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Price Monitoring for Food Security in the Kyrgyz Republic, Issue # 59 | 09 September 2022

Страны
Кыргызстан
Источники
WFP
Дата публикации

Situation Update

The current Global Food Crisis is heightening inequalities and vulnerabilities in a world still confronting the effects of the COVID-19 pandemic. The key factors contributing to increased food insecurity are decreased access to nutritious foods, reduced purchasing power and increased cost of living. While there are some positive macro-economic trends, the situation is volatile and the effects of this remain to be born by the most vulnerable. Domestic food price inflation also remains high in the Kyrgyz Republic. In August 2022, the Consumer Price Index (CPI) increased by 20.3 percent for staple foods, as compared to August 2021. The CPI for fuel and lubricants is estimated to have increased by 18.8 percent, leading to an increase of transportation costs, which in turn has impacted all other prices. Rising food and fuel prices, combined with inflation are eroding the purchasing power of the most vulnerable to access a nutritious diet.

High inflation and growing poverty levels as a result of food crisis may push more households to resorting to food and asset depletion coping strategies, especially in southern provinces, where livelihoods are especially fragile due to high dependence on remittances from Russia and border conflicts.

Notwithstanding the challenges to recover from the effects of the COVID-19 pandemic, in January – August 2022, the Gross Domestic Product (GDP) of the Kyrgyz Republic increased by 8 percent, compared to the previous year, adding a net 506 billion Kyrgyz Soms (USD 6.1 billion) to the economy. This increase was predominantly driven by the improvements to the service (+3.9 percent) and industry (+12.9 percent) sectors. On the other hand, in August 2022, annual inflation increased reaching 15.6 percent (NBKR) compared to August 2021, among the highest in the region.
Both the Russian Federation and Kazakhstan have announced export bans on wheat and sugar, with quotas provided to the EAEU states, including the Kyrgyz Republic. The restrictions introduced by the Russian Federation before June 30 has already expired for wheat; however, restrictions for sugar remained valid until 31 August 2022. Whereas restrictions introduced by Kazakhstan remain valid until 30 September 2022; however, this may be revised as the situation develops. In 2022 a record wheat harvest is expected in the Russian Federation. Despite the increase in production and seasonal peak of sales usually taking place in July-August, the Russian Federation continues to export wheat in the same amount recorded in 2021. In addition, export wheat prices have fallen to January 2022 levels. The Kyrgyz Republic has a high dependency on imports: 30 percent for wheat, 84 percent for vegetable oil and 37 percent for sugar. Out of the imported wheat, vegetable oil and sugar; 95 percent, 81 percent and 99 percent respectively came from the Russian Federation. In September 2022, the Ministry of Agriculture of Kyrgyz Republic introduced a draft resolution "On the introduction of a temporary ban on the export of certain types of agricultural products from the Kyrgyz Republic" for six months. The document proposes to introduce a temporary ban on the export of wheat and meslin outside the customs territory of the Eurasian Economic Union. According to the Ministry of Agriculture, Kyrgyz Republic's need for grain products for 2022 is estimated at 769,100 tons. Approximately 75-80 percent of the volume is expected to be covered by domestic production. To stabilise the market and to support local sugar producers, the Government has also introduced Zero VAT for the import of sugar, raw sugar and vegetable oil.
Fertilizer prices have been rising sharply worldwide and rising input costs could impact next season’s harvest, leading to elevated food prices in the longer run. The Russian Federation is one of the world’s most important exporters of the three major groups of fertilizers – nitrogen, phosphorus and potassium, however, its exports are affected by sanctions. Globally, fertilizer prices have increased by 300 percent compared to two years ago and by around 15 percent since January 2022, mainly because of surging input costs, supply disruptions, and export restrictions. This is likely to remain until the end of 2022 and have major impacts on agriculture and food production — and thus food security — around the world and for the Kyrgyz Republic, a country heavily reliant on imported fertilizers as farmers struggle to pay for a key input and face potential supply chain disruptions. Removing the obstacles in relation to the export of Russian fertilizers remains critical. Current restrictions affect 20 percent of global trade and threatens more than 50 percent of fertilizer supply for 24 countries.

Last year, abnormally high temperatures and lack of irrigation water led to significant lower yields across multiple key crops in the country: wheat (-42 percent), barley (-46 percent), oil crops (-25.4 percent) and sugar beet (-18 percent). In 2022, planting areas increased by +7.1 percent for barley, +1.9 percent for vegetables, +12.5 percent for cotton, and +4.5 percent for oil crops (sunflower, cotton and safflower). Along with this, there was a decrease in planting areas of wheat by -6.7 percent, leguminous crops by -5.9 percent, sugar beets by -11.3 percent, rice by -6.2 percent, as well as potatoes by -0.9 percent. This year, favourable weather conditions observed in spring led to an increase in the pace of spring field works; and during June - July months to increased yields. As of 23 August 2022 compared to the same period last year, the production of several crops has increased significantly: for barley by 159 percent, wheat by 89 percent, fruit crops by 7 percent and oil crops by 10 percent. However, these increases are compared to the unfavourable 2021 harvest levels, and thus point at significant improvements and a recovery of the sector after abnormally dry conditions in the previous year.