Decreased potato prices may affect producers in Rasht Valley

• The wheat harvest has concluded in most areas of Tajikistan, but is ongoing in high-elevation areas. Production estimates indicate a nine percent increase as compared to the same time last year. 

• Potato prices have been decreasing since the beginning of 2015, and are currently 10 percent below average. The harvest has not yet concluded in all areas, and it is expected that prices may decline further after the harvest is completed in major producing areas such as Rasht Valley, adversely affecting producers who rely on potato sales as a primary income source.

• Decreasing remittances and further weakening of the Tajikistani somoni (TJS) against international currencies will lead to a deterioration in purchasing power for households dependent on remittances. These households are expected to be Stressed (IPC Phase 2) from now until at least December 2015. 

Grain crops, primarily wheat and barley, have been harvested in most districts of Tajikistan, but are still developing in high-elevation areas. According to the Ministry of Agriculture, as of August 7th nearly 708,000 metric tons (MT) of grain have been harvested, nine percent above the 2014 level, which was an average year in terms of agricultural production. The seasonal increase in availability of grains including wheat, along with vegetables and fruits during the summer, has improved the dietary diversity of rural farming households and landless agricultural laborers. At this point in the season, most rural households who are engaged in agricultural and livestock activities are less dependent on market purchase, relying more on own production. Harvests for potato, the second staple food after wheat, have also started in many areas.

Although wheat flour prices have been stable since April 2015, they are at relatively high levels, despite a 20 percent decrease in the price of fuel as compared to last year. The current wheat flour price is 22 percent above last year and 36 percent above the five-year average (Figure). The price increase is largely driven by the weakening of the Tajikistani somoni (TJS) against international currencies, including the U.S. dollar (USD) and Kazakhstan tenge (KZT). In addition, the high wheat flour price also reflects high wheat grain and wheat flour export prices from Kazakhstan, where the harvest has not yet started and prices are 10 percent above the average.

Rain and high temperatures during July and early August caused flooding and mudslides that displaced households and affected hundreds of individuals. Following the natural disasters, food and non-food assistance was provided by international donors for affected areas and populations. The United States Agency for International Development (USAID), Mercy Corps, the Government of Kazakhstan, the European Commission’s Humanitarian Aid and Civil Protection Department (ECHO), and other international organizations were among the distributers of food assistance. In addition, the government of China committed support to these disaster-affected populations in the near future.

Wheat production in Kazakhstan, the main wheat exporting country to Tajikistan, is expected to be 12.8 million metric tons (MMT) in 2015, near last year’s production level of 12.9 MMT. The slight reduction is attributed to the national agricultural diversification strategy, where focus has been shifted to cultivation of other crops, such as oilseeds and fodder crops. In addition, heavy rains during May affected the cultivated area under wheat. Estimates for overall grain production in Kazakhstan remain at 17 MMT, similar to last year.

Grain stock levels in Kazakhstan have begun to increase following three years of decline. As of July 1st, grain and wheat stocks were 30 percent higher than at the same time in 2014, with wheat stocks increasing from 3.5 MMT to 4.7 MMT (FAO/Astana). In Tajikistan, current wheat flour prices are significantly higher than last year and the average, but are expected to decrease after the wheat harvest is concluded in Tajikistan as well as in Kazakhstan. Prices for potato, the second staple food, have followed a decreasing trend since the start of 2015, and are 32 percent below the same time last year, when prices were the highest within the available data range since 2006. With an increase in cultivated area and strong production in other exporting countries, primarily Pakistan, it is expected that prices will decline further in the coming months. Although the reduction in potato prices will improve access to food for those who rely on market purchases, potato producers will be adversely affected, including those in the Rasht Valley where the main source of income comes from the sale of potatoes.

The value of remittances from migrant workers in the Russian Federation to households in Tajikistan has been continuously declining since last year. According to the National Bank of Tajikistan (NBT), nearly USD 1.162 billion was remitted during the first six months of 2015, 32 percent less than the amount of money remitted during the first six months of 2014. Similarly, Amonatbonk (Tajikistan Savings Bank) reported a 40 percent decline in the value of remittances in USD through its branches during the first six months of 2015 compared to the same time last year. Though some international financial institutions predict a 40 to 45 percent drop in the value of remittances as compared to last year, the NBT claims recovery in the level of remittances and forecasts a 27 percent decline. Households dependent on remittances as a major source of income for market purchases of food will find it difficult to meet all basic food and non-food needs, and are Stressed (IPC Phase 2) from August until at least December 2015.