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Uzbekistan’s exports of finished textile products increased as exports of raw cotton declined

Uzbekistan Materials 12 February 2021 00:08
Uzbekistan’s exports of finished textile products increased as exports of raw cotton declined

BAKU, Azerbaijan, Feb. 11

By Klavdiya Romakayeva - Trend:

Uzbekistan cotton exports plunged 65.35 percent to $78.87 million in 2020 compared to $227.61 million in 2019, Trend reports citing Fibre2Fashion TexPro market-driven B2B portal.

It is reported that the drop to $5.98 million was first observed in March from $12.00 million in January. The cotton exports remained low throughout the year except for September at $10.38 million.

According to the information, Uzbekistan planned to ban raw cotton exports to push companies into investing in added value production of finished and semi-finished products such as textiles and fashion. Government funding and support for cotton clusters had encouraged foreign and domestic companies to implement a more fully integrated supply chain.

Uzbekistan canceled state regulation of cotton production, price, and mandatory sale from the 2020 harvest season. Cotton producers got the right to choose their zoned varieties, while a certified seed delivery system got maintained.

The government canceled to produce and sell cotton. Setting the purchase price of raw cotton was also canceled. According to the decree, in regions where there were no cotton clusters, voluntary cooperation of farms was organized with the participation of cotton-ginning enterprises, whose main task was to join the use of machines, equipment, vehicles, and factories by members of the cooperative.

From March 15, a new credit mechanism for the production and processing of raw cotton was introduced. Commercial banks would provide loans for the purchase of raw cotton for up to 12 months for the collection of cotton and the final calculation.

The use of concessional loans and the lack of free distribution of funds have led to a 15-20 percent reduction in cotton production. It was possible to freely use loans and freely choose service companies. The structure of agricultural expenditures was diversified, with an emphasis on areas such as science and seed production.

The Uzbek government estimated that ending the boycott, which was supported by more than 300 apparel manufacturers and retailers, could let the country earn an extra $1 billion in a year alone by selling cotton and textiles on western markets.

In April 2020, the Uzbek government urged to lift the ban on cotton exports of the country to fight against the loss due to the COVID-19 pandemic, but the cotton campaign said that only complete eradication of forced labor along with civil society reforms such as registering NGOs (non-governmental organizations) that monitor worker rights would prompt it to lift the boycott.

Many Chinese firms were approaching Uzbekistan as it could provide high-quality raw cotton, cheap labor, the power that costs three cents per kWh.

In September 2020, Pakistan and Uzbekistan signed a memorandum of understanding to set up a joint working group on trade and economic affairs for promoting economic partnership. The agreement would help both the nations identify areas for trade enhancement, promotion of inter-governmental projects in different sectors, and improve connectivity.

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Follow the author on Twitter: @romakayeva

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