As skyrocketing food prices become an increasingly salient trigger for social and political protests across the developing world, sharp rises in prices for basic foodstuffs in Tajikistan are contributing to a growing popular frustration with the government’s inability to control prices. The food costs in the country rose by up to 30 percent over the last two months, with meat and wheat flour prices jumping 50 percent in some areas. Although government officials expect a moderation in food prices later this year, analysts warn that the costs for major foodstuffs might rise again before Ramadan, the Islamic month of fasting, in August.
Following sharp rises in wheat prices last year, price escalation has become a recurring trend in Tajikistan. The World Bank estimates that since last summer, the global rise in grain prices has led to a 3.6 percent increase in extreme poverty in Tajikistan. The latest price spike is predicted to have a devastating impact on the diets and disposable incomes of poor families, pushing more families into extreme poverty.
While some experts suggest that the recent price jump in the country is simply part of the global escalation in food prices, an increasing number of analysts argue that the situation in Tajikistan has been aggravated by the government’s foreign policy miscalculations and mismanagement of public resources. The surge in food costs in the country was triggered by Russia’s decision to increase tariffs on oil and oil products exported to Tajikistan by up to 5.3 percent starting from April 1, 2011. As Tajikistan imports more than 92 percent of its petroleum products from Russia, higher tariffs have led to gasoline and diesel prices in the country soaring by an average 30 percent. Higher fuel prices then caused an upsurge in the cost of foodstuffs and other basic goods.
Tajik government officials have described the higher tariffs on oil exports imposed by Moscow as an unfortunate development that Dushanbe had no other choice but to accept. Some critics, however, argue that the tariff increase could have been avoided by making political concessions to Russia. Such concessions might, for instance, have included granting Moscow permission to establish an airbase at the Ayni airfield near Dushanbe. Russia has long been known for using energy as a lever with its post-Soviet neighbors. While increasing dues on oil imports to Tajikistan, Moscow has kept low tariffs for imports to Kyrgyzstan, which hosts a Russian airbase.
Other critics believe that it was beyond the Tajik officials’ power to stop the increase in food prices. They argue, however, that the government was aware of the imminent price spike and could have used available financial resources for early intervention in the market to prevent such a drastic cost increase. Already in early March, Tajik president Emomali Rahmon warned about higher food costs and urged the country’s population to stock up on basic food items, including grains and beans, to prepare for escalating prices. Critics complain that despite the early warning to the population, the government continued squandering state resources on lavish construction projects in the capital, including the world’s tallest flagpole, a giant library, and a new museum. It is argued that these resources should have been used to control inflation, food and fuel costs, and support poor families which are hit hardest by rising food prices.
The government intervened in the food market only in mid-May. The authorities announced that they would spend US$ 58 million on food subsidies for the poorest families, helping them cope with price inflation. Another US$ 13 million was allocated for flour and fuel reserves which would be provided to the population at discounted prices. The government has also set up special commissions to procure meat and other foodstuffs directly from farmers and sell them on to the population without the involvement of intermediaries. Desperate to keep food prices low, the municipal authorities in Dushanbe set a cap on prices for wheat flour and meat in the capital, and enforced it by detaining butchers that defied the instructions.
It is difficult to assess the effectiveness of government interventions in the food market at this stage. Food prices in the country will most likely decrease soon as more farmers begin harvesting fruit and vegetables. The prices are not, however, likely to drop by more than 10 percent due to the high fuel costs. In order to better withstand global pressures, the Tajik government needs a long-term strategy to boost food production at home, including by promoting agricultural diversification and allowing farmers more control over the land they use.
(By Alexander Sodiqov, CACI Analyst, vol. 13, no. 10, May 25, 2011)