«Kyrgyz farmers are not fully utilizing the existing natural asset for growing medicinal herbs, which are in great demand both domestically and abroad. The cultivation and marketing of medicinal herbs has a long-term perspective for development» – says researcher Amangeldi Djumabayev, in his article written specifically for CABAR.asia.
Today, the main problem remains the imbalance of export and import cargo traffic. Kyrgyz imports exceed exports by almost three times, which indicates the need to develop export potential. The development of pharmaceutical products can become an industry that will make a significant contribution to the development of the country, especially considering the fact that the cost of herbal medicines is constantly growing.
“Kyrgyzstan is the main supplier of the medical industry of the USSR (up to 90-95%) of certain types of plant materials from which medicines are obtained: ephedrine, thermopsidine, etc., which are exported to many countries of the world.” – Academician Altimyshev A.
Medicinal herbs grow in all regions of Kyrgyzstan. Since Soviet times, in a number of areas of the Issyk-Kul region, the cultivation and processing of various varieties of medicinal plants has been successfully established. Still, the nearing Issyk-Kul region territory remains poorly studied. The region has rich resources of wild plants. Valerian, for example, was one of the most common and popular medicinal crops. After the disintegration of the USSR, the processing of medicinal herbs fell into decay. The main problem of the restoration of production on an industrial scale is, among other reasons: the lack of knowledge, both practical (lack of specialists) and theoretical. Nevertheless, the cultivation of medicinal herbs is gaining momentum again, especially in the Tyup, Jeti-Oguz and Ak-Suy districts of the Issyk-Kul region. The climate of the region has a very favorable effect on the crop. The most widely sought after herbs are calendula, mint and valerian.
Production and export of medicinal herbs in the Kyrgyz Republic
Medicinal herbs were actively grown during the Soviet era in Kyrgyzstan and are considered as a familiar crop. Only in the Issyk-Kul region, there are 70 species of medicinal plants. Some types of medicinal plants, such as valerian roots, licorice and ginseng roots, have been widely used. Since the Soviet era, medicinal herbs have been successfully grown in several areas of the Issyk-Kul region, which were then dried and delivered to pharmacies. Valerian officinalis (garden heliotrope) was one of the most widespread crops. There was a base for harvesting, washing, drying and sending valerian to other republics of the USSR. Due to the mountainous terrain, there are various natural climatic zones, which makes the germination of medicinal plants possible. Favorable weather conditions combined with a large number of sunny days (up to 2800 hours / year), as well as the ice-free Issyk-Kul Lake – all this affect the biological development of plants.
The foreign economic activity of the Kyrgyz Republic is characterized by a slowdown in activity, especially with the entry of Kyrgyzstan into the EAEU. Despite the fact that the government is taking a number of measures, such as: a subsidy program for export-oriented and import-substituting enterprises, export development does not improve. There are a number of problems, such as the development of transport and logistics infrastructure, quality infrastructure for export development, low lending to exporters, and the search for investments and support for promotion in foreign markets.
At present, the herbal sector is not among the priority sectors of the Kyrgyz economy, despite the fact that the products have a stable export orientation. As a result, the contribution of the herbal sector is meager compared to exports in general.
The agricultural sector employs approximately 40% of the country’s population. Despite the fact that the share of agricultural exports in the total share of exports is not more than 25%. This is a low indicator despite the fact that large resources are concentrated in this industry. Agriculture in Kyrgyzstan lags behind in development in comparison with the EAEU countries. This is primarily due to the poor development of the processing industry. In addition, the small or medium size of farms are making the affect. As a result, Kyrgyzstan so far acts at the regional level as a supplier of raw materials, which are supplied in separate batches. Kyrgyz producers take risks when they supply exclusively raw materials, as they lose the opportunity to make profit with added value, which is the largest part of income. To all this, a large amount of taxes remains abroad. As a result, we are witnessing a welfare decline of the population both in the region and in the country. For example, the poverty level in the Issyk-Kul region – the region where the herbal industry is gradually reviving – on average, slightly differs from the country indicator. Unemployment remains the main problem of the region, the rate of which is higher than the national average.
The country’s potential in growing environmentally friendly medicinal plants is huge. In recent years, a number of countries have stepped up their participation in trade and economic relations with Kyrgyzstan. For example, in 2017, the Republic of Korea occupied 35 percent of Kyrgyzstan’s exports of medicinal herbs. Significant volumes also belong to China, Russia and Germany.
From year to year, the demand for medicinal herbs is growing. To date, the purchase price of valerian (non-dried) has reached 50 KGS / kilogram. While for 1 kg of dried plant, the price is 235 KGS. In 2017, 30 tons of medicinal herbs were exported to Germany alone. (Based on an agreement with the German pharmaceutical company Schwabe and Galenharm) Annually, the demand for valerian from the German companies is 20 thousand tons per year. However, Germany in the last two years shows a slight increase in the export of medicinal plants. If in 2017 export amounted to 129 thousand dollars, then in 2018 export reached 134 thousand dollars.
The territory sown with medicinal herbs is growing every year. To date, it has reached twenty hectares. Grass cultivation makes up a large part of the income in the villages of Kyrgyzstan. In this regard, farmers started to adopt a strict approach to the selection of medicinal herbs, which are beneficial to grow. The industry is predominantly women. They plant and harvest themselves.
Based on market research data from the German Technical Center, between 700 and 1000 tons of dry plant material are harvested each year in Kyrgyzstan. Mostly, up to 95% of these products are exported to Uzbekistan, South Korea, India, France, Russia, Japan, China, and only a small part from 5 to 7% is sold on the local market. In Kyrgyzstan, there are about 50 companies and private entrepreneurs who are engaged in a full cycle of cultivation and processing of medicinal plants. Despite this, many Kyrgyz companies do not have direct access to German markets, mainly due to the lack of product certification. Platforms are being created that facilitate the export of raw materials to Germany. For example, Import Promotion Desk (IPD) is one of the projects funded by the German Ministry of Economic Cooperation and Development, which provides direct access to Kyrgyz exporters of processed products in order to create higher costs.
According to UN Comtrade, Kyrgyzstan has begun to export actively medicinal raw materials since the 2000s. Traditionally, China, Russia, Germany and South Korea remain as main export markets. In the future, there is an opportunity to establish export to India. According to the schedule of export of medicinal herbs, it is seen how the export of medicinal herbs to Uzbekistan fell sharply in 2014. Most likely this is due to the entry of Kyrgyzstan into the Customs Union (later the Eurasian Economic Union). Until 2014, the annual export of medicinal herbs to Uzbekistan reached half a million dollars: in 2013, it was 580 thousand dollars, and in 2012, it was 611 thousand dollars. Moreover, in 2018, exports to Uzbekistan amounted to only 7 thousand dollars. Deliveries to China also fell sharply from 330 thousand dollars in 2013 to 102 thousand dollars in 2014. Starting from 2018, export to Estonia began, which amounted to 73 thousand dollars.
If in 2018 Germany imported $ 330 million worth of medicinal raw materials from the world, then import from Kyrgyzstan amounted to 140 thousand dollars. A similar situation is developing with other countries, where the share of Kyrgyzstan in their import of medicinal herbs does not even reach 1%.
Conclusion and recommendations for improving the market of medicinal herbs
Despite the fact that the herbal industry has not yet reached its potential, it can be the main source of poverty reduction and income growth of the population in the regions. It is clear that access to export markets remains a major factor in this industry. Another important component is the dissemination of “know-how” in the field of medicinal herbs cultivation. Conducting various trainings for herbalists with a view to their competitive advantage.
The revival of agricultural cooperatives. Cooperatives may soon become the locomotive of regional development. For small farmers, this is a necessary stage in their further market promotion. The main advantage of agricultural cooperatives is the joint operation of the entire value chain, which allows to profit without intermediaries. Agricultural cooperatives will allow delivering products to companies in the required quantity without any interruption.
We are currently facing rapidly increasing pressures on plant populations in the wild due to increased commercial collection, mainly uncontrolled trade. With moderate use of stocks of medicinal plants, it will be possible to provide raw materials to Kyrgyz pharmaceutical companies. This will significantly reduce prices for their further sale, as well as provide additional work to the local population. Thus, it is necessary to combat the chaotic collection of medicinal plants; otherwise, it can lead to the loss of natural germination locations of medicinal herbs. Great damage is also exerted by year-round cattle grazing in places where medicinal herbs germinate, which negatively affects their further resumption.
Therefore, several specific steps in the further implementation on medicinal plants sphere development can be highlighted:
1) Consolidation of farms and creation of cooperatives. Many agricultural cooperatives in Kyrgyzstan represent only the primary level, limited to crop production.
It is important for cooperatives to be stimulated in reaching the second level, which will allow them to process and sell the finished products. The creation of regional cooperatives will allow specializing in local products. Based on the experience of activating the regional economy and communities through the movement “One Village One Product” (OVOP), in the Issyk-Kul region, it is possible to promote the cultivation and procurement of medicinal raw materials for export: from assembly and drying to quality control and packaging of the final product. This method has already been successfully implemented in the region – in the production of wool products. The main advantage of OVOP is the activation of local communities through job creation, especially for women. Meanwhile, the JICA project conducted training on drying medicinal plants for employees of the Kara-Kol and Jeti-Oguz forestry. Training materials on drying and collecting herbs were prepared.
2) Dissemination of “know-how” and training of farmers. A certain state structure is needed, for example, the State Agency for the Development of the Pharmaceutical Industry, which will organize and control the collection of medicinal plants. At the moment, the procurement and marketing of medicinal raw materials is chaotic. It is necessary to maintain control in this area. The structure’s responsibilities will also include training for collectors, the proper storage of collected medicinal raw materials, improving the literacy of farmers in the selection and cultivation of medicinal plants through the creation of an integrated training system. (TV, radio, social networks). Training of agricultural consultants who will conduct trainings for local farmers in their villages, which will help to increase the number of farmers involved.
3) Promotion and conclusion of export contracts on a long-term basis. This is one of the important parts of trade relations and it is the reason why Kyrgyzstan cannot yet export its products to foreign markets in full force. Active negotiations were held with several countries, such as Korea, Russia and China, but the issue has not been fully resolved. It is worth exploring the needs and markets of various countries for the production of medicinal plants and offering the export opportunities that Kyrgyzstan possesses. Surely, the export of finished herbal medicines is in the first place, but at the initial level, exporting raw medicinal raw materials can be launched. For the future, those herbs that will be most suitable for sustainable commercial development and industrial processing in the supplying countries should be identified. Since 2010, the project “Construction and Development of the Value Added Chain for Valerian Medicinal in the Issyk-Kul Region” is being implemented through the German Society for International Cooperation (GIZ). It is also necessary to increase the capacity of state institutions, like the Agency for attracting investments through the involvement of high-quality specialists working with specific investment projects.
4) Study on the need for medicinal herbs by domestic manufacturers. Kyrgyzstan remains a relatively environmentally clean country and has many plants for the manufacture and production of various medicines. Already at the initial stages, it is worth intensifying the search for the sale of medicinal raw materials among domestic manufacturers. It is necessary to resume annual tasks for the collection of medicinal herbs by local forestry (лесхоз). Domestic manufacturers serve as the basis for the production of prepared medicine. This will help to overcome the dependence on imports of important medicines and in the future to develop our own production of medicines.
This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project implemented with the financial support of the Foreign Ministry of Norway. The opinions expressed in the article do not reflect the position of the editorial or donor.