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DE RUEHAH #1491/01 3191116
ZNR UUUUU ZZH
P 141116Z NOV 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 1869
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
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RUEHKO/AMEMBASSY TOKYO PRIORITY 2181
RUEHIT/AMCONSUL ISTANBUL PRIORITY 2752
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UNCLAS SECTION 01 OF 02 ASHGABAT 001491 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EUR/RUS, EUR/CARC, EEB 
ANKARA FOR REGIONAL AGRICULTURAL COUNSELOR 
 
E.O. 12958: N/A 
TAGS: EAGR EIND ECON TX
SUBJECT: TURKMENISTAN: GOVERNMENT SILENT ON OUTCOME OF COTTON 
HARVEST 
 
¶1.  (SBU) SUMMARY:  For the second year in a row, the Turkmen 
government has not released cotton production figures.  Numerous 
challenges result in a harvest that falls short of the record 
harvests of the Soviet era.  The impact of last year's increase in 
the price paid to cotton farmers, intended to boost production, was 
mitigated by inflation.  Despite plans to attack corruption in 
cotton marketing activities, a new marketing organization announced 
by the government last year showed no sign of life.  Some regions 
not naturally suited for cotton cultivation experienced water 
shortages, reducing the crop yield.  In response, the government is 
looking at diversifying its agricultural planning, which could 
result in increased efficiency.  Meanwhile, cotton remains king and 
its importance will likely require significant investments in water 
and other technologies in order to maintain adequate production. 
END SUMMARY. 
 
GOVERNMENT DOES NOT RELEASE COTTON PRODUCTION FIGURES 
 
¶2.  (SBU) At the November 3 Cabinet of Ministers meeting, President 
Berdimuhamedov announced that ninety percent of the cotton harvest 
had been gathered.  He did not, however, mention any cotton 
production figures, nor are such figures expected to be released. 
While the official date for the end of the cotton harvest is 
November 30, as a practical matter the first rain, which occurred 
several weeks ago, marks the end of the harvest.  Unlike former 
President Niyazov's practice of announcing inflated cotton and wheat 
harvest goals, which then led to falsified harvest reports, the 
current Turkmen government remains silent on production targets and 
harvest results. 
 
COTTON PRICES INCREASED, BUT INFLATION ERODED THE GAIN 
 
¶3.  (SBU) On April 10, 2007, Berdimuhamedov signed the decree "On 
increasing the production of cotton in Turkmenistan and improving 
the procedure of carrying out payments to cotton producers," which, 
at that time, substantially raised cotton farmers' income. 
According to the decree, the state purchasing price for the 2007 
cotton harvest was quintupled to 5,200,000 manats (USD 366) per ton 
of medium-staple cotton, and 7,500,000 manats (USD 528) per ton of 
fine cotton.  Despite the increase, however, some farmers reportedly 
feel nostalgic about the Niyazov-era method of payment, which was 
done partially in currency and partially in-kind (cotton seed oil 
and cotton seed cake), which farmers found profitable to sell at the 
market due to price inflation. 
 
NEW COTTON MARKETING BODY EXISTS ON PAPER ONLY 
 
¶4.  (SBU) Prior to 2007, Turkmenpagta (Turkmen State Cotton Concern) 
was the exclusive buyer and seller of Turkmen cotton.  In order to 
eliminate corruption at Turkmenpagta, last year the president 
established the self-financed "Ak Altyn" ("White Gold") marketing 
organization.  Officially, Turkmenpagta was left with responsibility 
only for cotton ginning.  Ak Altyn was reportedly capitalized 
through a bank loan and was supposed to both pay back the loan and 
pay for farmers' input costs through the proceeds of cotton sales. 
It appears, however, that Ak Altyn exists only on paper.  A cotton 
grower from Mary Province told Embassy staff that Turkmenpagta is 
still concluding purchase contracts with farmers, despite the 
president's decree, while Ak Altyn is nowhere to be seen. 
 
WORKING AGAINST NATURE RESULTS IN GREAT INEFFICIENCIES 
 
¶5.  (SBU) Embassy contacts in Dashoguz and Balkan Provinces have 
reported poor harvests, which they attribute to a shortage of 
irrigation water.  Agricultural officials in these provinces 
struggle every year to distribute their scarce water resources 
equally between wheat and cotton growing needs.  Insufficient 
irrigation water results in stunted cotton plants and immature 
cotton bolls.  This, in turn, makes mechanized harvest impossible 
and requires a huge manual labor force, often drafted from other 
provinces.  Hired labor costs 1,000 manat (seven U.S. cents) per 
kilo.  A contact from Balkan Province said that local officials 
doubled this payment to hired labor in order to attract skilled 
cotton pickers from Mary Province, since Balkan is not a 
cotton-growing area and natives of the region are not experienced in 
 
ASHGABAT 00001491  002 OF 002 
 
 
cotton-picking. 
 
PRESIDENT SUGGESTS DIVERSIFICATION OF STATE AGRICULTURE 
 
¶6.  (SBU) During the November 3 Cabinet meeting, President 
Berdimuhamedov reportedly ordered his Cabinet to review the policy 
of growing predominantly cotton in Turkmenistan and to consider 
diversifying state agriculture.  (NOTE:  This would be a radical 
turn away from the Soviet practice of monoculture, or exclusively 
focusing on one individual crop.  END NOTE.)  He ordered Deputy 
Chairman for Agriculture Myratgeldi Akmammedov to develop a state 
agriculture diversification program, taking into account each 
province's weather, land and water resources for growing certain 
crops.  If implemented, such a program could release Dashoguz and 
Balkan Provinces from the burden of cotton growing, and bring them 
back to their traditional occupations:  rice and wheat cultivation 
in Dashoguz, and cattle and sheep breeding in Balkan. 
 
¶7.  (SBU) COMMENT:  The fact that the government failed to release 
harvest figures signals that this year's cotton harvest probably did 
not meet expectations.  Current production will always be measured 
against Turkmenistan's record cotton harvest, last achieved in the 
1980s, which was 1,000,000 tons.  Some Turkmen farmers are 
disappointed in Berdimuhamedov because he has not reformed the 
agriculture sector as he promised during his election campaign in 
early 2007.  In addition, corruption continues in spite of the 
cotton marketing decree announced in 2007, indicating bureaucratic 
resistance to reform. 
 
¶8.  (SBU) COMMENT CONTINUED:  The fact remains that cotton is a 
strategic crop for Turkmenistan.  It yields hard currency revenues 
as well as provides raw materials for the domestic textile industry. 
 In order to maintain cotton production at an adequate level, the 
government will have to invest more in the agriculture sector and 
improve cotton growing technology.  In addition, returning to 
traditional farming activities better suited to naturally occurring 
soil and climate conditions could result in greater efficiencies, if 
properly implemented.  END COMMENT. 
 
CURRAN