More than pouring money into an ailing sector? Farm-level financial constraints and Kazakhstan’s ‘agribusiness 2020’ strategy

Abstract

The Republic of Kazakhstan’s agricultural development strategy relies on capital subsidies as a main engine for boosting competitiveness. This approach under-estimates the knowledge and incentive problems inherent in state-guided management of sector development. Based on unique farm-level data, we examine the financial constraints actually perceived by farmers. Most farm managers doubt that the returns on agricultural investments are reliable enough for credit funding, so they do not take out loans. We conclude that, rather than pouring money into the sector, the government should improve the local institutional environment and invest in public services relevant to agriculture.