One of the mechanisms created by the state to curb the growth of prices for socially significant food products is the formation of a regional stabilization fund, through the purchase and sale of food, as well as the provision of concessional lending.
In accordance with the decree of the Government of the Republic of Kazakhstan dated October 09, 2012 SEC “Zhetisu” is a specialized organization carrying out activities in this area.
To ensure the implementation of mechanisms for stabilizing prices for socially significant food products in the Almaty region, a Commission has been formed, which determines the list of food products purchased for the stabilization fund, procurement and commodity interventions, and also approves the list of business entities that have submitted applications for a preferential loan. The Commission includes members of public organizations, representatives of private business entities and employees of government departments. Based on the decision of the Commission, the regional akim approves the prices of procurement and commodity intervention.
To stabilize prices for socially significant food products in the region, the akimat of the Almaty region in 2020-21 allocated funds from the regional budget in the amount of 3.7 billion tenge, for the implementation of 2 price containment mechanisms, including the formation of a stabilization fund 700 mln. tenge and for concessional lending, a “circulating” loan for business entities involved in the production and sale of NWPT 3.0 billion tenge.
The stabilization fund is formed for food products from the list of socially significant food products, which consists of 19 items, approved by the Government of the Republic of Kazakhstan on March 1, 2010 “On approval of the list of socially significant food products.”
Food products purchased for the Stabilization Fund, about 90% are purchased from producers of the Almaty region and meet the requirements for food safety.
The purchase of SZPT is carried out in accordance with the Law of the Republic of Kazakhstan “On public procurement”.
With the allocated funds, since 2020, the food stabilization fund of the region has purchased NWT in the amount of 9791. 2 tons of products in the amount of 1 billion 573 million tenge.
Since March last year, about 8,586. 2 tons of products have been sold from the stable fund, most of the products sold were grade 1 flour. 55 bakeries of the region were provided with cheaper flour to curb the rise in prices for molded bread. Thanks to the measures taken, starting from November 2019 and throughout 2020, the price of molded bread did not rise above 85 tenge per loaf from bakeries.
NWPT is sold from a stable fund at fixed prices, below market prices.
The sale of the stable fund’s goods is carried out to the population of the region daily at the municipal market in Taldykorgan, as well as through socially oriented partner outlets, taking into account a commodity surcharge of no more than 10 tenge per kg.
As of December 22, 2021, the region’s Stable Fund has 1204.9 tons of products, including:
– granulated sugar – 924 tons;
– ground rice – 74 tons;
– horns – 5.6 tons;
– sunflower oil – 200 tons.
For the information of the population, it is possible to purchase sugar from the regional stabilization fund, the production of the Aksu sugar factory at a price of 207 tenge per kg, rice purchased from rice farmers of the Balkhash district at 210 tenge per kg, horns produced by “Mareven Food Tien Shan” at a price of 185 tenge per kg.
According to the second mechanism of price containment for NWPT, concessional lending to entrepreneurs under a revolving scheme.
Business entities, as well as trade enterprises engaged in the production and sale of socially significant food products, can take part in this mechanism.
The main condition is the sale of their products at prices at the level of no more than + 10% to the threshold values of retail prices.
To date, out of the allocated 3 billion tenge, loans have been issued for 2 billion tenge. Agreements have been concluded with 11 business entities, including producers of NWPT, these are sugar factories, dairies, poultry factories of the region, a bakery, as well as trade entities, including the Toymart supermarket chain and grocery stores in regional centers and in Taldykorgan.
When implementing this instrument of price containment, the SEC acts as a link between manufacturers and subjects of domestic trade, in connection with which products, bypassing the chain of intermediaries, go directly to trade counters.
For this purpose, Memorandums were concluded between SPK, commodity producers and trade entities in order to directly supply manufactured products to retail outlets and conclude forward deliveries.
In the future, the SEC plans to attract as many business entities as possible to cooperate in the framework of concessional lending under the “turnaround scheme”.
“From field to counter”
At the initiative of the Head of State, in order to establish a system of constant purchase and sale of agricultural products, as well as to keep prices for NWPT, in 2020, we implemented a pilot project “from field to counter” on concessional lending to commodity producers in order to replenish their working capital.
For these purposes, 1 billion tenge was allocated from the republican budget.
Lending to commodity producers was carried out instead of the obligation to issue a pre-agreed volume of goods of own production at a fixed price for retail facilities.
Within the framework of the pilot project, soft loans were issued to peasant farms growing sugar beets for sugar production, producers of polished rice, dairy products, eggs and vegetable products.
The products were sold through retail outlets in the Almaty region, and peasant farms growing sugar beets sent the entire volume of raw materials for the production of granulated sugar.
The products of local producers are sold on the counters of the Toymart supermarkets, the Sanzhar store and through other stores that have received preferential loans.
The cheap loan helped our peasants in harvesting, the demand from farmers and processors for a soft loan is huge. Based on the results of the projects implementation, we hope that this mechanism will continue in the coming years.