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Wheat farmers face tough competition from abroad
09 Apr 2007 20:26:04 GMT
Source: FEWS NET
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FEWS NET Monthly Report for Afghanistan covering the period Feb 2007 to Mar 2007.

AFGHANISTAN Food Security Update

March 2007

 

Figure 1. Water Requirement Satisfaction Index (WRSI) for wheat, extend through end of season

 

 

Figure 2. Median irrigation water supply/demand for wheat

Afghanistan’s food security situation is in a transitional state, affected by drought in 2006 and now facing a good likelihood of normal to above-normal harvests in 2007. However, because imported cereals are widely available and cheaper than domestic cereals, normal to above-normal harvest may have negative impact on surplus producers in northern Afghanistan.

 

Despite the likelihood of a normal to above-normal harvest in 2007, chronic food insecurity is going to persist in remote, isolated central highlands and northeastern Afghanistan.

 

 

Upcoming harvest projection

 

Based on remote sensing and ground meteorology data from NOAA and USGS, the cumulative precipitation from October 1, 2006 to March 10, 2007 was greater than long term average everywhere except in the northeast, where precipitation was below the long term average.

 

The extended mode of the Water Requirement Satisfaction index (WRSI) indicates that rain-fed crops, which suffered heavy losses due to the drought in 2006, are likely have enough water needed to produce normal to above-normal yield this season. There are two exceptions: Maruf in southern and Khaki Safid in western Afghanistan (see figure 1).

 

The median Irrigation Water Supply/Demand Index indicates that conditions are favorable for irrigated corps. South and north central parts of Afghanistan are likely to have more than adequate levels of irrigation water while crops in east, central and western Afghanistan are likely to have near average levels of water available.

 

The positive soil moisture and irrigation indicators support a favorable most likely case scenario, with normal to above normal harvests, particularly in agricultural surplus areas of northern Afghanistan. FEWS NET Afghanistan is keen to provide early warning or sensitize the decision makers about the implications of normal to above-normal harvests.

 

While generally positive for food security, normal to above-normal harvests and subsequent decreases in wheat prices may have negative consequences for produces, given the competitive regional trade environment. FEWS NET Afghanistan’s recent study, Pakistan Wheat Market Review and its Implications on Afghan Food Security reveals that the Pakistan’s wheat market policy can seriously harm the Afghan producers, particularly when harvests are normal to above-normal result and lower producer prices combined with Afghanistan’s non-protective agricultural policy and the high cost of agricultural inputs in Afghanistan:

 

a) The Pakistan government provides subsidies for agricultural inputs such as seed, chemical fertilizer, machinery and transportation. In addition, the government buys 70 percent of the total wheat surplus, selling back to the market on a daily basis, effectively controlling wheat prices. There are no export duties levied on Pakistan wheat. This makes imported wheat from Pakistan very competitive with Afghan wheat in Afghan markets.

 

b) Afghan wheat market policy is comparatively liberal, largely due to the fact that as a post-conflict country with many pressing priorities, Afghanistan has limited financial and administrative capacity to adopt and enforce countervailing protectionist agricultural policies. All agricultural inputs are not subsidized, but imported from neighboring countries and sold in Afghanistan at a higher cost than in neighboring countries. Furthermore, Afghan labor tends to be more costly as well.

 

Consequently, Afghan farmers have difficulty competing with their Pakistani counterparts. The abovementioned factors are disincentives for Afghan wheat producers. Their profit margins are eroded as prices decline with the great influx of Pakistan wheat, and some farmers are left unable to cover the costs of production in a good harvest year. The relatively high internal transportation costs only exacerbate this situation. Government and/or humanitarian agencies may want to consider adopting strategies to mitigate the negative affects and disincentives created by this imbalanced policy environment.

 

Even with normal to above normal harvests this year, Afghanistan will not be self sufficient in food production, and about 20 percent of the Afghan population will suffer from chronic food insecurity. (This figure needs to be verified during the upcoming NRVA 2007). Response to chronic and transitory food insecurity requires a wide range of discussions among the stakeholders that FEWS NET Afghanistan intends to hold in April 2007.

 

 

Flood risks

 

There is a significant probability of flooding in Afghanistan this year (see figure 3), based on three factors:

 

  • High and above average levels of cumulative precipitation from October 1, 2006 to March 2007
  • High temperatures in March could lead to a rapid melt of larger amounts of snow
  • Environmental degradation, which further accelerates flooding

 

FEWS NET Afghanistan is alerting agencies that are working in the natural disaster sector to be prepared for the likelihood of flooding in high risk flooding zones.

 

 

Figure 3 Afghanistan national flood risk zones

 

 

 

Famine Early Warning System Network (FEWS NET)

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Lawyers chant anti-Musharraf slogans during a protest in Islamabad May 3, 2007. Several hundred lawyers and political activists rallied in Pakistan's capital on Thursday to support the country's top judge as he attended an inquiry into the government's misconduct charges against him. Pakistan has been gripped by a judicial crisis ever since President Pervez Musharraf suspended Chief Justice Iftikhar Chaudhry on March 9 and ordered a panel of judges to hold an inquiry against him.



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