Mapping and Analyzing Service Provision for Supporting Agricultural Production in Khorezm, Uzbekistan

Abstract

Following independence in 1991, the need for a more efficient and stable agricultural production in Uzbekistan led to the institutional transformation of the main agricultural producers, the collectively owned shirkats, to privately owned farms. This transformation, which was completed between 2004 and 2006, inter alia required corresponding changes in the agricultural service-providing organizations (ASP). The efficiency and functioning of such organizations in the Khorezm region of Uzbekistan is the main research topic of this study. Data were collected through interviews with farmers and representatives of three types of ASP: machinery and tractor parks (MTP – мaшинo-тpaктopный пapк (Russian) – since Soviet times, the fleet of tractors and machines is called machine-tractor park), distribution outlets for selling fuel and mineral fertilizers, and mini-banks. Farmers were asked to give their qualitative assessment of the service provision and functioning of these service organizations. The ASP representatives provided both a qualitative and a quantitative assessment of their interaction with farmers. The financial performance of the ASP was analyzed to assess their ability to render full and timely services to farmers. Research results indicate serious flaws in the examined current service provision to farmers. Most problems can be grouped around (i) poor enforcement of property rights, because in particular local authorities frequently interfered with the internal decision-making process of both ASPs and farmers, thus affecting their activities; (ii) poor corporate management because the elected heads of the ASPs needed approval of their nomination from local authorities, which led to their direct accountability to local authorities irrespective of the business interests of the ASPs; (iii) weak contractual relations owing to violations of the contractual terms by both ASPs (caused by for instance the lack of machinery or other inputs of ASPs) and farmer/clients (caused by the lack of working capital). This, in turn, caused delays in service provision to farmers and untimely payments for the services rendered. The services were frequently not completed. Moreover, the results of the analyses show that commercial banks and their mini-bank branches in the villages constantly faced cash and liquidity problems, whilst farmers did not have direct access to their bank accounts. It is therefore argued that local authorities should attempt to interfere less with the activities of the ASPs and private farms.