Modern dairy market in Kyrgyzstan

The dairy industry in Kyrgyzstan is a crucial part of the national economy and plays a key role in ensuring the country’s food security. The industry is characterized by a wide range of products, including traditional Kyrgyz dairy products, which have deep roots in the culture and history of the region.

The modern dairy product market in Kyrgyzstan is undergoing a stage of significant changes, related to both internal and external factors. These changes include the improvement of production technologies, the expansion of the range, as well as adaptation to new market conditions, caused by globalization and integration into regional and global economic processes.

It is important to note that the dairy industry in Kyrgyzstan faces a number of challenges, including the instability of milk purchase prices, competition with imported products, as well as the need for modernization of the technological base and improvement of product quality. Despite these difficulties, the industry demonstrates potential for development and expansion, especially in light of increasing export supplies and growing demand for dairy products both in the domestic and foreign markets.

The dairy product market in Kyrgyzstan represents a complex and dynamically developing system, which is influenced by many factors. This includes political, economic, and social aspects, which together form the current position and outline the prospects for future development of the industry.

Historical context and development of the dairy sector

A brief overview of the history of dairy farming in Kyrgyzstan.

Dairy farming in Kyrgyzstan is an integral part of the agricultural industry and national culture. It has a centuries-old history, rooted in the era of nomadism. Milk and dairy products were the main source of nutrition for nomadic peoples, and dairy farming played an important role in their lives.

The evolution of the dairy industry from traditional methods to modern technologies.

Over time, dairy farming in Kyrgyzstan has undergone significant changes, moving from predominantly traditional, natural methods to more modern technological approaches. The transition from a nomadic lifestyle to a sedentary one contributed to the intensification and industrialization of the industry. As a result, modern dairy farming in Kyrgyzstan is characterized as a sector that is in the process of transitioning from a traditional approach to the use of advanced technologies in breeding, feeding, and milk processing.

However, this industry is currently facing a number of problems: instability of milk prices, insufficient state support, reduction in the number of large specialized enterprises, as well as obsolescence of technological and technical equipment. These factors have led to a decrease in the quality and volumes of milk and dairy product production.

Despite these difficulties, the dairy sector in Kyrgyzstan demonstrates potential for development and modernization. Government initiatives to support the industry, including financial support and improvement of the quality and safety control system, are aimed at increasing the efficiency and competitiveness of the dairy sector in the domestic and international markets.

Analysis of the modern dairy product market in Kyrgyzstan

The modern dairy product market in Kyrgyzstan represents a unique combination of traditional production methods and modern technologies. Let’s consider the main types of dairy products produced in Kyrgyzstan, as well as data on milk production and its products.

Main types of traditional dairy products

• Kurut - dried balls of sour milk, usually salty and sometimes slightly spicy. Kurut is stored for the winter and can be consumed in dry form or dissolved in warm water as a drink.
• Kaymak - a thick dairy product, similar to sour cream. It is especially popular in Kyrgyzstan.
• Kymyz (kumis) - a national drink, made by fermenting mare’s milk. Known for its refreshing and healing properties.
• Zharyma (jarma) - a drink made from ground corn flour, mixed with ayran (a fermented dairy product, similar to kefir) and salt.
• Chalap - a popular fermented milk drink, consisting of a thick fermented milk mixture of ayran, salt, and carbonated water.

Production of classic dairy products and milk

In addition to traditional dairy products, Kyrgyzstan also engages in the production of classic dairy products, including milk, kefir, cottage cheese, sour cream, yogurts, and cheeses.

According to the National Statistical Committee, milk production in Kyrgyzstan is steadily growing, providing not only the domestic market, but also export to countries such as Russia and Kazakhstan. In 2021, the total volume of milk production reached 1 million 709 thousand tons. This growth is supported by state support and modernization of production processes.

Thus, the dairy industry in Kyrgyzstan represents a combination of rich cultural heritage and modern processing technologies, allowing the country to meet both internal and external needs for dairy products.

The role of personal subsidiary farms and large producers

The dairy industry in Kyrgyzstan is one of the leading sectors of the country’s agriculture. Every year, more than 1.5 million tons of milk are produced in the republic, of which only 2.5% is processed at industrial enterprises.

The main problem of the dairy industry in Kyrgyzstan is the low productivity of cows. On average, one cow in the republic gives no more than 2-4 liters of milk per day. This is due to the low level of livestock development, as well as the lack of modern technologies in personal subsidiary farms, which produce most of the milk.

In recent years, Kyrgyz dairy enterprises are taking measures to increase the volumes of milk processing. In particular, new dairy plants are being built in the republic, and new technologies are being introduced.

The main directions of export of Kyrgyz dairy products are the EAEU countries and China. In 2020, 13 Kyrgyz companies received the necessary certificates for the supply of products to China.

Thus, the dairy industry in Kyrgyzstan has great potential for development. However, to do this, it is necessary to solve a number of problems, including increasing the productivity of cows and introducing modern technologies in personal subsidiary farms.

In Kyrgyzstan, large dairy producers are engaged in milk processing. These include “Bishkek Sut”, “Shin Line”, “Artesian”, “Kant Sut”, and “Sut Bulak”.

“Bishkek Sut” is one of the largest producers of dairy products in Kyrgyzstan. It offers a wide range of products under well-known brands, such as “Vesely Molochnik”, “Domik v Derevne”, BioMax®, “Frugurt”, “Chudo”.

“Kant Sut” specializes in the processing of whole milk products and exports its goods, including butter and casein, to various countries.

Finally, “Sut Bulak”, founded as part of the Kyrgyz-Swiss state program, is engaged in the production of cheese and other dairy products under the Dairy Spring brand.

These companies play an important role in supporting and developing the dairy sector in Kyrgyzstan, providing both the domestic market and exporting their products to the EAEU countries and beyond. Despite stiff competition with imported brands and challenges in the domestic market, these enterprises continue to adapt and make a significant contribution to the country’s economy.

Market Trends and Challenges

The analysis of the dairy market in Kyrgyzstan reveals several key trends and challenges that the industry faces:

• In recent years, Kyrgyzstan has shown an increase in milk production volumes. For example, from 2006 to 2021, milk production in the Kyrgyz Republic increased from 1212 thousand tons to 1698 thousand tons. However, despite the growth in production, the average milk yield from one cow remains relatively low, fluctuating around 2000 kg per year, indicating potential for productivity improvement.
• The market is characterized by price instability. For example, in 2021, due to drought, there was a rise in prices for pasteurized milk and raw milk. Purchase prices for raw milk increased from 25 soms to 35-45 soms per liter, which is associated with the rise in feed prices.
• Local producers face serious competition from imported goods, especially from Russia and Belarus. This forces farmers to sell milk at reduced prices, making it difficult to retain in the market.
• The industry suffers from the use of outdated technological and technical means on farms. This leads to high energy intensity of production and an increase in the cost of milk, and also affects the quality of products.
• Despite the increase in milk production, Kyrgyzstan is experiencing problems with food security due to insufficient processing volumes and dependence on imports.

However, despite the fact that the dairy industry in Kyrgyzstan is facing a number of problems, such as price instability, strong competition with imports, and outdated technologies, there is significant potential for growth and improvement, especially through increased exports and modernization of production processes.

Export Potential and International Markets

Overview of Dairy Product Exports from Kyrgyzstan

Dairy product exports from Kyrgyzstan play an important role in the country’s agrarian economy, showing significant growth in recent years. From 2016 to 2020, the volume of dairy product exports doubled, reaching approximately 35 thousand tons, amounting to about 46 million dollars. The main export destinations are Kazakhstan and Russia, accounting for more than 52% and about 46% of total exports respectively, as well as Uzbekistan and Tajikistan. Among the exported types of products, butter (37% of the market volume), cheeses and cottage cheese (21%), condensed and dry milk and cream (17%), non-condensed milk and cream (13%) and fermented dairy products (about 11%) occupy a special place.

From January 2019 to February 2023, Kyrgyzstan exported dairy products worth about 190 million dollars, which is more than 130 thousand tons. However, this is only a small part of the total volume of dairy product production in the country. For example, in 2022, 1 million 734 thousand tons of milk were produced, of which just over 30 thousand tons were exported. In addition to Kazakhstan and Russia, Kyrgyzstan also supplies dairy products to South Korea, Uzbekistan, Georgia, Afghanistan, UAE and USA. It is noted that in early 2023, exports to Russia increased ninefold compared to the same period in 2022, mainly due to supplies of butter, cream, yogurt, kefir, cheeses and cottage cheese.

Prospects for Dairy Product Exports

The prospects for exporting dairy products from Kyrgyzstan to new markets, such as Uzbekistan, are also outlined positively. In March 2023, Kyrgyzstan announced the start of supplies of dairy and meat products to Uzbekistan. This became possible thanks to the signing of a “road map” with the government of Uzbekistan and negotiations on opening borders for the export of products from Kyrgyzstan. The Ministry of Agriculture of Kyrgyzstan focuses on breeding pedigree cattle, which can increase productivity and quality of dairy products for export​​.

State Policy and Support for the Dairy Industry

The state policy of Kyrgyzstan in the field of the dairy industry is aimed at supporting and developing this sector. State measures include financial support, reducing interest rates for farmers, as well as stimulating the use of modern technologies and improving the quality of products. For example, the government of Kyrgyzstan has allocated subsidies for the development of agriculture in the form of a credit rate reduced to 6%, and a minimum service term at the mark of three years. These measures are aimed at supporting farmers and increasing their competitiveness. The issue of introducing state regulation of milk prices to support domestic producers and ensure stable sales of products is also being considered. However, there are complaints from farmers about the difficulty of obtaining a preferential loan.

In general, the export potential of the dairy industry in Kyrgyzstan is supported by state support, the opening of new markets and improving the quality of products. These factors together contribute to the sustainable development of the industry and the expansion of the international presence of Kyrgyz dairy products.

Conclusion

Dairy farming in Kyrgyzstan occupies an important place in the agrarian sector of the country. However, the industry faces a number of difficulties, including the disparity in purchase prices for milk, the imperfection of the state regulation mechanism for imports, insufficient credit support and technological lag. As a result, a large part of milk production is carried out on a natural basis in private households, which limits the use of modern technologies.

Despite internal difficulties, Kyrgyzstan demonstrates significant export potential, especially to the EAEU countries. Dairy product exports significantly exceed imports, with the main markets being Russia and Kazakhstan. Recently, supplies of dairy products to Uzbekistan have begun.

The state recognizes the importance of the industry and takes steps to support it. In particular, it is proposed to give the state the ability to regulate purchase prices for milk and provide subsidies to support local producers.

Improving the quality and efficiency of dairy farming can be achieved through the introduction of innovative technologies, strengthening the feed base, comprehensive mechanization and automation of production processes.

The opening and search for new markets in the conditions of possible trade restrictions, enhance the export potential of Kyrgyzstan.

Sources

agro.gov.kg, www.stat.kg, wikipedia.org, oec.world, wits.worldbank.org and other resources.