Agriculture is one of the leading sectors of Uzbekistan’s economy. This sector accounts for more than 24% of the republic’s gross domestic product and employs about a quarter of the total workforce. Thus, sustainable development and modernization of agriculture is a key priority of state policy and macroeconomic development strategy of the republic to ensure overall economic growth and improve the population’s welfare.
By the end of 2016, the previous sources of agricultural production growth had been exhausted, and the sector encountered a number of barriers introduced under the self-sufficiency policy, such as export monopolies, regulation of export prices, and the procurement of agricultural products under state orders at unfair prices for agricultural producers, etc. The new government of Uzbekistan decided to fundamentally revise its political course and gradually began implementing reforms to liberalize both the economy as a whole and the agricultural sector in particular.
In 2017, a new direction appeared in the agriculture of Uzbekistan – the cluster system. The main purpose of clusters is to form a single production chain that unites all processes of production of finished products – from the cultivation of raw materials to their processing and manufacturing of the final goods. In Uzbekistan’s agriculture, clusters of various directions are developing: cotton-textile, fruit and vegetable, seed production, grain, meat and dairy, etc.
Looking at the example of the cotton sector, the development of clustering progressed very actively. In 2017, the first two cotton-textile clusters were created. In 2018, their number had reached 16; in 2019 – 77; in 2020 – 97; in 2021 – 122; in 2022 – 134; and in 2023 – 142.
In 2017, cotton-textile clusters occupied only 2,2% of the total cotton sown area in the republic. In 2018, their share in cotton sown area was 15,1%, in 2019 – 59,0%, in 2020 – 85,4% and in 2021 they covered 100% of all cotton sown area in the country.
During the active development period of cotton-textile clusters (2017-2023), raw cotton production in the country increased by 30,0%. Although cotton sown area decreased by 18,5% during this period.
This was possible primarily due to the clusters’ widespread adoption of innovations and advanced technologies in cotton cultivation, which led to an increase in yields. The average cotton yield in the country in 2017-2023 increased by 34,1%.
Of course, it is worth noting that the cluster system is just being established and there are problems in some links of the chain, but the prospects for its further development will allow the most efficient use of the production potential of agriculture in Uzbekistan.
But the increase in the efficiency of cotton growing was not only due to the development of the cluster system. The process of liberalization of the sub-sector, envisaged within the framework of the Strategy for Agricultural Development until 2030, has also played a major role here. It also affected the grain sector.
Starting from October 15, 2019, state regulation of flour prices, which had been in place since 1994, has been discontinued in Uzbekistan. The sale of flour at market prices ensured efficient allocation of resources and competition in the markets, taking into account the interests of both producers and consumers. This mechanism has increased the interest of flour mills and provided them with the financial capacity to modernize their production facilities, which serves to improve quality, increase production volumes and increase labor productivity.
Since the 2020 harvest, the state order for grain has been reduced by 25%, and starting with the 2021 harvest, the practice of setting state purchase prices for grain has been completely abolished.
Also, from the 2020 harvest, the practice of setting purchase prices for raw cotton was abolished, and raw cotton producers (farms, cotton-textile clusters, cooperatives) received the right to free variety allocation of zoned cotton. Mechanization of the sector is actively carried out in cotton growing, replacing manual labor.
As a result, the value chain of cotton has fundamentally changed. Uzbekistan now exports textile and garment products, which have a much higher value than the cotton fiber that dominated the cotton export structure in the recent past.
The liberalization process has also taken place in other areas contributing to the development of the agricultural sector. Particular attention should be given to the process of reform aimed at liberalizing the export of fruit and vegetable products.
In June 2017, on the initiative of President Sh. M. Mirziyoyev, the company JSC “Uzagroexport” lost its monopoly on the supply of fruit and vegetable products abroad. As a result, since July 1, 2017, business entities were allowed to export fresh fruit and vegetable products, grapes and melons on the basis of direct contracts.
The Government of Uzbekistan has created an unprecedented system of support for fruit and vegetable exporters, which did not exist in Uzbekistan before.
For the first time in the years of independence, exporters of fruit and vegetable products began receiving subsidies covering up to 50% of transportation costs by rail when exporting to distant foreign countries. However, this measure was not highly effective, as deliveries via this mode of transport were rare and in small volumes. Therefore, the subsidization of export transportation was later expanded to include shipments by road and air.
At the end of 2020, the Government further expanded support for fruit and vegetable exporters. A procedure was introduced according to which exporters are provided with coverage of expenses in the following areas:
- implementation of standards and obtaining certificates of conformity;
- holding presentations and advertising campaigns to introduce local products and brands (trademarks) to foreign markets;
- participation in international tenders and competitions;
- registration of national products and brands (trademarks) in foreign authorized bodies;
- organization of business seminars, trainings, trade missions and business forums with the participation of local and foreign companies and specialists in order to increase the export potential of entrepreneurs in the regions of the Republic of Uzbekistan;
- participation in business seminars, trainings, trade missions and business forums in foreign countries;
- participation in exhibition and fair events.
In general, trade liberalization and export stimulation have become one of the main elements of the policy. It also included opening new markets for agri-food products and obtaining the status of the Generalized Scheme of Preferences (GSP+), which offers access to the highly profitable EU market for 6,200 items. Work was also carried out to expand the “green corridors” at border crossings and initiate the creation of a network of agro-logistics service centers aimed at increasing efficiency and reducing losses in the trade of perishable fruit and vegetable products.
In the area of land relations, major changes are also expected in the coming years. The first step towards reforming the rights to use agricultural land was taken in September 2020 by introducing a sublease mechanism for the purpose of growing agricultural products. The sublease period is up to one year.
The government also reallocated land from cotton to other crops and introduced electronic auctions for the allocation and redistribution of land plots, significantly increasing the transparency of this process.
During the reform period, government spending on agricultural research and development also increased significantly. This long-awaited increase in government funding for agricultural research is associated with the creation of AKIS (Agricultural Knowledge and Innovation Systems), which is the basis for the dissemination of agricultural knowledge and innovation. In Uzbekistan, the AKIS concept was first mentioned in the Strategy for Agricultural Development until 2030.
In February 2021, the President of the Republic of Uzbekistan signed a decree on the establishment of AKIS for the agricultural sector with a development roadmap for 2021-2025. The Republican AKIS Center in Tashkent region opened in March 2021.
AKIS centers are expected to combine agricultural education, research and advisory services to provide more comprehensive and innovative information and education to farmers and other agricultural entrepreneurs.
The sector is undergoing an active digitalization process.
The information system “Agrosubsidy” has been launched, which is being implemented within the framework of the Decree of the President of the Republic of Uzbekistan No. 6079 of October 5, 2020 “On approval of the Strategy” Digital Uzbekistan – 2030 “and measures for its effective implementation.” It is designed to collect, review and coordinate with authorized bodies and organizations issues of providing subsidies to agricultural producers.
Another important project in the field of digitalization being created by the Ministry of Agriculture of the Republic of Uzbekistan is the information system “Agroplatform”. Thanks to the introduction of this system, information about all agricultural activities – from sowing to harvesting – will be available in the information system, which will eliminate the practice of paper-based document management. At the same time, the system will allow to conveniently formalize the allocation of preferential loans for agricultural producers, risk insurance, conclude contracts in electronic format and obtain equipment for leasing. Also, the transparency of financing of all processes will increase.
The Ministry of Agriculture’s geoinformation system based on ArcGIS software product has been launched since November 2021. The processed data and the system’s capabilities are continuously expanded with space images received every 10 days, as well as monitoring data collected from 200 field workers in real time. It is possible to obtain all necessary data, including information on land users, soil properties, availability of irrigation systems and data analysis made with the use of artificial intelligence technologies for automatic recognition of crop types. In the future, the system will be reoriented for the needs of a wide range of agricultural land users, and with its help it will be possible to determine a favorable time for planting or harvesting, calculate the scheme of fertilizers, monitor, forecast the volume of crop yields, and timely identify their diseases.
Also in 2021, the automated information system “E-IJARA” was launched to collect, review and coordinate with the competent authorities and organizations materials related to the lease of agricultural land. This system is used to place lots on the electronic trading platform “E-AUKSION” in order to conduct open electronic tenders, as well as to assist in the registration of rights and documents of the winners with the relevant authorities.
Thus, in 2017-2020, Uzbekistan’s agriculture has undergone tremendous reforms, the results of which have already made it possible to ensure sustainable growth of the sector and improve resource efficiency. In the long term, they will serve to fully utilize the existing potential of the country in agricultural development and bring Uzbekistan among the world leaders in the production and export of agro-food products.