The introduction of utilization fee for agricultural machinery may lead to higher prices and limited access to new technologies

On 8 May, the leading industry associations of Kazakhstan (all 14 specialized associations and unions) opposed the introduction of utilization fee for agricultural machinery. In their opinion, such an initiative will deliver a serious blow to agriculture and the economy of Kazakhstan, as well as cause irreparable damage to farmers, depriving them of access to modern high-performance equipment.

To recall, on December 5, 2019, the order of the Ministry of Environment on introduction of utilization fee was adopted, but in accordance with the protocol of discussion in NCE Atameken, it was imposed on the list of agricultural machinery that is produced in Kazakhstan, to protect against parallel imports.

"However, at the moment there is again an attempt to introduce utilization fee for the entire range of agricultural machinery, whether it is produced in Kazakhstan or not, and even to expand it to other types of special equipment. At the same time, the initial rates of fees on tractors reach over 11 million tenge per unit, and on the harvester up to 12.5 million tenge per unit. When buying an agricultural machinery, this fee will have to be paid in full," reads the statement.

It is assumed that the introduction of total utilization will help domestic assembly plants to increase production and sales of their products. But, according to the agro-industrial unions, their current and future range, as well as the quality of produced equipment can't meet all the needs of the country's farmers in terms of up-to-date productive agricultural machinery. In this regard, the full introduction of this fee will lead to a sharp increase in price of high-performance machinery, which is not produced in Kazakhstan, and will severely limit the ability of farmers to invest in technical upgrading.

To understand this issue in more detail, we decided to talk to the chairman of the Akmola branch of RPU "Union of Farmers of Kazakhstan", Kanat Suleimenov. You can read more about it in our interview.

Where do you stand in regard to the idea of introducing utilization fee on agricultural machinery in Kazakhstan?

- The issue of utilization fee is very controversial, its goals and objectives are not fully understood. Now our equipment has been working for over 30 years, the new equipment will work no less. Therefore, it is not clear why we need to introduce this utilization fee now. Nevertheless, even if there is such a collection, it should not affect the agricultural producers. Maybe this is a politically correct decision, but things automatically become more expensive in our country. And even Kazakhstan machinery will start to become more expensive, and this will complicate everything. In our understanding, the interests of domestic agricultural producers, on the contrary, should be protected.

In your opinion, what other effect will it have on the agricultural sector?

- Apart from the rise in price, another question arises - access to new technologies. When we talk about digitalization, when the world progresses, it turns out that we will have limited access to new technologies. Accordingly, it will have an impact on the productivity of the agricultural sector.

Of course, among those who advocate the introduction of utilization fee, there is an opinion that small farmers practically do not buy expensive imported equipment, so the introduction of the fee will not affect them. In fact, any farm will be happy to buy quality equipment from major producers, including John Deere, Buhler, Claas. However, they do not buy, because there is no financial opportunity. Therefore, we have to look for lower quality analogues.

The problem is that with the introduction of the utilization system, the domestic equipment, which should be protected by such measures, will also become more expensive, because we mainly have assembly production based on imported spare parts. Perhaps, it is necessary to create 100% domestic production of machinery at the state level so that we do not have to import spare parts. For private business, it is practically not profitable to build a plant for the production of agricultural machinery, because in Kazakhstan the need for it will be less than the necessary level of production for the payback of the enterprise. In addition, it may be reasonable to cancel taxes and apply preferences. There are many ways to do this. 

What options do you see for solving the problem?

- I think it needs to be reconsidered, to think everything over again. There has to be a wide discussion so that everyone can participate. We need to identify the best option that will suit everyone.

What is the status of recycling today? How severe is the damage to the environment from old machinery?

- In terms of ecology, today's old equipment is not idle on the fields, rusting. It seems to me that there is no point in utilization fee at all. Today, old machinery is dismantled into parts that are used to fix working machines. There are also scrap brigades. When necessary, they come when called, take apart the old equipment. In general, the issue of introducing a utilization fee needs to be studied further.

Thank you for the interview!

The editorial staff of World of Nan portal will continue to follow the developments regarding the introduction of utilization fee for agricultural machinery.