VZCZCXRO7979
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHAH #0309/01 0811256
ZNR UUUUU ZZH
R 221256Z MAR 06
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 7113
INFO RUCNCIS/CIS COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 2526
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEFDIA/DIA WASHINGTON DC//DHO-2/REA/NMJIC-J2//
RHMFIUU/CDR USCENTCOM MACDILL AFB FL//CCJ2/HSE/CCJ5//
RUEKJCS/SECDEF WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC//J5/RUE//

UNCLAS SECTION 01 OF 02 ASHGABAT 000309 
 
SIPDIS 
 
FOR SCA/CEN (PERRY) 
ANKARA FOR AGRICULTURE COUNSELOR (HIGGISTON) 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR ECON ETRD PGOV EIND TX
SUBJECT: WHAT'S IN A NAME? NEW GOTX COTTON COMMISSION 
 
 
Sensitive but Unclassified; not for Internet Distribution 
 
Summary 
------- 
 
¶1.   (SBU) President Niyazov recently created five 
commissions under each of the provincial governors' 
offices to administer cotton sales on the international 
market.  While GOTX officials view the creation of the 
commission as a positive step, farmers remain 
pessimistic.  GOTX officials say that the 32-member 
commissions were created to give private farmers 
incentives to grow cotton and keep more money through 
increased access to the international market.  The real 
aim is simply another attempt by Niyazov to more closely 
control both the legal and illegal (corruption) revenue 
streams.  End Summary. 
 
New Commission Controls Cotton Sales 
------------------------------------ 
 
¶2.   (U) On January 18, President Niyazov signed a decree 
to regulate the sale of cotton on the international 
market.  Special commissions headed by welayat 
(provincial) governors (all of whom have been appointed 
personally by Niyazov within the last six months) were 
established in each of the five provinces to assist 
Agricultural Joint Stock Companies (AJSC) and private 
farmers in selling their cotton.  Prior to the decree, 
the State Cotton Concern was the state middleman, 
purchasing cotton from farmers at a state-fixed price and 
selling it for international prices.  Now, all cotton 
produced in the welayats will be sold through to the 
respective welayat commissions and the commissions will 
negotiate with international buyers.  It is unclear what 
principal - market or state - will set the farmers' sale 
price to the commission.  The new system is expected to 
provide higher - though not "world prices" - for farmers, 
according to commission members. 
 
¶3.   (SBU) On February 9, Pol/Econ Officer met with 
Deputy Governor of Lebap Welayat and Lebap cotton 
commission-member Taganmurad Mammedov.  Mammedov said the 
32 members of his commission included etrap (district) 
governors, and representatives from the Ministry of 
Water, "Turkmenobahyzmat" (Village Machinery Service), 
the State Standards Department, and the State Cotton 
Concern "Turkmenpagta." 
 
¶4.   (SBU) Mammedov said that cotton producers would 
directly participate in auctions and price negotiations 
through their regional brokers, nominated by the 
commissions.  The task of the commission is to protect 
the interests of cotton growers. 
 
Will Farmers Really Benefit? 
---------------------------- 
 
¶5.   (SBU) Singapore-based cotton buying company Olam 
representative Hardjot Singh told Pol/Econ Officer on 
March 3, that starting this year, international cotton 
buyers were concluding contracts directly with the AJSCs. 
The role of the commission is to distribute profits from 
cotton sales between servicing agencies and farmers.  In 
his opinion, the commission was created with the purpose 
of securing transparency and fair profit distribution, 
increasing farmers' profits.  Mammedov said that a 
farmer's net profit would increase from 5 million to 25 
million manat per season (based on an average three 
hectare farm).  According to the government plan this 
will stimulate more farmers to grow cotton.  However, 
Ilkinjiler Farmers' Coop member Sheker Mollayeva was 
pessimistic, believing that the commission was another 
government body created to support the flailing state- 
controlled AJSC system.  Farmers still have not received 
payment from the commissions for last autumn's harvest, 
according to Mollayeva. 
 
Comment 
------- 
 
ASHGABAT 00000309  002 OF 002 
 
 
 
¶6.   (SBU) Touted as a positive step for farmers, instead 
the creation of the cotton commissions appears to be 
another attempt to centralize revenue streams from cotton 
into organs more directly controlled by the president. 
End Comment. 
 
Brush