Current status of Agricultural sector in Kyrgyz Republic from the perspective of increasing presence of individual entrepreneurs

Abstract

Agriculture is a major sector in the economy of Kyrgyz Republic (Kyrgyzstan), a small landlocked mountainous country in Central Asia. The National Development Strategy of Kyrgyz Republic defines agriculture and agroindustry as strategic priority sectors in the economy of the country. Collapse of Soviet Union in 1991 caused a drastic decrease in Gross Agricultural Output (GAO) in early 1990’s, but GAO recovered to its level of 1990 in 2002 owing to the increasing output of peasant farms (“фермерские хозяйства” in Russian). Kyrgyz Republic implemented comprehensive and innovative land and agricultural reforms, especially land privatization policy adopted in 1998 caused dissolution of “Kolkhoz” and “Sovkhoz” and brought mass emergence of individual peasant farmers with their own small land. Output of peasant farms accounts for about 60% of GAO and the number of officially registered individual entrepreneurs among peasant farms has more than doubled from 2007 to 2019, with the percentage of 26% of the total in 2019.

Since early 2000’s, the agricultural output growth has been slowing down due to low productivity, soil degradation, poor maintenance in irrigation system and lack of agricultural inputs etc. Under these conditions, the government intends to improve competitiveness of the agricultural sector through consolidation of the fragmented farmland and promotion of creating clusters. This new direction stated in the National Development Strategy obviously conflicts with interests of peasant farms, greatly contributed to the recovery and growth of the sector, especially emerging individual entrepreneurs might lose their incentive for investment under the consolidation policy initiated by the government.

On the other hand, the National Development Strategy stipulates that the government policy gives priority to production of environmentally friendly organic products, using Kyrgyzstan’s geographical and climatic advantages in the regional markets. In late 2018, parliament ordered the government to develop a plan to achieve 100% shift to the organic farming within 10 years, and “Law on organic farming” was adopted in 2019.

Increasing presence of individual entrepreneurs might be defined in the context of promotion of organic farming to increase competitiveness of Kyrgyz agricultural products in the regional markets. In addition, the activities of “social entrepreneurs in agribusiness” who try to solve social challenges through business are notable in recent years. They are expected to contribute to the sustainable agricultural development and regional community vitalization in Kyrgyz Republic. Reforms in educational programs to foster entrepreneurs in sustainable agriculture has just started in collaboration with “social entrepreneurs”, the national agrotechnical college and Japanese agricultural high school in Hokkaido.