Uzbekistan’s strategy of agriculture development in action: can Iranian apples drive the local producers out of the market?

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Iranian apples a pilot batch of which has recently been imported to the market of Uzbekistan are able to compete strongly with the local ones. How to avoid that?

A small-scale value of 1 kilogram apples from Iran in the wholesale market of Tashkent city does not exceed 10 thousand sum. Meanwhile, the Uzbek producers aren’t eager to sale their own apples waiting for the price surge, as reported by the experts from the analytical platform East-fruit.com.

The Uzbek Review consulted Mr. Akram Talibov, an expert in project management at the agro-industrial complex as per the scheme called “From field to market”, General Director of the consulting company Moscow Competence Center LLC and a member of the INGO “Buyuk Kelajak” to find out what risks for the local farmers such a trend implies and what should be done to change this situation.

In the expert’s view, the Uzbek producers still use the old model of production, i.e. they accumulate a big volume of apples and then sell it in wintertime at a high price. This model arose at a time when due to the absence of convertation it was hard to import products from abroad to Uzbekistan. Although there is no such a problem now, the traders’ thinking has not changed yet: the Uzbek entrepreneurs store their products to sell them in winter and springtime on top margin.

Mr. Akram Talibov supposes that it is a temporary process and the producers will soon realize that there are always ones eager to fill the niche in the conditions of the open market.   In terms of free competition, the shortage of products can be easily covered with supplies from abroad. He believes that the existing situation will not last long and the local producers of apples will soon correct their sales strategy.

The expert draws the attention of the Uzbek farmers to the fact that the countries importing cheap apples to Uzbekistan have a more efficient model of growing certain sorts of fruit and vegetables. That is the reason why Iran in spite of relatively long-distance logistics still can supply fruit competing with the domestic products in local market. We should draw our focus toward the pricing and cost system connected with the production of fruit and vegetables in Uzbekistan. To minimize the costs it is necessary to bring into use the intense fruit growing, improve irrigation system, efficiently use the irrigated lands and review the land resources legislation.

According to Mr. Akram Talibov, over the long term, the lack of development in the field of intense fruit growing will worsen the country’s positions in the market of producing and exporting farm products:

“The average pay-back period of a garden amounts to 5-8 years. If the intense fruit growing is not developed now, over the middle term, Uzbekistan will have nothing to oppose to apples imported from abroad but for draconian measures such as customs duties increase, closing of market, convertation etc. This will form a downward spiral, as the other states will respond on such measures. Finally, it can lead to the country’s isolation”.

The experts from the INGO “Buyuk Kelajak” focused their attention on the farm sector and made their suggestions regarding optimization and acceleration of this field. More information on the analysis and suggestions made can be found on pp. 105-121 of the Concept of the Development Strategy of the Republic of Uzbekistan until 2035.

The Government of Uzbekistan realizes how important it is to develop and strengthen the agricultural sector. On October 23, 2019 the Strategy of Development of the Agricultural Sector of the Republic of Uzbekistan for 2020-2030 was adopted. Some of the priorities are as follows:

  • providing food security for the population;
  • agribusiness facilitation and creating value chains;
  • reducing the state participation in the management of the sector and improving the investment climate; 
  • ensuring rational environment and natural resources management;
  • developing modern public administration systems;
  • staged diversification of the government expenditure in support of the sector.

While in 2018 neither public, nor specially allocated or non-budgetary funds of the ministries and departments of the Republic of Uzbekistan were provided for the horticulture development program, now the situation has changed and it is planned to increase this cost structure gradually. However, the schedule thereof is still unknown.

On December 11, 2019, the Resolution of the President regarding the additional measures for the further horticulture and winegrowing development and creating value chains in the sector was adopted. The following measures for the intensive horticulture development are provided:

  • Creating intensive orchards and vineyards, building greenhouses on open strips of land not being used in agriculture, low-yielding areas and areas released from cotton and grain crops, as well as on the lands occupied by orchards and vineyards out-of-use. The created intensive orchards, vineyards and greenhouses will be transferred to the population on credit and leasing terms. Later, on their basis new fruit-and-vegetable clusters and agri-corporations will be created.
  • The part of cost for purchasing intensive seedlings (dwarf and semi dwarf) and rootstocks grown in local conditions will be reimbursed to members of agri-corporations and fruit-and-vegetable clusters. The reimbursing is carried out at the expense of the Fund for horticulture and green housing development under the Agency for horticulture and green housing development, as well as the Supporting Fund for winegrowers of Agency for viticulture and winemaking   under the Ministry of Agriculture of the Republic of Uzbekistan. 
  • Minister of Agriculture of the Republic of Uzbekistan Mr. J.A. Khodjayev, Chairman of the Council of Ministers of the Republic of Karakalpakstan and the hokims of the regions are personally responsible for creation of black cherry orchards on 7 thousand hectares, walnut and peach gardens on 8 thousand hectares, apricot and pomegranate gardens on 8,5 thousand hectares, plum orchards on 2,5 thousand hectares using the intensive method on 26 thousand hectares of land occupied by low-yielding and out-of-use gardens in 2020;   
  • Director of the Agency for horticulture and green housing development under the Ministry of Agriculture of the Republic of Uzbekistan Mr. N.E. Nadjimov and the Director of the Agency for viticulture and winemaking Mr. O.S. Mustafoyev are personally responsible for creation of new intensive orchards and vineyards on lands occupied by the out-of-use gardens, greenhouses and vineyards;
  • The Cabinet of Ministers of the Republic of Uzbekistan is tasked within two weeks to take executive decision on approval of the Regulation on the procedure for creating intensive gardens and vineyards, building greenhouses and transferring them to the population on credit and leasing terms. 

The illustrations given in the article are taken from the Concept of the development strategy of the Republic of Uzbekistan until 2035 by the INGO “Buyuk Kelajak”.

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