Cotton Industry Under Threat
Thursday, 31 August, 2006
Cotton Industry Under Threat
Thursday, 31 August, 2006
The government has already lowered its forecast for this year’s cotton harvest by 60,000 tons, and is doing everything possible to fulfill this plan. But its efforts to save the day may not be enough: even last year, when fuel prices were much lower, the state fell short of its target by more than 25 per cent.
The main problem is guaranteeing cotton growers access to direct financing. Of the country’s 11,000 cotton farms, 90 per cent are in debt to middlemen, the futures companies that provide loans and agricultural equipment at usurious interest rates, and which are in turn in debt to foreign investors. Estimates of the total debt owed to futures companies amount to approximately 300 million US dollars, the equivalent of three-quarters of the government’s annual budget.
Analysts say the government’s recently announced attempts to resolve the problem by creating a working group to develop new mechanisms for financing cotton growers are too little, too late. Any positive effect from the new system, which aims to ease growers’ liquidity by reducing their debt burden, will not be felt until next season.
Another factor is that the area of land given over to cotton cultivation is constantly shrinking. This year alone, it has fallen by almost nine per cent. An infestation of locusts this summer also damaged the cotton crop in many areas.
A further problem is created by perennial shortages of fuel and lubricants, as well as constant price hikes for them. Over the past week, petrol prices jumped to one dollar per litre due to a halt in supplies transiting Uzbekistan, which was busy celebrating its September 1 independence day. The Tajik agriculture ministry acknowledged that investors in the cotton industry were unable to guarantee adequate supplies of fuel.
The systemic crisis in the cotton industry is due not only to technical problems, but also to soil depletion. The cotton monoculture, a feature of Tajikistan’s most fertile regions over many years, has had extremely adverse effects on around half the country’s arable land. Every year, 50,000 hectares of land are lost to depletion, erosion, and salinisation.
As a result of all of these factors taken together, Tajikistan now produces an average of 1.5 to 1.6 tons of cotton per hectare. The experts say anything less than two tons a hectare means a farmer cannot make a profit on his crop.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
