Post forecasts 2011/12 wheat production at 2.5 million tons down 33 percent from the previous year due to unfavorable weather conditions in the early wet season.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: AF-2011-04
2011 Grain and Feed Annual - May 2011
Grain and Feed
Abdul Jalal and Michael Ward
Post forecasts 2011/12 wheat production at 2.5 million tons down 33 percent from the previous year due
to unfavorable weather conditions in the early wet season. 2011/12 rice production is forecast at 350
thousand tons attributed to increased area in northern Afghanistan and normal yield. To meet continued
growth in demand for grain, Post forecasts marketing year (MY) 2011/12 wheat imports at 3.5 million
tons with rice imports at 250 thousand tons. Pakistan will remain the dominant source of imported
wheat/flour in MY 11/12 after regaining the status as the number one source of imports in MY 10/11.
Over the last 30 years, Afghanistan?s agricultural sector has suffered as the result of a variety of adverse
factors such as civil strife, degradation of irrigation infrastructure, and droughts directly impacting the
agricultural capacity of the country. Wheat production fluctuates widely from year to year as a result of
variable precipitation during the growing season and subsequent availability of water for irrigation. The
2009 and 2010 crops were both above average at 4.2 million tons (record production) and 3.7 million
tons, respectively. These crops have stabilized Afghanistan?s food security over the past two years.
However, concerns about the 2011 crop weigh heavy on Government of Afghanistan and the
international community and threaten to weaken food security 1.
Early Season Dryness Cuts Wheat Production
Post forecasts the 2011 wheat crop at 3.5 million tons from a cultivated area of 2.1 million hectares.
This is 33 percent below than last year. This anticipated decline in wheat production is attributed to
unfavorable weather conditions in early wet season (October to December), when the crop received
little or no rain/snowfall. This precipitation deficit negatively impacted the germination of rain-fed
wheat varieties throughout most of the country and as a result, rainfed area has declined. A well-below
average wheat harvest is to be expected in the Central Highlands and Northern Afghanistan due to the
reduced rainfed area and yield. The yield potential of irrigated area, grown throughout Afghanistan and
concentrated in river valleys, is below average but not as poor as rainfed prospects.
Post harvest loss remains a critical problem Afghan farmers face and a major factor contributing to food
insecurity, especially in rural areas. It is estimated that between 10 ? 30 percent of the wheat harvest is
lost shortly after harvest. For the purposes of the supply and distribution balance sheet Post estimates
15 percent post harvest loss annually. Activities addressing post harvest loss at the farm or household
level would have a very positive impact on food security, reduce the need for imports, and mitigate
This report is a forecasted analysis of the national Afghan wheat and flour market during the 2011/12 Marketing Year (July
2011 ? June 2012) and does not represent a food security assessment. This report provides estimates of production,
consumption and trade at a national level as well as discusses price trends and government policy. The U.S. Agency for
International Development?s Famine Early Warning System Network provides detailed Afghan food security assessments
throughout the year.
against price spikes in rural areas.
Pakistan Regains Dominant Role in Market
Afghanistan has an intricate network of grain and flour traders that are very adept at filling flour deficits
with imports. On average commercial imports and foreign food assistance of wheat and flour,
contribute between 35 to 65 percent of total wheat/flour consumption annually, depending on domestic
production. Afghan borders are very porous making it very difficult to obtain reliable customs data for
agricultural products but based on per capita wheat consumption and depending on domestic
production, imports are estimated to range between 1.7 to 3.5 million tons annually. Post?s MY 11/12
estimate for wheat imports is 3.5 million tons, 36 percent higher than last year offsetting the decline in
Pakistan and Kazakhstan will continue to be the main exporters in the Afghan market in MY 11/12.
Kazakhstan was the prime exporter of wheat and flour (in wheat equivalent) during Pakistan?s wheat
export ban, exporting an estimated 1.4 million tons of wheat and wheat flour in MY 09/10 to
Afghanistan. Kazakh exports to Afghanistan have slowed during MY 10/11 likely reaching 700,000
tons due to a short Kazak crop in 2010. The Pakistani Government lifted an export ban on wheat and
flour to Afghanistan in December 2010 (the ban was in effect since 2007) and Pakistan regained the
status as number one exporter to the Afghan market during MY 10/11 and will likely continue to be so
in MY 11/12. Despite last year?s floods in Pakistan, traders estimate that Pakistani millers will have an
estimated 2-3 million tons available for export which is available with a milling subsidy. Pakistani
exports traditionally come to Afghanistan shortly after the harvest ends (June) and continue until April
of the next year when the Government of Pakistan adjusts the subsidy to further encourage or
discourage trade depending on the prospects of the next wheat crop and domestic availability. Post also
estimates that Iran is playing a more important role in the Afghan market during MY 10/11 and this
importance will continue in MY 11/12. It should be noted that Afghan traders report that regional
wheat availability is much improved from the previous year and will supply the Afghan deficit without
much disturbance in the market.
Flour / Wheat Prices Trend Upward Before Harvest
According to a price survey in Afghanistan?s five major cities conducted by the World Food Program,
average wheat and flour prices in Afghanistan?s main markets were 17 Afghani/kilogram (kg) and 24
Afghani/kg respectively during April 2011. Afghan wheat and flour prices trended upward, increasing
25 percent between April and September 2010 before stabilizing. Since September, flour prices
remained stable until April 2011 while wheat grain prices continued a slow climb to current levels.
Wheat and flour prices experienced an uptick in April 2011, increasing 3-5 percent, as farmers and
traders signal they expect the decline in domestic production. Afghan wheat and flour prices are
strongly correlated to Pakistani flour prices and will likely stabilize after the recent uptick as surplus
supplies in Pakistan and the improved regional availability of wheat and flour temper price increases.
The price differential between remote areas of Afghanistan and major cities remains concerning. Prices
in rural areas tend to be substantially higher depending on the local availability of flour. It is important
to note that external policy measures, such as export bans in neighboring countries, will have a bullish
impact on wheat and flour prices over the next six months to a year.
Source: WFP ? VAM Market Price Bulletins
Afghanistan is wheat deficit country and does not have a functioning strategic wheat reserve. After the
record harvest in 2009 the Ministry of Agriculture, Irrigation, and Livestock purchased an estimated
70,000 tons from wheat surplus provinces. This wheat is stored in Pul-e-Khumri, Baghlan and Herat
City, Herat. MAIL has negotiated the sale of 12,000 tons of this reserve to the World Food Program
(WFP) for use as prepositioned supplies in remote districts in Afghanistan. An additional sale of 8,000
tons to WFP from MAIL was negotiated in the Spring. Recent local purchases by WFP are an
important development and will aid in reducing post-harvest loss and stabilize prices in rural areas.
Responding to concerns in the Afghan parliament about food security and wheat prices the Government
of Afghanistan has a plan to develop a strategic grain reserve of up to 500,000 tons of wheat. The
project is still in the development stage and substantial storage infrastructure and technical training in
storage management are needed before a reserve could be successfully implemented but many
international donors are interested in contributing funds to the activity once it is properly developed.
Wheat Milling Industry
Over the last 30 years the Afghan wheat milling industry has degraded to the point that it is now
regionally uncompetitive. The quality of flour processed entirely from Afghan wheat does not bake
well and most mills and consumers blend Afghan flour with imported flour to prepare bread.
Additionally, the domestic milling industry faces Afghan consumers that prefer imported flour over
The milling industry is made up of five public mills, eight commercial mills, and many small scale
water and diesel mills called ?asiabs or zirandas?. Public mills constructed in major Afghan cities by
the Soviet Union in 1980s consist of large grain silos (with large storage capacity), flour mills, and
bakeries. During the Afghan civil war all of these mills were partially or completely destroyed. The
public mill in Kabul is operational and the adjacent bakery prepares bread for the Afghan National
Army. The public mill in Mazar is rarely used for milling and mostly used to store grain. Public mills in
Kandahar, Herat and Pul-e-Khumri are not functional and used for storage. Current storage in public
mills is in bags as all mechanical silos have been damaged.
Eight commercial mills are located in Kabul, Mazar, Jalalabad and Herat with a milling capacity
ranging from 80 to 500 tons per day. These mills do not operate at full capacity and on occasion shut
down entirely due to the unavailability of wheat grain, high labor and electricity costs, and competition
from Pakistani flour. Post estimates at present more storage exists at private mills than at public mills.
Small scale ?asiabs or zirandas? are the most important subsector of the milling sector and process
more than 90 percent of domestic production. These mills play a particularly important role in rural
areas where transportation prohibits the internal movement of grain. These small scale mills process 1-3
tons wheat per day and normally operate on an in-kind basis meaning farmers compensate the miller
with a portion of the flour milled.
Rice Area, Production Expand
Post estimates rice production in MY 11/12 to be 350,000 tons from a harvested area of 200,000
hectares up slightly from MY 10/11 due to the increase in the planted rice area in the northern
Afghanistan. Major rice growing provinces areas such as Kunduz, Baghlan, Laghman, Herat, Balkh, and
Takhar have expanded area in recent years as rice cultivation has become more profitable given
improved access to inputs and rebuilt irrigation infrastructure.
Consumption and Imports
Rice makes up an important supplementary component of Afghans? diets. Per capita rice consumption
is 18 kilograms per year and Post estimates MY 11/12 annual rice consumption at 600,000 tons. To
keep pace with growing demand, rice imports are forecast at 250,000 tons in MY 11/12. Pakistan is the
primary source of imported rice capturing more than an estimated 95 percent of the market.
Additionally, Kazakhstan rice donations are an important component of the market accounting for 5 to
15 thousand tons annually.
Consumption will continue to increase in future years as rising incomes and increasing urbanization in
Afghanistan?s major cities increase per capita consumption. Imports will also likely increase as there is
limited land in Afghanistan agro-climatically suitable for rice cultivation. In the short term, Pakistan
will remain the low cost supplier of Afghan rice imports.
In contrast to wheat, rice prices have not risen over the last six months in the major cities in
Afghanistan. With the exception of Kandahar, rice prices have tracked close to each other in the major
cities. The average market price of rice was 28 Afghani/kg in April 2011, remaining stable throughout
the last year in four of the five cities surveyed (exception is Kandahar). Traders report that rice prices
track world prices very closely and future price movements in Afghanistan will likely follow that
Source: WFP ? VAM Market Price Bulletins
Table 1: Wheat Production Supply and Distribution
2009/2010 2010/2011 2011/2012
Whea Market Year Begin: Jul Market Year Begin: Jul Market Year Begin: Jul t
A 2009 2010 2011 fghanistan USDA New USDA New USDA New
Official Post Official Post Official Post
Area Harvested (1000 HA) 2,500 2,500 2,300 2,300 2,100 2,100
Beginning Stocks (1000 MT) 0 0 0 70 70 0
Production (1000 MT) 4,250 4,250 3,700 3,700 2,500 2,500
MY Imports (1000 MT) 2,500 1,820 2,300 2,250 3,000 3,525
TY Imports (1000 MT) 2,500 1,820 2,300 2,250 3,000 3,525
TY Imp. from U.S. (1000 MT) 30 30 0 0 0 0
Total Supply (1000 MT) 6,750 6,070 6,000 6,020 5,570 6,025
MY Exports (1000 MT) 0 0 0 0 0 0
TY Exports (1000 MT) 0 0 0 0 0 0
Feed and Residual (1000 MT) 0 637 0 555 350 375
FSI Consumption (1000 MT) 6,750 5,363 6,000 5,465 5,150 5,650
Total Consumption (1000 MT) 6,750 6,000 6,000 6,020 5,500 6,025
Ending Stocks (1000 MT) 0 70 0 0 70 0
Total Distribution (1000 MT) 6,750 6,070 6,000 6,020 5,570 6,025
Yield (MT/HA) 2. 1.7 2. 1.6 1.2 1.2
TS=TD 0 0 0
Comments To Post
Table 2: Rice Production Supply and Distribution
Rice, Milled 2009/2010 2010/2011 2011/2012
Afghanistan Market Year Begin: Market Year Begin: Market Year Begin:
Jan 2009 Jan 2010 Jan 2011
USDA Official New Post USDA Official New Post USDA Official New Post
Area Harvested (1000 HA) 190 190 190 190 200 200
Beginning Stocks (1000 MT) 0 0 0 0 0
Milled Production (1000 MT) 335 335 275 275 350 350
Rough Production (1000 MT) 500 500 410 410 522 522
Milling Rate (.9999) (1000 MT) 6,700 6,700 6,700 6,700 6,700 6,700
MY Imports (1000 MT) 265 235 300 305 250 250
TY Imports (1000 MT) 265 235 300 305 250 250
TY Imp. from U.S. (1000 MT) 0 0 0 0
Total Supply (1000 MT) 600 570 575 580 600 600
MY Exports (1000 MT) 0 0 0 0
TY Exports (1000 MT) 0 0 0 0
Consumption and Residual (1000 MT) 600 570 575 580 600 600
Ending Stocks (1000 MT) 0 0 0 0
Total Distribution (1000 MT) 600 570 575 580 600 600
Yield (Rough) (MT/HA) 3. 2.6316 2. 2.1579 2.61 2.61
TS=TD 0 0 0
Comments To Post