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Uzbekistan to end state regulation of cotton

Mar '20
Pic: Shutterstock
Pic: Shutterstock
Uzbekistan will cancel state regulation of cotton production, price and mandatory sale from the 2020 harvest season. A decree to this effect was signed by President Shavkat Mirziyoyev recently. Cotton producers can now choose their zoned varieties, while a certified seed delivery system will be maintained. The government will no more produce and sell cotton.

Setting the purchase price of raw cotton is cancelled as well, according to a news agency report.

According to the decree, in regions where there are no cotton clusters, voluntary cooperation of farms will be organised with the participation of cotton-ginning enterprises, whose main tasks is organisation of joint use of machines, equipment, vehicles and factories by members of the cooperative.

The document also envisages provision of the members of the cooperatives with agricultural machinery, fuel and lubricants, fertilisers, seeds and chemical and protective equipment as well as to organization of production, transportation, storage, processing and sale of finished products and rendering agro-technical, accounting, consulting, intermediary and other services to members of agricultural associations.

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

The existing credit system leads to the creation of receivables and payables between farmers and suppliers of goods and services, a decrease in the quality of products and services and artificial price increases. The use of concessional loans and the lack of free distribution of funds have led to a 15-20 per cent reduction in cotton production.

It will be possible to freely use loans and freely choose service companies. The economic interest of farmers will rise. The structure of agricultural expenditures will be diversified, with an emphasis on areas such as science and seed production.

JSC Uzpakhtasanoat will be liquidated. In particular, shares of regional joint-stock companies under ‘Pakhtasanoat’ will be sold to cooperatives and business entities.

Cotton will also be freely sold on the commodity exchange at the initial exchange price, without a 10 per cent discount from the initial exchange price.

Sewing and textile clusters will be established with the participation of Uzpakhtasanoat and its enterprises in the regions of the country.

Fibre2Fashion News Desk (DS)

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March 2020

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