Afghanistan

FEWS Afghanistan Monthly Food Security Bulletin Sep 2003

Format
Situation Report
Source
Posted
Originally published


Bumper harvest brings benefits and consequences

Following three years of severe drought, this year's bumper cereal harvest is expected to be 50% higher than in 2002. Rain and snowfall was plentiful and well distributed in the north. Farmers increased their use of fertilizers and improved seeds, and the total area under cultivation increased by 27% over 2002, including a 77% increase in rainfed wheat cultivation. According to forecasts, 13 of Afghanistan's 32 provinces will enjoy wheat surpluses, mostly concentrated in the northern half of the country. The remaining 19 provinces, all in central and southern Afghanistan, indicate deficits. While the country is close to self-sufficiency in cereals this year, transport and logistical constraints limit the ability of traders to move food from surplus to deficit areas.

Transport limitations have been further aggravated by temporary closure of the Salang Tunnel just north of Kabul. The tunnel provides the only reliable road link between north and south, particularly during winter, and is expected to remain out of service into November.

The combined effect is that farmers in the north fear falling prices due to over-supply, while consumers in the south face increasing prices and a continuing need to import food from neighboring countries, primarily Pakistan and Iran.



Farmers who could not afford to use improved wheat seed and fertilizers, or did not have good harvest, may also need to purchase wheat from the market for household consumption. Similarly, some small land owners and farmers cultivating marginal rain-fed farms may not be able to cover the total cost of production, and this may put them deeper into debt, creating a disincentive to production next year and forcing some farmers to grow poppies instead.

Another factor contributing to the bumper harvest is the expansion of cultivation into land traditionally used for pasture. Preliminary figures from an FAO Livestock Census show large decreases in animal herds since 1995, particularly sheep which have seen a 60% decrease. Around 185,000 hectares of rainfed land that contributed to the 2003 harvest encroached on traditional pasture land, representing a potential obstacle for the future recovery of animal husbandry. There is concern that while animal herds are reviving, continued use of pasture for agriculture by large land-holders could cause degradation and weaken herders' future access to this land. For farmers who profit from this years harvest despite price reductions, it will be tempting to expand even further onto pasture, hill slopes and other land not traditionally used for cultivation.


FAO Livestock Census (preliminary figures)
1995 (millions)
2003 (millions)
Chang (millions)
Change (%)
Cattle
3.70
3.70
-
-
Sheep
22.00
8.80
-13.20
-60.00
Goats
8.90
7.30
-1.60
-17.98
Donkeys
1.00
1.60
+0.60
+60.00
Camels
0.28
0.18
-0.10
-36.82
Horses
0.37
0.14
-0.23
-61.58
Poultry
6.60
12.00
+5.40
+81.82

Wheat prices stable in September but expected to fall in surplus areas

Traditionally, the prices of cereals start to increase during the mid-autumn planting season (November onward) when households begin to stockpile food for winter and the pre-harvest period. It is expected that with the arrival of large volumes of wheat on the market, prices in northern markets will instead decrease. Since the extent of the harvest became known, price decreases have been expected, however to date prices of wheat have remained generally stable except in Kabul, where they increased significantly (31%) in September. The relatively stable price is believed to be influenced by the fact that the bulk of the harvest has not yet physically arrived in grain markets, as farmers wait to see if any government intervention will take place that could affect the price they receive.


Wheat Prices over the Previous 12 Months

As shown in the above tables, wheat prices declined slightly during the month of September in the wheat surplus producing areas of Faizabad, Hirat and Mazar. September wheat prices also remained significantly below long-term average levels in most of the major markets. However, wheat prices in September this year were near or above last year's levels in the east and southern markets of Kabul and Kandahar. These main markets are receiving wheat and wheat flour from Pakistan, rather than from surplus areas in Afghanistan.

Farmers expect intervention by government and donors

Although expected price drops in surplus areas have not yet been as dramatic as some had feared, prices are expected to fall further once the bulk of this year's harvest reaches grain markets in November. Farmers in surplus harvest areas expect some form of intervention by the government to stabilise wheat prices and prevent them falling below production costs. The main option being discussed among government and donors is the local purchase of wheat for food aid distribution, though there is an ongoing debate on the pros and cons of this approach.

There is consensus that the purchase of surplus wheat by the government would likely prevent further price drops, however critics of the plan point out a number of concerns. The local purchase of wheat in support of food aid distribution does not seem to be consistent and with national policies in trade, agriculture and social protection. Experts are also concerned that local purchase would divert resources away from more urgent priorities and would imply a continuation of public support for food aid. It would also meet logistical obstacles due to the country's limited capacity for milling, storage and transportation.

The state of the milling industry in Afghanistan is extremely poor. Very small water and diesel operated mills are traditionally used in rural and urban areas. There is a very strong need for developing this sector and increasing local milling capacity. Improving this sector would address the existing need for importing large quantities of wheat flour from neighboring countries.

Autumn planting will be influenced by November rainfall and farmer confidence

Autumn planting depends on the availability of irrigation water and rainfall. It has already started in some parts of the Central and East-Central provinces. The perception is that there might be a good level of rain and snow this year, however there is concern that uncertainty over cereal prices may lead to a loss of confidence among farmers and further delay planting of wheat for next season. Poor farmers who sell their wheat harvest at lower prices might not be able to afford improved seed and fertilizers, and as a result, might have a poor harvest next year.

According to traders who visited and talked to farmers in northern provinces, some farmers are concerned about the future prices of wheat and are considering alternative crops. However, the unavailability of good varieties of seed and lack of markets for alternate crops is another issue of concern. Some farmers may prefer opium poppy cultivation as it is the highest earning cash crop. For instance, Helmand and Badakhshan provinces are famous as poppy growing areas, and farmers there could easily turn from low-price crops such as wheat to very profitable cash crops such as poppy. This situation also needs to be closely monitored in areas that have not traditionally seen poppy cultivation.