Agriculture is a structure-forming sector of the Kyrgyz economy and a constant priority of all state development strategies. Agriculture employs 20 percent of the population. 66 percent of the population lives in rural areas, where the poverty rate is always higher than in cities.
In the structure of Kyrgyz GDP, the share of agriculture has been steadily declining since obtaining of independence until 2016, after which this indicator has sustained at a level slightly above 12 percent.
Real gross value added in agriculture has grown steadily at about 3 percent annually since 2015, increasing it by 11 percent by 2019. At the same time, the entire economy during this period grew at a faster pace and by 2019 has grown by 18 percent compared to 2015.
The agricultural growth rates stability in general is a positive factor, given the inherent high risks. However, the magnitude of the annual growth is low, almost inertial, especially if we take into account the opportunity costs and the importance of this sector.
The gross output of agriculture, hunting and forestry in the Kyrgyz Republic includes crop growing and livestock, the total share of which is 97 percent. The remaining 3 percent covers the «services, hunting and forestry, fisheries».
During the period under review (2015–2019) there was a relative balance of crop and livestock production volumes (in value) with a slight shift (1-2 percent) in favor of crop production. At the same time, the physical volume of crop growing during this period increased by 12.9 percent, livestock — by 10.5 percent, which may indicate possible further structural changes.
The number of economic units in agriculture and their share in production
The number of economic entities in agriculture (at the end of 2018) was 440055 units, of which 439602 are farms, 295 are cooperatives, 427 are collective farms. .
75 percent of the total gross output in crop production is produced by peasant households (farms), citizens’ subsistence farming- 23 percent, the rest of production — state and collective farms.
The overwhelming dominance of small producers in agriculture in the Kyrgyz Republic is an institutional problem and an obstacle for the investment attraction and productivity growth.
During 2015-2019, production increased for almost all types of agricultural products . The production of grapes, rice, fruits and berries, barley and raw cotton increased by more than 20 percent. Production of leguminous crops and corn for grain increased by more than 10 percent. The production of vegetables and grain increased up to 10 percent. The latter group also includes sugar beets, the production of which grew by 5 percent between 2016 and 2019.
It should be noted the rapid growth in the production of barley and corn i.e. the products that can be used to increase the production of livestock husbandry.
During 2015-2019, the production of four types products decreased: potatoes — by 3 percent, wheat — by 15 percent, tobacco — by 30 percent and oilseeds — by 37 percent.
The production of basic food safety crop products in 2019 amounted to: wheat — 601.2 thousand tons, potatoes — 1373.8 thousand tons, fruits and berries — 269.5 thousand tons, vegetables and gourds — 1379.4 thousand tons, oilseeds — 31.1 thousand tons, sugar beet — 741.1 thousand tons. Own production does not meet the food safety criteria for the following products: wheat (bakery products), fruits and berries, oilseeds.
The production volumes of specific agricultural products are determined by the farmer under the influence of market factors, and this is the most reasonable mechanism for development. At the same time, recurring cases of overproduction of a specific type of product or, as it was in connection with COVID-19, the aggravation of food security issues requires application of more effective tools by the government to solve such problems.
Agricultural products are one of the largest export items of the Kyrgyz Republic. Export of crop production by commodity groups 07 «Vegetables and some of the root crops and tubers» and 08 «Fruits and nuts; peel of citrus fruits or melons cover " in 2019 accounted for 6.5 percent of the country total exports.
Table 1. Export structure of the Kyrgyz Republic by groups 07, 08 CN FEA EEU  (million US dollars)
Group code *
Vegetables and some of the root crops and tubers
Fruits and nuts; peel of citrus fruits or melons cover
The main exported products: leguminous vegetables, dried fruits, nuts, grapes, apples and pears, apricots, cherries, potatoes, onions and others. The largest exported food group is leguminous vegetables (group 0713) — 71.6 million US dollars, of which exports to Turkey amounted to 26.1 million US dollars, to Iran — 9.7 million US dollars, to Russia — 9.3 million US dollars.
The volume of exports of crop products has a sustainable growth. The EEU countries, particularly, Russia and Kazakhstan, are the largest and most accessible markets for the export of crop products from Kyrgyzstan, where 43 percent of all crop products are exported.
Table 2. Export structure of the Kyrgyz Republic to EEU member states by groups 07, 08 CN FEA EEU (million US dollars)
Cost, million KGS
Vegetables and some of the root crops and tubers,
Fruits and nuts; peel of citrus fruits or melons cover,
Fresh potatoes, onions, cabbage and legumes are exported to Belarus (group 07).
Most of all exported to Kazakhstan (group 07) are onions, vegetables, legumes, etc., as well as (group 08) apples, pears, grapes, dried fruits.
Most of all exported to Russia (group 07) are legumes, onions, vegetables, carrots, fresh tomatoes, cabbage, etc., as well as (group 08) dried fruits, apricots, cherries, sweet cherries, fresh grapes, etc.
According to the website «Foreign Trade of Russia» in 2019 Kyrgyzstan was placed at the 15th position with a share of 1 percent in the structure of imports to Russia within the group " Vegetables and some of the root crops and tubers «. China was the leader in exporting goods to Russia with a share of 22 percent in the structure of imports to the Russian Federation, Azerbaijan took the second position (13 percent share), Turkey was the third (9.5 percent share). Belarus — fourth position (9.1 percent share), Uzbekistan — ninth position (3.6 percent share), Armenia — 11th position (2 percent share), Kazakhstan — 12th position (1.7 percent share).
In the structure of imports to Russia of goods from the group „Fruits and nuts; peel of citrus fruits or melons cover“ in 2019 Kyrgyzstan took the 39th position with an insignificant share of 0.12 percent. In 2019, the top four exporters were the following counties: Ecuador with a share of 21 percent, Turkey — 16 percent, China — 6 percent, Azerbaijan — 5.5 percent. Uzbekistan placed at the 13th position among suppliers was a partner with a share in the structure of imports to Russia — 2.2 percent, Belarus — 15th position (1.7 percent), Armenia — 27th position (0.4 percent), Kazakhstan — 34th position (0.2 percent).
The Revealed Comparative Advantage Index (RCA), cited in a World Bank study, indicates that fresh apricots, walnuts and fresh plums from Kyrgyzstan have the greatest comparative advantages.
Table 3. Kyrgyzstan export competitiveness assessment
Net exports (average value, 2015-2017, USD)
RCA (average value, 2013–2017) *
2 605 524
Walnuts (in shell)
7 331 118
* The Revealed Comparative Advantage Index (Balassa Index) shows the ratio of the share of a product (industry) in national exports to the share in world exports.
Crop yield indicators in the Kyrgyz Republic in 2019 were: grain crops — 32.1 c/ha, potatoes — 171.3 c/ha, vegetables — 198.7 c/ha, fruits and berries — 52.9 c/ha. In the period 2015-2019 crop yield dynamics  increased: by 10 percent or more — for grapes, fruit and berry crops and oilseeds, by 5 percent or more — for corn (grain), cereals and cotton, less than 5 percent — for wheat, barley, vegetables, rice, tobacco. Cucurbits crop yield did not increase.
Although there was some recent increase in crop products, Kyrgyzstan needs significant measures to increase the yield. Thus, compared to the EEU countries, the yield in the Kyrgyz Republic is higher only for grain and legumes, for all other crops listed above — lower.
The maintenance of status quo for a long time may negatively affect the competitiveness of crop products in foreign markets.
Natural resources used
Land resources. The area of arable land in the period 2015-2019 increased by 0.5 percent and in 2019 amounted to 1287584 hectares  (6.4 percent of the area of the entire state). The Kyrgyz Republic has limited arable land, for example, for 1 person (permanent resident) in 2019, there was 0.2 hectares of arable land, which decreases annually. For comparison, the worst world indicators : China — 0.08 ha, Japan — 0.03 ha), the best : Ukraine — 56.1 ha, Moldova — 53.7 ha.
During 2015-2019 the area allocated for crop cultivation increased: for vegetables — by 4 percent, for rice — by 31 percent, barley — by 19 percent, corn — 4 percent, for sugar beets — by 27 percent (since 2016). The area allocated for crop cultivation decreased: for wheat — by 19 percent, for potatoes — by 6 percent, cucurbitaceous — by 3 percent, grapes — by 24 percent, oilseeds — 40 percent.
Water resources. The total volume of water resources in Kyrgyzstan is 560.6 km3/year, of which approximately 48.7 km³ is river runoff.  The total volume of water consumed in Kyrgyzstan is estimated at 10-12 billion cubic meters per year.  Water losses during transportation in river beds, canals, irrigation facilities reach 1.7-2.3 billion cubic meters. Mainly small rivers which irrigate about 800 thousand hectares or 76 percent of all irrigated lands play a crucial role in providing water to irrigated lands. The runoff of mountain sources is slightly regulated, only 80 thousand hectares (11 percent) of land are irrigated from regulated sources (i.e., water-saving hydraulic facilities are used), the remaining 720 thousand hectares are irrigated with a runoff.
The huge reserves of water resources in Kyrgyzstan are extremely unevenly distributed over the territory. This forces the active use of pumps to deliver water to arable land, which increases the cost of production, and also stimulate more widely use of drip irrigation.
Funding for agriculture
Government funding. Direct government funding is carried out annually within the framework of „Financing for Agriculture“ project.
The Government subsidizes the interest rates under contracts with financial and credit organizations involved in the project. Credit terms are updated annually. Funds are being provided at a concessional interest rate for the development of crop production, animal husbandry, processing of agricultural products and services in the agricultural sector.
The republican budget for 2018–2020 provides for 1 billion 50 million KGS for this project.
There are no direct government investments in agricultural enterprises (with the exception of state owned farms). At the same time, the government bears huge costs for the development and maintenance of the irrigation system functionality.
Lending by commercial banks. The main creditors of agriculture are Aiyl-Bank, RSK-Bank, microfinance organizations. The Guarantee Fund participates in the lending process.
The most demanded loans issued by commercial banks in 2019 and for 2 months of 2020 (for the period)  were loans in national currency with a maturity of 1-3 years (2019 — 61 percent, 2020 — 54 percent of all loans), then with a maturity of over three years (2019 — 20 percent, 2020 — 28.4 percent of all loans) and with a maturity of 6-12 months (2019 — 18.6 percent, 2020 — 17 percent of all loans). In foreign currency with a maturity of 0-1 months (2019 — 65.6 percent, 2020 — 53 percent of all loans) and over three years (2019 — 28 percent, 2020 — 43.5 percent of all loans). The distribution of loans by currency is as follows: with a maturity of 0-1 months — 100 percent in foreign currency, for a period of 1-3 months, 3-6 months, 6-12 months — 100 percent in national currency, with a maturity of 1-3 years and over three years — 91 — 99 percent in national currency.
The Kyrgyz Republic is quite poorly represented on the Russian market in various food segments as a major agricultural products exporter. Considering the export to the Russia Federation, Kyrgyzstan is significantly behind countries such as Azerbaijan, Uzbekistan, Belarus, Kazakhstan, Armenia, as well as Egypt, Israel, Turkey, Iran, etc.
Kyrgyzstan has a very high export capacity to world markets for such products as fresh apricots, walnuts (in shell), fresh plums, prunes and cherries. China is a very capacious and underdeveloped direction.
Kyrgyzstan has many ongoing challenges that prevent the agricultural export growth at the production/post-harvest/marketing level as well as terms of technical barriers/institutional constraints. Addressing these challenges requires a comprehensive approach providing the entire specific value chain effectiveness and balance.
Regarding the factors for cluster creation in the regions of Kyrgyzstan
The key instrument for addressing the problems can and should be the way of cluster creation and development, which requires solving the problems of legislation elaboration, applying project-oriented solutions, improving mechanisms for executing decisions by authorized bodies, methodological and financial support, as well as a system of motivation, training and awareness of rural producers.
Batken region is the largest producer of fruits and berries — a quarter of production in the country. Production is geographically concentrated in two districts. The region has a relatively high yield of fruits and vegetables, there are several processing enterprises that can become the basis for the fruit and vegetable cluster creation. There are prerequisites for the „fruit and berry crop“ cluster creation.
Jalal-Abad region is a large producer of vegetables, fruits and berries, and to a lesser extent — potatoes. There is a territorial concentration of vegetable production; there is no pronounced concentration of fruit and berry crops production. The region has a high yield of vegetables, as well as fruit-bearing crops, there are processing enterprises. There are prerequisites for creating clusters for „vegetables“ and „fruit and berry crops“.
Issyk-Kul region is a large producer of potatoes and fruit and berry crops. There is a territorial concentration of potato production, there is no concentration of fruit crops production. The region has the highest potatoes yield, as well as the highest fruit and berry crops yield. There are processing enterprises. There are prerequisites for the creation of clusters for „potatoes“ and „fruit and berry crops“.
Naryn region produces potatoes in limited quantities. In accordance with the preliminary estimates, the use of cluster organization of economic relations for the „potato“ product is inappropriate.
Osh region is a major producer of potatoes, vegetables, fruits and berries. There is a territorial concentration of the vegetables and fruit crops production. The region has a low vegetables yield, but the fruit-bearing crops yield is quite high. There are many processing enterprises in the region, which, most likely, can become the basis for a fruit and vegetable cluster creation. There are prerequisites for „vegetables“ and „fruit and berry crops“ clusters creation. It is possible to create a „potato“ cluster, but apparently of horizontal type, oriented towards the domestic market.
Talas region is a large producer of potatoes, the production of vegetables, fruit and berry crops is almost half less in volume. There is a territorial concentration of potatoes, vegetables, fruit and berry crops producers. The yield of all these crops is above the national average. There are processing enterprises in the region. The region advantage is its proximity to the border with Kazakhstan, which creates favorable opportunities for exports and participation in cross-border value chains. There are prerequisites for the „potato“, „vegetables“ and „fruit and berry crops“ clusters creation. It should be subjected to an additional assessment.
Chui region is a large potatoes and vegetables producer. There is a territorial concentration of the producers. The crop yields are slightly above average. Many processing enterprises are located in the region and in Bishkek. There are prerequisites for the „potatoes“, „vegetables“ cluster creation.