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Bozorov Abdurashid Toyir o‘g‘li
O‘zbekiston Respublikasi Prezidenti Administratsiyasi huzuridagi Iqtisodiy
tadqiqotlar va islohotlar markazi bosh ilmiy xodimi
O‘ZBEKISTON RESPUBLIKASI HUDUDLARIDA QISHLOQ XO‘JALIGI
SUBYEKTLARI KLASTERLARI – RIVOJLANISHNING
IQTISODIY OMILI
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Bozorov Abdurashid Toyir ugli
Chief Research Fellow, Center for Economic Research and Reforms under the
Presidential Administration of the Republic of Uzbekistan
CLUSTERING AGRICULTURAL ENTITIES IN THE REGIONS OF THE
REPUBLIC OF UZBEKISTAN
AS AN ECONOMIC FACTOR OF DEVELOPMENT
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Бозоров Абдурашид Тойир угли
Главный научный сотрудник Центра экономических исследований и реформ
при Администрации Президента Республики Узбекистан
KЛАСТЕРИЗАЦИЯ СУБЪЕКТОВ СЕЛЬСКОГО ХОЗЯЙСТВА
РЕГИОНОВ РЕСПУБЛИКИ УЗБЕКИСТАН КАК ЭКОНОМИЧЕСКИЙ
ФАКТОР РАЗВИТИЯ
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Clustering agricultural entities in the territory of Uzbekistan as a factor for
economic development
Today, agriculture plays an important role in the development of Uzbekistan’s
economy. The sector accounts for 27% of the country’s GDP at factor cost and 27% of
total employment. By 2025, the country's GDP is projected to reach $100 billion and
annual exports are projected to reach $30 billion. To achieve these figures, the untapped
potential of agriculture needs to be utilized to create additional income and
employment opportunities. As the changes in the global standards, high value
production, massive growth in the demand for agricultural goods, clustering agri
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industrial entities would enable this sector to become a driver for economic
development similar to ICT, electronics, industrial manufacturing and oil and gas
industries.
Agro-clusters are a single vertically integrated system of commercial and dekhan
farms, processing industries, storage facilities, transport logistics and trade
infrastructure which is needed to plant, process, store and sell agricultural products. In
addition to deep processing agricultural products, agro-clusters optimise the activities
of crop farmers and provide them with modern equipment and technology, fertilisers,
expertise and necessary chemicals on an ongoing basis.
As Uzbekistan have observed a stagnant productivity during the last decade until
2017 in cotton and wheat production, reforms were essential in agricultural sector to
meet rising demand for food and other agricultural goods. Therefore, the first agro-
cluster in the country was launched in 2017, and by the end of 2021 this figure has
reached more than 600. Agro clusters are established to reduce state intervention and
support measures into the agriculture, to increase productivity of crop production, to
develop an agro processing industry and to increase farmer’s income in Uzbekistan.
The development priorities of the Republic of Uzbekistan for 2017-2021 placed
great emphasis on modernizing the country’s agriculture and processing industry on
the basis of intensive and modern technologies and methods. In particular, the
presidential decrees of 29 July 2019 “On additional measures for deep processing of
agricultural products and further development of food industry” and 11 December 2019
“On additional measures for further development of horticulture and viticulture and
creation of value-added chain in the industry” adopted a number of additional measures
to create added value in processing products in the processing and marketing system.
The clusters address the following key challenges that farmers face in gaining
an advantage over other producers:
1. Uninterrupted supply throughout the year using machinery not available to
farmers
2. Providing farmers with the services of agronomists and other agricultural
specialists (optimization of production activities)
3. Elimination of financial shortages and uninterrupted supply of all necessary
fertilizers and chemicals to the farmers
4. Supporting farmers in finding a customer for fresh and processed agricultural
products, and in planning for the future.
Thanks to the clusters - private investments in the development of new types of
modern agricultural technologies and introduction of advanced agricultural methods -
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deep ploughing, drip irrigation and laser leveling of fields are increased, agrotechnical
soil conditions are improved and agrotechnical maps are updated.
According to our analysis, since 2017 cotton cultivation productivity per hectare
has increased by 13.6%. With the introduction of the cluster system, the total cotton
harvest increased from 2.9 million tons to 3.1 million tons per year by ensuring a
seamless link between producers and processors of raw materials.
In 2016-2020, 330.5 thousand hectares of low-yielding cotton and cereal fields
have been reduced and replaced by vegetables, potatoes, melons, fodder, oilseeds and
pulses.
In 2020, total merchandise exports amounted to $13,097 million, 1.4 times more
than in 2016. Of this, $ 1.3 billion (9.7%) was exports of fresh agricultural products
and $ 478 million was exports of value-added agricultural products in 2020. Exports
of processed agricultural products in 2020 increased by 2.3 times compared to 2016.
Today, the country is gradually establishing clusters in the cotton and textile
sectors, as well as in the horticultural and pharmaceutical sectors. Fruit and vegetable
clusters have been functioning since 2020 and have processed a total of 237,400 tons
of fruit and vegetables during the year, of which 163,900 tons of fruit and vegetables
were exported to foreign markets.
The number of registered food processing enterprises increased from 8,050 in
2014-15 to 12,065 in 2017-2018 and to 20,000 in 2020. The sector accounts for 9.8%
of total industrial investment in Uzbekistan. In addition, the sector is considered to be
the 4th largest FDI acceptor in Uzbekistan, and production in the food industry in 2020
increased by 189% compared to 2016, reaching 42.4 trillion UZS.
2016
2017
2018
2019
2020
Total exports - million USD
8,974
10,079 10,920
14,023
13,097
Agricultural products -
million USD
1,274
1,230
1,177
1,608
1,281
Share in total exports
14%
12%
10,7%
11%
9,7%
Processed agricultural
products - million USD
210
281
337
372
478
Share in total exports
2,3%
2,7%
3,1%
2,6%
3,6%
Table 1. Dynamics of agricultural exports
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In addition, agro-clusters play an important role in increasing farmers’ and people’s
incomes, as well as improving resource efficiency and preventing production losses.
Cotton processing clusters have increased mechanization of cotton harvesting from 1%
in 2018 to 5% in 2019 (Zoria S. 2020).
In a short period of time, activities based on the cluster system in our country
have started to show positive results. During 2017-2020, 101.7 thousand ha of drip
irrigation, 3.5 thousand ha of irrigation, 4.2 thousand ha of water saving systems and
146.8 thousand ha of flexible pipes were introduced on a total area of 256.3 thousand
ha.
Currently there are 463 agro-clusters operating in the country, including 122
cotton and textile clusters, covering 1,033 thousand ha (100%), including 26,800 farms,
157 grain clusters, covering 1,038 thousand ha (100%), including 36 000 farmers who
have established cooperation on the basis of contracts. Cooperation has been
established between 146 fruit and vegetable clusters and 10 000 farms on 116 thousand
ha (35%) of land, 29 rice clusters on 21 thousand ha and 9 pharmaceutical clusters on
1,4 thousand ha (Minselkhoz, 2021).
Conclusion
Overall, the cluster system plays an important role in improving living standards
by increasing the interest of the enterprises, attracting industrial production to the rural
areas, rising employment, and increasing the country’s export potential through the
introduction of innovative technologies in the industry which is highly competitive.
Nevertheless, to promote equal development, competition between the clusters
and private farmers should be maintained and ensured by law. Farmers’ right should
be maintained to avoid monopoly power in the market. The following market failures
are identified:
1. Many of the farmers yet did not fully understand how clusters work and the
obligations of the parties within the cluster due top-down approach in organizing the
clusters;
2. Financial obligations of the cluster members are not made on time to the
farmers which is increase financial burden on the farmers during plantation and there
is no legal responsibility against it.
3. Current system in practice created a monopoly in regions while contracting
farmers to single cluster which set the prices potentially lower than the market prices.
4. Farmers are not given the right to decide with whom to cooperate.
The economic importance and potential benefits of clusters should be promoted
and explained for its members. Thus, cluster organization will be initiated by the
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private sector. The government should provide workshops to improve the
understanding of the joint benefits within the cluster system.
Further improvement of the competitiveness of Uzbekistan’s agro-industrial
sector is associated with the introduction of new technologies and innovations in the
production of goods and services. Furthermore, the following areas should be paid
special attention to develop clusters complexes in the country:
Digitalization of enterprises are also necessary to support the further
development of the agro-processing industry.
Improving basic infrastructure and services
Improving skilled level of the labour force in the regions
