Above-average wheat flour prices affect households relying on market purchases

• The majority of households will rely on average food stocks through normal food and income sources during the current winter and lean season. Most areas are expected to be in Minimal (IPC Phase 1) acute food insecurity from January through June 2015.

• An increase in wheat flour prices has been driven by various factors, including above-average prices of imports from Kazakhstan, high domestic fuel and transportation costs, and seasonal demand for winter stocks. The national average price in December was 26 percent above the five-year average.

• The Russian ruble (RUB) has depreciated by 43 percent against the Tajikistani somoni (TJS) from late August to late January, reducing the purchasing power of remittances from Tajikistani labor migrants working in Russia.

According to the Ministry of Agriculture, total domestic cereal production in 2014 was near to the previous year, while wheat production was 625,000 metric tons (MT), four percent less than in 2013. Most rural households are currently utilizing foods that are stocked from harvested production.

The cotton harvest concluded by the end of December, and 373,000 MT of raw cotton was produced on 178,000 hectares. This represented a five percent decrease from 2013, mainly due to a seven percent contraction in planted area. The contraction in area planted was largely due to increased diversification in the agriculture sector, as farmers allocated more land to cereals and fodder crops to meet livestock and poultry needs. This was partly made possible by increased authority for farmers to make cultivation decisions. The value of cotton exports was reported to decline by 24 percent as compared to the previous year, due to decreased international cotton prices and reduced output.

Wheat grain prices in Kazakhstan, the main source of imports for Tajikistan, were 21 percent higher than last year and 19 percent above the five-year average, largely due to lower production in 2014. Above-average prices of imports from Kazakhstan and somewhat lower domestic wheat production in Tajikistan, as well as high domestic fuel and transportation costs and seasonal demand for winter stocks drove wheat flour prices to increase across the country (figure 2), particularly in Khatlon Oblast, where prices were 25 percent higher than the five-year average. It is expected that wheat flour prices may increase further in the coming months, until the next harvest. Poor households that are dependent on market purchases will be particularly affected. Prices for potatoes, another staple food, have also increased since September 2014 in major markets. For example, in Sughd Oblast, prices were 47 percent higher than last year and 89 percent above the five-year average.

Remittances from Tajikistani labor migrants working in Russia constitute a significant source of income for many households in Tajikistan. According to the Centre for Strategic Studies under the President of Tajikistan, remittance flows from the Russian Federation to Tajikistan in 2014 were five percent lower than the previous year, which was the highest on record. The reduction in remittances was mainly due to the depreciation of the Russian ruble (RUB) against international currencies, including the somoni. Economists speculate that further depreciation of the ruble, or even stabilization at its current value, would continue to adversely affect those countries that rely heavily on remittances from Russia, including Tajikistan.

According to FAO, planting of 2014-2015 winter cereals crops, including wheat and barley, started in mid-August and concluded in November. Early estimates indicate that area planted is similar to 2013-2014. Weather conditions for planting and establishment of the crop were generally favorable. Cumulative precipitation from October through January has been significantly higher than last year in most parts of the country. However, most areas have still received below-average precipitation, particularly in Gorno-Badakhshan Autonomous Oblast (GBAO). In late January and early February, additional precipitation with more than 25 mm liquid equivalent is expected for Tajikistan, which will increase snowpack used for irrigation during the spring and summer.

The majority of households are expected to cover basic food and non-food needs during this winter from normal food and income sources. Most areas will be in Minimal (IPC Phase 1) acute food insecurity from now through June 2015. However, urban households and net purchasers of wheat flour in rural areas will face constraints on purchasing power due to elevated prices of wheat and wheat flour in markets.