1. Cotton production policy and output forecast
To ensure hard currency revenue and support growth in the textile sector, maintaining stable cotton production remains the government’s primary objective. However, on October 21, 2008, the government passed a decree on “Measures to Optimize Grain Sowing Area and Increase Grain Crop Production” because of the continued shortage of irrigation water and rising world grain prices. The goal is to increase production and variety of food crops to meet domestic demand. According to this decree, Uzbekistan’s cotton field area decreased by 75,000 hectares in 2009, with a total area of 1.3115 million hectares. Uzbekistan’s official seed cotton production is 3.4 million metric tons. The released land will be used to produce food and vegetables. Soon the government passed another farm amalgamation decree, in which small farms would be merged into larger ones. The decree does not contain specific details, but according to unofficial discussions, the government may require farms producing grain and cotton to occupy at least 80-100 hectares, and farms producing fruits and vegetables to occupy at least 20 hectares. According to reports, the main original intention of the government in making this decision is that farmers who rent 15-20 hectares of land will always bear the rent of agricultural machinery and cannot effectively use credit funds. But more importantly, the merger will be beneficial to government management and control, and the government should sow seeds in the spring to accelerate the merger process. As of October 1, 2008, there were 218,000 operating farms in Uzbekistan, with a total leased land area of 5.89 million hectares, and at least 85% of the farms covered an area of less than 20 hectares.
According to the U.S. Foreign Agricultural Service website citing a report released by U.S. Department of Agriculture officials on December 1, Uzbekistan’s cotton output is expected to drop to 5.04 million bales in 2008/2009 due to dry heat in spring and shortage of irrigation water, and export expectations have already Down to 3.8 million bales, the 2008/2009 Uzbekistan cotton harvest has ended. As of November 8, Uzbekistan’s state media announced that farmers had harvested 98% of the country’s total cotton harvest target – 3.6 million metric tons of seed cotton.
Some independent analysts believe the report is unrealistic as producers contend with challenging weather conditions: an unusually cold winter of 2007 with higher-than-usual snowpack, followed by an early and very hot and dry spring that resulted in rapid ground Evaporate water. In some areas, crops are experiencing shortages of irrigation water. Therefore the actual harvested seed cotton quantity will be lower than the official target. Based on an estimated seed cotton production of 3.3 million tons, Uzbekistan’s lint cotton production in 2008/2009 is forecast to be 5.04 million bales.
2. Cotton production and consumption forecast
1. Cotton ginning department
Extensive modernization and structural changes continue in the cotton ginning sector. 45 of the 129 ginneries in Uzbekistan have been renovated, and quality has slowly improved, maintaining a seasonal average ginning productivity of 33%. According to the new government plan in 2010, investment opportunities will be provided to rebuild 20 ginning plants and modernize 21 more.
2. Textile industry
During the 4th International Uzbekistan Cotton Exhibition and Textile Conference held in Tashkent from October 14 to 16, 2008, Uzbekistan once again emphasized its position as a major cotton producer and exporter, and also showed that it was not afraid of Wal-Mart and other European and American companies announced a boycott of Uzbek cotton in August 2007. During the meeting, the Minister of Foreign Economic Relations, Investment and Trade of Uzbekistan (MFERIT) announced that Uzbekistan’s domestic cotton consumption in 2007 was 280,000 tons and will reach 3 million tons in 2008. In the past 10 years, Uzbekistan has actively pursued the goal of becoming a major textile country in Central Asia and a strong competitor in the international textile market. Some progress has been made since then in modernizing the department. The goods produced are mainly cotton yarn and gray cloth, gradually increasing the market share in Russia and Eastern Europe. Over the past few years, the focus has expanded to further processing of primary textiles, particularly through increased vertical consolidation of ginners, to enhance the value of the final product to meet local and export demand.
According to official reports, about 150 ginning mills have joined the Uzbek Ginning Industry Association (Uzbekengilsanoat), which represents more than 90% of the country’s production capacity. Among these factories, 90 are involved in the production of cotton yarn and woven fabrics, 50 are involved in the production of knitted clothing, 12 are involved in the production of ready-made clothing, and 3 are involved in the production of socks. Although it can currently process about 3 million tons of raw cotton and has the ability to produce 250,000 tons of cotton yarn, 480 million square meters of fabric, 110 million pieces of knitted clothing, and 40 million pairs of socks, the latest data shows that the current capacity utilization rate of these goods is still Quite low.
3. Domestic prices
At the end of August 2008, before the cotton harvest, the Ministry of Finance of Uzbekistan set the purchase price of seed cotton and lint cotton. The current average purchase price: seed cotton (based on grade 2 and 5) 430,000 soums/ton (official exchange rate: 1,350 soums = 1 US dollar). The current export price of Uzbekistan’s lint cotton depends on the quotation of the Liverpool Cotton Exchange A Index, which is US$1,100/ton. As a rule, Uzbekistan exporters offer a discount of US$70 per ton, after which the price is determined. Lint sales are usually made on an FOB basis.
3. Cotton export forecast
Due to the forecasted decline in production, Uzbekistan’s cotton exports in 2008/2009 will be reduced to 3.8 million bales (in 2007/2008 Uzbekistan’s cotton exports were 4.2 million bales). According to official information, the event will be held in October�At the Zbekistan International Cotton Export Fair, Uzbekistan signed a memorandum of understanding on the export of 950,000 tons of lint cotton in 2008/2009 and 2009/2010. Uzbekistan’s cotton is exported more to Asian countries and regions including China, South Korea, Bangladesh, and Iran. For example, Bangladesh’s annual demand for cotton is 2.7 million bales, 65% of which comes from Uzbekistan. Trading companies sell cotton through the Ministry of Foreign Trade and Economic Cooperation (MFERIT), the Commodity Exchange, and the Dubai Cotton Center (DCC). DCC can purchase 200,000 tons of Uzbek cotton every year and re-export it to other countries.
