The current global food crisis is increasing inequalities and vulnerabilities in a world still facing the effects of the COVID-19 pandemic. The main factors that contribute to the increase in food insecurity are reduced access to nutritious food, reduced purchasing power and an increase in the cost of living. While we are seeing stabilizing trends and some positive six-monthly numbers in the Kyrgyz Republic, the situation is unstable and the effects are yet to be borne by the most vulnerable. In 2021, poverty has skyrocketed to 33%, with an additional 10% of the population at risk of poverty. This means that nearly 3 million people lived below or near the poverty line. After a sharp depreciation in March 2022 (99 KGS per USD against 86 KGS in February), on July 15, the Kyrgyz Som appreciated by 18% against the dollar to reach 81 KGS per USD.
Despite the difficulties in recovering 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% compared to the previous year, adding a net amount of 335 billion Kyrgyz soms. (4.1 billion USD) to the economy. The IMF has estimated that GDP will grow by 2.8% this year. In contrast, in June 2022, annual inflation remained high at 13.1% (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% for all goods and services and by 16.4% for staple foods, compared to January-June 2021. As indicated by the government, in March 2022, the state reserve still has five months of national stocks of vegetable oil, three months of stocks of sugar and 60,000 tonnes of wheat flour. The CPI for fuel and lubricants is estimated to have increased by 47%, driving up transport costs, which in turn impacted all other prices. Rising food and fuel prices, combined with inflation, are eroding the purchasing power of the most vulnerable to access nutritious food.
The Russian Federation and Kazakhstan have both announced wheat and sugar export bans, with quotas given to 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 evolves. Despite a record wheat harvest expected in Russia in 2022, Russian regulators continue to exercise strict control over grain exports. The Kyrgyz Republic is heavily dependent on imports: 30% for wheat, 84% for vegetable oil and 37% for sugar. Of imported wheat, vegetable oil and sugar, 95%, 81% and 99% respectively come from the Russian Federation. The government has prepared a decree for the Council of Ministers on the introduction of a temporary ban from February 15 until August 15, 2022 on the export of wheat, wheat flour, sugar, vegetable oil , eggs and fodder crops from the Kyrgyz Republic to others outside the EAEU, to ensure the country’s food security, prevent critical food shortages and respond quickly to internal and external threats in the food market. To stabilize the market, the government has also introduced zero VAT for the import of sugar and vegetable oil.
Fertilizer prices have risen sharply around the world and rising input costs could impact next season’s harvest, pushing food prices higher in the longer term. The Russian Federation is one of the world’s largest exporters of the three main groups of fertilizers – nitrogen, phosphorus and potassium, but its exports are affected by sanctions. Globally, fertilizer prices have increased by 230% since May 2020 and by almost 30% since January 2022, mainly due to soaring input costs, supply disruptions and restrictions on export. This is likely to have major impacts on agriculture and food production – and therefore food security – worldwide, as farmers struggle to pay for a key input and face potential disruptions in the supply chain. Current restrictions affect 20% of global trade and threaten more than 50% of fertilizer supplies in 24 countries.
Last year, abnormally high temperatures and lack of irrigation water led to a significant drop in yields of several key crops: wheat (-42%), barley (-46%), oilseeds (-25.4 %), sugar beet (-18%). and melons (-14 percent). This year, the favorable climatic conditions observed in the spring made it possible to accelerate the pace of the spring work on the ground. Thus, in 2022, the areas planted increased slightly (by 0.2%) compared to the previous year, more precisely the areas planted increased by: +7.1% for barley, +1.9% for vegetables, +12.5% for cotton and +4.5% for oilseeds (sunflower, cotton and safflower). At the same time, there was a decrease in sowing of wheat by -6.7%, pulses by -5.9%, sugar beets by -11.3%, rice by -6.2%, as well as potatoes by -0.9%. The largest share of the decrease in plantation area was observed in the province of Chuy 33.9 percent, Yssyk-Kul 15 percent, Osh 14.7 percent, Jalal-Abad 12.9 percent and l Naryn Oblast 9.1 percent.
The following section deals with the average prices for the four weeks from June 17 to July 15, 2022, compared to the previous month, June 2022, the July 2021 annual average and the February 2020 monthly average (before the start of the outbreak of COVID19 in the country).