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Agricultural Transformation and
Food Security in Central Asia
Johan Swinnen
LICOS Centre for Institutions and Economic Per...
A Heterogenous Region
• Size (geographic, population, economic)
• Income and poverty
• Economic reforms
• Political transi...
Political Freedom and Natural Resources
Political and civil freedom (2012)
Source : Freedom House
Oil and natural gas rent...
GDP / capita
(constant 2005 USD)
0
1000
2000
3000
4000
5000
6000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GDPperc...
0
1
2
3
4
5
EBRDReformindicator
Economic Reforms
(EBRD indicator 2012)
Observation
Remarkably low correlation between
economic growth and (past) economic
reforms.
Do the details matter (or not)...
Economic Reforms
(EBRD indicator 2012)
Kazak
hstan
Kyrgy
zstan
Tajikist
an
Turkme
nistan
Uzbekista
n
Poland Russia
Large s...
Membership of WTO
• Kyrgyzstan (1998)
• Tajikistan (2013)
• Other members in the region: Armenia (2003),
Georgia (2000), R...
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
20...
Water & Energy in Central Asia
Upstream and
downstream
states opposed
demand
patterns for
water and
energy
The numbers on
...
RESTRUCTURING,
GROWTH AND PRODUCTIVITY
IN AGRICULTURE
Agricultural Production
-50
-40
-30
-20
-10
0
10
20
30
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Changei...
Lessons from Agricultural Transition
“Agricultural output is not
(necessarily) a good indicator for
success or failure of ...
Productivity - TFP
-30
-20
-10
0
10
20
30
40
50
60
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
ChangeinTotalFac...
Land Productivity – Grain Yields
-50
-40
-30
-20
-10
0
10
20
30
40
50
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
20...
Land Productivity – Cotton Yields
-60
-40
-20
0
20
40
60
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Chang...
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 far...
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Slovakia
Tajikistan
CzechRep
Kazakhstan
Hungary
Bulgaria
Moldova
Es...
Cost and benefits of farm
individualization
O
K/L
Efficiency gains in
labour
governance
Losses in scale
economies and
diso...
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...
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 far...
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
B...
Agric Labour Productivity
-60
-40
-20
0
20
40
60
80
100
120
140
160
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010...
Central Asian Pattern of Transition
An Update
TAJUZ
KYR
TAJ
UZ
KYR
TAJ
UZ
KYR
0
10
20
30
40
50
60
70
80
90
100
-20 -10 0 1...
Agric Labour Productivity
-80
-60
-40
-20
0
20
40
60
80
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Change...
Farm structure - Tajikistan
Land use GAO
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1991 1995 2000 2007
Shareinlanduse(%)...
Farm structure - Uzbekistan
Land use GAO
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1997 2002 2007
ShareinGAO(%)
Househol...
Farm structure – Kazakhstan (north)
Land use GAO
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1991 2000 2005 2009
Shareinla...
PRICE LIBERALIZATION
AND SUBSIDIES
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 sta...
PSE in Kazakhstan
-10.0
-5.0
.0
5.0
10.0
15.0
20.0
25.0
30.0
1995 1997 1999 2001 2003 2005 2007 2009 2011
%PSE
Source: OECD
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
%ProducerSingleCommod...
PSE in Kazakhstan in a
regional perspective
0
2
4
6
8
10
12
14
16
18
Kazakhstan Russia Ukraine
%PSE(average2010-2012)
Sour...
Price Distortions to Agriculture in CA
• Kazakhstan and Kyrgyzstan: “roughly neutral
policy towards agriculture”
• Turkmen...
Swinnen -- WB Rome Feb 05
Cotton Central Asia
Annual Growth Rate (%) & Cotton Prices
Kazakh Kyrgyz Uzbek Tajik
Harvested A...
FOOD SECURITY
AND
THE RECENT FOOD CRISIS
Undernourishment
(% of population 2010)
0
5
10
15
20
25
30
35
40
Tajikistan Kyrgyzstan Uzbekistan Kazakhstan Turkmenistan
...
0
5
10
15
20
25
30
35
40
45
Tajikistan Uzbekistan Kyrgyzstan Kazakhstan
Stunting
Source: World Bank Development indicators...
The Price of Food
0
50
100
150
200
250
300
Food Price Index
Dairy Price Index
Cereals Price Index
2002-2004=100 Source: FA...
Food Prices & Food Security:
A Diverse Region….
– Tajikistan and Kyrgyzstan included in the list of
countries most sufferi...
Import dependency for cereals
1%
3%
11%
15%
34%
44%
54%
65%
0% 10% 20% 30% 40% 50% 60% 70%
Kazakhstan
Turkmenista
n
Uzbeki...
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
...
Policy Reactions to the Food Crisis
• Trade measures:
– Enhanced export restrictions in the KRU
– Reduced import restricti...
Exporters’ Reactions to the Food Crisis
Ukraine Russia Kazakhstan
Barley Corn Wheat Barley Corn Wheat
Milling
wheat
Flour
...
Export bans & global food prices
Source: FAO
Volatility
Source: Sedik (2011)
Importers’ Reactions to the Food Crisis
– Introduced export restrictions: Tajikistan, Turkmenistan
and Uzbekistan introduc...
Food security in the ECA region:
food prices or econ growth ?
• Over the past years: large decline in poverty
and undernou...
Strong Economic Growth
in Past Decade
Despite Food & Financial Crises
Real GDP growth (%; 2003-2013)
2003 2004 2005 2006 2...
Poverty ($2/day) declined strongly
(2004 vs 2009)
0
10
20
30
40
50
60
Kazakhstan Kyrgyz Republic Tajikistan
Povertyheadcou...
Importance remittances (2013)
48%
31%
21%
11%
05%
03% 02%
00% 00%
0%
10%
20%
30%
40%
50%
60%
Tajikistan Kyrgyzstan Armenia...
Importance remittances (2003-13)
.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
3500.0
4000.0
4500.0
Kazakhstan Kyrgyzstan Ta...
Wages increased stronger
than food prices (2003-09)
Green= real wages; Red= real food prices; Blue= real retail prices
Sou...
VALUE CHAINS, INVESTMENT AND
QUALITY GROWTH
Wheat supply chain
• Wheat production increased in all countries, but
because of different reasons:
– Kazakhstan: rise of ...
• Change in land use since 1992
Land Availability
Source: FAOstat
0
1
2
3
4
5
6
Wheatyieldin2012(ton/ha)
Grain yields in a comparative
perspective
Source: FAO
Swinnen -- WB Rome Feb 05
Cotton Central Asia
Annual Growth Rate (%) & Cotton Prices
Kazakh Kyrgyz Uzbek Tajik
Harvested A...
Cotton supply chain
Kazakhstan, Kyrgyzstan and Tajikistan
• Sector more market driven, but differences between
countries (...
Cotton supply chain
Turkmenistan and Uzbekistan:
• State control over the cotton sector and rent
extraction to public reve...
Cotton supply chain
Contract motivations for cotton farmers in
Kazakhstan, 2003
Reasons for contracting
(%)
Yes No Most im...
Cotton supply chain
Farm assistance received by cotton farmers from
the gins, Kazakhstan, 2003
89
73
65
40
20
4 4
0
10
20
...
Foreign direct investment
0
1000
2000
3000
4000
5000
6000
7000
2000 2002 2004 2006 2008 2010 2012
FDIinflowstock(currentUS...
FDI inflows in agriculture and food
processing in Kazakhstan
-2
1.2
37.3
-24.9
32.5
37.5
61
51.6
63
125
-40
-20
0
20
40
60...
Ease of doing business 2014
Economy
Kazakhstan
Kyrgyz
Republic
Tajikistan Uzbekistan
Ease of Doing Business Rank 50 68 143...
Water & irrigation infrastructure
– High level of salinization
– Regional tensions between upstream and
downstream countri...
Infrastructure and
Institutional Constraints
• Are bottleneck for
‒ Investments
‒ Transport
‒ Market development
‒ Price t...
Concluding comments
• Major opportunities
• Major challenges
• Heterogenous region
• Agriculture is important throughout t...
Agricultural Transformation and Food Security in Central Asia
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Agricultural Transformation and Food Security in Central Asia

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"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

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Transcript of "Agricultural Transformation and Food Security in Central Asia"

  1. 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. 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. 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. 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
  5. 5. 0 1 2 3 4 5 EBRDReformindicator Economic Reforms (EBRD indicator 2012)
  6. 6. Observation Remarkably low correlation between economic growth and (past) economic reforms. Do the details matter (or not) ?
  7. 7. Economic Reforms (EBRD indicator 2012) Kazak hstan Kyrgy zstan Tajikist an Turkme nistan Uzbekista n Poland Russia Large scale privatisation 3,0 3,7 2,3 1,0 2,7 3,7 3,0 Small scale privatisation 4,0 4,0 4,0 2,3 3,3 4,3 4,0 Governance &enterprise restruct. 2,0 2,0 2,0 1,0 1,7 3,7 2,3 Price liberal. 3,7 4,3 4,0 3,0 2,7 4,3 4,0 Trade & Forex system 3,7 4,3 3,3 2,3 1,7 4,3 4,0 Competition policy 2,0 2,0 1,7 1,0 1,7 3,7 2,7 Overall 3,1 3,4 2,9 1,8 2,3 4,0 3,3
  8. 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. 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. 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.
  11. 11. RESTRUCTURING, GROWTH AND PRODUCTIVITY IN AGRICULTURE
  12. 12. Agricultural Production -50 -40 -30 -20 -10 0 10 20 30 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 ChangeinGAOIndex(percent) Central Asia Central Europe European CIS Caucasus -80 -60 -40 -20 0 20 40 60 80 100 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 ChangeinGAOIndex(percent) Kazakhst Kyrgyzst Tajikistan Turkmen Uzbekist
  13. 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
  14. 14. Productivity - TFP -30 -20 -10 0 10 20 30 40 50 60 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 ChangeinTotalFactorProductivity(1990=100) Central Asia Central Europe European CIS Caucasus -50 -40 -30 -20 -10 0 10 20 30 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 ChangeinTotalFactorProductivity(1990=100) Kazakhs Kyrgyzst Tajikista
  15. 15. Land Productivity – Grain Yields -50 -40 -30 -20 -10 0 10 20 30 40 50 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Changeingrainyield(%,1990=0) Central Asia Central Europe European CIS -60 -40 -20 0 20 40 60 80 100 120 140 160 180 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Changeingrainyield(%,1990=0) Kazakhst Kyrgyzst Tajikistan Turkmen Uzbekist
  16. 16. Land Productivity – Cotton Yields -60 -40 -20 0 20 40 60 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Changeincottonyieldindex(1990=0) Kazakhstan Kyrgyzstan Tajikistan Turkmenistan Uzbekistan Source: FAO
  17. 17. 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)
  18. 18. 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 Slovakia Tajikistan CzechRep Kazakhstan Hungary Bulgaria Moldova Estonia Lithuania Romania Latvia Azerbaijan Slovenia Albania ShareofCFinlanduse Post-reform share of corporate farms in land use in transition countries (after 13 years of transition)
  19. 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. 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. 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. 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
  23. 23. Agric Labour Productivity -60 -40 -20 0 20 40 60 80 100 120 140 160 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 ChangeinALPIndex(percent) Central Asia Central Europe European CIS Caucasus Source: FAO, ILOstat and Asian Development Bank
  24. 24. Central Asian Pattern of Transition An Update TAJUZ KYR TAJ UZ KYR TAJ UZ KYR 0 10 20 30 40 50 60 70 80 90 100 -20 -10 0 10 20 30 40 50 60 70 Changeinindividualfarming(%) Change in agricultural employment (%) 1991 1995 2000 2005
  25. 25. Agric Labour Productivity -80 -60 -40 -20 0 20 40 60 80 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 ChangeinALPIndex(percent) Kazakhstan Kyrgyzstan Tajikistan Turkmenistan Uzbekistan Source: FAO, ILOstat and Asian Development Bank
  26. 26. Farm structure - Tajikistan Land use GAO 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1991 1995 2000 2007 Shareinlanduse(%) Households Peasant farms (mid-sized, commercially oriented) Corporate farms 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1997 2002 2007 ShareinGAO(%) Households Peasant farms (mid-sized, commercially oriented) Corporate farms Source: Lerman and Sedik (2009)
  27. 27. Farm structure - Uzbekistan Land use GAO 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1997 2002 2007 ShareinGAO(%) Households Peasant farms (mid-sized, commercially oriented) Corporate farms 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1991 1995 2000 2007 Shareinlanduse(%) Households Peasant farms (mid-sized, commercially oriented) Corporate farms Source: Lerman and Sedik (2009)
  28. 28. Farm structure – Kazakhstan (north) Land use GAO 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1991 2000 2005 2009 Shareinlanduse(%) Households Peasant farms (mid-sized, commercially oriented) Corporate farms 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2004 2007 2010 ShareinGAO(%) Households Peasant farms (mid-sized, commercially oriented) Corporate farms Source: Petrick et al. (2011)
  29. 29. PRICE LIBERALIZATION AND SUBSIDIES
  30. 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
  31. 31. PSE in Kazakhstan -10.0 -5.0 .0 5.0 10.0 15.0 20.0 25.0 30.0 1995 1997 1999 2001 2003 2005 2007 2009 2011 %PSE Source: OECD
  32. 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. 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. 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)
  35. 35. Swinnen -- WB Rome Feb 05 Cotton Central Asia Annual Growth Rate (%) & Cotton Prices Kazakh Kyrgyz Uzbek Tajik Harvested Area (Ha) 1993 – 1998 12.3 6.0 -1.7 3.7 1993 - 2003 5.8 7.6 -1.7 -0.1 Baled Cotton Production (1000 MTs) 1993 – 1998 12.6 20.4 -2.7 0.4 1993 - 2003 5.4 25.9 -2.6 -3.5 Cotton Price $550 $450 $200 $165
  36. 36. FOOD SECURITY AND THE RECENT FOOD CRISIS
  37. 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. 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. 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. 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. 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. 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. 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. 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)
  45. 45. Export bans & global food prices Source: FAO
  46. 46. Volatility Source: Sedik (2011)
  47. 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. 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
  49. 49. Strong Economic Growth in Past Decade Despite Food & Financial Crises Real GDP growth (%; 2003-2013) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2003- 2013 Avg Kazakh. 9,3 9,6 9,7 10,7 8,9 3,2 1,2 7,0 7,5 5,1 5,0 7,0 Kyrgyz. 7,0 7,0 -0,2 3,1 8,5 7,6 2,9 -0,5 6,0 -0,9 7,4 4,4 Tajik. 10,2 10,6 6,7 7,0 7,8 7,9 3,9 6,5 7,4 7,5 6,8 7,5 Turkme. 17,1 14,7 13,0 11,0 11,1 14,7 6,1 9,2 14,7 11,1 12,2 12,3 Uzbek. 4,2 7,4 7,0 7,5 9,5 9,0 8,1 8,5 8,3 8,2 7,0 7,7
  50. 50. Poverty ($2/day) declined strongly (2004 vs 2009) 0 10 20 30 40 50 60 Kazakhstan Kyrgyz Republic Tajikistan Povertyheadcountratioat$2aday(PPP) (%ofpopulation) 2004 2009 Source: World Bank Development indicators
  51. 51. Importance remittances (2013) 48% 31% 21% 11% 05% 03% 02% 00% 00% 0% 10% 20% 30% 40% 50% 60% Tajikistan Kyrgyzstan Armenia Georgia Ukraine Azerbaijan Belarus Russia Kazakhstan RemittancesasashareofGDPin2013(%) Source: World Bank
  52. 52. Importance remittances (2003-13) .0 500.0 1000.0 1500.0 2000.0 2500.0 3000.0 3500.0 4000.0 4500.0 Kazakhstan Kyrgyzstan Tajikistan Remittanceinflows(millioncurrentUS$) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: World Bank
  53. 53. Wages increased stronger than food prices (2003-09) Green= real wages; Red= real food prices; Blue= real retail prices Source: Sedik (2011)
  54. 54. VALUE CHAINS, INVESTMENT AND QUALITY GROWTH
  55. 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. 56. • Change in land use since 1992 Land Availability Source: FAOstat
  57. 57. 0 1 2 3 4 5 6 Wheatyieldin2012(ton/ha) Grain yields in a comparative perspective Source: FAO
  58. 58. Swinnen -- WB Rome Feb 05 Cotton Central Asia Annual Growth Rate (%) & Cotton Prices Kazakh Kyrgyz Uzbek Tajik Harvested Area (Ha) 1993 – 1998 12.3 6.0 -1.7 3.7 1993 - 2003 5.8 7.6 -1.7 -0.1 Baled Cotton Production (1000 MTs) 1993 – 1998 12.6 20.4 -2.7 0.4 1993 - 2003 5.4 25.9 -2.6 -3.5 Cotton Price $550 $450 $200 $165
  59. 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. 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. 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. 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)
  63. 63. Foreign direct investment 0 1000 2000 3000 4000 5000 6000 7000 2000 2002 2004 2006 2008 2010 2012 FDIinflowstock(currentUSDpercapita) Kazakhstan Kyrgyzstan Tajikistan Turkmenistan Uzbekistan Source: UNCTAD
  64. 64. FDI inflows in agriculture and food processing in Kazakhstan -2 1.2 37.3 -24.9 32.5 37.5 61 51.6 63 125 -40 -20 0 20 40 60 80 100 120 140 2004 2005 2006 2007 2008 FDIInflows(millionUSD) Agriculture Food processing Source: OECD (2011)
  65. 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. 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)
  67. 67. Infrastructure and Institutional Constraints • Are bottleneck for ‒ Investments ‒ Transport ‒ Market development ‒ Price transmission ‒ Technology transfer ‒ Productivity growth ‒ …
  68. 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
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