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DE RUEHTA #0928/01 1521026
ZNR UUUUU ZZH
O 011026Z JUN 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5512
INFO RUCNCIS/CIS COLLECTIVE 1621
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0998
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RUEHNO/USMISSION USNATO 2642
RUCPDOC/DEPT OF COMMERCE WASHDC
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RHEFAAA/DIA WASHDC
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RUEKJCS/SECDEF WASHDC 1099
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1566

UNCLAS SECTION 01 OF 03 ASTANA 000928 
 
SIPDIS 
 
STATE FOR SCA/CEN, EUR/ACE, F 
STATE PLEASE PASS TO USAID 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAID EAGR SOCI KZ
SUBJECT:  KAZAKHSTAN:  PUBLIC-PRIVATE ALLIANCE LEADS TO INCREASED 
PROFITABILITY IN DAIRY SECTOR AND COMMERICAL POSSIBILITES 
 
ASTANA 00000928  001.2 OF 003 
 
 
¶1.  SUMMARY: The Sustainable Dairy Global Development Alliance 
(SD-GDA), initiated in 2006 by USAID in cooperation with U.S. and 
Kazakhstani based dairy farms and dairy service providers, is a 
public-private partnership designed to increase the profitability of 
small and medium sized dairy farms.  Through the introduction of 
rotational grazing methods during the first several months of the 
project, dairy farms were able to increase milk production by 20 to 
40 percent and reduce feed costs by 70 percent at two pilot farms. 
Moreover, farmers were impressed with the techniques and clamored 
for vendor information to purchase the U.S.-manufactured equipment. 
END SUMMARY. 
 
BACKGROUND 
 
¶2.  Despite economic growth and increased opportunities in natural 
resource-rich Kazakhstan since the break-up of the former Soviet 
Union, rural households continue to rely heavily on agriculture for 
their livelihood.  Increasing agricultural productivity and 
profitability is therefore essential to the long-term and 
sustainable development of the country's rural and predominantly 
poorer population.  Moreover, as the recent global financial crisis 
and its impact on world fuel prices demonstrate, economic 
diversification remains an important goal of Kazakhstan and 
international development programs.  The Central Asia region, like 
other parts of the developing world, has also experienced a shortage 
of basic food products this past year, further highlighting both the 
need for a strong agricultural sector in the region and the strong 
demand and need for continued food production. 
 
¶3.  With the break-up of the former Soviet Union, land previously 
controlled and managed through collective farms, or kolkhozes, was 
distributed among the former members of the kolkhozes.  Most of 
these small farmers found their plots too small for producing a 
profitable crop of grain, and also found too much competition from 
China for fruits and vegetables.  Some farmers partnered with 
neighbors to create larger crops and increase economies of scale, 
while others began breeding cattle for meat or harvesting other 
crops, such as alfalfa. 
 
¶4.  Farmers also lacked access to agricultural specialists, quality 
inputs, and modern equipment.  Dairy farmers in particular possessed 
only basic agricultural knowledge and were often wary of seeking new 
skills and information.  Most of Kazakhstan's dairy farms are very 
small and are notable for their lack of modern machinery, their 
limited access to credit, poor herd nutrition, and very low milk 
production.  As a result, the milk market in Kazakhstan relied 
heavily on imported milk products from neighboring countries. 
 
THE ECONOMIES OF ROTATIONAL GRAZING 
 
¶5.  Research on rotational grazing in the U.S. and other western 
countries has shown it to be at least as profitable as conventional 
methods of milk production as farmers realize variable cost-savings 
in the areas of feed, labor, fuel, and veterinary expenses. 
Additionally, over time, the necessary farm infrastructure and 
machinery for a rotational grazing operation can be reduced relative 
to traditional or barn feeding systems.  This can reduce the 
investment level required and subsequently reduce the fixed costs of 
production as well.  This is important for dairy farming in Central 
Asia, where productive and profitable dairy farms can be created 
with affordable levels of capital investment. 
ROTATIONAL GRAZING AND THE ENVIRONMENT 
 
¶6.  Rotational grazing also improves soil quality through reducing 
erosion.  A permanent vegetative cover reduces erosion relative to 
tillage agriculture, since as the vegetative cover increases in 
density, less soil is lost by erosion.  This improves pasture 
productivity and results in increased farm profitability.  Moreover, 
well-managed dairy pastures contain twice the organic matter of that 
of tilled soils used for annual crops.  This organic matter, which 
is primarily carbon, increases water absorption and moisture 
retention.  The ability of pasture soils to hold carbon also has 
 
ASTANA 00000928  002.2 OF 003 
 
 
important benefits for air and water quality.  Finally, it is 
"green," supporting efforts against global warming. 
 
WATER QUALITY 
 
¶7.  Well-managed grazing is one of the most effective ways to 
protect water quality in mainstream agriculture.  Well-managed 
grazing systems reduce phosphorous and sediment runoff from 
agricultural land, including fecal matter, which has the potential 
to contaminate drinking water system.  Well-managed pastures act as 
buffers and serve to protect water quality for the benefit of the 
environment and human health. 
 
SUSTAINABLE DAIRY AT WORK: GOT MILK? 
 
¶8.  Rotational grazing requires a relatively small capital 
investment by livestock owners and has resulted in significant 
increases in milk yields per cow.  By demonstrating this innovative 
technology to Kazakhstani livestock owners, USAID's implementing 
partner, Winrock International, as well as its other partners 
(Gallagher Animal Management Systems, Kencove Farm Fence, Fisher and 
Thompson, Taurus Service, Taurus Service of Central Asia, Alipov-T 
and Kamyshinskoe Farms, the Dairy Union of Kazakhstan, Kazakhstan 
Land Cultivation Research Institute, and the University of Vermont) 
sought to enhance small- and medium-sized enterprise (SME) 
development in the dairy sector, and increase the incomes of rural 
families.  Each partner provided critical components for the 
development of sustainable dairy production systems, including 
pasture management and water systems, milking management, breeding 
and reproduction, farm financial management, and technology 
transfer.  The SD-GDA project also worked with local agribusiness 
concerns in order to develop and provide comprehensive packages of 
U.S.-manufactured supplies and technical assistance to farmers 
interested in adopting rotational grazing and sustainable dairy 
systems. 
 
¶9.  The SD-GDA project established demonstration sites on two pilot 
farms in Kazakhstan, which serve as powerful examples of the 
potential impact that rotational grazing can have on farming 
operations.  The first, Alipov-T Farm, is a small dairy farm located 
40 kilometers east of Almaty.  The farm milks 60 cows and harvests 
crops on approximately 200 hectares of land.  Prior to its 
participation in the SD-GDA project, the farm kept all cows, bulls, 
and young stock in barns and barnyards, and used its land to produce 
corn, oats, barley, wheat, and hay for cattle feed.  In spring 2008, 
the SD-GDA project helped the farm install a single-wire electrified 
fence around sections of the property and instituted a rotational 
grazing plan.  After just one month, milk production jumped from 12 
liters per cow per day to 15 liters per cow per day.  The following 
month, changes were made to the grain feeding to better complement 
the pasture forage.  Milk projection increased again to 17 liters 
per cow per day.  In addition to the 42% increase in milk production 
and resulting revenue, the average feed costs for the herd fell by 
67 percent, from $3.55 to $1.15 per cow per day. 
 
¶10.  The second farm, Kamyshinskoe Farm, is located 120 kilometers 
west of the city of Ust-Kamenagorsk.  The farm has 1700 dairy cows, 
making it the largest herd of Ayrshire cattle in the world and the 
largest dairy farm in Kazakhstan.  In the years prior to the SD-GDA 
project, some of the dairy cows grazed on hillside pastures. 
However, in spring 2008, the SD-GDA project helped fence 120 
hectares of land for 300 cows from the dairy herd, and 20 hectares 
for the calves.  Initially skeptical, farm managers quickly came 
around after observing milk production jump from 14.5 to 18 liters 
per cow per day.  This 24 percent increase in milk output was also 
accompanied by a reduction in feed costs of 70 percent.  The changes 
in grazing also increased the efficiency of farm labor, reducing the 
number of herders necessary from six to two and, thus, freeing up 
four workers to attend to other duties on the farm.  The result has 
been an $1100 increase in profit per day. 
 
SPREADING THE WORD, INCREASING IMPACT AND SUSTAINABILITY 
 
ASTANA 00000928  003.2 OF 003 
 
 
 
¶11.  In both August 2008 and in May 2009, the SD-GDA project held 
Open Field Days at both farms, attracting more than 200 farmers and 
extension service providers from Russia, Kyrgyzstan, and 
Kazakhstan's South Kazakhstan Karaganda, and Almaty oblasts 
interested in learning about rotational grazing and the potential 
impact of these techniques on their own farms. 
 
¶12.  A number of other organizations have also seen the value in the 
SD-GDA project and have become involved.  For example, the Talgar 
Agricultural College attended the Field Days and thereafter sent 
groups of its students to the Alipov-T Farm to conduct soil 
sampling.  Other students also assisted in fence construction at the 
farm.  The Kazakh Meat Company (KMC) saw the value of rotational 
grazing methods and plans to use rotational grazing for its large 
beef production operation.  KMC's owners attended the Field Day at 
the Alipov-T Farm and the SD-GDA project's technical advisor will 
work with KMC to further develop its plan.  Moreover, the Kazakh 
Scientific Research Institute for Animal Husbandry and Forage 
Production selected Alipov-T Farm as one of the five farms on which 
it will conduct a three-year intensive research project on forage 
improvement and cattle reproduction for the purpose of training 
other farmers. 
 
¶13.  COMMENT:  At a time of reduced economic growth in Kazakhstan, 
the SD-GDA project has introduced dairy farmers and the agricultural 
sector to simple methods that have had significant and lasting 
effects on farm profitability.  It also opens commercial 
possibilities.  The farmers present at the field day clamored for 
information about purchasing U.S.-produced equipment -- from the 
milking machines to the electric fences.  While Kazakhstan's economy 
will continue to be dominated by its vast mineral resource sectors, 
agriculture will remain an important provider for much of the rural 
population.  END COMMENT. 
 
MILAS