Subsidized Financing for the Agricultural Sector Helped Increase Coverage of Sown Areas to 8.5 Million Hectares

One of the key challenges facing Kazakhstan’s agricultural sector for many years has been a shortage of working capital. In different periods, between KZT 70 billion and KZT 140 billion in subsidized loans were allocated for spring fieldwork and harvesting campaigns, but the needs of agricultural producers significantly exceeded the available support. Given limited budget resources, a solution was needed to increase financing volumes without raising the financial burden on farmers.

Such a solution was found through a mechanism for subsidizing coupon payments on bond loans. Its implementation made it possible to attract additional resources for agricultural lending while maintaining a fixed preferential interest rate of 5% for agricultural producers. In effect, the approach to subsidies was fundamentally transformed.

According to Almat Ashirbekov, Chairman of the Management Board of Agrarian Credit Corporation JSC, farmers previously obtained loans at market rates and then independently went through the subsidy application process. This created additional administrative burdens and risks associated with delays in receiving government support. The new mechanism preserved the 5% preferential rate, while the Corporation assumed the risks related to untimely subsidy payments.

The impact of the mechanism can be seen both in financing volumes and in the scale of industry coverage. In 2024, KZT 321.5 billion in subsidized loans was allocated for spring fieldwork and harvesting campaigns, financing agricultural activities on 5.6 million hectares. By 2025, the volume of concessional financing exceeded KZT 549 billion, while the area covered increased to 8.5 million hectares.

For the agricultural sector, this means more stable cost planning and improved production efficiency. According to the Ministry of Agriculture, the average yield of grain and leguminous crops in Kazakhstan increased from 10.3 centners per hectare in 2023 to 15.2 centners per hectare in 2024.

As Almat Ashirbekov noted, the primary objective is not simply to increase lending volumes but to ensure a sufficient level of working capital within the agricultural sector. Access to the necessary financial resources allows producers to follow production technologies, improve farm efficiency, and reduce production costs. Ultimately, this contributes to strengthening the competitiveness of Kazakhstan’s agro-industrial complex.

Another significant advantage of the mechanism is the opportunity for producers to secure financing in advance, as early as October–November, for the upcoming production cycle. This enables farmers to purchase necessary resources at more favorable prices and optimize the cost of field operations.

Special attention is also given to the distribution of profits generated by development institutions. Under the Budget Code of the Republic of Kazakhstan, 70% of the net profit of quasi-public sector organizations is transferred to the state in the form of dividends. The remaining funds are reinvested in core activities, including further financing of agricultural producers.

Ultimately, the effectiveness of any financial mechanism is determined not by the method of attracting funds but by its practical results. If farmers receive financing on time, carry out fieldwork without disruptions, and achieve a successful harvest, then the system is fulfilling its purpose. The results of the past two years indicate that this objective has been achieved.