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COTTON: WORLD MARKETS AND TRADE
AUGUST 1997
UZBEKISTAN
Although the rains in May necessitated replanting, temperatures in June and July have been favorable to crop development; thus production is expected to reach 5.8 million bales, an 18 percent increase over the estimated output for MY 1996/97. The increase in production has helped to rank Uzbekistan as the second largest world exporter of cotton in MY 1997/98, with projected exports of 4.9 million bales, a 7.1 percent increase over the 1996/97 level. Uzbekistan has historically been the leading FSU cotton exporter and supplier, accounting for 61 percent of FSU cotton exports in MY 87/88 and climbing to a projected 72 percent in MY 1997/98.
Image: Uzbekistan's Cotton Production and Exports. Although cotton is the major crop in Uzbekistan and accounted for 40 percent of the value of all exports in 1996, Uzbekistan has embarked on a diversification program. The program, which has supported the gradual shift of about 600,000 hectares from cotton to wheat, is an effort to become self-sufficient in wheat production. The present policy in Uzbekistan is to increase cotton yields and stabilize cotton area and production at current levels. The government is also trying to realize a program of macroeconomic reforms, which includes increasing agricultural production incentives, privatizing input and output markets, streamlining the export system, and eliminating the state order for cotton by MY 1998/99. Despite the announced program of reform, the state continues to play a major role in the production and marketing of cotton. The state owns most of the land and all of the cotton is produced on state farms. The state determines cotton area, sets production targets and prices, supplies all inputs, and purchases the bulk of the crop.
The Government of Uzbekistan (GOU) is interested in using more of its cotton production internally to produce value-added textile products. Even though domestic cotton consumption is expected to increase by nearly 6 percent in MY 1997/98, it is below the GOU desired level. The future of Uzbekistan's domestic cotton consumption looks brighter as two Uzbek-South Korean and one Uzbek-Turkish joint-ventures in textile mills recently started operating. GOU officials plan to encourage other joint-ventures with foreign partners to further develop Uzbekistan's textile industry.
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