Measures to Increase Productivity and Interest in Agriculture Identified

12 Feb 2024

On February 12, President Shavkat Mirziyoyev chaired a videoconference on the attraction of new reserves for the agriculture sector.

In recent years, agriculture has developed both quantitatively and qualitatively. High-performance machinery and deep processing through cluster systems are being introduced. In 2023, production in the industry increased by 4.1% and reached 426 trillion Uzbek soums. Exports reached almost US$2 billion. 152 thousand hectares of orchards and vineyards have been created, with the capacity to process 185 thousand tonnes of fruit and vegetables, 31 thousand tonnes of meat and 485 thousand tonnes of milk.

For the first time in our recent history, 3.7 million tonnes of cotton and 8 million tonnes of cereals were harvested. The system for accounting and selling products is fully digitalized.

Increasing agricultural productivity, reducing production costs and conserving water were among key issues discussed at the meeting.

The President stressed the need for innovative approaches to work and increase production in conditions of limited land and water resources, as well as establishing industrial culture in industry. For example, the average yield per hectare in our country is lower than in developed countries, while fertilizer, fuel and water consumption is twice as high. It was noted that cotton yields of up to 50 centners per hectare and cereal yields of up to 100 centners per hectare can be achieved by importing productive seeds and training farmers in new agro-technologies.

The Head of State particularly emphasized the issue of farmers’ interests. Under the new system, raw cotton is now sold on the stock exchange. Cotton prices on the New York Stock Exchange are rising. In cereal production, farmers’ incomes have doubled thanks to the introduction of market relations.

“If we can interest the farmer, he will be able to work without government subsidies. Such times will come, and that is my goal,” said Shavkat Mirziyoyev.

In order to further stimulate interest, a system of preferential loans directly to farmers, similar to the one used for cotton, will be introduced this year for the production of cereals. In addition, transport and storage costs for wheat purchased with government funds will be fully covered by the budget.

An important aspect of farm sustainability is cost reduction. In this regard, instructions have been given to reduce the production cost of mineral fertilizer by 15% this year, to ensure sufficient supply on the exchange and to organize fertilizer warehouses in an additional 70 districts.

The quality and mark-up of mineral fertilizer will also be controlled. Conditions will be created for farmers to buy fertilizer at their own expense. Mandatory registration with the logistics portal for transport of mineral fertilizer from warehouses will be abolished.

In order to reduce water losses, 680 billion Uzbek soums has been allocated from this year’s budget for the construction of 75 large canals. A system of loans at 14% for up to 5 years with a grace period of 3 years has been introduced for the implementation of water-saving technologies. Work in this direction was analyzed by region and shortcomings were identified at the meeting.

Problems with payment discipline in the industry have been identified. For instance, clusters’ debts to farmers have not yet been repaid in full. According to the new procedure, the futures contract with the cluster that has not repaid the debt by April 1 will be cancelled and the farmer will have the right to sell cotton on the exchange. Farmers who have registered with the electronic platform and signed a futures contract should receive a loan within three days.

The measures to increase the production and export of fruit and vegetables were also discussed at the meeting. In addition to the 200 thousand hectares already allocated, another 60 thousand hectares of land will be distributed among the population. In addition, production based on cooperation in personal subsidiary farms will be supported. Preferential loans of up to 100 million Uzbek soums without collateral and up to 150 million Uzbek soums with reduced collateral will be provided for this purpose. Necessary equipment will be leased to farmers and dekhkans by the joint stock company “Uzagroleasing” for up to 10 years with a grace period of 3 years. Customs duty on the import of cultivators and minitractors will be extended for 3 years.

In recent years, the number of greenhouses and the production volume in them has tripled in our country. Today, more and more greenhouses are being built that do not require fuel for heating. The President acknowledged this experience and stressed the need to expand it by providing farmers with “turnkey” greenhouses. Under the “Family Entrepreneurship” programme, interest-free loans of up to 100 million Uzbek soums are being provided for this purpose.

Investment in agriculture is also being actively encouraged. It is planned to attract US$655 million in foreign investment this year. Projects pay special attention to supplying the market with quality products and reducing food inflation. In particular, 342 projects are being implemented for the production of 25 types of import-substituting food products.

The importance of continuing this work, developing new projects and attracting international brands was emphasized. World Bank funds will be provided for new projects for up to 10 years at 18% in local currency, and for working capital replenishment – loans for up to 2 years. 50% of the cost of sourcing companies that place orders with domestic companies from global brands will be covered. A subsidy of up to 500 million Uzbek soums will be provided for each brand acquired.

From now on, VAT will also be refunded to businessmen who export products.

Measures to support livestock, sericulture and fish farming were adopted at the meeting. In particular, loans in local currency at 17% with a grace period of 3 years for up to 10 years will be provided for the construction of livestock complexes, the purchase of livestock and the production of compound feed. Livestock farms will also receive 1 trillion Uzbek soums in preferential loans for working capital. The part of the loan exceeding 18% of the interest rate will be covered by the State Fund for Support of Entrepreneurship.

Sericulture will be developed on an industrial scale, based on the experience of Vietnam and China, and net silk plantations will be established. Two silkworm breeding stations will be established at the Institute of Sericulture.

In order to increase material interest in the industry, a transition to market principles will be made in two stages. This year, in the first stage, the price of cocoons will be increased by 25%. The population will receive subsidies to purchase cocoons, and cocoon producers will be exempted from income tax. In the second phase, starting from 2025, government price regulation will be abolished and specific areas and farmers will no longer be assigned to clusters. Cocoons will be sold at a free price based on a contract between the farmer and the cluster or through the exchange.

Tasks for the development of fish farming in river basins and private households were also identified at the meeting.

At the meeting, reports and plans were heard from the responsible officials for the issues under discussion.

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