Agro Perspectiva

Afghanistan eyes wheat price amid import needs

02.09.2010 11:39 "Agro Perspectiva" (Kyiv) — Afghan authorities are keeping a close eye on world wheat prices as they seek to boost strategic stocks ahead of winter and ensure that demand is met as some traditional suppliers halt exports. Afghanistan is among the most vulnerable countries in the world for food supply, according to the Food Security Risk Index 2010, compiled with the UN’s World Food Programme. The country, one of the world’s poorest, faces a shortfall of 700,000 tonnes of wheat, the mainstay of the Afghan diet, the agriculture ministry said. Afghanistan usually imports most of its annual shortfall from Russia, Pakistan and Kazakhstan. Devastating natural disasters — floods in Pakistan, drought in Russia — meant Kabul would rely on Kazakhstan this year, said Majidullah Qarar, ministry spokesman. «This year’s output of wheat is predicted at 4.5 million tonnes while the need for wheat this year is 5.2 million tonnes, which means we need 700,000 tonnes of wheat to make up for the shortfall in production,» he said. While the world has plenty of wheat this year, thanks to good harvests and high stockpiles in major producers such as the United States and Australia, prices spiked on the back of Russia’s decision to ban exports. Russia, the world’s third-largest wheat exporter, has banned grain exports until December due to drought and fires that have destroyed millions of hectares (acres). Russia also slashed its 2010 grain harvest forecast to 70–75 million tonnes, compared with a harvest of 97 million tonnes in 2009. Last year Russia exported 21.4 million tonnes of grain and observers had already warned exports could be sharply lower this year. The move stung world wheat markets, sending prices to two-year highs and sparking worries of a crisis in global food supplies. Wheat soared to 8.68 dollars a bushel (about 25 kilograms) on August 6 but by Friday on the Chicago Board of Trade, wheat for delivery in December had fallen to 6.87 dollars a bushel, from 7.12 dollars the previous week. Supplies from Pakistan have been hit by floods swamping large swathes of the country, turning need inwards but also destroying transportation routes to Afghanistan. Pakistan would probably be an importer this year as «80 percent of the farmers in flood-hit areas have lost their wheat stock and seeds,» said Pakistan’s food and agriculture minister Nazar Mohammad Gondal. For Afghan needs, that left Kazakhstan, the former Soviet republic to the north, Qarar said. «Kazakhstan’s output of wheat has dropped but it can still export six to seven million tonnes of wheat (so) we can easily purchase the required 700,000 tonnes from Kazakhstan,» he said. A spokesman for the Kazakh ministry of agriculture said he had not heard about any such request from Afghanistan but confirmed that Kazakhstan would be able to meet the 700,000-tonne wheat shortfall if asked. «In principal Kazakhstan has the export potential, but it all depends on the requests of the government of Afghanistan,» spokesman Talgat Makhanov said. Afghanistan’s strategic stockpile currently held about 85,000 tonnes, said Suzanne Poland, an agronomist in Kabul with USAID, Washington’s aid arm. «Everyone is keeping an eye on prices but supply as a factor at the moment isn’t like 2008, when there was a shortage,» she said, referring to the global tightening of cereal supply that led to record prices. Afghanistan’s 2009 wheat crop was «a record breaker» at 4.1 million tonnes, triple the output of a year earlier, she said, adding: «We’ve got lots of wheat, price is the factor.» As a landlocked and mountainous country, Afghanistan is vulnerable to price spikes because it must import most of its consumption needs. In common with other under-developed countries, the cost of producing wheat is higher than in exporting countries, raising the potential for cheaper imports to undercut the local produce. The UN’s Food and Agriculture Organisation (FAO) said wheat flour prices in Afghanistan «remain below the five-year average,» at about 14 afghanis (33 US cents) per kilo. Poland said authorities were considering cutting the 16 percent wheat import tariff, though the impact on domestic producers would be the deciding factor. «So far the impact on food security in Afghanistan has been minor. It’s something we need to watch but there is no cause for alarm,» she said Published by HT Syndication with permission from Right Vision News.