Kazak Cotton Farmers' Poor Prospects

Falling purchase prices leave farmers in debt and some are abandoning the cotton business.

Kazak Cotton Farmers' Poor Prospects

Falling purchase prices leave farmers in debt and some are abandoning the cotton business.

Farmers in Kazakstan’s main cotton-growing region say falling prices on top of last year’s poor weather conditions are making it increasingly untenable for them to stay in business.

They accuse the government of not doing more to help them, but officials say farmers need to learn to survive on their own in a competitive commercial market.

As harvesting drew to a close in November, officials estimated that the final figure for the whole of Kazakstan would be 330,000 tons, a quarter down on the previous year’s figure of nearly 450,000 tons.

In the course of 2008, farmers in the southern region where most Kazak cotton is grown had to contend with hail which forced them to re-plant their crops. This was followed by a lack of rain and a shortage of river water to irrigate the fields.

By autumn, they found that the average price they could expect to be paid for their cotton by commercial buyers had fallen from 60 tenge last year to 50 tenge a kilogram, or less than five US cents, and as fuel and other costs were still rising, they could not balance their books.

Purchase prices have fallen because of the decline in demand for cotton on world markets as economies slow.

The head of the local agriculture department in Shardara district, Turanbek Ospanov, said the best sort of cotton was fetching 56 tenge, and second-best was less than that.

“Prices for the crop are such that any farmer can go bust in a short space of time,” said Sadu Bekenov, who owns a large cotton-farming cooperative. “They have to live on something, feed their families and think of the future.”

Farmers with less land have fewer options for keeping their businesses sustainable as things get tighter.

Aybek and his family, for example, works a small plot of land in the Makhtaaral district. He borrowed money to buy tractor fuel and fertiliser last spring, but then found himself short of water to keep the crop alive. Lower-than-anticipated buyers’ prices then meant he was unable to recoup his debt-funded initial investment.

Like other farmers in South Kazakstan region, he depends on irrigation water from the Druzhba canal, which in turn is fed by the Syr Darya river, originating in Kyrgyzstan.

This major Central Asian river is the source of constant dispute between Kazakstan and Uzbekistan, on the one hand, which need as much water as possible over the growing season, and Kyrgyzstan on the other, which tries to store a certain amount in its reservoirs to generate hydroelectricity.

Aybek blames his own government for not securing enough water from Kyrgyzstan.

“The shortage of irrigation water is a direct consequence of our officials’ failure to reach agreement with the Kyrgyz,” he said. “And it’s the peasants who suffer.”

Farmers also say a promise by the government to buy some cotton at a fixed price of 67 tenge a kilogram – higher than the market average – has not really materialised.

To take one district, Shardara, as an example, government agencies bought less than 3,000 of the total 80,000 tons produced.

Aybek found the government quota had been filled by the time he was ready to sell.

“I don’t know who managed to sell their harvest at the government prices. My neighbours and I had to sell it cheap, and we were unable to repay our debts,” he said.

Unlike neighbouring Uzbekistan, where the state is the monopoly buyer, the Kazak cotton industry is run along commercial lines, meaning that in good years farmers do much better than their Uzbek counterparts. The downside is that when prices fall, they are on their own.

Bekenov said that when farmers have asked the Kazak government to review cotton pricing on previous occasions, “They told us that this was a market with its own laws, and we must live by them.”

Local agriculture official Ospanov, confirmed what many farmers have been saying – that it was becoming uneconomic to work the less productive fields.

“Already some farms are abandoning fields where the yield is low,” he said. “They think it doesn’t make sense to harvest [the cotton] as it will cost too much. You need to get at least two tons per hectare to make it worth growing cotton, and the costs are high because fuel and fertiliser have become more expensive.”

An agricultural expert who asked not to be named predicted that the trend would continue.

“I think the cotton sowing [area] will be curtailed substantially next year because, even with support from the government, farmers won’t be able to make a profit if prices stay the same,” he said.

As well as price fluctuations, the expert pointed to what he sees as inherent flaws in the structure of cotton farming in Kazakstan. He believes there are too many small farms which work their land over-intensively and plant poorer grades of seed, all of which makes their product uncompetitive.

He argues that to benefit from economies of scale, small units would do better to amalgamate.

“No small farm in isolation can afford good-quality seeds, secure irrigation water or carry out proper crop rotation,” he said.

Bakhytjan Bayjumartov, head of the new technologies department in the provincial agricultural agency for South Kazakstan region, insists government is responding to farmers concerns, and plans to increase subsidies to farms that plant cotton.

“Whereas the state allocated 6,000 tenge per hectare [in 2008], in the coming year it plans to provide 22,000 tenge [180 dollars] per hectare,” he said.

At the same time, Bayjumartov warned that farmers should expects more water shortages over the coming growing season.

Oxana Sivtsova is a reporter in Shymkent and Marik Koshabaev is an IWPR-trained” journalist in Almaty.

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