Distribution Network Construction to Export Agricultural Produce From the Kyrgyz Republic to the Customs Union
On 27 November 2014, the ACF Council approved the preliminary request submitted by Investment and Trade Business Holding OJSC and the Concept Note for the investment project of Distribution Network Infrastructure Construction to Export Agricultural Produce from the Kyrgyz Republic to the Customs Union Member States (DNI Project). US $25 million are to be mobilised from the ACF.
Project objectives: The DNI Project involves the development of a supply chain for agricultural produce primary processing and supply from the Kyrgyz Republic to the Customs Union Member States. There are two key objectives under the project: to expand agricultural exports primarily to central regions of the Russian Federation and Republic of Kazakhstan and develop the warehouse infrastructure in agricultural regions of the Kyrgyz Republic to store part of the produce to be consumed by local people in winter.
Project components: The system of product processing and distribution includes regional contracting and storage centres and a full-scale logistics centre in Bishkek. Contracting centres will enable formation of agricultural product batches in the regions to be delivered to Bishkek, as well as storage of part of produce for local consumption. The logistics centre will be responsible for storage, certification, processing, and packing of products to be sold in the domestic and external markets and will manage the activities of contracting centres.
Key expected Project implementation effects
- development of additional modern warehouse facilities with temperature and atmosphere control with the capacity of 15 thousand tonnes per year—an increase by the factor of 4.5;
- development of a logistics network to transport 60 thousand tonnes of agricultural products per year—5% of fruit and vegetable consumption in the Kyrgyz Republic;
- expansion of fruit and vegetable exports by 18 thousand tonnes—6.5% of total exports of fruit and vegetables;
- lowered retail fruit and vegetable prices due to lower losses in the process of product transportation;
- higher share of registered exports to the Russian Federation and Republic of Kazakhstan, substitution of illegal exports of low-quality products from the People’s Republic of China;
- foreign direct investment of US $11.4 million—3% of total FDIs in 2012.
- enabling farmers from south-western and eastern regions to supply their products to central regions and to export;
- improved employment in agricultural regions;
- reduced seasonal fluctuations of fruit and vegetable prices and regional price distortions;
- reduced social tension in agrarian regions caused by recession in agriculture;
- lower outflow of the population from rural areas;
- improved quality of fruit and vegetables exported to the markets of the Russian Federation and Republic of Kazakhstan.