SPECIAL REPORT

FAO/WFP CROP AND FOOD SUPPLY ASSESSMENT MISSION TO THE KARAKALPAKSTAN AND KHOREZM REGIONS OF UZBEKISTAN

19 December 2000

1. OVERVIEW

The report is based on information gathered by a recent FAO/WFP Crop and Food Supply Assessment Mission to Uzbekistan. The Mission evaluated crop production in 2000, assessed the overall food supply situation and estimated cereal import requirements, including food aid, in the marketing year 2000/2001. It also identified emergency support and remedial measures needed for the rehabilitation of agricultural sector¹.

The Mission visited Tashkent and moved overland to the worst affected areas, the Autonomous Republic of Karakalpakstan and Khorezm province, located about 1 200 km and 950 km north-west of Tashkent respectively at the tail-end of the river AmuDarya. Extensive discussions were held with Government officials in Tashkent and with the regional, district and local authorities in Karakalpakstan and Khorezm as well as with farmers, personnel of UN and bilateral agencies and NGOs. The staff of the UNDP offices in Tashkent and Nukus provided useful support to the Mission. In the country, the donors requested particular emphasis on the most affected regions.

Climatically, Uzbekistan and the two most affected regions in particular are part of the dry mid-latitude desert characterised by hot summers and cold winters. Agriculture is dependent on irrigation and concentrated in the river valleys. Drought conditions in Central Asia since 1999 have affected the flow of the rivers draining into the Aral Sea Basin. The effect of reduced flows were aggravated by inadequate water management, in particular along the AmuDarya which provides irrigation water to some 500 000 hectares of land in Karakalpakstan and 231 000 hectares in Khorezm. For the nine-month period January-September 2000, the mean riverflow at the Tyuyamuyun Reservoir, south of the affected areas was only 42 percent of the long-term mean. The geographic location of Karakalpakstan and Khorezm, not only at the tail-end of the river but also at the tail end of several hydro-electricity and irrigation schemes upstream, seems to have made the impact of the drought more pronounced in these areas than elsewhere in the country.

At the national level, the drought has caused a drop in food and cash crop production this year. The dry conditions affected rainfed winter wheat production, while irrigation water shortages more than halved the 2000 rice harvest and reduced cotton production. At the national level, the 2000 grain harvest is estimated at 4.05 million tonnes, well below target (5.8 million tonnes) and some 6 percent less than last year. Aggregate wheat production in 2000 is officially reported to be 3.6 million tonnes (cleanedweight), similar to last year's level, with 3.1 million tonnes from the public enterprises and private farmer sector and 0.6 from the dekhan farms/household sector (bunker weight). The aggregate rice output is estimated at only 200 000 tonnes compared to 421 000 in 1999. Karakalpakstan and Khorezm, which together account for about 70 percent of the rice area, have a sharply decreased rice crop. The cotton harvest, the major export crop which finances imports of wheat and machinery, is officially estimated at only 3 million tonnes, compared to 3.6 million tonnes last year and well below the target for 2000 of 3.9 million tonnes.

The cereal import requirement in the 2000/2001 marketing year (July/June) is estimated at 702 000 tonnes, including 610 000 tonnes wheat, 62 000 tonnes of rice and 30 000 coarse grains. In particular, the rice import requirement is higher than normal. Official data indicates that the balance of trade has remained narrowly positive, but the substantial losses to the economy caused by the drought in foregone foreign exchange and lost rural income in the affected areas could put both household access to food in Karakalpakstan and the national budget under stress and will limit the extent to which the central Government can assist the most affected areas. However, food aid was not included in the assistance request. The external assistance priorities of the central Government were equipment and machinery to improve the water supply for the population and agriculture in the affected regions and medical supplies. About half of the population of Karakalpakstan does not have access to drinking water and the ground water supplies are increasingly mineralized, brackish and undrinkable. Irrigation water runoff is being used for livestock. As a result there is an increase in the incidence of disease in both the affected population and livestock.

In the Autonomous Republic of Karakalpakstan, the 2000 wheat harvest (which was planted in September/October 1999 and escaped the water shortage as of late spring) was good and reached 91 000 tonnes. However, the shortage of irrigation water experienced acutely as of May, affected all spring crops, on public farms and household plots. Potato production failed, the rice crop is down by 86 percent, maize grain and other spring grain output are down by about 65 percent, melon, fodder and oilseed crops by about half, while cotton and vegetable production are down by a third. In addition, the water shortage has sharply reduced the areas that could be sown to winter wheat for harvest in the spring/summer of 2001.

Indications are that the aggregate cereal production in this Republic in 2000 could fall to about 122 000 tonnes compared to 266 000 tonnes in 1999 and 210 000 tonnes in 1998. The region is traditionally a deficit area for wheat (but a surplus producer of rice) and annually receives an allocation of about 50 000 tonnes of wheat flour from the central Government. Production of rice and other cereals in the dekhan farms/household sector supplements this allocation. The extent to which the shortfall of 54 000 tonnes of cereals in Karakalpakstan in 2000/2001 can be covered by increased allocations from the central authorities is not clear. The Government of Karakalpakstan considers food aid a top priority. By contrast, the authorities in Tashkent tend to place greater emphasis on donor assistance for equipment to improve the supply of drinking water and imported medicines.

Livestock production in Karakalpakstan is a cause for concern as a result of the shortage of good drinking water, quality feed and veterinary supplies. Private farmers and households are likely to suffer the most this winter, because quality conserved forage and grazing to maintain animals is in extremely short supply.

Khorezm also suffered from the irrigation water shortage, but to a lesser extent. Paddy production is estimated to be down by 84 percent, cotton and sugar beet by a third, compared to 1999.

Nine districts² in Karakalpakstan with a population of some 400 000 (or 25 percent of the population) and 5 districts³ in Khorezm, with a population of nearly 600 000 (or 44 percent of the population) have been most affected by the water shortage. In these areas, the availability of drinking water is also a major problem.

With regard to the outlook for the 2001 cereal harvest, the target area to be sown in the public sector to winter grains has been lowered to 1.18 million hectares, including 1 million hectares of irrigated land and 182 000 hectares of rainfed. The target output in the state sector is 4.07 million tonnes of wheat and barley, including 3.94 million tonnes of wheat. Additional cereals are sown in the private sector. In Karakalpakstan, wheat planting for the 2001 season has progressed extremely slowly. Water supplies were enough to plant 11 000 hectares by mid-October, compared to an average (1996-2000) area sown of 31 000 hectares. Much larger areas of winter wheat had been established in Khorezm, where more water was available.

2. SOCIO-ECONOMIC SETTING AND AGRICULTURE SECTOR

Uzbekistan comprises 12 provinces and the Autonomous Republic of Karakalpakstan. With a population of 24.5 million, the country occupies 447 000 sq. kilometres, bordering Tajikistan in the southeast, Kyrgyzstan the northeast, Kazakhstan in north and northwest and Turkmenistan in the southwest. Three fifth of the country is desert or semi-desert with only 4 million hectares of the area cropped. Climatically, Uzbekistan is part of the dry (annual rainfall 110-200 mm) mid-latitude desert characterised by hot summers and cold winters, with temperatures falling as low as -40 and rising to +45 degrees centigrade. Topographically, it is mostly flat-to-rolling sandy desert comprising dunes or broad and flat intensely irrigated river valleys. The elevation varies from 12 metres above sea at the lowest point to 4 300 metres at the highest.

Uzbekistan GDP, estimated at US$2529 in 1997, is the third highest among Central Asian States after Kazakhstan and Turkmenistan. Real GDP growth was 5.2 percent in 1997 and 4.4 percent in 1998 but may be over estimated according to the IMF. GNP per capita was estimated at US$870 in 1998.

Uzbekistan is a well-endowed country but has a high rate of poverty, estimated at 75 percent in 1999. Nevertheless, the Gini coefficient is estimated at 0.3333, i.e. one of the lowest rates of growth in income inequality amongst the CIS Central Asian states. The unemployment rate is 11 percent in 2000 but there is much seasonal fluctuation. Most seasonal employees in agriculture do not register with employment offices, in particular as they cultivate their private plots. Literacy rates are high (99 percent), with little difference between women and men. However, women have higher unemployment rates. Young people have disproportionately high levels of unemployment. Uzbekistan is ranked 106 out of 174 countries on the human development index.

The Government of Uzbekistan is currently implementing a number of policies to increase women's participation in politics and economic development and has established a quota for women positions in political administration. The Government provides maternity benefits to women for two years after child delivery. Women are also exempted from tax on their profits at the beginning of an agricultural enterprise for two years. Unemployed women are eligible for vocational training and retraining.

The Government has adopted a very gradual approach to market oriented reforms. The key objective of economic policies is to achieve broad based growth and improvement of living standards, while maintaining social stability. The development strategy is based on import substituting industrialisation. Trade regulation and exchange rate controls⁴ are key elements in this strategy. Discretionary and administrative foreign exchange allocations are redistributing income from export oriented sectors such as agriculture to import substituting sectors.

Karakalpakstan has a population of 1.5 million with a rural population of 1.1 million. It is a relatively poor area with few natural resources. Its major economic activity is agricultural production.

Agriculture is dependent on irrigation. Water, used for hydro-electricity generation and irrigation, is supplied by two major river systems: the AmuDarya and the SyrDarya which also supply Kyrgyzstan, Tajikistan, Afghanistan⁵, Turkmenistan and parts of Kazakhstan. Fed mainly by glaciers in the mountains of Tajikistan, the AmuDarya is the biggest river in Central Asia with a catchment area of 309,000 km2 and a total length of 2,540 km. It enters Uzbekistan upstream of Termez and after meandering along the Turkmenistan-Uzbekistan border it debouches into the Aral Sea. Karakalpakstan and Khorezm are located in its delta. The SyrDarya originates in the Alai glacier mountains in Kyrgyzstan and flows through Kyrgyzstan and Uzbekistan (the Ferghana Valley) to also debouch into the Aral Sea. The Aral Sea has been progressively drying out due to excessive use of the riverwaters creating an environmental disaster in the bordering areas, including Karakalpakstan.

Agriculture is the largest sector in the economy, contributing about one-third to GDP and employing nearly 40 percent of the workforce. Approximately 60 percent of the value of agricultural production is derived from the crop sector and the remainder from the livestock sector. Cotton is the most important crop economically, followed by wheat. Uzbekistan is the fifth largest cotton producer and second largest exporter of cotton in the world. Much light industrial output is related to cotton, which is produced in irrigated areas throughout the country and makes up about 40 percent of export earnings. The Government is attempting to achieve self sufficiency in food and some (irrigated) land has been shifted from cotton to food production, while anticipated yield increases for cotton have not materialized, partly due to inadequate incentives.

In Uzbekistan as a whole, the largest category of land use (53 percent) is unimproved natural pastures for grazing and hay; 36 percent is non-agricultural and about 10 percent is cultivated, of which 82 percent is irrigated.

There is no private ownership of land, no land market, and those rights of leasehold use that do exist, are limited and unclear. There are three main types of farming enterprise. In the public sector, considerable progress has been made over the past decade in reorganizing state and collective farms into shirkhats, which, however continue to operate very much like the old structures. The shirkhats are a transitional phase and are devolving small private farms to the shirkhat farmworkers.

Private farmers operate individual farms of 10 to 100 ha, depending on the area. The lease of their land is permanent and can be inherited by heirs. Despite their apparent legal independence, these farms depend heavily on the shirkhat for irrigation, inputs and marketing and are often subject to the State Order, operative for wheat, cotton and rice. This category is intended eventually to include the bulk of farmers, but reform and privatization is moving slowly. Private livestock farms are the most independent farms in Uzbekistan. They do not depend on the state farms for irrigation and other essential inputs and occupy an average of 65 hectares and possess an average of 400 head of livestock.

"Dekhan farms" or household plots (SFH) are limited by law to 0.25 ha of land. About half of this land is permanently situated and usually supports a house, while the other half is often temporary, moving from location to location within a shirkhat. Most smallholders are part-time private farmers, and they grow a wide variety of crops. Some cultivate for subsistence while others produce cash crops for income. They are an extremely important sector and account for a substantial proportion of agricultural output - reportedly 75 percent of food other than wheat that is produced in the country.

3. AGRICULTURAL PRODUCTION

Agricultural production in Uzbekistan is largely state controlled. Targets for wheat, rice and cotton (crops which account for the bulk of the area sown, are set centrally and broken down by region, district, and by individual farm (see Table 1). The state also directly controls production and prices of inputs and processing as well as exports of cotton and imports of wheat. The enforcement of the "State Order" system as it is known for cotton and wheat, (rice is also affected by state plans) has severely exacerbated the problems that have been experienced during this drought in Karakalpakstan and Khorezm. District governors (and the public and private farmers in their jurisdiction) are compulsorily required to plant all available areas of each crop in order to fulfil their targets, irrespective of whether sufficient irrigation water is available.

Moreover, farmers (but not households) have to sell a considerable proportion of their output to the Government at set prices. For cotton, the State Order regime requires that 30 percent of the targeted production be sold at the fixed price of 52 som/kg or about US$168 per tonne at the official price and $US77 per tonne at the commercial exchange rate and even less at the market rate. Only after this State Order target is met, the balance may be sold at a somewhat higher price. As target production (3.9 million tonnes in 2000) is often not met (or met only in a small number of regions), the state buys up to 70 percent of the harvest at the lower state order price. With regard to wheat, the state procures 50 percent of the targeted wheat crop, at an average procurement price of 24 som/kg (equivalent to US$77/36 per tonne). The procurement price of paddy is 75 som/kg, (US$242/111 per tonne). In 2000, nearly 2.2 million tonnes of wheat (or 73 percent of the harvest in the public/private sector) were procured, compared to 2.15 million tonnes in 1999. The price of wheat on the open market was three times the official purchase price. Products other than cotton, wheat and rice are not subject to explicit production quotas or procurement orders. However, public ownership of major processing plants for meat and milk continues, and local Governments can require processors to supply schools, hospitals and local institutions with special status.

3.1 Agricultural Production and Forecast for 2000 in Uzbekistan

The quantitative implications of the drought/water shortage on the areas planted, on yield and production of food and cash crops at the national level are difficult to assess with precision. A major problem of reviewing developments in agricultural and food production is the unclear separation between the public and private farmers and the confusion on production targets and forecasts depending on whether household production is included or not. Official crop production data for past years includes household production, but early official forecasts do not. This is particularly important for wheat, but not for cotton which is virtually only grown on the large farms. As private farmers are, in practice, not beyond of the reach of the state order, so even if their production is not included in the state sector output, a part of their output may be included in the quantities procured. In addition, the bulk of livestock are in the private and household sectors. Collection of data from this sector remains problematic. Finally, there is considerable pressure to meet state order targets, and reported data can be inflated. In the drought affected areas, all cotton bolls, including those lying on the ground, are collected. Although this helps to fulfil the production target, crop quality (and potential export earnings) is adversely affected.

As can be seen in the Table 1 below, official data indicate that the aggregate area sown to crops has been almost stable since 1991. However, the area sown to grains, and in particular wheat, has increased substantially, mainly at the expense of fodder crops and to a lesser extent cotton. The aggregate area sown to grains has increased steadily from 1.1 million hectares in 1991 to a targeted 1.740 million hectares in 2000 while the area sown to fodder crops has fallen from 1.1 to an estimated 0.4 million hectares. The area sown to cotton has declined from 1.7 to 1.425 million hectares, with irrigated land being diverted to wheat to meet the wheat self sufficiency target.

The area sown to winter cereals (wheat/barley) in 1999 for harvest in the spring/summer of 2000 in the public sector, was 1.36 million hectares of which 1.05 were irrigated and 0.31 rainfed. Comparative data for 1999 was 1.3 million hectares of which 1 million were irrigated. In addition, households and dekhan farms also sow about 100 000 hectares of grain.

Table 1: UZBEKISTAN - Trend in Agricultural Production and Forecast for 2000 (Area '000 hectares; Production '000 tonnes)

1/ Includes minor cereals such as barley, oats, maize, mixed grains and pulses, in addition to wheat and rice.

2/ Excludes SFH sector.

f = Forecast.

SFH = Dekhan farms and households.

The rice area and output fell sharply in 2000. Irrigation water shortages sharply reduced the actual areas sown in Karakalpakstan and Khorezm from 86 000 to 57 000 hectares and from 36 000 to 29 000 hectares, respectively and the aggregate area sown to only 126 000 hectares. The area sown to coarse grains has shrunk continuously in response to the state order for wheat and has resulted in keen shortages of feedgrain.

3.1.1 Growing Conditions in the 1999/2000 Agricultural Season

The winter was relatively mild with below normal snowfall, the spring was relatively cool but the summer was very hot and dry. The dry conditions caused crop damage in unirrigated areas. Crops in irrigated areas also suffered particularly towards the tail ends of the irrigation systems notably the delta of the AmuDarya in Karakalpakstan and Khorezm but also the Hunger Steppe and Djizhak areas on the SyrDarya. Temperatures in the summer exceeded 40 degrees for extended periods in places and the high evapo-transpiration level of crops necessitated more frequent than normal irrigation. However, most rivers this year had discharges that were less than normal due to very weak winter precipitation (October/February) in the catchment areas in Kyrgyzstan and Tajikistan. During September-December 1999 and in the spring 2000 (April/May), the amount of precipitation was 33 percent less than in 1999. A cool spring also reduced glacier melt off.

Although poor snows in the catchment areas of the major rivers prompted a sharp decline in levels of water in rivers and canals, the devastating effects of the drought in Karakalpakstan have been exacerbated by numerous man-made factors. These include (I) fragmented control of water distribution along the AmuDarya River, poor maintenance of the irrigation system, the enforcement of the Government's State Order system and unsustainable cropping practices, - e.g. the cultivation of rice in Karakalpakstan - and poor land husbandry practices that will lead to desertification of the Karakalpakstan region followed by Khorezm province.

3.1.2 Other Constraints to Yields

While the drought/irrigation water shortage was the major factor affecting the level of output this year, there are many other constraints to increasing production. These include inadequate crop rotations as farmers are officially required to meet area and production targets for certain crops, shortages of machinery and inputs (although the availability of fertilizers was reported to have improved somewhat over last year), planting and harvesting well beyond the optimum times and inadequate producer incentives to adopt improved crop production technologies.

3.1.3 Crop Production

As at 1 October, with the harvest virtually completed, the wheat/barley harvest in 2000 is officially put at 3.855 million tonnes bunker weight, indicating a cleaned weight small grain harvest of about 3.7 million tonnes of which about 0.1 million is estimated to be barley. The area sown to wheat reportedly increased, but rainfed wheat suffered drought damage. Official sources indicate that aggregate production of paddy has fallen by 57 percent to 180 000 tonnes in the public sector and aggregate output is forecast by FAO at only 200 000 tonnes, less than half of last year's 421 000 tonnes. Output of all spring coarse grains, notably maize could also be less and the aggregate 2000 grain harvest is estimated by FAO at only 4.05 million tonnes compared to 4.3 million tonnes in 1999. Satellite imagery indicates that growing conditions were not as good as last year in many areas.

Wheat and rice are the most important foodcrops, but potato, fruit and vegetables are also important in the diet. Indications are that overall food output will be reduced this year. The 2000 cotton output has fallen to 3 million tonnes, some 17 percent less than last year and below average. The output of cottonseed oil will fall by even more.

3.1.4 Livestock Production

As at 1 January 2000, the livestock population consisted of nearly 5.3 million head of cattle (of which 2.3 million cows), nearly 8.9 million sheep and goats, 83 000 pigs and 14.5 million poultry. Since 1991 there has been a very sharp reduction in feed intensive animal production systems (pigs - 80 percent and poultry - 36 percent), a smaller (15 percent) fall in sheep/goat inventories but only minor changes in the numbers of cattle/cows. However, at the same time the area available for fodder crop production has been reduced from over 1 million hectares to about 0.4 million hectares and the areas sown to fodder grains increasingly displaced by wheat. Dairy cows are mainly kept in the irrigated areas and fed on fodder crops and crop residues where possible. Sheep and goats are farmed on natural pastures of the desert and semi-desert zones. The bulk of livestock, including 85 percent of cattle, nearly 90 percent of cows and 60 percent of poultry are in the private sector.

Most rural families have at least one cow, a number of sheep or goats and some chicken. Livestock products often represent an important source of household income and are the major contributor of protein to the diet. Animal productivity is low reflecting insufficient quality feed, low reproduction rates and high mortality rates of young animals. Veterinary supplies are in very short supply. Scarcity of feed is the main factor affecting production. Winter food reserves are essential and must last a minimum of five months. Crop residues and the feed availability are less this year due to lower cotton and grain harvests. As hay and other fodder crop production has also been affected by the drought and water shortage (cotton receiving priority on public farms), animal feed supplies are tighter than usual and the foreseen increase in the number of cows may not eventuate.

During normal seasons, some 475 000 tonnes of meat (slaughterweight) and 3.5 million litres of milk are produced as well as some 1.2 billion eggs.

3.2 Agricultural Production and Forecast for 2000 Output in Karakalpakstan

Other areas in Uzbekistan, e.g. Khorezm, also experienced difficulties this year but nowhere was the effect of the shortage of irrigation water as devastating as in Karakalpakstan.

3.2.1 Crop Forecasts

In Karakalpakstan, the aggregate area sown to crops for harvest in 2000 fell by 14 percent to 334 000 hectares, as some land ploughed could not be sown. The wheat area declined due to reduced spring wheat sowings. There was a sharp fall in the area sown to rice, area under other crops was also reduced (see Table  2).

The 1999/2000 winter wheat harvest was good. Officially put at 63 000 tonnes in the public/private sector plus an additional 28 000 tonnes in the dekhan farms/household sector, it surpassed last year's 75 000 tonnes. However, the impact of the water shortage affected all spring crops; some 36 000 hectares could not be sown to foodcrops, primarily rice, and, severe crop damage was caused to 210 000 of the 334 000 hectares sown. As a result, the paddy harvest in Karakalpakstan is officially put at only 24 000 tonnes, compared to 171 000 tonnes in 1999. Coarse grain production fell to an estimated 7 000 tonnes, reflecting losses in excess of 75 percent to maize and substantial losses all other spring grains. White sorghum production for human consumption, which is important in the dekhan farms/household sector, failed on nearly two-thirds of the area sown. Aggregate cereal production in Karakalpakstan in 2000 is estimated by the mission at only 122 000 tonnes, some 54 percent less than in 1999, well below average and only one fifth of target.

In addition, although the 2000 wheat harvest was good, the outlook for wheat production in 2001 in Karakalpakstan has been severely compromised by the dry conditions at planting. By mid-October, only 11 000 hectares had been planted, compared to an average (1996-2000) area sown of 31 000 hectares.

Table 2 shows that the area, yield and production of most other food fodder and cash crops were also affected. The mission found that the potato harvest had virtually failed. Oilseed production is forecast to be down by 45-50 percent, melons by about half and vegetables by a third. Although Karakalpakstan is not an important producer of these items at the aggregate level, loss of these crops impact heavily on household consumption and purchasing power.

Table 2: KARAPALKSTAN - Trends in Agricultural Production and Forecast for 2000 (Area '000 hectares; Production '000 tonnes)

1/ = Official.

SFH = Dekhan farms and households.

PF = Private farms.

Cotton production, which received priority in water allocation, fell by a third to 128 000 tonnes. Instead of the normal 4-5 irrigations, many fields were watered only once and some not at all. Lower cotton production will also impact on the availability of protein additives for animal feed and the availability of vegetable oils for human consumption. Two thirds of the small area (2 100 hectares) sown to sunflower and sesame seed failed.

3.2.2 Livestock Production

The region of Karakalpakstan supported over a million sheep and goats in the past, but numbers have declined over the years. Currently, there are some 313 000 cattle, 460 000 sheep and goats, 6200 pigs and 580 000 poultry, mostly in the dekhan farms/household sector. For rural villagers and private farmers, raising livestock is a significant aspect of their livelihood and of household food security, providing the primary means of savings and investment of any earnings, as the value of livestock will not depreciate and banks are considered too risky. Most households cannot afford to buy supplemental feeds and rely primarily on available grazing materials to raise their livestock, while sometimes providing higher quality feeds during milking or fattening periods prior to sale. Livestock also produce milk for the immediate families with occasional sale of surpluses to neighbours or in the market place.

Livestock production in Karakalpakstan is seriously undermined by an inadequate quality, availability and good distribution of water, a shortage of quality feed and veterinary supplies and vaccines. Private farmers and households are likely to suffer the most this winter, because the quality conserved forage and grazing to maintain animals is in extremely short supply.

Given sharp reductions in crop residues and dried fodder stocks, the outlook for livestock production in 2000/2001 is poor. Selling of animals is the major coping mechanism in rural areas, but prices are likely to fall sharply. Already in October, animals were being fed cuttings from weeds and branches of shrubs. Considerable reduction of animal inventories may be necessary. Based on output in the first 8 months of 2000, official expectations are that meat production will fall by 20 percent and egg production by 11 percent. Milk yields per cow have fallen steadily from 1.12 litres in 1997 to only 1.015 litre per cow per day in 1999. An indicator of the gravity of the livestock fodder situation in Karakalpakstan is the fact that the average milk yield per cow in the period Jan-August 2000, i.e. before the onset of the difficult winter season, has fallen to 0.7 l/ per day. Given this trend in milk yield, milk production could fall by more than the 25 percent forecast.

3.3 Agricultural Production and Forecast for 2000 Output in Khorezm

Khorezm suffered a serious but somewhat less crop damage than Karakalpakstan (Table 3). The wheat harvest was satisfactory, but the paddy and cotton were particularly affected. Rice production is officially estimated to be down by 84 percent and cotton by nearly a third. Potato, fruit, vegetable and melon production is down by between a half and a quarter.

Table 3 : KHOREZM - Trends in Agricultural Production and Forecast for 2000 (Area '000 hectares; Production '000 tonnes)

SFH = Dekhan farms and households.

PF = Private farms.

4. FOOD SUPPLY SITUATION

4.1 Food Prices and Access to Food

4.1.1 National Level

Progress has been made in price liberalization and small-scale privatization but the Government has maintained administrative control over the prices for energy products and a number of consumer goods and services. A rationing system for basic foodstuffs has been introduced to mitigate the negative impact of price liberalization on standards of living. The price of bread is controlled. Prices remain fixed for rationed items whereas they are free for other products. However, "commodity associations" maintain a controlling influence over most marketed products and state influence in pricing remains pervasive. Traditional markets, called bazaars, privately run under the surveillance of the municipality authorities, are generally well supplied with locally grown food and have become the main source of supply of most foodstuffs. There are many small private flourmills.

There is little recent or systematic information on living standards and the nutrition situation in the country. Surveys in 1993 and 1994 indicated that there are marked standard of living differences between oblasts, with Karakalpakstan, Kashkadarya, Namangan (i.e. the Ferghana Valley) and Khorezm consistently worst off. Intra-regional differences in living standards may be even more important than interregional ones and are only likely to have increased since 1995 as agricultural wages have declined relative to average wages and wage arrears are worse in the agricultural sector.⁶

No recent household or nutritional survey was available. However, the results of a rapid nutritional survey in Karakalpakstan, undertaken in view of the current situation, should become available in the near future. Historical data indicates that the diet, with official per caput consumption data in 1995, is mainly made up of cereals products (157 kg/pc/pa), milk and milk products (160 kg/pc/pa) vegetables (120 kg) meat, (33 kg) eggs (53 units) vegetable oil (14 l), potatoes (23 kg) fruit (29 kg). A survey in 1994 indicated that there were significant variations in calorie intake between the provinces and Karakalpakstan (2 209 calories/pp in 1993) had the lowest intake. At least half of the calorie intake came from bread. Indications are that per caput consumption of most imported and/or higher priced food items are less than in 1995.

A regional survey carried out in 1995, and representative of only for 3 regions - Tashkent, Ferghana and Karakalpakstan - found that there was low prevalence of wasting, but significantly higher rates of moderate and severe stunting of children, indicating chronic nutritional problems. Already in 1995, smaller towns and rural areas had 1 in 5 children stunted; a rate 2.5 times that of the capital.

The volume of domestic agricultural production has increased since the mid- nineties but the population has also increased steadily (by 1.8 percent per annum) and imports of basic foodstuffs are being curtailed to a minimum. Imports of foodstuffs, which accounted for almost 30 percent of all imports in 1996, only made up 16 percent in 1999 and their value fell from 1 252 million US$ to 279 million in the first nine months of 1999 (latest data available). At the same time the share of chemicals, machinery and metals has increased markedly. Moreover, Although the elements of the cereal balance remain tentative, indications are that per caput cereal consumption could be declining. Official data suggest that the availability of some foodstuffs has decreased between 1997 and 1999, notably wheat flour, sugar and vegetable oil while that of meat have increased.

4.1.2 Karakalpakstan and Khorezm

In Karakalpakstan the wholesale price of bread is 61 som/kg with a retailing margin of 15-17 percent. An analysis of the data of the food availability in 1999 indicates that availability of all products (other than rice) was well below (the pre-1991) norms, with coverage ratios being the lowest for e.g. sugar (imported). Surveys in Karakalpakstan indicate that the variety of foods in the diet is fairly limited, particularly in the environmentally worst affected areas and during the bleak winter months. In Nukus, there are governmental shops, which sell essential products like bread, flour, sugar, salt and oil at a subsidised price on a ration basis to people within their catchment neighbourhood. Mahalla committees⁷ provide the household lists to the governmental shops. However, the bazaar is frequently the cheapest place because one can find inferior quality.

In Karakalpakstan, the availability of cereals through the channels reported by the official statistics amounted to 189 000 tonnes, and included 148 000 tonnes of flour, (including 20 000 tonnes from coarse grains) nearly 28 000 tonnes of rice and 13 000 tonnes wheat equivalent of pasta. Allowing some margin for losses (4 000 tonnes or under 3 percent) the availability for human consumption reached an estimated 185 000 tonnes or 123 kg/pc, less than the consumption norm of 148 kg/pc. (The estimated consumption of wheat exceeded apparent availability (production and central Government allocations) by 9 000 tonnes, possibly indicating private sector activity).

The Mission found that the food prices were rising in the Karakalpakstan markets. The lowest bazaar food prices in som in Nukus in October were bread one loaf 53 som, rice 230/kg, beef 700/kg, cottonseed oil 470/litre, milk 80/litre, wheat flour 100/kg carrots 80/kg, potatoes and onions 75/kg. Given that household crops in 9 areas have virtually failed, and food stocks are low or virtually non-existent, affected households need to purchase a larger share of food needs on the market. At the same time, however, income form livestock production, or the sale of livestock, and other crops is down. Employment opportunities (in cotton processing and rice mills, etc.) are also reduced given less raw material and there are few employment opportunities other than in agriculture, where unemployment is seasonally high.

The Government has allocated som 756 million (US$2.44/1.12 million depending on which exchange rate is used) for targeted social protection in Karakalpakstan including 272.4 million soms (US$0.878/0.40 million) for financial aid to 13 897 low income families (i.e. US$65/30) per family in the affected areas, som 233.9 million (US$0.755/0.346m) for allowances to families with children under 16 and other indirect assistance. The Government is also reallocating budget resources for items such as assistance with the costs of providing drinking water to Karakalpakstan and Khorezm, the creation of employment opportunities etc. The extent to which this compensation - already being disbursed during the Mission's visit - will be enough to cover the losses and ensure adequate access to food is difficult to assess.

Rural wages have fallen steadily in real terms over the past years; confiscatory polices and inflation has diminished savings and livestock prices are expected to fall. With the added effects of the current drought, a large number of the rural population in the nine worst affected areas in Karakalpakstan is expected to face food shortages in the current marketing year.

4.2 Cereal Supply/Demand Balance

Data, historical or current, on the cereal supply/utilization and trade is not released by the Government. In addition, the considerable confusion as to what current area and production forecasts include and the lack of recent household survey data mean that the estimates for the cereal balance remain tentative.

The cereal balance for 2000/2001 for Uzbekistan is based on the following assumptions:

• Mid-marketing year (i.e. December 2000) resident population of 25 million.
• Per caput cereal consumption of 136 kg kg/person/annum including 126 kg of wheat, 7 kg of rice and 3 kg of coarse grains.
• Feed-use of cereals to fall marginally to 718 000 tonnes from an estimated 741 000 tonnes last year. Feed use of wheat is estimated at 570 000 tonnes, compared to 589 000 tonnes in 1999/2000.
• Other uses include seed, losses, industrial use and suitcase trade in cereals. Seed requirement in 2000/2001 assumes that the area sown will by down by at least 230 000 hectares, reflecting the reduced area to be sown to wheat. Seeding rates are 250 kg/hectare for wheat, barley and paddy.
• Post-harvest losses and other uses are assumed to be about 4-5 percent of the harvest.
• A stock drawdown of 70 000 tonnes is assumed. A high priority is given to social stability, and even if supplies and foreign exchange are tight, stock levels are unlikely to be drawn down to less than 2-3 months supply. The Government indicated there were stocks of rice after last year's good harvest and market supplies in Karakalpakstan and Khorezm confirmed this situation.
• Commercial imports (mainly wheat with very little rice (8 000 tonnes) and some coarse grains), which averaged 600 000 tonnes in the past two years and reached 634 000 tonnes in 1999/2000, are estimated at 611 000 tonnes in 2000/2001.

Table 4 : UZBEKISTAN and KARAKALPAKSTAN - Cereal Balance 2000/2001 (`000 tonnes)

1/ Includes emergency assistance needs of 4 300 tonnes of wheat flour.

Based on the above assumptions, the balance sheet suggests an import requirement of 702 000 tonnes of cereals including 610 000 tonnes of wheat in 2000/2001 (July/June) and 62 000 tonnes of rice, if consumption levels in rice are to be maintained. The wheat import requirement is at the same level as last year, but that of rice has risen sharply. Commercial imports in 2000/2001 are estimated at 611 000 tonnes, mainly wheat. Concessional imports of 37 000 tonnes of hard wheat have already been received. This would leave a shortfall of 54 000 tonnes, an amount close to the estimated uncovered deficit in 2000/2001 in Karakalpakstan. However, in the country as a whole, the shortfall is in rice. In Karakalpakstan the shortfall is primarily in wheat.

The cereal balance for Karakalpakstan is based on the following assumptions:

• Mid-marketing year (i.e. December 2000) resident population increasing only a little over 1.5 million in view of outmigration.
• The historical consumption norms amount to some 148 kg of cereals per caput⁸. On this basis, the total grain requirement for direct food use is estimated at 222 000 tonnes, including up to 215 000 tonnes of wheat.
• Actual consumption of cereals in 1999/2000 differed considerably from the norm, with wheat consumption (111 kg/per capita) about 25 percent short, while rice utilization had almost tripled to 19 kg/per capita.
• Given the lower purchasing power of the population this year, and the losses to crops other than cereals, the Mission has based its estimates of the cereal requirement for food use on the norms, i.e. 222 000 tonnes. This is 37 000 tonnes more than officially reported consumption in the preceding year.
• Lacking information, no allowance is made for feed use of cereals.
• The seeding rate is 250 kg per hectare. Only 20 000 hectares of wheat will be planted at most. The seed requirement for paddy assumes that 80 000 hectares will be planted. However, unless considerable pressure to reduce the paddy area in Karakalpakstan is exerted, it is more likely that farmers will in fact seek to increase the area sown to paddy beyond this amount, notwithstanding its environmental effects, to offset the lower areas sown to wheat this winter.
• Losses are taken at about 4 percent of output.
• A stock drawdown of 20 000 tonnes of rice is foreseen⁹.
• The annual allocation of wheat flour (50 000 tonnes or 65 000 tonnes of grain) from the central Government is confirmed.

The aggregate requirement for cereals, with rice in milled equivalent and no allowance for feed use of grains whatsoever, is estimated at 253 000 tonnes of cereals. Against this requirement, domestic production (rice in milled equivalent) amounts to 114 000, and the annual allocation of 65 000 tonnes of wheat from the central resources have been confirmed. This would leave a gap of 74 000 tonnes, if no stocks were available in the region. However, apparent utilization of rice in 1999/2000 (83 000 tonnes out of 114 000 tonnes, including 34 tonnes of transfers to other regions) points to the existence of rice stocks. The bulk of these stocks are thought to be in the state reserves, as 150 000 out of the 171 000 tonnes of paddy produced in 1999 was sold to the Government. Given a stock drawdown of 20 000 tonnes of rice, the balance suggests a cereal gap of 54 000 tonnes of cereals including 41 000 tonnes of wheat and 13 000 tonnes of coarse grains or its wheat equivalent in 2000/2001 (July/June).

The extent to which the central authorities are willing or able to cover the deficit by further allocations of cereals is not known. To its credit, the central Government is maintaining social security payments as far as possible and the timely payment of pensions is a top priority. However, the budget is severely limited and the payments made inadequate to cover living expenses. In Karakalpakstan, the shortage of funds for targeted supplementary assistance to socially vulnerable families has led the Mahalla committees to rotate payments amongst the most vulnerable people with eligible families each receiving assistance only 3-4 months out of 12. In addition, the external assistance priorities of the central Government were equipment and machinery to improve the water supply for the population and agriculture in the affected regions and medical supplies to combat the upsurge disease.

As indicated in Table 5 below, the aggregate cereal supply situation has tightened considerably over the years, as the increase in aggregate production, (rice in milled equivalent) has not matched the decrease in estimated annual imports. In 2000/2001 the Government needs to mobilize 100 000 tonnes of cereals above its normal imports, just to maintain the status quo. The commercial import capacity of the Government is limited by reduced cotton export availability. In addition, the 54 percent devaluation of the official exchange rate of the som in May has destabilized the budget, as the Government is guarantor of debts for imports of many of the import substituting industries being created. Unless imports/food aid allocations are made specifically for Karakalpakstan, it is difficult to see much scope for the Bread Authority to move adequate supplies from other regions to Karakalpakstan. In addition, the purchasing power of the population in Karakalpakstan, already amongst the lowest in the country, is likely to decrease further, despite the compensation schemes being implemented. The regional Government of Karakalpakstan has indicated that food aid in the form of wheat flour and vegetable oil, as well as assistance to provide drinking water to the affected population, are its top humanitarian priorities. Two thirds of the budget in Karakalpakstan is provided by the central Government, which is wholly responsible for the payment of pensions and the financing of agriculture. The balance of the annual budget is raised locally. As the drought in Karakalpakstan has led to a sharp fall in tax receipts, the Government of Karakalpakstan has little or no scope to deal with emergencies.

Table 5 - UZBEKISTAN - Total Cereal Balance (`000 tonnes) 1991-2000

Given the extent of state control in the economy, the market risks associated with a food aid allocation of the order of 54 000 tonnes is limited. On the other hand, allocation of food aid in rice (with the condition that an equivalent amount of wheat be transferred by the central Government to Karakalpakstan) could help to convince the Government to reduce the rice planting targets in areas such as Karakalpakstan where its production is unsustainable and is adding significantly to the environmental problems of the Republic and the Aral Sea Basin.

5. FOOD ASSISTANCE NEEDS OF KARAKALPAKSTAN

The major livelihood strategy for the rural population in Karakalpakstan is agricultural production. Eighty percent of the rural population are in the agricultural sector and the rest in the state sector, employed, as teachers or doctors and a small percentage are pensioners. Most of the population in the agricultural sector is working on reorganized state farms or shirkhats and only a small proportion are private farmers. Agricultural workers earn the least income. The amount of income earned by the state sector agricultural workers depends upon performance of the farm. Workers on shirkhats that are loss making do not receive payment and are left with a large debt. They normally constitute a large proportion of households that apply for welfare assistance in a given year. Shirkhat farms that are loss making over a number of years are being privatised and the affected households receive land on leasehold basis, which is subject to the State Order. Such households do not have income during the early years of privatisation.

There are few alternative sources of employment other than agriculture in rural areas. Rural households including state workers have land of about 0.25 ha on which they grow crops for their consumption. The produce on these plots has been a major coping mechanism for rural households who have faced declining incomes and inflation over the years. Many households are also engaged in petty trading to supplement on their incomes. Since membership to the shirkhats is the only way to gain easy access to land and inputs, better off households have at least one member working for the shirkhats with other members engaged in the informal sector e.g. petty trading.

Karakalpakstan has experienced many droughts in the past but households were able to cope as they had livestock. However, the quality of livestock has been declining over the years. Due to inadequate water, lack of quality feed and veterinary supplies, livestock production is further threatened.

A 1998 survey conducted by Medecins Sans Frontieres (MSF) showed that many households consumed a wide variety of foods including meat, fish and dairy products. However, changes in dietary intake have been taking place over the last few years, coinciding with declining agricultural productivity at the household level. The major cause of food shortages and reason for welfare assistance is crop failure. The poorest households live on infertile high saline land that has low productivity. Land degradation has seriously affected the production of vegetables and fruit in the worst affected areas, thus depriving households of these important foods. The drought is further changing the food consumption pattern of many households. Households in the affected areas of Karakalpakstan are dropping off foods from their diet that they cannot afford and are eating more of the cheaper but less nutrient dense foods. The poorest households rarely have meat and dairy products and little fruit and vegetables. Acute malnutrition is not evident but chronic malnutrition among children is present in some of the poorest households.

The Government has allocated 1.5 billion som for drought relief, about half as income relief and the balance to cover various expenditures including the creation of employment, contributions to Saving the Aral Sea Fund, reafforestation and clearing of irrigation and drainage systems. Social security payments are made regularly. Households that have children receive child support. Women with young children receive maternity benefits for two years. About 183 000 pensioners in Karakalpakstan receive monthly payments of about 7 300 som. Single elderly people also receive a monthly food aid package consisting of eight food items and soap. Some households receive different types of benefits, which when added up together allow them to purchase food. The Government of Uzbekistan also provides cash benefits to vulnerable households through the community based mahalla committees. The mahalla committees consult community members to verify whether a household qualifies for welfare assistance and thus target assistance to the most vulnerable households of the community. The need for assistance is much higher; about 10 percent of the households apply for welfare assistance each quarter but only 2-3 percent receive payments. The proportion of households requiring assistance is likely to double this year to about 20 percent of the rural population as a result of loss of harvest in Karakalpakstan.

The regional Government of Karakalpakstan has requested for food aid assistance of 80 000 tonnes of wheat, and 3 000 tonnes of vegetable oil for distribution to 1.1 million rural population in the region. However, the worst affected areas are nine districts, which have a sparse rural population of 227 000. The majority of rural population live in districts away from the worst affected districts that have marginal lands. Based on the discussion with Mahalla committees, the mission estimates that 20 percent of the rural population or 45 000 people will face severe food shortages as a result of the drought. These severely-affected people, would require a total of 4 300 tonnes of wheat flour and 286 tonnes of vegetable oil in the nine districts for eight months. A daily ration of 450 g of wheat flour and 30 g of oil per person for six months in winter (November to April) will provide about 80 percent of the energy requirements during the harsh winter period. A reduced ration of 225 g of wheat flour and 15g of vegetable oil per day providing about 40 percent of energy requirements is recommended for two months in May and June as fruits and vegetables become available during spring. No food assistance is required for Khorezm region as the effects of the drought are less severe and households are better able to cope without external assistance compared to Karakalpakstan.

The Mission recommends that food assistance for the worst affected population in Karakalpakstan can best be distributed through established NGOs based in Karakalpakstan with logistical support provided by WFP if needed. The mission further notes that the central Government is not requesting for any emergency food aid assistance. It is worthy noting that the winter planting season is about to end and many households have not planted due to lack of water in Karakalpakstan. The food security situation will even be more precarious next year and the number of households unable to meet their food requirements will increase. The need for close monitoring of the food security conditions in Karakalpakstan cannot be over-emphasized. Early and advance information will need to be regularly shared and discussed to enable early and effective intervention.