/ru/bankovskie-uslugi-chastnim-lisam/krediti

50

Booklet about the leasing Consulting room in a branch office

of Aiyl Bank The Leasing Department at

the headquarters of Aiyl Bank

b. Actual performance of the leasing

Table 3-15 – 3-17 show the actual performance of the leasing by agricultural machinery, by

year and by provinces. The average unit amount of the lease is about 0.92 million Kyrgyz som

(18 thousand USD) for tractors, about 3.93 million Kyrgyz som (78.6 thousand USD) for

combine harvesters and about 0.31 million Kyrgyz som (6.2 thousand USD) for implements.

Table 3-15 Amount of Aiyl Bank Leasing by Agricultural Machinery

Source: Aiyl Bank

Table 3-16 Amount of Aiyl Bank Leasing by Year

Year

Equipment

2011 2012 2013 Total

No. Sum (som) No. Sum (som) No. Sum (som) No. Sum (som)

Tra

ctor

s

МТZ 17 16,660,000 198 201,141,264 424 426,597,600 639 644,398,864

YTO 263 196,440,749 94 75,196,583 86 70,910,250 443 342,547,582

Others 0 0 1 9,899,150 2 4,378,588 3 14,277,738

Combines 2 6,480,000 9 40,941,820 17 62,555,445 28 109,977,265

Attachments 2 216,000 44 9,056,657 51 20,846,867 97 30,119,524

Total 284 219,796,749 346 336,235,474 580 585,288,750 1,210 1,141,320,973

Source: Aiyl Bank

No. Sum (som) No. Sum (som) No. Sum (som) No. Sum (som) No. Sum (som) No. Sum (som)

MTZ 94 96,007,372 236 235,963,624 284 287,228,716 25 25,199,152 0 0 639 644,398,864

YTO 284 212,218,067 5 1,571,613 0 5 2,984,652 149 125,773,250 443 342,547,582

Others 2 4,378,588 0 0 0 1 9,899,150 0 3 14,277,738

9 35,347,538 14 51,114,227 0 5 23,515,500 0 28 109,977,265

53 13,169,561 38 16,255,874 0 6 694,089 0 97 30,119,524

442 361,121,126 293 304,905,338 284 287,228,716 42 62,292,543 149 125,773,250 1,210 1,141,320,973

Total

Combines

Attachments

Total

State lease-2　　Program

Equipment

State lease-3 WB leaseChine Development Bank

(1USD = 50som)State lease-1

Tra

ctor

s

51

Table 3-17 Amount of Aiyl Bank Leasing by Province

Year

Province

2011 2012 2013 Total

No. Sum (som) No. Sum (som) No. Sum (som) No. Sum (som)

Chui 76 62,572,149 74 92,286,569 120 139,779,496 270 294,638,214

Talas 31 23,620,767 35 41,414,548 82 76,904,104 148 141,939,419

Issyk-Kul 37 27,636,151 18 17,758,151 58 54,151,347 113 99,545,649

Naryn 18 13,444,614 18 16,206,922 32 30,824,633 68 60,476,169

Osh 54 41,499,227 83 77,858,608 108 102,026,098 245 221,383,933

Jalal-Abad 48 36,085,381 81 63,516,076 112 107,877,703 241 207,479,160

Batken 20 14,938,460 37 27,194,600 68 73,725,369 125 115,858,429

Total 284 219,796,749 346 336,235,474 580 585,288,750 1,210 1,141,320,973

Source: Aiyl Bank

c. Leasing procedure

Farmers wishing to obtain a lease should visit Aiyl Bank for the first consultation after the

selection of agricultural machinery for leasing. During the first consultation, the visited farmers

can obtain a detailed explanation about the leasing conditions from the bank. If farmers can

accept the conditions, the next procedure is taken for the qualification examination by the bank.

For the qualification examination, a person in charge of Aiyl Bank makes a visit to the farmer’s

house and farmland to check his/her financial condition and property. Only if both the farmer

and bank have confirmed the farmer’s reliability of repayment, is an official application made

for the farmer. It is, therefore, unusual that the application be refused in the final analysis

conducted by the headquarters of Aiyl Bank.

It is impossible to confirm the % of farmers who could get the lease, for farmers who had the

first consultation, since Aiyl Bank does not have data on the number of farmers. According to

the information from a branch office of the bank, only 1 farmer can obtain a lease out of 3 – 4

applicants in a month; even the number varies season to season. The qualified farmer for the

lease is a farmer who makes a consistent profit, more than the expected amount of repayment. It

is, however, difficult to standardize the qualification examination, since different farmers have a

different farm management status, such as land property, farmland area, growing crops, land use,

agricultural mechanization, etc. Aiyl Bank staff suggests that more than 90 % of the lease

beneficiaries have more than 20 ha of farmland, including rented land, and they have a certain

income from agricultural mechanization services provided by using existing machinery.

52

Procedure Remarks

1 Selection of machinery

The farmers intending to lease machinery are given a free hand to choose the machinery except for when the lease is applied to machinery provided by aid. Only brand-new machinery is applicable.

A machinery list by Aiyl Bank is made considering agricultural condition by region

The number of allocated machinery to each branch office is determined by actual demand, cultivated area, leasing performance, etc.

2 The first consultation

Farmers who intend to apply for the lease make a request to the branch office in the area

There are 4 - 5 staff handling the leasing in the case of medium-scale branches

The staff explain the lease conditions to participated farmers Qualification Examination:

Financial status is the most important checking point. Property, income (including non-agricultural income and pension), expenditure (family expenses, school expenses, etc.), etc. are analyzed by interviews and by a site visit survey.

Repayment capacity of a farmer is evaluated not only by the property of farmland, but also other income generation items, such as the rented farmland area and performance of mechanization services, etc.

If a farmer is disqualified by the qualification examination, the farmer cannot apply for the lease

Contents of the consultation and the request from branches or provincial offices are reported to the headquarters

3 Application Qualified farmers of the qualification examination can make an application for the lease

Required documents (individual farmers); Application form, passport, marriage certificate, letter of consent from spouse, registration for farming, property certificate (car, house, livestock, etc.) and others if necessary

More than 90% of the applicants are individual farmers. Corporate farms should prepare additional application documents, and contents of the documents vary according to the type of cooperative farms

4 Qualification Examination by the headquarters

Indispensable conditions are 3 consecutive-years of surplus at financial closing and not tax-delinquent for individual farmers, as well as for corporate farms

Influence of other debt is evaluated by the result of cash flow analysis

5 Approval It is unusual that the application is refused by the headquarters of Aiyl Bank at this stage.

6 Leasing contract

Leasing contract is concluded at the branch offices concerned.

53

Procedure Remarks

7 Down payment As most customers make a down payment of more than 30% of the machinery value, a mortgage is not applicable in most cases

8 Sales contract between the bank and suppliers

All orders are made from the headquarters on a daily basis. Suppliers:

Kyrgyz Avtomash Radiator, YTO, Atalyk Group, John Deere, Standard Agroservice, Kyrgyz Agro Market, Central Asia Machinery, etc.

9 Payment to suppliers

In case of a leasing scheme supported by the China Development Bank, the bank directly makes a payment to YTO.

10 Machine delivery

Customers pick up machinery from suppliers It takes 2 – 3 months, sometimes about 6 months, from the application

to the delivery

Source: The JICA Study Team

Source: The JICA Study Team

Figure 3-2 Aiyl Bank Leasing Procedure

Under the leasing schemes, the payment for agricultural machinery is made by Aiyl Bank. The

bank maintains ownership of the machinery even after the machinery is delivered to the

customers. Re-leasing is not allowed. The ownership is transferred to the customers when they

pay off the lease obligation. Almost all clients pay their lease obligation without delay, and

presently the recovery rate is almost 100%. Aiyl Bank visits all customers 2 times in a year for

the monitoring. The bank staff makes a comment that the customers are increasing their

understanding of the leasing system through consultation with the bank during the monitoring.

According to farmers who leased agricultural machinery from Aiyl Bank, they do not

experience a big problem with preparing necessary documents and in the leasing procedure.

Since Aiyl Bank treats many customers for the leasing, it has established a systematic and

smooth procedure compared to other financing institutions.

Ministry ofFinance

Ayil BankHead Office

Ayil BankRegional Office

Leasee

MachinarySuppliers

④ Evaluation

② Consultation

Fundings

③ Application

⑤ Утверждение ⑥ Contract

⑦ Prepayment

③ Application

⑦ Prepayment

54

3.4.2 Other Finance Institutions

(1) Agricultural financing services of private banks

Table 3-18 shows private banks that provide agricultural loans or leases, and their financial

products. They impose the following terms and conditions on the products in general.

<Loan>

・ Interest rate: about 20% a year

・ Repayment term: Max. about 5 years

・ Repayment schedule: monthly (harvesting time is considered in some cases)

<Leasing>

・ Interest rate: about 16 – 24 % a year

・ Repayment term: Max. 5 years

・ Down payment: 30 % of the value

・ Repayment schedule: monthly (harvesting time is considered in some cases)

Table 3-18 Agricultural Financing Products available in Private Banks

Agricultural loan

Bank Objective Currency Amount Annual Interest

Repayment Term

Bai Tushum Bank(The name before Jan. 2014 was “Bai Tushum and Partners”)

Livestock, Dairy products, Seeds, Crops

SomUSD

10,000 som or more

Som 20% USD 17%

3~60months

Kyrgyz Investment and Credit Bank (KICB)

Agriculture SomUSD

0.2~5 million USD

Som 18~26% USD 16~25%

12~24months

Commercial Bank Kyrgyzstan

Agribusiness SomUSD EUR

2.5~ 20 som 50~500 thousand USD/EUR

Som 21~32% USD 17~27% EUR 13~21%

3~36months

Project “Support to improve agricultural productivity” financed by the Ministry of Finance (Crops, Livestock, Agro-processing)

SomUSD

More than 50 thousand som or 1,000 USD

Som 16~18%、USD 10~12%

12~24months

BTA Bank Expenses for purchasing livestock, seeds, and equipment, labor wages, etc.

SomUSD

Up to 1 million USD

Depends on repayment schedule and the market rate

3 years (5years in some cases)

55

Agricultural loan

Bank Objective Currency Amount Annual Interest

Repayment Term

IDA project “Agribusiness and Marketing” (Equipment for the production, processing and storing)

Som USD

Up to 250 thousand USD

18~20% (Floating interest)

Max. 5 years

Optima Bank Livestock, Agricultural inputs, Agricultural machinery, etc.

SomUSD

More than 50 USD

More than 14%

3~60months

Leasing

Bank Objective Currency Amount Annual Interest

Repayment Term & Down Payment

Bai Tushum Bank Equipment for agricultural cooperatives or corporate farms

SomUSD

0.15 ~ 15 million som

Som 24% USD 20%

5 years Min. 30% of the value

Kyrgyz Investment and Credit Bank (KICB)

Vehicles, Agricultural machinery, Sewing machines, etc.

SomUSD

5 ~ 100 Thousand USD

Som 18% USD 16%

6 months ~5 years Min. 40% of the value

Commercial Bank Kyrgyzstan

Vehicles, Agricultural machinery, etc.

Som USD EUR

Depends (no limit)

Som 21~22% USD 17~18% EUR 14~15%

1~7 years30% of the value

Other

Bank Objective Currency Amount Repayment Amount

Repayment Term

Eco Islamic Bank (No interest is allowed because of Islamic financing. It actually provides sales financing)

Livestock, Forage, Agricultural machinery, etc.

Som More than 50,000 som

1.4 times of the original amount after 3 years

1~36months

Source: The JICA Study Team, conducted based on the Banks’ websites or the interview survey.

Table 3-19 Leasing Performance of Private Banks in 2013

Bank Number Machinery

Bai-tushum Bank 62 Tractor:12 units, Implements: 50 sets

KICB 1 Rice combine harvester (Chinese made, 20 thousand USD）

Eco Islamik Bank 17 Tractor: 3 units, Implements: 14 sets

Total 80

Source: The JICA Study Team, conducted based on the interview survey for the MA & LR and the concerned banks.

56

Due to the change in the tax system in 2012, VAT and interest tax have not been applicable

to leasing. After the change, a favorable environment to promote leasing services is created in

Kyrgyz because even a private bank has been able to reduce the interest rate. Some banks intend

to expand their leasing services. However, they may have the disadvantage of high interest rates

compared to Aiyl Bank, if they run the leasing machinery leasing service. They differentiate

their leasing services to the non-agricultural sector, such as construction, industry and the

medical sector.

(2) Microfinance

The microfinance system in Kyrgyz has been developed since 1994 with cooperation from

the World Bank, UNDP, ADB and international NGOs. As a result, laws and regulations

concerning the microfinance institutions have been enacted, and the financing system is

controlled under the jurisdiction of the central bank in order to promote a proper and organized

operation.

According to the Association of Microfinance Institutions (AMFI), there are 249

microfinance institutions across the country as of September, 2013, and 32 institutions are

members of AMFI. The institutions spread into nearly every rural side in the country. The total

financed amount is 23,862.4 million Kyrgyz som (484.55 million USD) covering 459,572

debtors in 2013. The average financed amount is 51,923 Kyrgyz som (1,054 USD)/debtor. The

average annual interest rate is 30.47%, while the average repayment team is 15 months.

Quarterly reports of AMFI suggest that 49 – 67 % of the total financed amount went to the

agricultural sector. Many benefited farmers bought livestock, while some of them bought seeds,

fertilizers, fuel, etc., according to the interview survey. Since the amount of microfinance is not

much and the interest rate is high, financing is not useful to procure agricultural machinery.

Considering the number of microfinance debtors, 8 % of the population or every 12.5

individuals could reach for financing in 2013. It is believed that microfinance provides good

financial access to local people and impoverished groups, and plays a significant role in

improving the farming of small-scale farmers.

57

3.5 Customs Union15

3.5.1 Background and Summary of the Customs Union

In the 1990s, Kyrgyz GDP declined approximately 20-25% due to the division of economic

cooperatives from former Soviet Union countries, as a result of the country collapse. Russia

tried to encourage economic integration with Commonwealth of Independent States: CIS

countries in order to form one united economic block. However, this attempt did not achieve the

desired progress due to conflicts between the CIS countries, caused by the discrepancy in

political principles and taxation policies. Hence, Russia intended to frame the economic block

with attractive countries for economic integration, and to implement a non-tariff policy by

signing a bilateral free-trade agreement with Belarus, Kazakhstan, Kyrgyz and Tajikistan.

Furthermore, Russia concluded the CU with Belarus and Kazakhstan, to encourage economic

unification. In 2010, the actual enforcement treaty of the CU between three countries was

launched, and in December of this year, Kyrgyz expressed a sense of accession to the CU. The

next year, in October 2011, at the meeting of the Eurasian Economic Community, the summit

approved that Kyrgyz accede to the CU, and agreed to implement specific procedures for the

accession.

The main purpose of the CU is to eliminate customs between the member countries, and to

liberalize intraregional transfers of goods (free trade). On the other hand, from a perspective of

external measures, unite member countries’ custom rates externally in order to create one

economic block. The main functions of the economic zone are the abolition of tariffs for trading

between member countries, the elimination of inspections related to customs, foreign goods,

animal and plant quarantine and hygiene, the installation of common standards, and the

unionization of common external tariffs. If Kyrgyz joins the CU, the country needs to adopt

these functions in the future.

Table 3-20 shows a comparison of the economic overview of Kyrgyz and the CU member

countries. As shown in the table, economic scale of Kyrgyz is significantly smaller than the

15References:

Eurasian Development Bank Eurasian Integration Yearbook 2012, “Assessing the economic effect of Kyrgyzstan’s accession to the Customs Union” Japan Association for Trade with Russia & NIS, 2012, “Research for the Customs Union: Russia, Belarus, Kazakhstan” USAID, 2008, “Economic Consequences of the Customs Union for the Kyrgyz Republic”

58

other countries. There is a huge gap of GDP per capita between Kyrgyz and the CU countries.

Kyrgyz reveals a high degree of dependence on foreign trade, and high population growth. As

demonstrated in the table, Russian economic scale is extremely large among these countries.

Since the superiority of Russia is obvious, Russia will assume a leading role in the future as

well. This situation indicates that the establishment of a Russian centered framework for the CU

may have negative effects on Kyrgyz due to differences of economic scale and the situation.

Table 3-20 Overview of Customs Union Member Countries and the Kyrgyz

2008 Kyrgyz Belarus Kazakhstan Russia

GDP(10 billion USD) 5.0 60.3 135.6 1676.6

Agriculture (%) 26% 9% 6% 6%

Industry (%) 17% 39% 42% 39%

Service (%) 57% 53% 52% 54%

GDP growth (%) 7.6% 10.0% 3.3% 5.6%

GDP per capita (thousand USD) 0.95 6.23 8.72 11.81

Export, % of GDP 61% 54% 61% 28%

Import, % of GDP 95% 65% 40% 17%

Population (million) 5 10 16 142

Population growth (%) 1.1% -0.2% 0.1% -0.1%

Source: USAID, 2008, “Economic Consequences of the Customs Union for the Kyrgyz Republic”

Although the importance of Belarus is comparatively low in a trading partner role, Russia and

Kazakhstan are the significant markets of Kyrgyz for exports, and at the same time, the

countries are also major exporters of fuels for Kyrgyz. Besides, Russia is not only a source

country of energy, but also a host-nation of Kyrgyz labor forces, and a massive loan supply

country. For all these reasons, Kyrgyz accession to the CU is strongly influenced by the

intention of Russia (see Table 3-21).

Table 3-21 Possible Effects of Kyrgyz Accession to the Customs Union

Positive aspects

Promotion of economic activities with the CU member countries (non-tariff trading, access to the

CU members’ markets)

Increase of participating countries in the CU (expansion of economic block)

Promotion of development

59

Encourage the development of the domestic textile industry (through high rates of external tariff

rates imposed on imported products from China)

Limited impact on agricultural sector (the import of agricultural inputs such as seed, fertilizer, fuel,

machines and export of agricultural products are mainly traded with member countries)

Expansion of trading with the CU member countries, Kazakhstan (current obstacle factors of trading

between Kazakhstan and Kyrgyz, including strict standards such as common external tariffs,

customs and sanitary inspections will be eliminated)

Increase of Russian assistance and grants

Possibilities to offer more open or smooth entry to Kirgiz labor immigrants in Russia (ease barriers

against member countries)

Negative aspects

Decline in trading with external countries (tariff rate for external countries will rise, the average

will approximately double by the implementation of CET: Common External Tariff)

Decrease the government tax revenues (VAT, import duties)

Decrease in decision power in terms of trading policies (concern about the possibilities that are

favorable policies for Russia)

Decrease in intermediate trading from China (intermediate trading which shows that large

proportions may decrease by a rise in the customs duty)

Installation of uniform standards in terms of quality, animal and plant quarantine, sanitation (more

strict standards than the current standards)

Increase in consumer commodity prices by the installation of common external tariffs (although

there are no changes regarding the commodities imported from member countries, imports from

external countries will increase)

Difficulties regarding political negotiations (Kyrgyz is a WTO member country, so if tariff rates

imposed on external countries increase by accession to the CU, the conflict with the WTO treaty

will result.)

Source: The JICA Study Team based on the references16

Kazakhstan has already joined the CU. The customs tariff rate between member countries

became zero percent. Regarding agricultural machinery imports from external countries, the

machines and implements that compete with member countries’ products are established at high

tariff rates between 0-15%, and a competitive rate was not set for low tariff rates.

60

Table 3-22 Trade Between Kyrgyz and CU Countries (Million USD), and % of Total Kyrgyz Exports and Imports with each CU Member

(Million USD) 2005 2006 2007 2008

Trade turnover with CU countries 812 1188 1755 2417

Export 252 317 440 506

Russia (%) 7.2 5.4 5.7 5.2

Kazakhstan (%) 6.2 5.8 5.0 3.1

Belarus (%) 0.1 0.1 0.1 0.6

Import 560 871 1315 1911

Russia (%) 20.3 23.1 23.7 25.1

Kazakhstan (%) 9.4 7.1 8.6 6.1

Belarus (%) 0.4 0.6 0.6 0.7

Balance of exports and imports -308 -523 -875 -1405

Source: USAID, 2008, “Economic Consequences of the Customs Union for the Kyrgyz Republic”

Table 3-23 Main Trade Between Kyrgyz and CU Members by Category

Source: USAID, 2008, “Economic Consequences of the Customs Union for the Kyrgyz Republic”

There are some export commodities, shown in the Table 3-23, that were originally imports

from China. Currently, Kyrgyz imports goods cheaply from China and about 75% of them are

re-exported to other Central Asian countries and Russia for the acquisition of foreign currency.

However, if Kyrgyz accedes to the CU, China will become an extra-regional country, and tariff

rates for outside regions will be adopted. As a result of this change, most items will have an

increase in tariff rates compared to the current rates, and this intermediate trade business style

will not work out. Actual trade quantities between China and Kyrgyz are significantly greater

than the statistical data. Therefore, if intermediary trade significantly decreases, this will have a

tremendous negative impact on Kyrgyz economy.

Export 2008

Minerals 28%

Textiles and articles of textiles 27%

Vegetable products 12%

Articles of stone, gypsum, cement, asbestos, and mica

8%

Electric machinery, equipment and appliances; electric technical equipment

6%

Food products, alcoholic, and non-alcoholic beverages

4%

Natural or cultured pearls, precious or semi-precious stones

4%

Animal or vegetable fats and oils 2%Miscellaneous 9%

Import 2008

Minerals 57%

Wood, articles thereof, wood charcoal, cork, and articles

3%

Machinery, equipment and mechanisms: electrical equipment

3%

Transport vehicles (road, air and water) 3%

Food products, alcoholic, and non-alcoholic beverages

8%

Vegetable products 7%

Chemicals and articles of base metals 6%

Base metals and articles of base metals 5%

Other 8%

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3.5.2 Impact on Agriculture and Agricultural Mechanization

In Kyrgyz, approximately 34% of the labor population is engaged in agriculture (including

food processing), but most of the population is small-scale farmers, and there are difficulties in

sufficiently acquiring agricultural inputs and spare parts for machines. In 2008, the agricultural

sector consisted of 26% of the GDP and 12% of total exports.

Table 3-24 illustrates the assumption of changes in duties when Kyrgyz accedes to the CU.

Table 3-24 Changes in Duties Due on Adoption of Common External Tariffs, non CIS Imports

Source: USAID, 2008, “Economic Consequences of the Customs Union for the Kyrgyz Republic”

Significant agricultural inputs (fuel, seed, fertilizer, agricultural machinery) are imported

from CU member countries, and main agricultural products for export (fruits, vegetables, dairy

products) are mainly exported to CU member countries. Therefore, the impact of Kyrgyz

accession seems to be limited in terms of the agricultural sector. Note, however, that there are

invisible border trades with China, including agricultural products and food stuffs. The

accession may influence the negative effect against the smooth implementation of trade, and

there is concern that inflation of food commodity prices is a possibility.

In Kyrgyz, most of the agricultural machines currently used were made during the former

Soviet Union era and are more than 20 years old. In recent years, renewal of these agricultural

machinery, especially tractors, are gradually prevailing from the assistance of international

donors and leasing programs with a central focus on Aiyl Bank. Recent renewed tractors tend to

be Belarusian machines due to its ease in spare parts procurement and mechanism similarities to

the former Soviet Union. But Chinese tractors are also easy to procure due to geographical

conditions and the Chinese government boost through grant aid of Chinese tractors. As such, the

number of Chinese tractors in Kyrgyz has become increasingly steady in recent years.

However, if Kyrgyz accedes to the CU, the tariff rate imposed on general machinery imports

Chapter TitleKyrgyzTariffs

CU Tariffs DifferenceImport Value,

KG TariffImport Value,

CU TariffDifference in

Tariff Due

Total 5.1 10.6 5.5 1885.5 1986 100.5Agriculture 7.9 10.8 2.9 121.4 127.3 5.9

Live animals and animal produce 7.5 15.9 8.4 38.9 42.2 3.3Vegetable products 6.7 8.2 1.5 35.6 36.1 0.5Animal or vegetable fats and oils 9.5 5.9 -3.6 5.5 5.3 -0.2Foodstuffs, alcoholic and non-alcoholicbeverages, vinegar and tobacco

7.7 13.3 5.6 41.4 43.7 2.3

Industry 4.3 10.8 6.5 1764.1 1858.7 94.6Foodstuffs, alcoholic and non-alcoholicbeverages, vinegar and tobacco

7.1 9.2 2.1 44.8 45.7 0.9

Minerals 4.1 4.6 0.5 22.5 22.6 0.1Machinery, equipment and appliances 2.7 5.9 3.2 383.4 395.7 12.3

62

from outside countries, including China will shift from 2.7% to 5.9%, a 3.2% increase from the

current situation. Regarding agricultural machinery, it will be expected to rise from 0% to 15%16,

so incentives for imports from Europe, China and the USA will decrease, and imports of

agricultural machinery seems to be concentrated on Belarus agricultural machinery. Other

potential problems are the procurement of spare parts from China. Most farmers purchase their

machine’s spare parts at bazaar shops. Most of these parts are manufactured in China not only

for Chinese agricultural machines, but also for Belarusian and Russian machines. In short,

Chinese spare parts are propping-up the former Soviet Union’s old agricultural machinery by

the provision of parts. Thus, if trading between China and Kyrgyz becomes less smooth by the

implementation of strict standards or price inflation, the accession will be influential on

agricultural mechanization from a perspective of parts procurement.

Although there are concerns about the accession to the CU, mentioned above, the official

timing of the accession is not obvious at this point, and changes in tariff rates are just an

estimation. Also, it is expected to establish a transition term for the tariff rate change of around

3 to 5 years when Kyrgyz joins the CU. Therefore some machine dealers have optimistic

expectations about the influence of agricultural machinery renewal.

16 In the case of Kazakhstan, tariff rates are different depending on the agricultural machinery. Especially, it is possible for there to be a high tariff rate for competitive machines imposed on member countries.

63

4. Analysis of Obstacle Factors to Agricultural Mechanization

4.1 Problems of Each Stakeholder

4.1.1 Ministry of Agriculture and Land Reclamation (MA & LR), Department of

Agricultural Mechanization and Electrical Supply

As mentioned in the above chapter, operations of the Department of Agricultural

Mechanization and Electrical Supply vary, however there are only four workers at the head

office. Under the current institutions, it is hard to cover all operations of the department. In

addition, there was one office staff for each district around the country before the organizational

change in 2012. Due to the organizational reform, the operations partly shifted from one

department to another department and 11 office staff were transferred to the Agency of National

Registration, which falls under the Interior Ministry. As a result of this transfer, 29 staff

members are covering 40 districts, and this situation poses problems for the sufficient operation

of the department.

Data collection, which required time in the survey, was not sufficiently implemented, such as

the number of agricultural machinery, the situation of usage and problems of agricultural

mechanization at the field level, and information sharing, including agricultural mechanization

policies for stakeholders and institutional change. Since it is difficult to implement effective

policy making without collecting accurate information, the government needs to take measures

for institutional improvement.

4.1.2 Kyrgyz National Agrarian University, Faculty of Engineering and Technology

Kyrgyz National Agrarian University is the only agrarian university in Kyrgyz, and faculty of

engineering and technology conduct research in agricultural machinery.

Currently the faculty is using decrepit machines of the former Soviet Union for research

works, lectures and practical trainings without enough of a budget allocated, hence there are

difficulties in launching new research activities and the development of human resources using

new machines and equipment.

4.1.3 Technical Colleges and Vocation Schools (agricultural machinery courses)

Both schools, founded during the Soviet Union period, had a very important role in

implementing agricultural machinery courses to train personnel, such as engineers at the

Kolkhoz and Sovkhoz farms. Presently, the teaching materials introduced during that time have

64

been not renewed. They are outdated. Many students are not interested in the coursework of

these schools. Therefore, both schools are faced with a decrease in students and educational

budget. Moreover both schools are not well-coordinated with the Ministry of Agriculture, which

has an important role in the country’s agricultural mechanization. As a result, the educational

program courses have run smoothly. The following points are problems that need to be

addressed to train personnel on agricultural mechanization.

Decrease the number of students specializing in agricultural machinery

Reduce the educational budget for courses

Since most teaching materials were introduced during the Soviet Union period, the

training courses do not engage the student’s study interest

The teaching materials shortage and its contents do not meet the needs of the present

farming system, and the school facilities are old

There is no proper coordination for training agricultural machinery specialists of the

Ministry of Agriculture, although specialists implement vocational school trainings

4.1.4 Agricultural Machinery Suppliers

Since the latter half of 2000s, agricultural machinery suppliers, who provide full-scale service,

have launched business operations in Kyrgyz. While there were a limited number of suppliers

and available manufacturers in the beginning, various types and models of agricultural

machinery from different manufacturers are presently sold. The suppliers listed in Table 3-5 are

official distributors of agricultural machinery in Kyrgyz. All of them operate their business in

Bishkek or its suburbs. In addition to the official distributors, there are several retail shops that

sell machinery of YTO, a Chinese manufacturer.

Since many suppliers have established an after-sales service system to provide repair,

spare-parts supply and quality guarantee, customers have gradually appreciated the improved

service compared to the previous situation. The following issues may remain to improve

customers’ convenience for buying agricultural machinery.

The suppliers concentrate on Bishkek city because domestic demand for agricultural

machinery in the Kyrgyz is relatively small compared to Kazakhstan and other countries.

Farmers living out of Bishkek have to make frequent visits to Bishkek to arrange for the

purchase and receiving of agricultural machinery. The farmers especially in the southern region,

i.e. Osh, Jalal-abad and Batken provinces, are burdened with frequents visit due to the poor

accessibility of Bishkek city. The MTZ tractor, a Belarus manufacturer, has been very popular

65

across the country since before independence. Farmers, therefore, have easy access to

information about MTZ tractors, such as working performance, fuel consumption, etc. even

though there is not a MTZ supplier nearby. However, they do not have enough information

about agricultural machinery produced by the other manufacturers. It is recommended that a

manufacturer, except for YTO, whose tractors are popularly sold in the southern region by small

retailers or individuals, who wants to promote the sales in Kyrgyz, should expand its supply

network in Osh, which is the central city in the southern region.

Eurasia Group, which sells John Deere agricultural

machinery in Kyrgyz, makes unique sales promotion

efforts, such as demonstrations on its own farm. Such a

sales technique may be useful in order to generate brand

awareness of agricultural machinery which is not popular

among Kyrgyz farmers. Eurasia Group has a plan to

expand its supply network to Osh city, as well as to open

a demonstration farm in the southern region.

While there is no limitation of manufacturers on Aiyl

Bank’s agricultural machinery leasing scheme, most of the machinery leased by the scheme are

Belarus made. The reason is that farmers have limited access to information about agricultural

machinery other than Belarus made machinery because a machinery list and machinery

pamphlets provided by Aiyl Bank mainly consist of Belarus machinery. It is necessary for

suppliers selling agricultural machinery other than Belarus made to prepare a machinery list and

pamphlets of their machinery for Aiyl Bank and other private banks in order to enhance their

sales and marketing.

A company loan arranged by only Avtomash is processed for limited corporate farms that are in

good financial condition. Many of them actually have the ability to buy agricultural machinery

in cash. Although the loan is a good sales promotion tool, the volume of the market for the loan

is limited to about 10% of the total sales of Avtomash.

4.1.5 Repair Engineers for Agricultural Machinery

As mentioned above, in this study, it was confirmed that there are private repair engineers for

agricultural machinery, but they do not have their own workshops. Most of them worked as

engineers during the Soviet Union period and presently they are rapidly increasing in an aging

population. Therefore, training the young generation is one issue to be addressed so that the

Demonstration of John Deere tractor

66

maintenance and repair work can be properly implemented in the future.

Machine stations and car service shops widely exist in the country. As such, this is one of

the ways these facilities can be fully utilized for maintenance and repair of agricultural

machinery. Moreover it is also necessary to obtain investment funds to introduce specialized

facilities and machine tools in order to improve the maintenance and repair services of

agricultural machinery.

4.1.6 Aiyl Bank

(1) Lack of Working Capital for Leasing

The number of lease subscriptions is increasing every year since 2011 when Aiyl Bank

started its leasing scheme for agricultural machinery. While demand for the lease is high, the

number of possible subscriptions depends on the volume of working capital. Since the working

capital of Aiyl Bank is insufficient, the lease does not presently meet the demand. According to

the interview survey, about 150 farmers have obtained approval for the lease throughout Kyrgyz.

They are presently awaiting the delivery of agricultural machinery. Although the potential

demand is larger than the actual demand, a lot of potential applicants do not make an application

due to the prolonged process from application to delivery.

Resource money for the lease has been accumulated with the cooperation from China (grant

& loan), Japan (counterpart funds of non-project grant aid and 2KR) and Turkey (grant). In

addition, the Eurasia Development Bank (EDB) has committed to disburse 20 million USD for

supporting the lease, and other donors, i.e. Poland, Korea, ADB and Islamic Development Bank,

are considering similar support. Nevertheless, there is still a great financial demand for the lease

considering the insufficient number and aging agricultural machinery.

Table 4-1 Assets of Aiyl Bank (million som)

Year 2009 2010 2011 2012 2013

Amount 2,550 2,960 4,041 4,330 7,381

Source: Aiyl Bank Financial Statement

(2) Lease Conditions

The past record shows that 90% of the leasing amount is paid for tractors. Although demand

for combine harvesters is also high, the following difficult conditions allow quite a limited

number of farmers to access the lease of combine harvesters.

High price of combine harvesters

67

Conditions of the down payment and repayment term are the same as the conditions for

tractors, although the price is much higher

While the minimum amount of the down payment is 10% of the total value, collateral is

required if the debtor makes a down payment only less than 30% of the total value. Although

real estate may be mortgaged, land is not applicable. It is very difficult for many farmers to

secure an amount enough for the mortgage from their houses due to their low value. In the rural

area, the hypothetical value of houses is only 40 – 50% of the assessed value. The 30% of down

payment for tractors, which are even cheaper than combine harvesters, is a difficult condition

for general farmers to meet. Many potential applicants for the leasing give up the application

due to the hard down payment condition. It is recommended that the conditions should be

relaxed in order to promote leasing. For example, a decreased down payment condition for

collateral-free leasing to 20% and a prolonged repayment term of up to 10 years.

(Example) Combine Harvester

In a case: Price: about 400 million Kyrgyz som, Down payment: 30% of the value, Interest rate: 8% a year, Repayment term: 7 years

Down payment: 1.2 million Kyrgyz som (24 thousand USD)

Annual payment: about 0.6 million Kyrgyz som (12 thousand USD）

Tractor In a case:

Price: about 100 million Kyrgyz som, Down payment: 30% of the value, Interest rate: 8% a year, Repayment term: 7 years

Down payment: 0.3 million Kyrgyz som (6 thousand USD) Annual payment: about 150 thousand Kyrgyz som (3 thousand USD）

(Reference)

17

The average monthly income of a farmer in 2012: 5,309 Kyrgyz som The average monthly expenditure of a farmer in 2012: 4,341.15 Kyrgyz som The monthly balance: 967.85 Kyrgyz som

(3) Qualification Examination Ability

While the size of the Aiyl Bank branch offices vary, the number of staff in charge of loans

and leasing is about 5 in the case of a middle sized branch. 300 customers who are interested in

loans or leasing visit the branch offices; the number depends on the season and the offices.

There are only 15 -20 customers out of 300 who intend to apply for the leasing scheme for

agricultural machinery. The bank’s human resources do not meet the required number to carry

out a proper qualification examination which is made at the applicant’s farm or house prior to

the lease approval.

The lease repayment rate is almost 100% at present. The high rate is caused by a conservative

selection of solvent farmers for the leasing. It is reasonable that Aiyl Bank pay serious attention

17 “Kyrgyzstan in Figures 2013”, the National Statistics Committee

68

to the safety of financing, and avoid troubling unreliable people regarding repayment of heavy

debt. However, it is expected that the bank conduct a more comprehensive qualification

examination by assessing not only the present assets and financial conditions, but also the

potential and possibilities of the applicant farmers, such as the farming plan and earnings after

the leasing of agricultural machinery, for accelerating the agricultural mechanization and

agricultural development. Aiyl Bank should improve the staff’s ability to conduct the

qualification examination in order to respond to expectations. Furthermore, the staff needs to

improve their knowledge about agricultural machinery and facilities for diversification of the

leased machinery.

(4) Loans for used machinery

The Aiyl Bank leasing scheme is available only for brand-new agricultural machinery. While

an agricultural loan scheme is applicable for buying used machinery, the annual interest rate is

18%. The high interest rate hinders many farmers from applying for the loan. Establishment of

an agricultural leasing scheme for used machinery is actually not realistic considering required

quality assessment and the guarantee system of the machinery. A loan scheme with a low

interest rate may contribute to the sales promotion of used machinery in Kyrgyz.

(5) Diversification of leased machinery

A properly balanced agricultural mechanization not only for tractors and combine harvesters,

but also with other agricultural machinery and facilities covering all agricultural aspects, such as

marketing and processing machinery, storage facilities, irrigation facility construction

machinery, etc. should be promoted for agricultural development. The Aiyl Bank leasing

scheme actually covers only tractors, combine harvesters and implements. It is recommended

that Aiyl Bank should diversify its leasing commodities. According to the collected information,

Aiyl Bank is planning to commence a leasing of agricultural processing machinery.

While growing crops vary with the region, Aiyl Bank prepares a list of machinery applicable

for its leasing scheme, considering the local agricultural condition. However, it is initially

difficult to purchase several types of machinery, i.e. rice combine harvesters, cotton tractors and

forage harvesting machinery, in Kyrgyz. Although any agricultural machinery, even those not

included in the list can be leased, many farmers do not have enough information and knowledge

for choosing unfamiliar machinery for the lease. Public relations activity and information

service through an exhibition, a demonstration run and a promotion meeting of agricultural

machinery may contribute to stimulate leasing.

69

4.1.7 Farmers

Figure 4-1 illustrates farmers’ problems based on the questionnaire (multiple answers from

agricultural machinery holders, users of machinery service, no machine holders and no service

users). The most common problem was “limited sales channel”. This is because a limited

number of customers understand the principle of market mechanism (competition principle).

The second largest number of farmers answered the problem as “accessibility of machinery

services”. The agricultural machinery holder also pointed out this problem because there are a

certain number of cases in which their agricultural works are not only covered by their own

machines, but also depend on external services. This answer is the most common among the

farmers who use external machinery services. There are also different cases in which farmers

are using external machinery service, although, farmers cannot implement appropriate seasonal

work because machines in the area do not cover all demands of the area. Also, even though

among the farmers who are categorized as no service users, some farmers desire to use

machinery services. But there are problems regarding accessibility of services, such as deficit

machinery service agencies around the area and the service cost is too expensive.

In Osh province, during harvesting season, deficit combines are substituted by rental

machines from Uzbekistan. However, since 2010, because of the border closure between

Kyrgyz and Uzbekistan, farmers in Osh province cannot use these machines, and the deficit

machines used during harvesting season are in a critical situation. Reflecting the situation, the

price of machinery services are increasing in some areas.

Source: The JICA Study Team (based on questionnaire)

Figure 4-1 Issues Relevant to Agricultural Producers

0 5 10 15 20 25

Storage facilitiesMaintenance

Distribution of spare partsDeficit funds

Cultivation technologiesPrice of fuel

Quality of fertilizerAccess to fertilizer

Cheap farm gate priceAccess to high quality seedes

Price of fertilizerTransportation

Accessibility to irrigationAccessibility to machinery services

Limited sales channel

Agricultural machinery holder

User of machinery service

No machine holder and no service user

70

On a related note, problems about the quality of agricultural inputs including fertilizer and

seeds, prices of inputs, supply quantity, cultivation technologies, necessary funds for

agricultural production, spare parts of machines and maintenance, and storage facilities of

agricultural products are also noted to be problematic. Additionally, the price of fuel also was

indicated as a key issue of agricultural machinery in the interview. As shown in Figure 4-2, the

fuel price tripled since the last decade. The prices of lamb and flour are not farm gate prices but

retail prices, so the inflation rate of their farm gate prices might be lower than retail prices.

Source: The JICA Study Team (based on the information of Kyrgyz Central Bank and National Statistics Committee)

Figure 4-2 Index of Retail Prices for Fuel, Flour, Lamb (in USD, 2003 as the base)

Regarding the purchase of agricultural machinery, of course among the farmers who do not

have machines, there are farmers who prefer to purchase machines. Machine preference and the

manner of purchasing varies, such as leasing for new machine purchases and loan for

second-hand machine purchases, but many farmers desire to set the lease or loan conditions as a,

“lower interest rate and longer term redemption period”. According to the results from farmers

who already have machines (Figure 4-3), the most common answer was “machinery

performance” (power output of the machine which suit their needs) as a point when they

purchase additional machines. In the second place, four issues: country of origin, price,

robustness/durability, price and accessibility of spare parts had the same number of answers.

There were a limited numbers of answers, but ease of maintenance and compatibility of

implements were also noted.

100

120

140

160

180

200

220

240

260

280

300

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gasoline,1Liter

Flour, 1kg

Lamb, 1kg

71

Source: The JICA Study Team (based on questionnaire)

Figure 4-3 Conditions for Selection for Agricultural Machinery Purchases

Work Efficiency of Decrepit Harvester Combines

Operation capabilities of decrepit combines harvest at a low rate, and this results in

harvesting losses, which results in a 30% decrease in production at times. This harvesting loss

data is referred to in various documents. According to MA & LR, this harvesting loss data is

calculated from the demonstrated results of farmers who provide machinery harvesting services

and for combine dealers for sales promotion.

Stones on the farmland

On farmland, there were large numbers of round shaped fist-sized, or bigger, stones. During the

field research, the research team discovered that the bigger sized stones accumulated next to

farmlands. Farmers seem to carry these stones away from their farms, but it seems that they

cannot remove all the stones. There is the possibility of breaking the stones by using agricultural

machinery on farmland.

4.1.8 Agricultural Machinery Service Agencies

The machinery service agencies in Kyrgyz are quite limited, and most of them are individual

farmers and agricultural corporations who have agricultural machinery. The issues surrounding

them, which are shown in the Figure 4-2, are the same as other farmers to a varying degree.

4.2 Problems of the Agricultural Machinery Market

The agricultural market in Kyrgyz has developed rapidly in the last 5 years with the financial

support of the Government and a quick expansion of machinery distributors. It is important that

0 5 10 15 20

Design

Compatibility of implements

Easiness of maintenance

Accessibility of spare parts

Robustness, Durability

Price

Country of origin

Machinery performance

72

the market be developed from now on, so that farmers will be able to choose the machinery

themselves, in accordance with quality and the cost performance. A proper information service

about agricultural machinery should be provided by the Governments, financial institutions

offering the lease, manufacturers and dealers in order to realize the market.

A milestone approach was taken by the

Government. The Ministry of Economy hosted the

“International Agricultural Exhibition” “Aiyl-Agro

2013” in May 2013 in Bishkek city. This is an

international exhibition of agricultural and

livestock machinery, and food processing

machinery, and there are about 6,000 visitors in

total. Various kinds of machinery produced in CIS

countries, Europe, USA, Turkey, China, etc. were

displayed at the exhibition. The exhibition was very useful not only for farmers and concerned

personnel to collect interested information, but also for manufacturers and suppliers to sense

responses and requests from potential customers.

The Governments of European countries and the USA intensively provided necessary support

and information to participating manufacturers from their own countries in the exhibition. Such

support from the Government was very helpful to manufacturers who intend to start their

business in Kyrgyz. While the Government has a plan to host the exhibition again in May 2014,

it is desirable to organize the same exhibition in Osh city, targeting farmers in the southern

region.

Manufacturers and suppliers usually focus their business on popular and profitable

agricultural machinery for increasing profit. Therefore, small-powered combine harvesters

applicable to Osh province, occupied by small-scale farmers or rice combine harvesters desired

by farmers in the Uzgen district, are not available in the Kyrgyz market. The MA & LR should

collect information about actual demand of such machinery and strong demand, but from

limited farmers. Then, the MA & LR should develop a support system for machinery

procurement by implementing a pilot operation and a subsidy system for reducing the financial

burden of leases.

4.3 Problems of Maintenance of Agricultural Machinery

Regarding supply of spare parts, some tractors introduced by the donor countries, have issues

“Aiyl-Agro 2013” in Bishkek

73

regarding high price and long delivery periods, since tractors are not generally utilized in the

country. Other machinery that is made in Belarus and Russia, have supply-and-demand issues in

some regions, but basically machinery spare parts are presently available. Recently the number

of Chinese made machinery has increased, and the supply of the spare parts system is gradually

improving as well.

Farm implements, chiefly for plowing, harrowing and leveling work, repair the old model

implements and are still widely being utilized.

As mentioned in 3.3.2, farmers and private repair engineers are repairing agricultural

machinery themselves. However, they do not use the measuring tools, and they cannot properly

judge repair work conducted. This is one of issues to be improved for their proper repair. To

improve this for such works, it is recommended that technical colleges and vocational schools

be fully utilized. The following countermeasures are to be considered.

Based on the agricultural development policy, teaching materials and curriculum should be

carefully reviewed, together with the ministries concerned.

The government should gradually renew the outdated training equipment like facilities,

machines, educational materials etc.

Re-education for the farmers, short-term training courses like cultivation technology,

operation and machinery services, farm management etc. should be conducted during

off-season farming.

Personnel training, mentioned above, should be considered as a agricultural mechanization

policy.

4.4 Problems of Financing for Agricultural Mechanization

The following problems of agricultural financing are recognized by the JICA Study.

(1) Less understanding of the lease

The leasing system is not well understood by benefited farmers. They have limited

knowledge about the system. Dissemination measures should be taken with due attention to the

following matters:

Differences between a loan and a lease

Different taxation imposed on a loan and a lease

Customs duty

Advantages and disadvantages of loans and leases

Information sources of the leasing system

74

Procedures and documents necessary for the lease

The Union of Kyrgyz Banks participated in workshops to train business women organized by

ADB as a consultant, and explained the available leasing system to the participants. The Union

also has a plan to organize a forum on the leasing system in “Aiyl-Agro 2014” expected in May,

2014. It is recommended to organize a similar workshop or forum in the provinces.

(2) The increase in financial institutions providing the lease

The number of leases provided by other banks other than Aiyl Bank is increasing with reform

of the taxation system. However, banks have no choice but to provide a lease with higher

interest rates than Aiyl Bank, as they do not qualify for the Government subsidy or donor’s fund

to support their leasing schemes. The number of financial institutions providing the lease and

their staff concerned should be increased in order to secure smooth provisions for the lease. It is

necessary to increase the number of institutions that can provide leases with the same conditions

as Aiyl Bank.

(3) Taxation regarding the lease

The leasing business in Kyrgyz started in 2002 when the Law on Finance leases (leasing) of

the Kyrgyz Republic was enacted. However, the number of leases grew at a sluggish pace at the

beginning because of the heavier burden of taxes than the loan. As to taxes for the lease, 10% of

income tax, 10% of interest tax, 2-3% of transaction tax and VAT were imposed. Consequently,

the accumulated tax was 24%. In order to stimulate the lease by addressing the above taxation

issue, the Government has taken the following measures:

Reform in customs duties in 2011

Revision of tax regulations in 2012

VAT exemption of agricultural machinery for leasing

Privilege of tax exemption (income tax, interest tax and transaction tax) to the leasing

business (to be reviewed whether or not the tax exemption will be continued in 2017)

Although the taxation issue has been mostly resolved by the above measures, a problem still

arises during the customs clearance. Due to the different interpretation of the relevant

regulations, the VAT exemption measure of agricultural machinery for leasing is not well

understood by some customs officers. Smooth customs clearance of machinery is sometimes

prevented due to different interpretations. The Union of Kyrgyz Banks which was involved in

taxation reform has a plan to address the different interpretations by issuance of a handbook

concerning the tax system. According to legal staff of the Union, there may be a discrepancy

75

between the tax regulations and other relevant laws. Presently, reform of other relevant laws is

gradually under way.

(4) Multiple debts

Among farmers interviewed, there are some farmers who cannot access an agricultural loan

of Aiyl Bank after getting a lease from the bank. According to the farmers, they are applying for

microcredit to procure seeds, fuel and chemical fertilizers while they utilized the Aiyl Bank loan.

After clarification of the situation with the bank, it has become clear that they cannot apply for

the loan only because of their solvency, as the bank does not have regulations prohibiting the

duplication of loans or leases. The bank has evaluated that the farmers may not have enough

solvency to take a new agricultural loan. However, their financial burden becomes heavy, if

they apply for microcredit instead of the agricultural loan, since the interest rate of the

microcredit is higher than that of the agricultural loan. A more flexible operation of the loan

conditions should be considered by financial institutions. On the other hand, it is necessary for

debtor farmers to improve their management ability, so that they will be able to make a

reasonable financial plan and to refrain from making easy and multiple loans.

(5) Agricultural insurance

An interview survey of farmers revealed that some farmers gave up having a consultation with a

financial institution due to anxiety about the failure of repayment, although they are interested

in leasing or buying agricultural machinery. Even farmers who have already leased agricultural

machinery after an appraisal of their assets, such as houses and livestock, may have difficulty in

repaying the debt during the 7-year repayment term due to a natural disaster, like a drought and

a sharp fall in the prices of agricultural products. Agricultural insurance may ease farmers’

concerns over the default, and contribute to accelerating the purchase of agricultural machinery

by a loan or lease.

4.5 Causal Relationship of Subjects Concerning All of Agricultural Mechanization

In order to organize the subjects concerning agricultural mechanization, a problem tree

diagram is summarized (Figure 4-4 and 4-5). Although the subjects concern agricultural

mechanization, the problems concerned have achieved not only agricultural machines, but also

all the agricultural production field.

76

Figure 4-4 Schematic Analysis of the Problems on Agricultural Mechanization (1)

Agriculturalmechanization does notprogress.

The governmental policy aboutagricultural mechanization is notfixed.

There is no policy for agriculturalsector.

There is no policy foragricultural mechanization.

The funding ability of farmhousesis insufficient.

Since the production costs arehigh, profit does not occur.

Services by agriculturalmachines are expensive.

Fuel costs are high.

Service costs by agriculturalmachines are maintained at highlevel.

The number of the agriculturalmachines in the area are notsufficient.

Since the border with Uzbekistanwas closed in the southern area,combine harvesters cannot berented.

Fuel cost is high.Since the combine harvester isexpensive, there are fewfarmhouses that can purchase it.

Fertilizer costs are high.

Agricultural chemical costsare high.

Seed cost is high.

The working efficiency of oldagricultural machines is low.

Appropriate machine maintenanceand repairing are not conducted.

Farmhouses are maintaining andrepairing agricultural machineswithout appropriate knowledge.

For farmhouses, there are noopportunities to learn appropriatemaintenance and repairingtechnologies.

Genuine parts are not used.

The aged deterioration of theagricultural machine isprogressing.

Transportation costs ofagricultural products are high.

Farmhouses do not own tractorsor trailers.

During the harvest season, it isdifficult to access agriculturalmachinery services.

Fuel cost is high.

The harvest yield is low.Large percentage of rain-fedproducts are cultivated.

Irrigation facilities become olderand cannot be used.

High quality seeds cannot beobtained.

Seeds are not renewed. High quality seeds are expensive.

The necessity for renewal ofseeds is not understood.

High quality fertilizer can notbe obtained.

Since the fertilizer isexpensive, it is difficult tosuficiently provide it.

Low interest loans for agricultureare not available.

Agricultural production workcan not be done at theoptimal time.

It is difficult to access to theagricultural machinery services atthe optimal time.

Agricultural machine serviceproviders prioritize working ontheir own farmland over otherfarmhouses.

Quantity of agricultural machineservice providers is not enough.

Large harvest loss occurswhen old combine harvestersare used.

Renewal of combine harvesters isdelayed.

Combine harvesters areexpensive.

Cultivation techniques are notunderstood well.

The spread system of agriculturaltechnology is underdeveloped.

Production losses are caused,because agricultural productionwork can not be done at theoptimal time.

Quantity of agriculturalmachine service providers isnot enough.

Price of agricultural products islow.

Since there are nowarehouses, all agriculturalproducts should be sold atthe time of harvesting.

Quality of the agriculturalproducts are not uniform.

Sorting and classification ofagricultural products are not done.

Necessity of the sorting andclassification of agriculturalproducts are not understood byfarmhouses.

Lack of adequate equipment forsorting and classification.

Since the buyer of theproducts is fixed, there is nocompetition in aspects ofprice and/or quality.

77

Figure 4-5 Schematic Analysis of the Problems on Agricultural Mechanization (2)

Processing for giving added valueto agricultural products is notestablished.

There are no processingfacilities in the area.

Investment for agriculturalprocessing sector does notprogress.

Market demand for agriculturalprocessed products is notresearched.

There is no information aboutprocessing facilities (in aspects ofspecifications and prices etc.)

There are not enough financialinstruments for investment.

Banks do not have enoughknowledge about the financing ofa processing plant.

Small farmhouses (less than 1 ha)have difficulty accessingagricultural machine services.

There are no agriculturalmachine services that canaccept small farmhousesrequirements.

There is no institution to realizeagricultural machine service, atthe focused area where smallfarmhouses are centered.

There are some farmhouses thatcannot make leasing contracts,even if they pass probation.

There is not enough in the bankfor seed funds leasing.

Finencing from thegovernment is insufficient.

Government supports only byusing counter part funds of grantaids by the Government of Japanand China.

Funds from the donors arenot sufficient.

This is not a priority sector fordonors.

There is no policy for agriculturalmechanization.

The results or necessity for theleasing system are not understoodwell by the persons concerned.

Only Aiyl Bank is performing low-interest rate leasing.

Other banks do not get lowinterest state funds for agriculturalmachine leasing.

Shortage of manpower in banks.Number of bank employeesconducting expertise of leasingcontracts is not enough.

Leasing conditions of banks aresevere.

Leasing conditions for high pricedcombine harvesters and lowpriced tractors are the same.(Initial payment, interest and termsof repayment)

Since leasing condition isbased on the governmentordinance, there is noinstitutional pliability.

Even the leasing of tractor withcomparatively low price is difficultto lease for small farmhouses.

Since leasing condition isbased on the governmentordinance, there is noinstitutional pliability.

If there are arrears in thecooperative social insurancepremiums, leasing contractscannot occur.

The financial health of theassociation was bad andprofits did not occur. And,social insurance premiumswere defaulted on.

After independence, men who didnot know about farm managementwere engaged in cooperativemanagement.

There is no agricultural machinewhich suited the cultivationenvironment.

Type of agricultural machineswhich are available by the leasingsystem are limited.

Agricultural machines for cropswith small quantity production,such as rice, are not introduced.

Secondhand agricultural machinesare expensive.

There are few machines whichappear on the secondhand marketof agricultural machines.

Old agricultural machines areused continuously.

Since cheap spare parts for oldagricultural machines are widelydistributed and used, oldmachines are used continuously,although their operationalefficiency is low.

Maintenance costs can bemaintained at low level, becausereplacement of parts andrepairmen of agricultural machinesare done by farmers.

Highly motivated farmhouses thatobtained new agriculturalmachines, also using oldmachines simultaneously,widening the cultivation area.

Loan conditions for secondhandagricultural machines are severe.(Annual interest is 18% and theloan limit is a maximum 10 years)

78

Current Status of the Government and Donors Against the Issues of

Agricultural Mechanization

Investigation of the Kyrgyz Government and Donors

Kyrgyz Government

After independence, the government’s approach towards agricultural mechanization has been

limited to grant aid (including counterpart funds), low interest loans and leasing through the

state bank or funds related to loan aid. There is no direct assistance in terms of technologies and

funds to farmers, dealers and private enterprises. Besides, currently the government has not

designed any policies pertaining to agricultural mechanization, so it is ambiguous regarding

what kind of assistance the government can provide in the future.

The Ministry of Education and Science and the Ministry of Work, Migration and Youth foster

agricultural machinery operators and mechanics at vocational training schools and technical

colleges across the country.

Major Donors

Food and Agriculture Organization (FAO)

FAO is mainly assists in the field of agricultural policy making and food security information.

Regarding agricultural policy, FAO published the research report, “Kyrgyz Republic Farm

Mechanization and Agricultural Productivity” in 2009, but FAO has not provided any tangible

assistance. According to FAO, the animal husbandry sector will be a significant field of

assistance in the country, and longitudinal assistance for this sector, such as human resource

development, upgrading production equipment and facilities, disease control, and research

programs will be needed in the future.

United States Agency for International Development (USAID)

The current USAID project that is related to the agricultural sector in Kyrgyz is the Kyrgyz

Agro-Input Enterprise Development Project (KAED) and the project assists with the following

fields. USAID commissioned this project to the International Fertilizer Development Center

(IFDC), and this organization is currently working on the project.

< Assistance Strategy of the KAED >

Cooperation in the field of animal husbandry, with the help of technical and technological

79

assistance for the introduction of modern management practices and improvement of

productivity

Capacity building of the seed production sector for high quality seed production and

distribution

Assistance for the improvement of food security (production of wheat)

Assistance of PPP promotion as a strategy to attract investment to the agricultural sector

Under the project, the following are the KAED 3 programs:

Program of the Economic Development Fund (EDF)

Phase I: 2011, Distribution of high quality seeds (4.1 million USD)

Phase II: 2012, Capacity building of seed production (7.4 million DM)

Phase III: 2012, Cooperation in the field of animal husbandry (8.5 million USD)

The Economic Development Fund which is under the Ministry of Finance, leased agricultural

machinery to farmers by using USAID grants. Regarding the collected money, the Ministry of

Agriculture, the Cabinet Office and Economic Development Funds agreed to reuse the collected

money for each sectors’ assistance in order to secure sustainability. Under the program of

capacity building for seed production, American and European manufacturers’ tractors and

combines are leased to farmers. The leasing conditions are at a 2% annual interest rate, 10 year

redemption period, and ownership shifts after the leasing term. Regarding the collected money,

this project will not take part in this component. And, this project will finish in September 2014,

but the further development of the decision has not yet occurred. According to the person in

charge of USAID, since current leasing conditions (the initial payment, interest rate, payment

term) are too strict, even middle-scale farmers may not apply for the leasing program.

The program of farmland rehabilitation

In the period 2011-2012, this program was involved in the rehabilitation of irrigation

facilities totaling 2,000ha abandonment cultivation areas in 5 locations of southern parts of

Kyrgyz, and the diffusion of cultivation technology.

The program of Public Private Partnership: PPP

In this program, KAED provides grant funds to the government, not directly to private firms,

for investment in agricultural machinery and facilities. And then, through the Economic

Development Fund which is under the control of the Ministry of Finance, whose funds are used

80

in leasing transactions. KAED also assists with trainings on the use of the purchased equipment,

and cultivation technologies for farmers. The details of the PPP program are described below.

Eurasia Group, LCC

In 2009, the private company Eurasia Group (headquartered in Switzerland) was established

as an agricultural firm that started machinery services for farmers. Eurasia Group established a

local corporation in Kyrgyz with the cooperation of international agricultural firms such as John

Deere, Pioneer, DuPont and Monsanto and has begun agricultural machinery services.

Cooperative companies sell seeds (wheat, sunflower), fertilizer and pesticides to farmers

intending to promote the improvement of quality and production as a synergistic effect. Eurasia

Group is an authorized John Deere dealer in Kyrgyz.

Oasis Agro, LCC

In 2011, KAED committed to work with Oasis Agro in order to promote investments for

poultry, production of chicken eggs and high quality foodstuff and soybeans. KAED established

a partnering relationship with soybean farmers and assisted in cultivation technologies in order

to produce high quality chicken eggs and edible oils.

Kumtor Gold Company, CJSC

In 2013, Kumtor Gold donated 200,000 USD to the rehabilitation (farmlands, irrigation

facilities) project of cultivation of abandoned areas, where south Issyk-kul lakeside villages are

controlled, as a CSR: Corporate Social Responsibility program. Also, the KAED and local

farmers input 170,000 USD (including labor force) for this program. About 1250 ha of the

targeted areas were invested in (rehabilitation and maintenance of farmland and irrigation

facilities), and leased to farmers through bidding in October 2013. The KAED also assists in

cultivation technologies for the targeted farmers.

Other donors (Turkey, China, Eurasian Development Bank)

China

In 2006, 1,200 units of Chinese tractors (100 million Chinese yuan) were granted, and

Chinese assistance to Kyrgyz has started at that time. Tractors were transferred from the Kyrgyz

Government to the state leasing company “Kyrgyz Aiyl Service” on a 10 year loan at a 16%

annual interest rate. The state company used leased tractors for its own agricultural production

or partially transferred to farmers in the lease (10 year term lease, without interest). But due to

the lack of after-sales service, it was difficult to obtain spare parts of Chinese tractors at that

81

time. Although the Aiyl Service leased their machinery to farmers without an interest rate, the

company had to pay an interest rate to the government. Due to the inability to obtain spare parts

and the unbalanced situation regarding the interest rate between farmers, the company and the

Government, this scheme could not continue. 18

In 2011, China donated 267 units of Chinese tractors (YTO904) and its spare parts (30

million Chinese yuan = 4.66 million USD). These tractors were transferred from Kyrgyz

government to the Aiyl Bank, and then leased to farmers (State Leasing-1). The counterpart

funds were utilized for re-leasing as a State-Leasing phase 2. In this scheme, leasing machinery

is not limited to Chinese machines, therefore the Belarusan tractor MTZ and other attachments

are also leased. Since the State Leasing-1 is low interest rate leasing, the target machines for

leasing are limited to high price machinery, such as combines.

Moreover, Aiyl Bank has concluded an agreement with the Chinese government, and a credit

line was set at 3 million USD to purchase tractors for leasing from Chinese dealers. Loan

conditions are a six month interest Libor plus 6.5%, and the period of redemption will be June

2017. The machinery leasing conditions of this scheme are a maximum leasing term of 5 years,

annual interest rate of 15 to 17 %, dollar-denominated leasing, Chinese tractors (YTO) only.

Bills for the tractors are directly paid by the Chinese Development Bank to the manufacturer.

Turkey

In June 2012, the Turkish government committed to providing 106 million USD to Kyrgyz

for social economic development. Of this amount, 100 million USD is loan assistance (interest

rate: 0.1%, redemption period: 20 years) and 6 million USD is grant aid. Kyrgyz Government

utilized this assistance for the leasing program of Aiyl Bank. In February 2013, the government

prorated 225 units of Belarusan tractors which was determined by bidding (232,831,500 som =

approximately 5 million USD). These became the underlying assets of “state leasing” 3 of Aiyl

Bank, and the counterpart fund of these assets are utilized for re-leasing.

Eurasian Development Bank: EDB

The Eurasian Development Bank was established by Russia and Kazakhstan in 2006. This

international financial institution aims to assists member countries’ economic growth, promote

trading and economic cooperation among the members, and assist with integration in the

Eurasian area. Current member countries are Armenia, Tajikistan, Belarus, Kyrgyz, Russia and

18 FAO 2009, “Mechanization and agricultural productivity of the Kyrgyz Republic”

82

Kazakhstan. According to MA & LR, Kyrgyz Government approved EDB’s loan (20 million

USD) in December 2012. This loan will be prorated for the agricultural machinery leasing of

Aiyl Bank in 2014.

Intervention of the Japanese Government

Non-Project Type Grant Aid and Grant Assistance for Underprivileged Farmers (2KR)

From 1995-2005, the Japanese Government provided 842 tractors and 304 combine

harvesters to Kyrgyz through Non-project type grant aid and 2KR. After independence in 1992,

public farmland was segmentalized and distributed to each household surrounding Kolkhoz and

Sovkhoz. Consequently, a large number of farm households began cultivation. Agriculture

machinery and equipment was distributed to a limited number of agriculture cooperatives and

individual farmers, and renewal of agriculture machinery was stopped by a disruption of the

Soviet Union since independence. As such, farmers had to buy agriculture machinery on the

market, but there were neither dealers nor agents of manufacturers in Kyrgyz. Furthermore,

there were no financial products available at commercial banks for purchasing machinery.

Farmers who could access agriculture machinery were very limited at this time.

Agriculture machinery provided by the Japanese Government at this period, was leased

mainly to agriculture cooperatives and machinery service companies to provide machinery

services to farmers who cannot access it. Repayment of this leasing has continued to be

undertaken by the State Fund for Economic Development (the Ministry of Finance).

Manufacturing countries of procured machinery of the above grant aid project were varied, such

as Russia, Belarus, Finland, Germany, and Poland. Agents of manufacturers of the machinery

no longer run their business in Kyrgyz, and never supply spare parts and any after-sales services.

However, genuine spare parts for the Belarus tractor, which have been used during the Soviet

Union era, namely MTZ, are available at a new agent in Bishkek and at nationwide bazaars.

Especially regarding machinery, which has been used since Soviet the Union era, Chinese made

imitation spare parts are also available in bazaars. Machinery owners can buy spare parts for

other manufacturers through dealers in Bishkek, but delivery time is as long as approximately 3

weeks, and the price is 3 to 5 times higher than that of MTZ.

In the case of 2KR in Kyrgyz, as previously mentioned, procured machinery is leased to

cooperatives and service companies. Repayment of machinery is collected and reserved in the

2KR Counterpart Fund for economic development. Due to a short repayment period, the

counterpart fund has not been reserved as scheduled. Leasing conditions for the 2KR program

83

were the following:

Machinery expense is the FOB price at country of origin,

Necessary collateral is 20% of the machinery expense,

0% interest rate, and

Repayment (leasing) period varied from 3 to 6 years after signing the Exchange of Note (E/N)

Since it took at least one year to receive the requested machinery at the recipient country after

E/N signed, the repayment period was actually a maximum of 5 years. The 2KR report said that,

at this time, lessees and the Government of Kyrgyz requested that the Japanese Government

extend the repayment (leasing) period up to 10 years19. The 2KR counterpart fund was utilized

for procurement of an additional 417 tractors and 70 combine harvesters, and a seed distribution

project.

JICA Training

From 2008-2013, the Kyrgyz Government sent thirteen participants to the JICA training

course “Agricultural Mechanization for Central Asia and Caucasus” being held at Tsukuba

International Training Center in Japan. Of which, nine participants came from the University of

Agriculture, two came from the Technical Inspection Bureau of the Ministry of Agriculture, and

two came from agricultural enterprises.

A goal of the training course is that participants complete a technical proposal for their

country on research and development, extension, and operation and maintenance of agriculture

machinery through industry-academia-government collaboration, which they learned from

Japan’s experience.

One participant from the University of Agriculture, who drew up an action plan for operation

and maintenance of agriculture machinery during the training, has tried to acquire a budget to

implement the action plan. Another proposed the concept of cost reduction and timeliness of

farm work for human intensive rice production in the southern area. Some participants extended

their knowledge and experience learned in Japan to other lecturers and students, or proposed

research work on agriculture machinery services. However, it was very difficult for them to

materialize their plans due to a limited budget at the university. In general, since independence

government agencies have been facing a budget shortage, and collaboration with the private

sector has not worked enough.

19 Grant Aid for the Increase of Food Production (2KR) in Kyrgyz Republic, 2004, JICA

84

Tab

le 5

-1

Res

ult

s of

Non

-pro

ject

typ

e G

ran

t A

id a

nd

2K

R

Typ

e F

isca

l Y

ear

EN

am

ount

s G

oods

N

umbe

rsM

odel

/ Man

ufac

ture

r (C

ount

ry o

f O

rigi

n)

Spe

cifi

cati

ons

FO

BU

nit

pric

es

(yen

)

Non

-pro

ject

ty

pe G

rant

A

id

1995

1 bi

llion

yen

(0

.526

bill

ion

yen

for

agri

cult

ure

mac

hine

ry)

Tra

ctor

206

MT

Z 8

2.0

(Bel

arus

)T

30A

-80

(Hun

gary

)M

TZ

(80h

p)T

30A

-80 (

30hp

)

Com

bine

har

vest

er25

S

eed

dril

l40

S

eed

clea

ner

15

Spa

re p

arts

1

1996

1 bi

llion

yen

(0

.53

billi

on y

en

for

agri

cult

ure

mac

hine

ry)

Tra

ctor

296

Bel

arus

82.0

(Bel

arus

)

P

otat

o ha

rves

ter

Com

bine

har

vest

er46

RO

ST

SEL

MA

SH

NIV

A(R

ussi

a)

S

pray

er

3-

whe

el tr

acto

r10

C

raw

ler

trac

tor

50

1997

1 bi

llion

yen

(0.4

58 b

illio

n ye

n fo

r ag

ricu

ltur

e m

achi

ner y

)

Tra

ctor

18

Plo

w18

Com

bine

har

vest

er38

19

99

0.1

billi

on y

enN

o ag

ricu

ltur

e m

achi

nery

2002

0.3

billi

on y

en

(0.2

25 b

illio

n ye

n fo

r ag

ricu

ltur

e m

achi

nery

)

Ref

rige

rate

d tr

ack

2M

AZ

-975

850

Tra

ctor

121

Bel

arus

82.0

(Bel

arus

)80

hp

See

d dr

ill

50S

PU

-4D

C

Tra

ctor

M

AZ

-642

208

Sub

tota

l

3.4

billi

on y

en (

1.73

9 bi

llion

yen

for

agr

icul

ture

mac

hine

ry)

2KR

1996

0.

3 bi

llion

yen

T

ract

o r56

MT

Z 8

2.1

(Bel

arus

)80

hp2,

544,

950

Com

bine

har

vest

er19

RO

ST

SEL

MA

SH

NIV

A(R

ussi

a)15

5hp

6,83

2,38

0 19

97

0.3

billi

onye

nC

ombi

ne h

arve

ste r

28M

asse

y F

ergu

son2

3(F

inla

nd)

115h

p, w

idth

4.2

m7,

730,

000

1998

0.

3 bi

llion

yen

Com

bine

har

vest

e r26

CL

AS

S D

omin

ator

88V

X(G

erm

any)

159h

p9,

000,

000

1999

0.

27 b

illio

n ye

n 4W

D tr

acto

r70

ZP

C U

RSU

S SA

161

4(P

olan

d)15

5hp

2,53

2,15

8 P

low

70U

NIA

TU

R 1

20 B

40.4

+1/

U-1

38/2

/"16

inch

es, 5

row

s17

8,56

5 20

00

0.33

bill

ion

yen

Com

bine

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vest

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SA

MPO

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SEN

LE

W 2

065

(Fin

land

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0hp

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02

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billi

onye

nC

ombi

ne h

arve

ste r

43S

AM

PO R

OSE

NL

EW

206

5(F

inla

nd)

200h

p5,

831,

000

2005

0.

2 bi

llion

yen

Com

bine

har

vest

er35

RO

ST

SEL

MA

SH

NIV

A(R

ussi

a)15

5hp

4,60

0,96

0 S

ub to

tal

2

billi

on y

en

Tot

al

5.

4 bi

llion

yen

(3.

739

billi

on y

en f

or a

gric

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re m

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)

Sou

rce:

Dev

elop

ed b

y th

e JI

CA

Stu

dy T

eam

ref

erri

ng to

doc

umen

ts f

rom

the

Em

bass

y of

Jap

an in

Kyr

gyz

For

the

FO

B u

nit p

rice

, the

ann

ual a

vera

ge e

xcha

nge

rate

of

Mit

subi

shi U

FJ

Fin

anci

al a

nd C

onsu

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g (h

ttp:

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urc-

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ases

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.jp/f

x/pa

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mon

th.p

hp)

was

use

d.

85

Consideration of Directions and Fields for Support Programs for Agricultural Mechanization

Approach for Promotion of Agriculture Mechanization

Countermeasures for problems analyzed in sub-chapter 4.5 were considered and listed in

Table 6-1. The Implementation agency and target period (short, medium and long) for each

countermeasure is shown in the table.

The main issue to be tackled for agriculture mechanization in Kyrgyz is the improvement of

quality and quantity of agriculture machinery. In other words, to increase agriculture

productivity by promoting renewal of machines that have low working efficiency, and the

acceleration of new tractor introductions to potential tractor owners to decrease machinery

shortage. This i) stems a decrease in the number of machines, ii) increases productivity by

in-time work and reducing harvest loss, and iii) increases the production area. As a result, it can

contribute to the achievement of “improvement of production and productivity” as a sector

development goal. Furthermore, it can improve access to machinery service for small-scale

farmers by increasing the number of machinery in the area where small plots are dominant.

The key program for renewal of agriculture machinery is the leasing program, and its

important role will continue in the future. However, in order to accelerate the renewal of

machinery with the leasing program, some issues in both public and private sector still remain.

The following are urgent and important issues and countermeasures. Institutional and Administrative Capacity Development of Agriculture Mechanization

At the time of this study, there were two policies on agriculture mechanization available in

the agriculture strategy in Kyrgyz. One was agriculture mechanization through public-private

partnership, and the other was the promotion of the leasing program. Neither policy had any

detailed actions or measures. In order to promote agriculture mechanization, the government

should show clear and detailed actions to the public: when and who will do what regarding

agriculture mechanization in Kyrgyz. Therefore, the establishment of an agriculture

mechanization plan, as a basis for various actions is necessary. Furthermore, organizational and

administrative capacity development to implement the plan is necessary to improve the Ministry

of Agriculture. In particular, appropriate manpower and human resource development are urgent

issues.

Machinery and facilities are one of the inputs for agriculture production. The balanced use of

other inputs, such as seeds, fertilizers, and chemicals, and appropriate cultivation techniques,

and farm management are important. In this regard, it is recommended to collaborate with the

private sector, other departments of the ministry, and other ministries concerning human

resource development.

86

Strengthening the Leasing Program

Since the initiation of the leasing program at Aiyl Bank, the national agriculture bank, in

2011, renewal of agriculture machinery has accelerated. However, the number of tractors in the

country is still two-thirds or less than during the level of the Soviet Union era. At the time of

this study, 150 farmers finished a qualification examination in 2013, but they were waiting to

receive new tractors, because of the shortage of funds for leasing. On the other hand, the leasing

program is currently utilized mainly for tractors, but a limited number of farmers can access this

program because of strict qualification examination conditions. Expansion of beneficiaries by

maintaining the present repayment rate should be taken into consideration through a review of

qualification examination conditions and the improvement of screening practices.

In the future, demand for machinery will shift from the tractor to the combine harvester for

both renewal and newly introduced machinery, but with the same leasing conditions, as tractors

are not easy for farmers to lease who want to lease a much more expensive combine harvester20.

This case requires a review of the leasing conditions as well. Furthermore, it is necessary to pay

attention to small-scale farmers to access machinery services, especially in the southern region.

Special measures, such as a preferential tax system, could be applied to service providers in

such region or area.

The number of tractors, that past more than 20 years of installation and the shortage number

has reached about 25,000. If this tractor number could be supplied to the market within 10 years,

2,500 per year of leasing contracts should have to be completed. 650 tractors (1.3 million USD),

including the number on the waiting list were contracted by Aiyl Bank in 2013. This contract

number is the maximum performance for Aiyl Bank in its capacity of both financial and

manpower. Private commercial banks also provide leasing services for agriculture machinery,

but few farmers utilize their services, as the interest rate is 15% higher than it is for Aiyl Bank.

In order to expand the leasing program, the utilization of funds and the manpower of private

commercial banks has to be taken into consideration. For example, the government could

support interests, if private banks could provide leasing services with the same leasing

conditions as Aiyl Bank. An increase of funds for leasing programs and human resource

development for qualification examinations are necessary as well.

For qualification examinations, the financial status of farm households in the past years was

mainly examined, but cost reduction by efficient work, the decrease of opportunities lost by

machinery use, the increase in service fees from machinery service as well as the cost increase

for machinery after machinery is introduced is not considered. The number of beneficiaries of

the leasing program could be expanded by examining both the financial status and future

20 Amount of payment will be 154,000 som/year for one tractor (MTZ) and 616,000 som/year for a combine harvester (NIVA)

87

business plan. Matching service of service providers and receivers can also help for business

planning on the provider side and farm management at the receiver side. Banks and local

governments should work together on sharing and providing information.

Especially in rain fed cultivation areas, in order for farmers to easily access the leasing

program, development of a financial product like agriculture insurance which guarantees a part

of the harvest, should be considered. Capacity Development of Farmers

In order to accelerate the number of leases and promote new-tractor sales, more farmers have

to be able to afford to buy agriculture machines by improving their farming management,

cultivation techniques, and market access. In addition, most farmers maintain and repair their

machines themselves by watching other people. Overhaul of a tractor engine, without

specialized tools, is not uncommon in Kyrgyz. However, maintenance and repair without

appropriate knowledge and technique often worsens the performance of machines. In order to

maintain the original performance of machinery for a certain machine’s age, it is necessary to

train farmers on the operation and maintenance of agriculture machine and equipment with

proper maintenance tools.

Improvement of facility and equipment of human resource development organization at a

regional level

Kyrgyz has no public extension service. It is difficult for farmers to access technical

information on cultivation, and operation and maintenance of machines and equipment. On the

other hand, various vocational schools and technical colleges exist countrywide, and some

schools and colleges have agriculture and agriculture machinery courses. These schools and

colleges could be utilized for the re-education of farmers on cultivation techniques. Since most

schools were established in the Soviet Union era, teaching facilities and equipment are

old-fashioned and do not meet the needs of farmers. Improvement of teaching facilities and

equipment for capacity development of farmers should be considered.

Improvement of infrastructure for stable agriculture production

Due to the malfunction of the irrigation facility due to age, farmland that relies on rain-fed

agriculture is increased, and causes low productivity and unstable production. The improvement

of the irrigation facility and proper maintenance of the existing facility is taken into

consideration.

88

Fields and Direction of Japanese Government Support on Agriculture

Mechanization

The assistance of the Japanese Government should basically go along with the development

direction of Kyrgyz. The following are possible opportunities of assistance to Kyrgyz for

agriculture mechanization. Figure 6-1 shows the agriculture mechanization of Kyrgyz and

possible assistance by the Japanese Government.

(1) Technical Cooperation on Institutional Capacity Development of Agriculture

Mechanization (Expert dispatch, training program)

Grasping the present number of agriculture machinery in the country is important to

establish an agriculture mechanization plan. However, deletion registration of defunct

machinery started just 2 years ago, and it is still ongoing. In order to obtain accurate figures,

it is necessary to accelerate deletion registration work in cooperation with the local

government office. An expert would be able to advise on the planning of agriculture

mechanization and its process as well as the institutional development of the Ministry of

Agriculture.

(2) Increase funds for leasing and advice for the leasing program (Loan, Dispatch of expert,

Training)

The present amount of the fund could not meet the demand for leasing. The capital

increment of the fund can be considered as loan assistance. Advice on the appropriate

leasing system / program (the review of the interest rate, repayment term, and qualification

examination conditions, improvement of farmer’s financial literacy), and the capacity

building of the bank staff are considered technical assistance.

(3) Utilize agriculture machinery and equipment procured by 2KR for the leasing program

(Grant aid)

Providing agriculture machinery and equipment procured by 2KR for the leasing program

has the same effect as the increment of capital. However, conditions of reserve for the

counterpart fund have to be consistent with the existing leasing condition. The

manufacturer and model of machinery has to meet the needs of farmers in terms of

availability of spare parts and ease of operation and maintenance.

(4) Technical Assistance of Agriculture Credit and Insurance System (Dispatch of expert,

Training)

Advise on the development and improvement of financial products other than the leasing

program, such as loans for agriculture inputs, livestock, and second-hand machinery, and

insurance products.

89

(5) Capacity building of farmers on cultivation techniques and farm management (Technical

cooperation project, Grass-root grant aid)

In order to enhance the paying capacity and stability of the farmer in the leasing program,

farm management, and cultivation techniques of major crops, including the utilization of

agriculture machines and equipment should be improved.

(6) Improvement of Teaching Facilities and Equipment in Educational Institutions (Grass-root

grant aid)

The technical extension system for farmers is not well organized in Kyrgyz. By installing

or renewing teaching facilities and equipment at vocational schools, these schools can be

utilized for farmers to learn cultivation techniques, and machinery operation and

maintenance techniques. Simple and basic tools and equipment, such as hand tools, special

tools, measuring equipment, and welding equipment, can be considered for re-education

training equipment.

(7) Improvement of Maintenance Equipment for Irrigation Systems, or Improvement of

Irrigation Systems (Loan or Grant aid)

In order to increase productivity and stability of production, dredging equipment (excavator,

power shovel, bulldozer) for maintenance of irrigation canals should be installed.

Improvement of dysfunctional irrigation systems is also necessary.

90

Figure 6-1 Direction of Promotion of Agriculture Machinery and the Assistance of Japan

Possibility of Business Expansion of Japanese Agricultural Machinery Manufacturers

For any machinery manufacturer, Kyrgyz cannot be a single target market in this area,

because the scale of the farming population and the cultivation area is not big enough to recover

investment, such as the cost for the establishment of sales networks, spare parts supply networks,

and after-sales service networks, staff training, and sales promotion. Therefore, other

neighboring countries have to be considered as a target market. A simple market analysis by

machinery is shown below. The market scale here is Kyrgyz domestic market.

Small-Medium-sized Tractors

More or less, 80hp-tractors are preferred in Kyrgyz. The market scale of this capacity tractor

is relatively big, and currently used countrywide. This means that in order to sell this capacity

91

tractor, the spare parts supply and after-sales service network has to be available countrywide as

well. For newcomers, they have to invest in the establishment of a sales network, a spare parts

supply network, and after-sales service network, staff training, and sales promotion. Meanwhile,

in this capacity, the Belarus tractor has been dominant in the market and the Chinese tractor

begun to gain a foothold in Kyrgyz. As such, newcomers have to show advantages over the

Belarus and Chinese made tractors in regards to price, capacity, quality, and after-sales services.

The price of a Japanese made tractor is 4 times more expensive than Belarus and Chinese made

tractors.

Market segment setting: Selling small-medium sized tractors to small-medium scale

farmers

Market size: Relatively big

Necessity of countrywide network of spare parts supply and after-sales services

Competition with Belarus and Chinese tractors exists.

Large-sized Tractor

There is little demand for large-sized (more than 100hp) tractors in Kyrgyz. The northern

region in which the relatively large cultivation size farmer exists has a small demand. According

to interviews with dealers in Bishkek, only 13 large-sized tractors were sold in 2013. The

market size is small in Kyrgyz and it is necessary to consider the market in neighboring

countries. The spare parts supply and after-sales service can be covered in a limited area where

demand exists. Competitors of this size in Kyrgyz are manufacturers in Europe and the USA.

The price of a Japanese made tractor this size is 1.5 times more expensive than European and

American brand tractors.

Market segment setting: Selling a large sized tractor to large-scale farmers

Market size: Very small

Network of spare parts supply and after-sales services can be covered in a limited area.

Competition with Europe and USA manufacturers.

Machinery and Equipment for Rice Production

The cultivated area of the paddy is only 3,000ha in Kyrgyz, and production is concentrated

in the southern region. The market size is very small. If the spare parts supply and after-sales

service network for other machinery is available in the southern region, machinery and

equipment for rice production can be sold utilizing the present network. There is concern

regarding broken down machines due to many stones in the field during land preparation,

92

puddling, and transplanting.

Market segment setting: Selling small-sized rice production machines and equipment to

small-scale farmers in the southern region.

Market size: Very small

Network of spare parts supply and after-sales services can be covered in a limited area in

the southern region.

Chinese manufacturers once tried to sell small-sized combine harvesters, but they have not

continued. The reasons are unknown.

Many stones in the field are a concern.

Implements attached to Tractors

The market size of an implement is varied, except implements that are used for common

work, like land preparation. Demand for implements for vegetables, root crops and forage exists

in the northern region. Turkish made implements are well balanced in price and quality, and

they recently began a sales promotion in Kyrgyz. It is necessary to show the working

performance to farmers through demonstrations to convince them.

Market segment setting: Depending on the kind of work.

Market size: Depending on the producers, but not very big

Network of spare parts supply and after-sales service is necessary.

Need to compete with Turkish products which are price-and-quality balanced.

As done by manufacturers in other countries, in order to test and demonstrate the

performance of machines and implements (working accuracy, efficiency, fuel consumption,

etc.), Japanese manufacturers should bring their machines and equipment to agriculture

machinery exhibitions that are held once a year in Bishkek. The results could then be utilized

for further research and development. The Japanese Government might be able to provide

support for information distribution of the exhibition to the Japanese side, test machines and

equipment for agriculture related projects.

93

Tab

le 6

-1

Pro

ble

ms

and

Cou

nte

rmea

sure

s fo

r A

gric

ult

ura

l Mec

han

izat

ion

in K

yrgy

zsta

n

Fie

ld

Pro

blem

s C

ount

erm

easu

res

Impl

emen

tati

on

agen

cy

Tar

get

Per

iod

Typ

e of

A

ssis

tanc

e

Pol

icy

The

pol

icy

on a

gric

ultu

re

mec

hani

zati

on is

yet

to b

e av

aila

ble.

T

here

are

no

deta

iled

act

ions

oth

er

than

the

leas

ing

prog

ram

in th

e se

ctor

pol

icy,

and

sta

keho

lder

s do

no

t kno

w th

e pr

iori

ty s

ubje

ct a

nd

area

of

agri

cult

ure

mec

hani

zati

on.

To

gras

p ac

cura

te n

umbe

rs o

f ea

ch m

achi

ne.

To

esta

blis

h an

agr

icul

ture

mec

hani

zati

on p

lan,

and

sh

ow p

rior

ity

poli

cy a

nd a

rea.

T

o st

reng

then

inst

itut

iona

l cap

acit

y of

Dep

artm

ent o

f A

gric

ultu

ral M

echa

niza

tion

, whi

ch im

plem

ents

va

riou

s m

easu

res

for

mec

hani

zati

on.

Min

istr

y of

A

gric

ultu

re

Med

ium

Tec

hnic

al

coop

erat

ion

Fin

ance

F

und

amou

nt f

or le

asin

g pr

ogra

m

does

not

mee

t the

dem

and.

T

o in

crea

se c

apit

al o

f fu

nds

for

leas

ing

prog

ram

ut

iliz

ing

dono

r as

sist

ance

. T

o ut

iliz

e ca

pita

l and

hum

an r

esou

rces

of

priv

ate

com

mer

cial

ban

ks f

or e

xpan

sion

of

leas

ing

prog

ram

by

sub

sidi

zed

inte

rest

rat

es.

Con

cern

ed

gove

rnm

ent a

genc

y S

hort

L

oan

and

gran

t aid

Lea

sing

con

diti

on (

adva

nce

paym

ent,

inte

rest

rat

e, r

epay

men

t te

rm)

To

expa

nd th

e nu

mbe

r of

leas

e by

rev

iew

ing

leas

ing

cond

itio

ns, s

uch

as c

olla

tera

l, ad

vanc

e pa

ymen

t, in

tere

st r

ate,

and

rep

aym

ent p

erio

d.

Con

cern

ed

gove

rnm

ent a

genc

y F

inan

cial

inst

itut

ion

Med

ium

−

To

ease

leas

ing

cond

itio

ns o

f a

com

bine

har

vest

er,

whi

ch h

as th

e sa

me

cond

itio

ns a

s a

trac

tor.

M

ediu

m−

Qua

lifi

cati

on e

xam

inat

ion

is

conc

entr

ated

on

coll

ater

al a

nd

prof

itab

ilit

y of

pre

sent

pro

duct

ion.

To

find

pot

enti

al le

asin

g us

ers

by r

evie

win

g th

e co

nten

ts o

f qu

alif

icat

ion

exam

inat

ion

(not

onl

y re

cent

ye

ars

fina

ncia

l sta

tus,

but

als

o fu

ture

fin

anci

al s

tatu

s an

d bu

sine

ss p

lan)

Fin

anci

al in

stit

utio

n M

inis

try

of

Agr

icul

ture

Sho

rt

Tec

hnic

al

coop

erat

ion

94

Fie

ld

Pro

blem

s C

ount

erm

easu

res

Impl

emen

tati

on

agen

cy

Tar

get

Per

iod

Typ

e of

A

ssis

tanc

e

To

prom

ote

mat

chin

g of

mac

hine

ry s

ervi

ce p

rovi

ders

an

d re

ceiv

ers

by g

rasp

ing

loca

l dem

and

of m

achi

nery

se

rvic

es.

Sho

rt

−

Inte

rest

rat

e of

sec

ond

hand

m

achi

nes

is v

ery

high

. T

o re

view

and

eas

e lo

an c

ondi

tions

for

sec

ond

hand

ag

ricu

ltur

e m

achi

nery

. F

inan

cial

inst

itut

ion

Med

ium

−

Far

mer

doe

s no

t und

erst

and

wel

l m

erit

s, r

isks

, and

use

of

leas

ing

prog

ram

.

To

diss

emin

ate

info

rmat

ion

on a

gric

ultu

re f

inan

cial

pr

oduc

t thr

ough

var

ious

med

ia a

nd o

ppor

tuni

ties

. F

inan

cial

inst

itut

ion

Min

istr

y of

A

gric

ultu

re

Med

ium

−

Fle

xibi

lity

of

leas

ing

syst

em is

low

. T

o es

tabl

ish

a fl

exib

le s

yste

m f

or c

hang

e of

leas

ing

cond

itio

ns, c

usto

m c

lear

ance

of

leas

ing

equi

pmen

t, an

d ut

iliz

atio

n of

don

or f

unds

.

Con

cern

ed

gove

rnm

ent a

genc

y M

ediu

m

and

long

−

Som

e fa

rmer

s he

sita

te to

app

ly f

or

a le

asin

g pr

ogra

m, b

ecau

se o

f vo

lati

lity

of

harv

est d

ue to

wea

ther

co

ndit

ions

.

To

deve

lop

an a

gric

ultu

re d

isas

ter

insu

ranc

e pr

oduc

t. T

o es

tabl

ish

a pu

blic

agr

icul

ture

dis

aste

r co

mpe

nsat

ion

prog

ram

.

Con

cern

ed

gove

rnm

ent a

genc

y F

inan

cial

inst

itut

ion

Med

ium

an

d lo

ngT

echn

ical

co

oper

atio

n

Agr

icul

ture

prod

ucti

on

Fee

for

agr

icul

ture

mac

hine

ry

serv

ice

is h

igh.

T

o ex

pand

the

num

ber

of le

ase

by r

evie

win

g le

asin

g co

ndit

ions

, suc

h as

col

late

ral,

adva

nce

paym

ent,

inte

rest

rat

e, a

nd r

epay

men

t per

iod.

Con

cern

ed

gove

rnm

ent a

genc

y F

inan

cial

inst

itut

ion

Sho

rt

−

Tra

nspo

rtat

ion

cost

for

agr

icul

ture

pr

oduc

t is

high

, bec

ause

of

the

shor

tage

of

trac

tors

and

trai

lers

.

To

expa

nd th

e nu

mbe

r of

leas

ing

trac

tors

by

revi

ewin

g le

asin

g co

ndit

ions

, suc

h as

col

late

ral,

adva

nce

paym

ent,

inte

rest

rat

e, a

nd r

epay

men

t pe

riod

.

Con

cern

ed

gove

rnm

ent a

genc

y F

inan

cial

inst

itut

ion

Sho

rt

−

Pro

duct

ivity

is lo

w a

nd h

arve

st lo

ss

is h

igh.

T

o ea

se le

asin

g co

ndit

ions

of

a co

mbi

ne h

arve

ster

, w

hich

has

the

sam

e co

ndit

ions

as

a tr

acto

r.

Con

cern

ed

gove

rnm

ent a

genc

y F

inan

cial

inst

itut

ion

Sho

rt

−

95

Fie

ld

Pro

blem

s C

ount

erm

easu

res

Impl

emen

tati

on

agen

cy

Tar

get

Per

iod

Typ

e of

A

ssis

tanc

e

Far

m o

pera

tion

in th

e pr

oper

tim

e ca

nnot

be

cond

ucte

d, d

ue to

the

num

ber

of m

achi

nes

bein

g in

suff

icie

nt.

To

expa

nd th

e nu

mbe

r of

leas

ing

trac

tors

by

revi

ewin

g le

asin

g co

ndit

ions

, suc

h as

col

late

ral,

adva

nce

paym

ent,

inte

rest

rat

e, a

nd r

epay

men

t pe

riod

.

Con

cern

ed

gove

rnm

ent a

genc

y M

inis

try

of

Agr

icul

ture

F

inan

cial

inst

itut

ion

Sho

rt

−

To

incr

ease

leas

ing

prog

ram

use

rs b

y im

prov

ing

prod

ucti

vity

and

fin

anci

al s

tatu

s th

roug

h ca

paci

ty

buil

ding

of

farm

man

agem

ent.

Sho

rt

−

To

appl

y a

pref

eren

tial

tax

syst

em f

or m

achi

nery

se

rvic

e pr

ovid

ers.

S

hort

−

Qua

lity

and

qua

ntity

of

agri

cult

ure

inpu

ts (

seed

, fer

tili

zer,

che

mic

al)

are

insu

ffic

ient

. Pri

ces

are

high

.

To

prom

ote

grou

p bu

ying

. T

o im

plem

ent p

erio

dica

l qua

lity

che

cks

of a

gric

ultu

re

inpu

ts b

y th

e au

thor

ity.

Min

istr

y of

A

gric

ultu

re

Med

ium

an

d lo

ngT

echn

ical

co

oper

atio

n

Mar

ket

Mac

hine

s su

itab

le f

or th

e pr

esen

t cu

ltiv

atio

n en

viro

nmen

t are

not

av

aila

ble.

To

mak

e m

ore

oppo

rtun

ity to

dis

sem

inat

e m

achi

nery

in

form

atio

n, in

clud

ing

mac

hine

s fo

r sm

all p

lot a

nd

min

or c

rops

to f

arm

ers

thro

ugh

the

loca

l gov

ernm

ent.

To

hold

agr

icul

ture

exh

ibiti

ons

in r

egio

nal c

ente

rs.

Min

istr

y of

A

gric

ultu

re

Mac

hine

ry d

eale

r F

inan

cial

inst

itut

ion

Med

ium

−

The

num

ber

of a

gric

ultu

re

mac

hine

ry s

ervi

ce p

rovi

ders

is

insu

ffic

ient

.

To

appl

y a

pref

eren

tial

tax

syst

em f

or m

achi

nery

se

rvic

e pr

ovid

ers.

T

o es

tabl

ish

spec

iali

zed

agri

cult

ure

mac

hine

ry

serv

ice

prov

ider

s by

Pub

lic-P

riva

te P

artn

ersh

ip (

PP

P)

in th

e ar

ea w

here

far

mer

s ca

nnot

acc

ess

mac

hine

ry

serv

ices

. Pub

lic

sect

or p

rovi

de f

acil

ity

and

equi

pmen

t, an

d co

nsig

n m

anag

emen

t to

the

priv

ate

sect

or.

Con

cern

ed

gove

rnm

ent a

genc

y M

inis

try

of

Agr

icul

ture

Med

ium

−

96

Fie

ld

Pro

blem

s C

ount

erm

easu

res

Impl

emen

tati

on

agen

cy

Tar

get

Per

iod

Typ

e of

A

ssis

tanc

e

Hum

an

reso

urce

deve

lopm

ent

Pro

fita

bili

ty is

not

goo

d be

caus

e of

a

lack

of

know

ledg

e an

d ex

peri

ence

of

farm

man

agem

ent

and

cult

ivat

ion

tech

niqu

es.

To

deve

lop

hum

an r

esou

rces

to a

dvis

e on

cul

tiva

tion

te

chni

ques

and

far

m m

anag

emen

t. T

o es

tabl

ish

a sp

ecia

l bus

ines

s sh

ort c

ours

e at

the

Japa

n C

ente

r, lo

cal v

ocat

iona

l sch

ool a

nd c

olle

ge f

or

farm

ers,

ban

k st

aff,

and

agr

icul

ture

rel

ated

sta

ff a

t the

lo

cal g

over

nmen

t.

Min

istr

y of

A

gric

ultu

re

Min

istr

y of

Edu

cati

on M

inis

try

of L

abor

Med

ium

an

d lo

ngT

echn

ical

co

oper

atio

n

Far

mer

has

to s

ell m

ost p

rodu

ce in

ha

rves

t sea

son

wit

h lo

w p

rice

, be

caus

e th

ey d

o no

t hav

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Attachment

Attachment 1: List of Interviewees

Attachment 2: Number of Tractor and Combine Harvester in Each Province

Attachment 3: Brochure of Manufacturers

Attachment 4: Financial Status of Aiyl Bank

Attachment 5: Result of Questionnaire Survey

Attachment 6: Crop Calendar of Main Crop

Attachment 7: Analysis of the Farmhouses that Procured Tractors

Attachment 1: List of Interviewees

Attachment −1

A1-1

List of Interviewees

Organization Name, position

The Ministry of Agriculture and Land Reclamation of the Kyrgyz Republic

Duysheev Nurlan State Secretary

The Ministry of Agriculture and Land Reclamation of the Kyrgyz Republic Foreign Relations Division

Sydykov Taalaibek Head of Division

The Ministry of Agriculture and Land Reclamation of the Kyrgyz Republic Department of Agricultural Mechanization and Electrical Supply

Kojogulov Nurlan Jamalidinovich Director Rasulov Farruh Chief specialist on Talas Oblsat Niyazaliev Kadanbek Esenbekovich Chief specialist on Alamedin Region, Chui Oblast Halmatov Abdurashid Chief specialist on Osh Oblsat Tokoev Salijan Chief specialist on Uzgen Region, Osh Oblast Mamashev Kurmanbek Chief specialist on Nookat Region, Osh Oblast

Alamedin district Department of Agricultural Development, Chui Oblast

Isaev Aftandil Konurbaevich Head of Department

Karasuu district Department of Agricultural Development, Osh Oblast

Mamedov Kubanychbek Head of Department

Uzgen district Department of Agricultural Development, Osh Oblast

Kamchibek Moldosh Head of Department

Nookat district Department of Agricultural Development, Osh Oblast

Turduev Mukamet Head of Department

Ministry of Finance of the Kyrgyz Republic State Fund for Economic Development

Israilov Bakyt Rasulovich Head of Credit Monitoring Department

State Agency of Professional and Technical Education, Ministry of work, migration and youth

Mamadaliev Abdrahim Deputy Director Jumanbekov Alseit Head of Education Curriculum Inspection Department

Department of Vocational Education Ministry of Education and Science

Turdaliev Toolos Head of Department

Tokmok Agro-industrial college

UsubalievaAinurOmushevna Deputy Director of Academic Affairs AbdurasulovBaktybek Moldoshevich Head of Department

Union of Kyrgyz Banks Abdraev Anvar President Sarybaev Rustam Project manager Satkaeva Cholpon Lawer

Kyrgyz Investment and Credit Bank Tashpolotova Zharkynai Head of Leasing Department

Attachment −1

A1-2

Organization Name, position

Aiyl Bank, OJSC IbraevMirlan Idinkulovich Head of Lease department, Head office, Bishkek

Estebesov Amanjol Chief specialist of credit department, Alamedin Branch

Moldoshev Almazbek Manager of Talas Branch Joroev Ibraim Manager of Osh Branch Osmonov Ulan Manager of Karasuu Branch Jenmuratov Altynbek Manager of Uzgen Branch Abdykadyrov Aibek Manager of Nookat Branch

Kyrgyz National Agrarian University, Faculty of Engineering and Technology

TemirbekovJeenbekTemirbekovich Dean of Faculty of Engineering and Technology, Ph.D, docent

JusupovUrmatToktomambetovich OsmonkanovTaalaibek Orozbekovich Head of the Chair “Agriculture mechanization”

AmatovSharibidin Bazarbaevich Deputy Dean of Faculty of Engineering and Technology Melisuulu Danielan Lecturer BolotovErkinbai Almambetovich Lecturer NuralievBakyt Saparovich Senior Lecturer Djumasheva Elmira Bekkulatovna Lecturer Murzaliev Mansur Lecturer

Kyrgyz Republic National Academy of Sciences Technopark of National Academy of Sciences

Kasymbekov Ryskul Candidate of technical science, Assistant professor (the senior lecturer) Head of Department “Management, marketing and intellectual property”

Seed Association of Kyrgyzstan (SAK)

AidaralievTaalaibek President, Doctor of Agriculture Science IslamovAbduhakim Executive director Farid Faridov Engineer

Agriculture Cooperative “KOSS” BarkoAleksandr Chairman

Rural agro-company “Raimbek” Kadyrov Robert The Head

Attachment −1

A1-3

Organization Name, position

Association of joint stock companies “Machine-Station”

UrahunovKerim Chief Engineer

Agriculture cooperative Adygine Alamedin region, Chui Oblast

Bugaichenko Anatoliy Vasil’evich Farmer

KyrgyzAgroMarket, Agro-equipment supplier in Bishkek

Osmonaliev Jyldyzbek Director

Avtomash-Radiator Co.Ltd., Belarus agro-equipment supplier in Bishkek

Konin Vladimir General Director Gomayunov Andrei Head of Sales and Marketing Department

ITOCHU Corporation, Almaty Yamaguchi Kanji Head of Almaty office, Kazakhstan

Toyota Tsusho Corporation, Almaty Sakurai Masanori Representative in Almaty, Kazakhstan

Trading House MTZ ElAZ LLC, Almaty Gudko Andrei Director, Almaty city, Kazakhstan

FAO, Kyrgyz Dr. Dorji Kin Lai Representative

Kyrgyz Agro-Input Enterprise Development Project, USAID

Kasymov Alisher General Manager

IG Consult, Consulting Agency BakirovaAigula Apasovna General Director

Attachment 2: Number of Tractor and Combine Harvester in Each Province

Attachment −2

A2-1

Number of Tractor and Combine Harvester in Each Province

Source: Ministry of Agriculture and Land Reclamation

0

5,000

10,000

15,000

20,000

25,000

30,000

2004 05 06 07 08 09 10 11 12 13

CountryTractor

Combine

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2004 05 06 07 08 09 10 11 12 13

Chui

Tractor

Combine

0

1,000

2,000

3,000

4,000

5,000

2004 05 06 07 08 09 10 11 12 13

TalasTractor

Combine

0

1,000

2,000

3,000

4,000

5,000

2004 05 06 07 08 09 10 11 12 13

Issyk-KulTractor

Combine

0

1,000

2,000

3,000

4,000

5,000

2004 05 06 07 08 09 10 11 12 13

NarynTractor

Combine

0

1,000

2,000

3,000

4,000

5,000

2004 05 06 07 08 09 10 11 12 13

Jalal-AbadTractor

Combine

0

1,000

2,000

3,000

4,000

5,000

2004 05 06 07 08 09 10 11 12 13

OshTractor

Combine

0

500

1,000

1,500

2,000

2004 05 06 07 08 09 10 11 12 13

Batken Tractor

Combine

Attachment 3: Brochure of Manufacturers

Attachment－3

A3-1

Attachment－3

A3-2

Attachment－3

A3-3

Attachment－3

A3-4

Attachment－3

A3-5

Attachment－3

A3-6

Attachment－3

A3-7

Attachment－3

A3-8

Attachment－3

A3-9

Attachment－3

A3-10

Attachment－3

A3-11

Attachment－3

A3-12

Attachment－3

A3-13

Attachment－3

A3-14

Attachment 4: Financial Status of Aiyl Bank

Attachment－4

A4-1

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

1514

,700

,000

1514

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21,

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000

1716

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263

196,

440,

749

263

196,

440,

749

263

196,

440,

749

00

26,

480,

000

26,

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000

221

6,00

02

216,

000

221

6,00

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319

6,44

0,74

917

14,9

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1,35

6,74

94

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9,79

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9

Rat

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SD=5

0som

Qty

Am

ount

Qty

Am

ount

Qt y

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

7981

,307

,372

7981

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,372

9696

,594

,740

2323

,239

,152

198

201,

141,

264

174

6,92

320

15,0

30,3

9521

15,7

77,3

185

1,57

1,61

35

2,98

4,65

263

54,8

63,0

0094

75,1

96,5

831

9,89

9,15

01

9,89

9,15

02

6,56

9,58

52

6,56

9,58

54

17,3

36,7

353

17,0

35,5

009

40,9

41,8

2031

5,82

8,36

731

5,82

8,36

77

2,53

4,20

16

694,

089

449,

056,

657

174

6,92

313

210

8,73

5,71

913

310

9,48

2,64

211

211

8,03

7,28

938

53,8

52,5

4363

54,8

63,0

0034

633

6,23

5,47

4

Rat

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SD=5

0so m

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

140

139,

368,

884

284

287,

228,

716

424

426,

597,

600

8670

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,250

8670

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,250

24,

378,

588

24,

378,

588

728

,777

,953

1033

,777

,492

1762

,555

,445

207,

125,

194

3113

,721

,673

5120

,846

,867

2940

,281

,735

181

186,

868,

049

284

287,

228,

716

00

8670

,910

,250

580

585,

288,

750

Rat

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SD=5

0so m

Qty

Am

ount

Qty

Am

ount

Qty

Am

ount

Qty

Am

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Qty

Am

ount

Qty

Am

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Qty

Am

ount

Qty

Am

ount

00

9496

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,372

9496

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,372

236

235,

963,

624

284

287,

228,

716

2525

,199

,152

00

639

644,

398,

864

264

197,

187,

672

2015

,030

,395

284

212,

218,

067

51,

571,

613

00

52,

984,

652

149

125,

773,

250

443

342,

547,

582

00

24,

378,

588

24,

378,

588

00

00

19,

899,

150

00

314

,277

,738

00

935

,347

,538

935

,347

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1451

,114

,227

00

523

,515

,500

00

2810

9,97

7,26

50

053

13,1

69,5

6153

13,1

69,5

6138

16,2

55,8

740

06

694,

089

00

9730

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264

197,

187,

672

178

163,

933,

454

442

361,

121,

126

293

304,

905,

338

284

287,

228,

716

4262

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149

125,

773,

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1,21

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Typ

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l Ban

k L

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Typ

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Attachment－4

A4-2

Aiyl Bank Leasing Record by Province

03.02.20142011

Qty Amount Qty Amount Qty Amount Qty Amount Qty AmountChui 63 47,056,149 9 7,076,000 72 54,132,149 4 8,440,000 76 62,572,149Issyk-kul 37 27,636,151 37 27,636,151 37 27,636,151Osh 49 36,599,227 5 4,900,000 54 41,499,227 54 41,499,227Jalal-Abad 47 35,105,381 1 980,000 48 36,085,381 48 36,085,381Talas 29 21,660,767 2 1,960,000 31 23,620,767 31 23,620,767Naryn 18 13,444,614 18 13,444,614 18 13,444,614Batken 20 14,938,460 20 14,938,460 20 14,938,460Total 263 196,440,749 17 14,916,000 280 211,356,749 4 8,440,000 284 219,796,749

2012 Rate 1USD=50som

Qty Amount Qty Amount Qty Amount Qty Amount Qty Amount Qty Amount Qty AmountChui 21 24,075,435 21 24,075,435 39 41,515,834 9 22,366,050 5 4,329,250 74 92,286,569Issyk-kul 8 7,840,000 8 7,840,000 8 7,840,000 2 2,078,150 18 17,758,150Osh 32 21,606,546 32 21,606,546 25 32,412,005 10 8,949,807 16 14,890,250 83 77,858,608Jalal-Abad 37 26,212,030 37 26,212,030 12 11,931,952 8 3,947,094 24 21,425,000 81 63,516,076Talas 15 12,635,704 15 12,635,704 11 11,143,944 6 14,997,650 3 2,637,250 35 41,414,548Naryn 1 746,923 11 10,082,743 12 10,829,666 3 2,596,006 3 2,781,250 18 16,206,922Batken 8 6,283,260 8 6,283,260 14 10,597,548 3 1,513,792 12 8,800,000 37 27,194,600Total 1 746,923 132 108,735,718 133 109,482,641 112 118,037,289 38 53,852,543 63 54,863,000 346 336,235,473

2013 Rate 1USD=50som

Qty Amount Qty Amount Qty Amount Qty Amount Qty AmountChui 16 20,518,625 32 43,894,060 68 71,898,811 4 3,468,000 120 139779496Issyk-kul 23 20,006,867 35 34,144,480 58 54,151,347Osh 4 4,196,685 22 20,121,377 55 54,225,286 27 23,482,750 108 102,026,098Jalal-Abad 2 153,872 41 40,806,250 50 50,672,331 19 16,245,250 112 107,877,703Talas 1 76,936 30 28,624,655 33 33,032,013 18 15,170,500 82 76,904,104Naryn 1 38,625 10 8,541,698 18 19,158,810 3 3,085,500 32 30,824,633Batken 5 15,296,992 23 24,873,142 25 24,096,985 15 9,458,250 68 73,725,369Total 29 40,281,735 181 186,868,049 284 287,228,716 86 70,910,250 580 585,288,750

2014 Rate 1USD=50som

Qty Amount Qty Amount Qty Amount Qty Amount Qty AmountChui 3 3,135,000 1 980,000 1 1,113,750 5 5,228,750Issyk-kul 3 2,704,930 4 3,920,000 7 6,624,930Osh 1 531,500 1 531,500Jalal-Abad 3 2,940,000 3 2,940,000Talas 2 2,155,000 6 5,880,000 6 5,203,750 14 13,238,750Naryn 1 980,000 1 1,113,750 2 2,093,750Batken 2 1,960,000 1 531,500 3 2,491,500Total 0 0 9 8,974,930 16 15,680,000 10 8,494,250 35 33,149,180

Total Rate 1USD=50som

Qty Amount Qty Amount Qty Amount Qty Amount Qty Amount Qty Amount Qty Amount Qty AmountChui 63 47,056,149 46 51,670,060 109 98,726,209 74 88,544,894 69 72,878,811 13 30,806,050 10 8,911,000 275 299,866,964Issyk-kul 37 27,636,151 8 7,840,000 45 35,476,151 34 30,551,797 39 38,064,480 2 2,078,150 0 0 120 106,170,578Osh 49 36,599,227 41 30,703,231 90 67,302,458 47 52,533,382 55 54,225,286 10 8,949,807 44 38,904,500 246 221,915,433Jalal-Abad 47 35,105,381 40 27,345,902 87 62,451,283 53 52,738,202 53 53,612,331 8 3,947,094 43 37,670,250 244 210,419,160Talas 29 21,660,767 18 14,672,640 47 36,333,407 43 41,923,599 39 38,912,013 6 14,997,650 27 23,011,500 162 155,178,169Naryn 19 14,191,537 12 10,121,368 31 24,312,905 14 12,117,704 18 19,158,810 0 0 7 6,980,500 70 62,569,919Batken 20 14,938,460 13 21,580,252 33 36,518,712 37 35,470,690 27 26,056,985 3 1,513,792 28 18,789,750 128 118,349,929Total 264 197,187,672 178 163,933,453 442 361,121,125 302 313,880,268 300 302,908,716 42 62,292,543 159 134,267,500 1,245 1,174,470,152

WB Leasing State Development Bank of China Total

State leasing-2 State leasing-3 Total

Oblast State leasing-1 State leasing-1 Total of State leasing-1 State leasing-3State leasing-2

Total

State leasing-1 State leasing-1 Total of State leasing-1 State leasing-2 WB Leasing State Development Bank of China Total

Oblast

Oblast

Oblast

State Development Bank of China

State leasing-1 State leasing-2 State leasing-3

State leasing-1 State leasing-1 Total of State leasing-1 WB Leasing

State Development Bank of China Total

Oblast State leasing-1

Attachment－4

A4-3

Statement of Comprehensive Income for the year ended 31 December 2013 (in 1000SOM )

31-Dec-13 31-Dec-12

Interest income 699,987 577,157

Interest expense (204,201) (174,303)

Net interest income before establishing RFCPL for interest 495,786 402,854

Establishing RFCPL for interset (43,524) 25,674

Net interest income 452,262 428,528

Net foreign exchange income 70,733 62,783

Fee and commission income 157,721 90,842

Fee and commission expense (36,550) (26,779)

Other imcome 12,304 9,102

Net non-interset income 204,208 135,948

Operating income 656,470 564,476

Operating expense (473,456) (405,221)

Establishing RFCPL for other activities (3,098) (5,789)

Profit before income tax 179,916 153,466

Income tax (17,028) (17,686)

Profit and total comprehensive income for the year 162,888 135,780

Base profit for one stock share, in SOM 2,715 2,263

*RFCPL= Reserve Fund to Cover Potential Loss

Attachment－4

A4-4

Statement of Financial Position as of 31 December 2013 (in 1000SOM )

ASSETS 31-Dec-13 31-Dec-12

Cash and cash equivalents 540,966 546,172

Corresponding account in National Bank 197,385 137,693

Acoounts and loans in other banks and financial institutions 536,376 139,497

Loans to customers 4,824,628 3,264,316

Reserve to cover the loss of value (132,625) (88,886)

Loans to customers after the loss of value 4,692,003 3,175,430

Securities 1,102,451 7,206

Property and equipment 229,541 195,364

Intangible assets 6,870 7,212

Current tax asset - -

Other assets 75,409 121,135

Total assets 7,381,001 4,329,709

LIABILITIES and EQUITY

LIABILITIES

Accounts and deposits from banks 2,394 -

Accounts and deposits from customers 3,445,568 1,389,263

Amounts owed to Ministry of Finance 1,230,598 1,236,600

Amounts owed to National Bank 122,100 216,189

Government grant 88,567 96,619

Long term liabilities 808,191 -

Other attrackted funds 156,885 91,639

Current tax liabilities 2,723 914

Other liabilities 192,595 47,778

Total liabilities 6,058,616 3,087,017

EQUITY

Share capital 600,000 600,000

Additional paid-in capital 55,246 47,468

General banking reserve 504,251 459,444

Retained earning 162,888 135,780

Total equity 1,322,385 1,242,692

Total liabilities and equity 7,381,001 4,329,709

Attachment－4

A4-5

Statement of Changes in Equity for the year ended 31 December 2013 (in 1000SOM )

Share Capital Added CapitalReserve for future

expensesRetained Profit Total Capital

Balance as at 1 January 2012 600,000 41,210 414,612 112,079 1,167,901

Profit and total comprehensiveincome for the year

- - - 135,780 135,780

Transfer funds - - 44,832 (44,832) 0

Contribution by the Government - 6,258 - - 6,258

Dividends declared - - - (67,247) (67,247)

Balance as at 31 December 2012 600,000 47,468 459,444 135,780 1,242,692

Balance as at 1 January 2013 600,000 47,468 459,444 135,780 1,242,692

Profit and total comprehensiveincome for the year

- - - 162,888 162,888

Transfer funds - - 44,807 (44,807) 0

Contribution by the Government - 7,778 - - 7,778

Dividends declared - - - (90,973) (90,973)

Balance as at 31 December 2013 600,000 55,246 504,251 162,888 1,322,385

Attachment 5: Result of Questionnaire Survey

Attachment −5

A5-1

Results of Questionnaire Survey

Table 1. Cultivated area of interviewees by type of machinery possession (ha) Type No. of sample Mini. Max. Ave. Median

A 23 3.5 200 44.1 30.0 B 30 1 100 11.6 4.0 C 19 0.04 6 1.1 0.7

All 72 0.04 200 19.2 4.5 Type A: Machinery owner Type B: No machinery owned and machinery service receiver Type C: Cultivator without both machines and machinery service

Table 2. Cultivated area of interviewees by region (ha) Region No. of sample Mini. Max. Ave. Median

North 4 provinces 41 0.2 200 26.5 7.0 Southern 3 provinces 31 0.04 70.4 9.6 3.0

All 72 0.04 200 19.2 4.5

Figure 1 Constraints of farmers by region

Table 3. Work efficiency of machines (Plowing) Province Crop Area

(ha) Working time (hr)

Fuel consumption

(L/ha)

Machines Work efficiency

(Ha/hr) Chui Barley 12 20 17 MTZ80, 3row 0.60Chui Alfalfa 13 20 18 MTZ80, 3row 0.65Chui Beet 2 5 17 MTZ80, 3row 0.40Chui Corn 5 8 17 MTZ80, 3row 0.63Issyk-Kul Wheat 15 60 35 MTZ80, 3row 0.25Issyk-Kul Barley 8 30 35 MTZ80, 3row 0.27Issyk-Kul Potato 1.5 10 35 MTZ80, 3row 0.15Issyk-Kul Sainfoin 16 60 35 MTZ80, 3row 0.27

0 5 10 15 20 25

Sales channelAccess to machinery

Irrigation waterTransportation

Price of fertilizerQuality seed

Price of productQuantity of fertilizerQuality of Fertilizer

Fuel priceProduction technique

Lack of financeAvailability of spare part

StorageRepair

Notern 4 provinces

Southern 3 provinces

Attachment −5

A5-2

Issyk-Kul Cabbage 0.15 2 25 MTZ80, 3row 0.08Issyk-Kul Carrot 0.15 2 25 MTZ80, 3row 0.08Issyk-Kul Red Beet 0.2 2 25 MTZ80, 3row 0.10Naryn Barley 66 104 40 MTZ80, 3row 0.63Naryn Forage 85 104 40 MTZ80, 3row 0.82Jalal-Abad Wheat 12 24 50 MTZ80, 3row 0.50Jalal-Abad Rice 2 24 50 MTZ80, 3row 0.08Jalal-Abad Sunflower 3 2 50 MTZ80, 3row 1.50Osh Cotton 3 16 30 MTZ80, 3row 0.19Osh Corn 2 16 30 MTZ80, 3row 0.13Osh Wheat 2 16 30 MTZ80, 3row 0.13Osh Barley 2.6 16 30 MTZ80, 3row 0.16Osh Alfalfa 2.5 16 30 MTZ80, 3row 0.16

Table 4. Work efficiency of machines (Plowing) Province Crop Area

(ha) Working time (hr)

Fuel consumption

(L/ha)

Machines Work efficiency

(Ha/hr) Chui Barley 25 63 25 YTO904 0.40Talas Barley 30 48 30 YTO904 0.63Chui Clover 21 8 25 YTO904 2.63Jalal-Abad Clover 3 4 25 YTO, 3row 0.75Jalal-Abad Corn 10 24 25 YTO, 3row 0.42Jalal-Abad Cotton 10 42 25 YTO, 3row 0.24Jalal-Abad Sunflower 10 24 50 YTO, 3row 0.42Chui Wheat 25 63 25 YTO904 0.40Talas Wheat 100 80 30 YTO904 1.25

Table 5. Work efficiency of machines (Harvesting) Province Crop Area

(ha) Working time (hr)

Fuel consumption

(L/ha)

Machines Work efficiency

(Ha/hr) Talas Wheat 37 24 25 Finland, 2m 1.54Talas Summer

grains 30 48 10 Finland, 2m 0.63

Talas Haricot 29 16 10 Finland, 2m 1.81Talas Summer

grains 30 48 10 Finland, 2m 0.63

Naryn Wheat 12 8 20 German PPL-1.6 1.50Naryn Barley 6 4 20 German PPL-1.6 1.50Naryn Sunflower 5 2 20 German PPL-1.6 2.50Naryn Wheat 12 8 20 German PPL-1.6 1.50Naryn Barley 6 4 20 German PPL-1.6 1.50Chui Barley 12 10 25 NIVA 1.20Issyk-Kul Wheat 20 24 25 NIVA 0.83Issyk-Kul Wheat 15 24 14 NIVA 0.63Issyk-Kul Barley 8 12 14 NIVA 0.67Jalal-Abad Wheat 25 48 30 NIVA80 0.52Jalal-Abad Oats 10 16 30 NIVA80 0.63Naryn Wheat 20 20 20 Russia D260(110hp) 1.00Naryn Barley 10 20 20 Russia D260(110hp) 0.50Naryn Wheat 20 56 20 Russia(110hp) 0.36Issyk-Kul Potato 1.5 20 14 Russian, 2row 0.08Issyk-Kul Potato 0.5 3 10 T28, digger 0.17Chui Wheat 25 63 25 Ukraine, 3row 0.40Chui Barley 25 63 25 Ukraine, 3row 0.40

Attachment −5

A5-3

Table 6. Labor cost for farming work (som/ha) Crop Work Min. Max.

Wheat Harvesting 1,000 1,500 Haricot bean Weeding 2,500 3,300 Haricot bean Harvesting 2,300 2,700 Potato Planting 2,400 2,400 Potato Weeding 3,000 3,000 Potato Harvesting 4,500 4,500 Beet Weeding 15,000 20,000 Corn Weeding 1,000 5,000 Cotton Harvesting 1,800 1,800 Sainfoin Harvesting 1,600 2,000 All crops Water management 1,000 2,500

Since number of samples for each crop and work are very few 1 to 3, these figures are just for reference.

Table 7. Person of machinery operation Owner himself/family Outsourcing Employee

17 9 0

Table 8. Means of operation skill acquisition Learnt from dealer School/collage Self-study

0 6 15

Table 9. Educational qualification of machinery owner ATC STE VC

3 7 1 ATC: Agricultural Technical College (Ministry of labor, migration and youth) STE: Secondary Technical Education (Ditto) VC: Vocational School (Ditto)

Regarding to accident during machinery operation, no accident was reported from interviewees of questionnaire survey, but from interview by the study team, it was reported that 2 persons died by overturned accident of a combine harvester in Osh province in 2006.

Table 10. Frequency of maintenance during cultivation period Daily basis Other

23 0

Table 11. Person/ place for maintenance (multiple answer) Owner himself/family Outsourcing Employee

21 3 0

Attachment −5

A5-4

Table 12. Means of maintenance technique acquisition (multiple answer) Learnt from dealer School/collage Self-study

0 3 14

Table 13.Person/ place for repair (multiple answer) Operator Dealer Repair shop Others

22 0 2 1

Table 13. Person who purchase spare parts for repair (multiple answer) Owner Dealer Repair shop Other

23 0 2 0

Table 14. Purchasing place of spare parts (multiple answer) Bazar Dealer Repair shop Other

20 1 4 0

Table 15. Spare part supply Item Yes No

Acceptability of delivery time 12 10 Stock of spare parts 9 14 Stability of spare part price 3 20 Use of genuine parts 7 18

Table 16. Country of origin of spare part China Russia Belarus Italy

16 7 1 1

Table 17. Problems of available spare part Cannot find suitable

one Low quality Expensive No problem

5 4 3 1

Table 18. Spare parts to be repair, adjustment and replacement Item Number

Tire 12 Fuel system related parts 9 Oil hydraulic system related 7 Transmission related parts, engine related parts, bearing 4 Injection nozzle and piston 3

Repair cost is varied from 0 to 280,000 som/year, average cost is 86,000 som/year.

Table 19. Tools and machines for maintenance and repair Welding

equipment Drilling machine

Lathe machine

Forging machine

Jack Compressor Grinder Hand tools

18 21 4 1 1 3 1 23

Attachment 6: Crop Calendar of Main Crop

Attachment −6

A6-1

Crop Calendar of Main Crop

Attachment −6

A6-2

Attachment 7: Analysis of the Farmhouses that Procured Tractors

Attachment−7

A7-1

Analysis of the Farmhouses that Procured Tractors

The trial calculation was made in order to investigate the relation between the cultivation area and the

income (net earnings) in wheat production. The preconditions of the trial calculation are as follows.

Maximum cultivation capacity of the tractor is 50 ha/month. Other than the farmer’s production

area (including leased land), a tractor is used for cultivation services by other farmers.

Cultivation services period for each work (plowing, harrowing, sowing, fertilizing and

transportation) should be one month. I.e. maximum period for each work should be completed

within one month.

Leasing system should be utilized only for the renewal of the tractor. Implement machines (such

as plow or harrow etc.) owned previously will be used continuously and not be renewed.

The unit prices for each work by tractor were set up as follows, from the interview results and

questionnaire investigation.

(a) Own land (including rental)

Plowing 20 liters/ha only fuel cost (40 som/liter) Harrowing 20 liters/ha only fuel cost (40 som/liter) Sowing 15 liters/ha only fuel cost (40 som/liter) Purchase seeds 1,000 som/ha 20som/kg, 200kg/ha. Updates every 4 years. Fertilizer 15 liters/ha only fuel cost (40 som/liter) Purchase of fertilizers 6,000 som/ha 20som/kg, 300kg/ha Chemical treatment 15 liters/ha Chemicals are not used. Purchase chemicals 0 Chemicals are not used. Water management 2,000 som/ha Labor cost. Harvesting 2,800 som/ha Cost for harvesting machine services

(b) Net income by machine service

Net income by machine

service 4,000 som/ha Sum of plowing, harrowing and fertilizing work

(not including the cost of operation, fuel and

machine maintenance)

Attachment−7

A7-2

Based on the above mentioned conditions, the trial calculation of total net income was derived from net

income by the agricultural machine service and net income by agricultural production, and by the

difference in the cultivation area. Results of the trial calculation are shown in the above figure.

When one half of the income is appropriated for the payment of the annual leasing fee (first year

154,000som), the profits income of the annual 308,000som (154,000x2) are needed. In order to attain

this, from the above figure, when only wheat is cultivated, at least agricultural production in 25ha and

agricultural machine service in 25ha should be performed simultaneously.

It is assumed that the average cultivation area of each farmhouse’s own 25ha and one tractor, and the

required number of tractors calculated by the Ministry of Agriculture is 28,000. In this case the

quantity of farmhouses that own a tractor should be 28,000. The following table shows the breakdown

of the farmhouses that own tractors and the farmhouses that receive services without owning a tractor.

When 28,000 tractors provide a cultivation service for 25ha of farmland, a total of 470,000 ha of

farmland will receive the cultivation service, owned by farmhouses they do not have tractors.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

0 5 10 15 20 25 30 35 40 45 50

純利

益(s

om)

借地を含む耕作面積 (ha)

農業生産からの純利益

機械サービスからの純利益Net income by machine service

Net income by agricultural production

Cultivation area including leased area (ha)

Net

inco

me

(som

)

Figure: Net income from agricultural production and machine service

Attachment−7

A7-3

Table Number of farmhouses and the cultivation area by tractor ownership form

Farmhouses that own tractors

Average cultivation area (ha)

25 According to the above trial calculation

Number of farmhouses 28,000 Required number of tractors calculated by the Ministry of Agriculture is 28,000. Number of farmhouses that own tractors should be 28,000.

Ratio of all the farmhouses (%)

7.8 (Number of farmhouses that own tractors) ÷ (Total number of farmhouses)

Cultivation area (ha) 700,000 (Average cultivation area) × (Required number of tractors)

Farmhouses that do not own tractors

Average cultivation area (ha)

1.43 (Total cultivation area of farmhouses that do not own tractors) ÷ (Number of farmhouses that do not own tractors)

Number of farmhouses 329,127 (Total number of farmhouses)−(Number of farmhouses that own tractors)

Ratio of all the farmhouses (%)

92.2 (Number of farmhouses that do not own tractors) ÷ (Total number of farmhouses)

Cultivation area (ha) 470,000 (Total cultivation area)−( Total cultivation area of farmhouses that own tractors)

Total Total number of farmhouses

357,127 Statistical data (3013)

Total cultivation area (ha)

1,170,000

Statistical data (2013)

Average cultivation area (ha)

3.3 (Total cultivation area) ÷ (Total number of farmhouses)

Source: JICA Study Team

In this trial calculation, the following articles are not considered.

Influence of the production of cash crops other than wheat.

Influence of other income such as sales of livestock or income by money transfer etc.

Influence of the number in the family at the farmhouse.

Tax and social insurance premium

For reference, the repayment plan when the Belarus tractor is leased, is shown below.

Table: Repayment plan when the Belarus tractor is leased (for reference)

Model MTZ82.1

Price 1,000,000 som

Down payment 300,000 som

Leasing price 700,000 som

Annual interest rate 8.00 %

Term of leasing 7 years

Attachment−7

A7-4

Leasing year

Quarter Leasing payment

Balanced principal

Remarks Annual repayment

1 1st quarter 14,000 700,000 Interest repayment 2nd quarter 64,000 650,000 Interest and principal repayment 3rd Quarter 13,000 650,000 Interest repayment 4th Quarter 63,000 600,000 Interest and principal repayment 154,000

2 1st quarter 12,000 600,000 Interest repayment 2nd quarter 62,000 550,000 Interest and principal repayment 3rd Quarter 11,000 550,000 Interest repayment 4th Quarter 61,000 500,000 Interest and principal repayment 146,000

3

1st quarter 10,000 500,000 Interest repayment 2nd quarter 60,000 450,000 Interest and principal repayment 3rd Quarter 9,000 450,000 Interest repayment 4th Quarter 59,000 400,000 Interest and principal repayment 138,000

4

1st quarter 8,000 400,000 Interest repayment 2nd quarter 58,000 350,000 Interest and principal repayment 3rd Quarter 7,000 350,000 Interest repayment 4th Quarter 57,000 300,000 Interest and principal repayment 130,000

5

1st quarter 6,000 300,000 Interest repayment 2nd quarter 56,000 250,000 Interest and principal repayment 3rd Quarter 5,000 250,000 Interest repayment 4th Quarter 55,000 200,000 Interest and principal repayment 122,000

6 1st quarter 4,000 200,000 Interest repayment 2nd quarter 54,000 150,000 Interest and principal repayment 3rd Quarter 3,000 150,000 Interest repayment 4th Quarter 53,000 100,000 Interest and principal repayment 114,000

7 1st quarter 2,000 100,000 Interest repayment 2nd quarter 52,000 50,000 Interest and principal repayment 3rd Quarter 1,000 50,000 Interest repayment 4th Quarter 51,000 0 Interest and principal repayment 106,000