16th Central Asian International Textile Machinery Exhibition – CAITME 2025

9 - 11 September 2025, Uzexpocentre NEC / Tashkent, Uzbekistan

News

The rules for selling cotton in Uzbekistan are changing again. Key points.

By decree of the President of Uzbekistan, cotton suppliers will have the right to freely choose buyers, but only within their regions for now. Farmers who grow cotton without using preferential loans will receive subsidies of 10% of the sale amount on the exchange.

On January 17, the President of Uzbekistan, Shavkat Mirziyoyev, signed a decree on measures for the gradual implementation of market mechanisms in the cultivation and sale of raw cotton.

Starting from the 2025 cotton harvest, the Uzbek Republican Commodity Exchange (UzRCE) will set the starting price for cotton (first grade, second class) on November 1 each year, and for the 2025 harvest, it will be set on February 1. The price will be calculated based on the average cotton fiber quotes on the New York Exchange over the past six months.

Contracts for the purchase and supply of raw cotton (futures, forward, and spot) between producers, clusters, and textile enterprises will be concluded through the cotton section of the exchange, with separate trading sessions for each region.

Thus, territorial restrictions remain in place, meaning that farmers can freely choose a cluster for a contract only within their region. For example, a farmer from Chinaz district in Tashkent region will not be able to contract with a cluster from Mingbulak district in Namangan region.

Contracts are executed through exchange trading, allowing free choice of terms, delivery timelines, and one or multiple buyers.

Additionally, futures contracts must be signed between November 1 and June 1 at a price not lower than the starting price. These contracts serve as a basis for obtaining preferential loans from the State Agricultural Support Fund.

Forward contracts between producers and processors will be concluded from November 1 to March 1 at an agreed price. The costs of cotton cultivation will be covered by their own funds or loans.

Spot contracts will be concluded in real-time for cotton stored in warehouses at a price agreed upon by the parties. When granting preferential loans, banks require liquid collateral of at least 50% of the loan amount.

As a result, clusters will post their volume and price requirements for cotton on the exchange, and farmers will be able to choose suitable offers and sign futures contracts. Initially, in 2024, it was planned that farmers would post their offers on the exchange, and clusters would compete for these volumes. However, in September, the rules were unexpectedly changed, and cotton prices were artificially lowered in favor of clusters. Since 2018, the cotton procurement rules have been changing annually, sometimes even before the harvesting season ends.

Other changes:

Farmers who grow cotton using their own funds or commercial loans (without preferential loans) will receive subsidies amounting to 10% of the sale price on the exchange.
Farmers who fully repay their preferential loans by the end of the year will receive a 4% refund on the loan amount, effectively reducing the interest rate from 10% to 6%. However, this is only possible if clusters settle payments with farmers on time.
Entrepreneurs engaged in cotton storage and primary processing will receive three-year loans (with a six-month grace period) at the Central Bank's key rate.
Recommended transportation tariffs and maximum rates for cotton reception, storage, and processing services will be approved annually by September 1.
All contracts must be executed through exchange trading and integrated with the "Agroplatform" information system.
Farmers without storage facilities must sign futures or forward contracts.
Loans issued to cotton-textile clusters for financing the 2022–2023 harvest will be extended, with interest rates recalculated proportionally.
The General Prosecutor's Office will monitor the timely repayment of extended loans.

Source
PARTNERS