Uzbekistan approves market-oriented mechanism for wheat acquisition

Uzbekistan is going to introduce market-oriented rules for harvesting and selling wheat, according to a new edict of President Shavkat Mirziyoyev of Uzbekistan. This year the country is planning to harvest about 2.5 million tons of wheat.

The National Agriculture Fund of Uzbekistan is going to buy 1.7 million tons of commercial wheat and 266,500 tons of seed. The authorities expect that the wheat price will follow the market, although at the very first stage the price will be set by the government.

In order to make sure there is enough wheat, the fund is going to make its contractors keep about 500,000 tons of wheat in their storage facilities. This wheat will be traded on the local exchange later. All costs associated with transportation, acceptance of wheat and storage before it is sold at the exchange will be covered by the Agriculture Fund.

The Uzbek government also wants the fund to allocate $72.5 million to subsidiaries of the public company Uzdonmakhsulot; they must acquire wheat from farmers directly.

According to the president’s edict, the market-oriented mechanism for wheat acquisition is set to operate in Uzbekistan starting from June 1. As President Mirziyoyev highlighted, the old system wasn’t able to bring profit either to wheat producers or processing companies.