Turkmenistan lags behind many of its former Soviet Union counterparts in moving from a command economy to a competitive environment, and land privatization has been slow. The government continues to control wheat production, marketing and processing and all domestic and international contract trade.
Turkmenistan's climate and long growing season enable the country to produce a variety of crops, including wheat, cotton, vegetables and fruit. Although about 82% of the land area is classified as agricultural, much of it is desert pasture, which sustains the highly nomadic livestock sector. Fewer than 2 million hectares are irrigated and used for intensive cultivation.
During the Soviet era, Turkmen agriculture was based on cotton, and at one time Turkmenistan was second behind the United States in cotton exports. Wheat was imported from other Soviet states. But after independence and the breakdown of former trade patterns, Turkmenistan was forced to provide for its own grain requirements. The "Ten Years of Stability" program adopted in 1994 called for the achievement of self-sufficiency in production of wheat, meat and milk.
Subsequently, dairy self-sufficiency increased to 85% from 50%, although meat self-sufficiency has remained roughly constant at 70%. For wheat, self-sufficiency is expected to be attained this season, after area was shifted to wheat from cotton production; additional land was brought under cultivation; and the government, through subsidies and modest reforms, provided production incentives.
Virtually all wheat area is irrigated to at least some degree, and production consists primarily of soft red and soft white winter varieties. Very small amounts of maize, barley and rice also are grown.
Reaching the wheat self-sufficiency goal has been a struggle. During the initial years after independence, Turkmenistan, like many FSU states, suffered from low agricultural productivity. Lack of credit, input shortages and inadequate equipment were common. To improve output, the government in the mid-1990s purchased under credit programs nearly U.S.$100 million of U.S. farm equipment.
Agricultural output also was constrained by inadequate incentives. Almost all wheat was grown on state farms, produced under state order and purchased by the state. Payments were frequently late, and the amount of income actually received by individual farmers was unreliable.
In 1995, the government took steps to privatize state agricultural holdings. The government restructured farm enterprises into farmer associations, bringing collective farms, state farms, and inter-enterprise agricultural farms under the same legal status. Under that arrangement, the associations leased land to individuals or production groups within the farm to produce under state orders.
After a disappointing 1996 harvest, Turkmen officials took another step toward reforming the country's production system by offering private land to farmers. A decree issued in December 1996 allowed individual farmers to receive temporary title to land. After two years, "productive" farmers — those who met targets — received permanent title to the land, which could be inherited but not sold. Wheat farmers generally received 10 to 15 ha under this distribution scheme, and a portion of the land was not subject to state orders, enabling farmers to plant crops of their choice for their own use or additional wheat to sell to the state.
The government also implemented a new credit program for the 1997-98 crop year, whereby the 95,000 private and leasehold wheat farmers and farm associations could receive interest-free loans to purchase inputs and rent equipment at 50% of cost. Wheat production began to turn marginally profitable, although yields remained problematic.
Wheat production in the aftermath of those reforms has increased substantially, from 450,000 tonnes in 1996 to more than 1 million tonnes each year beginning in the 1998 season. The government's target to attain wheat self-sufficiency is 1.5 million tonnes. Turk-menistan hopes to harvest more than 1.6 million tonnes in 2000.
In addition to production incentives, Turkmenistan has invested in its grain handling infrastructure. Most recently, six grain storage elevators with a total capacity of 180,000 tonnes, representing an investment of U.S.$16.2 million, were built under an agreement between the state Turkmen Grain Products Association and the Iranian company Jakhat. The agreement was concluded under a long-term credit allotted by the Iranian government to Turkmenistan.
The six locations for the facilities were selected based on their proximity to rail lines. The elevators, equipped with handling systems from European suppliers, were to be commissioned in August after the completion of Turkmenistan's 2000 winter wheat harvest.
WHEAT MILLING. Bread is the staple food of Turkmenistan, and during Soviet times, per capita wheat consumption was estimated at about 155 kilograms. Most observers think per capita wheat use has increased significantly since then, based on the decline in consumers' purchasing power.
Before independence, Turkmenistan received large amounts of flour from Russia and other republics to meet its consumption needs, in return for cotton. Afterward, Turkmenistan bartered cotton and natural gas for wheat and wheat flour with a number of countries, including India, Pakistan, Iran, Russia, Ukraine and Kazakhstan.
Another goal after independence was to increase milling capacity to reduce the dependence on imported flour. The country's official milling capacity in 1996 was reported to be 1,200 tonnes per day, but several mills were old and inefficient, reducing actual daily working capacity to about 700 tonnes.
In the mid-1990s, the government invested U.S.$112 million to construct a total of six new mills, designed to add a total daily milling capacity of 1,050 tonnes and combined wheat storage capacity of 300,000 tonnes. In addition, small 60-tonne-per-day feed mills were built at each complex to produce ruminant feed from millfeed. Those mills became operational by the end of 1997.
According to government sources, Turkmenistan now has 15 wheat mills with a total annual capacity of 1 million tonnes. Flour production in 1999 was reported at 438,200 tonnes, up from the 316,000 per year averaged in 1996 and 1997. But with internal flour needs estimated at 720,000 tonnes a year, the country must reach its wheat production targets and increase capacity utilization to avoid flour imports.
Although Turkmenistan has privatized a number of food sectors, the state remains in control of all wheat procurement, milling and bread production through the Bread Products Association, created in April 1996 as a result of reforms in the Ministry of Agriculture.
Turkmenistan's standard flour is 75% extraction, although some sources estimate actual output is closer to 80%, with about 1.5% ash content. Flour is available to consumers through the ration system, sold at subsidized prices of 100 manats, or about U.S.$0.02 per kg at the official exchange rate.
The bulk of state-produced flour is used for bread production at 20 state bakeries. The Bread Association "sells" flour to the state bakeries at the same price as its procurement price for wheat.
Several private bakeries also are in operation and consume an estimated 5,000 to 10,000 tonnes of flour annually. Privately produced bread sells for about twice the price of state-produced bread. Restaurants and retail outlets also may purchase flour through the State Commodity and Raw Materials Exchange (Comex), but the process is burdensome.
The government is attempting to lure investment in the small food processing sector to improve efficiencies and reduce costs, as Turkmenistan's people spend almost 50% of their incomes on food.
Turkmenistan's only modern supermarket opened in February 2000 in the capital city of Ashgabat and is owned and operated by Turkish investors. A few other "minimarts" with limited supplies also operate in the four major cities.
An estimated 98% of food is bought in bazaars, which reign in Turkmenistan as the one place where everyone shops almost daily and where everything for sale can be found.
TRADE. Turkmenistan, which is not a member of the World Trade Organization, exercises strict control over imports and exports, primarily through Comex. No transactions exceeding U.S.$5,700 in value, including all domestic purchases and sales, may be concluded legally without Comex approval.
All contracts are registered with Comex, and fees of 0.2% of transaction value must be paid by both the buyer and seller. More significantly, Comex has the authority to deny approval of any contract — domestic, import or export — if, in its view, the price is not "right." Price checks are conducted by comparing the contract price to similar products.
Turkmenistan in 1996 opened a rail link with Iran, connecting Turkmenistan to both the Arabian Gulf via Iran and the Black Sea via Turkey. The rail line enabled Turkmenistan to avoid total dependence on Russia's transportation infrastructure for its strategic trade. It also is significantly cheaper than truck transportation through Turkey or Iran or rail transport through Russia.
Melissa Cordonier Alexander, formerly an editor of World Grain, is now a consultant providing information research services for agriculture.
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