It is necessary to introduce a recycling fee for agricultural machinery, which is produced at domestic enterprises.

The Atameken suggests this compromise solution, and it should be implemented. At the same time, each of the parties should undertake obligations: industry - to increase the share of localization and improve the quality, and farmers - to ensure a guaranteed demand for domestic equipment.

It should be reminded that two committees of the Atameken NCE RK have developed a common position to support the interests of farmers and agricultural machinery builders.

What arguments do the farmers have?

According to Yerbol Yeseneev, the director of the Department of AIC and Food Industry, the introduction of a recycling fee in the version offered by the state body (MIID RK) will result in a 10% increase in the cost of imported equipment, which will ultimately affect the consumer's wallet.

"The farmer should have a choice in technology. Moreover, we are now actively diversifying our sowing areas. In the history of Kazakhstan there have never been such voluminous areas on flax, legumes and oilseeds in the history of Kazakhstan, in the north we have never sown soybean. These are global trends that make us to be competitive. For all this, we need high-performance imported equipment, which we don't have," he said.

According to him, although the government agency calls the waste collection an "environmental fee", in practice it is considered as a way to protect the domestic market of agricultural machinery. Many farmers have already built a production process using imported equipment, and in order to switch to domestic (less productive) equipment, he will have to bear additional costs: recruitment of additional personnel, loss of time and product quality.

At the same time the small agrarians prefer to use domestic combines and tractors, because they are cheaper and their horsepower is enough for small areas.

"We understand that it is impossible to simply limit the farmer's choice, we need to support agricultural machinery builders in other ways. Give them preferential loans and preferences. They contribute to the development of agriculture. The solution may be to provide preferential loans to domestic machine builders for further development and increase the share of localization of tractors and combines. In addition, it is possible to envisage an increase in the standard of investment subsidies for domestic machinery," Yerbol Yeseneev said.

The department proposes to make a decision on the basis of analysis, introducing this tool into circulation gradually, in an evolutionary way.

"We have to analyze where we are, what we want to do in 5-10 years.  Moreover, there was an instruction from Elbasy to increase labor productivity in agriculture by 2.5 times. We say: let's go step-by-step to this. What does 10% of the cost mean, where does this figure come from, where is the calculation? The industry is very sensitive, any careless action on the part of government agencies will lead to negative consequences", the director of the department said.

Besides, the time has come when it is necessary to establish clear criteria of service to manufacturers and official dealers at the legislative level, after all, it is not a secret that delivery of necessary spare parts during mass works occupies considerable time and negatively affects terms of sowing and harvesting. Farmers require that each region has its own service center and warehouses of necessary spare parts.  

What motivates machine builders?

Arman Mambetayev, Director of the Processing Industry Department of the Atameken NCE RK, who represents the interests of more than 20 manufacturers of agricultural machinery and attachments, notes that the issue of introducing a recycling collection has been raised for years.

Last year, there was an agreement that this measure would be introduced in mid-2019. To mitigate the risks of agricultural producers, it was proposed to increase the standard of investment subsidies for domestic equipment from 25 to 35%, introduce discount certificates for the delivery of old equipment to 3 million tenge, and improve the rules of preferential leasing of equipment. This will be an additional incentive to buy domestic equipment.

Also, the agricultural producers raised the issues of increasing the level of localization, compliance with quality standards and development of services.

 "These issues have been implemented to a greater or lesser extent. Subsidies are available, discount certificates have been introduced, preferential leasing of agricultural machinery from the Development Bank of Kazakhstan has been launched, the service network of our manufacturers is developing, and manufacturers have already made commitments on an annual increase of localization within the framework of the Agreement on industrial assembly. Machine builders are developing and expanding their product range to meet the needs of their agricultural customers," Arman Mambetayev said.

 According to him, there has been an increase in the production of machinery by 25% in six months of the year. The leaders are agricultural regions,  Kostanay and Akmola regions.

To further develop the domestic agricultural machinery industry, it is necessary to provide preferential loans to increase the localisation of production. It is about 20 billion tenge for 5-7 years.

According to him, the introduction of the recycling collection is mainly opposed by large businesses that are interested in expensive imported equipment. It's more efficient for small farms to use domestic equipment.

According to dealers, 259 combine harvesters and 199 tractors of John Deere and Class were imported into Kazakhstan between 2017 and 2018, while agricultural producers purchased 577 combine harvesters and 615 domestic tractors.

"A limited number of large enterprises can afford John Deere equipment. The rest of them, most of them buy domestic equipment," Arman Mambetayev said.

The speaker noted that the adoption of the recycling collection would accelerate the process of entering the market of global players - machine builders.

"The advantage of domestic equipment is its affordability, availability of components, while the farmers have to wait for the delivery of the repair parts of the imported equipment up to a month," he said.

At the same time, agricultural machine builders should think about the improvement of equipment: automatic driving systems, documentation systems, changes in the consumption rate, increase the reliability of equipment.

The manufacturers of agricultural machinery should adjust to the farmers’ needs, contribute to the development of the agricultural sector. This will make it possible to achieve a multiplier effect in the development of both agriculture and mechanical engineering," he said.

At the last meeting of both committees, a common position was developed: if we introduce a recycling fee for tractors and combines, then only those that are produced in Kazakhstan and their interchangeable counterparts.

The technical capabilities of our manufacturers are limited, and there is no point in setting up barriers on the equipment we do not produce.

As a result, everyone will benefit. Providing guaranteed sales, agricultural machine builders will be able to multiply the production of equipment and expand the lineup. Agrarians will be able to buy tractors and combine harvesters at an affordable price with proper service.