Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
101
Significant domestic barriers to trade, beyond transport costs arising from the distance
between two locations, appear to persist. Numerous roadblocks and attempts by local
governments to restrict access to local markets and bazaars drive price differences
between regions of Kyrgyz Republic to levels that are at least as high as price differences
between Central Asian countries.172 In 2010, for instance, differences in average annual
prices between selected northern and southern provinces were 35 percent for apricots, 83
percent for tomatoes, 86 percent for wheat, 110 percent for cabbages, and 113 percent for
potatoes. Significant differences in prices for similar commodities were recorded even
within regions, including differences of 75 percent for beans, 125 percent for onions, and
175 percent for carrots within the southern region. Differences in wholesale and retail
prices for fruit and vegetables within the same market were as large as 80–90 percent.173
A reliable market information system would go a long way to helping farmers strengthen
their bargaining position, develop relationships with buyers based on transparency and
trust, diversify production, and increase their production of cash crops.
Access to markets in Iran, Turkey, and Gulf countries will expand if the North–South
transportation route becomes operational. That route would enable Kyrgyz and Tajik
exports to avoid Uzbek border crossings,174 which are associated with highly uncertain
delivery times and costs. In addition to official fees of US$ 300 per truck, informal
payments of US$ 1,000 per truck are expected. Truckers need visas and must pay an escort
fee of US$ 1 per kilometer. Given the difficulties involved in crossing Uzbek borders,
agricultural exports to Afghanistan, Bahrain, Jordan, and UAE are limited. Kyrgyz Republic
currently exports nuts, dried fruit and vegetables, and kidney beans to UAE, Iran, and
Turkey. If transportation routes are rehabilitated—the Osh–Batken road (bypassing Uzbek
territories) and the Anzob and Shakristan tunnels between Dushanbe and Khudjand—
exports can grow and diversify.
Kyrgyz Republic already enjoys preferential access to markets in Kazakhstan and Russia
under free trade agreements. Joining the Customs Union would allow cheaper wheat
imports from Kazakhstan and Russia. At the same time, it would increase import tariffs for
food, vegetables, and fruit from China, which would protect local agriculture and open
additional market opportunities. To benefit from such arrangements, however, the
country must invest in improving agricultural productivity and processing and reduce
marketing costs and other trade barriers.
ACCESS TO FINANCE
Despite the expansion of agricultural finance, lending is highly concentrated in livestock
production. Interest rates remain high for several reasons, including insufficient
competition among financial institutions, financial institutions’ difficulty in accessing
deposits and external funding, the high disease and weather risks in agriculture, poor
quality of information on prospective borrowers, as well as the limited collateral and high
172 Grafe, Raiser, and Sakatsume (2005).
173 World Bank (2011a).
174 World Bank (2011b).