FAO Initiative on Soaring Food Prices

Europe and Central Asia

Though international cereal prices have recently come off record peaks, they still remain at historically high levels, with maize 45 percent higher in September compared with September 2007 and rice more than double its price of a year before.

Only rich countries could increase output

This year’s bumper world cereal production can be attributed mainly to a 10 percent increase in wheat output in developed nations. By contrast, developing countries registered a less than 1 percent increase in cereals production. Many cannot afford the inputs needed to produce more: fertilizers, for example, have tripled in price over the last year.

In the transition countries of Central Asia, the rising cost of food and several consecutive years of poor harvests have weakened the buying power of many families.

Prices higher in countries that import food, fuel

In Kyrgyzstan, prices of basic foodstuffs have risen sharply between December 2007 and May 2008, for example: flour by 81 percent; butter by 100 percent; eggs by 59 percent, meat by 22 percent and vegetable oil by 20 percent. The government reached an agreement with Kazakhstan to import wheat, despite the country’s export ban that ended as of September. But Kyrgystan also depends on Kazakhstan for sunflower and vegetable oil for over two-thirds of its needs, and an export ban was only lifted as of October.

In Tajikistan, the situation is much the same. Wheat harvests are expected to be 21 percent lower than the average of the past five years, due to low rainfall, extreme cold and locust infestations in the spring. The country also relies on Kazakhstan for substantial wheat imports.

Tajikistan especially is having trouble securing wheat commercially, and the UN has appealed for funding for food aid and other assistance.

The most vulnerable families spend up to some 80 percent of their income on food in both Tajikistan and Kyrgyzstan.

Record harvests for big grain exporters

Meanwhile, bumper harvests in Russia, Ukraine and Kazakhstan are expected to lower prices in that region beginning in the fall. But this won’t fully spill over to Central Asian countries as steadily higher fuel and thus transport costs add to the overall bill. The cost is still prohibitive.

Boosting wheat output locally

The Initiative on Soaring Food Prices has ongoing activities in three countries in the Europe/Central Asia region: Armenia, the Kyrgyz Republic and Tajikistan, where FAO is implementing a US$5 million programme with the World Bank. These revolve around provision of winter wheat seed, fertilizers and some policy support.

Armenia is in a particularly difficult position as the conflict in Georgia has reduced import flows via the country’s main rail transport artery from the Black Sea.

In addition, an FAO needs assessment mission took place in Tajikistan from April until May, and another mission is planned for Azerbaijan.

Policy analysis by FAO and regional development banks

FAO funding is also supporting regional workshops and studies to assess soaring food prices and their effects, with the goal of then assisting governments to formulate effective policy at national levels and in coordination with their neighbours.

FAO and the European Bank for Reconstruction and Development are also partnered in finding solutions to high food prices. Through a series of roundtable discussions, one of the important findings has been that in Russia, Ukraine and Kazakhstan, some 13 million hectares of arable land could be brought back into production. Massive investments in storage, handling and transportation would be needed, however, to realize profits from a production increase.

bread prices are skyrocketing in impoverished Tajikistan
Costly fertilizers are key to increasing yields