Cotton for Uzbekistan: National Treasure 2.0

Gathering Cotton in the Uzbek SSR, by Pavel Ben’kov

In Uzbekistan, cotton is seen as a national treasure, carrying the fancy euphemism of “white gold.” While the country is also rich in real gold, ranking among the top ten gold-producing countries globally, the metaphor of “national treasure” for cotton seems fitting at first glance. Uzbekistan is the fifth largest cotton exporter in the world, generating more than 1 billion dollars in annual revenue for the state. However, this level of production comes at immeasurable costs: the mobilization of public sector workers for three months of cotton picking, a negative reputation for the state, land degradation, and overall mismanagement in the cotton industry. Nonetheless, with a long-term fix to these problems, Uzbekistan may yet take up the mantle of “the land of cotton,” this time fairly and proudly.

Cotton in Uzbekistan: Retrospective

Cotton has been an important commodity for Uzbekistan for centuries. Historical evidence shows that cotton has been produced in Central Asia since the 5th and 6th centuries. In the 16th and 17th centuries, cotton was exported to Russia, which used to receive it mainly from the United States. With the invasion of Central Asia by Tsarist Russia, the region served to supplement the demand for cotton in Russian industry. Later, in the light of the Soviet Union’s formation and Stalin’s coming to power, demand for cotton further increased. Cotton producing lands in Central Asia were expanded: between 1913 and 1940 Uzbekistan’s cotton area increased from 441,600 ha to 1,022,600 ha. Furthermore, the use of chemicals and minerals was introduced to boost production. In the 1950s cotton production in Uzbekistan reached 3.5 million tons, becoming self-sufficient for the USSR and even an exporter.

With the introduction of a specially-designed irrigation system in the 1960s, the deserts, mainly in the Aral Sea Basin, were transformed into cropland for cotton production. The cotton fields constituted around 61 percent of arable land, and the level of specialization was greater than any other Soviet republics. Cotton became the main commodity, producing more than two-thirds of the Soviet Union’s cotton. However, the Soviet Union didn’t invest in the industry and infrastructure for cotton reproduction, which brought about tremendously devastating consequences for the economy of Uzbekistan after its independence.

In the 1990s, Uzbekistan found itself in an inescapable trap of multilinear problems. “Inadequate attention to other agricultural commodities and dependence on imports of food products—especially grain, overuse of water resources, insufficient crop rotation, environmental problems, such as soil salinization and erosion, downstream pollution, and ultimately the infamous desiccation of the Aral Sea have all been direct consequences of decades of monoculture cotton production” says Inna Rudenko. The state still depended heavily on cotton exports as a means of filling its budget. Despite many reforms aimed at diversifying agriculture and modernizing cotton production, improving light industry and infrastructure, the state had to keep the old practices as cotton still accounted for a vast part of the economy. According to the World Bank report of 2005, cotton made up 13% of Uzbekistan’s GDP and around 25% of foreign exchange revenues, which was quite significant. Besides, previously state-owned farmers were replaced by private farmers, and they only hired seasonal workers for cotton harvesting rather than keeping permanent workers. This caused a huge gap in employment in the cotton industry, which had previously represented around 20% of the total workforce.

Forced labor rhetoric

Along with economic and ecological costs arose another problem: the notorious reputation for Uzbekistan as being “the state forcing its own citizens into cotton harvesting.”

Every year, during the cotton harvesting season lasting from September till mid-November, teachers, students, and nurses were mobilized into cotton fields to harvest. The Walk Free Foundation estimated that almost 4% of the population—32 million people—participated in picking cotton in fields. From the side of the state, this practice made sense for two reasons: first, harvesting cotton by hand allows for quality maintenance, full and relatively immediate harvesting compared to harvesting by machine. Second, as the state controlled every stage of cotton production, harvesting costs were also to be lowered to maximize revenues from cotton production, and the cheapest way to do it was to involve government workers into cotton harvesting. Although in terms of hard cash (foreign currency), it would seem that profits exceeded the costs, in reality, it is not the case due to colossal opportunity costs.

First of all, in an era of globalization, international reputation and trust play an important role. Uzbekistan suffered a huge loss in this regard due to the practices involved in cotton production. “Slavery,” “state-sponsored child labor,” and “forced labor” made headlines in prominent newspapers, magazines, and reports of international organizations. In 2010, the International Labor Organization dedicated the 99th session of the International Labour Conference to this issue. Attempts were made to put Uzbekistan on the same list with North Korea in terms of “modern slavery.” Close to 250 leading textile companies pledged not to knowingly use Uzbek cotton in any of their products until such practices were stopped by the government. Since 2012, instances of child labor have decreased significantly—close to zero, in fact—though it is now difficult to convince the international community of such progress. The damage done to the image of the state is, though immeasurable, also an obviously huge loss to the economy and reputation of Uzbekistan, which takes even more to fix.

Second, as a result of mobilizing government workers in cotton harvesting, students would lose around three months of education each year, teachers would have to cover more class material after the harvesting season, and there would be disruptions in hospitals due to a lack of medical staff. It may not be possible to calculate all these losses in hard cash, but when the state struggles to find an answer for why there are tremendous problems in the education system, or why there is a lack of truly qualified specialists, the answer might be found not from outside the system, but within.

Third, cotton production noticeably slowed down the state’s path towards democracy, just society and the practice of the rule of law. For the most part, the rhetoric that “cotton is national treasure” played an ideological role to justify state control, owing to the premises that the state cotton policy was in the nation’s best interests. Anyone who would go against these policies could find themselves under informal accusations that they were in conflict with national interests. Such ideological rhetoric damaged freedom of speech and civil society institutions. For instance, labor associations that were supposed to defend workers’ rights wouldn’t dare to disapprove of the government’s policy of mobilization of employees. The media was in a “mute” mode, creating a rough impression that everyone in cotton fields was patriotically happy to contribute to the state budget. These practices clearly delayed democratic progress, which is now unfolding under the new leadership.

Between September 17-19, 2017, the new President of Uzbekistan, Shavkat Mirziyoev, made a so-called “historic” visit to the U.S.A and met the World Bank, IMF officials, and U.S. business leaders. He delivered a speech at the UN General Assembly, in which he mentioned the forced labor practices in Uzbekistan. It was the first time an Uzbek leader officially admitted forced labor practices. Within few days after his return to Uzbekistan, Prime Minister Aripov organized a meeting and ordered regional hokims (governors) to immediately call back all the teachers, students and medical staff from cotton fields. This was quite surprising for international human rights organizations as they were still skeptical and didn’t emphasize this progress much, allocating it only one line in their report. Although there is still much space for democratic reforms in this direction, their benefits undoubtedly outweigh any previously-borne costs.

New thinking

The year 2018 in Uzbekistan was announced as the “Year of Proactive Entrepreneurship, Innovative Ideas, and Technologies.” No sector in Uzbekistan, however, is in greater need of new business thinking, innovation, and technology than agriculture, which makes up around 18% of the GDP and employs around 30% of the labor force in the country. Agriculture is underperforming despite its huge potential due to long-existing issues in the system. The cotton industry, the main commodity in Uzbekistan’s agriculture, hasn’t seen significant innovative improvement in production and usage since independence. The reforms in the cotton industry should address not only the issues of cotton production per se but the lack of infrastructure, “rebranding,” innovation, and technology.

Cotton production itself suffers from a series of problems, some of which have been mentioned above. Ecological issues and land degradation are unbearable consequences of the forced hyperproduction of cotton during the Soviet Union and even afterward. Farmers were sometimes forced to plant cotton even in lands not fertile or convenient for cotton production. Such times have passed, says the President of Uzbekistan, Shavkat Mirziyoyev. In this regard, cotton fields should be decreased, limiting them only to cotton-fertile lands and with deep consideration of current and potential ecological consequences. This clearly means a reduction in overall cotton production, but the state may regain revenues by getting farmers to plant other crops that are suitable to geographic and climatic conditions of the land. The introduction of a state order last year for the procurement of fresh fruits, vegetables, potatoes, melons, and grapes may well be in place for this purpose. According to this order, “Uzbekoziqovqatholding” will purchase agricultural products and further process them to later export them. However, such policies should be followed only after a favorable cost-benefit analysis.

The export of cotton solely as a raw product has left the state vulnerable to global cotton price fluctuations and widened the gap between opportunity costs and real revenues. The losses from cotton price declines in 1998 to 2001 cost Uzbekistan around 1.5 billion dollars. Besides, the lack of infrastructure to process cotton and use it in light industry erased the potential for further revenue. For instance, in the 2016/2017 cotton season, Uzbekistan produced 811 thousand tons of cotton, exported 283 thousand tons and used 446 thousand tons domestically while Turkey produced 697 thousand tons, used 1.415 thousand tons (including imported cotton) and exported only 73 thousand tons. Without a reference to how much revenue Turkey is making from this trade, one may assume without any reservations that the cotton industry benefits Turkey several times more than it does Uzbekistan. A spoiler alert: it is roughly 10-12 times more. What allowed Turkey such an edge is a cotton-based textile that has managed to gain an important spot even in Western markets. A well-planned and close link should be established between cotton production and textiles in Uzbekistan, to a level at which the export of raw cotton is no longer significant. The “cluster” approach currently being implemented in cotton production is an important step on this path, but it shouldn’t be limited to producing cotton strips; rather, it should be focused on a wide-range of products (around 200 products can be made from cotton). The formation of textile companies should be further incentivized, and new markets for their products should be sought. This is quite a complicated task for the state. However, once achieved, it may start a wave of economic booms and sustainability that people long believed the cotton industry “promised” to bring, but never lived up to until now.

The cotton industry should be “rebranded” in all senses. An immediate task should be to negotiate with the 247 companies that signed a pledge not to knowingly use Uzbek cotton. Their conditions could be met by fully eradicating forced labor, a situation where there is already much progress. Harvesting should be solely optional for seasonal workers, and more people could be attracted by incentivizing them through higher wages. A broader task is to effectively communicate to the international community that significant progress is underway, and practically convince them that Uzbekistan has left this negative legacy in the past once and for all. This requires allowing a third-party investigation, other than that of the ILO, which was criticized for its methodology and findings. Regaining the trust of international consumers in buying textiles made from Uzbek cotton is, therefore, a long-term task. A negative legacy may now play a positive role by showing this current progress to a wider public and encouraging them to assist with sustaining it. For these purposes, an effective rebranding campaign should be applied. Additionally, this could contribute to improving an overall image of Uzbekistan before the international community.

Innovation and technology seem to be visibly absent from the cotton production “ingredients.” The methods and technology used today are, with a few exceptions, dating from the Soviet Union’s time. Improvements in this direction require huge investment, research facilities, grants and highly-qualified specialists. Technology should eventually replace humans as cotton pickers for the considerable part. Higher education institutions of agriculture should be enhanced, modernized and brought into the same level of reputation as popular fields such as medicine. For instance, the Tashkent University of Agriculture currently suffers from a lack of national and international grants (there are only a few), and subsequently has a low reputation among other universities in Tashkent. Innovation should be boosted through grants to universities and institutes to conduct research and experiments. In doing all of these above, environmental consequences should be taken into account, and a human-centered approach should be applied to assure that the cotton industry in Uzbekistan is fully human-friendly.

In conclusion, all of these tasks are quite broad and therefore complicated. They require long-term thinking and commitment. The solution, however different it might be from what has been suggested, cannot surely be found solely within the cotton industry, but rather around the sectors directly and indirectly affected by it. A systems-thinking approach should be a backbone of any plausible solution. Potential environmental and political consequences should be considered as non-negotiable factors eliciting decisions that prioritize human benefits. With all this remarkable potential for cotton production and right policies in place, Uzbekistan may well surpass Turkey, Bangladesh, or Pakistan in terms of cotton-directed revenues rather than raw cotton exports. Once it reaches such a level, the “white gold” euphemism and “cotton as national treasure” rhetoric will become fair, just, and truly patriotic.