"Agricultural Transformation and Food Security in Central Asia", presented by Johan Swinnen, at Regional Research Conference “Agricultural Transformation and Food Security in Central Asia”, April 8-9, 2014, Bishkek, Kyrgyzstan
Agricultural Transformation and Food Security in Central Asia
1. Agricultural Transformation and
Food Security in Central Asia
Johan Swinnen
LICOS Centre for Institutions and Economic Performance
KU Leuven, Belgium
&
Centre for Food Security and the Environment
Stanford University, USA
Regional Research Conference IFPRI &UCA
Bishkek, Kyrgyzstan – April 2014
2. A Heterogenous Region
• Size (geographic, population, economic)
• Income and poverty
• Economic reforms
• Political transitions
• Resources
• Trade in agri-food products
• …
But: Agriculture is important everywhere
And: Much room for improved data collection and
analysis
3. Political Freedom and Natural Resources
Political and civil freedom (2012)
Source : Freedom House
Oil and natural gas rents (2010)
Source: World Bank
> 6,0: Totally unfree
5,1 – 6,0
4,1 – 5,0
< 4,1: Free
> 20% of GDP
10% - 20%
5% - 10%
< 5%
4. GDP / capita
(constant 2005 USD)
0
1000
2000
3000
4000
5000
6000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GDPpercapita(Constant2005USD)
Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan
Source: IMF
8. Membership of WTO
• Kyrgyzstan (1998)
• Tajikistan (2013)
• Other members in the region: Armenia (2003),
Georgia (2000), Russia (2012) and Ukraine
(2008)
• Countries in negotations: Azerbaijan,
Kazakhstan, Uzbekistan
9. Share of Agriculture
in Employment and GDP
.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
ShareagricultureintotalGDP(%)
Kyrgy
Kazak
Taijik
Turkm
Uzbe
Source: World Bank & Asian Development Bank
0
10
20
30
40
50
60
70
80
2002 2004 2006 2008 2010 2012
Agriculturalemployment(%oftotalemployment)
Kazakhstan
Kyrgyzstan
Taijkistan
Uzbekistan
10. Water & Energy in Central Asia
Upstream and
downstream
states opposed
demand
patterns for
water and
energy
The numbers on
the map indicate
where there are
dams build are
currently under
construction.
13. Lessons from Agricultural Transition
“Agricultural output is not
(necessarily) a good indicator for
success or failure of reforms”
Rozelle & Swinnen, J. Econ. Literature, 2004
19. Cost and benefits of farm
individualization
O
K/L
Efficiency gains in
labour
governance
Losses in scale
economies and
disorganization
Net benefits of
shift to household
farms
20. Labor intensity and
the shift to individual farming
Balkan
Caucasus
Central Eur
Core CIS
China
0
20
40
60
80
100
0 0,2 0,4 0,6 0,8
Pre-reform labor intensity (person/ha)
Individualfarming5yearsafterreform
(shareoflanduse)
21. Shift to Individual Farming and
(Initial) Land/Labour Ratios
> 0.53 farm workers per ha
0.24 – 0.53
0.14 – 0.24
< 0.14 farm workers per ha
0
10
20
30
40
50
60
70
80
90
100
1991 2007
Shareofarablelandinindividualuse,%
Kyrgyzstan
Kazakhstan
Tajikistan
Uzbekistan
Source: Lerman and Sedik (2009)
22. PATTERNS OF TRANSITION
(Macours and Swinnen, 2002; Swinnen et al 2004)
TaTu
Ru Uz
Md Ky
Uk
Be
Ro
Li
Po
Lv Sn
Sk
Cz
Hu
Es
Bu
Bu
RoLi
Lv Sn
Po
Ky
TuTa
Md
Uz
Uk
Ru
Be
Sk
Cz
Hu
Es
0
10
20
30
40
50
60
70
80
90
100
-80 -60 -40 -20 0 20 40 60
Change in agr. labour
ShareoflandinIF
year 0
year 4
year 8
30. Liberalization and price adjustments in
transition countries
0
20
40
60
80
100
120
140
160
180
0 1 2 3 4 5
Years after start of the reform
PP/IPindex
Albania
Bulgaria
Czech Rep.
Hungary
Poland
Romania
Slovakia
Slovenia
Estonia
Lithuania
Belarus
Russia
Ukraine
China
Viet Nam
32. PSE in Kazakhstan by sector
-40.0
-30.0
-20.0
-10.0
.0
10.0
20.0
30.0
wheat barley milk beef poultry
%ProducerSingleCommodityTransfers
(average2010-2012)
Calculation of % Producer Single Commodity Transfers is similar to the % PSE but is commidity specific
Source: OECD
33. PSE in Kazakhstan in a
regional perspective
0
2
4
6
8
10
12
14
16
18
Kazakhstan Russia Ukraine
%PSE(average2010-2012)
Source: OECD
34. Price Distortions to Agriculture in CA
• Kazakhstan and Kyrgyzstan: “roughly neutral
policy towards agriculture”
• Turkmenistan and Uzbekistan: “governments
relied increasingly on rent extraction from
agriculture for a large share of their revenues”
– using state monopoly power over marketing
• Tajikistan: “chaos and disruptions, but no
substantial sector-specific distortions (except
for Cotton)”
Source: Pomfret (2009; in Anderson & Swinnen WB book)
37. Undernourishment
(% of population 2010)
0
5
10
15
20
25
30
35
40
Tajikistan Kyrgyzstan Uzbekistan Kazakhstan Turkmenistan
Prevalenceofundernourishment
(%ofpopulation)
Source: World Bank Development indicators
38. 0
5
10
15
20
25
30
35
40
45
Tajikistan Uzbekistan Kyrgyzstan Kazakhstan
Stunting
Source: World Bank Development indicators
0
2
4
6
8
10
12
14
16
Malnutritionprevalence,weightforage(%of
childrenunder5)
Wasting
Malnourishment indicators
(2006, % of children under 5)
39. The Price of Food
0
50
100
150
200
250
300
Food Price Index
Dairy Price Index
Cereals Price Index
2002-2004=100 Source: FAOSTAT
40. Food Prices & Food Security:
A Diverse Region….
– Tajikistan and Kyrgyzstan included in the list of
countries most suffering from the food crisis
(-- did they ? Poor also highly dependent on
agricultural prices as incomes).
– Kazakhstan has benefited as a major grain
supplier to the world market
41. Import dependency for cereals
1%
3%
11%
15%
34%
44%
54%
65%
0% 10% 20% 30% 40% 50% 60% 70%
Kazakhstan
Turkmenista
n
Uzbekistan
Kyrgyzstan
Azerbaijan
Tajikistan
Armenia
Georgia
Imports as portion of domestic availability, 2000-2008
Source:FAOstat
42. Origin of grain imports (2008)
96%
28%
46%
9%
1%
62%
51%
86%
4%
3%
3%
3%
6%
2%
0% 20% 40% 60% 80% 100%
Kyrgyzstan
Georgia
Azerbaijan
Armenia
Kazakhstan
Russia
Ukraine
Rest of the world
Source: FAO
43. Policy Reactions to the Food Crisis
• Trade measures:
– Enhanced export restrictions in the KRU
– Reduced import restrictions in the importing countries in
the region
• Price controls and other market interventions:
– Intervention purchases
– Price controls on retail prices
– Strengthening of social assistance programs
44. Exporters’ Reactions to the Food Crisis
Ukraine Russia Kazakhstan
Barley Corn Wheat Barley Corn Wheat
Milling
wheat
Flour
Oilseeds,
buckwheat
Wheat
2006 10-12
2007
1-3
4-6
7-9
10-12
2008
1-3
4-5
6-7
8
9-12
2009 1-12
2010
1-5
6-8
9
10-12
2011 1-5
6
* Light grey=Export quotas; Dark grey=Export taxes; Black=Export ban
Source: David Sedik (2012)
47. Importers’ Reactions to the Food Crisis
– Introduced export restrictions: Tajikistan, Turkmenistan
and Uzbekistan introduced export quota on grain exports
– Reduced import constraints to facilitate grain imports:
Kyrgyzstan lowered its import duties by two-thirds during
the food price spikes during 2010 and 2011
– Improved access to food for the poor and control food
price inflation (mechanism reflects economic governance)
• In Kyrgyzstan, the government increased social assistance
payments, distributed wheat reserves to the poor and increased
the monitoring of processing and retail margins for primary
products during the price spikes of 2008 and 2010
• In Uzbekistan, the government is keeping prices low by selling
more flour from state resources
• In Tajikistan, the government reduced the VAT on wheat by 50%
and implemented price controls on food in Dushanbe during the
2010-2011 price spike
Source: Swinnen and Van Herck (2012)
48. Food security in the ECA region:
food prices or econ growth ?
• Over the past years: large decline in poverty
and undernourishment due to a rapid increase
in economic growth
– Direct effects
– Indirect via employment (wages)
– Indirect via remittances
• Food & financial crisis :
– in 2009 decline in real GDP and remittances, but
rapid recovery in 2010
55. Wheat supply chain
• Wheat production increased in all countries, but
because of different reasons:
– Kazakhstan: rise of agroholdings specialized in wheat
production
– Kyrgyzstan: farmers value lower risk associated with
wheat compared to F&V as it is not perishable and the
domestic price is relatively stable
– Turkmenistan and Uzbekistan: wheat production
stimulated to increase self-sufficiency by making
relative prices more attractive for wheat growers (but
within a context where all farmers are penalized)
Source: Pomfret (2007)
56. • Change in land use since 1992
Land Availability
Source: FAOstat
59. Cotton supply chain
Kazakhstan, Kyrgyzstan and Tajikistan
• Sector more market driven, but differences between
countries (e.g. Tajikistan still substantial rent extraction by
government as the government active in at all levels)
• Interlinked contracting with gin who pay in advance for
inputs and labour, but differences between countries in the
quality of these programs (e.g. bargaining position farmers in
Tajikistan much weaker due to local monopolies and as a
result frequent complaints of inflated prices, low quality and
late payments)
• Prices were initially in local currency (gin bears the exchange
rate risk), but in recent years linked to world market price
Source: Pomfret (2007)
60. Cotton supply chain
Turkmenistan and Uzbekistan:
• State control over the cotton sector and rent
extraction to public revenues (low output
prices)
• State procurement
• Foreign exchange controls
• Subsidized inputs (fertilizer and seeds). This
stimulated smuggling to the neighbouring
countries where inputs are not subsidized
Source: Pomfret (2007)
61. Cotton supply chain
Contract motivations for cotton farmers in
Kazakhstan, 2003
Reasons for contracting
(%)
Yes No Most important
reason
Guaranteed product sales 9 91 8
Guaranteed price 4 96 3
Access to pre-financing 81 19 75
Access to quality inputs 11 89 10
Access to technical
assistance
0 100 0
Other 4 96 3
Source: Swinnen et al. (2007)
62. Cotton supply chain
Farm assistance received by cotton farmers from
the gins, Kazakhstan, 2003
89
73
65
40
20
4 4
0
10
20
30
40
50
60
70
80
90
100
Finance Water Seeds Fertilizer Fuel Agrochemistry Agroconsulting
Percentageofthefarmers(%)
Source: Swinnen et al. (2007)
65. Ease of doing business 2014
Economy
Kazakhstan
Kyrgyz
Republic
Tajikistan Uzbekistan
Ease of Doing Business Rank 50 68 143 146
Getting Credit
Rank 86 13 159 130
Strength of legal rights index (0-10) 4 10 2 2
Depth of credit information index (0-6) 5 4 4 5
Public registry coverage (% of adults) 0 0 0 0
Private bureau coverage (% of adults) 45,6 32,1 2,1 16,5
Protecting
Investors
Rank 22 22 22 138
Extent of disclosure index (0-10) 7 7 8 4
Extent of director liability index (0-10) 6 5 6 1
Ease of shareholder suits index (0-10) 7 8 6 7
Strength of investor protection index (0-10) 6,7 6,7 6,7 4
Registering
Property
Rank 18 9 78 136
Procedures (number) 4 4 6 14
Time (days) 23 6 37 77
Cost (% of property value) 0,1 0,3 4,1 0,6
Enforcing
Contracts
Rank 27 70 39 40
Time (days) 370 260 430 195
Cost (% of claim) 22 37 25,5 22,2
Procedures (number) 37 38 35 41
Source: World Bank
66. Water & irrigation infrastructure
– High level of salinization
– Regional tensions between upstream and
downstream countries
Area equipped
for irrigation
(% of cultivated
area)
Area irrigated
(% of area
equipped for
irrigation)
Salinization
(% of area
equipped for
irrigation)
Drainage
(% of area
equipped for
irrigation)
Kazakhstan 9 61 20 17
Kyrgyzstan 75 100 5 14
Tajikistan 85 91 3 47
Turkmen 100 100 68 58
Uzbekistan 89 88 51 66
Source: FAO (2012)
68. Concluding comments
• Major opportunities
• Major challenges
• Heterogenous region
• Agriculture is important throughout the
region but for different reasons
• Lots of areas where research can improve
insights and thus a better basis for policy-
making
