Current state and development trends of food industry of the Republic of Kazakhstan

Gaukhar Sakhanova

Abai Kazakh National Teachers’ Training University

Dostyk str. 13, Almaty, Kazakhstan

E-mail: ecolady@mail.ru

Annotation: Kazakhstan came into new period of development – stage of economic growth. In economic policy there appeared new orientation points related to gradual withdrawal from “raw” model of development and creation of competitive and diversified industry. Economic growth achieved at the account of extensive use of natural resources seldom has sustainable character. Therefore development of sectors and industries providing growth of added value becomes of big importance.

Among these sectors is food industry. Food industry allows more rational use of rich natural potential of country, developing it on the basis of production with higher added value and, as the result, providing the sustainability of economic growth.

JEL Classification: L000, E660, E690

Key words: food industry, food safety, state support, agroindustrial complex

UDC: 330.341.1:62(574)

Introduction

Food safety of country is one of the factors of state security. It defines economic stability and political independence of state, it’s possibility to fulfill the primary needs of it’s citizens without damage to national and state interests.

National interests of the Republic of Kazakhstan in agriculture production sphere may include: provision of adequate volume of domestic production of food products; keeping the specified level of state food reserve; provision of correspondence of quality of produced and realized food products to standards of quality and safety on food products; provision of adequate living wage, level and high quality of healthy life for population; expansion of production of competitive food products with orientation for export; performing state control of food market (including account and control of production, foreign and domestic supplies, food reserves).

Therefore, strategic aim in sphere of food and processing industry in middle-term period is increase of competitiveness of processing sites based on principles of sustainable development of the Republic of Kazakhstan. According to data of Statistical Agency for January 1, 2009, in Kazakhstan output of production of food industry is performed by approximately 3,0 thousand sites, where 69,1 thousand of people work, that is nearly 17 per cent of all employees in processing industry.

Average annual rate of increase of sphere for the lat five years made 108,4 per cent.

Analysis of output of food products in the republic

Food industry is a combination of industries producing food stuff, belonging to the primary spheres of life support and takes one of the first places in sustainable development of the economy of country. Production of food stuff is intensively developed sector of processing industry of Kazakhstan [1].

In conditions of crisis the more dashing, if compared to other industries, increase of prices for food stuff is explained by their primary importance and necessity. Due to this increase rate food industry follows the industries of natural monopolies.

Development of domestic food industry, turning it to highly effective and high-yield economic sector is the main factor of providing of food safety of country, affecting the interests of all economic system of state.

Food industry plays significant role in development of agriculture and essentially affects the development of such related sectors as electrical energy, transport, production of packaging materials. It plays key role in formation of social prosperity of population [2].

The message of President of the Republic of Kazakhstan «New decade – new economic upsurge – new possibilities for Kazakhstan» says that the important segment of diversification of the development of agriculture-production complex, which shall be performed due to three main directions:

1. Increase of labor productivity;

2. Providing the food safety;

3. Realization of export potential.

Labor productivity in agriculture sector makes approx. 3 thousand dollars for one employee per year. In developed countries this marker is 50-70 thousand dollars. Therefore the task is aimed to increase the productivity in agriculture sector at least twice. To deal with this task is possible only with agriculture-industrial diversification, that is rapid increase of production of agriculture raw materials, new equipment, new technologies and approaches in agriculture. International experience shall be applied; it shall be rapidly embedded into our agriculture. By year 2014 more than 80 per cent of domestic market of food stuff shall be comprised of domestic food products [3].

According to estimations of Ministry of economy and budget planning of RK, actual increase of GDP in 2009-2010 makes 1-3 per cent. Inflation rate at the end of 2009 and 2010 is planned within the limits of 7-9 per cent.

Strategic aim in sphere of food industry at midterm period is the increase of competitiveness. Due to this, maximum efforts are aimed at creation of favorable conditions for increase of competitiveness of processing sites and providing food safety.

Data of Statistical Agency show that within recent years volume of production in food industry of the republic had reduced, particularly in 2009 it reduced for 1,8 per cent and made 792 billion tenge in current prices (table 1). Decrease happened to be less deep that in several other sectors of processing industry of country, yet preconditions for decrease of production were substantial enough:

• compression of customer demand of population;

• deficiency of turnover assets;

• decrease of possibility to attract credit resources;

• loss of competitive price advantages by certain food products.

Table 1 – Volume of production of food industry

Source: according to data of Statistical Agency. www.stat.kz

In year 2009 there appeared the significant growth of such trends as production of vegetable oils, meat and meat products, juices. The biggest decline, affecting on the whole the markers of sector, was shown by manufacturers of sugar and milk products (table 2). The output of non-alcoholic and soft drinks reduces insignificantly. Beer production remained actually due to the level of 2008.

Table 2 – Production of food stuff in RK

Year	2005	2006	2007	2008	2009
Meat and food subproducts, mln. tonnes.	85,6	91,4	110,2	113,5	122,2
Cereal, rough grinded flour mln. tonnes.	26,1	35,9	40,2	43,2	42,1
Pasta, mln.tonnes.	85,1	104,1	124,8	122,4	127,2
Vegetable oils Refined and non-refined, mln. tonnes	167,0	212,7	237,3	188,9	206,7
Processed milk - liquid and Cram, mln. tonnes	179,7	225,8	258,7	266	235,2
Solid forms of milk, mln. tonnes	4,3	4,4	3,8	3,0	2,8
Butter, mln. tonnes	19,7	18,6	19,7	17	14,7
Cheese and curd, mln. tonnes	14,9	17,0	17,1	16	13,9
Fruit and vegetable juices, mln. litres	99,5	129,9	168,0	122,5	132,2
Canned fruits and vegetables, mln. tonnes.	5,2	5,2	6,3	6,9	4,0
Sugar, mln.tonnes	528,7	490,2	392,3	508,5	385,1
Wine, mln.litres	52,8	36,8	19,4	13,3	11,7
Cognac, mln.litres	5,4	6,3	6,1	4,3	4,4
Vodka and liquor-vodka products, mln.litres	65,6	64,4	63,6	61,2	59,9
Beer, mln.litres	323,5	363,8	410,9	360,7	360,8
Soft drinks (including soda), mln.litres	777,5	904,3	1112,2	1094	1005
Tobacco products, bln. pieces	30	30,8	31,5	28,5	26,7

Source: according to data of Statistical Agency. www.stat.kz

The last year was especially problematic for development of milk and sugar industry in Kazakhstan. Negative dynamics in production of milk stuff was experienced during all year, and production of sugar showed increase only in November and December. The main reason of this situation is rise of price of raw materials.

For milk industry this factor became the major, as in conditions of limited effective customer demand and high price competitiveness on the part of Russian manufacturers, rise of prices for end products is limited. The previous year, due to created favorable conditions for import milk products, volumes of supply of it’s certain types in the territory of country exceeded markers of the preceding year. Thus, compared to 2008, in Kazakhstan there were imported for 6,2 per cent more cheese and curd, for 5,2 per cent – butter milk, yogurt and kefir, for 28,3 per cent – milk and non-concentrated cream, for 30 per cent - butter.

In sugar production factor of price rising for raw materials in 2009 was partially compensated by price rising for end products (almost for 30 per cent compared to 2008), which became possible due to introduced regime of limited import of white sugar in the territory of country. Nevertheless, as in 2008 production of sugar cane in Kazakhstan reduced for 58 per cent, factor of two-fold price rising of import raw material still affected the decrease of output volume of sugar by domestic plants.

Table 3 – price index of food industry products, in per cent to the previous year

Source: according to data of national Bank of RK

Prices of domestic manufacturers of food products increased in 2009, but their growth rates substantially slowed. Thus, if in 2008 price index made 127,2 per cent, then in 2009 – 103,5 per cent. The most rise in price was of sugar – for 29,8 per cent, tea and coffee – 27,4 per cent, tobacco products – 23,7 per cent, meat of poultry and rabbits - for 21,5 per cent. The reason was price rising of raw materials. Only in December 2009 compared to December 2008 price for sugar, tea and non-processed tobacco, purchased by industrial plants for further reprocessing, increased correspondingly for 44,5 per cent, 38,3 per cent and 36,1 per cent (table 3).

Increase of prices for poultry appeared on the background of increase of it’s production and is related, most probably, to price rising of corn – main feed for poultry, of electric energy and of import vaccines and premixes.

At the same time in 2009 due to decrease of price for raw materials vegetable oils reduced it’s cost for 18,8 per cent, flour and cereal - for 12,9 per cent, spices and flavors – for 3,7 per cent.

Kazakhstan began to export wheat to China approx. 3 mln. tons, and through China to Japan, Korea and countries of South-Eastern Asia, that will affect the export markers of country.

According to data of Ministry of Agriculture of RK, average annual volume of consumption of wheat in China is nearly 100 mln. and each year demand for wheat in China increases for 2 mln. tons.

Table 4 – Investments to capital stock in food industry

Source: according to data of National Bank of RK

In this year investments to capital stock in food industry continued to reduce. Compared to 2008, they reduced for 7,6 per cent, while in 2008 г. - for 21,8 per cent. In conditions of shortage of financial assets for realization of current activity of entities, investments to capital stock reduced at the account of owned assets. So, investment share at the account of owned assets decreased from 81 per cent in 2008 to 76 per cent in 2009. (decrease in nominal terms made 8,5 per cent to 2008). At the same time, there increased the ration of loan assets from 13,2 per cent to 19,4 per cent (nominal increase made 42,8 per cent), and budget assets from 0 to 0,9 per cent (table 4) [4].

Therefore, in 2009 conditions of functioning for agriculture-processing productions were complicated enough. Partially, it was based on devaluation of tenge, which became the reason of increase of prime cost of domestic end product due to rapidly increased cost of imported complete parts (machinery and equipment, accessories, raw materials), share of which in food industry of Kazakhstan is rather large. Besides that, the higher levels of devaluation of national currency performed in countries – main trade partners of Kazakhstan – in Russia and Ukraine created competitive advantages in the domestic market for imported food stuff from these countries. As result, lower prices offered by Russian and Ukrainian manufacturers at impossibility to devalue them by domestic manufacturers, made certain types of Kazakhstani products non-competitive.

However state support of agriculture-processing productions allowed escaping the deep degradation of sector.

Kazakhstan has all possibilities for realization of reserves aimed at increase of volumes of production of food stuff of higher quality. Large-scale implementation of scientific-technical progress into production will allow to develop food industry.

For most Kazakhstani entities the main goal is the cooperation with international manufacturers, which became possible on the basis of their innovation development. In many cases the most effective became the strategy of long-term cooperation, participation in alliances with worldwide leaders as the alternative to independent approach to foreign markets. Level of cooperation of Kazakhstani companies with foreign partners shows that as they move further on the way of understanding problems and advantage of approach the worldwide market, the more effective their financial and economic status becomes.

As we can see from table 5, general goods turnover in 2009 made 4 067 066,2 thousand dollars on agriculture products, 1 274 512, 2 thousand dollars on processed products, 2 792 554 thousand dollars, that is 1 989 976 thousand dollars less if compared with 2008, i.e. for 32,8 per cent.

Goods structure of Kazakhstani export and import from 2000 till 2009 did not undergo great changes in direction of improvement.

Thus, in structure of Kazakhstani export raw materials still prevail.

Table 5 – General foreign turnover of RK for the period January - December 2008-2009, thousand USD

Products	Turnover	2008	2009	2009 to 2008, per cent
In general	General goods turnover	6 057 042,2	4 067 066,2	67,2
	Export	3 140 634,4	1 702 834,1	54,2
	Import	2 916 407,8	2 364 232,1	81
	Balance	224 226,6	- 661 398	74,6
Agriculture products	Turnover	2 343 273,2	1 274 512, 2	54,3
	Export	1 901 779,4	805 618,1	42,4
	Import	441 493,8	468 894,4	103,2
	Balance	1 460 285,6	336 724,0	23,1
Processed products	Turnover	3 713 769	2 792 554	75,2
	Export	1 238 855	897 216	72,4
	Import	2 474 914	1 895 338	76,6
	Balance	- 1 236 059	- 998 122	80,7

Source: according to data of Statistical Agency. www.stat.kz

Insufficient competitiveness of processing industry leads to increase of import of goods with high degree of processing.

At present time status of agriculture sector shows signs of growth. Volume of gross output of agriculture for the last years increased 3,6 times. At that, prices for this period increased almost 2,9 times. Gross harvest of cereal crops in 2009 reached 20,8 mln.tons, which allowed fulfilling the domestic needs of country and export potential (including flour).

In 2005 Kazakhstan, having exported 931, 9 thousand tons of flour, became the first in the world as exporter of flour per capita, and since 2007 — the world’s first on physical volumes of exported flour. In 2009 Kazakhstan, for the first time bringing into market more than 2 mln.tons of flour (approx. 2,2 mln.tons of flour (that makes in crop equivalent more than 3,1 mln.tons of , grain) (record volumes in history of Kazakhstan)) will for the third time take the leading position in worldwide rating of flour exporters.

Up to date the republic export more flour than it is consummated within the country (56 per cent of produced). Thus, nearly 80 per cent currency earning from sale of processed agriculture products in the republic consist of exported flour. The main consumers of Kazakhstani exported flour are Uzbekistan, Tajikistan, Kyrgyzstan, Afghanistan. It shall be mentioned that among the goals of milling industry – bringing the volumes of export of flour from republic to 2, 5–3, 0 mln. tons, and among plans on development of export are Iran, India, China. The last two countries present strategic interest for export, as in further decade population of these countries will increase for one billion of citizens, and possibilities of increase of production of cereals as at the account of extensive approaches (increase of cultivation areas), so as at the account of intensive approaches (increase in productivity) are extremely limited. Besides, recently population of these countries changes the structure of nutrition, including into ration more and more cereal products, which also enlarges the demand [5].

The offered conditions of development of national food market, including the improvement of organizational-economic mechanism of market regulation, will lead to creation of impulses for the further development of offer and increase of population welfare on level adequate for healthy and active life. Along with that, there will be changed the parameters of market itself, which will acquire the higher characteristics of effective sustainable development in perspective.

State support of agriculture-production complex in the republic

State support of APC aimed at it’s effective development and dealing with utmost important tasks, that is providing the sustainable increase of production and processing of agriculture products, food safety, stimulating social-economic development of rural areas, creation of conditions for Kazakhstan to enter WTO [6].

Competitiveness of agriculture products of Kazakhstan and products of it’s processing is the main parameter of development of APC, included in various state, regional programs and strategic plans for development of APC: Concept for sustainable development of agriculture-production complex of the Republic of Kazakhstan for years 2006-2010 [7].

The problem of capital raise for agriculture demands substantial state regulation. At present time state support of agriculture sector provides subsidizing the expenses for purchase of material-technical resources, use of short- and long-term bank credits; leasing of agriculture machinery; purchase of agriculture products and regulating cereal market with the help of purchase and trade interventions; support of insurance of harvest of agriculture products; tax benefits and financial recovery of agriculture entities, etc.

At present time financial support of agriculture sector of economy is performed through: JSC «National holding «KazAgro», which includes share companies «Agriculture production corporation», «Mal onemderi corporatsiyassy», «KazAgroFinans», «Agriculture credit corporation», «KazAgroGarant», «Fund for financial support of agriculture», «KazAgroMarketing»; microcredit organizations; commercial banks. Budget assets are provided for holding events under programs, which are defined in Budget Code [8], namely:

- increase of productivity in agriculture sector based on use of high-yielding technologies;

- organization of medium- and large-sized trade entities;

- processing of agricultural products;

- implementation of innovation technologies;

- stimulating the initiative of rural population.

«KazAgroFinans» performs the financing of perspective projects in six directions of development of agriculture in country: creation and development of modern large-sized dairy farms, network of poultry factories, hothouse entities, greenhouses; organization of production for assembling of agriculture machinery and implementation of drop irrigation technology at production of horticultural products.

Total sum of financial support of APC by holding «KazAgro» for years 2009-2011 will be 283,9 billion tenge, of which:

In 2009 141,5 billion tenge (realization of investment projects – 17,6 billion tenge; financing of agriculture manufacturers during spring field and harvest works – 68,8 billion tenge; purchase of grain – 55,1 billion tenge).

In 2010 90 billion tenge (realization of investment projects – 50 billion tenge; purchase of grain – 40 billion tenge).

In 2011 52,4 billion tenge (realization of investment projects).

Thus, based on results of analysis by republic budget there was provided financing of agriculture in 2009 in amount of 111 227 mln. tenge. In 2010 there will be forwarded 114 672 mln.tenge, 114 005 and 128 047 mln.tenge in 2011 and 2012 correspondingly (Table 6).

Table 6 – State support of agriculture-production complex for years 2009 – 2012.

Year	2009	2010	2011	2012
Republic budget expenses (RB), total, mln.tenge	3178048	3702354	4031182	4257080
RB expenses for small-sized agriculture, total, mln.tenge	157762	162964	166816	177936
Including:
RB expenses for APC, total, mln.tenge	111227	114672	114005	128047
Including:
Direct state support of APC	42325	51888	49219	61902
Indirect support of APC	68902	62784	64786	66145
RB expenses for other (woodland, water, fish industry, land relations), mln.tenge	46535	48292	52811	49889
APC share in RB expenses, per cent	3,5	3,1	2,8	3,0
Share of direct state support of APC in RB expenses, per cent	1,3	1,4	1,2	1,5

Filed according to data of Law of the Republic of Kazakhstan «On republic budget for 2009-2011» dated 04.12.2008 г. and Law of the Republic of Kazakhstan « On republic budget for 2010-2012» dated 07.12.2009.

Share of financing of agriculture sector in expensive part of republic budget made in 2009 - 3,5 per cent; 2010– 3,1 per cent, 2011– 2,8 per cent, 2012– 3,0 per cent. Share of direct support is provided by republic budget from 1,4 per cent in 2010 to 1,5 per cent in 2012.

Direct state support includes current transfers to oblast budgets, budgets of Astana and Almaty cities for development of agriculture and state support for development of APC.

As the result of financial support, in republic there formed favorable conditions for development of stock farming and land farming, which were significantly stimulated by state investments to APC. Thus, wheat production per capita in 2007 reached 1058 kg, which allowed Kazakhstan to become the worldwide first on this marker, leaving behind Australia, and on wheat export – 7 place worldwide. In 2009 total cultivated area made 21,6 mln.hectares, which is 1,6 mln.hectares or 8,2 per cent more than level of 2008. At that, cereal crops were located on area of almost 17 mln.hectares or 4,9 per cent more than level of 2008 (wheat was disseminated on area of 14,5mln.hectares). Oil-bearing crops accommodated 1076,4 thousand hectares, or 18,9 per cent more than level of 2008. Feeding crops were located on area of 3,1 mln.hectares, which is 32,9 per cent more than level of 2008. Potato was seeded in area of 170,2 thousand hectares, sugar cane -19,2 thousand hectares, cultivated areas of vegetable-vine crops stabilized at level of the previous year and made 112,1 thousand hectares.

In 2009 number of cattle stock increased for 2,4 per cent compared to 2008, in 2008 – for 2,9 per cent compared to 2007. In all categories of farms there increased the cattle stock of sheep and goats for 3,9 per cent, horses for 5,8, camels for 5, poultry for 6,4 per cent. Still it is necessary to point that pig stock decreased for 1,2 per cent. For 2009 realization for slaughter of all types of stock and poultry in live mass in all categories of farms increased if compared to the previous year for 2,8 per cent, milk production - for 1,6 per cent, chicken eggs – for 19,5 per cent.

Food safety

Food safety is a situation when all people at any time have physical and economic access to adequate in quantity relation safety food, necessary to lead active and healthy life. «Roman declaration on worldwide food safety» says about obligation of any state to provide right of each person for access to safe and full-value food products according to right for adequate nutrition and right for freedom of starvation [9].

Food safety is one of the main goals of agriculture and economic policies of state. In it’s general view it forms the vector of direction of any national food system to the ideal condition. In this sense, strain after food safety is uninterrupted process. At that, while reaching it there often happens the change of priorities of development and mechanisms of realization of agriculture politics [10].

Food safety of country is provided in case if it’s economy produces not less than 80 per cent of consumed products, or in case if country specializes in production of stuff, which export allows it to get the positive balance of external trade balance on production. Food safety is considered to be provided if beside production of necessary quantity of products there performed it’s additional output in volume of compensated reserve stock in period of 60 days or in 17 per cent of annual volume of consumption. In case if certain types of products are not produced in country or their production is limited, need in them is fulfilled by purchase from other countries. Whereas it is important not to allow the appearance of production, political or other dependence from exporting countries due to lack of products.

All developed countries protect product markets from import: in the USA it does not exceed 17 per cent. Self-sufficiency level in the USA and in France makes 100 per cent, in Germany – 93 per cent, Italy – 78 per cent, Japan – 50 per cent [11].

The necessary condition to provide food safety is physical and economic accessibility of food products for population.

Upon physical accessibility of products we shall understand the presence of food products in the whole territory of country at any time and in adequate assortment. Here it should be accounted that, as food products of own production have high ratio in consumption structure of Kazakhstani population, physical accessibility of products is defined not only by presence of goods in market, but also by possibility to produce them in private farm holding.

Formation of worldwide production resources is characterized by systematic crisis of production and sale of agricultural products, presenting a serious threat to sustainability of production supply of population. United Nations Organization (UN), World Bank (WB), International Monetary Fund (IMF), World Food Program (WFP) and Food and Agriculture Organization (FAO) in March 2008 declared international production crisis. In April it already spread over 39 countries of the world, impending the further spread. Starvation problem began to perceive especially acute when in 2007 and 2008 in 22 countries there rushed the wave of «product revolts», in course of which many people suffered or died.

Director General of FAO Jacque Diouf at world summit on November 16-18, 2009 mentioned that when 20-30 per cent of population in country are starving or constantly lack food, the growth of the whole economy is slowed. Considering that there are more than 40 such countries and that quantity of starving people already exceeds 1 billion, that is 105 million more than in 2008, and every 30 seconds 5 children die of starvation worldwide, then it surely will raise serious concern of international community. At the same time development trends of international product market with account of many restricting factors exciting deep contradictions in world economy, do not allow to predict very high rate of growth of product and raw resources even in long term perspective.

Estimates of long-term forecasts, made in cooperation by specialists of Organization for Economic Cooperation and Development (OECD) and FAO, gives the evaluation of markets of main agricultural products 10 years ahead. If we take as hypothesis that in later perspective there will remain the same trends and level of influence of various factors on each other, then we can predict the scenario of development of situation in worldwide agriculture sector based on existing forecasts.

Russian institute on agricultural issues and informatics named after A.A.Nikonov in cooperation with Russian-German high school of management of Academy of National Economy there were developed variants of forecasts for development of world and Russian agriculture for period up to 2050 г. (study is performed with support of project №08-02-00008а of Russian Humanitarian Scientific Fund). As prerequisites for this forecast, there were proposed four hypothesises.

The first. Cultivation areas for main agriculture products (wheat, corn, rice) will not be reduced, and will be even increased. It is one of the main lessons that each country shall learn as the result of production crisis in 2007-2009. Otherwise many countries and mankind on the whole condemn themselves for constant repeat of such type of crisis.

The second. In all countries even more recourses will be wasted on implementation of innovations of scientific-technical progress into agriculture, thus allowing increasing the effectiveness of use of resources, first of all land and water.

The third. Developing countries of many regions will increase consumption of proteins at the account of meat and milk products. It follows that the more share of grown plant resources will be used as feeding.

The fourth. In most of the countries there will remain the tendency to use agricultural resources generally for production goals. Exception will be made only by those countries where exist special natural and political conditions allowing them the effective use of land resources for production of biofuel. To such countries may be referred, at first, the USA (ethanol made of corn), Brasilia (ethanol made of sugar cane) and in perspective – several countries of South-Eastern Asia, which can grasp effective production of biodiesel from palm oil [12].

According to data by specialists on solving production problem and liquidation of deficiency until 2050 rate of consumption shall 1,3-1,5 times exceed rate of population growth. At that coincidence of rates of population growth and cumulative nature of rate of consumption is predicted only for three planetary regions (North America, Oceania, and Europe). Negative tendencies of resource formation depressively influence as the product market on the whole, so as markets of certain countries.

At the end of previous century nearly 15 countries in the world annually underwent product crisis, in current century their number increased up to 25. In 2007 in crisis declaration addressing FAO for extraordinary help signed 47 countries. To fulfill needs in food provision for planet population, which it is estimated to reach 9,1 billion to 2050, production of food stuff shall increase for 70 per cent, yet with background of the whole row of problems including climate change and rapid urbanization.

The main reason for starvation and lack of nutrition on summit of 2009 was named lack of financing of agriculture in developing countries. According to estimates of FAO specialists, to reach the necessary growth dynamics of production, total average annual volume of investments to primary agriculture (increasing soil fertility, their security, technique, technologies, stock, etc.) and processing sectors (storage, realization, processing of products) of developing countries compared to 2007 shall be increased for almost 50 per cent.

Price rising for food stuff leads to degradation of life quality in many countries, including developed ones. Nominal prices index for products filed by FAO doubled for the period of 2002-2008. Increase of actual prices was less expressed but still significant. After four decades of relative balance actual price index for food stuff began to increase in 2002 and rose rapidly in 2006-2007. At mid- 2008 actual prices of food stuff if compared to 2002 increased for 64 per cent. The feature of tendency is that if earlier after price rise there happened stabilization and even decrease, then in 2000-s this process becomes irreversible.

Therefore, each country shall design proved methodology including complex of strategic and operative measures for sustainability, security and reproducing of base of food safety. The methodology which is the reliable basis for stabilization of domestic production and sale, establishing of effective foreign economic relations at food trading, formation of legal and economic warranties of sustainable provision of national agriculture-production independence.

Conclusions

Financial support of APC aimed at it’s effective development promotes dealing with primary importance issues, i.e. providing sustainable growth if production and processing of agriculture products, food safety of country, stimulating social and economic development of rural areas, creation of conditions for Kazakhstan to enter WTO.

Any economically developed state has highly developed food industry. Level of development of food industry characterizes the status of food safety in country. The important role is played by sector at providing health of population on the basis of proper balanced nutrition. Social significance of food industry is increasing, as price level for food products in conditions of low paying ability of most of the population defines social climate in community. Increasing of it’s investment attractiveness compared to other processing sectors gives it the possibility to become one of the “points” of economic growth.

This sector, as “systematically important”, socially important, shall always be within sphere of state priorities. It shall be eliminated from secondary status that formed as result of residual financing principle in conditions of command-and-control economics. Also the sector shall not be brought to such crisis state which was usual during process of market transformations and began to threaten food safety of country.

Nevertheless problem of establishing mutually favorable relations between suppliers of raw materials and processors remains outside the limits of view of state bodies. Development of agriculture-production integration demands at first state regulation of price policy, as it is done in developed countries. It means that alongside with free market prices in agriculture production there shall exist prices regulated by state (guaranteed, target, loan, threshold, interventional).

Together with economic methods during process of establishing the mutually favorable relations between agriculture and processing entities exclusively important is the form of organization of agricultural business. The most appropriate for Kazakhstan is considered the cooperative form, where function of integrators is performed by agricultural entities. But cooperation in agriculture is performed rather slow and for this issue demands the activation of organizational work on the part of state.

The sector needs investments, tax privileges and other measures of economic stimulating on the part of state. There exists acute need in qualified specialists, who is almost nowhere trained in the republic nowadays.

References

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