Uzbek Cotton Farmers Form Cooperative To Fight Private Monopoly

Market News

Uzbek Cotton Farmers Form Cooperative To Fight Private Monopoly

Uzbekistan cotton industry has always been in the news for the use of forced and child labour. Some reforms are happening in that area. However, according to media reports from Uzbekistan, another form of coercion that exists in the country’s cotton economy is the monopoly of private players that exploits Uzbek farmers. Uzbek farmers are trying to fight the `cluster’ system, which has come up as part of the country’s agriculture reform strategy. In the Shovot district of the northwestern region of Khorezm, cotton farmers have come together to set up a cooperative, to sidestep the private cluster monopolies of the Uztex Group and a powerful local oligarch, Farhod Mamajonov, the media reports state. Altogether, the heads of 78 farms in the Shovot district of the Khorezm region have joined together to set up the new Shovot Cotton Cooperative. The group says it plans to use “family contracting methods” in order “to get rid of the clusters” that dominate the district: Shovot Texile and Textile Finance Khorezm. Both are subsidiaries of the Uztex Group, which is controlled by Mamajonov. Farmers are refusing to sign contracts for 2021 with these private players that dominate the cotton economy - from agricultural loans, seeds, fertilizers, and fuel to cotton gins and export licenses; and enjoy state support. The Shovot Cotton Cooperative admits it has a daunting task ahead. Corruption scheme The media reports state that Uzbekistan’s new `cluster’ firms have taken over the state’s longtime monopoly on the most profitable aspects of agriculture. Uzbek state banks have disbursed hundreds of millions of dollars to the private firms from loans received through the World Bank’s Horticulture Development Project since January 2018, when Tashkent launched its cluster reforms. Uzbek authorities also marked out exclusive territorial control for each of the new private agribusinesses without any public bidding process. The World Bank says the funds it has provided were meant to help create “better paid jobs in rural areas” where about half of Uzbekistan’s 32 million people live. But since 2018, an increasing number of Uzbek farmers say they’re not being adequately compensated under contracts they’ve been forced to sign with the cluster firms that monopolise their region. There is no competition between clusters within their marked-out territory. That means farmers don’t have an option to get loans or supplies elsewhere, or sell their harvests, if their cluster contracts are unfavorable. Western agriculture experts conclude that if farmers don't have the incentive of higher prices for their harvests, it is only a matter of time before agricultural production collapses. The Uztex Group says on its official website that it is “the largest exporter of textile products” in the Commonwealth of Independent States. It owns five large cluster monopolies in Uzbekistan’s Khorezm and Namangan regions. Uztex representatives would not comment to RFE/RL about the situation that led Khorezm’s farmers to create their own independent cooperative. According to farmers, the minimum prices set by the state for supplies farmers receive under their cluster contracts is high, while the minimum prices the clusters must pay to farmers for their harvests is low. Before setting up their new cooperative, the Shovot farmers wrote a formal letter of complaint about their plight to Uzbek President Shavkat Mirziyoev and the head of the Khorezm Regional Cotton Terminal. That letter claims farmers have been “forced to sign a contract” with clusters that have enslaved them. It also gives examples of how the Uztex clusters have “deceived farmers” with promises to buy their cotton at higher prices than they’ve received. “In 2020, we signed an agreement on monopolistic terms in the interests of only one party, the cluster Textile Finance Khorezm, under pressure from the district government, and the Agriculture Department,” the letter says. “Our dissatisfaction with the terms of the agreement was not taken into account at all,” it continues. “As a result, the cluster has plunged us into a swamp of poverty.”