POVERTY: AFGHANISTAN: Pressure on wheat prices

DUBAI, 23 September 2010 (IRIN) - Abundant global wheat stocks and unusually good wheat harvests in Afghanistan in 2009 and 2010 have kept prices in the country relatively stable so far. According the Ministry of Agriculture, Afghanistan will only need to import 14 percent of its wheat needs this year (about 700,000 tons) - down from recent levels of 25-33 percent.
However, there are indications prices could rise in the coming months, placing an additional burden on poor people in a country considered one of the most food insecure in the world.
The floods in Pakistan, which traditionally accounted for more than half of all Afghan wheat imports, could drive up wheat prices. Kazakhstan, another major exporter of wheat to Afghanistan, has seen prices rise following news that the 2010 Kazakh cereal harvest is anticipated to be 22 percent below average. The Russian export ban adds to the pressure on prices. On the other hand Uzbekistan may well be in a position to fill the gap.
On the domestic front, the US Agency for International Development's Famine Early Warning Systems Network (FEWS NET) [ http://www.fews.net/docs/Publications/afghanistan_FSOU_08_2010.pdf ] said in August that food security conditions were expected to deteriorate in production-deficit provinces in southern, eastern, and central Afghanistan where poor harvests and recent flooding had constrained supplies.
Additional pressure on wheat prices is usually triggered by demand for wheat during September, October, and November as Afghans build stocks ahead of winter.
According to a 6 April report [ http://ftp.info.usaid.gov/our_work/humanitarian_assistance/disaster_assistance/countries/afghanistan/template/fs_sr/fy2010/afghanistan_ce_sr01_04-06-2010.pdf ] by the US Agency for International Development, the Afghan government has 70,000 tons of wheat in a newly created Strategic Grain Reserve for use in food emergencies. The government procured the excess wheat from areas with agricultural surpluses in order to support local farmers and meet emergency food needs, but the reserve accounts for only 10 percent of this year's wheat shortfall.

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