The current global food crisis is heightening inequalities and vulnerabilities in a world still confronting the effects of the COVID-19 pandemic. The key factors contributing to increased food insecurity are decreased access to nutritious foods, reduced purchasing power and increased cost of living. While we see stabilization trends and some half year positive figures in the Kyrgyz Republic, the situation is volatile and the effects of this remain to be born by the most vulnerable. In 2021, poverty sky -rocketed reaching 33 percent, with an additional 10 percent of the population being at risk of poverty. This means almost 3 million people were living under or close to the poverty line. After significant depreciation in March 2022 (99 KGS per USD compared to 86 KGS in February), as of 15th July, the Kyrgyz Som appreciated by 18 percent against the dollar reaching 81 KGS per USD.
Notwithstanding the challenges to recover from the effects of the COVID-19 pandemic, in January – June 2022, the Gross Domestic Product (GDP) of the Kyrgyz Republic increased by 6.3 percent, compared to the previous year, adding a net 335 billion Kyrgyz Soms (USD 4.1 billion) to the economy. The IMF estimated that GDP will increase by 2.8 percent this year. On the other hand, in June 2022, annual inflation continued to remain high at 13.1 percent (NBKR) compared to June 2021, among the highest in the region.
Domestic food price inflation remains high in the Kyrgyz Republic. In January – June 2022, the Consumer Price Index (CPI) increased by 12.8 percent for all goods and services and by 16.4 percent for staple foods, as compared to January – June 2021. As reported by the Government, in March 2022, the state reserve still has five-month of national stocks of vegetable oil, three-month stocks of sugar and 60,000 tons of wheat flour. The CPI for fuel and lubricants is estimated to have increased by 47 percent, leading to an increase of transportation costs, which in turn has impacted all other prices. Rising food and fuel prices, combined with inflation are eroding the purchasing power of the most vulnerable to access a nutritious diet.
Both the Russian Federation and Kazakhstan have announced export bans on wheat and sugar, with quotas provided to the EAEU states, including the Kyrgyz Republic. These restrictions, introduced before June 30 expired for wheat in the Russian Federation, but remain valid for sugar until August 31, 2022, and for wheat and sugar in Kazakhstan until September 31, 2022, which may be revised as the situation develops. Despite a record wheat harvest expected in Russia in 2022, Russian regulators continue to exercise tight control over grain exports. The Kyrgyz Republic has a high dependency on imports: 30 percent for wheat, 84 percent for vegetable oil and 37 percent for sugar. Out of the imported wheat, vegetable oil and sugar, 95 percent, 81 percent and 99 percent respectively come from the Russian Federation. The Government has prepared a decree for the Cabinet of Ministers on the introduction of a temporary ban starting from 15 February until 15 August 2022 on the export of wheat, wheat flour, sugar, vegetable oil, eggs and feed crops from the Kyrgyz Republic to other countries outside the EAEU, to ensure the food security of the country, prevent critical shortages of food and promptly respond to internal and external threats to the food market. To stabilise the market, the Government has also introduced Zero VAT for the import of sugar and vegetable oil.
Fertilizer prices have been rising sharply worldwide and rising input costs could impact next season’s harvest, leading to elevated food prices in the longer run. The Russian Federation is one of the world’s most important exporters of the three major groups of fertilizers – nitrogen, phosphorus and potassium, however, its exports are affected by sanctions. Globally, fertilizer prices have increased by 230 percent since May 2020 and by almost 30 percent since January 2022, mainly because of surging input costs, supply disruptions, and export restrictions. This is likely to have major impacts on agriculture and food production —and thus food security — around the world as farmers struggle to pay for a key input and face potential supply chain disruptions. Current restrictions affect 20 percent of global trade and threaten more than 50 percent of fertilizer supply for 24 countries.
Last year, abnormally high temperatures and lack of irrigation water led to significant lower yields across multiple key crops: wheat (-42 percent), barley (-46 percent), oil crops (-25.4 percent), sugar beet (-18 percent) and melons (-14 percent). This year, favourable weather conditions observed in spring led to an increase in the pace of spring field works. Thus, in 2022, the planting areas increased slightly (by 0.2 percent) compared to the previous year, more specifically planting areas increased by: +7.1 percent for barley, +1.9 percent for vegetables, +12.5 percent for cotton, and +4.5 percent for oil crops (sunflower, cotton and safflower). Along with this, there was a decrease in planting of wheat by -6.7 percent, leguminous crops by -5.9 percent, sugar beets by -11.3 percent, rice by -6.2 percent, as well as potatoes by -0.9 percent. The largest share of planting area decrease were observed in Chuy province 33.9 percent, Yssyk-Kul 15 percent, Osh 14.7 percent, Jalal-Abad 12.9 percent and Naryn oblast 9.1 percent.
The following section discusses average prices for the four weeks from 17 June to 15 July 2022, in comparison to the previous month, June 2022, the annual average of July 2021 and the monthly average in February 2020 (before the COVID19 outbreak began in the country).