Crops yields (100 kg/ha) 2000 2006 2007Wheat 23.4 20.7 20.0Sugar-beet 191.4 167.6 180.3Potatoes 151 152 157Vegetables 157 176 178Cott<strong>on</strong> 26.0 25.7 27.4Tobacco 23.8 24.0 24.7Nati<strong>on</strong>al Statistics Committee of Kyrgyzstan, update of 19 February 2008 Kyrgyzstan is self-sufficient <strong>in</strong> potatoes, most vegetables and fruits, milk products, meat(93%) and eggs but must import half or more of its wheat (more than 200,000 t<strong>on</strong>sannually), vegetable oil and sugar. Food aid has dropped to close to zero s<strong>in</strong>ce 2003. Yields of ra<strong>in</strong>fed wheat seemed poor (0.3-0.9 t/ha) compared to <strong>the</strong> 2.5-6.0 t/ha for <strong>the</strong>irrigated sub-sector. However, compar<strong>in</strong>g 2007 with 2006, no decl<strong>in</strong>e of wheat yields isreported, while an <strong>in</strong>crease <strong>in</strong> <strong>the</strong> yields of sugar-beet and potatoes is apparent. Yields of<strong>the</strong> cash crops tobacco and cott<strong>on</strong> also seem to have improved.Crops yields (100 kg/ha) 2000 2006 2007Wheat 23.4 20.7 20.0Sugar-beet 191.4 167.6 180.3Potatoes 151 152 157Vegetables 157 176 178Cott<strong>on</strong> 26.0 25.7 27.4Tobacco 23.8 24.0 24.7Nati<strong>on</strong>al Statistics Committee of Kyrgyzstan, update of 19 February 2008 Data from NCS <strong>in</strong>dicate a decrease <strong>in</strong> <strong>the</strong> producti<strong>on</strong> of gra<strong>in</strong>s (wheat especially) andsugar-beet <strong>on</strong> State farms and farm cooperatives <strong>in</strong> 2007 compared to 2006, but an<strong>in</strong>crease <strong>in</strong> <strong>the</strong> producti<strong>on</strong> of potatoes and vegetables. At household level, <strong>the</strong> producti<strong>on</strong> ofwheat and sugar-beet also decreased between 2006 and 2007, but <strong>the</strong> producti<strong>on</strong> ofpotatoes rema<strong>in</strong>ed similar, while <strong>the</strong> producti<strong>on</strong> of vegetables <strong>in</strong>creased. The producti<strong>on</strong> ofcash crops <strong>in</strong>clud<strong>in</strong>g cott<strong>on</strong> and tobacco decreased <strong>in</strong> all types of units between 2006 and2007. The results c<strong>on</strong>firm <strong>the</strong> grow<strong>in</strong>g share taken by farm cooperatives <strong>in</strong> total cropproducti<strong>on</strong>, with a decl<strong>in</strong>e of <strong>the</strong> importance of State farms and relative decrease of <strong>the</strong>share taken by household producti<strong>on</strong> units.Crop (Mt) Year State farms Farm cooperatives Households2000 294.3 760.6 107.5Wheat 2006 104.1 708.3 58.22007 78.3 624.0 34.22000 82.9 194.3 33.7Sugar-beet 2006 30.0 166.6 29.42007 14.8 118.2 22.42000 72.3 457.1 592.7Potatoes 2006 10.6 876.4 367.72007 13.1 991.6 369.12000 56.4 326.4 388.0Vegetables 2006 18.4 476.5 266.42007 20.6 489.5 279.72000 22.1 80.2 0Cott<strong>on</strong> 2006 11.5 105.7 0.302007 3.5 91.6 0.032000 5.5 15.9 5.5Tobacco 2006 0.8 11.9 0.72007 0.7 13.3 0.4Nati<strong>on</strong>al Statistics Committee of Kyrgyzstan, update of 19 February 20087
The nati<strong>on</strong>al <strong>food</strong> balance situati<strong>on</strong> did not change significantly between 2006 and 2007 <strong>in</strong>terms of per capita availability of bread and bakery products, potatoes, vegetables, fruits,sugar, meat, dairy products, eggs and vegetable oil. Fur<strong>the</strong>r agricultural growth would require <strong>in</strong>creased labour productivity, ei<strong>the</strong>r by adopt<strong>in</strong>gbetter (and more costly) plant<strong>in</strong>g technology (high quality seed, fertilizer), or by <strong>in</strong>creas<strong>in</strong>g<strong>the</strong> agriculture capital stock – both of which require <strong>in</strong>vestment. For <strong>the</strong> Kyrgyz farmer,higher productivity comes from <strong>in</strong>vestment <strong>in</strong> fertilizer, seeds, dairy cool<strong>in</strong>g equipment,better breed<strong>in</strong>g and vacc<strong>in</strong>es. The 2005 Kyrgyz Integrated Household Survey showed that <strong>on</strong>ly 3% of rural householdsowned a tractor or any o<strong>the</strong>r agricultural equipment, while 9% of households owned a horse.The remarkably low capitalizati<strong>on</strong> c<strong>on</strong>firms <strong>the</strong> small-scale/subsistence farm<strong>in</strong>g nature andlow commercializati<strong>on</strong> of <strong>the</strong> agriculture. In <strong>the</strong> absence of such <strong>in</strong>vestment, <strong>the</strong> quality and quantity of Kyrgyz outputs is <strong>in</strong>ferior,mak<strong>in</strong>g Kyrgyz farmers uncompetitive <strong>on</strong> <strong>in</strong>ternati<strong>on</strong>al markets, and forc<strong>in</strong>g <strong>the</strong>m to sell at<strong>the</strong> local market price. Never<strong>the</strong>less, potatoes and vegetables c<strong>on</strong>tribute 12% to <strong>the</strong> valueof official exports 11 . Prices for some goods, such as cereals and gra<strong>in</strong>s, were found to be 50-80% higher <strong>in</strong>Kyrgyz markets than <strong>on</strong> world markets. These high prices benefit larger scale farmers,mostly located near <strong>the</strong> Kazakh border. But <strong>the</strong> producti<strong>on</strong> technology does not apply for<strong>the</strong> typical small-scale farmer, who has less than 1 ha of land. In additi<strong>on</strong>, <strong>the</strong>se higher prices do not necessarily raise <strong>in</strong>come of Kyrgyz farmers.Incomplete and segmented markets provide arbitrage opportunities for traders, and despitegrow<strong>in</strong>g competiti<strong>on</strong> <strong>in</strong> trad<strong>in</strong>g, <strong>the</strong>re rema<strong>in</strong>s a large wedge between farm-gate prices andmarket prices across <strong>the</strong> country. Low revenues per worker are partly expla<strong>in</strong>ed by <strong>the</strong> highratio of farm workers to land, and partly by low farm-gate prices for farm outputs. Low farm-gate prices are, <strong>in</strong> turn, an artefact of Kyrgyzstan’s geographic situati<strong>on</strong> as a landlocked, mounta<strong>in</strong>ous country. For some goods, farmers face prices much lower than worldprices (e.g. export prices for wool are less than 1/3 rd of world prices for standard quality).But for many <strong>in</strong>puts, such as fertilizer, farmers face prices higher than <strong>the</strong> world price. An important market failure for agriculture is <strong>the</strong> lack of c<strong>on</strong>tract enforcement. Bothbus<strong>in</strong>esses and farmers reportedly do not h<strong>on</strong>our agreements and breach c<strong>on</strong>tracts. As aresult, without know<strong>in</strong>g with certa<strong>in</strong>ty how much m<strong>on</strong>ey will be earned after a grow<strong>in</strong>gseas<strong>on</strong>, farmers cannot justify <strong>in</strong>vestments <strong>in</strong> fertilizer or seeds. Four factors re<strong>in</strong>force a stable equilibrium <strong>in</strong> Kyrgyzstan as a rent-seek<strong>in</strong>g society:1) Wage levels near poverty for civil servants: makes supplemental <strong>in</strong>come essential forsurvival;2) Unstable political envir<strong>on</strong>ment: leads to short-term outlook am<strong>on</strong>g politicians and <strong>the</strong>irsubord<strong>in</strong>ates;3) Complicated regulatory structure, with numerous c<strong>on</strong>flict<strong>in</strong>g rules and by-laws:provides mid-level bureaucrats with justificati<strong>on</strong> for <strong>in</strong>terference;4) Inc<strong>on</strong>sistent level of penalties for n<strong>on</strong>-compliance: mak<strong>in</strong>g bribery an attractivealternative to pay<strong>in</strong>g f<strong>in</strong>es. Rent-seek<strong>in</strong>g state organizati<strong>on</strong>s lead to two dist<strong>in</strong>ct types: (i) very small, household-levelfarms which operate <strong>in</strong>formally to avoid taxes and rent-seek<strong>in</strong>g by <strong>the</strong> state; and (ii) largebus<strong>in</strong>esses which have <strong>the</strong> professi<strong>on</strong>al staff and resources to manage <strong>the</strong> rent-seek<strong>in</strong>gstate <strong>in</strong> a cost-effective way. Most farmers (83%) are small-scale.11 Regi<strong>on</strong>al Market Survey for <strong>the</strong> Central Asia Regi<strong>on</strong> – World Food Programme, Draft, September20088