Report Highlights: 

Despite continued water deficit in the South and some pest problems during vegetation in some regions, in general, this year’s weather conditions were favorable for growers and Post forecasts marketing year (MY) 2014-2015 lint production at 4.3 million bales. The government of Uzbekistan continues to encourage investments in higher value cotton products to meet the goal of retaining 50 percent of Uzbek cotton for domestic textiles production by the end of 2015.

PRODUCTION 

Uzbekistan’s MY2014/2015 mass cotton harvest finished at the end of October. As of October 24, 2014 according to official estimates, farmers harvested 3.42 million metric tons (MMT) of seed cotton. However, the final official production numbers for seed cotton are not yet available, and some observers and independent experts believe that official production figures might be overestimated. It has always been extremely difficult to verify the reliability of official production numbers. 

The planted area did not change much from previous years, although GOU has been putting active efforts in order to switch some cotton land area to grain and horticulture. Local experts claim that in the past 2-3 years, slightly higher yields in cotton production are mainly attributed to utilization of early maturing and high yield cotton varieties. 

Problems with irrigation water supplies, especially in some southern regions were reportedly a big issue for growers during the vegetation period this summer. Moreover, there was about 8-10 percent replanting of cotton fields due to mid spring rains right after sowing, which also had a partial negative impact on the present crop - but just in few regions. 

Production Policy 

The Government’s overall cotton policy is still aimed at maintaining stable production and improving quality and fiber characteristics. This was once again confirmed in the speeches of Government officials during the recent 10th International Uzbek Cotton and Textile Fair. 

In his opening remarks during the Fair, the Uzbek Prime Minister declared that by 2016 Uzbekistan would increase machine cotton harvesting to 80-90 percent. In addition, he stated that that Uzbekistan would increase its domestic cotton consumption to 50 percent by the end of 2015. 

At the same time, the area sown with faster-maturing varieties is increasing every year in Uzbekistan. During the last 5-6 years, the government initiated a major program to reform the cotton sector, aimed mainly at improving fiber quality. 

Research on New Cotton Varieties 

During past 8-10 years, Uzbek cotton breeders have developed 201 new cotton varieties, 57 of which were included in the State Register and are recommended for planting in different regions of the country. In the past years Uzbek researchers paid special attention to development of cotton varieties with integrated tolerances to stress factors, and that produce high fiber quality meeting requirements of the world market. 

In particular, the Uzbek Genomics and Bioinformatics Research Center has developed new cotton varieties (Porlok-1, Porlok-2, Porlok-3, Porlok-4) using the gene knockout technology characterized by high productivity and unusually extensive root systems. Currently these varieties are being extensively tested in all regions of the country. 

According to Uzbek researchers, cotton varieties (18 in total) released during the last 10 years ripen 5 to 7 days more quickly, and newly developed perspective varieties have reportedly even faster maturing periods. 

Domestic prices 

As usual, at the end of August the Uzbek Ministry of Finance set up official procurement prices for seed cotton. 

CONSUMPTION 

At the recent 10th International Uzbek Cotton and Textile Fair, government officials once again confirmed as they have the past 3 years that domestic cotton consumption would further increase in the coming years. In particular, during his official speech at the fair, Uzbek Prime Minister stated that Uzbekistan would increase its domestic consumption to 500,000 tons in 2015. However, Post still believes that it is not going to happen this quickly. Rather, it will depend on further successful development and operation of the local textile industry. Post forecasts MY14/15 domestic consumption at 1.55 million bales. 

The spinning and weaving industries continue to invest heavily in new equipment as well as to renovate existing equipment due to improving profitability over the past several years. Domestic demand is growing with a marginal increase over the last 5 years, so also is export demand, especially for cotton yarn and textile garments. Presently, the share of local textile industry in the country’s GDP reached 2.7 percent. In 2013 local light industry companies produced products in total amounting to 2.14 trillion Uzbek Sums. 

According to its development strategic program, the State Joint-Stock Company ‘Uzbeklegprom’ plans to allocate about US$1 billion in 2015-2020 to finance different projects in light industry aimed to increasing domestic cotton consumption. Currently implemented projects will allow the increase in cotton yarn production at 2.6 times to 563,000 tons, 340 million square meters of cotton fabric (+2.8 times), 110,000 tons of knitted fabric (+2.9 times), 296 million pieces of garments (+2.1 times) and 21 million pieces of wearing apparel (+3.3 times). According to government decree, by 2016 “Uzbekengilsanoat” SJS Company plans to implement over 1,000 projects in the textile industry and implement investment projects in the amount of US$2 billion, including the creation of vertically integrated textile complexes with finished outputs. 

At the same time, last year GOU prolonged until January 1, 2016, its decree which frees local textile factories from paying import duties while importing dye solutions, chemicals, garment accessories and some additional materials not produced domestically. 

TRADE 

Post forecasts MY14/15 lint exports at 2.75 million bales. After the recent 10th International Uzbek Cotton and Textile Fair, the officials of the Ministry of Foreign Economic Relations, Investments and Trade (MFERIT) announced the signing of contracts for 580,000 tons of cotton lint exports. Most of these, however, are not finalized sales, but rather memoranda of intent. In addition, according to official reports, during the Fair the Uzbek Textile Industry concluded contracts for exporting textile products for amount of more than US$1 billion. The fair once again showed that Uzbekistan currently remains as the primary supplier of cotton to Asia, with Bangladesh, China, Iran and Turkey as the major markets. Specifically, according to official sources, Uzbekistan exported 228,000 tons of cotton to China and 198,000 tons to Bangladesh in CY2013. 

Reportedly, few months ago the government of Bangladesh (GOB) finalized an MOU with Uzbekistan, which reportedly has agreed to export 200,000 tons of raw cotton to Bangladesh on an annual basis. In MY 2013/14, Uzbekistan had about 25-percent export market share in Bangladesh cotton imports. 

Currently a well-established local system of logistics, consisting of 21 specialized cotton terminals with a storage capacity of 410,000 tons, and a good transportation infrastructure and shipment corridors, facilitate timely deliveries of Uzbek cotton to buyers. 

Textile exports 

In 2013, Uzbekistan textile exports reached as much as US$823 million, and the share of ready garment exports reached 35 percent of total exported textile products, which is 25 percent more than in 2012. In particular, during 2012-2013 JSC “Uzbeklegprom” expanded the assortment of exported textile products from 21 to 27 products, as well as importer countries of Uzbek textile products have increased from 43 to 50; and the number of local companies involved in textile exports increased from 123 to 250. According to official statement of “Uzbeklegprom”, by 2020 Uzbekistan plans to increase annual textile products exports from US$800 million to US$1.5 billion