Pros and Cons of Cotton Production in Uzbekistan

AUTHOR

Nodir Djanibekov, Inna Rudenko, John P. A. Lamers, Ihtiyor Bobojonov

CITATION

Nodir Djanibekov, Inna Rudenko, John P. A. Lamers, Ihtiyor Bobojonov (2010). Case Study #7-9, "Pros and Cons of Cotton Production in Uzbekistan". In: Per Pinstrup-Andersen and Fuzhi Cheng (editors), "Food Policy for Developing Countries: Case Studies." 13 pp.
URL: http://cip.cornell.edu/dns.gfs/1279121771

EXECUTIVE SUMMARY

Cotton production and export have a long history in Uzbekistan. The production of cotton, also called "white gold," has long been a strategic centerpiece of the economy of Uzbekistan, which ranks second among world cotton exporters. Despite the declared objective of the Government of Uzbekistan—a market-oriented transition and liberalization—the government has not loosened its grip on the entire cotton value chain, including the centralized setting of prices through the state procurement system. This system focuses on implicit taxation of cotton producers, which represents an important source of government revenue. Annual cotton production targets set by the state call for cotton cultivation on more than 50 percent of total cropland.

This case study considers the pros and cons of cotton production in Uzbekistan. Since the country's independence from the Soviet Union in 1991, revenues from cotton taxation have contributed substantially to developing the industrial sector, boosting the current account, achieving energy and food-grain self-sufficiency, and buffering domestic shocks in food and energy prices. Nonetheless, some argue that the state procurement system hampers the development of the agricultural sector. Often the payments for cotton hardly cover farmers' production costs, and the quasi monoculture of cotton production has adversely affected environmental sustainability.

The stakeholders of cotton production in Uzbekistan—the government, farmers, the textile industry, and the rural population—face several policy options for improving the economic and ecological performance of cotton production. The concerns of each stakeholder must be taken into account when choosing what policy measure to use for improving cotton production.

Your assignment is to recommend to the relevant stakeholders an appropriate policy or set of policies to ensure economic growth in the cotton sector, taking into account the trade-offs between the state and farmers as well as potential short- and long-term effects of recommendations on the national economy, social security, and the environment.

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