The Agriculture Sector in Uzbekistan

Uzbekistan is known for its agricultural sector, with cotton being perhaps its highest profile products, and, while being a key industry (over one third of GDP is generated by this sector) it is also one requiring considerable reform, from management institutions down to individual farms. (During the current privatization process, the Ministry of Agriculture has privatized 470 collective farms, 390 unions and cooperatives, 116 leased associations and 32 other farms from over 1,000 state farms.)

At the highest level, it is likely that the current Ministry of Agriculture and Water Resources will be merged with that of Water, together with the Academy of Agricultural Sciences, to form the overall authority in the sector. This would appear to be a realistic decision given the importance of irrigation to a climate with some 260 sunny days per year. Under the Ministry are the commodity associations or "proms" responsible for individual industries which are to be privatized together with farms and processing factories.

Farms in particular require restructuring and privatizing. In 1996, 26 farms were being experimentally transformed into private joint-stock companies. In addition, more than half of the livestock farms have been transferred to collective ownership and 600 of them sold by auction.

Official reports suggest that farmers have received considerable assistance, helping their numbers to increase 10 fold to over 19,000 in July 1996. Nevertheless, much remains to be done. The payment system for farms through local banks, for example, needs to be greatly improved. Currently slow and difficult, farmers sell in open markets rather than to processing organizations, reducing produce available for export. However, product quality is anyway often poor and exportable only to the Former Soviet Union and there is, in addition, a serious lack of packaging materials. Further, prices for products going to processing are nominally free but can be subject to local manipulation. Overall, therefore, an investor's involvement may range from product quality improvement through to marketing.

A further necessary stage is that of land allocation and the transfer of titles to allow ownership, currently prohibited. This requires the development of land markets (now under discussion) and may come into operation in the near future. In addition, work on developing a more positive foreign investment climate and opportunities is also likely to get underway shortly. The improvement of land fertility itself is a key practical aim of agricultural development during the current reforms. Investments in rural areas will be directed towards development and reconstruction of irrigated cultivation zones and collector-drainage networks.

Of the individual industries, cotton deserves a first special mention. A stated strategic goal is to increase the rate of cotton fiber processed by up to 30% in the coming years: 2 million tons of it is currently produced annually. In cotton sales the country ranks second in the world and work is under way to improve cotton seed growing and to develop and introduce new, high yield varieties. Using preferential credits from the World Bank, it is planned to establish five cotton seed-growing corporations by the year 2000. In addition, the average level of cotton yields is to be increased to 2.5-3.0 tons per hectare via land reconstruction and utilization of fertilizers.

With regards to other agricultural products, during the current reform special attention is being given to the processing of products such as silk, jute, fruits, vegetables, and grapes/grape products. It is also planned to increase the production of dried fruits and vegetables to meet international standards for processing and export.

Vast areas of land are allotted for vegetable growing. Annually Uzbekistan produces 5 million tons of fruit and vegetables, well in excess of domestic demand and, aiming at self-efficiency in processed food, the republic is developing a sugar industry in order to be able to process domestic sugar beets. There is a plan to increase potatoes cultivation to up to 57,000 hectares and to produce up to 800,000 tons of potatoes with the help of Dutch technology.

There is also a substantial leather hides industry, originating from the large stocks of livestock (although there is a lack of good foodstuff) and, between 1996 to 2000, the intention stated is to be become self-sufficient in meat and dairy products. Great efforts are being made therefore in the development of livestock breeding farms, of which there some 11,500 in Uzbekistan today.

Official figures suggest that the share of the non-state sector in the total volume of gross agricultural production increased in 1996 to over 90%.