The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein.
Please address any comments or suggestions you have on this report to:
Ben Berry - berryb@agr.gc.ca
For 3,000 years, Afghanistan has been at the junction of trade routes between Central, South and West Asia, as well as serving as a key gateway between Europe, the Middle East and Asia. Afghanistan is bordered by Pakistan to the south and east, Iran to the west and Turkmenistan, Uzbekistan and Tajikistan to the north. In the extreme northeast, Afghanistan has a common border with China.
Afghanistan's agricultural sector has historically been important to both its population and various export markets. While the sector and its support infrastructure have been severely damaged over the last 30 years, it has demonstrated the ability to be both self-sufficient and profitable.
**All economic information and trade data included in this report has been presented without the inclusion of the poppy/opium/heroin trade, unless otherwise stated.
Canada established diplomatic relations with Afghanistan in 1968, but relations were ended ten years later as a result of the Soviet invasion. After the Soviet withdrawal, Canada did not renew relations until 2002. Afghanistan reopened its embassy in Canada in 2002, while Canada's embassy in Afghanistan reopened in 2003.
Canada's current relations with Afghanistan are framed by its military efforts and development projects, aimed at bringing peace, security and economic rejuvination to the country. Both types of participation have ensured that Canada is deeply invested in the future of Afghanistan.
Canada is one of the top five bilateral donors for reconstruction and development in Afghanistan. Canada's funding, overseen by CIDA, is delivered through trusted and well-managed partner organizations including the World Bank, UN organizations, as well as reputable international and Canadian non-governmental organizations (NGOs).
CIDA's aim is to help Afghans help themselves and to strengthen the presence of the national government across the country. Support focuses on Afghan national programs that ensure local ownership, accountability and community-based engagement. Through these programs, such as the National Solidarity Program (NSP), grassroots community groups set priorities, plan and implement village projects. This is democracy in action at the local level.
CIDA addresses the basic human needs of Afghans and supports projects that:
Many of Canada's aid efforts are focused on the province of Kandahar through the Provincial Reconstruction Team (PRT). Canada assumed responsibility for the Kandahar PRT in August 2005. 24 PRTs throughout Afghanistan help the democratically-elected government extend the authority and ability to govern, rebuild the nation and provide services to its citizens.
Based in Kandahar City in the southern province of Kandahar, the Canadian PRT is located in the former heartland of the repressive Taliban regime, which previously controlled much of Afghanistan. Kandahar is arguably the most targeted province for insurgent activities and represents the greatest need for support. The PRT supports key national Afghan programs such as the NSP. The PRT concurrently works on projects that have impacts in the long, medium and short term. The most important achievements will be those which bring about long-term sustainable benefits to the Afghan population. In addition, immediate-need, "quick impact" projects are also being carried out across the province.
Some examples of completed or ongoing projects in Kandahar Province funded by the NSP include:
Canada has implemented a community renewal project in Northeast Afghanistan through the Aga Khan Foundation Canada's (AKFC) Community Renewal Program, providing alternative livelihood options in the context of concerted anti-narcotics efforts. Most of these efforts have been related to agricultural development, including:
Canada has also contributed to the Mine Action National Development Budget which has focused on clearing areas affected by land mines and other ordinance freeing up key arable land for agriculture. Additionally, CIDA has been involved in a number of quick impact projects that have provided seeds and fertilizers to 70,000 farmers.
| Afghanistan Total Trade | |
| Exports | US$471 million |
| Imports | US$3.87 billion |
| Trade balance | (US$3.40 billion) |
| Canada- Afghanistan Trade | |
| Exports | $19.084 million |
| Imports | $461,184 |
| Trade balance | ($18.623 million) |
| Canada - Afghanistan Ag Trade | |
| Exports | $1.397 million |
| Imports | $74,823 |
| Trade balance | ($1.322 million) |
Canada's most valuable exports to Afghanistan include:
Canada's most valuable imports from Afghanistan include:
| 1999 | 2000 | 2001 | 2002 | |
|---|---|---|---|---|
| Exports | $457,994 | 0 | $143,069 | $112,480 |
| Imports | $108,685 | $98,737 | $76,658 | $76,366 |
| 2003 | 2004 | 2005 | 2006 | |
|---|---|---|---|---|
| Exports | $678,885 | $70,337 | $2,101,388 | $1,397,053 |
| Imports | $61,385 | $51,779 | $10,025 | $74,823 |
Afghanistan ranks as Canada's 134th largest agricultural export market and 148th largest supplier of imports. In 2006, Canada's top five exports to Afghanistan were: Chicken Capon cuts $1.3 million, Food preparations nes $21,553, Frozen Swine cuts $16,362, Tea or Maté extracts $4,661 and Refined Sugar $3,414.
Since 1999, Canada's agricultural exports to Afghanistan have generally been dominated by a single product annually (with the exception of 2003 and 2005).
Despite single product dominance, a number of goods have been shipped in quantity with some regularity since 1999. Such commodities include chicken and capon cuts and edible offal, wheat nes, soya-bean oil, canola oil, prepared foods (swelled or roasted cereals), food preparations nes, and frozen swine cuts.
In 2006, Canada's agricultural imports from Afghanistan were almost entirely comprised of wine (95% of imports), and cheese (4% of imports). Since 1999, the following items have been imported from Afghanistan with some frequency: wine, dried grapes and pharmaceutical plants.
The Afghan economy is dominated by small-farm agriculture. With a lack of strong central governance the reported national economy represents only a fraction of actual economic activity. Currently, as much as 80-90% of economic activity remains informal.

During the last four decades, Afghanistan has undergone drastic economic policy changes. The economy was semi-market led in the 1960's and 1970's, a highly centralized state controlled system in the 1980's and early 1990's, and suffered from the complete destruction of public institutions during the Taliban era.
Regardless of state control or involvement, this economy remains reliant on its agricultural sector. The manufacturing sector is showing strong growth, but the sector remains very small, and continues to operate well below capacity. Before the collapse of manufacturing, the sector was predominately focused on processing agricultural products. Non-agricultural manufacturing is centred on the small-scale production of textiles (wool, rayon and cotton), soap, furniture, shoes, fertilizer, cement; hand woven carpets; and natural gas, coal, and copper.
Afghanistan is estimated to have very large natural gas, exploitable oil and coal reserves and substantial deposits of other metals, minerals and semi-precious stones. Afghanistan's exports of natural gas earned US$300 million a year until the Soviet withdrawal, when wells were capped. Production has since dropped to less than 10% of the country's 1980 production levels.
| 2002 | 2003 | 2004 | 2005 | 2006 | |
|---|---|---|---|---|---|
| GDP (US$ billions) | 4.08 | 4.58 | 5.97 | 7.31 | 8.91 |
| GDP PPP (US$ billions) | 21.0 | 24.8 | 27.4 | 31.9 | 36.1 |
| GDP Growth | 28.6% | 15.7% | 8.0% | 14.5% | 8.4% |
| Per Capita GDP (US$) | 182 | 199 | 253 | 300 | 354 |
| Per Capita GDP PPP (US$) | 939 | 1,079 | 1,158 | 1,310 | 1,440 |
| Inflation | 5.1% | 24.1% | 13.2% | 16.3% | 12% |
Major impediments to Afghan economic growth include intermittent electrical power which is only focused around major urban areas, a weak and mainly inaccessible telephone network, as well as an unstable and dangerous transportation infrastructure.
As an agriculture-based economy, most recent GDP performances and growth forecasts are dependant on favorable weather conditions. Drought is an inflationary threat (particularly food prices), but recently favourable growing conditions have also affected inflation by bringing larger cash inflows from informal agricultural activity. Rapid economic growth due to the informal economy has led to concerns that the currency relative strength at this early stage may hamper the development of the domestic economy by creating a reliance on imports.
Historically, Afghanistan has relied on traditional trade routes and longterm regional trade partners for its import suppliers and export markets. Trade of smuggled goods to Pakistan once constituted a major source of revenue for Afghan regimes, including the Taliban. This still exists as an important element of the Afghan economy, although efforts are underway to formalize this trade. Outside of its region, the country has been renowned internationally for select products such as rugs/carpets and certain agricultural products (e.g. pistachios, raisins and pomegranates).
Legal trade during the 1990s was dominated by the re-export of products to Pakistan and other neighbouring countries. Many of these goods originally entered duty-free from Pakistan under the Pakistan-Afghanistan Trade and Transit Agreement. When Pakistan clamped down on the types of goods permitted duty-free transit in 2000, ransporting of the goods through Iran and the Gulf increased significantly. More recently, trade with NATO countries participating in Afghan operations has supplimented traditonal trade partners.
Agricultural products have historically dominated total Afghan trade. However, the last 30 years have turned the country from a net agricultural exporter to a nation reliant on imports to meet its food needs. While agricultural products still dominate exports, they have become an increasingly large component of total imports. In 2005, agricultural products made up between 25% and 30% of the country's total imports.
Agricultural products accounted for about 53% of Afghanistan's exports in 2001. Nuts and fruit, including pistachios, almonds, grapes, melons, apricots, cherries, figs, mulberries, and pomegranates are among Afghanistan's most important exports.
Key Afghan agricultural products maintain a very high international image, particularly in India, and building on this image will be a key torecreating the once strong export sector.
Afghanistan has no existing Free Trade Agreements. However, it is actively negotiating access and investment agreements with a number of countries, particularly with neighbouring nations. Apart from development goals, it appears that Afghanistan and its region/traditional export markets are seeking to put in place the framework for a return to normalcy as soon as Afghanistan regains its supply capabilities.
Afghanistan is a member of the following trade organizations:
Afghanistan receives special access to several Western markets based on its status as a least-developed country.
Afghanistan is an observer to the WTO and plans to complete the accession process by 2010.
Domestic competition for quality Western goods is limited and imports will dominate this market for some time to come. Competition for general consumer goods comes primarily for cheap, low-quality goods from Iran and Pakistan. These products enter the country easily and are sold through sales and distribution networks that would be near impossible for an outsider to access.
Three decades of conflict and natural disasters led to millions of Afghans fleeing to neighbouring Iran and Pakistan and a million more internally-displaced within Afghanistan. Since 2002, between 2 and 3.5 million Afghan refugees have returned to their country and over 400,000 internally displaced people have returned to their home towns and villages. It is estimated that as many as 3 million Afghan refugees currently remain in Pakistan and Iran.
Current population figures for Afghanistan vary greatly. A 2006 Asia Development Bank estimate states the population is roughly 24 million while the CIA World Fact Book states the total is closer to 31 million. There are estimates from various sources which mirror or fall between these two values. Approximations have obviously been affected by a number of factors, such as a thirty-year gap in solid national governance for statistics purposes, conflict, deaths, refugees (both fleeing and returning) and a largely rural population, including nomads, which are difficult to account for. Generally, municipal figures are considered more accurate.
Islamic religious tradition and codes, together with traditional tribal and ethnic practices, have an important role in personal conduct and dispute settlement. Afghan society is largely based on kinship groups, which follow traditional customs and religious practices, though somewhat less so in urban areas.
Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care and employment. It will probably take the remainder of the decade and continuing donor aid and attention to significantly raise Afghanistan's living standards from its current status, among the lowest in the world.
Overall literacy rates are low at 50%, while that of males and females is estimated at 50% and 20% respectively. However, since 2001 aid and development projects have targeted this issue, and 235 schools in Kandahar now in operation. In addition, 40,000 men and women are enrolled in higher education.
A return to normalcy in traditional Afghan markets has been seen by many as one of the true positive developments since 2001. Retail trade in Afghanistan is unlike its Western counterparts, but all indications point to the fact that an active central market in a city, town or village is an excellent economic indicator and speaks to a heightened sense of security amongst local consumers.
Agriculture continues to be the backbone of the Afghan economy. While arable land accounts for only 12% of the available land area, the sector was able to be almost entirely self-sufficient and a net exporter of many high-value commodities. Over the last three decades, cultivated land area has declined by half to just 6% of the country because of population dislocation, land mines, drought and damage to centuries-old irrigation infrastructure. Permanent crops make up less than 1% of total land use.
Prior to decades of conflict, Afghanistan had a largely self-sufficient and export capable agriculture sector. The sector produced roughly 95% of its wheat and rye requirements, and produced surpluses of rice, potatoes, pulses, nuts and seeds. Horticultural crops (specifically pistachios, citrus fruits, figs, dates and almonds) once accounted for between 30% and 50% of the country's export earnings. However, current agricultural production is a fraction of its potential. A sector that was traditionally 80% self-sufficient has been reduced to 60%. In some regions, agricultural production had all but ceased due to destruction caused by the war and the migration of Afghans out of those areas. Land mines and a lack of irrigation have taken thousands of hectares of agricultural land out of production.
Apart from conflict-related issues, the sector has traditionally been constrained by an almost total dependence on erratic winter snows and spring rains for water. Drought is always a concern. Irrigation was primitive before the series of conflicts took place, and now it is essentially in ruins. The sector has never modernized or implemented modern techniques, and as a result, has very little experience with machines, chemical fertilizers or pesticides. Current issues facing the sector include limited natural fresh water resources, soil degradation, and overgrazing. There are current efforts underway to repair the damage of soil degradation, repair and renew the irrigation system and to introduce new farming and management techniques.
Irrigation is required for 50% of the country's agricultural land. This irrigated land contributes roughly 80% of the sector's total output. Despite irrigation's positive impact, the dated technology operates at an estimated 25% efficiency. Droughts are a regular occurrence and ypically affect the sector through mild droughts every two to three years and severe droughts every 30 years.
Wheat currently makes up 80% of all grain production. In the years directly following NATO involvement in the country, wheat production has increased considerably. In 2002, the wheat crop grew by almost 70% over the level achieved in 2001.
The variety of the country's crops corresponds to its topography.
The size of farms is a real issue in Afghanistan. Many farms are still listed as little more than subsistence level, and as such too small to positively impact domestic needs. One key issue which will affect the future of the sector is farm debt. This seems to be one of the key reasons behind the persistence of poppy cultivation. While individual debt is under $500 per debtor, interest rates can be as high as 50%, and $500 is roughly a years wage for many Afghans.
The immediate plan for the sector involves a number of key issues which have been supported by and contributed to by the world's leading agricultural organizations. Through detailed actions which involve a sector-by-sector plan engaging communities, government and the private sector, the Afghan government envisions a sector that can:
Afghanistan is currently the world's largest producer of opium. The country's opium GDP is estimated at 27% of the total economy and 36% of illicit GDP. Afghanistan is estimated to produce 90% of the world's opium supply. Poppy production is centred in two provinces in the south where insurgents are at their strongest. Expanding poppy cultivation and a growing opium trade generate roughly US$3 billion in illicit economic activity and looms as one of Kabul's most serious policy concerns. Afghanistan's President calls the opium trade his country's "worst enemy".
Cultivation dropped 48% in 2005; but this was due to weather, not success shifting agricultural producers away from poppy production. Better weather and lack of widespread disease returned opium yields to normal levels in 2006 and the opium harvest up 49% over 2005. There have been reported successes at getting farms off of poppy production, but it seems that examples are sited largely for publicity.
The negative effects of the sector's reliance on poppy production are not as simple as the issues associated with an economy reliant on illegal narcotics for dollars. Opium has a huge effect on this economy. The cash inflow from aid and opium is so much greater than current economic potential that it is having an effect on the currency's exchange rate as well as consumer prices. In effect, when combined with aid dollars, opium is putting too much money into the economy.
There are many impediments to stopping the poppy production in Afghanistan.
These are all key factors in the minimal success to-date in ending/reducing poppy production. It is interesting to note that even the repressive Taliban regime gave up on its efforts to ban the production of opium because of the near impossibility/unpopularity of the initiative.
Regardless of the moral/social issues, most experts believe that destroying the opium economy would have a devastating impact unless it was preceded or accompanied by decades of development. So many people are reliant on funds from poppies that stopping the practice dead would leave thousands if not millions without income.
The Embassy of Canada to Afghanistan
House 256, Street 15, Wazir Akbar Khan
Kabul, Afghanistan
Telephone: (011 930 799) 742-800
Fax: (011 930 799) 742-805
Email: Kabul@international.gc.ca
Web site: www.canada-afghanistan.gc.ca
Embassy of Afghanistan in Canada
246 Queen Street, Suite 400
Ottawa, Ontario K1P 5E4
Telephone: (613) 563-4223 / 65
Fax : (613) 563-4962
Email: contact@afghanemb-canada.net
Web site: www.AfghanistanEmbassy.ca
Consulate General of Afghanistan in Toronto
477 Richmond Street. West, Suite 901
Toronto, ON M5V 3E7
Telephone: (416) 385-1033
Fax: (416) 385-3810
Email: infoconsulate@cgoa.ca
Web Site: www.cgoa.ca/
Protecting Canadians / Rebuilding Afghanistan - Government of Canada
www.canada-afghanistan.gc.ca/
Canadian International Development Agency - Afghanistan - CIDA
www.acdi-cida.gc.ca/cidaweb/acdicida.nsf/En/JUD-129153625...
Country Fact Sheet - Afghanistan - Australian Government Department of
Foreign Affairs and Trade
www.dfat.gov.au/geo/fs/afgh.pdf
CIA World Fact Book - Afghanistan - CIA
https://www.cia.gov/cia/publications/factbook/geos/af.html
Country Commercial Guide - Afghanistan - U.S. Commercial Service 2006
www.buyusainfo.net/docs/x_9192893.pdf
Fact Sheet - Afghanistan - ATS Web site - 2007
www.ats.agr.gc.ca/stats/afghanistan.pdf
Rebuilding Afghanistan's Agriculture Sector - Asian Development Bank
2003
www.adb.org/Documents/Reports/Afghanistan/Agriculture...
The Afghanistan Compact - CIDA - February 2006
www.fco.gov.uk/Files/kfile/20060130%20Afghanistan%20...
Agriculture and Food Production in the Post-war Afghanistan, a Report
on the Winter Agricultural Survey 2002/2003 - FAO 2003
www.fao.org/docrep/007/ae407e/ae407e00.htm
Afghanistan Agriculture Master Plan - Islamic Republic of Afghanistan
Ministry of Agriculture and Food - 2006
www.agriculture.gov.af/fills/English%20summary%20for...
A Policy and Strategy Framework for the Rehabilitation and Development
of Agriculture and Natural Resource Sector of Afghanistan - AIMS 2004
www.aims.org.af/services/government/related_documents...