Uzbekistan’s recent efforts to reform its cotton-production system have caught the attention of Central Asia watchers, and raised hopes for economic growth. Liberalization of the sector on paper, however, cannot guarantee an increase in prosperity. The example of neighboring Tajikistan shows that lifting controls does not automatically lead to greater sector efficiency, or higher living standards.
Since independence in 1991, Uzbekistan’s government has maintained tight control over its cotton sector, enforcing price controls and notoriously relying on forced labor to harvest the crop. In Tajikistan, the cotton sector was ostensibly deregulated and privatized in the 1990s. And in 2007, the government, under growing international pressure, decreed that it would end state intervention altogether. Supporters of the reforms believed the changes would foster increased diversification of the agrarian economy – in particular, shifting attention and resources away from cotton cultivation. International donors considered the reforms overdue, not least in view of the serf-like conditions endured by many rural farmers.
A decade later, however, cotton monoculture remains a fact of rural life in lowland Tajikistan. Agricultural reforms there have done little to promote better living standards.
To understand why, some context is needed. Only six percent of the country’s land is arable, and over 20 percent of Tajikistan’s arable land is under cotton cultivation. Cotton accounts for an estimated 13.5 percent of Tajikistan’s exports, and the state budget is reliant on tax revenue generated by the cotton-production complex.
At the same time, the profit margins of cotton are only a fraction of those of other crops. Whereas remittances from Tajik migrant workers in Russia can amount to upwards of $200 USD per month, profits from cotton might be just $200 USD per hectare.
The emphasis on cotton cultivation is a source of suffering in the countryside in Tajikistan. Over 70 percent of the population resides in the countryside, and over 50 percent is engaged in the agricultural sector. And yet, overall, only 24 percent of Tajikistan’s population enjoys food security. So-called dehqon (commercial) farmers tend to give cotton cultivation priority over consumable crop production.
Ultimately, the sector reforms in Tajikistan have proven cosmetic. Up until the late 2000s, the privatization of farms occurred mainly in name, not in fact. Soviet-era production methods remained in place; the only difference was that a new elite replaced Soviet apparatchiks. This new elite stifled change.
Under the so-called futures system, farmers received inputs on credit while the future cotton harvest served as collateral. The system created a dynamic in which farmers incurred accumulating debt, tying them to the land. Meanwhile, political insiders siphoned off revenues and stashed them in foreign bank accounts. And to this day, the Tajik cotton sector remains highly politicized, with members of the elite controlling outlets to the world market.
The reforms of 2007-2008 were supposed to break the debt cycle and promote rising prosperity in the agricultural sector by encouraging diversification. Yet, it is not certain how many debts have really been annulled under the 2007 reform. In fact, it appears that information about debt resolution programs has not reached all villages.
The formal write-off of debt has not taken place everywhere. In some localities, especially in the southwest Khatlon region, farmers in the wake of the 2007-08 reforms have been forced to assume substantial debts from former collective farms, as debt has not been written off. These indebted farmers have little choice but to plant cotton, and cannot abandon the locality without first finding a successor to take over their farms. Hence, the extent to which farmers have been freed from debt tends to be directly related to the political economy of the locality.
At the same time, throughout Tajikistan production plans are still enforced; actual implementation of the plans depends on farmers’ bargaining power, i.e., farmers’ social and political capital.
Despite its association with rural poverty and food insecurity, cotton production would be less problematic for Tajikistan’s farmers if they could obtain a higher price for their produce. Currently, cotton prices are too low for a farmer to maintain a family. While low world market prices play a role, the price of raw cotton in Tajikistan is lower than in Kyrgyzstan and Kazakhstan, where the cotton sector has been liberalized in earnest. In Tajikistan, prices languish in large part because of the weak bargaining power of cotton farmers, who lack the ability to speculate with their harvest and cannot easily transport their harvest over large distances.
Pressure from authorities is not the only reason why farmers stick to cotton production. For one, land taxes for cotton tend to be half of that for other crops. Secondly, growing food crops is often challenging in Tajikistan. Many farmers face problems in obtaining quality seeds and – more importantly – face logistical problems with getting their produce to the market quickly enough. Due to a poor distribution and storage infrastructure, a significant portion of harvests can be lost to spoilage and other factors before reaching customers. And crucially, many farmers also have little understanding of market dynamics. In addition, cotton remains important in the countryside because the by-products of cotton cultivation (i.e., cotton stalks) are still an important heating source, given that electricity and gas supplies in many areas are unreliable. Animal dung and expensive coal are also used for heating in winter. Lastly, cotton picking is one of most important moments in the year for many rural dwellers, a time when they can earn cash.
International donors have begun to recognize that to stimulate the diversification of crop production, there is a greater need for infrastructure and storage facilities. But it remains to be seen who can reap the benefits from these innovations.
Tajikistan’s example offers a cautionary tale for Uzbekistan’s efforts to improve its cotton-sector performance. To succeed, officials need to cede a large measure of decision-making authority – something that, historically for the region, has few precedents.
And if authorities step back, farmers will need to step up and show initiative. The legacy of Soviet-era communism, and, even more, present-day authoritarianism, have severely impacted the spirit of individual enterprise in the region. To succeed in a genuinely deregulated environment, many farmers will need technical and financial assistance, and access to quality inputs, to make a successful transition from the old system to a new one that raises living standards and greatly improves food security. It's not just the removal of government intervention, and infrastructure that needs to be developed, but another mindset among farmers as well.
Irna Hofman is a Ph.D. Candidate at Leiden University, the Netherlands. She focuses on the political economy of agrarian transformation in Tajikistan, and her interests also include the politics of Chinese agricultural investments in Tajikistan and Central Asia at large.