WHAT'S IN A NAME? NEW GOTX COTTON COMMISSION

UNCLAS SECTION 01 OF 02 ASHGABAT 000309

SIPDIS

FOR SCA/CEN (PERRY)
ANKARA FOR AGRICULTURE COUNSELOR (HIGGISTON)

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: EAGR ECON ETRD PGOV EIND TX
SUBJECT: WHAT'S IN A NAME? NEW GOTX COTTON COMMISSION


Sensitive but Unclassified; not for Internet Distribution

Summary
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1. (SBU) President Niyazov recently created five
commissions under each of the provincial governors'
offices to administer cotton sales on the international
market. While GOTX officials view the creation of the
commission as a positive step, farmers remain
pessimistic. GOTX officials say that the 32-member
commissions were created to give private farmers
incentives to grow cotton and keep more money through
increased access to the international market. The real
aim is simply another attempt by Niyazov to more closely
control both the legal and illegal (corruption) revenue
streams. End Summary.

New Commission Controls Cotton Sales
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2. (U) On January 18, President Niyazov signed a decree
to regulate the sale of cotton on the international
market. Special commissions headed by welayat
(provincial) governors (all of whom have been appointed
personally by Niyazov within the last six months) were
established in each of the five provinces to assist
Agricultural Joint Stock Companies (AJSC) and private
farmers in selling their cotton. Prior to the decree,
the State Cotton Concern was the state middleman,
purchasing cotton from farmers at a state-fixed price and
selling it for international prices. Now, all cotton
produced in the welayats will be sold through to the
respective welayat commissions and the commissions will
negotiate with international buyers. It is unclear what
principal - market or state - will set the farmers' sale
price to the commission. The new system is expected to
provide higher - though not "world prices" - for farmers,
according to commission members.


3. (SBU) On February 9, Pol/Econ Officer met with
Deputy Governor of Lebap Welayat and Lebap cotton
commission-member Taganmurad Mammedov. Mammedov said the
32 members of his commission included etrap (district)
governors, and representatives from the Ministry of
Water, "Turkmenobahyzmat" (Village Machinery Service),
the State Standards Department, and the State Cotton
Concern "Turkmenpagta."


4. (SBU) Mammedov said that cotton producers would
directly participate in auctions and price negotiations
through their regional brokers, nominated by the
commissions. The task of the commission is to protect
the interests of cotton growers.

Will Farmers Really Benefit?
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5. (SBU) Singapore-based cotton buying company Olam
representative Hardjot Singh told Pol/Econ Officer on
March 3, that starting this year, international cotton
buyers were concluding contracts directly with the AJSCs.
The role of the commission is to distribute profits from
cotton sales between servicing agencies and farmers. In
his opinion, the commission was created with the purpose
of securing transparency and fair profit distribution,
increasing farmers' profits. Mammedov said that a
farmer's net profit would increase from 5 million to 25
million manat per season (based on an average three
hectare farm). According to the government plan this
will stimulate more farmers to grow cotton. However,
Ilkinjiler Farmers' Coop member Sheker Mollayeva was
pessimistic, believing that the commission was another
government body created to support the flailing state-
controlled AJSC system. Farmers still have not received
payment from the commissions for last autumn's harvest,
according to Mollayeva.

Comment
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ASHGABAT 00000309 002 OF 002




6. (SBU) Touted as a positive step for farmers, instead
the creation of the cotton commissions appears to be
another attempt to centralize revenue streams from cotton
into organs more directly controlled by the president.
End Comment.

Brush