The Implementation of Market Mechanisms in the Grain Industry to Continue

16.05.2022, 09:32

The Implementation of Market Mechanisms in the Grain Industry to Continue

On May 11, President Shavkat Mirziyoyev held a meeting regarding essential stage of reforms in grain growing.

Recently, food prices on world markets have been growing rapidly. Prices for 1 tons of wheat on international exchanges exceeded $ 400, showing 30% increase since the beginning of the year.

In order to achieve price stability, there is a need to introduce market mechanisms in the grain industry. In this regard, the meeting discussed issues of increasing the supply on the market by ensuring the interest of farmers, increasing yields. 

In recent years, more than 160 large private enterprises of bread products with a capacity of about 3 million tons have been put into operation in the regions. Last year, the country produced about 3.5 million tons of flour, of which 54% is accounted for by  private grain enterprises.

At the meeting, the inability of 43-grain enterprises of the «Uzdonmakhsulot» company to work effectively in new market conditions was criticized. Inefficient use of production capacities, as well as cases of theft at state-owned grain enterprises that have been observed so far, have been noted.

It is emphasized that the existing old system of operation of state grain enterprises does not benefit either grain producers or processing enterprises.

It was noted that it was time to take the next important step towards the long-awaited decision by the people and farmers of Uzbekistan - the gradual cancellation of the state procurement order and the creation of a real grain market.

The President announced that from June 1, after the completion of all necessary organizational work, a transition to market prices will be made for the purchase and sale of grain by the state.

The state will create all conditions for farmers and clusters to put their grain on the stock exchange. The price of 1 ton of wheat purchased for state needs will be increased from last year’s 1 million 550 thousand Uzbek soums to 3 million Uzbek soums for this year’s harvest.

1 million 783 thousand tons of wheat purchased by the Agriculture Fund will be put on the stock market based on the need. At the same time, farmers, based on the average prices formed on the stock exchange in July-August, will be paid a positive difference. This year, the state will provide more than 6 trillion Uzbek soums for these purposes.

In addition, 500 thousand tons of wheat, which will remain at the disposal of farmers, will be taken for temporary storage by bread products enterprises, and from July 1, farmers and clusters will be able to independently put it up for sale at market prices for the first time. At the same time, the state will cover the costs of temporary storage of these 500 thousand tons of wheat. Farmers will also be exempt from exchange payments for the 2022 wheat harvest.

The President instructed the responsible officials to organize the registration of farmers and clusters that harvest grain on the exchange, assign brokers to them, and teach farmers and clusters in exchange trading.

Approximately, 7,6 trillion Uzbek soums are allocated for this year’s grain harvest. For the new order to work fully, fairly, and transparently, each soum will reach farmers and clusters on time and in full, as well as a system of daily control will be introduced to prevent price increases and product shortages.

«The real owners of grain are farmers and clusters», the President has said. «From now on, it is strictly forbidden to seize grain from farmers under the pretext of not fulfilling the plan in the area, the need for feed for livestock, poultry, and fish farming. There will be no restrictions on the movement of grain sold through the exchange», the President said.

The credit resources for 800 billion Uzbek soums will be allocated to replenish the working capital of «Uzdonmahsulot» and private enterprises.

The President instructed to increase the number of modern, compact, energy-efficient flour mills, expand areas for growing grain and increase their productivity, and introduce a system for compensating transportation costs for the delivery of flour and flour products to remote villages. The khokims (governors, mayors) of the regions were instructed to take personal responsibility for preventing shortages in the market and ensuring price stability by importing flour and flour products from other regions of the country and from abroad.

The privatization of bakery enterprises will also accelerate. The responsible officials were instructed to sell state-owned shares in 20 grain enterprises by August 1.

The agenda of the meeting also included issues regarding the prevention of emergencies.

In March-May this year, about 15 major floods and landslides occurred due to heavy rains in Bukhara, Jizzakh, Namangan, Samarkand, Surkhandarya, Syrdarya and Tashkent regions. As a result, 9 people died, as well as 245 houses and 19 bridges were damaged. More than 450 heads of livestock died.

It was noted that this is also due to the fact that chaotic construction and disorderly irrigation have been carried out for years in areas with a high risk of floods and landslides.

The President instructed the responsible officials to create round-the-clock staff and increase the number of rescue teams in the places where mountain rivers and streams flow, to study the state of readiness of river banks, reservoirs, and flood protection facilities for emergencies, and to relocate residents from risk zones to safe areas.

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