UZBEKISTAN: A PRIVATE CONSULTANT'S VIEWS

UNCLAS SECTION 01 OF 02 TASHKENT 001255 SENSITIVE SIPDIS STATE FOR SCA/CEN, EEB/ESC STATE FOR OES: PHUDAK, NFITE AMEMBASSY ANKARA FOR AG COUNSELOR E.O. 12958: N/A TAGS: PGOV ECON SENV SOCI EAID PINR UZ SUBJECT: UZBEKISTAN: A PRIVATE CONSULTANT'S VIEWS ON AGRICULTURE ¶1. (SBU) SUMMARY: The head of a private Uzbek consulting firm gave us his views on the current state of agriculture and water resource management in Uzbekistan. Confirming what we have heard from other sources, he told us that Uzbek farmers have little choice in choosing what to grow, with the government dictating orders for cotton and wheat production. The government provides all the inputs on credit and then buys the harvest at a reduced price, leaving farmers with very little after paying off their debt. Despite this bleak picture, an October 20 presidential decree that will increase the land used for growing grain by 50,000 hectares and increase the production of food crops at the expense of cotton gives hope that the lot of the Uzbek farmer may improve. END SUMMARY. WATER AND AGRICULTURE: A PRIVATE CONSULTANT'S VIEW -------------- -------------- ¶2. (SBU) In early October the Regional Environmental Officer (REO) met in Tashkent with Azim Nazarov, a U.S.-trained agricultural engineer who heads NBT (no expansion),a private consulting firm specializing in agriculture, water resource management, and environmental protection issues. Founded in 2007, NBT works primarily on projects funded by international financing institutions including the World Bank, Asian Development Bank (ADB),and USAID. At present NBT is working with ADB on a water resources management project. ¶3. (SBU) Nazarov said Uzbekistan allows farmers to lease land up to 99 years and to pass on this lease to their children. The government still owns the land, however, and farmers have limited discretion about what they can grow. The government still submits state orders to local farmers with the result that, on average, 50 percent of the total annual crop is dedicated to cotton and wheat. Nazarov continued that the government provides all the inputs (e.g., seed, fertilizer, water, etc.) on credit to the farmers, who must pay it back at harvest time. The government then buys the harvest at a reduced price, leaving farmers with very little left after paying off their debt. The government purchases the cotton at 80 cents per kilogram (800 USD per metric ton) and, after processing it, sells it on the world market at 1200 USD per metric ton. The government returns the cotton gin biomass back to the farmers, who use it as fuel in winter. ¶4. (SBU) Nazarov noted that Uzbekistan is the world's fifth largest producer and the second largest exporter of cotton. He added that Uzbekistan will not give up cotton production because the cotton revenues support many other sectors of the economy. Furthermore, the land and irrigation system is "hardwired" for cotton. Possible substitute crops are fruits, vegetables, and sugar beets, but there is no infrastructure for large-scale processing of these alternative crops. Notably, fruit and vegetable crops are not governed by any state structure; farmers themselves can decide what to grow and to whom to sell their harvest. Nazarov said that this year farmers were earning more from the sale of wheat than cotton because the price of wheat has increased substantially. AGRICULTURAL EXTENSION NETWORK -------------- ¶5. (SBU) Nazarov supports setting up agricultural extension facilities in Uzbekistan similar to those that are part of the U.S. Department of Agriculture's Cooperative Extension System. As in the U.S., the purpose of such facilities would be to TASHKENT 00001255 002 OF 002 provide information to agricultural producers, small business owners, consumers, and others in rural areas and, thereby, increase crop productivity. (NOTE: Agricultural extensions have been set up in Africa and Asia. END NOTE.). Nazarov is looking for potential partners among international organizations that can help set up an extension system. He complained that a number of donors had set up demonstration sites, including training, but that these projects had never progressed beyond the demonstration phase. COMMENT -------------- ¶6. (SBU) Although Nazarov is undoubtedly correct that cotton will remain at the center of Uzbek agriculture for some years to come, the GOU is beginning to show flexibility. Most notably, on October 20 President Karimov signed a decree that will reduce the land used for cotton cultivation and increase the grain sowing lands by almost 50,000 hectares. The decree also calls for a significant increase in the production of vegetables, oil, and other food crops. This is good news for Uzbek farmers and could signal an eventual move away from a cotton monoculture. NORLAND