Tajikistan – Food Processing and PackagingTajikistan-Food-Processing

Overview

 Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
 Unit: USD thousands

 Data Sources: Tajikistan State Statistics Agency, January 2018

In 2017 Tajikistan’s agricultural sector produced nearly USD 2.8 billion worth of goods, comprising 40.2 per cent of the country’s GDP.  The food-processing sub-sector produced $488.2 million worth of goods, comprising roughly 7 per cent of the country’s GDP.  Tajikistan has the potential to develop its agriculture and agro-processing sectors due to its comparative advantages including soil, water and weather conditions.  Roughly 70 per cent of the population lives in rural areas, and the availability of inexpensive field labor exceeds demand, even for labor-intensive crops. 
 
The majority of small farmers lack access to farm machinery and, although some machinery service providers exist, their equipment is often old and outdated.  Farmers compete for machinery at planting and harvest time, limiting their ability to realize full production potential.  Expanding existing MSPs and developing new ones will help to overcome this production bottleneck.  Agribusiness value-added chains in Tajikistan are fragmented and disjointed due to low levels of farm production and a lack of raw materials for processors.  Farmers often have difficulty obtaining seeds, fertilizer, and pesticides.  Farmers are often unfamiliar with modern business management practices.  Post-harvest losses are significant due to antiquated or non-existent transportation equipment and a lack of climate-controlled storage facilities. 
 
The majority of domestically harvested food is consumed through the fresh market, leaving food-processing plants to operate at a fraction of their capacity.  Quality control, certification, marketing, packaging, and branding of Tajik products is weak.  Development of value-chains would help Tajik agribusinesses overcome some of these obstacles.  Businesses all along the value-chain have reported difficulty gaining access to finance and problems with high interest rates, especially for loans denominated in Tajik somoni.  Processors and other agribusinesses need assistance to develop and strengthen their businesses, adopt international quality standards and certification, form cooperatives to build and operate storehouses, and invest in new processing and packaging equipment. 
 
Demand for products in Tajikistan’s traditional markets, such as Russia and Kazakhstan, remain strong.  New export opportunities are also emerging, such as China, Turkey, India, and Afghanistan, which are becoming the country’s main processed food export partners.  Tajik agri-business enterprises are poorly placed to respond to these opportunities, and command low prices for exported products.  It is very important that the country improve its capacity to identify and respond to market opportunities, in particular, since the regional export markets are expected to grow strongly in response to improved rail links through Kyrgyzstan into China and through southern Tajikistan into Turkmenistan, a route that also affords access to markets in the Caucasus, Middle East and Europe.  A new transit trade agreement will also enable Tajik goods to travel by truck through Afghanistan to Pakistan, enabling them to reach new markets by sea via the port at Karachi.

Overall statistics and marketing analysis

In 2017 Tajikistan’s food processing industry was valued at over $488.2 million, 21.5 percent of Tajikistan’s $2.27 billion total industrial output.  The food industry is one of the largest contributors to gross industrial output, processing domestically harvested fruit, wheat, tobacco, and other agricultural products.

The food-processing sector in Tajikistan has 21 sub-sectors, including canned vegetables, canned fruits, fresh and dry fruits, meat (including poultry) and dairy processing, feed and confectionary production, organic (animal) oil, vegetable oil, pasta, liquor, wine, beer, non-alcoholic drinks, salt, and tobacco production.  There are 337 companies in the sector.  Once wholly government-owned, the industry is now largely private, and has a strong demand for capital equipment.  Most enterprises are small seasonal operators, selling to local markets.  The three main State Owned Enterprises (SOEs) in the food sector are “Hurokvori,” “Zerno,” and “Myaso and Moloko.

Small packaging facilities in Tajikistan mainly use Chinese equipment.  Heavy agricultural machinery in Tajikistan is supplied from China, Belarus, and Ukraine.  In general, however, most processing and packaging equipment in the country is obsolete, with some machinery dating back to the 1930s. 
 
The amount of land used to cultivate fruits and vegetables in Tajikistan increased by roughly 84,000 acres between 2014 and 2016, but investment into food processing and packaging has been negligible.  Tajik firms can process up to 20 per cent of Tajikistan’s fruit and vegetable output, but sometimes have trouble obtaining even that much, as they compete directly with the fresh market for supplies.

Sub-Sector Best Prospects

There is demand for food processing on all scales.  Additional opportunities exist for U.S. investors who are willing to establish joint ventures and partnerships with existing producers to add value to products. 
 

The best prospects for U.S. exporters and investors are:

-- Machines to process fruits, nuts, and vegetables;
-- Machines for cleaning, sorting, and grading seeds, grains, and vegetables;
-- Juice extractors;
-- Machines for filling, closing, and sealing bottles, cans, boxes, bags, or other containers, and food storage;
-- Fruit dehydrators;
-- Cold storage and refrigerators for fruits and vegetables.
 
In general the following items are in demand, arranged by International Harmonized System (HS) Product Codes:

 Opportunities

In general, opportunities exist in fresh fruit and vegetable production, poultry production, processing, and related services, such as cold storage facilities or transportation; there is also potential for organic production and exports to high-value markets.
 
Government sees domestic poultry development as a national priority, which could address domestic food security issues.  In early 2018, Tajik government introduced a number of incentives to develop its domestic poultry production.  The government has lifted taxes for domestic firms and customs duties to import equipment for development of local poultry production.  In a hope to boost domestic poultry production in late 2017, Tajikistan banned the import of U.S. chicken claiming it is of low quality.  However, realizing that it will not meet domestic demand with its own poultry production, it issued temporary import certificates to some countries, including United States, a few months after the ban.
 
The Tajik poultry industry is growing and now has 93 poultry farms with 5.26 million birds, which produced 341.1 million eggs in 2017.  Despite the development, United Nations Food and Agricultural Organization reports that each Tajik household consumes only 5.5 pounds of poultry and about 3.7 pounds of eggs annually, of which it imports almost 90 per cent.
 
Various industry experts agree that Tajik food security will depend on poultry and that the domestic market has great potential.  It is forecasted that Tajikistan’s growing population will require more meat.  With poultry an affordable option, households will likely purchase more chicken once a quality product is supplied to the market.  The key to a successful poultry industry is producing quality feed, which is a complex process.  Tajikistan lacks the feed factories required to generate a sufficient supply.  In 2018, Tajikistan imported one million hatching eggs and more than three thousand tons of poultry feed from Uzbekistan to grow chicken production.  State owned enterprise Pticeprom reported to media that Tajikistan will increase imports of these products since it needs 330 thousand tons of poultry feed annually.  In addition to Uzbekistan, Tajikistan imports poultry feed from Argentine, Russia, China, Brazil, Kazakhstan and the Baltic states.
 
The EU-funded Enhanced Competitiveness of Tajik Agrobusiness Project is supporting Tajikistan to test soybean and corn production while also strengthening the Tajik Food Safety Committee’s ability to monitor and control the quality of poultry meat.  It has already provided the committee with USD 600,000 in lab equipment.  There is a great potential for foreign investors to develop a cold chain system that will allow Tajikistan store high-quality fresh poultry products, rather than the frozen chickens to which Tajik consumers are accustomed. 

Web Resources

Reports on Food Security and Social-Economic Situation in Tajikistan 2017  
https://stat.tj/ru/publications
 
Tajikistan World Food Program
http://www1.wfp.org/countries/tajikistan
 
Customs Agency
www.customs.tj
 
Ministry of Agriculture
www.moa.tj
 
Consulting firm Harif
www.harif.tj
 
Tajikistan Agriculture Commercialization Project, World Bank
http://projects.worldbank.org/P132652?lang=en
 
Tajik Agricultural Marketing Information System
http://agroinform.tj/
 
Asia Agricultural Marketing System
http://www.agro-asia.com/
 
Enhancing Competitiveness of Tajik Agribusiness Project
www.ectap.org
 
Консалтинго-исследовательская компания M-Vector: Исследование рынка молочной продукции в городе Худжанд
http://m-vector.com/upload/news/22_04_15/Otchet.pdf

Development of proposals on adjusting strategies of industry development on fruit and vegetable processing in Tajikistan, 2012
http://www.agroinform.tj/project2/publications/ru/tahiyai_peshnihodhoRu.pdf

Strategy to develop exports – fruit and vegetable processing sector in Tajikistan 2006-2010 http://itctj.files.wordpress.com/2011/01/taj-sectoral-export-strategy-2005-r.pdf
 
2014 project for commercialization of agriculture in Tajikistan 
http://moa.tj/rus/novosti/proekt-po-kommertsializatsii-sel-skogo-hozyajstva-pksh/

Training on the concept and design of food security 2013 
http://www.foodsec.org/fileadmin/user_upload/eufao-fsi4dm/docs/Training_FSIS_March_2013_rus.pdf

Case Study Regarding Apricot Primary Packing in Tajikistan 2011 
http://etc4ca.com/wp-content/uploads/2011/06/Apricot-Packing-Report.pdf

Aglinks Final Report, Kyrgyzstan, Kazakhstan, Tajikistan and Turkmenistan 2008 
http://pdf.usaid.gov/pdf_docs/Pdacm094.pdf

Research on Agricultural Value Chains in Tajikistan 2011
http://www.mfc.org.pl/sites/mfc.org.pl/files/Valuepercent20Chains percent20research percent20report percent20Tajikistan percent20final.pdf
 
Procuring Wheat Flour, Pulses and Vegetable Oil in Tajikistan 2011
http://documents.wfp.org/stellent/groups/public/documents/ena/wfp237289.pdf

Economic Development, External Shocks and Food Security in Tajikistan 2012
http://www.ifpri.org/sites/default/files/publications/ifpridp01163.pdf

Potential of Organic Products produced in Tajikistan 2012
http://www.agroinform.tj/project2/publications/en/Potential_of_organic_products.pdf