Institute for War and Peace Reporting | Giving Voice, Driving Change

Kyrgyzstan Unveils Food Security Plan

Government’s plan to build up food reserves may prevent a repeat of last year’s price hikes, but sceptics say the country needs to grow more grain.
By IWPR Central Asia
Fearing a repeat of last year’s dramatic food price hikes, which caused a crisis for the country’s poor, the Kyrgyz authorities have announced plans to introduce a new system for stocking up on food reserves, especially grain.

Last autumn, the price of bread – the basic foodstuff for much of the nation - rose sharply, leaving many families locked in a battle for survival. The increases were largely beyond the government’s control, as they were triggered in large part by worldwide hikes in the price of grain. But speculative stockpiling and trading made the problem worse in Kyrgyzstan.

The country is sensitive to fluctuations in cereal prices on world markets. There is little arable land in this mountainous country, and much of it is given over to raising livestock rather than growing crops.

To feed a population of just over five million, Kyrgyzstan has to import more than 200,000 tons of grain and about 30,000 tons of flour every year. Most of it comes from Kazakstan, the breadbasket of Central Asia.

Last year, however, from last August onwards, prices rose by 100 per cent from an average of 140 US dollars per ton of grain to a high of 300 dollars.

This external shock and the resulting shortage of affordable flour were compounded by speculators who bought up stocks in anticipation of further rises. Even when the government released 15,000 tons of flour from national reserves onto the market in August, this failed to stop bread prices from doubling in shops.

Daniyar Usenov, the mayor of the capital Bishkek, accused distributors and vendors of capitalising on the instability in order to bump up prices and reap a 300 per cent profit instead of the normal 20 to 30 per cent.

This week, Arstanbek Nogoev, the agriculture minister in Kyrgyzstan’s new cabinet, unveiled a new policy to substantially increase grain reserves, which is due to start being implemented in February.

Nogoev said that by increasing national grain reserves to 100,000 or even 150,000 tons, the government will be in a position to intervene more effectively in the market in future.

At the same time, the government wants to set up new “agricultural unions” which will bring together small-scale producers, who will then be in better a position to coordinate and maximise production and set prices more effectively.

“When the president appointed me to this position, he said my main task would be to increase output from agriculture, one of the most important economic sectors, in a very limited timeframe,” Nogoev told IWPR. “So now we have to abandon the old strategies and come up with completely new ones.”

After the previous cabinet was blamed for failing to intervene effectively to restrain price rises, there were political casualties. President Kurmanbek Bakiev sacked the Minister for Economic Development and Trade, Sabyrbek Moldokulov, among others.

Nogoev told IWPR that the idea behind the farmer’s unions was to unite all small agricultural producers and help ensure that all their crops were sold at an pre-arranged time.

Experts have been warning for years that the country’s agricultural sector is in trouble, making the state more vulnerable to external price shocks. The area of land under grain has shrunk sharply in the last five years alone, and the scale of imports keeps on increasing.

Kyrgyzstan now has only about 1.5 million hectares of arable land, less than seven per cent of its territory, and only 360,000 hectares is used for grain production.

Abdymomun Joldoshev, who heads the Osh office of Kyrgyzstan’s International Business Council, says the government needs to get to grips with the farming crisis and stimulate higher production.

“The state has to motivate farmers and grain producers especially, and provide them with good quality grains,” Joldoshev said.

He also said that effectiveness of the proposed food producers’ unions will depend on their status in the wider scheme of things.

“Everything will depend on the legal status of such holdings. In our experience, farmers associations have not proved very popular, at least in southern Kyrgyzstan,” Joldoshev added.

However, Taalaibek Koichumanov, representative of the State Investment Committee, says the new associations might act as a counterweight to the virtual monopoly held by a handful of purchasers on the flour market.

But Koichumanov warned that the plan to build up government-held grain reserves would not halt bread price rises; at most, they could soften the blow to consumers dealt by sudden price hikes. “Reserves are not a panacea,” he said.

Sergey Slepchenko, head of the International Institute for Strategic Studies in Bishkek, agreed. Reserves might help counter speculative trading and thus prevent gross overcharging for bread, but the effect would be limited if world grain prices were to rise sharply.

“Small countries like Kyrgyzstan are not capable of producing all their basic commodities in sufficient quantities, which is why they can only hope to come up with successful food security strategies,” he said.

Jyldyz Mamytova and Gulnara Mambetalieva are IWPR contributors in Bishkek.

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