2013 as part of global capital outflows from emerg- ing markets, plunged further to new depths in 2014, largely as a result of western sanctions and tumbling oil prices. By mid-December, the ruble had lost more than 75 percent of its value against the dollar over 12 months. More than half of the loss took place aſter the last week of October, coinciding with a similar decline in oil prices. Kazakhstan was also compelled to perform a 19 percent devaluation of its currency in February 2014. Tis has important implications for the economies of Central Asia through remit- tances (Kyrgyzstan, Tajikistan, and Uzbekistan), trade (all countries), and direct investment (Kyrgyz- stan and Tajikistan).
Remittances Economic growth in Central Asia has been blunted by deteriorating economic conditions in the Rus- sian Federation, the region’s main trading partner and source of remitances. Preliminary data on cross-border money transfers from the Central Bank of Russia suggest that remitance flows from Rus- sia to the region have already begun to decline. For example, in the third quarter of 2014 remitance flows to Uzbekistan declined by about 10 percent compared with the same period in 2013.5 Te eco- nomic slowdown in Central Asia also reflects falling global energy and commodity prices. For example, average prices of gold, a major export commodity for Kyrgyzstan and Uzbekistan, declined by more than 15 percent in 2014.
Effects on Food Security It is too early to accurately assess the impact of these negative developments on household food insecurity in Central Asia. However, past experiences suggest that they may manifest themselves in the region through fewer remitances from abroad, condensed employment opportunities, and reduced wages at home. Past experience also suggests that households are likely to reduce staple food consumption, lower diet quality, and cut health expenditures.6 Fallout from the geopolitical impasse between
Russia and western countries, which has exacer- bated pressure on the Russian economy, presents mixed consequences for Central Asian households. Tose reliant on migrant remitances are clearly leſt
vulnerable by the Russian slowdown. On the other hand, the Russian ban on western agricultural prod- ucts has created a void that Central Asian farmers could fill, particularly for fruits and vegetables. Te resumption of northward trade, which was common during Soviet times, would require considerable investment in both export infrastructure and qual- ity control but could further encourage agricultural diversification in Central Asia. Tis could generate new opportunities for the region’s horticulture and livestock sectors, especially in combination with growing domestic demand for fruits, vegetables, meat, and dairy products. Steady economic growth in the past decade, a growing population, and increased urbanization have all contributed to an increased domestic demand for these products. In fact, agricultural diversification through allo-
cation of more arable land to horticulture and feed crops has received increased government priority in recent years. For example, Uzbekistan’s horticul- tural products are rapidly becoming an important source of the country’s export earnings. Still, wheat and coton remain the centerpiece of agriculture in countries like Tajikistan and Uzbekistan; a move toward higher-value products could have an espe- cially positive impact on household incomes there. Agricultural diversification may also provide the added benefit of improving household dietary diver- sity, including nutrition outcomes for children and rural households.7 Moreover, the arid climate that prevails throughout much of Central Asia (with the notable exception of northern Kazakhstan) lends itself well to a variety of popular water-sparing horticultural products, which may prove crucial in a region fraught with water issues. For these rea- sons, countries such as Kazakhstan, Tajikistan, and Uzbekistan are making efforts to diversify their agri- cultural production.
Other Challenges Considerable barriers remain, however, affecting all aspects of the value chain in the horticulture and live- stock sectors. Tese barriers include limited knowl- edge of modern technologies and farm practices, inadequate infrastructure and market information systems, weak food-processing and storage capacity, and limited institutional and technical capacity to
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