The Ministry of Agriculture and "Atameken" discussed how to keep cattle hides in the country and to provide processing enterprises with the work load

The representatives of the Ministry of Agriculture, the State Revenue Committee of the Ministry of Finance, professional associations, businesses, and the National Chamber of Entrepreneurs of Kazakhstan "Atameken" took part in the meeting on the control of the movement of cattle hides.

The first speaker was the Vice-Minister of Agriculture Gulmira Isayeva. She clearly defined the problem and urged all participants to think about its solution. "Today, the amount of officially exported cattle hides according to the data of the State Revenue Committee does not coincide with the number of slaughtered livestock. Where do the rest of the cattle hides go to? There is a problem of insufficient use of the raw material. The problem is that the process is not controlled by the state agencies. The large amount of the raw material is exported in various ways abroad. The well-known routes: through Kyrgyzstan to China or directly to China. We need to resolve the question of how to control it. Unfortunately, the duties, which were introduced, do not give the desired effect. The second question how should do we in terms of subsidizing the industry help to load the relevant enterprises", - she said.

The head of the Department of Livestock Breeding of the Ministry of Agriculture Erkebulan Akhmetov confirmed the words of his colleague, citing the following statistics: "Total production of cattle hides amounted to 2 million 536 thousand pieces. Production of leather goods is about 1 million 294 thousand pieces. 158 thousand pieces were exported. The remaining amount is a million pieces of hides, which nobody tracks", - he said.

"There have been issued 400 thousand veterinary certificates. So, 440,000 pieces of raw hides had to be deducted. According to the State Revenue Committee, 148 thousand pieces were exported. So, the rest of the hides, for which were issued veterinary certificates, in fact, were taken as raw wet-blue hides, but they were shown as recycled hides in order not to pay taxes. That is the difference of a million, which is claimed to be sold in the form of wet blue and crustand the volume of which is shown by our plants. That is, today there is a substitution of goods that are exported. Raw hides are exported as unprocessed. But in order to avoid the duty, they are written as finished wet blue, in reality it just undergone de-hairing process", - added the vice-minister.

Isayev stressed the need to take systematic measures to prevent this substitution of concepts, as most of the raw materials must remain on the territory of Kazakhstan for processing at domestic enterprises.

"Why did no one raise the question of some semi-backstreet groups of  suppliers, who currently monopolized the market of raw hides in Kazakhstan and block the work of the official procurement organizations?", - She said.

The representatives of business also made speeches during the meeting. The general director of the Semipalatinsk leather and fur plant Zhumagazy Rakhimgaliev said that he sees the only way out of this situation - to ban the export of the cattle hides from the country. "We have already proposed a ban on the export of hides, but the Government did not support it. Belarus and Russia have introduced a ban on 5-6 years, they protect their businesses, and their workload", - he said.

Deputy Director General of the Kazakhstani Association of processors of raw hides and fur Vladimir Semushkin also proposed to introduce a complete ban on the export of raw hides from Kazakhstan.

"When we say that there was one million of hides left in the country over the past year, we forget that Kazakhstan imported 54 thousand cattle hides. That is, they have had to be in balance. It turns out that about 30 thousand tonnes were exported illegally. The loss of this budget will be 15 million euro - at the current rate of 5 billion tenge", - he added.

The representatives of the Ministry of Agriculture in this situation, proposed to use the subsidy mechanism. "The cost of one kilogram of raw hides for today is about 300 tenge. The costs of processing of one kilogram on average is about 189 tenge, the cost of production around 500 tenge. If we take 300 tenge for the base and will reimburse about 30% to the processing enterprises, thus they could offer a good price for those who sell raw hides. The planned production volume of semi-finished products on average is 150 thousand pieces. Thus, we get the necessary amount of funds. Basically, the money is small, but the effect is obvious. Here you can immediately stimulate farmers on delivery of raw materials to processing enterprises, and the latter can, accordingly, reduce the cost of their products", - said Akhmetov Erkebulan.

Acting Secretary of the Secretariat of the manufacturing industry Tolegen Moldakhmetov, who acted as a moderator of the meeting, summarized the discussion. He stressed the need to build a complete industrial chain from slaughter to the production of finished leather products. "So, we can introduce monitoring and control of epizootic situation in the regions and the "shadow" export of raw cattle hides. However, we consider it necessary to establish a joint working group with the participation of experts from the Ministry of agriculture, Ministry of investment and development, the Ministry of the national economy, ALE "Association of processors of raw hides and fur of Kazakhstan" and domestic leather production enterprises. Within the framework of a working group it is necessary to discuss proposals for the Ministry of Agriculture regarding subsidies for processors of raw materials (leather), the introduction of a mechanism for accounting raw hides (labeling), as well as additional measures of state support for the development of the industry ", - he said.