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Trends of Agro-industry
• Economic Development
TAJIKISTAN
Tajikistan is a landlocked and low income country with GNI per capita as of US$ 700 in 2009. Total number of
population is 7 million inhabitants, of which 74 percent live in rural area, and the annual population growth is 1.68
percent. Tajikistan enjoyed strong economic performance and macroeconomic stability with 15.2% of annual growth
on average between 2000 and 2008. As a result of the global economic crisis, GDP declined by 8.1 percent in 2009. The
economy remains highly agriculture-dependent with above 66 percent of employment in 2009. The agricultural sector
contributed with 22 percent of value added to GDP with 8.2% of annual growth between 2000 and 2009 boosted
mostly by an increase in non-cotton agricultural production. In 2009 in accordance with the Cotton Debt Resolution of
$580 million the government of Tajikistan, with the help of donors, has resolved a long-standing problem of
accumulated farms’ debt for the growing of cotton by writing debts off. This allowed facilitating new commercial
financing to the agricultural sector. Manufacturing industry generated about 10.8 percent of GDP with 8.3% of annual
growth on average between 2000 and 2009. Investments in Fixed Capital accounted 17.1 percent in 2009 (-8.1%).
Key Economic Indicators
2011
2009
Food and Beverages Industry
2009
GDP, US$ billion
4.98
Output, % of manufacturing
Manufacturing VA, % of GDP
10.8
Value Added, % of manufacturing
Agriculture VA, % of GDP
22.0
Enterprises, % of industry
Employment in Agric., % of total
66.2
Employment, % of industry
9.3
Gross Fixed Capital F., % of GDP
17.1
Investments, % of manufacturing
n/a
FDI net inflows, % of GDP
0.32
FDI inflows, % of total FDI inflow
n/a
R&D, % of GDP
0.06
R&D, % of Output
n/a
Merchandise Trade, % of GDP
71.9
Net Trade, US$ billion
Merchandise Exports, US$ billion
1.01
Exports, %of merchandise exp
4.3
Food and Agriculture Organization of the United Nations
Merchandise Imports, US$ billion
2.57
Imports, % of merchandise imp
8.9
Regional Office for Europe and Central Asia
Global Merchandise Exports rank
142
Exports annual growth, %
• Food and Beverages Demand
In Tajikistan 50 percent of population live below the poverty line. According to the World Bank and the UNDP
Tajikistan made a good progress and the poverty rates have fallen between 1999 and 2009 from 83% to 47%. A share
of total household expenditure declined to 60.3 percent in 2009 compared to 87 percent in 2000. The highest share in
food consumption refers to bakery & macaroni, meat products, sugar & confectionery and vegetable oil. Expenditures
for alcoholic products is very low. Demand for beverages, dairy products and high quality meat and fish is growing in
the capital due to increased number of expatriates.
Agro-industry Outlook
The food and beverages industry forms a modest part of the economy, but it is the second-largest contributor to gross
industrial output, generating TJS278.2 mln (US$60 mln), that represents about 21.5 percent of industrial output
increased by 91% compared to the 2003 level. The food-processing industry employed 9.7 thousand people (or 9.3%
of industrial labor force) working at 265 enterprises (or about 20% of total number of industrial enterprises) in 2009,
most of which are private small or medium-scale enterprises operating seasonally and selling products to local
markets. Labour productivity is low. Important subsectors include the flour and cereals industry, meat processing and
fruit & vegetable processing (mainly canned and dried fruits). Dairy sector is underdeveloped. The F&B industry
performance is not stable over time in terms of output employment share. Domestic retail market is underdeveloped
across the country with no hypermarkets exist. Retail trade of food products generated TJS2.6bln (US$0.6bln) in 2009
sharing 47.5% of the total retail turnover. The industry has a strong demand for capital investments. Opportunities
exist in fruits & vegetables processing, vegetable oil and food-organic production, development of fish and wine
industry.
Chart 1: Food and Beverages Industry Performance
Chart 2: Products Output Share, 2007
21.5
n/a
19.9
-0.19
185
Agro-industry National Policy Framework
National Development Programme. The key document setting out the Government policies for the
country, agriculture, rural and agro-industry development include: (i) the National Development
Strategy for 2006-2015; (ii) the third Poverty Reduction Strategy for 2010-2012; (iii) the Programme
of Economic Development up to 2015 (2004); (iv) the Concept of Agricultural Policy up to 2015 with
an Action Plan for the comprehensive Agrarian Reform (2009); (v) the Development Programme for
Cotton Industry for 2010-2014; (vi) the Development Programme of Seed Industry for 2010-2014;
(vii) the Strategy of Reforming of the State Governance (2006).
In 2010 the Agricultural Information Marketing System of Tajikistan was established for providing
services to the management of agricultural business as well as the State Committee on Investments
and State Property Management was established in 2006 with a focus on the foreign aid coordination.
Tajikistan is a recipient of significant international aid. In 2009 the Government of Tajikistan and 12
Development Partners from International Organisations signed a Joint Country Partnership Strategy
for 2010–2012. Donors hold Food Security cluster meetings as a focus on coordinating emergency
response in the field of food security, agriculture and nutrition in Tajikistan. Besides, the Donor
Coordination Council was established with the purpose of improving multi-way flow of relevant
information among donors, government agencies and civil society institutions. Together with the UN
organisations Tajikistan elaborated UNDAF for 2010-2015. Between Tajikistan and the EU the
Partnership and Coordination Agreement was signed in 2004 that entered into force 2010 with a
focus of the EC assistance on rural development and poverty reduction, agriculture and land reform,
promotion of good governance and economic reforms.
Legal Framework. Tajikistan adopted a number of laws to encourage agricultural growth and rural development,
among those are: the Land Code (2008); the Law on Privatization of State-Owned Property that encourages the
participation of foreign investors in the privatization of the national economy; the Decree of the GoT on Resolution
of Cotton-Growing Farms’ Debts and Improvement of Financial Conditions for Agricultural producers (2008);
Presidential Decree on Additional Measures to Support the Agricultural Sector (2009), the Resolution on Reforming
Agriculture (2009); the Law on Dehkan Farm (2009); the Law on the State Protection and Support of
Entrepreneurship (2002, amended 2007), the Law on Geographic Indications (2007); the Law on Public
Procurement of Goods, Works and Services (2006).
Tr ad e L i be r al i z at i o n , W TO A c c e ssi o n an d Tr ad e Per fo r m anc e
Foreign Direct Investments
F o od S afe t y , C e r t i fi c at i o n & Qu al i t y C on t ro l
Regulation. Law on Investment (2007), the Law on
Trade Regulation. Tajikistan has a progress in reforming its trade regime in order to be fully
compatible with WTO rules. The legal basis is the Law on the State Regulation of Foreign Trade
(1999), the Custom Code (2004) among others. The rates of customs duties for the goods imported
to the Republic are established by the Resolution of the Government on Customs Tariff (2003) and
ranges in accordance with a type of goods at rates of 0%, 2.5%, 5%, 7%, 10% and 15%. Due to the
regime of free trade the zero rates are applied for imported customs duty for imported goods
produced in Russia, Kazakhstan, Belarus and Kyrgyzstan. Customs duties are low and the country
does not have strict trade barriers. The excise taxes apply to spirits, alcoholic and non-alcoholic
drinks, vinegar, tobacco and tobacco products. Tajikistan signed 9 FTA and continuing a negotiation
with 15 WTO members, among them, the EU, Japan, Honduras, Canada, the US, Korea, El Salvador
and Dominican Republic.
WTO accession. Tajikistan has been negotiating accession to the WTO for 10 years since May 2001,
and it has gone through various steps of the WTO accession procedure (application, Working Party
creation, memorandum of external trade, no export subsidies, 5 meetings, and agreements). The
current status of Tajikistan in WTO is an observer. As a result of the fifth meeting of the WTO
Working Party that took place in Nov 2010 more clarifications on a number of areas as well as
further trade reforms are required.
Trade Performance. Tajikistan is a net imported country. In 2009 Tajikistan had a negative trade
balance of US$1.6bln that has been steadily increasing till 2008. Processed F&B products accounted
8.9 percent of total merchandise imports and 4.3 percent of total merchandise exports in 2009 with
almost double annual export growth in 2009. Main export commodities are electricity, aluminum,
cotton fibers and fruits (mainly fresh and dried). Fruits & vegetables generated an export value
US$50.5 mln (slightly increased) and cotton – US$99.8 mln (decreased by 28% to the 2007 level).
The main imported products of F&B are: wheat flour (4.6% of total imports), wheat (3.1%), sugar &
confectionery and vegetable oil (each 2%) and alcohol and non-alcohol beverages (0.4%).
Top destinations for F&B products: Afghanistan (84%) and Russia (5.8%) in 2009;
Foreign Economic Activities (1993), the Law on
International Treaties (1999, amended in 2005) and
the Law on Free Economic Zones (2003) provide the
legal basis for foreign investment in Tajikistan. The
State Committee on Investments and State Property
Management of the Republic of Tajikistan coordinate
the foreign aid and investments.
FDI inflows. In 2009 Tajikistan’s FDI inflows
accounted 0.32 percent of GDP experiencing a sharp
reduction by 96 percent to the 2008 level. FDI levels
have increased in recent years, reaching an average
of 3.8% as a share of the GDP since 2000. F&B
industry continues to attract low levels of FDI, mainly
supported by international aid and there are two
joint-venture companies in tobacco industry
.
The vast majority of FDI is directed to the
hydroelectric central power plants and banking
sector. More than 210 joint ventures are established
in Tajikistan with the main activities in textiles, agroprocessing, construction and construction materials,
telecommunications,
and
mineral
resources
exploration. The main five investing countries are
Russia, China, Uzbekistan, Kazakhstan and Turkey.
Donors’ contributions for development purposes in
Tajikistan for the period of 2008-2010 accounted
US$146 million. Since 1997 to 2010 Tajikistan had
signed agreements with donors on grants amounted
US$505 mln and loans on US$2.1 bln. Agriculture and
irrigation are the second sector after energy receiving
the most of support.
Food Safety regulation. Tajikistan is not a member of the Codex
Alimentarius Commission and it has a status of correspondent member in
the International Organisation of Standardization (ISO). Issues of
protection of human health in general and in particular from food-borne
risks are dealt with by the Law on Sanitary-Epidemiological Safety (2003)
and the Law on Veterinary (2003). Food products are a subject to the Law
on Food Quality and Safety (2002), the Law on Consumer Rights
Protection (2004), the Decree of the Government on the protection of the
consumer market from the introduction of unsafe food (1999), the
Regulation of the Government on measures for the prohibition of
processing of foodstuff, feedstuff (1994) and the Law on Technical
Regulations (2010). There are the Norms on Public Nutrition Services
were adopted and amended with the Governmental Decree (2005, 2007).
Certification. The following normative documents on standardization of the
following categories are in force in Tajikistan: international (regional) standards;
interstate standards – GOST (all-Union State Standard); national standards of the RT
– ST RT; branch standards – OST; enterprise standards – STP; technical terms and
conditions of the RT – TU RT. There are above 240 national and GOST standards used
for agriculture and food industry in Tajikistan.
Quality Control. The State Centre for Sanitary Epidemiological Control under the
Ministry of Health and Tajikstandart, which is affiliated with the Ministry of Economy
and Trade with 30 accredited laboratories ensures compliance with standards and
prevents prohibited and non-compliant food products from gaining access to market.
Yet. they seem to have overlapping functions. Harmonization of legislation with
international standards on food safety and quality (i.e. Codex Alimentarius
standards) is still under way. There are still weak official controls over
manufacturing of food ingredients and food products have a negative impact on food
safety and quality. HACCP system has not been introduced yet.
Top origins for F&B products: Russia (28%), Ukraine (6%), Turkey (6%) and Belarus (4%) in 2009
Chart 3: Food and Beverages Trade Performance over time
Chart 4: Share of Exported Product Groups of
F&B in total exports, in 2009
Business Environment and Competitiveness
Business Environment. According to the Doing Business Report 2011 Tajikistan
is making their regulatory environment more favorable to business by
implementing reforms over for all categories of doing business, especially in
protecting investors through a new law, but it has made registering property and
dealing with construction permits more difficult and costly. The country was
ranked (out of 183 economies) as 139 in 2011 (up by 10 points to 2010). Trading
across the borders is ranked as of 178, paying taxes – 165, protecting investors –
59 (up by 49), getting credit – 168, and starting business – 136 (up by 15).
Taxation Relieving. Tajikistan is in the list of the last ten countries of the world
where the highest total tax rate (86% of profit). The tax burden on companies is
still the subject to be improved. Recently only the corporate income tax was
lowered. Agriculture is VAT exempt. Farms are taxed through the Unified Tax for
Agriculture Producers apart from social taxes, personal income and property
taxes, as well as road taxes. A sales tax of 3 percent is applied to state farms,
dehkan farms, and family farms, but not to household plots.
Competitiveness. According to the Global Competitiveness Report 2010-2011
Tajikistan is at 1st stage of development, it got 116 overall Global Competitiveness
Index among 139 countries, having the most five problematic factors of doing
business as follows: access to financing, tax regulations, tax rates, corruption and
poor work ethic in national labor force.
Agr o- indu str y Br ief