VZCZCXRO5906
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #0226/01 0431340
ZNR UUUUU ZZH
P 121340Z FEB 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 0273
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 3384
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1202
RUEHKO/AMEMBASSY TOKYO PRIORITY 1069
RUEHIT/AMCONSUL ISTANBUL PRIORITY 1638
RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 ASHGABAT 000226 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
 
E.O. 12958: N/A 
TAGS: PGOV EAGR ECON SOCI TX
SUBJECT:  TURKMEN FEEL IMPACT OF RISING MARKET-BASKET COSTS 
 
REF: ASHGABAT 0213 
 
¶1.  (SBU) SUMMARY:  As Turkmenistan's unusually chilly weather 
continues, food prices have continued to rise.  A recent price 
survey showed that the average increase for basic food staples since 
early January was three percent.  Turkmenistan's residents worry 
that Turkmenistan's unusually cold winter will affect livestock and 
crops, leading to a further increase of food prices.  However, the 
major concern for most Turkmenistanis is the February 11 increase in 
the cost of vehicle fuel.  Most here expect food prices to begin 
showing the effects of the higher gasoline prices very soon.  END 
SUMMARY. 
 
COLD WEATHER CONTINUES TO AFFECT FOOD PRICES 
 
¶2.  (U) A February 7 price survey revealed that prices of both local 
and imported food items have continued to increase.  According to 
vendors at local food markets, prices for locally supplied food 
items -- including (non-subsidized) bread, meat and vegetables -- 
increased primarily due to the unusually cold weather Turkmenistan 
experienced throughout most of January and the early part of 
February. 
 
Food Item              Price (2/08)  Price (1/08)       % 
                                                     Change 
Bread (1 homemade)     8,000 Manat    6,000 Manat     33 
Flour (1 kg)           16,000 Manat   16,000 Manat      0 
Rice (1 kg)            20,000 Manat   20,000 Manat      0 
Butter (1 kg)         140,000 Manat  130,000 Manat      8 
Vegetable Oil (1 lit)  43,000 Manat   36,000 Manat     19 
Sugar (1 kg)           16,000 Manat   16,000 Manat      0 
Beef (1 kg)            55,000 Manat   50,000 Manat     10 
Lamb (1 kg)            50,000 Manat   45,000 Manat     11 
Chicken (whole)        55,000 Manat   70,000 Manat    -21 
Milk (1 lit)           15,000 Manat   15,000 Manat      0 
Cheese (1 kg)     95,000 Manat   90,000 Manat      6 
Eggs (ten)             17,000 Manat   30,000 Manat    -43 
 
¶3.  (SBU) With the exception of lamb, higher feed prices for cattle 
and pigs resulted in increased prices for meat products, including 
sausage.  Lamb prices are currently low because many sheep perished 
in the cold in Turkmenistan's northern provinces in January. 
However, lamb prices are expected to be much higher than usual by 
spring, because Turkmen farmers do not freeze meat products for 
future sale, and fewer live lambs will be availabe in April.  Thanks 
to the import of U.S. chicken-leg quarters around the new year and a 
change in policy that allows local chicken to be sold in markets, 
chicken prices fell 21% since early January. 
 
¶4.  (SBU) Not reflected in the above market basket is the doubling 
in the last month in local produce costs.  Carrots and lettuce, for 
example, have risen from 5,000 to 10,000 manat.  Other produce has 
shown similar increases.  In January, many vendors in Turkmenistan's 
outdoor markets experienced substantial spoilage due to produce 
freezing.  Decreased availability led to higher produce prices. 
Prices for imported food, including butter and vegetable oil, also 
increased due to higher shipping costs.  However, the price of eggs 
has fallen 43% since early January due to an infusion of imported 
eggs. 
 
INCREASED GASOLINE PRICES WILL AFFECT FOOD MARKET PRICES 
 
¶5.  (SBU) Gasoline prices increased on February 11 from 400 to 3,100 
manat per liter (from 2 cents to approximately 16 cents at the 
commercial exchange rate).  Local observers believe that increased 
transportation costs due to the increased price of gasoline will 
shortly lead to an increase of food prices at local markets.  Since 
the majority of produce comes from Dashoguz, Lebap and Mary 
provinces, residents of Ashgabat and western Balkan province will 
feel the brunt of the increased prices. 
 
WAGE INCREASE HAS NOT COMPENSATED FOR INCREASED PRICES 
 
 
ASHGABAT 00000226  002 OF 002 
 
 
¶4.  (SBU) On January 1, the government increased wages of state 
employees by 10 percent.  The following comparison of food prices 
from the period between January 2005, when state employees' wages 
last increased, and January 2008, indicates that prices for market 
basket items have risen an average of 30 percent. 
 
Food Item  Price (1/08) Price (1/05)  % change 
 
Bread (1 home-made) 6,000 Manat 4,000 Manat  33 
Flour (1 kg)     16,000 Manat 8,000 Manat  50 
Rice (1 kg)     20,000 Manat   15,000 Manat  25 
Butter (1 kg)     130,000 Manat   80,000 Manat  38 
Vegetable oil     36,000 Manat   25,000 Manat  31 
(1 liter) 
Sugar (1 kg)     16,000 Manat 11,000 Manat  31 
Beef (1 kg)     50,000 Manat 45,000 Manat   10 
Lamb (1 kg)     50,000 Manat 45,000 Manat  10 
Chicken (1 kg)     70,000 Manat 45,000 Manat  36 
Milk (1 Liter)     15,000 Manat  5,000 Manat  67 
Eggs (ten)     17,000 Manat 15,000 Manat  12 
 
Total cost    426,000 Manat   298,000 Manat  30 
 
¶5.  (SBU) COMMENT: Although the manat's value against the dollar has 
increased, food prices (which should be falling) are not yet 
reflecting the new currency exchange rates.  With an average 
middle-class wage of about $150 per month, people have become 
increasingly preoccupied about how they will make ends meet. 
However, the government does seem to be aware of the problems people 
are facing.  The decision to import "Bush legs" and to allow local 
chicken producers to sell their chickens locally on the market came 
about following the virtual disappearance of chickens from the 
market last fall.  About a week ago, after news that many head of 
cattle had been lost in the cold, the government put out a tender to 
purchase 11,365 tons of beef and beef parts.  We assume that these 
measures in both cases are to help ensure that access to and prices 
of certain basic items remain steady until herds (and flocks) can be 
replenished.  END COMMENT. 
 
HOAGLAND