Government Must Control Flour Prices

Flour and grain suppliers in Tajikistan appear to be driving up prices unnecessarily, and the government must take control of the crisis by declaring a temporary state monopoly over sales, say NBCentralAsia analysts.



The government has set up a special committee to investigate a huge rise in the price of flour, according to local media. The price of a 50 kilogram sack of flour more than doubled in the first two weeks in September from 60 to 120 somoni, or 32 US dollars.



This is the second major price jump this summer. In early August, the price of one sack of flour rose from 55 or 60 to reach 90 somoni. The government intervened by instructing flour traders not to sell 50 kg sacks for more than 70 somoni, but did not draw on state grain reserves to ease the shortage.



In neighbouring Kyrgyzstan, which is experiencing similar shortages, the government released 15,000 tons of grain to give bakers a cheaper source of flour.



NBCentralAsia analysts say traders in Tajikistan may be exploiting the shortfall to hike up their prices, so the government must impose a temporary monopoly on the industry if it is to avert a crisis.



Journalist Olimjon Kurbonov, who has worked on an investigative report on the issue, says the most recent price hike is a consequence of earlier speculative dealing by traders, who were reacting to the re-imposition of a three per cent sales tax on flour in June. “I have done an investigation which showed that a sack of flour bought for 23 or 26 somonis two or three months ago was sold by speculators at 75 to 80 somonis, and that price has now doubled,” he said.



Rustam Jabbarov, the head of strategic management at the State Tax Committee, says grain importers should be heavily fined if the government can prove they are bumping up their prices excessively.



Abdulvahid Shamolov, an analyst at the Centre for Strategic Studies, warns that Tajikistan could face a grave economic crisis if grain prices continue to rise unchecked.



He argues that the government should control all flour and grain supplies to put an end to speculative trading.



Tajikistan imports up to 60 per cent of all its flour, mainly from Kazakstan, and has been affected by rising global grain prices over the past year.



Gerard Deshay, a European Commission expert on food security in Tajikistan, says while this may have a lot to do with the price jump in Tajikistan, the authorities have reacting with “the habitual command-and-control methods”, whereas they should apply market economics to develop domestic production and incentivise farmers.



(NBCentralAsia draws comment and analysis from a broad range of political observers across the region)