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 -------------- ¶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 -------------- ¶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? -------------- ¶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 -------------- 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