Sultan Madrakhimov is desperate to sell his potatoes, even at a considerable loss. That would be better than watching his pile of spuds slowly rot in his yard.
The main problem, Madrakhimov laments, is that he cannot get his produce to markets beyond southern Kyrgyzstan. His difficulties, as well as those of hundreds like him, are a direct consequence of the inter-ethnic violence that engulfed southern Kyrgyzstan in June. [For background see EurasiaNet’s archive].
“Early potatoes have never been so cheap. They sell now for 4-4.5 som [about US 10 cents] per kilo, but the cost is 6-6.5 som,” says the 58-year-old farmer in Aravan District outside of Osh. In 2009, he could sell his crop for 12 som per kilo. “In the past, hundreds of wholesalers were coming from Bishkek and Kazakhstan to buy potatoes for their markets. But they couldn’t come because of these [June] events.”
The inter-ethnic violence disrupted trade, closed borders, and left farmers in the South stranded at one of the most delicate times on the agricultural calendar. “Because the harvest was happening during the June events, the connection between Bishkek and here was cut; the roads were closed so we couldn’t sell,” says Baltabai Eraliev, an agronomist with Mehr Shavkat, a non-governmental organization in Aravan. “The events in June happened during the first potato harvest. It took longer and the potatoes were spoiled. … Problems with the first harvest influenced the second harvest.”
In addition, a new customs union connecting Russia, Kazakhstan and Belarus created a trade barrier, causing a rise on import tariffs for Kyrgyz produce. “Before we sold to Kazakhstan and Russia, but this year they increased the tax by three times and that’s also why our exports dropped,” Madrakhimov said. [For background see EurasiaNet’s archive].
Local experts say the situation could have long-term impacts on farmers. The area is already affected by rising labor costs related to the refugee crisis and exodus of young men. “We’re worried about the prices. It will influence every family. When people sold potatoes, they’d buy and store coal and wheat for the winter. Now they have wasted all that money on the first harvest and lost,” Eraliev, the agronomist, added.
According to the United Nations World Food Program, 353,000 people in southern Kyrgyzstan are now in need of food assistance.
Disrupted trading routes affected the whole economy, says Rekha Das, Early Recovery Coordinator with the UN Development Program (UNDP) in Osh. “The conflict meant that people in busy trading towns all of a sudden lost their businesses. Both the supply and the demand for goods were adversely affected and labor prices went up,” because many people left as refugees during the harvest, but also because annual migrant laborers from Uzbekistan could not reach the fields.
Nationwide, the Kyrgyz economy is projected to decline by at least 5 percent this year. Southern areas are expected to experience a much sharper contraction. “There is no work. People don’t know where to get money or a salary. If before they were sure they could make a living baking bread, for example, now they’re not sure,” Tinar Musabaev, the Osh-based manger of the Central Asian Alliance for Water, told EurasiaNet.org. “People don’t have the capital to start anything. Businesses and market traders lost everything and there is still a lot of violence.”
Perhaps the most glaring symbol of the sudden economic decline is Osh’s main bazaar. Once a bustling center of trade where thousands once worked, the bazaar is now little more than a burnt husk in the heart of the city.
The full impact of the June events may become apparent only this winter, Musabaev said. For starters, many people will be forced to rely on coal since Osh’s gas distribution network was badly damaged during the fighting. “In the summer there are a lot of alternatives to bread, but in the winter it will be very, very difficult,” he said.
Compounding the problem, Russia has responded to a drought by banning wheat exports for the rest of the year. With world grain costs on the rise, bread prices in Kyrgyz markets have jumped almost 20 percent in recent weeks. A baker confirmed prices are rising quickly. “Before June a loaf of bread was 18 som. Now, during the daytime bazaar, it is 25 som,” said Saipjamal Abdykaparova at a makeshift stand near the old Osh bazaar. (Prices are slightly less in the evening, when the bread grows stale.) Now we buy flour for 950-1050 som [per 50 kilo bag] and last week it was 800-850.
In early August, Agriculture Minister Mamatsharip Turdukulov offered assurances that the Russian ban on wheat exports would not have a tangible impact on Kyrgyzstan, saying the bulk of Bishkek’s wheat and flour imports come from Kazakhstan. But Kazakhstan too is suffering from a drought. And, moreover, the Russian ban has caused a jump in world commodity markets.
Food-price instability is scaring would-be investors just as Osh desperately needs new business. “It’s taking time for people to find faith in the market. … And then there are institutional barriers like closed borders,” said Das from UNDP. The first step to help farmers in the South, she says, would be opening the border with Uzbekistan, a frontier that has been closed for much of the year. That would help farmers to get their produce to new markets.
“The borders must be opened for farmers and business holders to stimulate demand in this paralyzed economy,” Das said. “The problems spread like rings in the water. When the economy is affected, people migrate away; and when communities lose able-bodied individuals, that will create another layer of problems.”
David Trilling is the Central Asia news editor for EurasiaNet.