How KazAgroFinance JSC helps Kazakh farmers to renew their agricultural machinery fleet

The peasant farm "AYAN" located in the Moscow rural district of Kostanay region is one of the most advanced farms in the region. The head of the small agricultural enterprise Aman Ayanov has long ago deduced his formula of successful agribusiness, the main component of which is a modern fleet of agricultural machinery.

"I often hear complaints from colleagues that there is no harvest, they incur losses. Yes, to a certain extent the agricultural sector is affected by weather conditions. But when you look at the equipment used by some of my colleagues, it becomes obvious what the problem is. Someone is still working on old Soviet tractors, seeders, which will bring nothing but losses to the owner. After all, all the money is spent on endless repairs and fuel overruns. Machinery stops, so does the work. We renew the park regularly. As a result, my one new harvester replaces up to 6 old ones. As a result, less labor is needed, money is saved, and productivity grows," says the experienced farmer.

Today in his farm Aman Ilyasovich renewed 90% of the machinery and equipment. Once he realized that the quality of agricultural machinery directly affects the yield and efficiency of work in the fields, he immediately set a goal - to replace worn-out equipment with new as soon as possible.

Our interlocutor still remembers his first purchase - the combine "Vector", purchased in 2007. That was the first time he applied to KazAgroFinance JSC. Aman Ilyasovich does not hide the fact that at first he had a small doubt whether it was worth the risk. But the farmer was won over by the attractive leasing terms. As it turned out, he took the risk and did not regret it. Since then, for 14 years he has been a regular customer of the Kostanay branch of KazAgroFinance JSC.

During this time the agricultural producer has significantly expanded his fleet. He bought 20 seeders, several combines, harrows, haymakers in leasing. The investment subsidies were used to buy a grain dryer, modern reapers, cultivators, dressers. A powerful seeding complex, including a trailer hopper, cultivator, seed and fertilizer sowing system, a universal loader, also purchased through the financial institution, helps to facilitate the work in the farm. There are plans to purchase a drone.

"From my personal experience I realized that the government has developed really productive financial programs. I purchased all the equipment on a leasing basis. 25% was subsidized by the state. The terms are optimal - up to 10 years. For the convenience of farmers, we pay the principal debt once a year. They understand that farmers' incomes often depend on the results of agricultural work. I am very pleased with the programs of the financial organization. Now we have applied for the purchase of a drone. We need it to fly over the fields, apply fertilizer and treat weeds. I want my team to have an easier job. Now I notice that more farmers began to understand the importance of high-quality equipment. There are good conditions for farmers and it's a shame not to take advantage of this support," Aman says.

Alibek Karaidarov, director of the Kostanay branch of KazAgroFinance (KazAgroFinance is a subsidiary of Baiterek, the national management holding company), echoes the words of an experienced farmer. According to him, those wishing to buy agricultural machinery and equipment in leasing grows every year.

"Agricultural producers nowadays realize that they need to change not only their approach to work, but also their machinery and equipment, if they want maximum return from the farm. They understand that losses in agribusiness largely depend on the wear and tear of machinery. Therefore, agricultural producers are now striving to become more productive and efficient. This is very encouraging," says Alibek Aidarkanovich.

According to Mr. A. Karaidarov, from 2000 to the present time KazAgroFinance JSC has invested 130.7 bln. tenge into Kostanay region or 14% of total volume of investments into AIC. The figures on investment speak for themselves. For example, if in 2017 the amount of investment was 3.3 billion tenge, then in April of this year it has already increased to 11.2 billion tenge.

To trace the dynamics of renewal of agricultural fleet by Kostanay agrarians simply reading the statistical data is enough. If in 2015 Kostanay agrarians leased 59 tractors, in 2019 - 85, and in 2020 - 98. Combine harvesters 107 in 2015, 93 in 2019 and 125 in 2020. All in all for 20 years the financial organization financed purchase of more than 6,3 thousand units of machinery for the total sum of 119,2 billion tenge. Including in 2020 there were 551 vehicles worth 14.1 billion tenge.

As the director of the regional branch notes, all districts of the region are involved in the renewal of the park and equipment. There are also some leaders in the renewal of the fleet and equipment. Thus, the list is headed by farmers of Karasu district. Local farmers this year managed to buy 60 units of equipment. In second place Sarykol agrarians who upgraded 55 units of agricultural machinery. And the third is Mendykara district, where 41 units of machinery were purchased through KazAgroFinance.

Speaking of programs. There are a few of them, they differ in terms of conditions, leasing terms, down payment, and depending on the direction includes investment subsidies to pay the initial payment to the end customers.

"The current product line is quite extensive. The most popular among the farmers of our region are special financing services under the programs "EXPRESS LEASING", "MASTER LEASING" and "RELIABLE FARMER". Convenience of receiving services by reducing the time of consideration, reducing the package of documents, the use of simplified forms of conclusions, the collection of documents once a year.

Under the "MASTER-LEASING" program the entrepreneur opens a non-renewable leasing credit line for one year. That is, the farmer himself decides when to use the KAF service. For example, to take the equipment at the beginning of sowing campaign or when preparing for the harvest. The documents are submitted only once. There is no need to collect documents again when you apply for it again.

It is enough to apply for the "EXPRESS LEASING" program with a minimum package of documents. 

"RELIABLE FARMER" is a loyalty program for bona fide borrowers of KAF, who already have previous history of cooperation and timely met their obligations to the financial institution. Each program is designed to reach clients of different categories. We have reduced to a minimum the amount of paperwork. As a result, there is trust in KazAgroFinance JSC and demand for the programs," says Alibek Aidarkanovich.

JSC KazAgroFinance also takes part in a subsidy program to reimburse some of the costs incurred by the subject of agriculture when investing. Thanks to investment subsidies KAF solved the most problematic issue of farmers - the lack of an initial payment for machinery. With this type of subsidy, farmers have the opportunity to provide a down payment at the expense of investment subsidies when purchasing machinery for leasing. Under this program in 2019 17 borrowers of the region were financed for the purchase of 23 units of equipment for a total amount of 1.3 billion tenge. And in 2020, 24 borrowers were financed for the purchase of 52 units of equipment to the amount of 1.3 billion tenge. As for the current situation, from the beginning of 2021, 8 farmers have been financed by investment subsidies for the purchase of machinery worth 433.71 million tenge.

In total, farmers in the region through KazAgroFinance JSC since the beginning of the year and in 4 months have already managed to buy 410 pieces of agricultural machinery worth 11.2 billion tenge. Among them are 108 tractors, 55 seeders, 40 seeders and 64 harvesters. The rest of the ordered equipment were sprayers, harrows, plows, packers and loaders.

The key role of KazAgroFinance JSC in the renewal and modernization of agricultural equipment and machinery of Kazakh farmers has been recognized by numerous rating agencies. Today KazAgroFinance is the only specialized company in the segment of leasing of agricultural machinery in Kazakhstan with a market share of about 90%.

However, in spite of the impressive figures and achievements, the picture across the country as a whole is not so rosy as we would like it to be. Last year at regular meeting of Ministry of Agriculture of Kazakhstan first vice-minister of agriculture Aidarbek Saparov stated that deterioration of old equipment of domestic farmers amounts to 80%.

To this day, the state still spends huge funds to support farmers. However, the average level of renewal of machinery fleet is still low. Officials have some reasonable arguments on this point.

"Without writing off old machinery, which is 80% depreciated, we will not increase the level of renewal, because the acquired equipment is simply not noticeable amid the total mass of the entire fleet," says the Vice Minister of Agriculture. And he sees the task set by the Government of the country to increase productivity in the agricultural sector within five years in the technical re-equipment of farmers. Especially since the state has the mechanisms for this in the face of "KazAgroFinance". The only question is in conscious approach of farmers to issues of renewal of agricultural park and equipment.

Support for agriculture is one of the strategic priorities for the government, due to the significant export opportunities of this sector and its social significance. Needless to say, every farmer should understand that not only the success of personal farming but also the food security of the whole country and its export potential ultimately depend on his choice in favor of efficient and new equipment.