NEWS AND EVENTS
March 30, 2016
UZBEKISTAN: FOOD MANUFACTURING
International experts draw a fairly bleak picture of the global food market’s future. The World Wild Fund for Nature warns that humanity may face an acute lack of food by 2050. Only countries that are building a complete industrial chain, namely, from garden beds to processing, are capable of avoiding the forecasts. Uzbekistan has been moving along this path for more than 20 years and has achieved certain progress.
Despite experts’ predictions, Uzbekistan is most likely to avoid serious problems with food provision. Over the past few years, the country has ranked among regional leaders in the production of fruit and vegetables, grains, meat, dairy and food products. There are still imports in certain positions, but import substitution has been in obvious progress.
Paradoxically, the global crisis has become a positive factor for the domestic food industry. The volatility in currency markets and difference in exchange rate have made Uzbek products more competitive both domestically and internationally. Now, it is much cheaper for local wholesale companies to buy domestic products instead of importing same products for foreign currency. Meanwhile, the domestic food industry has grown significantly in terms of quality over the past decade, outstripping many CIS countries.
UT has repeatedly reported about the well-built and efficiently operating system ‘State-tax preferences-farmer-processor-exporter’, which allowed creating a reliable shield for food security in Uzbekistan. However, time does not stand still. In order to maintain the leadership, the country needs to implement new initiatives, innovative projects, attract strategic investors. In this context, Uzbekistan has something to be proud of.
In the years since independence, Uzbekistan has carried out large-scale reforms in the food industry. In 1990, the republic imported more than 82% of the total consumption of grain, 50% of meat and meat products, about 60% of dairy products, 100% of sugar, powdered milk and baby food. Today, Uzbekistan fully provides the population with all major types of products by means of domestic production. Moreover, during the years of independence, meat consumption per capita has increased 1.3 times, milk and dairy products - 1.6 times, and processed fruit and vegetables – almost 4 times.
At the same time, Uzbekistan has always sought to rely on long-term development. The food industry is no exception: there are plans afoot to implement an unprecedented number of business initiatives in the next five years.
This February, the President of Uzbekistan signed a landmark document to define the development of Uzbekistan\'s food industry for the years ahead. It is envisaged to establish a new holding company, O’zbekoziqovqatholding, which would incorporate 176 food, oil and fat, meat and dairy enterprises. The establishment of a specialized Fund for Development, Reconstruction, and Modernization of Food Industry is another noteworthy fact. The financial issue is in the spotlight, as always: the document clearly defines how the fund will be financed. Firstly, the state will allocate 50% of the dividends received from the state shares of enterprises under the holding. In addition, the Fund was entitled to get 0.5% of net profit of enterprises and companies of O’zbekozikovkatholding.
The establishment of the new structure is largely aimed at the formation of the industry\'s export-oriented vector. As a result of reforms on agricultural diversification and provision of the population with food products, Uzbekistan annually exports foods, fruits and vegetables worth more than $5 billion. The volume of exports of agricultural products has tripled in the past three years. Our country delivers more than 180 kinds of fresh and processed fruit and vegetable products to 80 countries.
Uzbekistan ranks among the ten leading suppliers in exports of apricots, plums, grapes, nuts, cabbage and other fruits and vegetables. In 2015, Uzbekistan was awarded among 14 countries for the achievement of the Millennium Development Goals in food security by member states of the Food and Agriculture Organization.
There are more than 10,000 economic entities in the republic, which are engaged in the production of food products. The system is generally completed, so the main goal now is to help it grow through access to foreign markets. The O’zulgurjisavdoinvest Association is intending to implement one of the initiatives by means of a new exposition and business platform for leading foreign procurers.
The Uzbek side is currently working on the country\'s first exhibition and business forum with the working title ‘Fruits and Vegetables of Uzbekistan’, which will bring together the leading international traders, representatives of major transport companies, processing enterprises, the agricultural sector and manufacturers of profile equipment. The main purpose of the event is to create all the conditions for foreigners to buy fruits, vegetables and other ‘Made in Uzbekistan’ branded food products.
This practice has proved its value in other directions. For example, Uzbekistan has been holding the International Cotton Fair for over a decade, contracting the bulk of cotton produced in the country. The forum is scheduled for late May - early June 2016. It will be convenient for everyone. The guests will come to Tashkent and negotiate on the whole range of issues on product delivery in just a couple of days, meeting with farmers, transporters, tax authorities, customs officials and representatives of other state institutions on the same site. It promises to become a good promotion of Uzbek fruit and vegetables in the world.
The event will be partnered by the country\'s largest Uzbek-British exhibition company ITE Uzbekistan. It will be organized in the halls of the republican center of exhibition and fair trade of consumer goods O’zko’rgazmasavdo.
Uzvinprom-Holding is planning to increase external supplies of fresh products, particularly grapes, worth more than $100 million, by implementing new measures on increase of exports. Forty-two agricultural companies engaged in the production and marketing of fresh vegetables and grapes were established under the Holding in various regions of the country. Today, they are working closely with roughly 12,000 farms.
Agricultural firms are mainly focused on the rehabilitation, reconstruction and establishment of vineyards. The policy is promising for higher yields and, therefore, increased exports. 19.600 hectares of young vineyards have been laid this year. The farmers were supported in procuring the seedlings and supply of special equipment. The total area of plantations has expanded to 99,600 hectares.
It is planned to plant other fruits and vegetables between the rows of vineyards on the area of 32,000 hectares this year, which should increase the volume of fruit and vegetable production. To date, such works have been carried out on 22,000 hectares.
Storage infrastructure ranks among the most important elements in ensuring a unified and uninterrupted supply chain of fruit and vegetable products to foreign markets. There is a system-based mechanism of its further development, supply of up-to-date equipment for reception, processing, sorting, grading, packaging and labeling of products for further exports.
Traditionally, a weighty share of fruit and vegetable products are consumed canned, processed or dried, when products lose their consumer appeal, taste and useful properties from a medical point of view. In recent years, Uzbekistan has been implementing a program on modernization of existing and construction of new cold storage facilities. Storage facilities of a total capacity of 200,000 tons have been built in the country in the last few years alone.
The emphasis is placed on the construction of modern cold storages for fruits and vegetables with a total capacity of 325,000 tons. The current country’s capacity makes up 832,000 tons. The construction of facilities will be financed through loans of Uzbek banks and capital funds of the companies that are engaged in exports. It is planned to allocate a total of 125 billion soums (currency rates of CB RU from 29.03.2016, 1$= 2876.72 soums) for these purposes.
Works will be carried out in stages in specific regions of the country to ensure a complete coverage of the CIS countries and the European Union with exports. It is envisaged to commission cooling storage capacities of 60-65,000 tons each year. Such volumes are specifically tied to the projected demand and logistical capabilities of Uzbek transport companies.
A new logistics system for exports of fruits and vegetables will be created concurrently with the construction of refrigerators. 17 specialized centers of processing, storage and transportation of fruits and vegetables will be commissioned in key export-oriented regions within five years, or 3-4 objects annually. Their construction will be funded by 119 billion soums.
Big industrial projects will not stay aside. Coca-Cola Company is planning to invest over $35 million in the development of three its plants in Uzbekistan in the coming years, producing six kinds of drinks.
In particular, Coca-Cola intends to upgrade plants in Urgench and Namangan, and establish a new line at the head manufacture in Tashkent. It is expected that it will produce up to 48,000 bottles per hour, which is twice higher than the current capacity. The equipment will be provided by one of the segment’s leaders - the German Krones. There is no similar line of this kind in Central Asia.
The decision on the increase of production capacity was entailed by the growing demand in the domestic market and good export prospects. Products totaling over $2.5 million were exported to the neighboring countries last year alone. The company is working towards the increase in production volumes, and development of new kinds of products. For example, experts are currently estimating the feasibility of producing juices and soft fizzy drinks in aluminum cans.
Another presidential initiative aims to support the beef and sausage production: farms and other agricultural enterprises, which are engaged in livestock breeding, are released from all taxes and mandatory contributions to the state specialized funds by January 1, 2021. Meanwhile, the development of the sector in the next five years will not be limited only by provision of tax breaks for its entities. The head of state has also approved several initiatives with specific sources of funding, which are aimed at the intensification of livestock breeding in the country.
For example, since 2016, Uzbekistan will annually purchase 50 bred bulls from the best foreign farms and institutions within five years. The project cost makes up $1.8 million. At the same time, it is planned to triple the number of breeding farms. Today, there are 470 of them across the country, and are expected to increase to 1,530 by the end of 2021. It is expected that these measures will ensure the supply of more than 80,000 heads of bred heifers to farms over the next five years.
As estimated by the Ministry of Agriculture and Water Resources, the number of cattle in the country will increase by more than 3,1 million animals - from 11.6 million in 2015 to 4.8 million in 2021, and meat production - from 1.9 million tons to 2.5 million, respectively.
(Source: «Uzbekistan Today» newspaper)