FAO GLOBAL INFORMATION AND EARLY WARNING SYSTEM ON FOOD AND AGRICULTURE

For official use only

SPECIAL REPORT:

PRELIMINARY ASSESSMENT OF 1996 FOODCROP PRODUCTION
AND 1996/97 CEREAL IMPORT REQUIREMENTS IN THE CIS

4 NOVEMBER 1996

1. INTRODUCTION

This report presents the findings of Missions fielded in late September 1996 by the FAO Global Information and Early Warning System (GIEWS) to the Commonwealth of Independent States (CIS) to assess the 1996 harvest outlook for foodcrops and the 1996/97 cereal import requirement. In September, the Mission visited Kazakhstanstan, the Russian Federation, Turkmenistan, and the Ukraine. Assessments carried out by GIEWS in February /March in Armenia, Azerbaijan, and Georgia were updated during FAO missions to Azerbaijan and Georgia in September. Another FAO Mission visited Tajikistan in June/July. Information for the States not visited was obtained from the CIS Statistical Committee with the assistance of the All-Union Research Institute of Information and Technical-Economic Studies of the Agro-Industrial Complex in Moscow and directly from the national statistics offices, crop monitoring specialists and WFP officers in the countries. Throughout its work, the mission received invaluable assistance from grain traders, the statistical offices, specialized institutes for agriculture, ministries of agriculture, grain marketing organizations as well as experts on food and agriculture and the staff of the EC TACIS projects, the World Bank and the United Nations Offices in the countries visited.

2. DEVELOPMENTS IN AGRICULTURE WHICH AFFECT THE 1996 HARVEST ASSESSMENT

While progress on farm restructuring (rather than legal reorganization) remains limited, most countries have implemented macro-economic reform programmes, which have had a positive impact on agricultural production in 1996. Policies to reign in inflation and the budget deficits has resulted not only in price liberalization of bread in most countries but also extensive privatization of the grain marketing infrastructure and dismantling the former state bread distribution organisations. This has resulted in the more rapid entry of private enterprise and new investment into these sectors. However, investment on farm in grain production remains limited, although changes in farm behaviour are occurring.

In all countries, but particularly in the Russian Federation, Kazakhstan and the Ukraine, farms are becoming more cost sensitive, responding to higher input costs, for example, by taking marginal land out of production, by using scarce inputs more effectively and by no longer harvesting areas where the costs of harvesting are higher than the expected returns of the crop. Secondly, a farm's performance in recent years has increasingly come to rely on the quality of farm management. Some collectivized farms have managed to survive or even flourish in recent years thanks to better managers who allocate resources more effectively and take advantage of emerging market opportunities. Thirdly, farms are responding to the opportunities offered by the more rapid privatization of the smaller scale processing and distribution channels downstream; other opportunities include taking advantage of being able to sell grain to small-scale buyers, who accumulate commercial lots for elevators and the small private milling plants and bakeries, whose numbers are increasing rapidly.

These developments have had a positive impact on the 1996 crops but their impact is difficult to measure owing to statistical methods which were not designed for a market economy. Indeed, the Mission collected extensive evidence that the continued reliance on data reported by farm managers and grain elevators to the statistical authorities - rarely corroborated by sampling - continues to lead to official underestimation of the grain harvests in the major CIS countries, as well as over-reporting of the extent to which mandatory grain area and production targets have been met in others, notably Turkmenistan and Uzbekistan. While it is difficult to estimate the actual magnitude of the under-reporting, it may be "guesstimated" on the basis of evidence provided by grain traders, local and external experts monitoring grain crops in individual countries, and in some cases by government and national statistical authorities. Indirect evidence is also provided for some countries by data which show higher grain exports and/or utilization than would be expected given officially reported production statistics. The under/overestimation occurs particularly for the grains most in demand, foodgrains, particularly wheat and malting barley.

Although the magnitude and mechanisms of underreporting vary by country and within countries by region, the motivations cited for such behaviour were fairly consistent. They included avoidance of taxes, producers' desires to increase their grain sales to marketing channels which pay higher prices or ready cash and reduce sales to the State, which typically offers less attractive payment terms, and avoidance of debt repayment in countries where farmers anticipate the government will write off all or a portion of their debt to the State (such as occurred in the Russian Federation during the past 2-3 years). At the regional level, grain yields may be under-reported (by as much as 30 percent for grains in one Russian oblast last year) to increase eligibility for drought relief.

Underreporting usually involves a combination of underestimated areas sown and underreported yields at harvest. In the Russian Federation, the Ukraine and Kazakhstan, yield understatement appears to dominate. In smaller countries, both the areas sown and crop yields may be understated. Reported areas would not reflect, at least not fully, the fact that areas are diverted from cash crops and new areas, outside or on the large farm enterprises, are bought into production by households. Farmers typically cite lower areas/yields to authorities in order to retain a portion of the grain produced on farm for own use (feed or as in-kind payment of salaries to employees), for on-farm processing (including flour and bread production), to sell for cash, or to barter for needed inputs, goods and services. In addition, services rendered to farmers by custom croppers and by privatized elevators who store and process grain are often paid for in grain, transactions which are not reported to the statistical authorities. In some cases, it was reported that custom croppers arrange to keep all grain harvested beyond a certain yield level and this or even a lower level, would be the one officially reported by the farmers.

3. THE FORECAST FOR PRODUCTION IN 1996.


3.1 Grains

In view of the problem of underestimation discussed above, the estimates of grain production in 1995 and the forecasts for the 1996 grain harvest presented in this report are FAO estimates, based on the Mission's findings. In general, for the larger states the under-estimation of official data was found to be of the order of 7-15 percent, with the biggest underestimate in wheat, but also rye, barley for export and pulses. As awareness of the phenomenon of underreporting of grain production is more widespread this year and some of the motivation for underreporting has been removed, the official harvest estimates this year may perhaps be more accurate than in previous years.

3.1.1 Areas Sown

The aggregate area sown to grains (cereals and pulses) for harvest in 1996 is estimated to have fallen by 3 million hectares to 93 million hectares, mainly in Kazakhstan and the Russian Federation(Table 1). In most other countries, the areas sown to grains remained stable or increased. This despite delays and difficulties due the cash flow constraints on farm, the critical shortage of agricultural credits, successive years of reduced investment in machinery and spare parts, and the need to obtain essential inputs at critical times in the cropping season by the cumbersome barter process. The area that will be harvested could be less reflecting the late harvest and poor weather conditions in some important producing areas in Kazakhstan and Siberia as well as some drought losses in north-western parts of Kazakhstan.

Table 1 - Total Area Sown to Grains in the CIS, 1995 and 1996 ('000 hectares)

1995 Estimate 1996 Forecast Percent Change
1996 over 1995


of which:
of which:
of which:

Total Wheat Total Wheat Total Wheat
Armenia 195 115 194 112 -0 -3
Azerbajan 639 447 656 462 3 3
Belarus 2 725 178 2 733 292 0 64
Georgia 354 81 401 113 13 40
Kazakhstan 18 877 12 552 17 122 12 246 -9 -2
Kyrgyz Republic 607 384 631 462 4 20
Moldova 844 341 842 338 -0 -0
Russian Federation 54 705 23 909 53 840 26 000 -2 9
Tajikistan 326 250 402 330 23 32
Turkmenistan 659 552 684 594 4 8
Ukraine 1/ 13 963 5 479 13 670 6 253 -2 14
Uzbekistan 1 664 1 163 1 747 1 332 5 15
Total CIS 95 558 45 451 92 922 48 534 -3 7


Source: CIS Committee for Statistics and FAO estimates
1/ Harvested Area

In recent years, foodgrains and particularly wheat, have been among the most profitable crops throughout the region as price liberalisation of bread has pushed up foodgrain prices relative to feedgrains for which demand continues to contract along with the shrinking livestock herds. As a result nearly all countries increased the area sown to wheat at the expense of barley, oats and pulses. The aggregate area sown to wheat increased, for the second year in succession, by some 3 million hectares, (from 45.5 million hectares to 48.5 hectares in 1996) while that sown to coarse grains declined by over 5 million hectares to 41.2 million. Both private and reorganised collectivised farms have increased wheat plantings. This trend is particularly marked over the longer term. Since 1991, the aggregate area sown to grains has fallen by 12 percent. That sown to wheat has increased by 3 million hectares or seven percent while area sown to coarse grains and pulses has fallen by 25 percent or over 13 million hectares. Strong demand also led to a sharp increase in rye plantings in 1996, notably in the Russian Federation. The aggregate area sown to rice increased due to larger plantings in the Central Asian States.

3.1.2 Yields

Growing conditions were generally more favourable than in 1995 and 1994, except in the belt stretching from Moldova, across the southern Ukraine to the Caucasus. In general, winter crops benefited from good snowcover and winterkill was significantly less than in the previous years. Drought losses in the Russian Federation and Kazakhstan were less widespread and were limited mainly to the northern Caucasus and southern Urals regions of the Russian Federation and two northwestern oblasts of Kazakhstan. However in Moldova and the southern and eastern regions of the Ukraine, very hot and dry weather affected crops during May and much of June. This, combined with the late spring, negatively impacted both winter grain development and spring grain establishment during critical growing stages. Hot and dry conditions extended into Georgia reducing crop yields. East of the Urals, growing conditions were mostly better than last year, and favourable for the second year in succession in Siberia. However, untimely rains during harvest in the New Lands has reduced the quality and could adversely affect the total volume of the harvest.

Better weather was the main contributor to the first increase in aggregate cereal yields in 4 years. The average CIS yields for total cereals (including pulses) rose about 5 percent but remained below the five year average due to continued shortages of agricultural credit and low levels of fertilizer, herbicide and other input use. In the marginal lands of Kazakhstan the effect of two successive years of very low fertilizer application has been a major factor depressing yields. Although the growth of barter trade for inputs and the market penetration of imported agro-chemicals in key production areas of the Russian Federation and the Ukraine is already an encouraging development and is likely to expand next year into Kazakhstan, no significant rebound in input use from the current low levels can realistically be expected until farmers have access to adequate short term production credit and crop insurance. No marked increase in investment on farm can be expected until farmers can use land as a collateral and have increased access to agricultural credit, which may not be for several years.

3.1.3 Production

Based on harvest returns and crop conditions in late September, the aggregate 1996 output of cereals and pulses in the CIS is provisionally estimated at 133 million tons (cleaned weight), only some 2 percent above last year's production, estimated by FAO at 130 million tons. Substantially better harvests in the Russian Federation and Kazakhstan offset poor yields in the Ukraine (Table 2). Larger harvests are also forecast in Belarus, Kyrgyz Republic, Tajikistan, and Uzbekistan. By contrast the 1996 harvests are to fall sharply, by between 18-50 percent in Moldova, Turkmenistan, and the Ukraine. In Armenia, Azerbaijan and Georgia, the crop could remain close to last year's levels.

Table 2 - Grain Production in the CIS, 1995 and 1996 ('000 tons)

1995 Estimate 1996 Provisional
Forecast 1/ 		Percent change
1996 over 1995


of which:
of which:
of which:

Total Wheat Total Wheat Total Wheat
Armenia 290 180 280 175 -3 -3
Azerbajan 1 030 725 1 060 750 3 3
Belarus 5 500 440 6 350 750 15 70
Georgia 580 125 570 175 -2 40
Kazakhstan 10 520 7 500 13 300 9 000 26 20
Kyrgyz Republic 990 680 1 160 850 17 25
Moldova 2 600 1 100 1 740 700 -33 -36
Russian Federation 68 000 32 500 75 010 38 500 10 18
Tajikistan 310 240 400 330 29 38
Turkmenistan 1 100 880 650 500 -41 -43
Ukraine 36 000 17 000 29 400 16 000 -18 -6
Uzbekistan 2 650 1 670 2 800 1 900 6 14
Total CIS 1/ 129 570 63 040 132 720 69 630 2 10


Source: CIS Committee for Statistics and FAO estimates
1/ Rounded

FAO estimates that CIS wheat production could rise by 10 percent this year to 70 million tons, thanks to both higher yields and expanded area. Wheat production in the Russian Federation and Kazakhstan alone is forecast to rise by more than 7 million tons, offsetting sharply reduced yields in Moldova and Turkmenistan and a small decline in output in the Ukraine, where the larger area sown almost offset reduced yields. The aggregate output of coarse grains is expected to decline 5 percent to 58 million tons as higher yields fail to fully offset the sharp decline in area. The 1996 paddy harvest is expected to remain stable, with lower average yields offset by the larger areas sown in the Central Asian states. The area sown to pulses has declined steadily since 1991 and output is likely to slip to 3.5 million tons in 1996 from about 4 million tons in 1995. These estimates are preliminary and should be used with caution. Harvesting is still in progress in some countries, while the biases in reporting the actual outputs in 1995 and 1996 add additional uncertainty. Where possible, this assessment has indicated the likely magnitude of underreporting.

3.2 Other Foodcrops

The bulk of vegetables and potatoes is produced by households rather than by large farms. Indications are that there has been an increase in the area sown to potatoes, a staple foodcrop whose consumption is increasing as bread prices rise to levels reflecting world grain prices. The area under vegetables and sugarbeet appears to have declined in response to shortcomings and difficulties in their processing and marketing. The area sown to sunflowers, which increased rapidly in recent years, appears to have stabilized but the full extent of plantings by private farmers and households may not be captured. Weather conditions favoured potatoes in most areas (excluding Moldova and the Ukraine), but were unfavourable for sugar beet and sunflowerseed. The area sown to cotton has declined further and output is expected to fall sharply in Tajikistan and Turkmenistan.

3.3 Livestock Production

The livestock industry remains in recession. Large scale livestock production remains mostly unprofitable. This has led to a sharp contraction in CIS livestock herds and in demand for concentrate and grain feed, a trend which is expected to continue for some years yet. Between 1991 and 1996 herd numbers (excluding poultry) have been cut back by one third on average. Pig and sheep numbers have fallen by about 40 percent on aggregate and poultry numbers as much if not more. Cattle and dairy herds have been cut back less sharply in part because they tend to be situated on farms that also produce grain and can also be fed with less expensive grazing and forage crops.

At the aggregate level there is little evidence of any upturn in animal productivity although some individual farms have improved operations and output. Aggregate output of meat, milk and eggs was down for the sixth successive year and has contracted by between 30 percent (meat and milk) and 40 percent (eggs) since 1991. Industrial processing of meat, milk, and eggs has fallen even more sharply than livestock numbers as farms process an increasing volume of output on-farm. Total CIS industrial meat processing contracted by 65 percent between 1991 and 1995, while production of milk products contracted by nearly three-fourths. Consumption of these products did not decline nearly as much, since more meat and dairy products were either processed on farm or were imported (especially in the case of poultry meat).

In 1996, sharply higher grain prices, reductions in the areas sown to both fodder and feedcrops, continued deterioration in livestock producers' terms of trade, as well as continued competition from imports are expected to result in further reductions in animal numbers and reduced livestock production in all the major countries including Uzbekistan as well as most smaller countries with the exception of Armenia and Kyrgyz Republic.

A major development in CIS livestock production has been the growing importance of the private sector in livestock production but here too the rate of increase has slowed. Private households now hold between one third and 80 percent of cows, sheep and goats and between 10 percent and 46 percent of pigs, with private ownership typically lowest in Belarus, the Russian Federation and the Ukraine and highest in Armenia and the Central Asian states. In terms of output, the private sector now accounts for about one-half of total CIS output of both meat and milk. There is considerable variation in the importance of the private sector between countries, with only 26, 40 and 43 percent of meat, milk and egg production originating in households in Belarus while in Kyrgyz Republic this proportion for all three foodstuffs is around 90 percent. The private sector has grown largely as a result of rapidly rising livestock holdings on subsidiary and household plots adjacent to collectivized farms. Such holdings tend to be for subsistence rather than for commercial purposes and are often fed with feed grain which is siphoned off the adjacent collectivized farm or paid as in-kind wages.

The increasingly large role of the private sector in livestock production makes it difficult to track real trends in production and consumption, in particular in countries such as Armenia, Azerbaijan, Georgia, Kyrgyz Republic, Tajikistan and Uzbekistan where the bulk of animals are in the private sector and meat output in private households has risen to between 68-99 percent of total reported output. Livestock is increasingly slaughtered and consumed on farm and meat is being marketed directly to consumers /retailers rather than meat processors, bypassing official channels. In the Russian Federation, for instance, the share of meat marketed directly to consumers by collectivized farms more than doubled between 1991 and 1995 to reach nearly 40 percent.

4. DISTRIBUTION AND PROCUREMENT


4.1 The emerging private market for grain

The bulk of grain is now no longer sold to the state purchasing authorities. Aggregate purchases of grain by the state authorities in the 12 CIS countries fell from 54 million tons in 1992 to only 20 million tons in 1995. The share of state purchases of grain in the total grain production fell from 28 to 16 percent over the same period. The single most important factor in the decline of the state purchases was the purchasing authorities' lack of financial resources to pay farmers within a reasonable time frame. Current difficulties with state purchases and the need for official restrictions on the movement of grain until purchase quotas have been met in Kazakhstan, Moldova and the Ukraine suggest that sales to the state will continue to decline also in 1996/97. In some countries however, notably Belarus, Turkmenistan, and Uzbekistan, the government continues to play an important, if decreasing, role in grain marketing and imports and still purchases the majority of grain marketed in those countries. In these countries, private traders play a role only if approved by the government.

Under-capitalization of the emerging private traders and infrastructural and other limitations on the volumes that could be handled through the newly established grain exchanges in some countries have occasioned a sharp increase in the use of non-cash grain marketing channels, such as barter and payment in kind (PIK). Barter and PIK accounted for an estimated 50 percent or more of total marketed grain in the Russian Federation and the Ukraine in 1995. Barter trade has developed rapidly, also in the smaller countries, in response to spot cash shortages and lack of other financing options for buying and selling grain. In some countries, the debts of many farms excludes the possibility of transactions via banks.

Nevertheless, despite still widespread government controls and influence, there has been a considerable expansion of private trading activity in the region. Local private grain traders are gaining market share through cash payment and by forming direct ties with producers and consumers of grain. In many cases, private traders have forged alliances with or acquired grain elevators, flour mills and related processing capacity, have agreements with the railways, and at least one company has invested in port facilities to expedite grain trading. Such activities are most developed in the Russian Federation, where the trade has become well organised and informed, and are expected to develop rapidly in Kazakhstan in the coming year now that the grain market has been privatized and companies have control of elevators. In the Ukraine, where privatization is less advanced, the market remains fragmented. In addition, many large international grain traders are active throughout the region, dealing primarily in the Russian Federation, Kazakhstan, Ukraine, and Uzbekistan. They facilitate imports and export trade of grains and other produce out of the region but have also brokered many intra-CIS deals as well. Within the CIS these companies work mostly with local traders.

One particularly effective way for grain traders to gain market share has been to barter key inputs with farmers in return for grain. In some parts of the Russian Federation and the Ukraine this practice has become fairly widespread. In Kazakhstan, it is expected to develop rapidly in the coming year.

Obstacles to the expansion of the private grain trade include government policies which continue to restrict the movement of grain. Many governments are still able, by direct or indirect means, to impose restrictions on the movement of grain until both the Federal and regional purchase quotas are fulfilled. A major trend in State control of grain marketing has been the devolution of authority from the federal to the regional level. In the larger states local authorities are responsible for food security within their oblasts. Local authorities often vary in the degree to which they permit the free movement of grain and have a wide variety of instruments whereby they can seek to enforce their policies. In the Russian Federation such restrictions have been made illegal and two offending regional governments have been successfully challenged. In Kazakhstan and the Ukraine, the government also seeks to control the grain market via the determination of minimum prices (for the domestic and /or export market) at the grain exchanges.

5. DEVELOPMENTS IN THE SUPPLY AND DEMAND
FOR BASIC FOOD PRODUCTS IN 1995/96 AND THE
FORECAST FOR 1996/97 CEREAL IMPORT REQUIREMENTS


5.1 The Overall Situation

Overall food supplies in the CIS remained adequate to meet effective demand during 1995/96. Imports, particularly of livestock products and processed foods, and intensified exploitation of household plots helped to offset declines in marketed domestic production. Despite sharp declines in employment, real purchasing power and intake of livestock products, widespread or significant levels of malnutrition have not been discerned although there are indications of chronic malnutrition in some countries, notably Azerbaijan, Georgia and Tajikistan. However, the intake of certain substances, such as iodine, vitamins and some minerals may be inadequate. Locally severe food supply problems persisted, particularly in countries affected by civil strife. Relief needs for the most vulnerable groups remain large, despite more narrow identification of the beneficiaries. The most vulnerable groups include mainly refugees and internally displaced people, the elderly, the disabled, orphans and inmates of institutions dependent on the budget as well as single parent households.

Effective demand for food, however, remains depressed because of falling real incomes in some countries and also as a result of sharp increases in the price of most services in recent years, as governments have implemented austerity programmes to control inflation and reduce budget deficits. Food consumption patterns have changed considerably over the last five years, with reductions in intake and variety of foods and a marked substitution of meat and dairy products by bread, pasta and pulses as well as homegrown potatoes, fruit, vegetables and nuts by the large proportion of families on low incomes. A positive development in the last year has been the increase in demand for eggs in some countries.

In Moscow, St. Petersburg, Kiev and in cities in Siberia, indications are that private plots, when available, provide more than half of total household consumption of fruits and vegetables which are eaten fresh in summer and processed for consumption over the winter. In some of the smaller countries with good agricultural potential, where a large proportion of the population is engaged in agriculture and private plot production, this percentage could be even higher. However, access to private plots varies by country and region. In Turkmenistan for example, the average size of the subsidiary or household plot is particularly small in view of the high population density on the very small proportion of land suitable for cropping.

Economic restructuring and the rapid growth of the private sector has seen income disparities grow considerably. Although a small but growing proportion of the population can afford a highly varied diet, the majority have to use a wide range of coping strategies to make ends meet. While markets in most capital cities boast a growing variety of produce, and an increasing number of people who can afford it, there are indications that the variety, quantity and quality of food available in some industrially depressed provincial cities has decreased sharply. Localized food supply problems have been reported even in Kazakhstan, a leading food exporter. On-farm food supplies have often improved with reduced procurement and an upsurge in barter trade but rural populations' access to imported processed foods tends to remain limited.

Throughout the region, access to heating, electricity and water has become much more erratic and social services have declined. This decline has been particularly marked in rural areas.

5.2 Supply and Demand for Cereals

Since 1991/92, aggregate cereal utilization has declined by about 35 percent in response to lower aggregate production and reduced imports. The fall has been characterized by a steep fall in feed use of grains and reduced waste, particularly in the low-income and food deficit countries. As historical levels of utilization of cereals for human consumption were marked by waste and the practice of feeding substantial amounts of bread to animals, it is difficult to draw any firm conclusions on developments in human consumption. However, the production of flour has declined sharply in all countries reflecting in part increased on farm and private milling, and trade and aid in the form of flour.

In 1995/96 aggregate cereal utilization contracted by about 15 percent, from 202 million tons to 172 million tons, mainly on account of reduced feed use of grain, estimated to have fallen by 12 million tons to 71 million tons. Human consumption of cereals is thought to have declined marginally in response to the sharper increase in the price of bread compared to that of other staples last year and increased consumption of potatoes. Moreover, budget and foreign exchange constraints limited the commercial imports of most countries and aggregate food aid deliveries of cereals, estimated at 1.3 million tons, were only half of the previous year's level. Waste and losses declined but seed use remained high.

Following the poor harvest in 1995, aggregate imports of cereals in 1995/96 are estimated to have risen to nearly 12 million tons (including intra-CIS trade), 1.2 million tons more than the preceding year. Imports from outside the CIS are estimated at 4.7 million tons, including 4 million tons of wheat, 0.5 million tons of coarse grains and about 0.3 million tons of rice. Total exports to outside the CIS were 1.1 million tons, mainly barley.

Aggregate cereal stocks were drawn down sharply in 1995/96, for the second year in succession. High international grain prices and foreign exchange constraints limited the volume of imports. Stocks are estimated to have been drawn down in many smaller food deficit countries including Armenia and Azerbaijan, as well as in Uzbekistan and Turkmenistan, two countries which faced unexpected shortages of wheat last year. More significantly, privatization of grain elevators and commercial rates for storage in the Russian Federation and Kazakhstan (but also in a number of smaller countries), require a lower stock-to-utilization ratio and a faster turnover. In the major countries there now exists a network of traders starting at the farm level and linked, through the elevators to the international grain traders. The trade only keeps minimum working stocks. In addition, in the Russian Federation the composition of the reserve stock has been changed in favour of a higher proportion of processed, ready to eat foods. Some wheat is still included, because of its better keeping qualities than flour, but no feedgrains are included and it is doubtful if livestock farmers can afford high storage charges for feedgrain. Therefore, food security will depend increasingly on the operational efficiency of the private trade.

In 1996/97 cereal utilization is expected to contract further to an estimated 157 million tons, compared to 172 million tons in the preceding year and an estimated 238 million tons in 1991/92. Human consumption of cereals is not expected to change significantly from last year's level of about 40 million tons, but seed use could decline a little as more marginal land is taken out of production and the barter trade for inputs develops. Feed use of cereals is expected to continue to contract sharply reflecting increased utlization of natural grasslands. Within the total use of feedgrains, less coarse grains will be fed because of a smaller availability while a substantial amount of feed quality wheat will be fed in both the Russian Federation and the Ukraine. Cereal stocks are estimated to continue to decline, but by much less than last year. Moldova, Turkmenistan and the Ukraine are expected to need to drawdown stocks after this year's poor harvests. Kazakhstan's stocks could also decline further to take advantage of export demand for food quality wheat..

Foreign exchange shortages and creditworthiness considerations will continue to limit imports of cereals in 1996/97. The recession in the livestock industry, not expected to end before the end of this century, will keep feedgrain imports at low levels. Current indications are that food aid availabilities will be sharply less than last year. EC assistance to the economically weakest food deficit countries is expected to take the form budget support in ECU instead of food aid for monetization while allocations by the United States are down. Disbursement of EC budget support is conditional to the implementation of reforms in the agricultural sector, particularly land reform, privatization of the cereal/bread processing and distribution chain and liberalization of cereal prices, where this has not yet occurred.

5.3 Estimated Cereal Import Requirements in 1996/97

Following the somewhat larger harvest, aggregate CIS cereal import requirements for 1996/97 are tentatively estimated at 9.2 million tons including intra-trade, some 2.7 million tons less than imports in 1995/96 (Table 3). This reflects reduced import demand for wheat for human consumption following better wheat harvests in most countries and increased use of feed quality wheat, and some barley, for bread making; reduced import demand for feedgrains in the Russian Federation after the better harvest this year; financial constraints and reduced food aid allocations. The bulk of the contraction is anticipated to occur in imports from outside the CIS, which are estimated to decline from 4.7 million tons to 3.2 million tons, partly in view of the reduced quantities that can be mobilized in eastern European countries. Provided the harvest estimates materialize, intra-CIS trade is tentatively estimated to fall by about 1.1 million tons. Intra-CIS trade in wheat is estimated to fall by 600 000 tons, and that of coarse grains by 450 000 tons.

Table 3 - CIS cereal import requirements 1996/97 with comparison for 1995/96 (`000 tons)

1996/97 Import Requirement Forecast 1995/96 Estimated Imports

Wheat Coarse Grains Total Cereals 1/ Wheat Coarse Grains Total Cereals 1/


of which
from:
of which
from:
of which
from:
of which
from:
of which
from:
of which
from:

 Total  abroad  CIS    Total  abroad  CIS    Total  abroad  CIS    Total  abroad  CIS    Total  abroad  CIS    Total    abroad  CIS  
Armenia 325 225 100 15 0 15 345 230 115 265 250 15 13 10 3 283 265 18
Azerbaijan 500 190 310 45 20 25 555 220 335 560 202 358 58 58 0 628 270 358
Belarus 275 0 275 100 0 100 385 10 375 450 242 208 227 0 227 687 252 435
Georgia 300 225 75 0 0 0 303 228 75 463 450 13 11 10 1 477 466 11
Kazakhstan 0 0 0 0 0 0 0 0 0 4 0 4 0 0 0 4 0 4
Kyrgyz Rep. 10 10 0 0 0 0 17 12 5 230 151 79 12 0 12 249 153 96
Moldova 100 35 65 100 0 100 215 50 165 20 20 0 80 70 10 112 90 22
Russian Fed. 3 000 500 2 500 800 200 600 3 947 820 3 127 4 537 1 186 3 351 1 344 295 1 049 6 141 1 709 4 432
Tajikistan 350 100 250 10 0 10 368 107 261 400 111 289 34 23 11 442 141 301
Turkmenistan 500 125 375 10 0 10 510 125 385 303 131 172 11 0 11 314 131 183
Ukraine 100 50 50 25 0 25 160 55 105 111 50 61 74 0 74 218 55 163
Uzbekistan 2 200 1 200 1 000 175 100 75 2 380 1 305 1 075 2 250 1 218 1 032 65 54 11 2 320 1 277 1 043
Total Imports 7 660 2 660 5 000 1 280 320 960 9 185 3 162 6 023 9 593 4 011 5 582 1 929 520 1 409 11 875 4 809 7 066
of which from:

















Kazakhstan

3 790

420

4 240

4 178

1 119

5 329
Russian Fed.

450

305

788

181

84

300
Ukraine

740

185

925

1 056

158

1 217
Georgia

10

0

10

40

0

40
Moldova

0

50

50

117

34

151
Uzbekistan

10

0

10

10

0

15
Belarus

0

0

-

0

14

14
Other CIS

0

0

-

0

0

-
Total

5 000

960

6 023

5 582

1 409

7 066


Source: FAO
1/ Includes rice.

The bulk of the cereal import requirement remains in the form of wheat for human consumption. Aggregate imports of wheat are estimated to decline by 1.9 million tons to 7.7 million tons, including 5 million tons of intra-trade, mainly from Kazakhstan and the Ukraine. Wheat imports from outside the CIS are anticipated to decline by almost 1.4 million tons to 2.7 million tons. The import requirement for coarse grains is tentatively put at 1.3 million tons compared to 1.9 million tons last year. The bulk of this is expected to be mobilized from within the CIS, (Kazakhstan, the Russian Federation and the Ukraine) while some imports of maize and a little barley are expected from outside the CIS. Rice imports are estimated to decline to around 250 000 tons in view of ample carryover stocks in the Russian Federation.

Imports of cereals are expected to increase sharply only in Moldova and Turkmenistan, following the poor harvests in these countries. Imports may also rise in Uzbekistan, where the displacement of fodder and coarse grains by wheat, coupled with lower international grain prices could result in some increase in coarse grain imports.

Exports of cereals outside the CIS could decline to about 600 000 tons mainly reflecting the sharp decline in barley production, quality considerations and the high purchase prices for cereals in the Russian Federation and Kazakhstan.

The 1996/97 aggregate cereal import requirement of the five most vulnerable grain deficit countries (Armenia, Azerbaijan, Georgia, the Kyrgyz Republic and Tajikistan) is estimated at 1.6 million tons, compared to actual imports of just over 2 million tons in 1995/96. Given the increase in wheat production this year and reduced demand for wheat bread following price liberalization and the rapid evolution of private trade, food aid deliveries to countries in 1996/97 could fall compared to the 1.1 million tons in the preceding year. Alternative forms of assistance to these countries are being developed. In 1996/97 all five countries will receive direct budget support instead of food aid for monetization from the EC. Disbursement is conditional on the implementation of further reforms in the agricultural sector, particularly in the fields of land reform, privatization of the cereal/bread chain and liberalization of cereal prices in those countries where this has not yet been completed (notably Azerbaijan and Tajikistan). Food aid needs, however, are expected to remain considerable in Tajikistan and in the other vulnerable countries to meet the emergency food requirements of the affected populations.

6. COUNTRY SUMMARIES


6.1 Armenia

Although the cropped area has declined steadily since 1990, the area sown to cereals appears to have stabilized at about 200 000 hectares. It is likely that the full extent of the (hitherto illegal) grubbing up of grape vines and fruit trees in the Ararat Valley to plant cereals is not yet fully reflected in the estimate. However, at the same time, farmers in other regions are not working their fields as returns have been discouragingly low vis-à-vis the costs of production.

Growing conditions during the winter were unfavourable and caused extensive winterkill but good spring rains benefited surviving crops and spring wheat and coarse grain plantings. Pending release of the official grain harvest forecast, FAO estimates this year's grain harvest at 275 000 tons, only marginally less than last year's output.

The area sown to potatoes has increased steadily and good yields are expected. The cattle and cow herd, as well as meat and milk production, appear to be recovering slowly from the depths reached in 1992 and 1993.

In 1996/97 the country needs 615 000 tons of cereals to maintain human consumption at last year's level of 360 grams per person per day for a resident population of 3.2 million (430 000 tons), plus feed (87 000 tons), other uses, mainly seed (78 000 tons), and a stock replenishment of 20 000 tons. Against this requirement domestic production of cereals (excluding pulses) is now estimated at 270 000 tons, leaving an import requirement of 345 000 tons. The bulk of this is expected to be imported on a commercial basis by the private trade which has expanded very rapidly following the complete liberalization of bread prices. However, there will continue to be a need for emergency food aid for vulnerable groups. Food aid pledges received to date amount to 65 000 tons. In 1996/97 the country will receive direct budget support from the EC instead of food aid for monetization. Disbursement is conditional to the implementation of reforms in the agricultural sector, particularly land reform and privatization of the cereal/bread processing and distribution chain.

The overall supply and variety of foods has improved with increased trade with neighbouring accessible countries. However, there is high unemployment and market prices are very high compared to salaries and pensions. About 40 percent of the population have an income of less than US $ 20 per month. The poorest 15 percent, (400 000 people, mainly refugees and internally displaced) continue to be in need of targeted food assistance.

6.2 Azerbaijan

The agricultural sector is still dominated by large enterprises at the farm level as well as in marketing and processing. However de facto privatization of land is gaining momentum, with small cooperatives and private farms being established within the state farms. The extent to which increased private production on state lands and significant price differentials between the official purchase price and ruling market prices of cereals have resulted in underestimation of yields and diversion from the state grain monopoly cannot be quantified but is thought to be significant.

Official information on the area and production of cereals remains conflicting. Indications are that the area sown to grains increased somewhat in response to good wheat growing potential, shortages of bread in rural areas and sharp increases in the price of bread over the past year. Despite below normal precipitation during the winter, wheat yields increased. The aggregate cereal harvest is estimate by FAO at 1.06 million tons, only marginally more than the 1 million tons many official and unofficial sources put the 1995 harvest. Production of wheat, is tentatively estimated at 750 000 tons, compared to 725 000 tons last year. This is about 100 000 tons higher than the official estimate of wheat production, which is thought to be underestimated.

Production of potatoes and vegetables in the private sector is increasing. Animal numbers (excluding those of pigs) have increased and a small recovery in output of meat, milk and eggs is forecast in 1996.

Official data indicate that per caput consumption of cereals is declining in response to higher prices and reduced commercial import capacity. Another sharp price increase for bread is expected. To cover the domestic cereal requirement in 1996/97 of 1.6 million tons, (human consumption needs 1.03 million tons or about 370 grams per person per day; feed nearly 350 000 tons and other uses mainly seeds 220 000 tons), the country would need to import 555 000 tons of cereals. Against the wheat import requirement, estimated at 500 000 tons, the government has already contracted 180 000 tons and considers that the private trade will import 300 000 tons commercially. The food aid requirement in 1996/97 is anticipated to be markedly less than in 1995/96 when 187 000 tons were delivered. The volume of food aid that may be required hinges on the speed with which the state control of the urban grain distribution channels and grain pricing is dismantled and whether or not current plans to constitute an intervention reserve to avoid disruption of supplies during the privatization of the State Bread Corporation, are implemented. However, emergency food aid for targeted distribution to the vulnerable populations will continue to be necessary. Confirmed pledges to date amount to only 5 000 tons. In 1996/97 the country will receive direct budget support from the EC instead of food aid for monetization. Disbursement is conditional to the implementation of reforms in the agricultural sector, particularly land reform and privatization of the cereal/bread processing and distribution chain and liberalization of cereal prices.

There are up to 900 000 refugees and internally displaced people as a result of the conflict over Nagorno Karabakh. The preliminary results of the World Bank `s poverty assessment indicate that about sixty percent of the population is affected by poverty and that some 20 percent could be considered extremely poor. About half a million people were in need of relief assistance in 1995/96 and the economic situation has continued to deteriorate.

6.3 Belarus

The aggregate 1996 cereal harvest is now forecast at 5.8 million tons, cleaned weight, some 300 000 tons more than last year reflecting better growing conditions this winter and better yields. The grain area remained stable at 2.7 million hectares but the area sown to wheat increased by two thirds in response to a government-backed drive for greater self-sufficiency. Wheat output is estimated to have risen to a record 750 000 tons. Although wheat displaced feedgrains especially barley, better yields limited the drop in coarse grain output to 4 percent from nearly 5 million tons in 1995 to 4.8 million tons in 1996.

In 1996/97, the country's import requirement for cereals is expected to decline to 385 000 tons from 687,000 tons in 1995/96 and to be sourced mainly from neighbouring CIS countries. The larger wheat harvest is expected to reduce wheat imports to a record low 275 000 tons, while continued contraction in the livestock sector is expected to result in only 100 000 tons of coarse grain imports. The country will continue to export small quantities of rye to neighbouring countries.

6.4 Georgia

Data on agricultural production are conflicting and growing conditions have been very mixed. Official indications are that the planted wheat area was larger than expected and that in aggregate for all cereals about 400 000 hectares were sown. Dry conditions and hail sharply reduced winter wheat yields in some parts of eastern Georgia while other areas obtained very good yields. The wheat harvest is officially estimated to have increased to 175 000 tons. Maize yields also suffered to some extent. In aggregate, the 1996 grain and pulse harvest is provisionally estimated by FAO to have remained close to last year's output of about 580 000 ton, about 50 000 tons higher than the official estimate but less than the 700 000 tons anticipated in March because of a lower maize crop.

Consumption of maize-meal has increased sharply in response to price liberalization of bread in June 1996 and past shortages of wheat. The government has estimated the 1996/97 cereal import requirement at 300 000 tons of wheat against some 460 000 tons imported mainly as food aid last year. The commercial imports of wheat flour by the private trade have increased rapidly and are expected to cover market needs, which are likely to contract because of the higher prices. Food aid will continue to be required to meet the needs for relief distribution to the most vulnerable populations. So far, food aid allocations, including those carried forward from last year, amount to 53 000 tons. In 1996/97 the country will receive direct budget support from the EC instead of food aid for monetization. Disbursement is conditional to the implementation of reforms in the agricultural sector, particularly land reform and privatization of the cereal/bread processing and distribution chain.

Economic recovery has begun but GDP fell very sharply during the years of civil strife which virtually bankrupted the country, left a huge debt, a persistent energy crisis and in addition resulted in some 288 000 of internally displaced people. In view of the severe budget constraints and the inadequate social security net, very low official salaries and widespread unemployment, the number of food-insecure people in need of assistance is estimated at 600 000- 700 000, mainly internally displaced, host families, mothers with young infants, pensioners, the disabled and inmates of social institutions dependent on the budget.

6.5 Kazakhstan

In recent years the official estimates of Kazakhstan's grain production are thought to have been under-estimated by about 10 percent as producers are believed to have underreported their output in order to reduce sales to the State, which pays low prices and with considerable delays, to maintain larger on-farm stocks to barter for inputs and fuel, and to avoid debt repayment. This year the Ministry of Agriculture has sent inspectors to the regions to assess the size of the grain crop in an effort to obtain more realistic estimates and to enforce repayment of the commodity credits and other debts.

Based on interviews with traders and other officials and an analysis of the cereal utilization and exports from Kazakhstan in the past years, it is estimated that last year's grain crop was about 10.5 million tons cleanweight, or about 10 percent higher than the officially reported figure of 9.5 million tons. Given an area planted to grains of 17.1 million hectares, and an average yield of about 760 kg. per hectare, this year's harvest is forecast by FAO at 13.3 million tons cleanweight. Official sources put the crop at between 11-12 million tons. Wheat production is estimated to increase by 1.2 million tons to 9 million tons this year, while coarse grain output is estimated at around 4 million tons compared to only 2.8 million tons in 1995/96. Growing conditions have been better than last year, but the reduced use of fertilizers, which was the main cause for the poor harvest last year, will keep yields below average.

Indications are that production of potatoes, vegetables and sunflower seeds are likely to increase while both the area and yield of sugarbeet is expected to fall. Livestock numbers have been cut back very sharply during the past two years with marked declines in the domestic production of meat (-20 percent), milk (-13 percent) and eggs (-30 percent) in 1995. This trend is forecast to continue also into 1996.

Production of cereals for export is profitable. Customs and grain exchange data indicate that the country has likely exported more than 5 million tons of grain in 1995/96, by sharply drawing down stocks and reducing feed use of grains. The bulk of these exports - nearly three-fifths - were destined for the Russian Federation during 1995-96 and the balance went mainly to the Central Asian States including Uzbekistan. Provided the 1996 harvest estimate materializes, Kazakhstan could export up to 4 million tons of wheat and about 400 000 tons of coarse grains to its traditional customers. However the Federal procurement target of 1.1 million tons as well as the oblast procurement targets have to be met before grain may be exported legally through the grain exchange. Aggregate food supplies are plentiful but there have been reports of localized shortages. Large parts of western Kazakhstan consist of desert, and living conditions in such infertile surroundings, and in depressed industrial towns, have become very difficult.

6.6 Kyrgyz Republic

The area sown to cereals increased by about 4 percent despite shortages of all the major inputs. Growing conditions were better than last year with good winter precipitation and snow cover replenishing soil moisture and irrigation reserves. Harvest returns indicate a sharp recovery from last year's poor yields. The 1996 harvest is tentatively forecast to increase to 1.16 million tons, somewhat less than earlier anticipated by the Government, but nevertheless substantially better than last year's crop of less than 1 million tons. Output of wheat could rise to 850 000 tons in response to the larger areas sown and better yields.

Production of potatoes, vegetables and sugarbeet are all expected to increase. Livestock numbers are still being cut back in view of the shortage of grain feed, overgrazing, and the fall in demand for wool. Following last year's dry conditions, meat, milk and egg production declined but improved grazing and fodder availability this year could result in a small recovery in meat and milk production, but egg production is expected to fall further.

Provided the harvest forecast materializes, the country could almost be self sufficient in wheat, production of which has nearly doubled since 1991. For 1996/97 the domestic cereal requirement is estimated at 1.18 million tons including 620 000 tons for human consumption, 310 000 tons for feed and 250 000 tons other uses, mainly for seed. Domestic resources (with rice in milled equivalent) amount to 1.16 million tons leaving an import requirement of only 17 000 tons. Against this requirement, 7 000 tons have already been pledged. In 1996/97 the country will receive direct budget support from the EC instead of food aid for monetization. Disbursement is conditional to the implementation of reforms in the agricultural sector, particularly land reform and privatization of the cereal/bread processing and distribution chain.

6.7 Moldova

The area sown to cereals remained stable but persistent hot and dry conditions at critical stages in the growing cycle for both winter and spring grains have reduced average yields by a third and the aggregate output of cereals and pulses is forecast to fall to 1.7 million tons from about 2.6 million tons last year. Output of wheat is expected to fall by some 0.4 million tons to 0.7 million tons while output of coarse grains, which were severely affected by the dry conditions, is forecast to fall by 0.4 million tons to 1 million tons.

Output of all other crops is also expected to decrease. Egg production rose in 1995 but livestock numbers and meat and milk output appears to have declined further and this trend is expected to continue this year. Since 1991, animal numbers have been cut back by 32 percent for cattle and 45 percent for pigs.

The country was a small net exporter of cereals in 1995/96 but is expected to need to import some 215 000 tons of cereals in 1996/97, including 150 000 tons of wheat as well as rye and some barley for animal feed.

6.8 The Russian Federation

It is increasingly difficult to make an accurate forecast of the harvest, given that policies regarding input financing, output pricing and the movement of grains vary hugely between regions and agro-meteorological yield models rely partly on historical data which may be underestimated.

The area sown to cereals is estimated by FAO at 53.8 million hectares in 1996, about 1 million hectares less than last year and almost 8 million hectares less than in 1991. The winter grain area increased by about 2 million hectares partially offsetting the reduction in spring grain sowings. The aggregate area sown to wheat rose about 2 million hectares in 1996, while that planted to coarse grains and pulses declined by nearly 3 million hectares.

Overall, weather conditions have been better than in 1995, when a prolonged drought sharply reduced yields. After a poor start, growing conditions for winter crops were mostly favourable. Winterkill was limited and average yields were markedly better. Spring grains were adversely affected by hot weather in May and a hot and dry spell in July, particularly in parts of the North Caucasus, southern Urals Regions, and some oblasts in the Central Chernozem. Harvest weather for grains was satisfactory in August but heavy rains in Siberia in September and October caused harvest delays, lodging and germination, reducing the quality of an otherwise good crop. Current official forecasts point to a harvest of 67-70 million tons, compared to 63.5 million tons in 1995. However, that year, the harvest was underestimated by some 5-7 million tons according to some official sources and by even more according to some trade estimates.

Under current conditions of farm indebtedness and payment delays by the Federal Fund, underreporting of output is likely to remain a feature and difficult to quantify. However, in the current year, when the market is more transparent, the trade better organised and inflation expectations lower, the element of underestimation could be less. Oblast restrictions on the movement of grains outside the regions have been outlawed by decree and infringements have been successfully combated. More stringent controls and tax collection efforts are also expected to reduce fraud.

FAO tentatively forecasts the 1996 harvest of cereals and pulses at around 75 million tons, cleaned weight, compared to an estimated 68 million tons last year. Output of wheat, at more than 38 million tons, is expected to be more than six million tons higher than last year. Output of coarse grains is estimated at nearly 34 million tons, about one million tons higher than the drought-reduced crop of 1995. Output of rice and pulses are estimated to fall to 0.4 and 1.8 million tons, respectively. The area sown to pulses is decreasing steadily and poor maintenance of the irrigation infrastructure in rice growing areas has reduced yields somewhat.

Current indications are that the 1996 harvest of potatoes could increase from last year's 39 million tons, while output of vegetables and sunflower seeds remains fairly stable. Potato production is difficult to estimate precisely given that the majority of it takes place in the private sector. The yield of sugarbeet was adversely affected by the relatively dry August, so beneficial for the grain harvest.

The decline in the livestock industry is expected to persist but at a slower rate than last year. A census of livestock held by individual households indicates that animal numbers in the household sector have remained stable while numbers on the large enterprises fell. Since 1991, the dairy herd has been reduced by one fifth while pig, sheep and goat inventory numbers have more than halved. Production of compound feed has declined to a quarter of the 1990 level and feedgrains shortages in 1995/96 have delayed any recovery in the livestock sector for another 2-3 years. Output of milk and eggs has fallen by about one third, and meat by two fifths.

Despite the 30 percent fall in agricultural production since 1991, there is no shortage of food, mainly reflecting increasing imports, particularly of meat, sugar, fresh fruits and vegetables as well as intensified production on household and subsidiary plots. Demand for cereals has fallen sharply in recent years, mainly due to the retrenchment in livestock production. Official consumption data indicate that human consumption of grains has remained stable in the past three years, with reduced waste thought to offset higher per caput intake. Following the sharp fall in grain production in 1995, imports of about 6 million tons supplemented with a sharp drawdown of stocks ensured a stable supply of foodgrains in most areas and permitted exports of over 0.7 million tons of cereals.

In 1996/97, cereal imports are expected to decline to about 4 million tons, and include 3 million tons of wheat. The bulk of these imports are likely to be sourced from Kazakhstan and Ukraine, leaving an estimated 0.5 million tons of wheat to be imported from outside the CIS, for the Far East. Imports of coarse grains are forecast to decline by about half a million tons to 800 000 tons, including barley and maize, the latter mostly from outside the CIS. Imports of rice are estimated to fall to about 150 000 tons from 260 000 tons in 1995/96, including CIS intra-trade. Exports of cereals in 1996/97 are tentatively forecast at around 1 million tons, fairly evenly split between wheat and coarse grains.

6.9 Tajikistan

Systematic and reliable information on agricultural production is difficult to obtain in this strife-torn country. However, in response to chronic shortages of wheat in past years, the area sown to cereals has increased very sharply to about 400 000 hectares, of which about 150 000 hectares were irrigated. Farmers have sown wheat on every spare piece of ground not occupied by state farms. This includes vegetable gardens, orchards, roadside verges and river banks as well as some traditional hilly pasture lands.

Growing conditions this year have been better than last year and there is general agreement, confirmed by the FAO Mission in June/July, that the 1996 cereal harvest will be about 400 000 tons, markedly better than last year's, estimated by FAO at about 300 000 tons. However, output of most other foodcrops and fodder are forecast to decline as land has been diverted to wheat. Output of cotton, the main cash crop, is expected to fall by a third. Production of meat, milk and eggs is also anticipated to fall sharply in response to the lack of concentrate feed and the reduced areas available for fodder and grazing.

Even with the higher cereal production in 1996, the country faces a substantial foodgrain deficit. Widespread poverty is expected to keep the food supply situation precarious. The risk of food shortages is particularly acute amongst the poor in urban areas and in areas affected earlier by civil strife. The 1996/97 cereal requirement is estimated at 760 000 tons including 660 000 tons for human consumption (or about 360 grams per person per day for a population of 5.5 million), and 100 000 tons for feed and other uses, mainly seed. Against this requirement, domestic supplies amount to 390 000 tons (excluding pulses with rice in milled equivalent), leaving an import requirement of 370 000 tons. Foreign exchange and creditworthiness considerations are expected to limit the country's import capacity and some 107 000 tons of food aid are expected to be necessary. Against this requirement 41 000 tons have been pledged to date leaving an uncovered balance of 66 000 tons in addition to the humanitarian relief supplies for the 620 000 most vulnerable people. These include populations displaced as a result of civil strife, elderly pensioners, war-widows with children, large single-parent families, orphans and the disabled/invalids. In 1996/97 the country will receive direct budget support from the EC instead of food aid for monetization. Disbursement is conditional to the implementation of reforms in the agricultural sector, particularly land reform and privatization of the cereal/bread processing and distribution chain and liberalization of cereal prices.

6.10 Turkmenistan

Current Government policies aim at rapidly increasing output of wheat, meat and milk while maintaining cotton production. In an attempt to achieve self-sufficiency in wheat, the areas sown to cereals have been expanded to nearly 700 000 hectares in 1996, from some 187 000 hectares in 1990. That of wheat has increased from 60 000 hectares in 1990 to nearly 600 000 hectares in 1996 [/ For the 1997 crop, the wheat area target has been reduced to 400 000 hectares.] /, partly at the expense of forage and feed crops, cotton and vegetables. Average wheat yields, however, have declined steadily since 1994 as additional marginal land was brought into production while investment in farm machinery, spare parts and inputs declined and compulsory deliveries of virtually the entire crop to the state at low, fixed prices offered few incentives to farmers to increase yields.

In 1996, the average yield of wheat roughly halved to less than 1 ton per hectare as a result of inadequate irrigation of the crop, extremely late plantings and very little fertilizer application. The aggregate output of cereals in 1996 is estimated at nearly 650 000 tons, compared to 1.1 million tons in 1995.

Output of potatoes has remained low as yields are constrained by poor seed material. Production of vegetables is expected to decline in response to low prices, inadequate processing and storage facilities and the loss of export markets. Critical shortages of inputs and infestations of white fly are expected to reduce the cotton harvest, the major cash crop, the proceeds of which are used to finance imports of food.

According to the available data, the animal herd, notably sheep and cows, is increasing steadily while the area planted to fodder and the availability of feedgrains are both declining. Animal productivity and output of pork and eggs have fallen steadily but, nevertheless, aggregate meat and milk production increased somewhat between 1990 and 1995 but could decline this year following the poor harvest. All of the increase up to 1995 occurred in the household and private sector, while herd size and output in the large farm enterprises have decreased.

The overall food supply situation remains difficult due in part to the seasonal and erratic supply of staple foods such as dairy products, fruit and vegetables. Salaries are low and only the availability of rationed subsidized foodstuffs allows the maintenance of minimum consumption levels. In rural areas the pressure of the government procurement quotas keep consumption levels low, also because the size of the subsidiary plots on which additional food can be grown is small (10 by 15 metres on average). Per caput intake of most foods has decreased since 1991. All in all the average consumption level of basic foodstuffs still appears to be acceptable but there are large differences between regions, with shortages in some products notably in the northern and Caspian districts. Nutrition surveys have indicated widespread deficiencies in the intake of vitamins and other minerals.

In 1996/97, the cereal requirement is estimated at 1.26 million tons and includes nearly 650 000 tons for human consumption, while feed use and other uses of cereals is expected to contract by almost 350 000 tons to some 500 000 tons as foreign exchange and budget constraints limit the amount of subsidized bread that can be provided. Against this requirement domestic supplies are estimated at 750 000 tons, leaving a minimum cereal import requirement of 510 000 tons. The quantity of cereals imported commercially has fallen in recent years. Following the partial failure of the wheat harvest and the anticipated poor cotton harvest, the country has requested assistance in the form of concessional credits or food aid in wheat.

6.11 The Ukraine

Following prolonged dry conditions this year, only 13.7 million hectares of the 14.5 million sown to grains are expected to be harvested. Based on recent returns, the 1996 cereal and pulse harvest is officially estimated to be around 27 million tons. However there is strong evidence to conclude that yields may be under-reported by as much as 5-10 percent as wheat and malting barley are diverted out of the state controlled channels.

FAO estimates the 1996 Ukrainian total cereals harvest (including pulses) at 29.4 million tons, including 16 million tons of wheat, 12 million tons of coarse grains, and 1.3 million tons of pulses. This compares to 35 million tons in 1995 (FAO estimate). Lower wheat yields were almost offset by larger areas planted and reduced winterkill, and wheat output is estimated to have declined only slightly from 1995. The decline in coarse grains output, especially barley, was much sharper - nearly 30 percent - as, in addition to a lower area, yields were also reduced. The areas sown to potatoes and sunflowers increased but growing conditions have not favoured these crops either.

The reduction in 1996 output reflects unfavourable growing conditions this year, with hot and dry weather in the spring and summer adversely affecting winter grain filling and spring crop establishment and development, particularly in the southern and eastern oblasts, where a larger area was hit by drought than last year. Yields in central and northern regions were also lower but not to the same extent. Low levels of input use, such as fertilisers and plant protectants, also influenced yields.

Large scale livestock farming continued to remain generally unprofitable and herd numbers (particularly cattle) were cut back sharply in the past two years. Between 1991 and 1996 (1 January) livestock inventories have been reduced by nearly 30 percent for cattle and pigs and about 50 percent for sheep, goats and poultry. Indications are that sharp cutbacks and reductions in meat, milk and egg production have continued also in 1996.

Domestic utilization of cereals has fallen sharply in recent years mainly reflecting reduced feed use. Stocks, particularly of wheat, remain high reflecting government policy to maintain large stocks and limitation of export possibilities, particularly of wheat and flour outside the CIS because of infrastructure and quality considerations. Despite this, the country became a large net cereal exporter in 1995/96, importing only 200 000 tons of cereals and exporting an estimated 1.2 million tons of wheat (mainly as flour) and almost half a million tons of coarse grains to other CIS countries. In 1996/97, despite the poor harvest, the country is still expected to export around 1 million tons of cereals, mostly wheat. The recent introduction of tariffs by the Russian Federation on imports of flour and other foodstuffs from Ukraine, could reduce trade with that country this year.

6.12 Uzbekistan

Agricultural policy emphasises a gradual approach to reform and import substitution of cereals, meat and sugar, while maintaining cotton production at about 4 million tons per annum. Grain production has increased in recent years but the real extent of this rise is difficult to ascertain as official statistics tend to overstate the extent to which the annual grain area and production targets have been fulfilled. Official data indicate that since 1991, the area sown to grains has risen from under 1.1 million hectares to over 1.7 million hectares (of which 1.2 million hectares irrigated) at the expense of fodder, cotton and fruit and vegetables. The area sown to wheat has more than doubled to 1.3 million hectares, increasingly displacing barley and maize. However, average wheat yields have declined as the area has increased.

Preliminary official indications are that the 1996 grain harvest is of the order of 2.8 million tons, falling well short of the target of 4.5 million tons. This level of output is close to last year's level, initially officially forecast at 3.2 million tons and subsequently revised downwards to around 2.7 million tons. Although winter growing conditions were better than last year, inadequate producer incentives, cropping practices and availability of inputs for the larger areas sown probably reduced yields. Only grain and cotton remain subject to compulsory state orders.

As regards other basic foodcrops, the output of potatoes is expected to be close to last year's and that of vegetables lower. The area sown to cotton is estimated to have declined marginally from last year to 1.45 million hectares, but early reports of the cotton harvest are optimistic. The cattle and dairy herd declined for the first time during 1995. Animal productivity declined further and output of meat, milk and eggs is forecast to decline in 1996 in response to shortages of feed.

Despite the campaign to increase wheat production, and sharp increases in the price of bread, the country remains heavily dependent on grain imports for its consumption needs. Because of low carryover stocks, imports of nearly 2.4 million tons are estimated to be necessary in 1996/97, a level slightly above last year's. Imports of wheat are estimated at 2.2 million tons while imports of coarse grains are put at nearly 200 000 tons. One million tons of wheat and 50 000 tons of maize are expected to be imported from abroad. The balance is likely to be sourced in neighbouring countries, notably Kazakhstan and the Russian Federation.

This report is prepared on the responsibility of the FAO Secretariat with information from official and unofficial sources and is for official use only. Since conditions may change rapidly, please contact Mr. Abdur Rashid, Chief, ESCG, FAO, (Telex 610181 FAO I; Fax: 0039-6-5225-4495, E-Mail (INTERNET): [email protected]) for further information if required.

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