Uzbekistan cancels state regulation of cotton production

Uzbekistan cancels state regulation of cotton production

BAKU, Azerbaijan, Mar. 6

By Ilkin Seyfaddini - Trend:

Starting from the harvest season in 2020 harvest, Uzbekistan will cancel state regulation of the cotton production plan, price and mandatory sales plan, Trend reports citing Uzbek media.

In addition, the plan for the compulsory sale of grain will be reduced by 25 percent.

The corresponding decree was signed by President Shavkat Mirziyoyev, according to the report.

Following presidential decree, the government cancels the plan to produce and sell raw cotton and the purchase price of raw cotton is canceled. Furthermore, raw cotton producers will have the right to freely choose their zoned varieties, while a certified seed delivery system will be maintained.

According to the decree, in regions where there are no cotton clusters, voluntary cooperation of farms will be organized with the participation of cotton-ginning enterprises, whose main tasks is organization of joint use of machines, equipment, vehicles and factories by members of the cooperative. The document also envisages provision of the members of the cooperatives with agricultural machinery, fuel and lubricants, fertilizers, seeds and chemical and protective equipment as well as organization of production, transportation, storage, processing and sale of finished products and rendering agrotechnical, accounting, consulting, intermediary and other services to members of agricultural associations.

In addition, according to the document, starting from March 15, 2020, a new crediting mechanism for production and processing of raw cotton will be introduced. Commercial banks will provide loans for the purchase of raw cotton for up to 12 months for the collection of cotton and the final calculation.

The existing credit system leads to the creation of receivables and payables between farmers and suppliers of goods and services, a decrease in the quality of products and services and artificial price increases. The use of concessional loans and the lack of free distribution of funds have led to a 15-20 percent reduction in cotton production.

The purchase price of raw cotton will be liberalized by not setting prices. It will be possible to freely use loans and freely choose service companies. The economic interest of farmers will increase. The structure of agricultural expenditures will be diversified, with an emphasis on areas such as science and seed production.

According to the document, JSC Uzpakhtasanoat will be liquidated. In particular, in accordance with the established procedure, the blocks of shares of regional joint-stock companies "Pakhtasanoat" will be sold to cooperatives and business entities.

In order to ensure the profitability of cotton producers, the recommended amount of one kilogram of raw cotton harvested before the harvest will be published in the media.

Cotton will also be freely sold on the Commodity Exchange at the initial exchange price, without a 10 percent discount from the initial exchange price.

In addition, it is planned to establish sewing and textile clusters with the participation of "Uzpakhtasanoat" and its enterprises in the regions of the country.

The practice of announcing prices to farmers before the start of vegetation will be introduced, which will allow farmers to see the economic effect of growing cotton and draw up their business plan and motivate them to optimize their expenses.

---

Follow author on Twitter: @seyfaddini

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