Government • 20 August, 2019

Government of Kazakhstan considers new tools to ensure price stability for socially important goods

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At the Government session chaired by the Prime Minister Askar Mamin, the ministers of national economy Ruslan Dalenov, trade and integration — Bakhyt Sultanov, agriculture — Saparkhan Omarov reported on the prices for socially important food products, reports primeminister.kz.  

As the Minister of National Economy Ruslan Dalenov noted, since the beginning of this year, inflation has remained within the 4-6% corridor. Annual inflation was at the level of 5.4%, and in July 2018, it amounted to 5.9%.

Food products had the greatest impact on rising inflation. Their contribution to inflation growth was 3.4 percentage points. These products formed about 63% of the price increase.

Half of the increase in food prices accounted for 19 socially significant food products.

“We have identified 10 products to keep inflation in 2018 in a given corridor. These are onions, carrots, potatoes, beets, rice, flour, horse meat, lamb, beef and bread. For this group of goods is proposed to conduct enhanced control. Also take measures to reduce prices for them,” Dalenov informed.

At the same time, new tools have been developed to keep prices down.

“Today, there are all the necessary tools to curb rising prices. These are the rules of trade, stabilization funds and lending to retail chains, wholesale distribution centers, monitoring and verification of intermediary operations. These tools will allow the local executive bodies to more effectively restrain price increases. Therefore, it is necessary to actively apply them,” Dalenov concluded.

Minister of Trade and Integration Bakhyt Sultanov, in turn, reported on measures to contain prices for socially significant food products.

Sultanov informed that Aug. 16, 2019, amendments to the Internal Trade Rules came into force. So, domestic manufacturers are given the opportunity to place their goods in all retail facilities. For this, the obligation of domestic trade entities to provide at least 30% of the shelf space or retail space for domestic food products is provided. At the same time, for the convenience of the population, the places of laying out of goods of domestic production will be indicated by the special sign “Made in Kazakhstan.”

“Akims of the regions need to work to ensure free access of domestic producers to shelves in retail facilities and place them on the most prominent, or as they say in trade, ‘golden’ shelves,” Sultanov said.

Another measure to stabilize prices will be to limit the trade allowance for socially significant food products to no more than 15%.

Aug. 17, 2019, the Model Rules for implementing mechanisms for stabilizing prices for socially significant food products came into force. Socio-entrepreneurial corporations have gained independence in the formation of reserves of the stabilization fund in terms of time and quantity of purchased goods and their implementation.

This year, it is planned to conduct a pilot project of a “reverse” scheme in five regions: Nur-Sultan, Almaty, Kostanay, Kyzylorda, Almaty region. Next year, it is planned to implement a “reverse scheme” throughout the country and for all 19 commodity items.

In order to reduce resellers and provide services to food storage, packaging, marketing and transportation manufacturers, it is planned to build wholesale distribution and distribution centers in five regions: Zhambyl, West Kazakhstan, Pavlodar, East Kazakhstan, Mangystau regions.

In parallel with the construction of wholesale distribution centers, work is underway to improve retail trade infrastructure. In the regions, construction of more than 30 large retail facilities and the modernization of more than 50 trading markets are underway.

To date, the Committee on Statistics on a weekly basis on Tuesdays collects prices of socially significant food products. Official statistics is published every Thursday.

Along with this, a system to collect prices of socially significant food products from the population will be created. There, any citizen can take a picture of the price of the goods and send them to a specialized site where price statistics are summarized. Using such a system, it is possible to track prices for socially significant food products in the context of regions and even specific stores online.

“We are ready to create this system and connect to it all interested state bodies and organizations,” Sultanov said.

Minister of Agriculture Saparkhan Omarov said that in order to stabilize prices in the regions, regional stabilization funds of food products are being formed.

Currently, 29.8 thousand tons of food products are available and in safe storage. There is 3.7 billion tenge for purchasing interventions on the accounts and deposits of the social entrepreneurship corporations.

Ministry of Agriculture has improved approaches to the formation of stabilization funds and introduced a new mechanism to contain prices for socially important food products.

Now, the mechanisms for stabilizing prices for socially significant food products will be regulated by documents of two levels:

1) Model rules approved by the Ministry of Agriculture, which determine the general procedure for implementing mechanisms to stabilize prices of socially significant food products.

2) Regional rules approved by local executive bodies, which reflect a detailed procedure taking into account the characteristics of the regions.

Regarding the increase in prices for some foodstuffs, Omarov noted that this was not connected with a decrease in their production volumes, that is, the physical accessibility of these goods was ensured by the Ministry.

To achieve indicative forecasts for the growth of fruits and vegetables by 2021, the Ministry of Agriculture provides basic subsidies in the form of a partial reduction in the cost of seeds, fertilizers and herbicides.

In addition, economic conditions have been created for increasing the production of fruits and vegetables in the form of subsidizing interest rates and investment subsidies for irrigation machines and irrigation systems.

To ensure the growth of livestock products, long-term industry programs have been approved to increase the production of meat and milk.

Subsidies for the development of livestock breeding, increasing the productivity and quality of livestock products are provided.

In turn, KazAgro Holding provides the necessary credit resources. In 2018, the volume of financing by the Holding Holding amounted to 400.1 billion tenge. As of 08/01/19, the Holding allocated 261.5 billion tenge to support the AIC.

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