TURKMENISTAN: IMPORTED FOOD PRICES DOWN

UNCLAS ASHGABAT 001234 SENSITIVE SIPDIS STATE FOR SCA/CEN ANKARA FOR AGRICULTURAL ATTACH E.O. 12958: N/A TAGS: PGOV EAGR ECON ETRD TX SUBJECT: TURKMENISTAN: IMPORTED FOOD PRICES DOWN ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: The Embassy's recent survey of food costs in Ashgabat confirms that imported food prices have gone down about 19% since a new customs law went into effect in August. Conversely, prices of locally produced staples and other goods have steadily increased in recent months. END SUMMARY. ¶3. (SBU) An Embassy LES who conducts regular checks of the cost of basic food items in Ashgabat grocery stores and markets surveyed prices during the week of September 8-12. In the survey, she noted that the price of imported sugar, sunflower oil, flour and butter had decreased by 25, 20, 19 and 8 percent, respectively. The shopkeepers she spoke with all said that the decreases are a direct result of new customs regulations, which removed customs fees and quantity restrictions on the importation of all types of meat, vegetable oil (excluding cotton seed oil),grain, butter, eggs, and sugar. (NOTE: According to the new regulations, put into effect on August 1st, importers of these food items now pay only a customs formality charge equal to 0.2 percent of the cost of goods. END NOTE.) ¶4. (SBU) In contrast, prices for locally produced food items have remained steadily high, according to our survey, and some had increased significantly - i.e. the price of eggs had increased by 50% and local rice by 25% - due to both increased production costs and shortage of local produce caused by the recent drought. ¶5. (SBU) COMMENT: Consumers have reportedly welcomed the decreased cost of imports and hope that the new customs regulation will encourage more food imports and eventually bring about lower food prices on the local market. Our local staff, however, are pessimistic about the long-term benefits of the policy and believe that it ultimately will benefit only food traders closely connected to the government. END COMMENT. CURRAN