We are pleased to announce the publication of two situation reviews including crop production, social support and regional market analyses for the Caucasus and Central Asia . 

On behalf of WFP, Regional Office, Cairo AA international Ltd undertook field missions to the Russian Federation including Ingushetia, Chechnya; Azerbaijan, Georgia and Armenia during March and April 2008. Field visits were made and detailed discussions held with some 100 key informants in the agricultural, food processing and socio-economic  sectors of these republics. Reviews of reports and statistics were conducted and recommendations made accordingly. The ISBN number of the composite final report is 978 - 0-9560807-0-7. If you would like to order a copy, please contact us. 

On behalf of WFP, regional Office, Cairo field missions to the Central Asian countries of Tajikistan, Uzbekistan, Kyrgyzstan and Kazakhstan were undertaken between June and August 2008. Field visits were made and detailed discussions held with 102 key informants in the agricultural, food processing and socio-economic sectors of these countries. Reviews of reports and statistics were conducted and recommendations made accordingly. 

The Executive Summary of the Central Asian Report is available BELOW in this BLOG <see Read More>.

The ISBN number of the composite final report is 978 - 0-9560807-1-4. If you would like to order a copy, please contact us.

Executive Summary

 A field Mission to 4 Central Asian Republics was undertaken on behalf of WFP Regional Office, Cairo, from June 22nd to August 3rd 2008, by a Consultant from AA International Ltd, UK. Activities included a briefing in Cairo by Regional WFP (March 2008); followed by contiguous field visits to Tajikistan, Uzbekistan, Kyrgyzstan and Kazakhstan. The purpose of the Mission was to conduct a Regional Market Survey following general Terms of Reference, which were prioritised, after the briefing in Cairo, to a final checklist of concerns to be addressed. 

 As WFP is only operational in Tajikistan, the Mission was hosted by UNICEF in the other three countries  The approach adopted included a) detailed discussions using a basic but flexible checklist with 100+ key informants comprising market traders, wholesalers, millers, importers, farmers, farmers’ association leaders, mayors, officials from Ministries of Economics, Agriculture, Social Affairs/ Protection and Labour, National Statistics Agencies, National Banks, Credit Agencies and NGOs, World Bank, USDA, UNICEF, UNDP, FAO and WFP staff; b) collection and review of reports collated by the Mission; c) downloading of official statistics from official websites, press releases and summaries of international grain boards d) acquisition of price data from market information services e) driving transects and farm/ pastoralist-livestock unit-field visits.  

The findings of the Mission identify Kazakhstan as the current, sub-Regional, resources and trade super-power with an economy that dwarfs the remaining states and with burgeoning trade partnerships that are equally strong with the Russian Federation and the West while harbouring clear intentions of expanding trade in energy and grain with China. Of the other three states, Uzbekistan and Tajikistan have sustained a 7% GDP growth for the past 3 years and Kyrgyzstan, following a year of recession and a year of 2% growth in the 2 earlier years, posted an 8% GDP growth in 2007. However, whereas Uzbekistan has had an identified fiscal surplus for the past 5 years, Tajikistan and Kyrgyzstan are in fiscal deficit, facts which restrict their opportunities for state investment and budgetary adjustments to relieve economic hardships.

 Regarding food security, three of the four countries- Uzbekistan, Kyrgyzstan and Tajikistan have high cereal import requirements. Kazakhstan exports cereals but imports fruit, vegetables and potatoes from neighbours. Considering wheat to be by far the most important staple in the sub-Region, the Mission constructed a national vulnerability index cVI, linking wheat import requirement with GDP and population. The index in which the highest score indicating the greatest vulnerability, was calculated for each Republic with the following results- Kazakhstan as a wheat exporter has a “0” score, Uzbekistan scores “65”, Kyrgyzstan “145” and Tajikistan “204” placing the latter in the most vulnerable position. Although, according to Mission calculations, Uzbekistan is by far the greatest importer of wheat and flour needing 1.2 million tonnes of wheat equivalents in 2008/9 compared to 752,000 t for Tajikistan and 515,000 t for Kyrgyzstan, Tajikistan is the most vulnerable.

At the same time, Tajikistan has virtually no strategic stocks of wheat or flour with only 10,000 t in reserve stocks compared to Kyrgyzstan at 132,000 t and Uzbekistan at 700,000 t. Given the global wheat price hikes noted in the past year and the propensity for export bans and export tax levies in what has proven to be an uncertain and administratively burdensome trading environment in the sub-Region, the Mission feels that the vulnerability of Tajikistan should be reduced and that WFP Regional Office has a role in this regard.  

The 2008 import figures are based on Mission cereal production estimates for the coming harvest, which, with a combination of various promotional packages, no significant pest losses, increased fertiliser use and irrigation patterns not dissimilar to last year are expected to be similar to 2007 in each country. The Mission estimates that increased area of winter wheat in the irrigated sector in Uzbekistan, Kyrgyzstan and Tajikistan and spring wheat in the rainfed sector in the northern oblasts in Kazakhstan makes up for any yield per unit area loss that may have occurred due to unfavourable climatic conditions during winter. Other food crops are noted to have also increased in area planted and are expected to return a slightly improved harvest compared to 2007.

All countries have experienced rapid food price increases for all commodities, except sugar. Average national price increases from January 2007 to July 2008 (18 months) and from July 2007 to July 2008 (12 months) for 1st grade wheat flour, vegetable oil, meat, sugar, diesel fuel and wage labour price calculated by the Mission from regression equations are tabulated below. In the table, the higher percentage increases over 18 months connect to low initial starting prices.   

  Mission analyses on the price data collected using T-tests and the determination of correlation coefficients show:- ·          High levels of market integration (C’s >0.95;T- nsd) of wheat flour between all countries; ·          High levels of market integration (C’s >0.90;T-nsd) for vegetable oil between all countries except Uzbekistan;·          High levels of market integration were identified for wheat flour (C’s >0.90;T-nsd ) and for vegetable oil (C’s>0.90;T-nsd) within all countries except in Tajikistan, where Khorog market prices were consistently different, presumably due to Khorog’s location on the Afghan border;·          Diesel price increases displayed partial integration between countries with price increases in Kazakhstan  highly correlated (C’s >0.9) with each of the other countries suggesting market integration; ·          Sheep meat prices in Tajikistan and Kyrgyzstan have a high (C >0.9) correlation coefficients suggesting market integration;·          No close relationships were found regarding the increases in wage labour rates between or within countries; Food price increases have prompted all governments to increase significantly pensions, allowances, supplementary benefits and salaries in a series of steps during 2007 and 2008. At the same time, the approaches to levying import and export duties and other taxes differ from country to country but are rooted in measures considered to be in the best interests of each country at the time in each case. ·          All import taxes have been removed on wheat in Kyrgyzstan and Tajikistan, but retained in Uzbekistan at 5%. ·          VAT is levied on imported wheat in Tajikistan and on non-UDM mills in Uzbekistan, but is not levied in Kyrgyzstan. ·          Import tax of 30% is levied on flour in Uzbekistan but not in Kyrgyzstan or Tajikistan. ·          VAT on flour is 10% in Kyrgyzstan, 13% in Kazakhstan but 20% in Uzbekistan and Tajikistan where debate continues regarding its removal. Although there are differences in average flour price over the 18 months studied, the differences are not statistically significant, (Uzbek quota flour, c.50% below market price is not included). This result suggests that as the fob price of flour in Kazakhstan is a constant, where VAT has been lowered i.e. Kyrgyzstan, other factors are pushing the price up.  

The non-standard nature of a loaf of bread caused the Mission to use 1^st grade wheat flour as the price comparator for the main staple. Mission calculations based on the traditional cost component ratios of a standard leavened loaf suggest that, across the 4 countries, the 50% of the cost of the loaf that is due to flour (a) may be expected to increase by 64% to 85% in the past 12 months. The remaining 50% of the cost (b) connect to labour and diesel (energy) costs with increases ranging from 14%-63% and 12%-41% respectively. With a 30:20 emphasis on labour, component (b) may be expected to rise by an average 34%. Combining (a) and (b) suggests overall cost increases of a standard loaf to be in the order of 66% (Taj), 71% (Kyr), 75% (Uzb- non quota) and 76% (Kaz) without profit taking. Mission data on the price of bread, not used for analysis because of the extreme variability of the product, suggests that doubling the price of a standard loaf over the 12 month period has been the normal response. 

Regarding market data generally, WFP-collected information is available only in Tajikistan. Food-security related market data are normally available from official sources in each Republic in a cleaned and summarised form. Original collections of monthly average prices of indicator commodities were obtained by the Mission from KAMIS (Kyrgyzstan), KazAgroMarketing (Kazakhstan) but no such sources were found in Uzbekistan, which meant that, in the absence of official data, prices were compiled from Mission market visits and extracts of articles/ journals.   

The Mission suggests that WFP Regional Office’s need for regular, accurate reports on the markets from independent sources should be translated into long term contracts for KAMIS and KazAgroMarketing with an option for them to extend activities into Uzbekistan. The former may also have a role to play in monitoring the actual movement and ease of movement (varying policies-bans, taxes; procedures- up to 60 instruments noted and delays up to 104 days; costs- up to US$ 4500 per shipment), both formal and informal, between importing and exporting countries in the cluster. 

Regarding agricultural data, Mission transects and farm visits suggest that with the exception of the large-scale, rainfed farming enterprises in Kazakhstan with some farm companies reaching 1 million ha and applying very modern management practices, production is generally underestimated as i) National Statistics data, which relies on self-completed forms for large farms are used for tax purposes and ii) the methods used by official numerators of National Statistic Committees for samples of small farms lack objective assessment and measurement; because of a lack of equipment and training and the baggage of analysts committed to agricultural yields of the Soviet era not the yields of the highly-productive, sustainable systems used by smallholders in the newly-allocated plots and backyards that presently make up the post- privatisation agricultural sector in each Republic.

Further, iii) Ad hoc rapid assessments by emergency task forces and mission teams rely on hearsay from focus group meetings or returns from post-event (harvest) surveys when dealing with the agricultural sector. No emergency assessments of agriculture/ livestock exhibit the rigour and the objective-measurement-based methodologies used by WHO/UNICEF in the Health and Education sectors.

It is very necessary to establish the recognition of the importance of accurate and objective information retrieval relating to the Agricultural and Livestock sector. These should involve, transect-based objective field observations using standard procedures through all agro- eco zones; and at sample household level- area measurement, weighing and, where necessary, repeat observations of in-field conditions with a view to establishing realistic benchmarks for all farming/ pastoralist systems. Only then will it be possible to make meaningful evaluation regarding variations from year- to- year of key indicators such as yields of crops and births and deaths of livestock. Summarising roles for WFP, the Mission suggests-

·          Extending current operations in Tajikistan into Kyrgyzstan;

·          Continuing and extending WFP market monitoring in Tajikistan to include farm gate prices and presentations for sale (crops and livestock).

·          Contracting KAMIS to provide monthly market and farm gate prices and presentations for sale in  Kyrgyzstan

·          Contracting KazAgroMarketing to provide monthly market and farm gate prices and presentations for sale in Kazakhstan.

 ·          Establishing market monitoring procedures in Uzbekistan (explore roles for KAMIS or UNICEF).

·          Establishing a means of regularly monitoring international movement/ ease of movement/ and cost of movement of food commodities between countries in the cluster using the services of KAMIS and KazAgroMarketing or similar agencies.

·          Developing and establishing objective crop and food supply assessment methodologies as standard operating procedures throughout the sub-Region;

·          Reducing national vulnerability of Tajikistan to global wheat price hikes and export restrictions by supporting the establishment of strategic reserves usingo         LPO 1 contract growing of wheat by rainfed farmers in northern Kazakhstan for specific export to Tajikistan to WFP managed strategic stocks for use in Tajikistan;

·          Stimulating local economies through support to small farmers/ communities in Tajikistan and Kyrgyzstan;

·          Enhancing food security in vulnerable urban communities by improving supply of and access to local products in urban areas. The Mission connects these  two suggestions to

o   LPO 2 in Tajikistan and Kyrgyzstan, contract growing of field crops, vegetables and fruits-connecting to the formation and support of a) smallholder producer pre-cooperatives (rural)  and b)  urban- based, vulnerable group, consumer pre-cooperatives; and c) brokering commercial activities between the two groups;

The emergence of a regional interest (Russian Federation, Ukraine and Kazakhstan and perhaps others), noted by the Mission, in establishing a forum for grain producing and exporting countries provides considerable food for thought. Such a forum might offer a platform for WFP Regional Office to discuss issues such as the ease of movement of food supplies and the continuity of supply of cereals to grain dependent states in the region. With regard to the latter, the Mission urges WFP Regional Office to urge WFP HQ to consider ways and means of legally requiring grain-exporting nations to maintain minimum flows of grain to wheat deficit neighbours, perhaps in a manner similar to water-resource release agreements between neighbouring countries in the same water basin.