VZCZCXRO5255
PP RUEHLN RUEHVK RUEHYG
DE RUEHNT #1323/01 3231056
ZNR UUUUU ZZH
P 181056Z NOV 08 ZDK
FM AMEMBASSY TASHKENT
TO RUEHC/SECSTATE WASHDC PRIORITY 0624
INFO RUEHBUL/AMEMBASSY KABUL 3024
RUEHIL/AMEMBASSY ISLAMABAD 4737
RUEHKA/AMEMBASSY DHAKA 0659
RUEHKT/AMEMBASSY KATHMANDU 1023
RUEHLM/AMEMBASSY COLOMBO 0987
RUEHNE/AMEMBASSY NEW DELHI 1683
RUEHBJ/AMEMBASSY BEIJING 1149
RUEHAK/AMEMBASSY ANKARA 2810
RUCNCIS/CIS COLLECTIVE

UNCLAS SECTION 01 OF 03 TASHKENT 001323 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB/ESC, AND G/TIP 
STATE FOR OES: PHUDAK, NFITE 
AMEMBASSY ANKARA FOR AG COUNSELOR 
 
E.O. 12958: N/A 
TAGS: PGOV ECON SENV SOCI EAID PINR UZ
 
SUBJECT: UZBEKISTAN: A STEP AWAY FROM COTTON? 
 
REFS:  TASHKENT 1204 
TASHKENT 1255 
TASHKENT 1256 
 
TASHKENT 00001323  001.7 OF 003 
 
 
¶1. (SBU) SUMMARY.  On October 20 the President of 
Uzbekistan signed a decree reducing cotton planting 
areas in favor of food crops.  The decree is a 
response to the challenges created by this year's 
water shortage and the growth of food prices on 
world markets.  Beginning in 2009 raw cotton 
production will decrease from 3.4 to 3.2 million 
metric tons, and 75,800 hectares (out of a total 1.3 
million) of land currently used for cotton will be 
used instead for grain, vegetables, and other food 
crops.  Although in absolute terms the size of this 
land conversion is small, industry experts believe 
that the decree is an important "first step" in the 
right direction.  At the same time, industry experts 
expressed concern that another presidential decree 
on enlargement of private farms will in practice 
mean redistribution of land in favor of large farms. 
This could put small farmers out of business and 
lead to increased unrest, particularly in the 
Fergana Valley.  END SUMMARY. 
 
COTTON LANDS TO BE DECREASED 
---------------------------- 
 
¶2. (SBU) On October 20, 2008, President Karimov 
signed a decree "On Measures to Optimize Sown Areas 
and Increase Food Crop Production."  In accordance 
with this decree Uzbekistan will decrease raw cotton 
production from 3.4 to 3.2 million metric tons 
beginning in 2009 and will decrease the land devoted 
to cotton by 75,800 hectares.  (NOTE:  Uzbekistan 
currently has 1,300,000 hectares of land devoted to 
cotton cultivation.)  The land withdrawn from cotton 
cultivation will be devoted instead to grain (48,800 
hectares) and to vegetables and other food crops 
(27,000 hectares).  The decree states that this 
decision was made as a result of this year's water 
shortage, the rise in food prices on world markets, 
and Kazakhstan's temporary ban on grain exports to 
Uzbekistan last summer.  Consequently, the decree 
aims to expand food crop production volume and 
variety to meet internal demand.  Local 
administrative authorities are charged with 
implementation and with supplying the necessary 
seeds to farmers. 
 
¶3. (SBU) Sources in the Ministry of Agriculture 
(MOA) told us that this decree is an important 
"first step in the right direction."  The cost of 
cotton production is growing while its share of 
export earnings is shrinking.  At the same time, the 
volume of expensive and unforeseen grain imports is 
growing. Cotton production requires 3-4 times more 
water and 2-3 times more fuel than grain production. 
In addition, Uzbekistan's inefficient and crumbling 
production, planning, and irrigation systems leave 
no choice but to reduce the area used for cotton. 
Some reports -- unverified -- say Uzbekistan is 
losing upwards of 20,000 hectares of arable land per 
year.  Our MOA contacts say that lands with a 
limited water supply will be transferred from cotton 
to food crops. 
 
TAKE FROM THE POOR, GIVE TO THE RICH 
------------------------------------ 
 
¶4. (SBU) Our MOA contacts as well as some industry 
experts expressed concern regarding another 
Presidential decree that will favor larger farms. 
This decree, which was signed in October 6 and did 
not receive wide publicity, sets the minimum size of 
farms to 100 hectares for those planted with cotton 
or grain and 20 hectares for those producing other 
food crops.  (NOTE:  20 hectares is roughly equal to 
 
TASHKENT 00001323  002.3 OF 003 
 
 
50 acres, which is at the lower end of what is 
considered to be a small farm in the U.S.  END NOTE) 
Already there have been reports that local governors 
and authorities are forcing smaller farmers to 
transfer their lands to larger farms on a "voluntary 
basis."  Implementation of this decree could provoke 
discontent among farmers, especially in the Fergana 
Valley.  So far the GOU has not commented officially 
on the reasons behind this decree. 
 
STATE ORDERS STILL RULE 
----------------------- 
 
¶5. (SBU) Uzbekistan's agricultural sector still 
operates under the compulsory "state order" system 
that it inherited from the Soviet Union.  State- 
owned monopoly purchasers set the prices -- 
sometimes not even covering production costs -- and 
farmers have little recourse.  Low procurement 
prices have created considerable incentives for 
under-reporting of production levels and illicit 
exporting of cotton.  There is no private land 
ownership; land can only be leased.  Local 
government officials have considerable discretion 
over the rights of private farmers and can terminate 
their leases at will.  Private agriculture is also 
held back by a shortage of machinery and fuel 
supplies.  The government still conscripts students 
and children to pick the cotton crop by hand (Ref 
C). 
 
THE DECLINE OF COTTON 
--------------------- 
 
¶6. (SBU) Before 1991 Soviet central planning forced 
Uzbekistan's agricultural sector to focus almost 
entirely on cotton.  The republic produced 5.5-6 
million metric tons of cotton and 3-3.5 million 
metric tons of cotton fiber annually.  Intensive 
cotton production caused serious environmental 
casualties, including the Aral Sea disaster. 
 
¶7. (SBU) In the early 1990s cotton contributed 
roughly 66 percent of Uzbekistan's hard-currency 
export earnings.  In recent years, however, poor 
harvests as well as the development of other export- 
oriented sectors of the economy have caused a sharp 
fall in cotton's share of export earnings.  In 2007 
Uzbekistan harvested 3.6 million metric tons of 
cotton and produced 1.1 million metric tons of 
cotton fiber.  This year it is expected that the 
cotton harvest will decline further to no more than 
3.2 million metric tons and that cotton fiber 
production will decrease correspondingly to 
approximately 1 million metric tons.  In 2007 cotton 
contributed about 12 percent of Uzbekistan's export 
earnings. (See also Refs A and B.) 
 
¶8. (SBU) The presidential decree increasing grain 
and food production at the expense of cotton is not 
unprecedented.  Shortly after independence the GOU 
aimed to become self-sufficient in grain by 1996. 
The area sown with grain increased from 0.974 to 
1.84 million hectares (about 40 percent of total 
planting area), and the area devoted to cotton 
decreased.  The goal was to produce 5-7 million 
metric tons of grain annually and eliminate the need 
for imports.  This target has yet to be reached. 
Moreover, the quality of Uzbek grain has been poor 
due to soil depletion.  By 1999 the area given over 
to grain had dropped to 1.7 million hectares. 
According to official figures, in 2007 the country 
produced 6.2 million metric tons of grain, with the 
majority of that going to fodder.  Uzbekistan 
imported 2.4 million metric tons of food quality 
wheat.  In 2008, official projections for wheat 
imports are 3 million metric tons. 
 
 
TASHKENT 00001323  003.3 OF 003 
 
 
COMMENT 
------- 
 
¶8. (SBU) Nearly 60 percent of the Uzbek population 
relies on agriculture for their income.  Also, the 
decree does nothing to free the individual farmer 
from the system of state orders.  If anything, the 
second decree on minimum farm size is a step 
backwards towards the "bigger is better" concept 
that characterized the Soviet system of collective 
and state farms.  The GOU has yet to show that it 
wishes to make real progress in reforming the 
agricultural sector.  To make progress in this area 
the GOU will need to improve legislation on land 
ownership, eliminate the "state order" system, offer 
fair procurement prices, and liberalize marketing 
channels.  Only then will individual farmers have a 
chance to act on their own, make their own 
decisions, and thrive or fail on their own merits. 
 
NORLAND