Beef and dairy in Tajikistan Market opportunities Structural - PowerPoint PPT Presentation

This project is funded by The European Union Beef and dairy in Tajikistan Market opportunities Structural bottlenecks and Strategic options for development

This project is funded by The European Union The pull force of the market

This project is funded by The European Union According to FAO/OECD, in the next decade 80% of the increase in world consumption of beef and dairy will come from emerging countries where there is strong income elasticity for food, especially better food (animal proteins, fruit and vegetables) Average income elasticities for various food categories across 144 countries in 2005 (FAO, Milk and dairy products in human nutrition, 2013) 0,90 0,83 0,80 0,79 0,76 0,80 0,72 0,69 0,66 0,70 0,60 0,59 0,60 0,55 0,53 0,51 0,49 0,50 0,36 0,40 0,34 0,30 0,20 0,08 0,10 0,00 Dairy Meat Fruits Cereals Low-income countries lower middle-income countries Middle-income countries High-income countries

This project is funded by The European Union The best example of this “quality food” revolution is China Production of rice, beef and dairy in China (t, 1961=100, Faostat) 18.000 16.000 14.000 15.238 12.000 10.000 8.000 6.208 6.000 4.000 2.000 385 - 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Rice (paddy) Meat, cattle Milk, whole, fresh

This project is funded by The European Union In Tajikistan, per capita consumption of animal products fell abruptly in the 1990s because of the impact on household income of the end of the FSU and of the Civil war. It still remains much below former Soviet levels Consumption per capita (kg/person/year, TajStat) 200 180 171 160 140 120 100 88 80 72 60 58 47 40 26 20 6 15 5 0 1991 1992 1993 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Meat Milk Eggs (number)

This project is funded by The European Union Levels of consumption of beef per capita in Tajikistan are currently much lower than in most neighbour countries Consumption of beef (kg/capita/yr, 2013, Faostat) 30,0 28,2 26,1 25,0 23,4 19,7 20,0 17,0 14,9 15,0 12,7 11,6 9,0 10,0 6,0 4,4 5,0 3,6 - Uzbekistan Turkmenistan Kazakhstan Armenia Russian Kyrgyzstan Azerbaijan Turkey Ukraine Georgia Tajikistan Iran Federation

This project is funded by The European Union The same applies to milk for which FAO recorded levels of 45 kg/capita/year are also much below the minimum level recommended by the WHO Consumption of milk (kg/capita/yr, 2013, Faostat) 300 258 250 203 200 163 152 144 150 128 125 119 102 100 90 45 50 18 0 Kazakhstan Kyrgyzstan Armenia Turkey Georgia Turkmenistan Uzbekistan Ukraine Russian Azerbaijan Tajikistan Iran Federation

This project is funded by The European Union These very low consumption figures reflect the fact that Tajikistan remains the poorest post Soviet Republic, even though its poverty rate has reduced from 96% of the population in 1999 to 31% in 2015 GDP per capita PPP USD 2014 (USD, WB) 30.000 24.449 24.108 25.000 20.000 18.246 17.761 14.217 15.000 9.209 10.000 8.681 8.164 5.630 4.998 5.000 3.622 2.698 -

This project is funded by The European Union Reduction of poverty rates is a result of fast GDP growth, the fastest among post- Soviet countries that do not benefit from an oil-and-gas natural resource rent Average GDP growth 2006-2016 (%, source IMF) 12 9,9 10 8,4 8,3 8 6,8 6 5,2 5,1 4,8 4,3 4 2 0 Turkmenistan Azerbaijan Uzbekistan Tajikistan Kyrgyz Republic Kazakhstan Georgia Armenia

This project is funded by The European Union Growth in GDP has impacted the volume and structure of consumption. While in 1999, an astonishing 87% of expenses of households were for food only, and more than half of food consumption was for bread Share of various products in household consumption of food (1999, TajStat) tea, coffee, soft drinks; 2,3 eggs; 1,4 vegetable sugar & confectionery; 4,4 oil, 7.9 milk & milk products; 5,1 fish & fish products; 0,1 meat & meat products, bread & bakery products, 52.5 10.6 fruits & berries; 4,5 vegetables & melons; 7,3 potatoes; 4,0

This project is funded by The European Union … in 2015 the share of food has fallen to 57% of total expenses and bread now accounts for only roughly one-third Share of various products in household consumption of food (2015, TajStat) 2,0 9,3 2,8 bread & bakery products potatoes 34,5 vegetables & melons fruits & berries 11,4 meat & meat products fish & fish products milk & milk products sugar & confectionery 3,6 0,3 eggs vegetable oil tea, coffee, soft drinks 3,7 16,9 9,4 6,1

This project is funded by The European Union Until recently, growth was driven by remittances from Tajik migrants to Russia. In 2013, they accounted for 51% of GDP. Remittances led to an impressive increase in household income. But after the Russian crisis there was an abrupt reversal Transfers inflows and household income (total, thousand USD, NBT, CBR) 6.000.000 4.923.061 4.907.911 5.000.000 Private transfers received ('000 USD, NBT) 4.235.504 Household income (thousand USD equivalent, NBT) 4.000.000 3.704.526 3.512.148 3.423.711 3.026.484 3.000.000 2.748.688 2.616.184 2.071.512 2.000.000 1.443.030 1.203.846 1.000.000 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

This project is funded by The European Union in H1 2017, remittances from Russia to Tajikistan have rebounded by 23% as the Russian economy is now back on track. We therefore expect a rebound in household income 6.000.000,00 Transfers inflows and household income (total, thousand USD, NBT, CBR) 5.000.000,00 4.923.061 Cross-Border Transfers of Individuals from Russia (CBR, '000 USD) 4.304.657 Private transfers received ('000 USD, NBT) 4.000.000,00 4.173.000 Household income (thousand USD equivalent, NBT) 3.423.711 3.000.000,00 2.388.000 2.000.000,00 1.929.000 1.203.846 1.000.000,00 0,00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (forecast)

This project is funded by The European Union Tajik growth is also driven by the USD 200 bn (OBOR) Silk Road strategy of China. Apart from the construction of infrastructure, Chinese firms invest in industry which currently increases by 20% per annum Components of GDP growth (index 2004=100, NBT) 260 240 238 233 229 220 220 219 GDP (2004=100) 206 205 200 Industrial production (2004=100) 199 198 194 Agricultural production (2004=100) 190 182 180 177 176 170 160 160 159 158 152 147 147 146 140 138 138 133 132 127 125 125 123 122 120 116 114 114 114 109 109 107 103 100 100 100 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (forecast)

This project is funded by The European Union In dairy and meat processing, local investors have also increased their official output. But real growth is higher as firms are under-reporting because of an excessive tax burden. Total Tax and Contribution Rate is 65.2% according to the WB against a regional average of 33.4% Production of agro-food processed products (2015, index 2010=100, TajStat) 1.200 1.065 1.000 800 661 600 412 374 354 400 231 191 150 200 136 71 57 50 32 32 17 - Cheese Butter (t) Sausage (t) Sugar Dairy Pasta (t) Non alcoholic Meat Mineral Vegetable oil Dried fruit (t) Canned Canned Preserves Canned confectionery products drinks processing (t) water (thousand t) processed processed (million units) vegetables (t) (milk (thousand (thousand tomatoes fruit (million (million units) equivalent, hectolitres) hectolitres) (million units) units) thousand t)

This project is funded by The European Union Subject to better tax environment, there could be massive increase of local agro- processing as current volumes produced per capita are just microscopic. Only 3% of milk consumed in the country is officially processed by local dairy factories! Processed agro-food products per person (kg, 2015, TajStat) 5,00 4,76 4,50 4,00 3,50 3,00 2,50 1,88 2,00 1,70 1,69 1,50 1,26 1,17 1,00 0,69 0,48 0,36 0,50 0,19 0,16 0,03 0,02 0,02 0,00

This project is funded by The European Union The pull force of the market is also qualitative. Most food products are still sold informally, but modern retail in Tajikistan is growing quickly, following in particular the recent opening by Schiever TJ of the first hypermarket Auchan (Achan)

This project is funded by The European Union The milk and meat supply side Recent evolution and key structural bottlenecks

This project is funded by The European Union Agriculture generates 21% of Tajik GDP and employs most of the rural population (74% of total population). Since FSU, there has been robust growth in output Gross Agricultural Output 2014 (1992=100, FAOSTAT) 220 200 194 183 180 180 170 160 154 150 140 128 115 120 109 100 93 87 79 80 60 Uzbekistan Armenia Tajikistan Iran Azerbaijan Turkey Kyrgyzstan Belarus Ukraine Russia Kazakhstan Georgia