Rural institutional development

Assessing the Impact of the International Financial and Economic Crisis on the Agricultural Sector in Kyrgyzstan

In recent decades, the agricultural and food sector has become not only globally connected through international trade, but also more integrated into the modern financial system. Consequently, it is more and more exposed to external macroeconomic fluctuations and changes and depends on the strength and depth of ties with the financial system and the world economy. In other words, the international financial and economic crisis affects the agricultural sector of different countries of the world in different ways, and Kyrgyzstan is no exception.

For Kyrgyzstan, agriculture is an important economic sector and one of the most important sources of livelihood and welfare of the population. The share of agriculture in the structure of production of the Gross Domestic Product is 40%, moreover, the agricultural sector employs about 750,000 economically active population of the country.

Key facts
Years of implementation:   2009
Place of implementation:   Chui, Osh, Jalal-Abad, Issyk-Kul regions
Donor:   UN Food and Agriculture Organization

Objective of the project
In the spring of 2009, the United Nations Food and Agriculture Organization decided to finance a study to assess the impact of the global crisis on the agricultural sector in four countries simultaneously: Kyrgyzstan, Hungary, Armenia and Ukraine.
To get a fairly complete picture of the agricultural and food sector, two subsectors were selected: one for agriculture and the other for livestock. In order to determine the level of economic dependence of the agricultural sector of Kyrgyzstan on the global crisis, the following vital product chains were selected: wheat, sunflower and milk. This choice was made due to the significant share of their income in the country's production and domestic and foreign trade.

Location of the project
The study in Kyrgyzstan, led by the RDF team, was conducted from July to October 2009. This study covered four (Chui, Jalal-Abad, Osh and Issyk-Kul) regions of the Republic, including 5 cities and towns and 18 villages.

In-depth interviews with stakeholders of selected agricultural and food chains were used as the main research method. Key questions focused on the processes of production, consumption and trade, as well as the effects of the economic downturn, indirect or direct credit constraints. Over 75 in-depth interviews were conducted with a variety of agricultural producers, leading food suppliers, processors, integrators, traders, buyers, retailers, banks and government officials.

Project results
Upon completion of the study, the main development trends and changes in the agricultural sector of Kyrgyzstan, caused by the impact of the global financial and economic crisis, were identified, recommendations were developed to counter the crisis and scenarios for the short and medium term dynamics of its impact.
The final report planned for the project, based on analytical reports from all participating countries: Kyrgyzstan, Hungary, Armenia and Ukraine, was prepared by the Research Institute of Agricultural Economics (AKI, Budapest), which is available on request at .kg.