Kyrgyz Republic - Country Commercial Guide
Agriculture

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-10-05

Overview

The agricultural sector is the largest employer in the Kyrgyz Republic, with about 40% of the labor force participating in this sector.[1] And while it accounts for an estimated 14% of GDP, the second largest component of GDP, it is disorganized and undercapitalized, and the Kyrgyz food processing industry remains underdeveloped.[2]  Most agriculture is family-based on small plots of land.  Larger production, particularly in apples, apricots, cherries, sugar beets, beans, cotton, tobacco, and walnuts, is regional and still small-scale compared to Western standards.  Most families grow small amounts of fruits and vegetables that are consumed locally, though the Kyrgyz Republic did export more than $155 million of produce in 2020.[3] There are opportunities for small-scale operations in a variety of areas:  orchards, dried fruits, improved seed, fertilizer, small-scale farm equipment, food processing equipment and slaughterhouses, improved storage, and packaging. 

Several international donor projects, including through USAID, focus on improving credit to the sector, though the results of such efforts are mixed.  Other USAID projects include its economic development initiative “Enterprise Competitiveness Project,” which aims to create jobs and prevent the outflow of Kyrgyz labor migrants (primarily to Russia).  The initiative helps Kyrgyzstani SMEs increase their competitiveness in local and regional markets. The project seeks to increase private-sector driven development in several sectors, including agriculture. USAID’s cross-border trade and economic integration activity, Agro Trade, aims to increase cross-border trade, particularly between southern Kyrgyzstan and the Ferghana Valley.  This activity seeks to create and link value chains and business opportunities in this region to connect enterprises to growing consumer demand and for companies to take advantage of liberalizing markets in Central Asia and the West.  In addition to supporting enterprises, the activity may partner with governments to develop policies and regulations that facilitate private sector trade.

Leading Sub-Sectors

Food Processing/Packaging Equipment

Despite its significance to the economy, most vegetable production is seasonal, and export markets are quite limited due to inefficiencies, regional barriers and packaging deficiencies that limit the amount of transport produce can endure.  Disorganization and limited capital not only hamper the fruit and vegetable industry, but also constrain cereal, dairy, and meat production.  Many international donors assist the agricultural sector, but inefficient and inadequate processing, packaging, certification, and marketing limit the sector’s transition from localized production and consumption to international competition.  Furthermore, many Kyrgyz dairy, meat, and fruit and vegetable producers still do not meet EAEU sanitary and phytosanitary (SPS) standards necessary to export to target markets within the customs union.

Local companies often lack sophisticated management skills and productive equipment, and many of them operate only at 20-40% of capacity.  There is a demand for various types of food-processing equipment, including production lines for juice, ketchup, dried vegetables and fruits, potato chips, pasta products, meat products, and packaging.  Local firms have limited financial resources and therefore prefer to purchase semi- and non-automated equipment.  Refurbished and used equipment is popular for the same reason.  Potential clients are food businesses with plans to produce new products or upgrade the packaging or quality of current product lines.

Most small food processing companies source local or Chinese equipment, which are more widely available at a lower price than analogous U.S. or European machines.  However, the largest and most successful companies prefer to procure equipment from Italy, Germany, Austria, and other European countries, while medium-size companies tend to rely on Russian or Turkish food processing equipment.

 

[1] http://www.stat.kg/ru/opendata/category/4/

[2]  http://www.stat.kg/ru/opendata/category/2314/

[3] http://stat.kg/ru/statistics/vneshneekonomicheskaya-deyatelnost/