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. Last Updated: 07/27/2016

Kazakhs Hope Reform Brings a Bumper Crop

ALMATY, Kazakhstan -- After 1995's worst grain harvest since the 1960s Virgin Lands campaign to colonize the steppe, Kazakhstan says output should recover this year as bold market reforms yield their first benefits.

"It all depends on climatic conditions. Last year we did everything possible to sow on time, but there was drought," Deputy Prime Minister Zhanybek Karibzhanov said Tuesday.

"People cried then that there would be hunger. Was there hunger? There was not, and there will not be," he said, adding that "significantly more" grain would be threshed this year.

Karibzhanov, 47, an agronomist, said decrees on land, registering property and mortgages had created "all the conditions to include land in the system of market relations."

He said the area being sown to grain was being cut by 540,000 hectares to 18.2 million. But land under wheat would rise by 350,000 hectares to 13 million.

Karibzhanov declined to comment on whether the harvest would meet a government target of 18 million tons set last December, after a meager 11 million tons in 1995.

But he said he expected grain exports to be toward the top of Kazakhstan's traditional range of 5 to 8 million tons.

Kazakhstan's steppelands stretch across territory the size of western Europe, but their role as the Soviet breadbasket vanished as the state farming sector collapsed and credit-starved private farmers struggled on some of the worst land.

Karibzhanov told a news conference the government has approved a battery of measures to help boost output and help develop the rural economy.

For this year, the state will buy 1.1 million tons of grain for its reserves using bills of exchange, paying half the price now and the remainder in June.

The scheme, operated by Kazkommertsbank and Agroprombank and guaranteed against existing strategic reserves, helps to offset the lack of a futures market.

Karibzhanov said 220,000 tons of seed had been released from reserves to ensure enough for planting, while 300 million tenge ($5 million) had been released from a state agriculture fund to ease prices for high-quality seed.

Regulations on fuel supplies have been tightened to wipe out nonpayments. A 600 million tenge state equipment-leasing program, though small, is working.

Kazakhstan "is on the finishing straight" on agreeing to buy a large batch of farm equipment from the U.S. firm John Deere, and is also looking into joint tractor and combine-harvester production.

State aid for up to half the cost of mineral fertilizers is being granted to support three Kazakh fertilizer plants. Funds have been borrowed under state guarantee to buy herbicides and pesticides. Talks are going on with France's Rhone-Poulenc to convert a plant in Stepnogorsk to meet internal demand.

An Asian Development Bank loan of $100 million, of which $50 million has been granted, aims to double the number of rural food processors and service businesses.

Foreign marketing efforts also generated Kazakhstan's first positive foreign trade balance in farm goods last year, with exports at $705 million and imports of $385 million.