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President Shavkat Mirziyoyev has signed a decree introducing market principles into the production and sale of grain, marking a significant departure from the state-directed procurement system that has long governed Uzbekistan’s wheat sector.
The decree, signed on 16 November 2021, is framed as part of a broader effort to raise the competitiveness of the agricultural and food industries, stabilise domestic prices and improve investment conditions through what the document describes as a complete rejection of government purchases beyond the volume required for the state grain reserve.
Exchange trading to replace directed procurement
The centrepiece of the reform is a requirement that, from 2022 through 2024, an average of 2.5 tonnes of grain per hectare of irrigated sown area — covering harvests produced by grain clusters and farms — be sold freely through exchange trading. Any remaining volume may be disposed of through direct contracts. The decree also allows economic entities to independently select wheat varieties recommended for sowing, based on local land and water conditions, starting in 2022.
Concessional loans are to be made available to grain farms, elite seed farms and grain clusters operating within the Seed Development Center framework, though the decree does not specify the terms or total lending envelope.
Rules for the state grain fund’s market role
Relevant government departments have been instructed to develop, by 1 January 2022, procedures governing how the state Grain Fund purchases grain at exchange auctions and subsequently resells it to maintain price stability. The decree sets out several conditions that those procedures must satisfy.
Commercial agents acting on behalf of the Fund must be selected through specific, transparent criteria, and the same conditions must apply equally to enterprises outside the JSC Uzdonmakhsulot system — the state grain-processing conglomerate — as to those within it. Each commercial agent is to bear full property liability for grain purchased on the Fund’s behalf. Purchases may only be made from clusters and farmers whose land-use rights have been registered in the National Geographic Information System of the Cadaster Agency under the State Tax Committee.
The Fund is also required to place purchased grain back onto the exchange in order to support price stability, rather than holding it off-market. Agents are to be reimbursed for costs covering purchase, storage, natural loss, growth, transportation and renewal of the state grain reserve.
Prohibition on official interference
One of the decree’s more pointed provisions explicitly prohibits government bodies — including local khokimiyats at all levels and law enforcement agencies — from interfering in agrotechnical decisions, the use of concessional loans, or any stage of the grain-selling process. The ban specifically covers directing farms to attach themselves to particular procurement or processing enterprises and restricting the internal movement of grain between regions.
The prohibition addresses a long-standing complaint among Uzbek farmers that local officials routinely dictated cropping decisions and forced sales to designated state buyers, undermining the autonomy that formal land-use rights were meant to provide.
The decree does not set out enforcement mechanisms for violations of the non-interference clause, nor does it specify penalties for officials who breach it.