Why is this important
The Uzbek authorities are expanding the system of financial support for agriculture amid high costs for loans, fuel, and the development of new land. The new measures are expected to reduce the burden on farmers and cotton-textile enterprises, as well as accelerate the repayment of concessional loans and the return of unused land into circulation. At the same time, the state is strengthening control over the efficient development of pasture and fallow lands through mandatory projects, feasibility studies, and an auction-based allocation mechanism.
What happened
- Uzbekistan adopted two presidential decrees on additional support for cotton and wheat producers, as well as on the introduction of new mechanisms for the use of fallow and pasture lands.
- The documents provide for subsidies on interest payments, compensation for part of diesel fuel expenses, and the transfer of a number of subsidy distribution functions
- to the Agrarian Payments Agency under the Ministry of Agriculture.
- At the same time, a new procedure is being introduced for the preparation, development, and allocation of land plots through electronic auctions with mandatory feasibility studies for projects.
Numbers and facts
- Under concessional loans for cotton cultivation, the state will compensate 2.5 percentage points on loans for farms that repay their debts within the сроки established by the contract.
- For farms that fully repay such loans before the end of the harvest year — by December 31 — the compensation amount will be 5 percentage points.
- Farms that fully repay concessional loans for wheat cultivation before August 1 of the harvest year will be able to receive compensation of 4 percentage points from the amount of interest payments.
- For cotton-textile clusters and textile enterprises with a cotton processing chain, partial coverage of interest payments on commercial loans for the purchase of raw cotton is provided.
- The compensated portion will cover the part of the rate exceeding 8 percentage points, but not more than 16 percentage points.
- Subsidies will be provided to certain agricultural enterprises, and from April 1 to July 1, 2026, agricultural enterprises will be able to receive subsidies for the purchase of diesel fuel through the exchange.
- Compensation will be allocated for each ton of fuel costing more than 13 million soums, while the subsidy amount will not exceed 2 million soums.
- From September 1, 2026, the Agrarian Payments Agency will receive the powers of the State Agricultural Support Fund for distributing a number of subsidies.
- The agency will compensate part of the cost of electronic invoices when selling raw cotton grown with the enterprise’s own funds and with loans from commercial banks.
- Compensation is also provided for part of the cost of cotton raw materials purchased by textile enterprises with cotton-textile clusters and a yarn production chain.
- As part of the new procedure for developing fallow and pasture lands, the Council of Ministers of Karakalpakstan and regional khokimiyats will annually approve land commissioning programs and submit applications to the Ministry of Agriculture.
- The Ministry of Agriculture will organize the development of land reclamation projects and feasibility studies jointly with relevant ministries and departments.
- The feasibility study must include an analysis of land plots, stages of commissioning, deadlines, funding sources, project efficiency calculations, and control mechanisms.
- Land plots together with development projects and feasibility studies will be put up for electronic online auctions through the E-auksion platform.
- The maximum period for putting land plots into operation after their allocation will be no more than two years.
Context
- For farmers, the new measures reduce the cost of loans and create additional incentives to repay cotton and wheat debts more quickly.
- Cotton-textile enterprises are receiving a mechanism for partially covering high interest rates on commercial financing for raw material purchases, which may support domestic processing within the country.
- The transfer of subsidy distribution functions to a single agency will make it possible to centralize the agricultural payment system and simplify the administration of support measures.
- The new land development procedure strengthens requirements for project preparation and investor responsibility, since plots will be allocated only through auctions and with fixed deadlines for commissioning.
