Identifier
Created
Classification
Origin
07BISHKEK996
2007-08-07 09:31:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Bishkek
Cable title:  

SNAPSHOT OF KYRGYZ AGRICULTURAL DIFFICULTIES

Tags:  EAGR SENV KG 
pdf how-to read a cable
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UNCLAS SECTION 01 OF 02 BISHKEK 000996 

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR SCA/CEN (GEHRENBECK),ASTANA FOR FAS (GIFFORD)

E.O. 12958: N/A
TAGS: EAGR SENV KG
SUBJECT: SNAPSHOT OF KYRGYZ AGRICULTURAL DIFFICULTIES


BISHKEK 00000996 001.2 OF 002


UNCLAS SECTION 01 OF 02 BISHKEK 000996

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR SCA/CEN (GEHRENBECK),ASTANA FOR FAS (GIFFORD)

E.O. 12958: N/A
TAGS: EAGR SENV KG
SUBJECT: SNAPSHOT OF KYRGYZ AGRICULTURAL DIFFICULTIES


BISHKEK 00000996 001.2 OF 002



1. (SBU) Summary: Shortfalls in agricultural irrigation,
coupled with the effects of alleged incompetence at the
Kyrgyz Ministry of Agriculture, have negatively impacted the
agriculture sector. Man-made problems have exacerbated
infestations of gypsy moths, whiteflies, viruses and fungi to
diminish apple, plum and pistachio harvests. Farmers are
turning away from tobacco and instead are raising livestock,
fruits and vegetables, or are selling their land for
residential development. Despite various disadvantages,
increased credit availability and Kazakh demand for Kyrgyz
produce are augmenting rural incomes. However, the Kyrgyz
agriculture sector's tired infrastructure will continue to
suffer as economic growth and job opportunities outside the
agricultural sector distract attention from the sector's
problems. End summary.


2. (U) Embassy met with Gulnara Shamshieva, director of the
Bai Tushum Micro-Lending Bank; Aurelio Lessing, managing
director of Dimon International Tobacco Company; Bolotbek
Oruzbaev, country director for USAID contractor Winrock
International; and Almaz Orozumbekov, professor at the Kyrgyz
Agrarian University, to discuss challenges to the Kyrgyz
agricultural sector.

Agricultural Backdrop
--------------


3. (U) Kyrgyzstan was one of the first ex-Soviet republics
to privatize agricultural land, but the large number of small
family-run plots makes it difficult to achieve efficiencies
of scale in agricultural production. Nearly half the Kyrgyz
workforce is employed in agriculture or raising livestock,
and, according to the Kyrgyz Statistics Committee, these
workers earn on average $80 per month. The elimination of
taxes on agricultural goods and equipment in 2005 improved
prospects, but has not overcome the insufficient allocation
of resources to maintain the Soviet-era network of wells,
pumps and aqueducts used for irrigating agricultural lands.
(Note: USAID-funded programs are helping stem the decline in
irrigation infrastructure. End note.) As a result, despite
the significant allocation of manpower, agriculture only
generated 29% of Kyrgyzstan's gross domestic product in 2006.

The Resource Challenge
--------------


4. (SBU) Despite glaciers and hydroelectric dams supplying
year-round water supplies, inadequate distribution of water
to agricultural lands is compounded by complaints about the
Kyrgyz Ministry of Agriculture. Several Embassy
interlocutors "complimented" the Ministry for rendering,
through incompetence and to a lesser degree corruption, some
successful agricultural programs useless. Complaints ranged
from shortfalls in the Ministry's technical assistance in
crop selection, fertilizer, pest control and marketing to
wasting resources through duplicative programs. These
difficulties are compounded by the exodus of agricultural
workers to higher-paying jobs in Russia, Kazakhstan and
Kyrgyzstan's capital, Bishkek.

Where Have All the Fruits and Nuts Gone?
--------------


5. (SBU) University professor Almaz Orozumbekov claimed that
up to 600,000 hectares of Kyrgyz fruit and nut trees are
infested with gypsy moths, whiteflies, viruses and fungi.
Onerous customs fees, he noted, make inexpensive gypsy moth
traps difficult to obtain. The Agriculture Ministry, he
added, has not intervened to alleviate these fees and has
failed to provide entomological advice to farmers. The

BISHKEK 00000996 002.2 OF 002


whitefly infestation has been contained in the southern
Fergana Valley where, Orozumbekov explained, local farmers
have devised bacterium treatments and utilized natural
parasites to control the whiteflies. Frequent mutations in
virus and fungus strains force farmers to routinely
reformulate sprays used to combat infestations. The 2006
apple, plum and pistachio harvests suffered greatly from
these infestations.

Tobacco Country
--------------


6. (SBU) Following fluctuations in supply and demand for
tobacco that caused some farmers to shift to raising
livestock, vegetables or fruit, or selling their land for
residential development, Dimon Tobacco's Aurelio Lessing
reported a 30% drop in 2006 tobacco production. He estimated
that 25,000 hectares of fields remained fallow for lack of
seeds or fuel to run machinery. Running at only 75% of
capacity, Dimon is encouraging farmers to grow more tobacco
by introducing more productive varieties of tobacco, granting
interest-free loans for infrastructural support, providing
technical assistance and supplying free seeds for farmers who
sign contracts. Previously, Dimon provided these incentives
without a contractual obligation only to see Kazakh companies
buy up the crops.

Rays of Sunshine
--------------


7. (U) Despite the problems afflicting the sector, rising
incomes and more credit are boosting the value of Kyrgyz
produce. USAID and European Bank for Reconstruction and
Development-supported microcredit initiatives, which focus on
the agricultural sector, have provided $12.5 million in
credits to 9,500 individuals over the past two years. Demand
for credit has exceeded supply to aid agribusiness, and
especially expanded livestock operations. Simultaneously,
anecdotal evidence points to increased exports of Kyrgyz
produce to Kazakh markets. (Note: Regional wheat shortages
have led to a 20-40% increase in bread prices in Kyrgyzstan.
End note.) Plus, a recent deal inked by Prime Minister
Atambayev to supply Kyrgyz produce to the Russian armed
forces might augment rural incomes.

Comment
--------------


8. (SBU) While agriculture provides a strong foundation for
Kyrgyzstan's economy, most farmland and farming population
are located in the country's less urbanized southern reaches
and are removed from the growing Kazakh market. Although
President Bakiyev's southern roots have raised the profile of
rural development issues, the sector's shortcomings require
long-term attention. However, while USAID and other
donor-funded programs are aiding the Kyrgyz to make
improvements in agriculture and other areas, the limited
investment and infrastructural problems besetting the
agricultural sector are repeated in transportation, power
generation, education, medicine and other sectors of the
Kyrgyz economy.

YOVANOVITCH