VZCZCXRO9799
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #0285 0591409
ZNR UUUUU ZZH
P 281409Z FEB 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 0344
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 3435
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1253
RUEHKO/AMEMBASSY TOKYO PRIORITY 1120
RUEHIT/AMCONSUL ISTANBUL PRIORITY 1689
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 ASHGABAT 000285 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
ANKARA FOR AGRICULTURAL COUNSELOR 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAGR ECON ETRD SOCI TX
SUBJECT:  TURKMENISTAN:  CITIZENS FEELING IMPACT OF INCREASED 
GASOLINE COST ON FOOD PRICES 
 
REF: ASHGABAT 0226 
 
¶1.  (SBU) SUMMARY:  Almost immediately following the eightfold 
increase in gasoline costs on February 11, meat and dairy product 
prices -- already increasing because of livestock losses due to the 
cold weather -- spiked by 20-50%.  For now, the government is trying 
to stabilize meat prices by enforcing a price cap and supplying 
alternative, but lower-quality, meat at a price which is affordable 
to the population, but this measure will only work for a short time. 
 Local observers believe that food prices will continue to increase 
further.  END SUMMARY. 
 
EFFECT OF THE INCREASED GASOLINE PRICE ON MEAT AND DAIRY PRICES 
 
¶2.  (SBU) The February 11 government-mandated gasoline price 
increase immediately created a spike in transportation costs and set 
off a 50% increase in the price of beef and lamb, and a 20 - 50% 
increase in dairy prices.  (NOTE: 100% of beef and lamb meat and 60% 
of dairy products available in Ashgabat markets are produced in 
Turkmenistan.  END NOTE.)  On February 12, the day after the new 
price for gasoline was implemented, the price of beef and lamb in 
Ashgabat markets rose sharply from 50,000 manat to 75,000 manat 
(about $2.50 to about $3.75 at the commercial exchange rate) per 
kilogram.  The price of cottage cheese increased from 20,000 manat 
to 30,000 manat ($1 to $1.50) per kilogram, yogurt and sour cream 
prices increased from 6,000 to 8,000 manat and from 15,000 to 17,000 
manat respective for 200-gram containers.  This follows several 
weeks of rising meat prices caused by substantial livestock losses 
due to this winter's long weeks of sub zero weather (reftel). 
 
GOVERNMENT STRUGGLING TO KEEP MEAT PRICES STABLE 
 
¶3.  (SBU) While the authorities allowed dairy prices to rise due to 
market forces, they also actively responded to the increased meat 
price by setting a price cap of 39,000 manat per kilo for both beef 
and lamb.  The Ministry of Trade, which controls prices at the food 
markets, unsuccessfully introduced this price cap a year ago. 
Although signs at meat stalls say that the price of meat is 39,000 
manat per kilogram, vendors will not sell their meat at this price. 
If a buyer insists, he/she will receive a piece of poor-quality, 
bony meat supplemented with edible offal.  The government is trying 
to stabilize meat prices by supplying alternative meat such as 
frozen "buffalo meat" (lower-quality beef scraps) blocks from India 
at 43,000 manat per kilogram, and U.S. chicken quarters at 37,000 
manat per kilogram.  While buffalo meat is not popular among 
Turkmenistan's residents, people are buying the U.S. chicken as an 
alternative to expensive beef and lamb. 
 
TEMPORARY EFFECT OF OFFICIALLY-IMPOSED PREVENTIVE MEASURES 
 
¶4. (SBU) Government efforts to stabilize meat prices do not appear 
to be effective.  Local vendors appear to be selling products at a 
price that falls somewhere between the high price of 75,000 manat -- 
which no one can afford -- and the government-mandated price cap of 
39,000 manat.  On February 27, Ashgabat vendors were selling meat 
for 55,000 manat per kilogram. 
 
¶5.  (SBU) COMMENT: Local observers believe that meat and dairy 
prices will continue to rise due to the increased transportation 
costs and livestock losses during the winter, and there almost 
certainly are some who are taking advantage of this expectation to 
maximize their own profits.  However, the higher gasoline prices are 
contributing to growing inflation at the markets, and the early 
increases will likely be followed by additional steep rises. 
Government efforts to hold down meat prices in the marketplace will 
be difficult to maintain, but supplying an alternative meat supply 
at prices the population can afford will help, as long as what is 
offered meets the population's quality expectations.  END COMMENT. 
 
HOAGLAND