The Status and the Problems of the Development of Kazakhstani
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1 The Status and the Problems of the Development of Kazakhstani Food Industry Nakipova G.N., Kazakhstan Karaganda Economic University Abstract: In modern conditions the special importance is given to the problem of increasing of the national economy competitiveness, it means the formation of necessary conditions providing occurrence of Kazakhstan to the number of the most competitive and dynamically developing states of the world. Keywords: Food Industry, Market, Problems of Food Industry, Clusters, Condition of Dairy production, GDP of RK 1. Introduction The President of the Republic of Kazakhstan has designated the basic priorities in the annual Message to people of Kazakhstan: successful integration of Kazakhstan into the world economy; achievement of qualitatively new successes in regional economy and maintenance of full participation in global economy; the further upgrade and diversification of economy; the further development of a modern infrastructure according to the regional and global conditions of economy; the development of a modern education, the formation of smart economy bases; address social support and the development of social sphere on market principles; upgrade of political system according to modern requirements; the accelerated carrying out of administrative reform with the view of an international practice; promotion of the achievements and opportunities of new Kazakhstan in the Central - Asian region and in the world community [1, N.Nazarbaev, 2007, p. 1-2]. The offered model of the national economy development demands a concrete definition of a trajectory of movement, the revision and the choice of new approaches to development of the national economy. 2. Research Key questions of the research: 1. To carry out the analysis of a macroeconomic situation. 2. To estimate the basic economic parameters of food industry of Kazakhstan. 3. To analyze the attitudes of the native economists and to give own vision on the questions of food safety of Kazakhstan. 4. To study the modern status of dairy branch of Kazakhstan and the opportunity of introduction of the cluster initiatives to the branch for example in a concrete region. 3. Methodology Methodological basis of the given research are the works of the leading native scientists - economists on the questions of the development of agrarian sector of economy. A methodical Volume I, No. 1, Central Asia Business, ISSN
2 basis of research became general scientific methods of the system analysis of complex social and economic objects. 4. The analysis and the results The analysis of an economic situation in Kazakhstan has shown, that during last years the positive tendency of growth of the national economy, described by an annual increase of GDP (the 1 st table) was outlined. Table 1 GDP of the Republic of Kazakhstan in Years GDP, in all GDP per capita Index of physical volume of gross national product, in % by last year Billion tenge In % by last year Thousand tenge In % by last year ,5 87,4 25,92 88,7 87, ,2 91,8 63,6 93,7 91, ,7 100,5 90,3 102,0 100, ,1 101,7 108,01 13,3 101, ,3 98,1 114,1 99,8 98, ,5 102,7 135,1 103,7 102, ,9 109,8 174,7 110,3 109, ,6 113,5 218,8 113,7 113, ,3 109,5 254,2 109,5 109, ,9 122,1 309,3 121,6. 109, ,5 120,2 369,2 119,4 109, ,0 134,5 446,71 121,0 109,4 The note: the table is made by the author on materials of the informational-analytical collection Kazakhstan: in Agency of RK on statistics, 2001 p.432. Kazakhstan in figures. The statistical collection. Almaty, 2003, p.397, 1-according to a site Apparently from the given data, the greatest depth of recession has fallen to 1994 and only in 1995 the positive tendency to revival of economy the growth of which has been interrupted by the global economic crisis, negatively reflected on economy of Kazakhstan has appeared. With some clauses on steady economic growth in RК it is possible to speak, since Mid-annual rate of growth of GDP for this period is 12,9 % [2, 3, 4]. It is necessary to count positive the growth of an index of physical volume of GDP. In 2004 rates of its gain has made 9,4%. On the given parameter Kazakhstan outstrips a number of the CIS. So, the rate of a gain of an index of GDP in Russia, Kyrgyzstan and Lithuania has made 7,1%, Moldova - 7,3%, Latvia - 7,5%, Georgia - 8,4%. The greatest growth of GDP among the countries of Commonwealth is fixed in Ukraine - 12%, Belarus 11%, Tajikistan - 10,6%, Azerbaijan - 10,2%, Armenia - 10,1%. On the average the gain of GDP in the CIS for 2004 has reached 8,9%, i.e. the rates of the growth of Kazakhstan economy remain higher, than in the countries of Commonwealth [2, 3, 4]. Volume I, No. 1, Central Asia Business, ISSN
3 Analyzing the structures of made GDP everything becomes more obvious the fluctuations of a share of the goods in GDP. So, density of the goods in GDP in 2004 has grown up to 44,9% against 43,1% in At the same time, this parameter appreciably lags behind a level of The share of the goods in GDP during this period made 65,9 %. At the same time, since 1993, the share of the services in the structure of GDP gradually increases. For the analyzed period its density has grown from 34,8 % up to 50,7 % in 2004, also having reached the maximal value in ,5 % [2, 3, 4]. The executed analysis allows to draw a conclusion, that the real volume of GDP as basic parameter of economic growth of domestic economy from year to year increases. However, there is a question: what is the reason of growth in Kazakhstan of GDP? The answer we shall try to find with the help of the analysis of structure of industrial production in sectors of economy on separate kinds of raw material and finished goods (the 2 nd table). Table 2 The structure of industrial production on some kinds of economic activities in RK Kinds of economic activities 2000, in 2001, in 2002, in 2003, in 2004, in 2005, in % % % % % % 2005 by 2000, +,- The mining industry 44,5 44,3 47,9 48,4 53,4 58,6 +14,1 Extraction of fuel and energy minerals 80,3 78,9 86,0 86,6 92,9 92,1 +11,8 Except for extraction of fuel and 19,9 21,1 14,0 13,4 7,1 8,5-11,4 energy minerals Manufacturing industry 46,5 46,9 43,3 42,9 39,7 35,8-10,7 Foodstuff manufacture 13,3 13,9 12,0 11,8 10,5 25,6 +12,3 Textile and a clothing industry 2,0 2,0 1,7 1,3 1,0 1,8-0,2 The note: the table is made by the author on materials of the Statistical collection «the Statistical annual-book of Kazakhstan». Published by. K.S.Abdieva - Almaty: Agency of Republic Kazakhstan on statistics, p.502. The analysis of structure of the industry on kinds of economic activities shows, that the basic volume of manufacture falls at raw branches. So, for the analyzed period the share of the manufactures connected to extraction of fuel and energy resources, has grown up on 11,8 %. In the structure of national manufacture the density of the mining industry branches has increased for the similar period for 14,1 %. The rates of the growth of a industry branches have decreased: for the last five years decrease in a share of processing manufactures has made up to 10,7 % [2, 5, Ramazanov, p. 4]. Now the density of a industry in total amount of industrial production makes 35,8 % [2, 6]. Hence, high rates of domestic economy growth are inextricably related with branches of a raw orientation. However such growth cannot be steady as any change of a conjuncture of the raw material world market will inevitably be reflected on the rates of development of national economy. The food industry is one of the basic branches of economy of Kazakhstan and has great value for steady development of economy outside of limits of the oil-extracting industry. Foodstuff manufacture is intensively developing sector in the industry. For the last three years the increase in growth of physical volume of production from 108,5 up to 113,2 % a year is marked. Food production manufacture in 2005 has reached 469,7 billion tenge that has made the one fourth part in the structure of the industry [7, p. 14]. Development of the domestic food industry, and its transformation into highly effective and highly remunerative sector of economy is a great importance for maintenance of economic safety Volume I, No. 1, Central Asia Business, ISSN
4 of the country and increasing of the population life standard. The economic status of food branch is reflected in the 3 rd table: The basic economic parameters of food industry of the Republic of Kazakhstan Parameter The volume of the industry, billion tenge The index of 79,3 135,1 100,3 98,0 91,0 114,6 108,2 108,7 110,7 109,4 physical volume of production, % by last year The share of 13,0 14,6 17,0 20,6 15,8 13,3 12,6 10,7 10,6 9,4 production of branch in a total amount of production, in % Number of the enterprises, in all Including independent balance Number of the personnel, thousands of persons in % by last year 123,389,5 101,081,9 92,391,4 90,097,5 68,976,6 67,397,7 67,3100,0 69,4103,1 60,887,6 63,3104,1 Share of the 12,0 11,0 11,5 11,9 10,3 10,3 10,1 10,3 10,2 10,5 occupied in branch of the personnel to the common number of the personnel, in % The monthly average salary of the personnel, in tg. Price index of 311,5 140,7 112,1 102,9 110,4 112,2 106,5 100,6 100,9 110,3 enterprises - manufacturers, % by last year. The cumulative ,8 3169, income (loss) up to the taxation, one million tg. The income (loss) of the basic activity, million tg. Level of profitability (unprofitability) of manufacture, in % 9,4 6,3 6,2 1,2 3,3-2,8 0,3 0,3 1,7 The note: the table is made by the author according to the statistical collection the Industry of Kazakhstan and its regions for Almaty, p Apparently, from the given data, during the period from 1995 till 1999 food stuff manufacture in the republic was in a crisis status. Such position has developed as a result of break of economic relations between rural commodity producers and the enterprises of a process industry. Incomplete delivery of agricultural raw material to the processing enterprises has led to their capacities have been loaded on %. As a result the financial position of these enterprises began to worsen considerably, and some of them have been compelled to declare bankruptcy. Volume I, No. 1, Central Asia Business, ISSN
5 Now the parameters describing an economic situation of food branch have a tendency of the growth. So, the volumes of the production in 2004 in comparison with 1995 have increased in 4,2 times and have made million tenge [8, p. 91]. It is necessary to count positive the changing of quality indicators. In particular, the size of the cumulative income up to the taxation for the last two years has grown up practically twice. Activity of managing subjects of the given branch since 2001 and till the present time is profitable, the tendency of increase in the income developed for this period from primary activity pays attention. Thus, the modern status of the food industry of Kazakhstan testifies to presence of internal opportunities of food stuff manufacture escalating. The food industry plays a significant role in the maintenance of the country food safety.the backlog of the foodstuff manufacture from the growth of internal requirements can lead to the growth of food articles import. Such position is rather burdensome for a national economy and strengthens its significant dependence from a foreign market. The analysis of publications on research of food safety problems has allowed us to allocate a number of economists opinions where there are following statements are given: - Food safety of the country is provided when about 80 % of the consumed foodstuff is made there. [9, A. Kaygorodtsev]; - Agricultural complex is appealed for providing of food safety of the country [10, V. Kayshev]; - Food safety of the country is such status of economy when not less than 70 % of the requirements for the basic food stuff is provided at the expense of its own manufacture [11,G. Kuanova]. Modern and widely used interpretation of food safety regards it as a status of economy where the providing of access of all population with food stuff in that volume which is necessary for its active and healthy life is guaranteed at any time. Simultaneously with it under the recommendations of the World bank the distinctions on the definition of chronic, temporal and potential food safety are entered. First two distinctions are connected to specification of a developed food situation, the last estimates an opportunity of an emergency approach when arising restrictions lead to temporal or chronic grocery dependence [12, the Report about the world development in 2000/2001]. Food safety is understood like the provided ability of the state by corresponding resources, potential and guarantees without dependence from external and internal threats to satisfy the requirements of the population for foodstuff, for volumes, quality and the assortment corresponding to accepted standards and norms [13, N. Apsalyamov, 2005]. Food safety is reached both by self-maintenance with foodstuff, and by an opportunity of their missing kinds import. In this connection, the special attention is demanded with the analysis of manufacture of the major kinds of production of the food industry of Kazakhstan. In food industry of RK there are about 4574 industrial enterprises and manufactures and into its structure enters more than 30 specialized branches, sub branches and separate manufactures. In the research work the branches getting special value in the decision of the questions of the country s population food stuff maintenance are investigated by us. The dairy branch is one of the most dynamical and competitive in the market of the country. Milk and dairy products are the most valuable foodstuff of the population, their food value is higher than parameters of other products meeting in the nature. Proceeding from medical norms, it is necessary for person to consume 400 kg of dairy products a year [14, T. Tultabayeva, 2004]. Nowadays the domestic dairy industry has the steady tendency to increase in volumes of made production: over 80 % of volume of internal realization is provided with its own production (the 4 th table). Volume I, No. 1, Central Asia Business, ISSN
6 Table 4 Manufacture and realization of dairy products by domestic commodity producers Parameters in % to 2000 Manufacture, 154,3 161,7 183,1 223,9 241,3 156,4 thousands of tons The volume of an internal realization, thousands of tons 189,6 201,9 222,8 272,6 299,1 157,8 The note: the table is made by the author on materials of the collection of the Research-analytical Center of joint-stock company " Kazagro-marketing ". Astana Commodity producers of all Kazakhstan are engaged in manufacture of dairy production. So, the greatest share in an internal market of dairy products belongs to Almaty region manufacturers -25 %. A share of Kostanay region and Almaty is 11 and 9 % from total amount of manufacture. other regions density changes in a range from 3 up to 7 % [15]. Last years the positive tendency in manufacture and processing of dairy production is observed. For example, for the last five years manufacture of butter has increased in 2,7 times. At the same time, it is necessary to note, that in butter market the presence of import production is significant. According to experts "KazAgroMarketing" the share of butter import in an internal market changes from 44,3 up to 63,1%, internal realizations of the product on 12,1% outstrippes its manufacture. Besides over 99% of the basic part of the produced butter comes true inside of therepublic. From the given data follows, that the volumes of the produced production are insufficient for satisfaction of various groups of the population requirement. (The 5 th table) Table 5 Manufacture and realization of butter by domestic commodity producers Parameters in % to 2000 Manufacture, in ,3 tons The volume of an internal realization,in tons 9366,3 8582, , , ,6 168,4 The note: the table is made by the author on materials of the collection of the Research-analytical Center of joint-stock company "Kazagro-marketing", Astana In manufacture of other kinds of dairy production there is a little bit other situation. So, for the researching period the volume of cheese and cottage cheese manufacture has grown in 1,5 times. An internal realization of the given products on 83 % is provided at the expense of its own manufacture. The basic capacities are located in such regions as Kostanay, North-Kazakhstan, Dzhambyl and Almaty. Their share is from 12 up to 14 % from the issued production total amount. It is necessary to note, that for this period actual consumption of cheese and cottage cheese from domestic raw material has appreciably grown. If, in 2000 the output has made 8409 tons, and parameters of internal realization was about 936 tons now it is observed not only their positive dynamics, but also positive change of the parity: tons to 15776,6 accordingly [15]. Thus, the carried out analysis of the dairy industry enterprises modern status has shown, that the Volume I, No. 1, Central Asia Business, ISSN
7 positive tendencies were outlined in the development of branch. At the same time, the import on milk and dairy products from the distant countries and near abroad is growing. One of the main reasons of the replacement of domestic products from an internal market of Kazakhstan is their low competitiveness. In the decision of the given problem the important place belongs to the realization of the clusters initiatives in national economy. So, according to Governmental order of RК from June, 25, 2005 the plan on creation and development of pilot clusters in priority sectors of economy has been authorized. As a result of the carried out analysis on revealing competitive clusters the most prepared spheres of economy for their organization have been determined. In particular, the decision on creation of a dairy cluster in Kostanay regions is accepted. Creation of a dairy cluster in Kostanay regions is directed on maintenance of food safety, maximal using of the region s resource base and the aim is to increase the producing GDP and the growth of the population well-being. Introduction of the cluster approach to dairy branch provides the progress of the whole production process till its final realization. It is well-known that the cluster represents the association of nearly located and cooperating among themselves enterprises groups and accompanying them organizations working in certain branch and supplementing each other. And because of it the participants of the cluster can be divided into the basic and auxiliary. The manufacturers of production providing a raw-material base, processing enterprises and the companies on manufacture of container and packing concern to the basic participants of a dairy cluster. Auxiliary participants are submitted by the establishments providing conformity of issued production to standards and other normative documentation, the enterprises, rendering services on breeding job, preparation and realization of agricultural raw material and production, financial institutions, transport services and the wholesale - retail network consisting of the large wholesale and retail markets. Effective activity of all participants of the cluster is directly connected with the activity of the organizations which is providing its support. Supporting structures are submitted by official bodies, the research organizations, the supreme and average educational institutions, public organizations and the companies on process equipment manufacture. The difference of Kostanay region from others in Kazakhstan is it possesses significant potential in the development of a dairy cluster. The advantages of Kostanay region dairy cluster are caused by the following characteristics: Presence of a raw-material base. On volumes of meat and milk manufacture the region occupies the first and third places in the republic. 12 milk - processing enterprises, competing among themselves in the region. The capacity of factories makes more than 700 tons a day. In 2005 milk is advanced by the given enterprises in 1,2 times more in comparison with the last year parameters. Now yogurt, milk and sour cream, cheeses and cottage cheese manufacture is increased. Milk - processing enterprises issue more than 50 % of total amount of made dry milk in the republic. The convenient geographical position and presence of transport communications allow the processing enterprises to carry out additional raw material stock on favorable price conditions, and also to master the new commodity markets located outside the state; Presence of personnel potential. The leading high schools of the region carry out the preparation of qualified personnel both for animal industries branch, and for the processing enterprises. Initiative activity of the participants of business environment has allowed to consolidate their efforts to create Association of milk manufacturers. Businessmen are planning to unit their efforts for the joint decision of the industry problems and to create the association of the production processors and the Union of the region milk and dairy production manufacturers [16]. Volume I, No. 1, Central Asia Business, ISSN
8 5. The conclusion At the same time, the activity of a dairy cluster for the expired period has shown, that available advantages of commodity producers and raw material producers are insufficient. With the help of the SWOT-analysis the basic problems interfering its effective work on competitive production manufacture are selected. So, with the mentioned above advantages or strengths of the cluster its weaknesses have been revealed. The analysis of weaknesses has allowed to allocate and unit them in the following basic groups: 1. A forage reserve. Absence of the corresponding forage reserve, capable to provide competitiveness of animal industries production. 2. Selective-breeding work. The absence of rocky cattle with high genetic potential does not allow to reach the high parameters of efficiency. 3. Financial questions. The absence of access to long-term credit resources reception complicates the decision of the questions connected with the purchasing of the modern equipment and technologies, a breeding livestock of cattle and a bird, etc. 4. The organization of preparation system. The absence of preparation system, huge distances between agrarian producers and production processors promote to the growth of transport charges of the last. It conducts to decrease of the procuring prices for production and raw material, that in its turn interferes with realization of agrarian producers motivation, participating in the cluster. 5. Management and marketing. There is a high degree of centralization of decision-making in the field of management and marketing at the enterprises till now. The basic attention in realization of marketing activity is given to the questions of selling and communications, analytical function of marketing isn t fully realized. Management of industrial - commercial structures is built on the principles of short-term planning of the aims and it reduces its efficiency. As the threats it is necessary to note the absence of an effective work on realizations of the legislative and normative documents regulating regulation of agriculture development and stimulating development of average and large commodity milk manufacture, the complex mechanism of registration of accompanying documents for production export on the nearby states territory, etc. Now gradually grows the priority of the purposes of the quality improvement, and that s why the problem of issued production quality management is staticized. In this connection, the absence of a quality management system at the enterprises which are carrying out industrial and commercial activity, conducts to decrease in their competitive advantages. Among opportunities on realization of the clusters initiatives in dairy branch of region it is necessary to note the presence of the state support on development of breeding animal industries, veterinary actions financing, crediting of leasing agreements for purchase of the equipment for the processing enterprises, escalating of export to the western regions of Kazakhstan, regions of Ural and Siberia. Thus, practice of managing at food industry enterprises has shown, that the introduction of the clusters initiatives for increasing of a production efficiency and competitiveness of issued production faces with the big circle of the unresolved problems connected with legislative both foreign trade activities and such tools as the finance, management and marketing. 6. The list of literature 1. N.A. Nazarbayev The message of Noursultan Nazarbayev the President of the Republic of Kazakhstan to people of Kazakhstan «New Kazakhstan in a new world». - Astana, on February, 28, 2007, Kazakhstanskaya pravda. Volume I, No. 1, Central Asia Business, ISSN
9 2. The Informational-analytical collection Kazakhstan: The agency of RK on statistics, 2001 p Kazakhstan in figures. The statistical collection. Almaty, 2003.p According to a site<http: // 5. N.Ramazanov. The industry has ceased to grow. The 10th business week in , p A statistical annual-book of Kazakhstan. Published by. K.S. Abdiyeva - Almaty: The agency of RK on statistics, p Social and economic position of the Republic of Kazakhstan for January - December, Brief statistics reference book./ The agency of RK on statistics,2006 p Kazakhstan and its regions industry for The statistical collection. - Almaty, p A. Kaygorodtsev The State regulation of agrarian and industrial complex as the factor of maintenance of food safety // Transit economy , p V. Kayshev, S. Seryogin Food industry in 2003: the results, the prospects // the Economist , p G. Kuanova The development of the food-processing industry as the factor of food safety maintenance // Sayasat No.9, p The report on the world development 2000/2001. The struggle against the poverty. The world bank, Oxford University Press, N. Apsalyamov Faktory of food safety maintenance // Bulletin KazEU. Economy p T. CH. Tultabayeva The status and the prospects of development of national sour-milk products manufacture : Analitical. The review. - Almaty: KazgosINTI, 2004,p The collection of the informational-analytical Center of joint-stock company " Kazagromarketing ". Astana Materials OO "Innovative - consultation centre" Kostanay city. Volume I, No. 1, Central Asia Business, ISSN
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