Agricultural machinery supplies to Kyrgyz Republic



Signed Investment credit

On 27 December 2013, the EFSD Council adopted a decision to provide an investment loan to the Kyrgyz Republic to finance the project Agricultural Machinery Supplies to the Kyrgyz Republic in the amount of US $20 million.

The project involves partial upgrading of the fleet of farming machinery in the Kyrgyz Republic—according to the Ministry of Agriculture of KR, over 90% of the farming machinery fleet has been operated for 3-4 times its designed life span, and many farmers utilise draft horses and manual labour.

In the process of the project implementation, it is planned to supply the machinery that should be urgently acquired or replaced. This is farming machinery that is most costly for agricultural producers, such as tractors with detachable equipment and grain harvesters.

The project is implemented in a chronically underfinanced sector of the economy—according to the official statistics, the fixed capital formation in agriculture has dropped since 2000 from 3.7% to 1.3% of total fixed capital formation.

The project implementation will help generate up to 560 new jobs, while the number of citizens employed in agriculture is constantly declining. Over the last 12 years, the number of people employed in agriculture has dropped by 20% for a number of reasons, including the insufficient financing of the sector, lack of proper working conditions, and poverty.

Expected outcomes of the project implementation:

  • Reduction of the cost of agricultural production by 2% through cutting down on overheads of farming machinery maintenance by 10% nationwide;
  • Increase in the quantity of farming machinery units by 8.5% of that available as of 1 January 2013;
  • Improvement of the level of investment in agriculture in KR with relevant upgrading of production;
  • Improvement of the trade balance owing to greater agricultural exports;
  • Reduction of the poverty rate of the rural population; and
  • Facilitation of further integration between the EFSD member states through improved agricultural exports from KR to the markets of the EFSD member states and supplies of agricultural machinery to KR from the EFSD member states.