High-Value Crops Help Central Asia Revitalize Agriculture Sector
Published: 28 October 2020
CAREC countries adopt diversification strategies as they shift to a market-oriented agriculture.
The 11 member countries of the Central Asia Regional Economic Cooperation (CAREC) program—Afghanistan, Azerbaijan, People's Republic of China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan—have undertaken institutional reforms to improve the performance of their respective agriculture sectors.
Previous policies emphasized food security. Now, governments are pursuing diversification strategies by highlighting high-value agriculture, such as horticulture and oilseed production. These policy reforms steered the region from a centrally planned to a market-oriented agriculture sector.
The paper, Agriculture Development in the Central Asia Regional Economic Cooperation Program Member Countries: Review of Trends, Challenges, and Opportunities, takes a comprehensive look at the agricultural and food systems of each country with focus on crop and livestock production, agri-food value chain development, and international agricultural trade.
Conducted by the International Food Policy Research Institute in partnership with the Asian Development Bank and the CAREC Institute, this review provides policy-relevant information that can serve as basis for designing policy interventions for revitalizing the region’s agriculture sector.
The region represents a diverse group of countries in terms of history, economy, culture, and population. Compared with other large global regions, the drive for regional cooperation and integration is relatively recent for CAREC members.
For decades, CAREC countries have engaged in efforts to improve the performance of their agricultural sectors. In the People’s Republic of China, reforms were implemented in the late 1970s while countries in Central Asia, the South Caucasus, and Mongolia started in the 1990s in response to the economic decline after the fall of the Soviet Union.
While specific efforts varied, most reforms were centered on redistributing collective farming management to individual farmers through lease rights or private ownership. Afghanistan and Pakistan, however, failed to implement widespread land reform.
While crop productivity improved since the implementation of land reforms, the economic potential of smallholder farming is constrained by farm fragmentation. Often, smallholders have no adequate access to processing, transport, and retail facilities for their goods, creating postharvest losses and missed income opportunities. For this reason, policy makers are paying more attention to strengthening agricultural value chains and designing ways to provide support services to fill institutional voids created by the decline of large-scale farming that was provided with government support.
CAREC governments are pursuing agricultural diversification strategies to strengthen the value chains. Diversification strategies have focused on promoting high-value sectors, such as livestock, horticulture, and oilseed. However, compartmentalized value chains can be an obstacle to providing high-value products to consumers, especially as they tend to be perishable.
An example of higher horticulture production can be seen with figures below, which show that while wheat yields in the region remained far below the world average of 8.2 tons per hectare in 2017, vegetable yields—especially those of Tajikistan, Turkmenistan, and Uzbekistan—were significantly higher than the world average of 28.9 tons per hectare.
Productivity of Wheat, 2017
Productivity of Fresh Vegetables, 2017
Agricultural trade, especially in Central Asia and Caucasus, has suffered from poor physical and inadequate institutional infrastructure for many years.
In order to enhance trade, harmonized cross-border customs and logistics procedures are important. In 2019, CAREC governments strengthened coordination and transboundary disease control systems and sanitary and phytosanitary measures. It is also improving trade connectivity with other regions.
The Eurasian Economic Union (EEU), which includes several CAREC countries, created a unified customs and trade bloc, removed customs controls between borders, and facilitated trade with nonmember states by creating an integrated transit network. One of its immediate benefits is preferential access to the Russian labor market. Following the Russian economic crisis in 2014–2015, the pipeline of remittances between the Russian Federation and Central Asia evaporated. However, among the three largest labor-supplying countries of the region—Kyrgyz Republic, Tajikistan, and Uzbekistan— Kyrgyz Republic recovered first because it was able to take advantage of preferential EEU labor laws.
The Belt and Road Initiative, meanwhile, aims to improve trade connectivity across the Eurasian landmass, linking the PRC with markets in Europe, the Middle East, and South Asia by investing in physical infrastructure (roads, ports, and telecommunications) for better connectivity. Central Asia plays a key role within this initiative as it borders both the PRC and several European and Middle Eastern markets. While some CAREC members have made some progress in broadband connectivity, most countries in the region still need to make significant investments to extend broadband access to all.
Governments have to contend with limited land and water resources.
Most populated and key agricultural areas in the CAREC region are characterized by arid or semiarid zones that rely on irrigation fed by glacial melts. With increasing temperatures, the region will likely see an initial increase followed by an eventual reduction in glacial melt, which in turn will reduce water availability. Flooding and droughts are also expected to increase, posing additional threat to the agricultural sector, particularly smallholder farmers.
Availability of arable land is another major concern for many CAREC countries. Land degradation and soil erosion are serious challenges in improving agricultural productivity and farm income.
Eliminating inefficiencies in policies and institutions, which existed under the former Soviet Union system, became the focal point for policy reform in many CAREC countries. A wide range of policy measures addressed issues—from land reform, farm reorganizations, and water and land management to price reforms, taxation, and the introduction of market mechanisms. Land use rights and farm reorganization policies created various forms and types of farm entities, ranging from family-based smallholders to large corporations.
Initially, many countries reacted to the disruption of food systems and shocks in international markets by adopting national strategies and supporting agricultural policies focused on achieving self-sufficiency in major staple products and sustaining export levels of selected cash products. Gradually, the emphasis shifted to agricultural diversification and to utilizing export potentials through production of higher-value crops, which improved labor and land productivity.
Some CAREC members are trying to implement land consolidation policies and promote institutional innovations, such as agricultural clusters, to overcome the agricultural development challenges related to land fragmentation. While outcomes of such strategies remain to be seen, some anecdotal pieces of evidence suggest that these approaches may create incentive and efficiency challenges.
Opportunities for Growth
While the agricultural systems of CAREC countries are too diverse to suggest a one-size-fits-all strategy, some common threads appear when considering avenues for further growth.
Agricultural development policy should focus on improving the capacities of small farmers throughout the region. Smallholder farming is an important engine for agricultural development and a crucial employer of the CAREC region’s large rural population. A primary and immediate need is to establish systems that allow farmers to access modern technology, technical know-how, and production inputs to promote productivity growth.
Investment in public goods, such as water, energy, and road infrastructure, can provide the kind of support that would aid household farmers and farm businesses of all types. Because most of the CAREC countries occupy arid or semiarid land surrounded by challenging terrain, investing in irrigation systems and transportation infrastructure must be key elements of agricultural policy.
Improvements in agricultural infrastructure should include the development of support structures for trade, such as storage and logistics facilities. Many CAREC countries have the potential to become global exporters of agricultural products but are constrained by the lack of facilities that would sustain export activities.
Institutional and regulatory frameworks will help regional agricultural products gain access to lucrative markets that are relatively close by, including East Asia, South Asia, the Middle East, and Europe.
The breadth and interconnectedness of the challenges confronting CAREC’s agriculture sectors afford governments, development organizations, and other stakeholders of agriculture a look at opportunities for collaborative research and development interventions.
The diversity of expertise and experiences among member countries—which applies not only to technical capacities and financial resources but also to institutional best practices and policy lessons—can be leveraged to facilitate research and knowledge exchanges.
Central Asia Regional Economic Cooperation Institute. 2019. Agriculture Development in the Central Asia Regional Economic Cooperation Program Member Countries: Review of Trends, Challenges, and Opportunities. Xinjiang.
K. Akramov. 2012. Foreign Aid Allocation, Governance, and Economic Growth. Philadelphia: University of Pennsylvania Press.
S. Mahnovski et al. 2006. Economic Dimensions of Security in Central Asia. Santa Monica: RAND Corporation.
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