Afghanistan's wheat potential
April 3, 2012
by Susan Reidy
While Afghanistan’s wheat production grew by 3.5% per year from 1990 to 2009, expected increases in demand mean imports will likely grow in coming years.
The production growth was driven mostly by yield increases due to long-term agricultural assistance from international organizations and functioning seed and fertilizer markets, according to a January report from the U.S. Department of Agriculture’s Economic Research Service (ERS). Even if this level of growth is sustained until 2020, model-based simulations indicate it will not be enough to meet expected increases in consumption.
As a result, the nation will have growing dependence on supplies from Pakistan and other countries. To become self-sufficient in wheat production, Afghanistan will have to increase its use of seed and fertilizer on irrigated and rain-fed wheat fields, along with sharp increases in irrigated wheat area.
Wheat is a staple food in Afghanistan, accounting for more than half of the population’s caloric intake. Imports from neighboring countries have helped stabilized wheat and flour prices, but also leaves the nation vulnerable to fluctuations in supplies and trade policies, the ERS said. Given the nation’s landlocked position and its reliance on regional suppliers with uncertain reliability, the ERS examined Afghanistan’s long-term prospects for expanding domestic wheat production.
About 12% of Afghanistan’s area is arable, with most of the agricultural and irrigation development along the few fertile valleys. Most of the wheat area and production is in the northern plains bordering Turkmenistan and Uzbekistan.
Because rainfall is unreliable during the main growing period, the nation must depend on irrigation to meet its crop water requirements. Winter snowfall in the mountain ranges supplies over 80% of Afghanistan’s annual precipitation. Snowmelt is the major source of irrigation water, and its timing and duration of the melt is a key in determining the volume of water and the length of time it is available, the ERS said.
The nation’s wheat harvests have varied wildly in the last several decades, due to prolonged droughts and the destruction of irrigation networks and infrastructure during years of conflict. Increasing production trends seen in the 1990s were short-lived after successive droughts led to substantial crop shortfalls. Production reached news lows in 2000-01.
Conditions improved between 2002 and 2007, and the nation finally surpassed the previous peak seen in 1976. Afghanistan saw harvest peaks of 3.55 million tonnes in 2003, 2005 and 2007, primarily due to higher yields. During that period, there was no year where estimated planted area exceeded the mid-1970s level, ERS said.
Below-average levels of rain and snow reduced later crops, but a rebound was seen again in 2009-10 with a record 4.3 million tonnes. Yields hit a new high of 1.65 tonnes per hectare, and the area planted to wheat finally rose above the 1976 level to 2.6 million hectares.
USDA forecasts that 2010-11 production and yield will be 3.7 million tonnes and 1.57 tonnes per hectare, respectively.
Improving wheat yields are the result of long-term efforts at seed development and availability supported primarily by the United States Agency for International Development (USAID), the Food and Agriculture Organization of the United Nations (FAO), and the International Center for Agricultural Research in the Dry Areas (ICARDA). International organizations developed contracting arrangements with Afghan farmers for the adoption of higher yielding seed varieties.
The use of fertilizer has become more widespread in irrigated wheat areas, with a national average of 179 kg per fertilized hectare of irrigated wheat in 2001-02. Growth in nutrient application was encouraged by private traders who sell imported fertilizer throughout the country.
While the seed and fertilizer markets have allowed growth in yield and output, the nation’s yield is still low relative to most other countries in the region, the ERS said. Variations in weather and rainfall, coupled with the disrepair of the country’s irrigation systems, explain the negligible growth in wheat area, and the constrained growth in output, the ERS said. As a result, imports have played a key role in the growth and stability of Afghan consumption.
Per capita consumption of wheat has grown significantly in recent years, increasing 7.4% per year from 2002-09, despite double-digit growth in real flour prices.
Although Afghanistan’s economy also expanded rapidly during this period, the ERS said that’s not the only reason for increased wheat consumption. Rehabilitation of the nation’s infrastructure and marketing channels allowed for the movement of grain into remote areas. Rising incomes are expected to lead to dietary diversification, the ERS said.
Imports have helped to meet the food needs of the nation’s growing population. Afghanistan imports wheat and flour from a number of neighboring countries, but given its 1,600-kilometer shared border and long history of trade, Pakistan is its dominant supplier.
Private millers and traders in Pakistan work closely with Afghan traders, and Pakistani wheat flour is widely accepted by Afghan consumers because of its quality. Pakistani mills extend credit to Afghan traders who want to purchase flour, the ERS said.
Pakistan’s price and trade policies influence Afghan wheat prices. The Pakistani government buys domestic wheat from farmers at a support price and also releases wheat to the provinces, which is sold to flour mills at a government-determined price.
Wheat prices in Pakistan and Afghanistan tend to move in the same direction. From 1999 to 2009, the real issue price of wheat in Pakistan and the real retail price of wheat in Afghanistan were well correlated, the ERS said.
Despite severe flooding, Pakistan’s 2010-11 wheat crop is estimated at 23.9 million tonnes, just slightly below last year’s record production. The ERS predicts significant future growth in Afghan wheat consumption if domestic production and Pakistani policies support such growth.
Despite the limitations presented by a mountainous terrain and arid to semi-arid climate, the ERS said further increases in wheat production and productivity are possible in Afghanistan.
The nation’s water resources include 75 billion cubic meters of renewable water resources annually, including surface and ground water. Given the country’s low and variable rainfall, irrigation is critical. The potential irrigable area is about 5 million hectares, significantly greater than the currently developed area of 2.6 million hectares.
The low efficiency rating of many of the existing irrigation systems means there’s substantial room for reducing water wastage and increasing the irrigated area. Only three of Afghanistan’s 34 provinces have fully operating irrigation systems.
Water is a shared resource, and projects that increase water in one location may reduce its availability in adjacent communities, resulting in conflict. Water rights have been a complicating factor in the development of Afghanistan’s surface-water irrigation systems, ERS said. Programs to harness water may also cause tension with neighboring countries.
Water tables in the nation are already falling, requiring deeper wells. Shifting toward greater agricultural usage of ground water is risky and will likely come at the cost of human consumption, ERS said.
Improved inputs, including better seed varieties and fertilizer, will help Afghanistan increase its wheat yields. In instances where Afghan farmers received improved seed varieties, the average yield increased significantly.
For example, a program in 2002-03 that provided 200,000 farmers in 13 provinces with fertilizer resulted in average wheat yields of 4 tonnes per hectare.
Other studies show that wheat yield can further be increased by improving and diversifying crop rotations beyond the typical wheat/rice or wheat/corn cycle.
The ERS noted that although it’s not possible to project exactly what will happen with the Afghan wheat market, it has developed projections through 2020 of the nation’s domestic wheat production, imports and consumption based on different scenarios of future growth.
All three scenarios assume a real GDP growth rate of 6%, an annual population growth rate of 2.3% and stocks of wheat and flour are assumed to be negligible. In addition, trade between Afghanistan and Pakistan continues, with the prices of wheat and flour in Afghanistan tracking with Pakistan’s release price. Projected wheat consumption does not differ from scenario to scenario.
The critical distinction among the three scenarios, the ERS said, is the assumed rates of yield growth. In the first scenario, domestic prices of wheat and flour show no growth in real terms from 2010-20. Per capita flour demand would grow 1.2% per year over the same period, due to growth in per capita GDP and stability in flour prices.
Total demand is expected to increase at an annual rate of 3.5% to 8.4 million tonnes in 2020. Projected consumption increases would not be as rapid as in the past decade, but the growth in demand would still exceed projected increases in output.
Farmers would rely on functioning seed and fertilizer markets to expand the share of land cultivated with improved seed varieties.
Under this scenario, the national average yield would grow at an annual rate of 0.9%, from 1.57 tonnes per hectare in the base period to 1.72 tonnes per hectare in 2020. The yield increases would not require an increase in the proportion of land that is irrigated or an increase in yields on rainfed areas.
The national projected yield average of 1.72 tonnes per hectare is above the 2002-09 average yields for Kazakhstan and Turkmenistan, but below all other countries in the region.
Area cultivated to wheat in Afghanistan would be higher in 2020 than in the base period. Area and yield would grow at annual rates of 1.3% and 0.9%, respectively, and wheat output would increase to 4.6 million tonnes in 2020. Still, growth in domestic wheat production would not keep pace with demand, and imports would continue to rise by 5.2% per year.
By 2020, about 46% of Afghanistan’s wheat demand would be met by imports, the ERS said, compared to 38% in the base period.
In the second scenario, prices, income and consumption would remain the same as in the first scenario. This scenario analyzes the impacts of sustaining the rapid wheat yield increases seen from 1990 to 2009. Yield would grow at an annual rate of 1.97%, from 1.57 tonnes per hectare in the base period to 1.91 tonnes per hectare in 2020.
As in the first scenario, the yield increases would not require that Afghanistan increase the proportion of its irrigated wheat area or that the county improve its yields on rainfed areas.
The yield on irrigated field would increase from 2.35 tonnes per hectare in 2010 to 3.13 tonnes per hectare in 2020. The yield improvement in this scenario is within the genetic potential of existing wheat cultivars, the ERS said.
For the country as a whole, national average yield would increase to 1.91 tonnes per hectare in 2020. This figure is well below those of Pakistan and Uzbekistan, the ERS said.
Area cultivated to wheat would expand more rapidly as faster improvements in yield would accelerate the growth in returns from wheat production. Area, yield and production would increase at annual rates of 1.7%, 1.97% and 3.7%, respectively.
Wheat production would still be 5.3 million tonnes in 2020, which is 15.6% higher than the 2020 level predicted in the first scenario. Still, with consumption outpacing domestic output, imports would continue to increase at 3.1% per year.
In the final scenario, the ERS estimated what would be required for Afghanistan to achieve self-sufficiency. This scenario models the impacts of even faster rates of technological change and irrigated fields.
Yield on rainfed land would grow, unlike in the first two scenarios, as a result of adopting higher quality seed. Also, the proportion of Afghanistan’s wheat area that is now irrigated would increase as a result of improving water availability and management.
Prices, income and consumption would remain the same as in the previous scenarios. To achieve self-sufficiency, the ERS said, more widespread use of improved seed and fertilizer on irrigated and rain fed wheat fields would be needed along with improbably sharp increases in irrigated wheat area.
Rain-fed yields would rise to 1.2 tonnes per hectare, as farmers adopt improved inputs. The critical factor in the scenario, the ERS said, is it includes unrealistically sharp increases in irrigated area.
By 2020, irrigated fields would account for 64% of land cultivated to wheat. As a result, Afghanistan would achieve a national average yield of 2.68 tonnes hectare.
This yield is above the 2002-09 average yield for Pakistan and is second only to Uzbekistan among neighboring countries. Area cultivated to wheat would expand more rapidly than in the other two scenarios.
With production increasing at an unrealistic 8.6% per year, Afghanistan would close the domestic supply-demand gap and would no longer be an importer by 2020. However, substantial growth in the irrigation sector would likely require international agreements with downstream neighboring countries that would see reduced water availability as a result of the increased usage in Afghanistan, the ERS said.
Afghanistan has the long-term potential for increasing domestic wheat production. Irrigation systems, which have been damaged or have not been maintained, and the nation’s irrigated area are not reaching their potential.
Large areas of Afghanistan are still planted with traditional, low yielding wheat seeds, ERS said. Even if the nation maintains its post-1990 production growth, domestic wheat output will not outpace expected increases in consumption.
It’s likely the nation will have growing dependence on supplies from Pakistan and other countries. To close the gap between domestic supply and demand, yields on rain-fed and irrigated areas would have to increase, ERS said.
Self-sufficiency would require increases in the amount of wheat area that is irrigated. Such growth may require international agreements if increased water usage in Afghanistan would impact neighboring countries.
Given the difficulties of expanding the irrigation sector, the ERS said wheat imports are likely to continue to play an important role in Afghanistan.