Tashkent, Uzbekistan (UzDaily.com) -- Minister of Agriculture Aziz Voitov noted that in Uzbekistan there is no state regulation of cotton productionand prices for cotton in accordance with the laws of a market economy are determined by buyers (cotton-textile clusters) and sellers (farmers).

In January 2023, the President signed resolution “On additional measures to further support the activities of raw cotton producers,” which consolidated the operation of market mechanisms in this area. According to the signed document, the purchase price is determined by “cotton-textile clusters and farms on the basis of a mutually beneficial agreement.”

“In recent years, Uzbekistan has gradually transferred the cotton industry to market relations. We have abandoned government regulation of prices and now they are determined by the market itself: supply, demand, and participants’ expectations. Cotton prices on the world market are also taken into account to ensure the competitiveness of our exports.

Sometimes farmers approach the ministry with a request to set a mandatory purchase price. But we have no right to force companies to buy cotton at a certain price: cooperation must be mutually beneficial - no one should bear losses. The ministry helps within the framework of its powers: acts as a mediator in disputes, conducts consultations on pricing, develops and implements mechanisms for subsidies and benefits,” said Minister of Agriculture Aziz Voitov.

According to Presidential resolution, government bodies are prohibited from interfering in the activities of cotton-textile clusters and imposing additional obligations on them.

“We see that farmers and clusters perceived the transition to a market economy differently. Some were able to quickly conclude contracts, while others could not agree on the price. This is a normal situation for a free market.

“We understand that it is difficult to switch to a market economy if crop prices have been set by the state for many years. Now the farmer has to determine it himself and negotiate with the buying cluster, which is also interested in maximizing profits. But this is an important step for the economy that needs to be taken. Dear farmers and clusters, today you are operating in conditions of market freedom. Only the buyer and seller have the right to determine the price of the goods,” emphasized Minister of Agriculture Aziz Voitov.

The minimum expected price for the 2023 harvest, calculated by the ministry’s specialists, is 8,000 soums/kg. It is made up of cotton futures quotes on the New York Exchange (average quote for October 84 cents/pound or US$1,852/ton) and other indicators (including those reduced by the costs of fiber preparation, transportation, storage and processing). The information is advisory in nature.