Uzbekistan to Auction off 24 State-Owned Wheat Mills


Apr 28, 2023 | Agricultural Markets News

Reading time: 2 minutes

Uzbekistan has a land area of 44.8 million hectares, of which 4.5 million hectares is arable. Its primary cultivated crops include cotton, Wheat, barley, rice, corn, potatoes, and fruits and vegetables. The main areas for Grain production are in the southern regions of the country. Uzbekistan produces a significant amount of Grain for use domestically. Total cereal output in 2022 is forecast at 7.2 million tons, a 3% increase from the five-year average, the FAO said, due to conducive weather conditions during the season. Wheat output is expected to be slightly above average, while corn and rice production will be near-average.

With Wheat consumption estimated at 8.5 million tons in 2022-23, it is one of the most significant consumers of the Grain in Central Asia. Domestic Wheat production will cover about 78% of that expected consumption. Uzbekistan imports high-quality Wheat from Kazakhstan but, in recent years, has relied less on flour imports from that nation. Uzbek millers also have taken market share from Kazakhstan millers exporting to Afghanistan.

The USDA said Uzbekistan produced 6 million tons of Wheat in 2021-22 and estimates production will increase to 6.6 million tons in 2022-23. The harvested area is estimated at 1.4 million hectares, a 3% increase from last year. Naan is a staple food of nearly all Uzbeks, but the low gluten and high starch content typical of domestically grown Wheat makes it less desirable for baking naan. As a result, tandoor bakers have been vital demand drivers for Kazakhstan flour and Wheat.

Wheat imports in Uzbekistan averaged 3.2 million tons over the last five years, while exports, mostly Wheat flour to Afghanistan, increased to 1 million tons in 2021, according to the US Department of Agriculture (USDA). The FAO said that Uzbekistan will import a near-average level of 3.3 million tons of Wheat. It noted that Wheat flour imports had dropped 70% from 2011-12 to 2021-22, while purchases of high-quality Wheat Grain have increased sharply due to an improved local milling capacity.
In 2021, Uzbekistan imported Wheat worth $535 million, becoming the world’s 31st largest importer of Wheat. During the period, Wheat was the 5th most imported product in Uzbekistan. Uzbekistan imports Wheat primarily from: Kazakhstan ($532 million) and Russia ($2.9 million). The same year, Uzbekistan exported Wheat worth $6.45 million, making it the world’s 52nd most significant exporter of Wheat. Wheat was the 146th most shipped product in Uzbekistan. The main destination of Wheat exports from Uzbekistan is Tajikistan ($5.79 million), Kyrgyzstan ($392k), and Afghanistan ($266k).

Wheat Milling in Uzbekistan

The state-owned milling holding company Uzdonmahsulot includes 43 mills that purchase around 4 million tons of the domestic harvest at subsidized prices. The Government ended state-subsidized Grain purchases and moved to market pricing on June 1, 2022. The Government’s privatization plan includes auctioning off 24 of Uzdonmahsulot’s mills in the first stage, but there have been delays.

Government officials were told to organize the registration of farmers and Grain-growing clusters on the exchange, assign them brokers, and train them in exchange trading. “There will be no restrictions on the movement of Grain sold through the exchange,” said President Shavkat Mirziyoyev.

He said in media reports that the cost of producing flour at the state-run mills was 20% to 25% higher than the private facilities, and profitability was half. Uzdonmahsulot has $164 million in debt, and over half has no hope of repaying. In the last three years, about 160 private Grain processors have started operations in the country. Private millers accounted for 54% of the 3.5 million tons of flour produced last year.

Other sources: WORLD GRAIN

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