Subsidies for independent cotton growers announced in Uzbekistan

Uzbekistan has introduced a fixed subsidy scheme for individuals and farms growing raw cotton at their own expense. The initiative was outlined in a Presidential decree titled "On measures to consistently continue the use of market mechanisms in the production and sale of cotton raw materials," issued on January 17.

Key provisions starting with the 2025 cotton harvest:

1. Contract Types and Timelines:
   - Futures Contracts: Farms and processors can enter into futures contracts between November 1 of the calendar year and June 1 of the following year. Prices are determined on the exchange but cannot fall below the initial published price.
   - Forward Contracts: Forward contracts can be negotiated from November 1 of the calendar year to March 1 of the following year at mutually agreed prices.
   - Spot Contracts: Spot contracts are concluded in real-time for raw cotton stored in warehouses at mutually agreed prices.
   - Farms without storage facilities must finalize forward or futures contracts by March 1 of each harvest year.

2. Subsidy Details:
   - Farms growing raw cotton using their own funds or commercial loans will receive a subsidy equivalent to 10% of the invoice value when selling the cotton on the Exchange.
   - Farms that repay preferential loans for cotton production by the end of the crop year (December 31) will qualify for an additional subsidy covering 4 percentage points of their loan interest payments.

3. Pricing and Trading Mechanisms:
   - The Uzbekistan Republic Commodity Exchange will establish a starting price for raw cotton for the upcoming harvest on November 1 each year (February 1 for the 2025 harvest). This price will be based on the average New York Stock Exchange cotton fiber futures quotations over the previous six months.
   - Trading of raw cotton between producers, clusters, and textile enterprises will occur via the Exchange's dedicated raw cotton section. Contracts include futures, forward, and spot agreements tailored to each region.
   - All contracts will be registered through the Exchange and linked to the "Agroplatforma" information system.