Wheat flour prices rise further as currency depreciates

• The average price for wheat flour is now 27 percent higher than in March 2014 and 36 percent above the five-year average. Factors contributing to the increased prices include the depreciation of the somoni (TJS) against the dollar (USD) and Kazakhstan tenge (KZT), reduced 2014 wheat harvests as compared to the previous year, and high prices for imported wheat flour from Kazakhstan.

• Remittances from migrant workers in the Russian Federation are expected to decline further due to weaker labor demand and reduced value of the Russian Ruble (RUB).

• Net food purchasing households and those dependent on income from remittances for food access are likely to be Stressed (IPC Phase 2) until the wheat harvest in June.

The spring wet season is progressing normally, and the total accumulated precipitation since October 2014 is higher than last wet season. Cumulative precipitation is near-average throughout much of Tajikistan, with the exception of Gorno-Badakhshan Autonomous Oblast (GBAO), where it is still well below-average. Extensive precipitation from 25 mm to 75 mm occurred during the last 30 days across much of the country, motivating farmers to bring more land under cultivation (Figure 2). Whereas rainfall and snowfall is beneficial to crops and planting, it also poses the risk of flooding, landslides, and avalanches as the rainy season continues and the weather becomes warmer.

Precipitation during the winter and spring facilitated the normal planting of crops. According to the Ministry of Agriculture, nearly 187,500 hectares (ha) of land was cultivated during autumn planting, nine percent more than the official target but 11,000 ha less than during the same time last year. For the ongoing spring planting, 65 percent of the 106,000 ha official target has been planted, which is 19,000 ha more than at the same time last year. Snow water equivalent in most river basins is average to above-average, and the availability of irrigation water is expected to be sufficient for crops during the spring and summer. Similarly, seasonal forecasts indicate above-average precipitation for May to July 2015 with near-average temperatures. Both of these factors are expected to contribute to the overall enhancement of 2015 agricultural production. Reports from the Ministry of Agriculture also confirm that nearly 9,500 ha of crops were attacked by locusts, of which nearly 2,800 ha were treated. Further locust attacks could cause crop losses in the absence of timely control measures.

Prices for wheat flour, the main staple in Tajikistan, have increased further in March 2015 in all major markets. The average price is now 27 percent higher than in March 2014 and 36 percent above the five-year average. The greatest increase was observed in Sughd Oblast, where the price for wheat flour is 41 percent above the five-year average. Factors contributing to the increased prices include 2014 domestic wheat production that was eight percent below 2013 levels, high prices for imported wheat flour from Kazakhstan, and the depreciation of the Tajikistani Somoni (TJS) against international currencies, including the U.S. dollar (USD) and Kazakhstan Tenge (KZT). The somoni (TJS) has depreciated nearly 12 percent against the tenge (KZT) and the dollar (USD) since the beginning of March, and by 24 percent against the dollar (USD) and 22 percent against the tenge (KZT) since April 2014 (Figure 3).

Export prices for wheat grain from Kazakhstan, the main source of wheat grain and wheat flour imports for Tajikistan, have decreased by three percent between March and April 2015. Petroleum prices within Tajikistan have also decreased recently. However, the depreciation of the somoni (TJS) against the tenge (KZT) and dollar (USD) has outweighed the influence of these factors on domestic prices. It is anticipated that wheat flour prices may increase further or remain at current high levels until the next harvest arrives in June. Poor households who are net food buyers are Stressed (IPC Phase 2) from now until June 2015, as they may have difficulty in covering the cost of food and may have to reduce expenditure on non-food essentials until the next harvest. Prices for potatoes, another staple food, continued their seasonal decline after the beginning of the harvest in regional exporting countries. Potato prices were nearly similar to 2013 levels, but still 16 to 32 percent above the average in major markets.

Households who rely on remittances as a primary source of income and food will suffer from the decreased level of work opportunities and the depreciation of the national currency, which will directly affect their purchasing power. It is anticipated that labor migration abroad, particularly to the Russian Federation, will continue to decline due to weak economic prospects in the Russian Federation. These households will also remain Stressed (IPC Phase 2) from April to June 2015 if domestic opportunities do not compensate the reduced level of work availability outside of the country.