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Uzbekistan Cotton Producers Face Problems Achieving State Targets

03 April 2014
USDA Foreign Agricultural Service

UZBEKISTAN - Uzbekistan's marketing year (MY) 2013/14 final lint production is estimated at 4.45 million bales.

MY2013/14 exports are forecast to decrease to 2.9 million bales. Due to a preliminary wet rainy weather forecast for April, MY2014/15 mass cotton sowing might start two weeks later, switching from mid to late April. State targets for MY2014/15 planted area and seed cotton production reportedly remain at same level as in FY2013/14, and set at 1.285 million hectares and 3.35 MMT respectively.

Over the last several years it has become increasingly difficult for producers to achieve State targets due to poor farming practices and the absence of appropriate production incentives. Official production reports generally match the production targets, regardless of actual yields.

Despite the global economic crisis and relative drop in world cotton consumption over last 5-6 years, local mills continue efforts to increase their capacities. Domestic consumption is estimated at 1.5 million bales in MY2013/14 and in MY2014/15 it is forecast to remain unchanged.

The government of Uzbekistan still maintains tight control over all aspects of cotton production, including area planted, production targets, prices, inputs, procurement and marketing nearly all the cotton in Uzbekistan. Domestic supplies are allocated according to the government’s quota mainly to State Joint-Stock Company “Ozengilsanoat” which then distributes cotton to domestic millers according to sales contracts. The local textile mills can also buy cotton through the Commodity Exchange.

Despite the Government's efforts in recent years, Uzbekistan's cotton ginning industry still needs more investment in order to modernize its old gins. The spinning and weaving industries continue to invest heavily in new equipment as well as renovating existing equipment thanks to improved profitability over the past years. Domestic demand has been getting stronger with a marginal increase over the past six years; as is export demand, especially in cotton yarn. Nowadays, the textile industry understands it must aggressively pursue quality improvements and production diversification to include more value-added products, rather than rely on exports of low-value yarn, if it wants to remain competitive in a shrinking global market.

Currently, there are more than 50 joint ventures established in the textile industry with partners from Turkey, Germany, South Korea, Japan and Switzerland. As of 2014, foreign investments in the textile industry exceeded USD 2.0 billion. The main products produced and exported by textile mills remain cotton yarn, gray fabrics and some textile garments.

As in the past few years, China, Bangladesh and Russia are still the major buyers of Uzbek raw cotton.

Further Reading

You can view the USDA GAIN: Republic of Uzbekistan Cotton and Products Annual 2014 report by clicking here.

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