European Union in partnership with the Executive Office of the Sughd Oblast
Promoting the Modernisation of the Fruits and Vegetables Value-Chains in Tajikistan
Sughd Oblast, 30–31 October 2018
“Support Strategies of International Donors to the Modernisation of Tajik Agriculture,
with a Focus on the Fruits and Vegetables Value Chains”
Jan-Peter Olters, World Bank Country Manager for Tajikistan
Chair, Development Coordination Council
Today’s potential of increasing agri-food exports is only dwarfed by tomorrow’s opportunities in the large markets of Central, East, and South Asia and beyond. High rates of population growth in Tajikistan and neighbouring countries, rising levels of income in countries of destination, accelerated trends towards urbanisation, changes in consumer preferences (with an increased premium being paid on the quality of food products), and distinctly different markets for specialised products in Tajikistan and Central Asia, in China, in Afghanistan and Pakistan, in the Gulf countries, and in Russia support the prospects for very dynamic agriculture and agribusiness sectors. Undoubtedly, the demand for food—especially organically grown fruits and vegetables—will grow dramatically over the next few years and decades. At present, Uzbekistan and Kazakhstan are investing massively to create markets for horticulture, livestock, and other niche products, spanning production, processing, transport, and export. The mere size of, and enormous demand from, hundreds of millions of potential customers allows Tajikistan (now with “in principle” access to neighbouring markets) to tap into this potential and, in so doing, have agribusiness play a central role in reviving the modernised “Silk Road”. Flourishing trade can, should, and (I am sure) will serve as powerful tractor to pull Tajikistan’s economy onto the path of investment, innovation, and rising and more secure incomes. To succeed, the country has all the most important ingredients—abundant water, a great climate, and a geographical location in the direct vicinity of about one-third of the world’s population. Everything else becomes a political and technical challenge that the private sector can resolve with the support of a Government that is playing its role of providing an attractive business climate with properly functioning institutions to facilitate processing, transport, and trade.
To realise its export potential, especially in higher-value products (including niche products like medicinal herbs), Tajikistan needs to focus on overcoming constraints along agricultural value chains. The Agribusiness Investment Forum today provides an excellent occasion to provide critical input towards approaches to overcome constraints in (i) production and processing (low yields, the lack of cold storage facilities, insufficient irrigation); (ii) technology (including the need to reinforce sanitary and phytosanitary capacities); and (iii) institutions (not least those that maintain expensive transport monopolies, arduous customs procedures, and restrictthe private sector’s role in agribusiness). Apart from urgent priorities in the broader PSD agenda, including those linked to fair competition, the predictability of effective tax obligations, and a supportive institutional and infrastructure environment, the Development Coordination Council has identified as principal constraints that prevent Tajikistan from increasing its exports of fruits and vegetables (i) the insufficiently upgraded infrastructure needed for certification compliance and food quality; (ii) fragmented supply chains; (iii) uneven playing field in exports; and (iv) high transport costs.
While restricted food-safety certification capacities might not yet limit severely food exports to local markets in Afghanistan, they present critical obstacles to creating added value and markets in China and other high-end markets. Most importantly, these constraints prevent Tajik farmers and agribusiness entrepreneurs from developing a reputation for products “made in Tajikistan” and earning price premia for their products, in established markets as well as in new ones. This would be a foregone development opportunity, as natural endowments allow Tajikistan to compete on quality, not on price on local markets as well as those in Central, East, South Asia, in Russia, or in the Gulf countries. Thus, it would be critical to have Tajik fruits and vegetables, and products processed from them, be sold to supermarkets (which require stricter quality and safety certifications) rather than be offered in open markets or alongside the road. As such, farmers could extend the time period, over which they earn income, and they would increase the overall value of their produce. Such a focus is even more important as Tajikistan, given its small size and mountainous landscape, does not have any comparative advantage vis-à-vis its Central Asian neighbours in competing with horticulture exports on volume. Today’s Forum is an excellent occasion to emphasise that Tajikistan can and should focus its attention on quality as the principal key to opening the doors to higher-end markets.
And, beyond the attention paid to addressing the domestic constraints limiting horticulture exports, it is equally critical to focus on understanding important import markets.Farmers require timely information about the opening and closing of cross-border markets with Afghanistan, which—at present—occurs principally by trial and error and word of mouth. More critically, to be able to export to China, Russia, the Gulf states, or other high-end markets, potential exporters require up-to-date information about import requirements, regulations, standards, and key players, akin to efforts undertaken by other importers entering these markets. Here, there are important links between agriculture and education, ensuring that the curricula of the Tajik Agrarian University reflect the emerging needs in this particular sector.
There is a consensus view among DCC members that agriculture and agribusiness—for economic, social, and demographic reasons—represents a unique opportunity. To harvest the proverbial fruits of corresponding efforts, development partners are already providing considerable support aimed at instituting sustainable land management and integrated water management systems and developing appropriate policies along the entire value chain, from seeds over machinery and fertilizers to a post-harvest infrastructure comprising storage, processing, and quality control. To coordinate related efforts and devise and implement a comprehensive set of policies across a multitude of institutions, beneficiaries, and partners, the DCC supports plans towards establishing an Agrarian Reform Secretariat and the implementation of policies with which to strengthen the agricultural extension system, transfer knowledge across the entire value chain, and plant the seeds for “climate smart” agriculture by linking reforms and investments to the need to adapt production to the effects from climate change.
For Tajikistan to be able to have agriculture and agribusiness be the powerful four-wheel tractor pulling the economy onto the path of sustainable socio-economic development, overarching policies need to focus on export-orientation and private-sector development. Investments into processing facilities, cold storage, and laboratories will only happen if the private sector feels sufficiently confident that it can indeed realise the opportunities inherent in the changed geopolitical landscape and the largely unconstrained demand for high-quality agricultural products from Tajikistan. In this endeavour, it might prove an advantage that Tajikistan does not need to restructure outdated, overstaffed, and uncompetitive value chains but can focus on promoting “greenfield” investments with most modern equipment, highest standards, and most competitive technology. Allow me please to take the opportunity to convey development partners’ commitment to supporting Tajikistan in planting the seed for a productive industry of high-quality agricultural produce that reinforces the country’s overarching development objectives of (i) increased trade integration and export orientation; (ii) food security and households’ access to high-quality nutrition; and (iii) productive employment in Sughd and the other regions of Tajikistan. Their expectations are policies and institutions that support private business, provide them with the space, confidence, and perspective needed to invest, innovate, and employ against the perspective of immense export opportunities in neighbouring markets. There is no reason why lorries returning to China have to leave Tajikistan empty and its people bereft of very considerable income opportunities.