Central Asia: Soaring Bread Prices Give Rise To Domestic Solutions

Buying bread at a market in Dushanbe (RFE/RL) September 17, 2007 (RFE/RL) -- Prices for bread and other wheat products have been rising in Central Asia to record highs over the past three months, causing hardship for many people. Experts say the reasons behind the surging prices are not local, and that prices have gone up worldwide --> http://www.rferl.org/featuresarticle/2007/07/a7b3dbda-3b38-4456-9e30-0b8f6d809262.html . Some Central Asian governments, however, are trying to find a solution to the problem inside their countries.

The start of the Muslim holy month of Ramadan this year has coincided with soaring prices for bread, flour, and wheat in Central Asia. The increase in the cost of a staple like bread has caused severe problems for many people in the poverty-stricken region, where many have already cut down on other staples such as meat and butter.

Rahmatullo Saidov, a Dushanbe resident who came to the city market to buy flour, found the price has gone up by almost 60 percent since the beginning of September. Saidov says his family usually buys flour to make bread at home because it is cheaper than buying bread. However, Saidov says he is no longer able to pay for all of the flour he needs.

"I can't believe that during one week the flour price goes up from $20 [per 50-kilogram sack] to $32," Saidov says. "Do we have any law or government that could do something about it? Our salaries are not enough for flour anymore. My family needs three sacks of flour every month. My income is about $22 a month. I don't know what we are going to do."

Regionwide Crisis

People in the rest of the region -- including Kazakhstan, which is the main exporter of wheat in the region -- are facing similar crises with steep price increases reported in the other four Central Asian countries. But it is far from being a local problem.

On September 13, a "pasta strike" was held in Italy to protest the sharp increases in the price of pasta there. In fact, prices for wheat, flour, and other grains used to make bread and other foods have gone up all around the world. For the first time, the price of a bushel of wheat has reached $9 on world markets. One bushel is enough to make about 70 loaves of bread.

The growing worldwide demand for wheat and severe droughts in some important grain-producing areas -- such as Australia -- have contributed to higher wheat prices.

Part of the increased demand on grains is for their use in making biofuels, an idea that is growing fast in an attempt to reduce the world's dependence on oil and cut down on global warming. And the forecast for the world wheat market does not have a rosy outlook. Canada -- another of the world's major producers of wheat -- predicts its harvest next summer will be its lowest ever.

Record Kazakh Harvest

However, Kazakhstan, which is the main wheat exporter for Central Asia, expects it will actually have a record harvest this year of some 20 million tons.

Galina Alekseyeva, an analyst at the Almaty-based Institute of Economy and Rural Development, says Kazakh wheat producers are raising the price of their wheat despite having an expected abundant harvest.

"There are no compelling reasons for such a rapid rise in the price of bread," she says. "Electricity and fuel have become slightly more expensive. But that only affects 10 percent of the cost [of bread]. The rest is just an anticipation of higher prices [on the world market]. [The wheat producers] are anticipating that the new harvest will enter the market with a higher price."

High prices have brought the residents of some Uzbek towns to the streets, and have caused a media frenzy in Tajikistan and angered consumers there and in Kyrgyzstan.

Domestic Solutions

In an attempt to prevent greater public discontent over the already high food prices, Central Asian governments are struggling to find a solution to the crisis from within their countries.

The Uzbek government has put pressure on private businesses not to increase bread prices. The measure has made some vendors close down at the prospect of losing money.

Turkmenistan has even tried to begin growing its own grain. However, the domestic wheat is hugely unpopular with consumers, who complain about its extremely low quality.

Kyrgyzstan is desperately trying to solve the problem, too. Kyrgyz Prime Minister Almaz Atambaev has asked the parliament to approve additional funds to import more flour. "The new bill asks for 600 million soms (nearly $16 million) to buy grain and flour from Kazakhstan," Atambaev said. "Also, 150 million soms are needed to buy agricultural products from Kyrgyz farmers."

Hoji-Mohammad Umarov, an analyst at the Center for Economic Studies, a state-run think tank in Dushanbe, says Tajik farmers should shift their focus from growing cotton to producing grain. But according to Umarov, that is something that cannot happen overnight. Umarov said the soil that has been used for decades to grow cotton would have to adapt to growing a new crop. And Umarov predicts it would not be easy persuading private farmers to switch from growing the more profitable cotton to producing wheat.

With so many people in Central Asia having already cut their consumption of many foods because of rising prices, they will have nothing else to cut back on if bread prices keep going up.

(RFE/RL's Kazakh, Kyrgyz, Tajik, Turkmen, and Uzbek services contributed to this report.)