Using Energy Resources to Diversify the Economy: Agricultural Price Distortions in Kazakhstan

Abstract

Kazakhstan's government has used oil revenues to promote economic diversification, including a billion dollar 2003–2005 Agriculture and Food Program to reverse the 1990s decline in agricultural output. This paper provides estimates of producer support equivalents for the main agricultural products in order to establish whether announced policies actually improved incentives for farmers. Although the estimates are approximate, they present a pattern of price distortions working against farmers in the 1990s and moving strongly in their favour since 2001. In sum, quantification of price distortions supports the government's claim that it has used the country's energy resources to promote agriculture.