Government Inaction Blamed for Rising Food Prices in Tajikistan

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)

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Filed under Economy, Food security, Tajik-Russian relations

5 responses to “Government Inaction Blamed for Rising Food Prices in Tajikistan

  1. Alexander Sodiqov

    Россия вновь поднимает экспортные пошлины на бензин

    Пошлина на вывоз бензина с 1 июня составит $415,8 за тонну вместо нынешней ставки в $408,3 за тонну.

    Душанбе. 30 мая. «Азия-Плюс» – | Повышенная пошлинная процентная ставка на экспорт бензина из России, которую ввели в этом месяце для стабилизации цен на внутреннем российском рынке, останется в силе до июля этого года.

    Соответствующее постановление, по данным РИА «Новости», подписал 26 мая премьер-министр РФ Владимир Путин.

    Таким образом, пошлина на вывоз бензина с 1 июня составит $415,8 за тонну вместо нынешней ставки в $408,3 за тонну.

    Тем же документом пошлина на экспорт светлых нефтепродуктов с 1 июня повышается с нынешних $304 до $309,6 за тонну.

    Правительство России на фоне наблюдавшегося роста цен на бензин и дефицита топлива на внутреннем рынке с 1 мая решило повысить экспортные пошлины на бензин больше, чем планировалось ранее – на 44% по сравнению с апрельской ставкой.

    При этом представители кабинета министров неоднократно называли данную меру временной и обещали отменить ее, когда проблема с дефицитом разрешится.

    После этого в Таджикистане стремительно начал дорожать бензин, так как Россия является основным поставщиком горюче-смазочных материалов, в том числе бензина в республику.

    Сегодня цена литра бензина марки АИ-95 на душанбинских автозаправочных станциях составляет 5,80 сомони против 5,30 в первой декаде мая. Стоимость же бензина марки АИ-92 повысилась с 4,80 сомони до 5,30 сомони. Стоимость дизтоплива также выросла и достигает в ряде АЗС 6 сомони за 1 литр.

    По данным министерства экономического развития и торговли РТ, в первом квартале этого года Россия экспортировала в Таджикистан 112 тыс. тонн нефтепродуктов, что составляет 79,3% от общего объема.

  2. Alexander Sodiqov

    IMF raises Tajik 2011 inflation forecast to 13.9 percent

    DUSHANBE, May 26 (Reuters) – The International Monetary Fund (IMF) expects consumer prices in Tajikistan to rise 13.9 percent in 2011, higher than previously forecast, as more expensive food and fuel exert inflationary pressure on the Central Asian state.

    The IMF had previously forecast Tajik inflation at “slightly more” than 10 percent this year. The government is forecasting 9.0 percent, compared with actual 2010 inflation of 9.8 percent.

    “Continued increases in future food and energy prices are likely to fuel inflation and aggravate poverty,” the IMF said in a report on Tajikistan published late on Wednesday.

    Tajikistan, a mountainous republic bordering Afghanistan and China, is the poorest of the 15 former Soviet states. More than 47 percent of its 7.5 million people live on less than $2 a day, according to World Bank data.

    Inflation in Tajikistan accelerated to 6.1 percent between the end of December and the end of April, versus 1.8 percent in the same period a year earlier, official data showed.

    A sharp rise in Russian fuel duties could have a damaging effect on Tajik consumers, who rely on Moscow for more than 90 percent of their fuel. Russia, facing its own supply crunch, raised duties on gasoline exports by 44 percent from May 1.

    High food prices also prompted the mayor of the capital Dushanbe to take the unusual step of capping the price of meat sold in local markets. [ID:nLDE74F1U6]

    The IMF executive board this month approved the drawing down of a further $20.9 million of its three-year extended credit facility of $167.1 million, bringing total disbursements under the deal — approved in April 2009 — to $125.3 million.

    In its latest report, the fund also reiterated its economic growth forecast for Tajikistan at 5.8 percent in 2011. The country’s gross domestic product grew 6.5 percent, year-on-year, in the first quarter.

    “Economic prospects for 2011 are good, but not without risks,” the IMF said. It cited relatively high international prices for cotton, Tajikistan’s main export crop, as favourable.

    Tajikistan’s budget also relies heavily on aluminium exports from the biggest smelter in Central Asia and on remittances from around 1 million citizens living abroad, mainly in Russia.

  3. Alexander Sodiqov

    Э. Рахмон: Торговая деятельность перекупщиков и мошенников может быть приостановлена

    На совещании в Дангаре Э. Рахмон выразил озабоченность в связи с ростом цен на некоторые продовольственные товары, в частности мяса.

    Душанбе. 26 мая. «Азия-Плюс» – | Президент Таджикистана Эмомали Рахмон по итогам своей двухдневной рабочей поездки в Дангаринский район 25 мая провел совещание с активом городов и районов Хатлонской области, районов республиканского подчинения и руководством ГБАО, а также Согдийской области.

    Основное внимание было уделено вопросу организации работ по снижению негативных влияний современного мира, в частности роста цен на ГСМ, продовольственные товары, засушливости и маловодия в Таджикистане. Президент подчеркнул, что эффективным путем снижения негативного воздействия внешних факторов и предотвращения роста цен на продовольственную продукцию является налаживание эффективного и рационального использования воды и земли, повторного сева овощей и огородных культур, а также обеспечение достатка на потребительском рынке.

    «Э. Рахмон выразил озабоченность в связи с ростом цен на некоторые продовольственные товары, в частности мяса, и подчеркнул, что такая ситуация искусственно создается со стороны некоторых недобросовестных перекупщиков и мошенников. В связи с этим, обращаясь к ним, было отмечено, что в случае недобросовестного отношения к делу, будет приостановлена торговая деятельность тех, кто сам не является производителем продукции, с тем, чтобы дать возможность самим производителям продавать свою продукцию по разумным ценам», – отметил источник

  4. Alexander Sodiqov

    Will Russia’s Fuel Shortages Stimulate Energy Cooperation within Central Asia?

    Eurasia Daily Monitor Volume: 8 Issue: 109 June 7, 2011
    By: Roman Muzalevsky

    Russia, one of the world’s leading energy producers and exporters, has recently announced its decision to significantly increase customs duties on the fuel it sells abroad starting on May 1. Viewed as a temporary measure to rectify the country’s domestic fuel deficit and rising inflation levels in light of the upcoming parliamentary and presidential elections, the move has not only exposed the limitations of Russia’s oil processing capacity but has also raised fears of likely fuel deficit and energy price hikes throughout Central Asia. This particularly concerns the regional energy importing countries of Kyrgyzstan and Tajikistan, which have a long history of energy shortages and heavy reliance on Russia as their predominant fuel supplier. The current and potential challenges thus call for more effective energy policies in Central Asia, not least through enhanced energy cooperation within the region between energy importers and exporters and more diversified risk management strategies for national energy industries.

    The Russian government has reportedly increased tariffs on fuel exports by 44 percent to induce local producers and suppliers to sell more at home. The policy aims to save as much as 200,000 tons of high-octane fuel each month for domestic consumption (www.inosmi.ru, May 7). Many suppliers in Russia have recently focused their activities on overseas markets given soaring global energy prices amidst the turbulent events in the Middle East. Meanwhile, the production of virtually all types of car fuel has dwindled in Russia by almost 130,000 tons compared to the previous year, while exports have grown by about 600,000 tons in the first quarter of this year alone. Experts believe the increase in excise duties on fuel and domestic price control policy has been responsible for this. Moreover, not all of the oil-processing plants in Russia have managed to transition to the production of the ecologically superior Euro-3 type of fuel. Local suppliers may also be interested in stocking up their fuel supplies in anticipation of higher prices in the domestic markets in the future. These conditions have led the Russian government to raise tariffs on fuel exports (www.inosmi.ru, May 7; http://www.izvestia.ru, April 29).

    However, experts fear that these steps could result in higher energy deficits and prices in Tajikistan and Kyrgyzstan, which already face dire inflation and food security challenges. Others even foresee an additional leverage that Moscow can gain over the Tajik and Kyrgyz economies as a result. Both countries rely heavily on fuel from Russia, making the country an essential energy supplier. Russian exports helped Tajikistan cover 90 percent of its oil needs last year. The figures for Kyrgyzstan are comparable, with the country currently importing as much as 92 percent of its fuel from Russia (www.inosmi.ru, May 7). Yet, such statistics also highlight the need for more effective national energy import diversification strategies in Central Asia to minimize the risks associated with energy policy changes enacted by any energy exporters.

    While no quality analysis is yet available to credibly assess the impact of Russia’s decision on the current fuel prices in the region, existing press reports indicate that fuel prices in Tajikistan have grown a great deal recently, reaching up to $1.2 for a liter of fuel in some locations. Kyrgyzstan, in turn, can expect to see fuel price increase of about 4 percent this year.

    The fears of energy deficits and price hikes induced by Moscow raising duties on exported fuel may be overly exaggerated, if not misplaced altogether. According to one Kyrgyz official, Russia’s export restrictions apply to one particular type of high-octane fuel only. Central Asian countries, however, primarily rely on imports of a Euro-2 type of fuel. Russian fuel suppliers have also pledged to ensure uninterrupted fuel supplies to Kyrgyzstan, which hosts and supplies fuel to a critically important US military base servicing coalition forces in Afghanistan (www.inosmi.ru, May 7; http://www.izvestia.ru, April 29).

    Fuel supplies may indeed keep flowing, but the potential for energy price surges remains high considering uncertain conditions in the global energy markets and Russia’s own domestic politics driven by preparations for the upcoming parliamentary and presidential elections this year and in 2012 respectively (www. inosmi.ru, April 30). In this context, speculation abounds on the potential deleterious socio-economic consequences for Kyrgyzstan and Tajikistan, where energy price increases and deficits have heightened social strains and undermined the legitimacy of national governments for several years. The popular protests in Kyrgyzstan, which were in part spurred by energy and utility price hikes and led to the removal of president last year, are a case in point, underlying the need for more effective public policies.

    Energy exporters and importers in Central Asia have further faced serious difficulties in maintaining, let alone developing forward-looking intra- and inter-regional energy markets, which could otherwise enable them to pursue more effective domestic and foreign policies. The announcements of Uzbekistan and Kazakhstan to extricate themselves from the regional electricity grid (EDM, January 18) and endless energy squabbles between upstream and downstream countries illustrate this point, exposing the region to further uncertainties. Both regional energy importers and exporters already face internal and external political and economic risks, in some cases due to excessive reliance on one fuel supplier, poorly regulated national and regional energy policies and cooperation, constrained oil processing capacities, and lack of coordinated policy responses. Enhancing oil-processing capacities in Russia, Uzbekistan and Kazakhstan may prove helpful here. Kazakhstan, for instance, already covers the remaining 10 percent of fuel needs in Kyrgyzstan (www.inosmi.ru, May 7).

    Current uncertainties about the impact of Moscow’s decision on energy supplies and prices in Central Asia only reinforce the case that the regional countries are better off if they choose to act proactively with Russia and other Central Asian countries now rather than be forced to act reactively later. Intra-regional energy cooperation in Central Asia, including in the framework of relations with Russia in some instances, looks shaky at this stage. But without it, no secure regional energy supply chain is likely to emerge to tackle energy security challenges in Eurasia. Russia’s fuel shortages may thus offer yet another raison d’être and stimuli for the regional countries to pursue better and more risk-free energy cooperation within Central Asian borders and beyond.

  5. Alexander Sodiqov

    В Таджикистане намерены сдерживать цены любыми способами

    Таджикские власти предлагают установить размер розничной надбавки на отдельно взятые социально- значимые товары. Об этом 13 июняИА REGNUM сообщил начальник управления по защите и развития конкуренции Антимонопольной службы при правительстве Таджикистана Акбар Ходжаев. По его словам, Антимонопольная служба разработала проект положения по данному вопросу.

    Ходжаев сообщил, что данная инициатива направлена на то, чтобы цены субъектов розничного звена были обоснованными. “Суть сводится к тому, чтобы продавцы розничной торговли не могли необоснованно взвинчивать цены. Это положения не касается продавцов оптовых рынков. Анализ показывает, что при розничной реализации товара ее цена увеличивается многократно. В случае принятия такого положения, будут установлены определенные размеры надбавок на определенные виды товаров, перечень которых уже разработан. В него входят в частности и ГСМ”, – отметил Ходжаев.

    Между тем Фируз Саидов, эксперт Центра стратегических исследований при президенте Таджикистана считает, что эта мера вряд ли поможет снизит цены. “Будет очень сложно реализовать такое положение. По нашим данным, цена на товары между оптовиками и розничной торговлей колеблется до 60%. Думаю, что эффективнее будет, если повысит налоги на тех, кто реализует товары по завышенным ценам. Кроме того, владельцы розничных точек сетуют, что большая часть прибыли уходит на оплату всяких “неформальных платежей”, размер которых достигает до 30% от стоимости товара. Как быть с такими потерями? Во всех странах власти компенсируют разницу между стоимости на социально значимые товары”, – отметил эксперт.

    Между тем таджикские власти не устают заявлять, что страна придерживается рыночных отношений в экономике. Как отметил экономист Ходжимухаммад Умаров, “Всемирный банк или МВФ обязательно раскритикуют последнее решение властей, но не стоит обращать внимание на это”. “В нынешних условиях, когда рост цен на товары повседневного спроса зашкаливают, нужно принимать эффективные меры. И пусть у нас возникнуть проблемы с вступлением в ВТО. Мы и так еще не готовы к членству в этой организации”, – считает эксперт.

    Власти принимают и иные меры для смягчения ситуации с ростом цен, особенно на продовольственные товары. В прошедшие выходные практически во всех регионах страны были организованы ярмарки-продажи продовольственных товаров, где цены были ниже рыночных на 20-25%.

    Напомним, что около 50% населения Таджикистана проживают за чертой бедности – то есть менее, чем на $2 в день. А всемирная продовольственная программа ООН, включила Таджикистан в список из 10 стран, где возможны голодные бунты.

    Подробности: http://www.regnum.ru/news/fd-abroad/tajik/1414996.html#ixzz1PDRxcfMX

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