Cotton in Central Asia

‘Curse’ or ‘Foundation for Development’?

MAX SPOOR
Institute of Social Studies
Centre for the Study of Transition and Development
The Hague, The Netherlands
 ‘White Death’ or ‘White Gold?’
• The Soviet Planner’s View versus the
outcomes:
– Environmental Degradation
– Forced/and even Child Labor
– Dependency and monoculture
• The opportunities to develop the cotton
sector as an engine or foundation for
development and growth
 An Overview
• The History of Cotton and its Legacy
• The Macroeconomics of Cotton in the
‘Transition’
• The changing institutional framework and
land reform & social relations
• The environmental impact of cotton
production
 The History of Cotton and its Legacy
• Cotton was already produced as cash crop in the
19th century
• With Russian empire, and American civil war:
‘Middle Asia’ became the Russian ‘cotton belt’
• USSR even intensified this role, and Moscow
order more cotton to be produced
• Cotton nomenklatura/cotton barons emerged
• Cotton was exported to the Center without
processing: Forced cultivation in the ‘periphery’
 Table 1: Cotton in Uzbekistan
1913 1940 1960 1970 1980 1985 1986 1987 1988 1989 1990 1991

Wheat
(winter) Area (x 1,000 Ha) 460.5 615.6 384.2 540.0 500.0 396.7 269.9 426.9 431.2 327.6 407.0 ..
Output (x 1,000 Tn) 299.3 172.4 253.6 340.2 415.0 353.1 224.0 461.0 539.0 321.0 521.0 ..
Yield (Tn/ Ha) 0.7 0.3 0.7 0.6 0.8 0.9 0.8 1.1 1.3 1.0 1.3 ..
..
Wheat
(spring) Area (x 1,000 Ha) 471.7 396.7 128.2 123.6 22.7 62.5 32.1 41.0 25.3 18.3 24.8 ..
Output (x 1,000 Tn) 212.3 103.1 70.5 66.7 16.8 34.4 17.0 34.0 24.0 21.0 32.0 ..
Yield (Tn/ Ha) 0.5 0.3 0.6 0.5 0.7 0.6 0.5 0.8 1.0 1.2 1.3 ..
..
Wheat (total) Output (x 1,000 Tn) 512.6 272.6 327.0 408.9 433.9 387.9 241.0 495.0 563.0 342.0 553.0 ..
..
Barley
(winter) Area (x 1,000 Ha) 117.7 107.1 211.8 312.4 304.3 163.0 119.4 208.9 256.4 214.7 269.2 ..
Output (x 1,000 Tn) 57.7 34.3 167.3 253.0 276.9 166.3 117.0 257.0 359.0 219.0 358.0 ..
Yield (Tn/ Ha) 0.5 0.3 0.8 0.8 0.9 1.0 1.0 1.2 1.4 1.0 1.3 ..
..
Barley
(spring) Area (x 1,000 Ha) 132.9 207.5 90.6 77.7 36.3 48.0 19.7 31.4 27.8 22.5 22.5 ..
Output (x 1,000 Tn) 74.4 64.3 55.3 45.8 33.0 33.6 15.0 32.0 32.0 27.0 27.0 ..
Yield (Tn/ Ha) 0.6 0.3 0.6 0.6 0.9 0.7 0.8 1.0 1.2 1.2 1.2 ..
..
Barley (total) Output (x 1,000 Tn) 143.3 98.0 225.4 301.4 309.2 199.4 132.0 289.0 391.0 246.0 385.0 ..
..
Rice Area (x 1,000 Ha) 161.1 83.1 31.2 63.3 105.1 150.3 127.5 155.2 166.5 160.8 147.1 ..
Output (x 1,000 Tn) 210.2 125.5 57.8 184.9 507.2 482.2 399.0 506.0 581.0 484.0 503.0 ..
Yield (Tn/ Ha) 1.3 1.5 1.9 2.9 4.8 3.2 3.1 3.3 3.5 3.0 3.4 ..

Corn Area (x 1,000 Ha) 38.8 17.3 30.8 24.6 185.0 128.9 117.4 118.6 116.3 111.1 108.8 107.4

Output (x 1,000 Tn) 38.8 33.5 70.8 66.3 1239.7 443.1 389.0 421.0 520.0 460.0 431.0 421.0

Yield (Tn/ Ha) 1.0 1.9 2.3 2.7 6.7 3.4 3.3 3.6 4.5 4.1 4.0 3.9

Cotton Area (x 1,000 Ha) 441.6 1022.6 1427.9 1709.2 1912.1 2027.0 2091.2 2103.0 2016.9 1967.3 1832.6 1719.6

Output (x 1,000 Tn) 517.2 1385.9 2823.5 4495.2 5579.0 5381.8 4989.0 4858.0 5365.0 5292.0 5058.0 4643.0

Yield (Tn/ Ha) 1.2 1.4 2.0 2.6 2.9 2.7 2.4 2.3 2.7 2.7 2.8 2.7

Potatoes Area (x 1,000 Ha) 6.5 23.5 28.1 21.2 23.3 26.3 30.0 30.7 31.1 35.3 42.0 39.5

Output (x 1,000 Tn) 46.2 113.3 162.7 180.3 239.0 240.7 308.6 261.0 308.0 325.0 336.0 316.0
The Macroeconomics of Cotton in ‘Transition’
• Cotton played an important role in avoiding
a supply shock (see ‘Uzbek Puzzle’)
• Hard currency access in world markets to
pay for necessary imports
• Taxation of cotton sector was high in the
1990s  finance for energy independence
and important substitution model
• Since 2000: Clear reduction of Net Outflow
 Cotton Taxation and Subsidies: Net Outflow
Table 2: Taxation of the Cotton Sector in Uzbekistan (2000-2004)

With debt write offs 2000 2001 2002 2003 2004

Net transfers (% of GDP) 4.7% 2.9% 3.1% 1.5% 1.8%
Net Transfer (as % of gross farm income) 50% 35% 35% 20% 22%
Taxation (million USD) 770 605 508 569 644
Subsidies (million USD) 486 450 290 420 441
Net Transfers (million USD) 285 155 218 150 203

Without debt write offs

Net transfers (% of GDP) 9.5% 8.4% 3.5% 2.4% 2.9%
Net Transfer (as % of gross farm income) 66% 61% 38% 28% 31%
Net Transfers (million USD) 572 443 246 240 338

Source: World Bank (2005)

 State Procurement for Cotton and Wheat
in Uzbekistan
Table 3: State Procurement of Agricultural Products (1991-2002)
Type of Product 1991 1992 1993 1994 1995 1996 1997 1999 2001 2002

Wheat 100 100 80 75 50 50 50 50 50 50*

Cotton 95 85 80 75 60 40 30 30 30 30

Vegetables 100 50 50 - - - - - - -
Fruits 100 100 50 - - - - - - -
Tobacco 100 100 80 - - - - - - -
Meat and Milk 100 100 80 50 - - - - - -
Source: Centre for Economic Research, Tashkent.
N ote: *In 2002 it was decided, by the Decree of the Cabinet of Ministers No. 306 dated of 29 August 2002,
that this procurement share would be on actual, rather than planned output.
 ISI and Taxation of Cotton
• Net Taxation went down to 1.5% of GDP
• Income share of gross output for farm enterprises
reversed (from 20% in 1993 to 80% in 2003)
• The Net Outflow was (at least in part) used to
finance Uzbekistan’s energy dependence
• The ISI-model and Consumer-led growth
avoided the dramatic contraction of other FSU
countries
 Cotton/Wheat Development

Table 4: Cotton/ Wheat Crop Mix in Uzbekistan (1992-2004)

Cotton
Unit 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Area Harv Ha 1,666.7 1,695.1 1,539.4 1,492.8 1,487.3 1,513.4 1,531.6 1,517.4 1,444.5 1,452.0 1,421.0 1,392.7 1,362.0
Yield Hg/ Ha 24.8 25.0 25.6 26.4 22.5 24.0 20.9 23.7 20.8 22.5 22.0 20.3 26.0
Production Mt 4,128.7 4,234.9 3,936.1 3,934.2 3,350.1 3,639.3 3,206.2 3,600.0 3,001.8 3,264.6 3,122.4 2,822.5 3,540.0

Wheat

Unit 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Area Harv Ha 627.0 697.4 958.5 1,164.4 1,328.6 1,486.2 1,412.4 1,419.9 1,355.8 1,219.8 1,282.6 1,507.0 1,210.0
Yield Hg/ Ha 14.4 12.6 14.2 20.2 20.6 20.9 25.2 25.4 26.0 30.2 38.7 35.8 37.0
Production Mt 964.0 876.0 1,362.0 2,347.0 2,741.8 3,073.4 3,556.0 3,601.8 3,532.0 3,689.8 4,967.4 5,400.0 4,476.0

Source: FAOSTAT (2005), Statistical Databases

 The changing institutional framework and
land reform & social relations (1)
• Land Reform in Central Asia with different
pace and various forms
• Kazakhstan and Kyrgystan more advanced,
Uzbekistan gradual process
• Uzbekistan:
– Land distribution (plots)  households
– Sovkhozy and Kolkhozy  Shirkats
– Formation of individual (peasant) farms
 The changing institutional framework and
land reform & social relations (2)
• In Uzbekistan: Peasant Farms 
Commercial Farms (not re-distributive)
Table 5: ‘Private’ Leasehold Farms in Uzbekistan (1992-2004)
1992 1993 1994 1995 1996 1997 1998

No 1,900 5,900 7,500 14,200 18,100 18,800 21,400

Size 7 8 9 14 15 15 15
Acreage 13,300 47,200 67,500 198,800 271,500 282,000 321,000

1999 2000 2001 2002* 2003 2004

No 23,000 31,100 43,800 55,400 87,550 103,900

Size 19 21 20 19 24.5 28
Acreage 437,000 653,100 889,600 1,054,700 2,148,100 2,929,980

Source: Department of Statistics Ministry of Macroeconomics and Statistics, Tashkent; Khan (2005)
N ote: Data is given for January 1st of each year, except for 2002. This reflects the situation in October 2001.
 Abandoning the Shirkats: ‘Private Farms’
• Formation of medium-sized individual lease-hold
farms
• They remain still (at least in part) within the
planned system and central procurement (for
wheat and cotton)
• Input markets gradually to be liberalized with
private agents
• Forced harvest labor still remaining
• Rural incomes to rise?
 The Environmental Impact of Cotton (1)
• Drying up of the Aral Sea
• Salinization of soil and rivers
• Changing climate (less frost-free days)
• Pollution of soil and air with particles from
exposed Seabed
• Fishery nearly disappeared
 The Environmental Impact of Cotton (2)
• However: ‘Down with cotton, long live the
orchards’ is no realistic option
• Central Asia, in particular Uzbekistan is
dependent on cotton for FOREX and
employment
• Drastic reduction of cotton is not the
solution, as it creates other problems
(unemployment for example)
 Conclusion
• Cotton will remain fundamental part of CA
economies, it is not a ‘curse’
• The challenge is to improve the social conditions
and productivity  rural incomes and livelihood
improvement
• Cotton can become engine of agro-industry led
growth. First signs of increased FDI in textile
industry
• Importance to give to practical measures to reduce
water losses, improve drainage and quality