The agricultural sector is the largest employer in the Kyrgyz Republic, with about 40 percent of the labor force participating in this sector. While the agricultural sector accounts for an estimated 9.7 percent of GDP, the second largest component of GDP, it is disorganized and undercapitalized, and the Kyrgyz food processing industry remains underdeveloped. 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.
Many families grow small amounts of fruits and vegetables that are consumed locally, though the Kyrgyz Republic did export $88 million of vegetables and edible root/tuber crops in 2023. 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. In addition, with the development of the Trans-Caspian International Transit Corridor, the Kyrgyz Republic’s exports within the region and to Türkiye, the Caucasus, and Europe may increase. Conversely, companies with operations in Europe and Türkiye may find increasing opportunities to export to the Central Asia region, including to the Kyrgyz Republic.
Despite its significance to the economy, most fruit and vegetable production is seasonal, and export markets are limited due to inefficiencies, regional trade 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 to international competition. Furthermore, many Kyrgyz dairy, meat, and fruit and vegetable producers still do not meet EAEU sanitary and phytosanitary standards necessary to export to target markets within the customs union, much less beyond it.
The Kyrgyz Republic produces over 1.7 million tons of milk annually, but processes only 2.5 percent of its production. The cost of raw milk is lower in the Kyrgyz Republic than in neighboring Kazakhstan. While foreign investors cannot own farmland, joint ventures with local partners who own land could further decrease production costs and guarantee a consistent supply of raw milk. Due to local inefficiencies, milk, butter, yogurt, cheese, and other dairy products sold in the Kyrgyz Republic generally are sourced from more expensive producers in Russia and Kazakhstan, but Kyrgyz producers are catching up. Dairy shipments have predominantly gone to the EAEU market, primarily to Kazakhstan and Russia. In 2024, the total export of dairy products reached 29,497 tons for a total amount of $49.7 million, mainly to Kazakhstan, followed by Russia, and Uzbekistan. The Ministry of Agriculture plans to increase annual dairy exports to $80 million by 2026.
The Kyrgyz Republic’s meat market is underdeveloped. Although neighboring Kazakhstan provides a market for Kyrgyz beef and lamb products, the Kyrgyz Republic lacks the local processing capability for value-added production. Foreign investment is making improvements in meat processing. Poultry also has considerable unrealized economic potential. Industrial poultry farming in the Kyrgyz Republic has been in decline since the 1990s, partially due to the lack of qualified specialists.
Opportunities
The Kyrgyz government is interested in partnering with U.S. industry after recognizing climate similarities in arid U.S. states and American dominance in horticulture and agrotechnology. For horticulture, the government is focused on shifting the sector toward sustainable, export-led production that requires modern technology and drought smart practices, including efficient irrigation systems. In the dairy sector, the government seeks to modernize and increase the technology adoption of its livestock sectors, including through technical support, U.S. cattle genetics, and training to improve milk yield.
There is an increasing demand for poultry, which is largely satisfied by China with around 40 percent of supply, followed by EAEU member-countries, predominantly Kazakhstan and Russia. U.S. poultry transiting Russia and Kazakhstan, and destined for the Kyrgyz Republic, faces a number of bureaucratic hurdles, including the continued requirement by the Ministry of Agriculture for “wet-signature” phytosanitary certificates (vs. PHIS digitally signed certificates). In 2022, the Kyrgyz Republic removed health safety restrictions on poultry imports from U.S. states.
Processed fruits and vegetables amount to slightly more than 2 percent of total agricultural production, but the export of dried fruits has steadily increased since 2016. Local companies often lack sophisticated management skills and productive equipment, and many of them operate only at 20-40 percent 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 use local or Chinese equipment, which is 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.
Potential U.S. investors may be interested in establishing a factory to produce Western-quality processed fruits and vegetables. Possible products include marinated products, canned vegetables and products such as sauces, and dried or preserved fruits.