An EBRD US$35 million loan is fostering development of modern farming techniques in Kazakhstn. As Kazakhstan seeks to diversify its oil and gas-dominated economy, agribusiness is seen by many as a key sector for growth and potential export revenues.
In this context, the EBRD provided a US$ 35 million loan to Kazexportastyk, a leading agro-industrial holding in Kazakhstan, to help the company implement an ambitious programme of advanced agricultural technology and practices.
"This was the first time that we have directly financed an agriculture deal in Kazakhstan," says Mehmet Ilkin, Principal Banker in the EBRD Agribusiness team. "Previously, the Bank supported the agricultural sector in Kazakhstan by providing loans to several local banks, which lent the money to entrepreneurs in the agricultural industry, but this time the funds went directly to farming operations in Kazakhstan."
Diversifying the economy
Kazexportastyk is a large producer and trader of grain and oil crops in northern Kazakhstan. The firm owns 53,000 hectares of farmland, on which it grows wheat, rapeseed and sunflower seeds. It also cooperates with 23 partner farms with which it has long-term cooperation agreements covering crop financing, machinery leasing and knowledge transfer.
"Kazakhstan's agricultural sector is heavily dominated by wheat production. The Bank's loan will help Kazexportastyk boost the production of other crops such as rapeseed and sunflower seed," Mr Ilkin explains. "The project therefore not only helps diversify Kazakhstan's economy, but also has an important impact on farming practices."
By introducing and diversifying crop rotation, the company aims to increase the area of land used for growing oil crops from 12 per cent to approximately 45 per cent in 2011. Consequently, farmers will be less dependent on monocrop production of wheat and can diversify into other attractive crops like sunflower and rapeseed.
"The company has high standards of transparency and corporate governance and adheres to international accounting standards," says Mr Ilkin.
One of the best deals of 2009
Leading business magazine Global Trade Review named the loan one of the Best Deals of 2009. The magazine received thousands of nominations and selected the best 40 deals worldwide, which it believed to best represent the achievements in the trade, export and commodity finance market across the globe in 2009.
"The Kazexportastyk project was the only one from Central Asia that made it into the final list," explains Mr Ilkin. "We hope that the project will have an important demonstration effect – not only on Kazakhstan but the whole region."