The contribution of regional markets to Afghan wheat supplies May 2007


Food security in Afghanistan is dependent on the availability of wheat. Although domestic production makes an important contribution, it is increasingly recognized that the wheat supply in Afghanistan is determined to a great extent on wheat production and trade within the broader Central Asia region, especially on production from Pakistan and Kazakhstan, and to a lesser extent on Iran (Figure 1). However, limited information on regional wheat markets and trade flows constrains the depth of market and food security analysis and, consequently, the provision of critical information to support the design of appropriate policy and program responses in Afghanistan.

FEWS NET recently began a Regional Wheat Markets and Afghan Food Security Initiative in an effort to reduce the existing information gaps and strengthen the understanding of regional wheat markets and food security in Afghanistan, and thereby enhance FEWS NET’s ability to provide useful food security and early warning analysis. The initiative is comprised of a set of separate but complementary market and trade assessment activities, implemented in a staged approach. Although the work is on‐ going and expected to conclude in June 2007, this brief provides decision makers with the findings to date, recognizing the timeliness of this information given that crop estimates will be available shortly and the summer harvest begins in June.

Overview and main findings

Wheat is the staple food in Afghanistan. Annual per capita wheat consumption is about 160 kg, one of the highest rates in wheat-consuming countries around the world. Almost all wheat is consumed as naan, the local unleavened bread. In 1978, Afghanistan was self‐sufficient in food production for its own population of 14 million people, but nearly two decades of war damaged or destroyed irrigation canals and storage and market infrastructure, severely decreasing the productive capacity of the wheat sub-sector. Consecutive years of drought further constrained agricultural production.

Agricultural production increased substantially in the 2003 production year, following significant precipitation and improvements in civil security (see Figure 2 below). However, efficient and affordable input supplies and food market and storage infrastructure are still lacking. Large‐scale grain silos were previously operated by the government, but all but a few have been destroyed or are inoperable.

Traders – who traditionally purchase about 90 percent of marketable wheat surpluses – have to rely on temporary storage facilities that can only store wheat for a few weeks. Flour milling capacity is also limited. Nine medium-sized commercial mills are in operation, but power shortages and a lack of quality wheat prevent full utilization of mill capacity. As a result, a few hundred small mills, or asiabs, process more than 90 percent of wheat produced in Afghanistan, but these mills lack the cleaning, purification, and separation systems necessary to produce quality flour. Furthermore, numerous wheat policies and programs within the region create significant obstacles and disincentives to investment in the subsector. For example, the few mills that have been established in Afghanistan with the help of foreign assistance have difficulty competing with Pakistani mills that receive subsidized credit and other forms of assistance.