Agricultural Transformation and Food Security in Central Asia

69
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

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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

Transcript of Agricultural Transformation and Food Security in Central Asia

Page 1: Agricultural Transformation and Food Security in Central Asia

Agricultural Transformation and Food Security in Central Asia

Johan Swinnen

LICOS Centre for Institutions and Economic PerformanceKU Leuven, Belgium

& Centre for Food Security and the Environment

Stanford University, USA

Regional Research Conference IFPRI &UCABishkek, Kyrgyzstan – April 2014

Page 2: Agricultural Transformation and Food Security in Central Asia

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

Page 3: Agricultural Transformation and Food Security in Central Asia

Political Freedom and Natural ResourcesPolitical 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%

Page 4: Agricultural Transformation and Food Security in Central Asia

GDP / capita (constant 2005 USD)

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

1000

2000

3000

4000

5000

6000

KazakhstanKyrgyzstanTajikistanTurkmenistanUzbekistan

GD

P p

er c

apit

a (C

on

stan

t 2

00

5 U

SD)

Source: IMF

Page 5: Agricultural Transformation and Food Security in Central Asia

Estonia

Hungary

Slovakia

PolandLatv

ia

Lithuania

Bulgaria

Romania

Slovenia

Georgia

Armenia

Kyrgyzsta

n

Russia

Ukrain

e

Kazakhstan

Azerbajia

n

Tajikist

an

Uzbekistan

Belarus

Turkm

enistan

0

1

2

3

4

5

EB

RD

Ref

orm

ind

icat

or

Economic Reforms(EBRD indicator 2012)

Page 6: Agricultural Transformation and Food Security in Central Asia

Observation

Remarkably low correlation between economic growth and (past) economic reforms.

Do the details matter (or not) ?

Page 7: Agricultural Transformation and Food Security in Central Asia

Economic Reforms(EBRD indicator 2012)

Kazakhstan

Kyrgyzstan

Tajikistan

Turkmenistan

Uzbekistan

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

Page 8: Agricultural Transformation and Food Security in Central Asia

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

Page 9: Agricultural Transformation and Food Security in Central Asia

Share of Agriculture in Employment and GDP

20032005

20072009

2011.000

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

KyrgyzstanKazakhstanTaijikistanTurkmenistanUzbekistan

Shar

e ag

ricu

ltu

re in

to

tal G

DP

(%

)

Source: World Bank & Asian Development Bank

20022004

20062008

20102012

0

10

20

30

40

50

60

70

80

KazakhstanKyrgyzstanTaijkistanUzbekistan

Agr

icul

tura

l em

ploy

men

t (%

of t

otal

em

ploy

men

t)

Page 10: Agricultural Transformation and Food Security in Central Asia

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.

Page 11: Agricultural Transformation and Food Security in Central Asia

RESTRUCTURING, GROWTH AND PRODUCTIVITY

IN AGRICULTURE

Page 12: Agricultural Transformation and Food Security in Central Asia

Agricultural Production

19901993

19961999

20022005

20082011

-50

-40

-30

-20

-10

0

10

20

30

Central AsiaCentral EuropeEuropean CISCaucasus

Ch

ange

in G

AO

In

dex

(p

erce

nt)

19901994

19982002

20062010

-80

-60

-40

-20

0

20

40

60

80

100

KazakhstanKyrgyzstanTajikistanTurkmenistanUzbekistan

Ch

ange

in G

AO

In

dex

(p

erce

nt)

Page 13: Agricultural Transformation and Food Security in Central Asia

Lessons from Agricultural Transition

“Agricultural output is not (necessarily) a good indicator for

success or failure of reforms”

Rozelle & Swinnen, J. Econ. Literature, 2004

Page 14: Agricultural Transformation and Food Security in Central Asia

Productivity - TFP

19901993

19961999

20022005

20082011

-30

-20

-10

0

10

20

30

40

50

60

Central AsiaCentral EuropeEuropean CISCaucasus

Ch

ange

in T

ota

l Fac

tor

Pro

du

ctiv

ity

(19

90

=1

00

)

19901993

19961999

20022005

20082011

-50

-40

-30

-20

-10

0

10

20

30

KazakhstanKyrgyzstanTajikistan

Ch

ange

in T

ota

l Fac

tor

Pro

du

ctiv

ity

(19

90

=1

00

)

Page 15: Agricultural Transformation and Food Security in Central Asia

Land Productivity – Grain Yields

19901994

19982002

20062010

-50

-40

-30

-20

-10

0

10

20

30

40

50

Central AsiaCentral EuropeEuropean CIS

Ch

ange

in g

rain

yie

ld (

%, 1

99

0=

0)

19901994

19982002

20062010

-60

-40

-20

0

20

40

60

80

100

120

140

160

180

KazakhstanKyrgyzstanTajikistanTurkmenistanUzbekistan

Ch

ange

in g

rain

yie

ld (

%, 1

99

0=

0)

Page 16: Agricultural Transformation and Food Security in Central Asia

Land Productivity – Cotton Yields

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

-60

-40

-20

0

20

40

60

KazakhstanKyrgyzstanTajikistanTurkmenistanUzbekistan

Ch

ange

in c

ott

on

yie

ld in

dex

(1

99

0=

0)

Source: FAO

Page 17: Agricultural Transformation and Food Security in Central Asia

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

1991 20070

10

20

30

40

50

60

70

80

90

100

Kyrgyzstan

Kazakhstan

Tajikistan

Uzbekistan

Shar

e o

f ara

ble

lan

d in

ind

ivid

ual

use

, %

Source: Lerman and Sedik (2009)

Page 18: Agricultural Transformation and Food Security in Central Asia

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Slov

akia

Tajik

ista

n

Czec

h Re

p

Kaza

khst

an

Hung

ary

Bulg

aria

Mol

dova

Esto

nia

Lith

uani

a

Rom

ania

Latv

ia

Azer

baija

n

Slov

enia

Alba

nia

Shar

e of

CF

in la

nd u

sePost-reform share of

corporate farms in land use in transition countries

(after 13 years of transition)

Page 19: Agricultural Transformation and Food Security in Central Asia

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

Page 20: Agricultural Transformation and Food Security in Central Asia

Labor intensity and the shift to individual farming

Balkan

Caucasus

Central EurCore CIS

China

0

20

40

60

80

100

0 0,2 0,4 0,6 0,8

Pre-reform labor intensity (person/ha)

Ind

ivid

ua

l fa

rmin

g 5

ye

ars

afte

r re

form

(s

ha

re o

f la

nd

use

)

Page 21: Agricultural Transformation and Food Security in Central Asia

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

1991 20070

10

20

30

40

50

60

70

80

90

100

Kyrgyzstan

Kazakhstan

Tajikistan

Uzbekistan

Shar

e o

f ara

ble

lan

d in

ind

ivid

ual

use

, %

Source: Lerman and Sedik (2009)

Page 22: Agricultural Transformation and Food Security in Central Asia

PATTERNS OF TRANSITION(Macours and Swinnen, 2002; Swinnen et al 2004)

TaTuRu Uz

Md KyUk

Be

Ro

Li

Po

Lv Sn

Sk

Cz

Hu

Es

Bu

Bu

RoLi

Lv Sn

Po

Ky

TuTa

Md

Uz

Uk

Ru

BeSk

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

Sh

are

of

lan

d in

IF

year 0

year 4

year 8

Page 23: Agricultural Transformation and Food Security in Central Asia

Agric Labour Productivity

19901992

19941996

19982000

20022004

20062008

20102012

-60

-40

-20

0

20

40

60

80

100

120

140

160

Central AsiaCentral EuropeEuropean CISCaucasus

Ch

ange

in A

LP I

nd

ex (

per

cen

t)

Source: FAO, ILOstat and Asian Development Bank

Page 24: Agricultural Transformation and Food Security in Central Asia

Central Asian Pattern of TransitionAn Update

-20 -10 0 10 20 30 40 50 60 700

10

20

30

40

50

60

70

80

90

100

TAJ

UZ

KYR

TAJ

UZ

KYR

TAJUZ

KYR

1991199520002005

Change in agricultural employment (%)

Ch

ange

in in

div

idu

al fa

rmin

g (%

)

Page 25: Agricultural Transformation and Food Security in Central Asia

Agric Labour Productivity

19901992

19941996

19982000

20022004

20062008

20102012

-80

-60

-40

-20

0

20

40

60

80

KazakhstanKyrgyzstanTajikistanTurkmenistanUzbekistan

Ch

ange

in A

LP I

nd

ex (

per

cen

t)

Source: FAO, ILOstat and Asian Development Bank

Page 26: Agricultural Transformation and Food Security in Central Asia

Farm structure - Tajikistan

Land use GAO

1991 1995 2000 20070%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

HouseholdsPeasant farms (mid-sized, commercially oriented)Corporate farms

Shar

e in

land

use

(%)

1997 2002 20070%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Households Peasant farms (mid-sized, commercially oriented)

Corporate farms

Shar

e in

GAO

(%)

Source: Lerman and Sedik (2009)

Page 27: Agricultural Transformation and Food Security in Central Asia

Farm structure - Uzbekistan

Land use GAO

1997 2002 20070%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Households Peasant farms (mid-sized, commercially oriented)

Corporate farms

Shar

e in

GAO

(%)

1991 1995 2000 20070%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

HouseholdsPeasant farms (mid-sized, commercially oriented)Corporate farms

Shar

e in

land

use

(%)

Source: Lerman and Sedik (2009)

Page 28: Agricultural Transformation and Food Security in Central Asia

Farm structure – Kazakhstan (north)

Land use GAO

1991 2000 2005 20090%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

HouseholdsPeasant farms (mid-sized, commercially oriented)Corporate farms

Shar

e in

land

use

(%)

2004 2007 20100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Households Peasant farms (mid-sized, commercially oriented)

Corporate farms

Shar

e in

GAO

(%)

Source: Petrick et al. (2011)

Page 29: Agricultural Transformation and Food Security in Central Asia

PRICE LIBERALIZATION AND SUBSIDIES

Page 30: Agricultural Transformation and Food Security in Central Asia

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

/IP

in

de

x

Albania

Bulgaria

Czech Rep.

Hungary

Poland

Romania

Slovakia

Slovenia

Estonia

Lithuania

Belarus

Russia

Ukraine

China

Viet Nam

Page 31: Agricultural Transformation and Food Security in Central Asia

PSE in Kazakhstan

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

-10.000

-5.000

.000

5.000

10.000

15.000

20.000

25.000

30.000

% P

SE

Source: OECD

Page 32: Agricultural Transformation and Food Security in Central Asia

PSE in Kazakhstan by sector

wheat barley milk beef poultry

-40.000

-30.000

-20.000

-10.000

.000

10.000

20.000

30.000

% P

rod

uce

r Si

ngl

e C

om

mo

dit

y T

ran

sfer

s (a

vera

ge 2

01

0-2

01

2)

Calculation of % Producer Single Commodity Transfers is similar to the % PSE but is commidity specificSource: OECD

Page 33: Agricultural Transformation and Food Security in Central Asia

PSE in Kazakhstan in a regional perspective

Kazakhstan Russia Ukraine0

2

4

6

8

10

12

14

16

18

% P

SE (

aver

age

20

10

-20

12

)

Source: OECD

Page 34: Agricultural Transformation and Food Security in Central Asia

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)

Page 35: Agricultural Transformation and Food Security in Central Asia

Swinnen -- WB Rome Feb 05

Cotton Central AsiaAnnual Growth Rate (%) & Cotton Prices

Kazakh

Kyrgyz Uzbek Tajik

Harvested Area (Ha)

1993 – 1998 12.3 6.0 -1.7 3.71993 - 2003 5.8 7.6 -1.7 -0.1

Baled Cotton Production (1000 MTs)1993 – 1998 12.6 20.4 -2.7 0.41993 - 2003 5.4 25.9 -2.6 -3.5

Cotton Price $550 $450 $200 $16

5

Page 36: Agricultural Transformation and Food Security in Central Asia

FOOD SECURITY AND

THE RECENT FOOD CRISIS

Page 37: Agricultural Transformation and Food Security in Central Asia

Undernourishment (% of population 2010)

Tajikistan Kyrgyzstan Uzbekistan Kazakhstan Turkmenistan0

5

10

15

20

25

30

35

40

Pre

vale

nce

of u

nd

ern

ou

rish

men

t

(%

of p

op

ula

tio

n)

Source: World Bank Development indicators

Page 38: Agricultural Transformation and Food Security in Central Asia

Tajikistan Uzbekistan Kyrgyzstan Kazakhstan0

5

10

15

20

25

30

35

40

45

Stunting

Source: World Bank Development indicators Tajik

istan

Kazakhstan

Uzbekistan

Kyrgyzsta

n0

2

4

6

8

10

12

14

16

Mal

nu

trit

ion

pre

vale

nce

, wei

ght

for

age

(%

of

chil

dre

n u

nd

er 5

)

Wasting

Malnourishment indicators (2006, % of children under 5)

Page 39: Agricultural Transformation and Food Security in Central Asia

The Price of Food

1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2009 2010 20110

50

100

150

200

250

300Food Price IndexDairy Price IndexCereals Price Index

2002-2004=100 Source: FAOSTAT

Page 40: Agricultural Transformation and Food Security in Central Asia

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

Page 41: Agricultural Transformation and Food Security in Central Asia

Import dependency for cereals

Kazakhstan

Turkmenistan

Uzbekistan

Kyrgyzstan

Azerbaijan

Tajikistan

Armenia

Georgia

0% 10% 20% 30% 40% 50% 60% 70%

1%

3%

11%

15%

34%

44%

54%

65%

Imports as portion of domestic availability, 2000-2008

Source:FAOstat

Page 42: Agricultural Transformation and Food Security in Central Asia

Origin of grain imports (2008)

Kyrgyzstan

Georgia

Azerbaijan

Armenia

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

96%

28%

46%

9%

1%

62%

51%

86%

3%

6%

2%

4%

3%

3%

KazakhstanRussiaUkraineRest of the world

Source: FAO

Page 43: Agricultural Transformation and Food Security in Central Asia

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

Page 44: Agricultural Transformation and Food Security in Central Asia

Exporters’ Reactions to the Food Crisis    Ukraine Russia Kazakhstan

    Barley Corn Wheat Barley Corn WheatMilling wheat

FlourOilseeds,

buckwheatWheat

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)

Page 45: Agricultural Transformation and Food Security in Central Asia

Export bans & global food prices

Source: FAO

Page 46: Agricultural Transformation and Food Security in Central Asia

Volatility

Source: Sedik (2011)

Page 47: Agricultural Transformation and Food Security in Central Asia

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)

Page 48: Agricultural Transformation and Food Security in Central Asia

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

Page 49: Agricultural Transformation and Food Security in Central Asia

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 20132003-2013Avg

Kazakh. 9,3 9,6 9,7 10,7 8,9 3,2 1,2 7,0 7,5 5,1 5,0 7,0Kyrgyz. 7,0 7,0 -0,2 3,1 8,5 7,6 2,9 -0,5 6,0 -0,9 7,4 4,4Tajik. 10,2 10,6 6,7 7,0 7,8 7,9 3,9 6,5 7,4 7,5 6,8 7,5Turkme. 17,1 14,7 13,0 11,0 11,1 14,7 6,1 9,2 14,7 11,1 12,2 12,3Uzbek. 4,2 7,4 7,0 7,5 9,5 9,0 8,1 8,5 8,3 8,2 7,0 7,7

Page 50: Agricultural Transformation and Food Security in Central Asia

Poverty ($2/day) declined strongly (2004 vs 2009)

Kazakhstan Kyrgyz Republic Tajikistan0

10

20

30

40

50

60

20042009

Po

vert

y h

ead

cou

nt

rati

o a

t $2

a d

ay (

PP

P)

(% o

f po

pu

lati

on

)

Source: World Bank Development indicators

Page 51: Agricultural Transformation and Food Security in Central Asia

Importance remittances (2013)

Tajikistan Kyrgyzstan Armenia Georgia Ukraine Azerbaijan Belarus Russia Kazakhstan0%

10%

20%

30%

40%

50%

60%

48%

31%

21%

11%

05%03% 02% 00% 00%

Rem

itta

nce

s as

a s

har

e o

f GD

P in

20

13

(%

)

Source: World Bank

Page 52: Agricultural Transformation and Food Security in Central Asia

Importance remittances (2003-13)

Kazakhstan Kyrgyzstan Tajikistan.000

500.000

1000.000

1500.000

2000.000

2500.000

3000.000

3500.000

4000.000

4500.000

20032004200520062007200820092010201120122013

Rem

itta

nce

infl

ow

s (m

illi

on

cu

rren

t U

S$)

Source: World Bank

Page 53: Agricultural Transformation and Food Security in Central Asia

Wages increased stronger than food prices (2003-09)

Green= real wages; Red= real food prices; Blue= real retail prices

Source: Sedik (2011)

Page 54: Agricultural Transformation and Food Security in Central Asia

VALUE CHAINS, INVESTMENT AND QUALITY GROWTH

Page 55: Agricultural Transformation and Food Security in Central Asia

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)

Page 56: Agricultural Transformation and Food Security in Central Asia

•Change in land use since 1992

Land Availability

Source: FAOstat

Page 57: Agricultural Transformation and Food Security in Central Asia

Uzbekistan

Ukrain

e

Azerbaija

n

Armenia

Tajikist

an

Russia

Georgia

Turkm

enistan

Kyrgyzsta

n

Kazakhstan EU

China

India US

Argentin

a

Australia

0

1

2

3

4

5

6

Wh

eat

yiel

d in

20

12

(to

n/h

a)Grain yields in a comparative perspective

Source: FAO

Page 58: Agricultural Transformation and Food Security in Central Asia

Swinnen -- WB Rome Feb 05

Cotton Central AsiaAnnual Growth Rate (%) & Cotton Prices

Kazakh

Kyrgyz Uzbek Tajik

Harvested Area (Ha)

1993 – 1998 12.3 6.0 -1.7 3.71993 - 2003 5.8 7.6 -1.7 -0.1

Baled Cotton Production (1000 MTs)1993 – 1998 12.6 20.4 -2.7 0.41993 - 2003 5.4 25.9 -2.6 -3.5

Cotton Price $550 $450 $200 $16

5

Page 59: Agricultural Transformation and Food Security in Central Asia

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)

Page 60: Agricultural Transformation and Food Security in Central Asia

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)

Page 61: Agricultural Transformation and Food Security in Central Asia

Cotton supply chainContract 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)

Page 62: Agricultural Transformation and Food Security in Central Asia

Cotton supply chainFarm assistance received by cotton farmers from the gins, Kazakhstan, 2003

Finance Water Seeds Fertilizer Fuel Agrochemistry Agroconsulting0

10

20

30

40

50

60

70

80

90

100

89

73

65

40

20

4 4

Per

cen

tage

of t

he

farm

ers

(%)

Source: Swinnen et al. (2007)

Page 63: Agricultural Transformation and Food Security in Central Asia

Foreign direct investment

20002001

20022003

20042005

20062007

20082009

20102011

20120

1000

2000

3000

4000

5000

6000

7000

KazakhstanKyrgyzstanTajikistanTurkmenistanUzbekistan

FDI

infl

ow

sto

ck (

curr

ent

USD

per

cap

ita)

Source: UNCTAD

Page 64: Agricultural Transformation and Food Security in Central Asia

FDI inflows in agriculture and food processing in Kazakhstan

2004 2005 2006 2007 2008-40

-20

0

20

40

60

80

100

120

140

-2

1.2

37.3

-24.9

32.537.5

6151.6

63

125

AgricultureFood processing

FDI

Infl

ow

s (m

illi

on

USD

)

Source: OECD (2011)

Page 65: Agricultural Transformation and Food Security in Central Asia

Ease of doing business 2014

EconomyKazakhstan

Kyrgyz Republic

Tajikistan Uzbekistan

Ease of Doing Business Rank 50 68 143 146

Getting Credit

Rank 86 13 159 130Strength of legal rights index (0-10) 4 10 2 2

Depth of credit information index (0-6) 5 4 4 5Public registry coverage (% of adults) 0 0 0 0Private bureau coverage (% of adults) 45,6 32,1 2,1 16,5

Protecting Investors

Rank 22 22 22 138Extent of disclosure index (0-10) 7 7 8 4

Extent of director liability index (0-10) 6 5 6 1Ease 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 136Procedures (number) 4 4 6 14

Time (days) 23 6 37 77Cost (% of property value) 0,1 0,3 4,1 0,6

Enforcing Contracts

Rank 27 70 39 40Time (days) 370 260 430 195

Cost (% of claim) 22 37 25,5 22,2Procedures (number) 37 38 35 41

Source: World Bank

Page 66: Agricultural Transformation and Food Security in Central Asia

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)

Page 67: Agricultural Transformation and Food Security in Central Asia

Infrastructure and Institutional Constraints

• Are bottleneck for ‒ Investments‒ Transport‒ Market development‒ Price transmission‒ Technology transfer‒ Productivity growth‒ …

Page 68: Agricultural Transformation and Food Security in Central Asia

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

Page 69: Agricultural Transformation and Food Security in Central Asia