VZCZCXRO1406
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHNEH RUEHPW RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHAH #0093 0211251
ZNR UUUUU ZZH
P 211251Z JAN 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 2172
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 4718
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2519
RUEHKO/AMEMBASSY TOKYO PRIORITY 2384
RUEHIT/AMCONSUL ISTANBUL PRIORITY 2966
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
RUEHRC/USDA WASHDC

UNCLAS ASHGABAT 000093 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
ANKARA FOR AGRICULTURE COUNSELOR 
 
E.O. 12958: N/A 
TAGS: EAGR ECON TX
SUBJECT:  TURKMENISTAN RAISES FARMER COMPENSATION TO ENCOURAGE 
INCREASED PRODUCTION 
 
REF: (A) ASHGABAT 81  (B) ASHGABAT 47 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY: President Berdimuhamedov recently announced 
higher state prices paid to farmers for wheat and rice and increased 
2009 crop production targets at an extended Cabinet meeting.  The 
new prices are meant to encourage farmers to increase production and 
ensure a steady increase of domestically-produced food.  They reveal 
the government's concern to improve the domestic food supply in the 
face of increasing food prices on the international market. 
However, inflation will eat away at these increases, making their 
impact negligible.  Many farmers believe that only free market 
access will incentivize the agriculture sector to such an extent 
that an increase in real prices can take place.  END SUMMARY. 
 
NEW PRODUCTION TARGETS AND PRICES FOR WHEAT AND RICE 
 
¶3.  (U) At an extended Cabinet meeting held on January 15, in 
addition to a reshuffle of government officials (Ref A), President 
Berdimuhamedov announced new state targets for cotton and wheat 
production, as well as increased state prices paid to farmers for 
wheat and rice.  The decree stated that Turkmenistan will produce 
1,050,000 tons of cotton and 1,600,000 tons of wheat in 2009.  Also 
in 2009, state procurement prices are 900 Turkmen manat (USD 315) 
per 1,000 kilograms of rice; 270 Turkmen manat (USD 94) per 1,000 
kilograms of wheat.  According to the decree, in 2010, the 
government will raise the wheat price to 400 Turkmen manat (USD 
140).  These new prices will significantly raise prices paid to 
farmers:  for example, in 2008, the state paid 800,000 old manat 
(USD 56) per 1,000 kilogram of wheat and 1,000,000 old manat (USD 
70) per 1,000 kilogram of rice.  (NOTE:  The exchange rate in 2008 
was 14,250 manat per USD 1.) 
 
BUT INFLATION WILL EAT INCREASED PAYCHECKS 
 
¶4.  (SBU) COMMENT:  President Berdimuhamedov's new target for 
domestic wheat production -- which is close to double the amount of 
wheat that Turkmenistan produced in 2008 (Ref. B) -- and increased 
state procurement prices for wheat and rice clearly indicate the 
government's concern about improving the domestic food supply in the 
face of increasing food prices on the international market. 
However, continuing inflation on the local market will eat away at 
these increases by the time the farmers get paid.  Farmers who are 
alumni of U.S. Government exchange programs feel pessimistic about 
the true impact of the government's new prices and believe that only 
farmers' free access to the market will boost agricultural 
production and income.  END COMMENT. 
 
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