UZBEKISTAN -- 1995 AGRICULTURAL UPDATE

1. SUMMARY: UZBEKISTAN'S GRAIN HARVEST IS BASICALLY COMPLETE. OUTPUT WAS LOWER THAN PLANNED BECAUSE OF LOW RAINFALL, BUT RECORD HARVESTS WERE STILL REACHED FOR WHEAT (AN ESTIMATED 1.7-2 MILLION METRIC TONS, OR MMT), AND GRAIN OVERALL (2.8-3.3 MMT). THE COMBINATION OF INCREASED OUTPUT AND LOWER CONSUMPTION MOVES UZBEKISTAN CLOSER TO ITS GOAL OF SELF SUFFICIENCY IN WHEAT. THE COTTON CROP LOOKS GOOD SO FAR, ALTHOUGH SHORTAGE OF FERTILIZER MAY STILL CAUSE SOME PROBLEMS. A HARVEST OF 4.0 MMT IS PROJECTED. PRICES FOR BOTH WHEAT AND COTTON HAVE BEEN INCREASED SIGNIFICANTLY, AND THE GOVERNMENT OF UZBEKISTAN (GOU) HAS PLEDGED TO DO A BETTER JOB OF PAYING FARMERS THAN IN THE PAST. SOME DECENTRALIZATION AND PRIVATIZATION IN AGRICULTURE IS TAKING PLACE, PARTICULARLY IN LIVESTOCK AND HORTICULTURE. HOWEVER, THE BULK OF CULTIVATED LAND REMAINS UNDER STATE- DOMINATED COTTON AND GRAIN CULTIVATION. END SUMMARY.

1994/95 GRAIN HARVEST

2. UZBEKISTAN HAS VIRTUALLY COMPLETED HARVESTING ITS 1994/95 GRAIN CROP (COMPOSED PRIMARILY OF WINTER WHEAT AND BARLEY), ALTHOUGH SOME SUMMER CROPS OF RICE AND CORN REMAIN TO BE HARVESTED. THE GOU HAS ANNOUNCED THAT A RECORD 2.8 MILLION METRIC TONS (MMT) OF (UNDEFINED) GRAIN WAS HARVESTED THROUGH THE END OF JULY, AGAINST THE 1995 STATE PLAN OF 3.3 MMT AND COMPARED WITH 1994 PRODUCTION OF 2.4 MMT. MINISTRY OF AGRICULTURE (MINAG) OFFICIALS CONFIDED THAT THIS FIGURE IS ESSENTIALLY THE FINAL HARVEST AND THAT THE PLAN FIGURE WILL NOT BE REACHED. THEY SAID THE MAIN REASON IS LACK OF SPRING RAINFALL, DOWN 25 PERCENT FROM 1994.

4. ALTHOUGH MINAG OFFICIALS WOULD NOT GIVE A BREAKDOWN OF THE GRAIN HARVEST BY CROP, OTHER KNOWLEDGEABLE SOURCES HAVE PUT THE WHEAT CROP AT 1.7-2.0 MMT (COMPARED TO 1.3 MMT IN 1994), WITH BARLEY, MAIZE (CORN) AND RICE MAKING UP THE REMAINDER OF THE GRAIN HARVEST (SEE CHART BELOW). OFFICIALS QUOTED IN PRESS REPORTS PUT AVERAGE YIELD PER HECTARE OF GRAIN AT 2.98 MT/HA, BUT THIS APPEARS TO BE, AT BEST, A FIGURE ONLY FOR WHEAT HARVESTED FROM IRRIGATED LAND. ACTUAL YIELDS BASED ON TOTAL AREA UNDER WHEAT CULTIVATION APPEARS TO BE ABOUT 1.5 MT/HA.

5. IN ITS DRIVE TO INCREASE WHEAT PRODUCTION, THE GOU IMPORTED HARVESTING COMBINES FROM A NUMBER OF COUNTRIES (INCLUDING RUSSIA, GERMANY, AND THE U.S.) FOR TESTING DURING 1995. THE GOVERNMENT ALSO QUADRUPLED THE STATE ORDER PRICE PAID TO FARMERS FROM 500 SOM TO 2000 SOM/MT (ONE USD EQUALS 31.5 SOM), AND REDUCED THE STATE ORDER AMOUNT FROM 60 PERCENT TO 50 PERCENT OF THE TOTAL HARVEST. MORE IMPORTANTLY, FARMERS ACTUALLY APPEAR TO HAVE BEEN PAID FOR THEIR WHEAT DELIVERIES THIS YEAR, SOMETHING WHICH OFTEN HAS NOT BEEN THE CASE IN THE PAST (SEE COTTON BELOW).

HOW MUCH WHEAT WOULD AN UZBEK EAT....

6. WHETHER OR NOT IT REACHES THE PLAN FIGURE, UZBEKISTAN DID IN FACT MAKE SIGNIFICANT PROGRESS DURING 1995 TOWARDS ITS STATED GOAL OF SELF-SUFFICIENTLY IN WHEAT. PREVIOUSLY THE GOU AND MOST OBSERVERS PUT UZBEKISTAN'S WHEAT REQUIREMENT AT ABOUT 4.0 MMT/YR. HOWEVER, PRESIDENT KARIMOV, IN A MARCH SPEECH, CLAIMED THAT ANNUAL PER CAPITA WHEAT CONSUMPTION HAD FALLEN FROM 178 KG TO 142 KG. IF THIS IS TRUE, TOTAL DEMAND FOR WHEAT WOULD BE REDUCED TO ONLY 3.1 MMT. ANOTHER GOU OFFICIAL TOLD POL/ECONOFF THAT WHEAT CONSUMPTION DURING THE FIRST QUARTER OF 1995 WAS ONLY 180,000 MT PER MONTH, WHICH TRANSLATES INTO ANNUAL CONSUMPTION OF 2.2 MMT.

7. A 50 PERCENT DECLINE IN CONSUMPTION IN ONE YEAR SEEMS UNLIKELY (EVEN WITH 50-100 FOLD INCREASES IN BREAD PRICES DURING THE SAME PERIOD); HOWEVER A 21 PERCENT DECLINE, AS CLAIMED BY THE PRESIDENT, SEEMS FEASIBLE. USING THE PRESIDENT'S FIGURE (3.1 MMT), ACID WITH DOMESTIC PRODUCTION AT 1.7-2.0 MMT FOR THIS YEAR, THE IMPORT NEED WOULD BE ONLY 1.1- 1.4 MMT. THE GOU PLANS TO INCREASE THE AREA PLANTED TO WHEAT BY 300,000 HA (ALL IRRIGATED) FOR THE 1995/1996 CROP SEASON. AT YIELDS OF AROUND 3.0 MT/HA, THAT COULD ADD ANOTHER 900,000 MT TO PRODUCTION, BRINGING UZBEKISTAN TO THE VERGE OF SELF-SUFFICIENCY IN 1996.

8. VERY LITTLE FEED GRAIN (CHIEFLY SOYBEANS) CURRENTLY IS IMPORTED, BUT ONE EXPERT ESTIMATES THAT TOTAL GRAIN DEMAND, INCLUDING THE LARGE UNMET DEMAND FOR FEED GRAIN, MAY BE AS MUCH AS TEN MMT.

COTTON LOOKS GOOD

9. THE SITUATION FOR COTTON IS CONSIDERABLY CLEARER THAN FOR WHEAT (OR AT ANY RATE, EVERYONE AGREES ON THE NUMBERS). BOTH AREA PLANTED IN COTTON AND PLANNED PRODUCTION ARE ABOUT THE SAME AS LAST YEAR -- 1.5 MILLION HA AND 4 MMT SEED COTTON. AFTER LAST YEAR'S MECHANIZED HARVESTING DEBACLE -- THE ACTUAL AMOUNT PICKED BY MACHINE WAS 23 PERCENT VERSUS THE PLAN TARGET OF 50 PERCENT -- THE GOVERNMENT THIS YEAR IS PLANNING MORE MODESTLY FOR 35 PERCENT OF THE CROP TO BE PICKED BY MACHINE, AND THE REST BY HAND.

10. ONLY 60 PERCENT OF THE COTTON CROP WILL BE SUBJECT TO THE STATE ORDER SYSTEM THIS YEAR, COMPARED TO 65 PERCENT IN 1994. A PRESIDENTIAL EDICT ON THE COTTON HARVEST ISSUED IN JULY ORDERED THAT THE STATE ORDER PROCUREMENT PRICE SHOULD BE 60 PERCENT OF THE WORLD COTTON PRICE. ACCORDING TO MINAG, THE ACTUAL PROCUREMENT PRICE WILL BE 8,000 SOM/MT OF SEED COTTON (ABOUT USD 253 AT CURRENT EXCHANGE RATES, A BIG INCREASE OVER THE 1994 PROCUREMENT PRICE OF 1,200 SOM/MT (COMMENT: POL/ECONOFF CALCULATES THAT 60 PERCENT OF WORLD MARKET PRICES, AT USD 1,800/MT FOR LINT COTTON AND AVERAGE GINNING RATES IN UZBEKISTAN, ACTUALLY WOULD BE OVER 10,000 SOM/MT FOR SEED COTTON. END COMMENT).

11. IN RECENT STATEMENTS, THE PRESIDENT PERSONALLY RECOGNIZED THAT IN THE PAST FARMERS HAVE GONE UNPAID FOR THEIR COTTON FOR UP TO 18 MONTHS AFTER THE HARVEST. HE PLEDGED THAT FARMERS WOULD GET ADVANCES OF 25 PERCENT OF THE PURCHASE PRICE, AND THEN BE PAID PROMPTLY AFTER HARVEST. IN WHAT APPEARS TO BE AN EFFORT TO IMPROVE THE PAYMENT SYSTEM, THE GOU ANNOUNCED THE DISSOLUTION OF THE STATE-OWNED UZAGROPROMBANK (WHICH CHANNELS CREDITS FROM THE CENTRAL BANK TO UZKHLOPKOPROM, THE STATE COTTON GINNING ENTERPRISE, TO FINANCE COTTON PROCUREMENT) AND ITS REFORMATION AS "PAKHTABANK" (COTTON BANK).

12. THE STATE HAS ALSO PLEDGED THAT IT WILL SIMPLIFY THE PROCESS THROUGH WHICH FARMERS CAN SELL THE 40 PERCENT OF THEIR COTTON CROP WHICH REMAINS AT THEIR DISPOSAL, ALTHOUGH HOW WELL THAT WILL WORKS REMAINS TO BE SEEN. IT APPEARS THAT ALL OF THE 35 PERCENT OF LAST YEAR'S CROP LEFT AT FARMER'S DISPOSAL EVENTUALLY WAS BOUGHT BY THE GOU, ALBEIT AT HIGHER PRICES THAN THE STATE ORDER PRICE.

13. BOTH GOU AND FOREIGN COTTON OBSERVERS AGREE THAT THE COTTON CROP LOOKS GOOD SO FAR, WITH LITTLE SIGN OF PEST INFESTATIONS OR OTHER PROBLEMS. THE LACK OF SPRING RAINFALL THAT BESET THE GRAIN CROP WAS NOT A PROBLEM FOR COTTON. ONE OBSERVER PREDICTED THAT THE CROP WOULD BE READY FOR HARVESTING TEN DAYS EARLIER THAN NORMAL BECAUSE OF THE HOT SUMMER.

OTHER CROPS

14. ACCORDING TO THE GOU, UZBEKISTAN HAS ABOUT 4.2 MILLION HECTARES UNDER CULTIVATION. OVER THREE-QUARTERS OF THAT GOES TO COTTON AND WHEAT, WITH THE REMAINDER PRIMARILY DIVIDED BETWEEN VEGETABLES AND FRUITS. MINAG OFFICIALS CLAIM THAT MOST OF THE INCREASED HECTARAGE FOR GRAINS IS COMING OUT OF THIS LAND RATHER THAN COTTON. IN FACT, THE AREA PLANTED WITH THESE CROPS FELL SLIGHTLY FROM 1993 TO 1994, AND WE ESTIMATE THAT IT PROBABLY FELL AGAIN IN 1995. HOWEVER, AREA PLANTED IN COTTON ALSO HAS FALLEN, FROM OVER 1.7 MILLION HA AS RECENTLY AS 1991 TO UNDER 1.5 MILLION HA IN 1995.

15. SUPPLIES OF FRUITS AND VEGETABLE IN THE MARKETS SEEM AS ABUNDANT AS EVER, AND PRICES ARE LITTLE CHANGED FROM LAST YEAR, DESPITE SEVERAL HUNDRED PERCENT INFLATION DURING THAT TIME PERIOD -- ALL OF WHICH WOULD SEEM TO HERALD A GOOD YEAR FOR THESE CROPS. THE GOU HAS ALSO LIFTED RESTRICTIONS IT IMPOSED LAST YEAR ON EXPORTS OF FRUITS AND VEGETABLES BY RAIL TO RUSSIA. THAT SHOULD PROVIDE AN OUTLET FOR THE MASSIVE LOCAL PRODUCTION, MUCH OF WHICH SPOILS BECAUSE OF DECREASED DEMAND AND INADEQUATE PROCESSING FACILITIES.

FERTILIZER AND PESTICIDE AVAILABILITY

16. MINAG OFFICIALS SAY THAT AVAILABILITY OF PESTICIDES IS LESS OF A PROBLEM THIS YEAR BECAUSE OF IMPROVED PROCUREMENT FROM THE WEST AND USE OF BIOLOGICAL PEST CONTROL METHODS. THERE IS A SHORTAGE OF DEFOLIANTS FOR COTTON, BUT THE DECREASED RELIANCE ON MECHANIZED HARVESTING THIS YEAR REDUCES ITS SIGNIFICANCE. HOWEVER, FERTILIZER SHORTAGES ARE STILL A PROBLEM. MINAG OFFICIALS SAY THEY HAVE NOT RECEIVED POTASH FERTILIZER FROM RUSSIA FOR TWO YEARS, AND DELIVERIES OF DOMESTICALLY-PRODUCED NITROGENOUS FERTILIZER FROM NATURAL GAS FEEDSTOCK ARE DOWN 25-30 PERCENT. HOWEVER, GIVEN THE HISTORICAL OVERUSE OF AGRICULTURAL CHEMICALS IN UZBEKISTAN, DECREASED FERTILIZER USE MAY NOT, IN FACT, BE DETRIMENTAL TO PRODUCTION.

PRIVATIZATION

17. THE STATUS OF PRIVATIZATION IN AGRICULTURE, AS IN OTHER SECTORS ON UZBEKISTAN, IS SOMEWHAT CONFUSING. ACCORDING TO THE GOU, OVER 90 PERCENT OF AGRICULTURAL OUTPUT NOW COMES FROM THE "NON-STATE SECTOR," BUT IT DOES NOT CLEARLY DEFINE WHAT THIS MEANS. THE GOU CLAIMS IT HAS ELIMINATED ALL STATE FARMS, (SOVKHOZES), AND A WORLD BANK REPORT STATES THAT DURING 1992-94, 1066 STATE FARMS WERE TRANSFORMED INTO 1085 OTHER TYPES OF FARMS, INCLUDING 530 COLLECTIVES, 374 COOPERATIVES, 129 LEASED FARMS, AND 52 "OTHER" TYPES OF FARMS.

18. HOWEVER, COLLECTIVE FARMS (KOLKHOZES), UNDER BOTH THE SOVIET AND PRESENT SYSTEM, ARE NOT "PRIVATE" IN A MEANINGFUL SENSE. ACCORDING TO GOU STATISTICS, THE TOTAL AREA PLANTED BY "PRIVATE FARMS AND WORKING COLLECTIVES" IN 1994 WAS ONLY 362,000 HA, OR LESS THAN TEN PERCENT OF THE TOTAL AREA CULTIVATED -- AND THAT FIGURE MAY ACTUALLY OVERSTATE THE EXTENT OF PRIVATIZATION. UNDER CURRENT LAW, EVEN "PRIVATE" FARMERS DO NOT HAVE FULL TITLE TO THEIR LAND -- THEY CAN PASS IT ON TO THEIR DESCENDANTS, BUT THEY CANNOT BUY OR SELL IT.

19. BY AGREEMENT WITH THE WORLD BANK, UZBEKISTAN WAS TO INCREASE LEASING OF LAND FROM COLLECTIVES TO INDIVIDUAL FARMERS TO 40 PERCENT OF THE TOTAL BY THE END OF 1995, BUT THIS PROCESS IS MOVING SLOWLY. MINAG OFFICIALS SAY THAT LARGER COLLECTIVES ARE BEING DIVIDED UP INTO SMALLER, LOOSELY-ASSOCIATED COOPERATIVE FARMS (MUCH AS THE CHINESE COLLECTIVES DEVOLVED AUTHORITY TO BRIGADES AND THEN FAMILIES). HOWEVER, IT IS UNCLEAR HOW MUCH AUTONOMY THESE COOPERATIVES ACTUALLY HAVE.

20. THE PRIVATIZATION PROCESS APPEARS TO BE MUCH MORE RAPID IN THE LIVESTOCK INDUSTRY, WHICH ACCOUNTS FOR SOME 80 PERCENT OF PRIVATE FARMS. THE GOU DECREED IN MARCH THAT ALL LIVESTOCK UNITS ATTACHED TO OTHER TYPES OF FARMS WOULD BE PRIVATIZED. PRIVATIZATION APPEARS RELATIVELY ADVANCED IN FRUIT AND VEGETABLE PRODUCTION AS WELL. THE MINISTRY OF AGRICULTURE REPORTS THAT 138 FARMS HAVE BEEN SOLD AT AUCTION SO FAR THIS YEAR, AND A TOTAL OF 518 WILL BE AUCTIONED BY THE END OF 1995. OF COURSE, PRIVATE LIVESTOCK, FRUIT AND VEGETABLE RAISING WERE A MAJOR FORCE IN UZBEKISTAN EVEN BEFORE INDEPENDENCE. EVEN IN THE CITIES, MANY PEOPLE RAISE LIVESTOCK AND HORTICULTURAL CROPS FOR THEIR OWN CONSUMPTION AND SALE.

21. HOWEVER, THE VAST BULK OF ARABLE LAND IN UZBEKISTAN REMAINS UNDER GOVERNMENT-DIRECTED GRAIN AND WHEAT CULTIVATION. AS SUCH, THE FARMERS, WHATEVER THEIR FORM OF ASSOCIATION, HAVE RELATIVELY LITTLE CONTROL OVER SUCH ISSUES AS THE TYPE AND AREA OF CROPS PLANTED, PURCHASE OF INPUTS AND SALE OF OUTPUTS, AND PRICES.

STATISTICAL SUMMARY

22. PROVIDING RELIABLE STATISTICS ON THE GRAIN CROP IS COMPLICATED BY THE CONFUSION OVER TERMS AND SENSITIVITY OVER THE SIZE OF THE STRATEGICALLY IMPORTANT WHEAT CROP. HOWEVER, POST BELIEVES THE FOLLOWING INFORMATION, CULLED FROM SEVERAL SOURCES, IS MORE OR LESS CORRECT. COTTON FIGURES, AS NOTED ABOVE, ARE GENERALLY AGREED UPON. WE HAVE AS YET NO RELIABLE FIGURES ON AREA PLANTED AND PRODUCTION OF OTHER CROPS FOR 1995.

                       1994/1      1995/2

TOTAL LAND IJNDER
CULTIVATION (000 HA)    4,230        4,200

OF WHICH:

GRAIN                   1,530        1,790
OF WHICH:
   WHEAT                  949        1,313
  (IRRIGATED)            (643)        (972)
--BARLEY                  287          300
--MAIZE                    81           20
--RICE                    162          170

COTTON                  1,539        1,490

POTATOES                   52          N/A
OTHER VEGETABLES          156          N/A
MELONS                     47          N/A
FRUITS AND BERRIES        238          N/A
GRAPES                    125          N/A


PRODUCTION (000 MT)

GRAIN/3                 2,444        2,800-3,300
OF WHICH:
--WHEAT/4               1,338        1,700-2,000
--BARLEY                  303          300
--CORN                    276          N/A
--RICE                    490          500

SEED COTTON             3,938        4,000 (PLAN)

POTATOES                  561        N/A
VEGETABLES              2,918        N/A
MELONS                    565        N/A
BERRIES AND FRUITS        520        N/A
GRAPES                    344        N/A

/1:  1994 STATISTIC PRIMARILY FROM GOSKOMPROGNOZSTAT 
(STATE COMMITTEE ON FORECASTING AND STATISTICS)

/2:  1995 STATISTICS BASED ON ESTIMATES FROM GOU 
OFFICIALS, PRESS REPORTS AND CONVERSATIONS WITH OTHER 
SPECIALISTS.

/3  AS NOTED IN PARA 3 ABOVE, IT IS UNCLEAR WHETHER 
RICE IS INCLUDED IN THE MINAG FIGURE OF 2.8 MMT FOR GRAIN.

/4 NO OFFICIAL ESTIMATE OF THE WHEAT HARVEST IS AVAILABLE.  
THE RANGE SHOWN REPRESENTS THE UNOFFICIAL ESTIMATES OF TWO 
KNOWLEDGEABLE OBSERVERS.

N/A:  STATISTICS FOR 1995 NOT AVAILABLE.