Economic sanctions against Russia imposed by the Western powers due to the war with Ukraine affected the economies of Central Asian countries, including Uzbekistan. Nevertheless, the Uzbek authorities guarantee food security.
Immediately after the introduction of sanctions against Russia, inflation rose, food prices increased sharply, and the national currency depreciated in Uzbekistan.
The residents of Uzbekistan faced a sharp increase in food prices in mid-March when it was reported that Russia had banned the export of sugar and grains. The residents started panic buying fearing that flour, sugar, and butter (these products are imported to Uzbekistan mostly from Russia) will be in short supply. The prices have almost doubled in many stores.
It is difficult to tell how long the challenging situation in the global economy will last, so the government began taking measures to ensure food security.
On March 25, the Deputy Chairman of the Central Bank of Uzbekistan Behzod Khamraev stated that in 2021, the som [the national currency of Uzbekistan – Ed.] devaluation was 3.4% but over the past two weeks, the som has depreciated by about 6%.
The Central Bank increased the base rate from 14% to 17% to minimise the monetary factors of inflation, curb devaluation, and preserve savings in the national currency. This had a positive effect on the market.
“We observe some stabilisation in the commodity, money, and foreign exchange markets,” Gazeta.uz quotes Behzod Khamraev.
A few days later, the situation stabilised, but people still fear that prices will rise.
“In March, the value of the dollar began to rise sharply. We know that if it rises, the prices of everything in stores are raised simultaneously. For example, yesterday, we bought sugar for 9,000 soms ($0.79) and two days later, it costs 14,000 soms ($1.23). When asked why the price rose so much, the sellers always say that the dollar rate is growing. At the same time, if the dollar rate falls, for some reason, prices for goods are not reduced,” said Shahlo Zununova, Tashkent resident.
Under these conditions, the government of Uzbekistan decided to take control of the country’s food market and urgently adopted a package of anti-crisis measures to stabilise the situation.
On March 31, President Shavkat Mirziyoyev held a videoconference on ensuring macroeconomic stability and additional business support. He instructed to implement the measures to prevent artificial price increases. For this purpose, a number of benefits on funds allocated for the import of food products have been extended until the end of the year.
The republican headquarters led by the Prime Minister and regional headquarters headed by khokims (governors) were established. They are instructed to monitor the market prices daily and take measures for additional supplies of products based on consumer demand. They were also instructed to establish daily supervision over the range of food products and raw materials on the stock exchange and prevent the artificial price increase.
The Antimonopoly Committee closely monitors price changes in the markets. The entrepreneurs overcharging for the products will be subject to legal measures.
The foreign enterprises began trading in wheat, flour, sugar, and vegetable oil at the Uzbek Republican Commodity and Raw Materials Exchange. They were granted benefits in the form of internal tariffs for rail transportation.
From April 1 until the end of 2022, a reduced tariff of 50% applies to the transportation of imported wheat (flour) and vegetable oil by rail. The tariffs for unloading goods from wagons for importers of all types of wheat will be reduced by 40% during the first three days.
At a media briefing organised on March 31, immediately after the President’s videoconference, the Ministry of Agriculture told that more than 1 million hectares of land were sown with wheat this year. It is planned to harvest over seven million tons of the crop, which is 1 million tons more than in 2021.
The Ministry of Agriculture highlighted that Uzbekistan’s population will have enough flour and sunflower oil for at least six months. Moreover, to maintain market stability, the country intends to purchase another 600,000 tons of wheat, and sugar reserves for 1 year.
In addition, in 2022, Uzbekistan plans to produce 600,000 tons of sugar at the domestic factories “Angren Shakar” and “Xorazm Shakar” JSC. However, the global situation will not affect sugar imports, the Ministry of Agriculture reassured, since raw sugar is purchased in Brazil.
Obid Khakimov, the Director of the Centre for Economic Research and Reforms, spoke about the package of measures adopted by the government to minimise the consequences of the global economic crisis due to the war in Ukraine on the “Tahlilnoma” program of the Uzbekistan-24 TV channel. He said that Uzbekistan now has large reserves of flour, vegetable oil, and sugar.
“We already have sufficient reserves. The annual consumption of vegetable oil is about 320 thousand tons in Uzbekistan. Now, 70 thousand tons of vegetable oil are reserved. As for flour, the population consumes 2.5 million tons annually. Now, 980,000 tons are reserved. The annual consumption of sugar is about 400,000 tons; as of April 1, 250,000 tons are reserved,” he said.
The authorities declare that, in general, despite global fluctuations, Uzbekistan is able to provide itself with food products. Uzbek food products can often be seen in markets in neighbouring countries. According to the State Committee on Statistics, last year, food imports amounted to only 9.9% of the total import.
The President of Uzbekistan announced the need to reduce food prices by 5-10% during the Muslim holy month of Ramadan.
However, food prices are rising, which affects many residents of the republic.
“During the year, food prices in the country rise constantly – along with the salaries of state employees and pensioners. The rise in prices strains the wallet because food is very expensive in comparison with our salaries. Recently, due to the high price, many people cannot afford to buy even fruits grown here, in Uzbekistan. It is getting harder to live paycheck to paycheck. Therefore, people panicked and rushed to buy flour, sugar, and vegetable oil,” said a capital resident Nargiza Usmonova in a CABAR.asia interview.