Required Report - public distribution

**Date:** 5/13/2004

**GAIN Report Number:** TX4001

TX4001

**Turkmenistan**

**Cotton and Products**

**Annual Report**

**2004**

**Approved by:**

![](media/image1.wmf)Jim Higgiston, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Robert Hanson, Agricultural Attache

**Report Highlights:**

After two very poor years, the Government of Turkmenistan has again
announced an unrealistically high target of seed cotton production at
2.2 million tons on 650,000 hectares. Post estimates that cotton will be
planted on approximately 500,000 hectares with production estimated at
200,000 tons.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Ankara \[TU1\]

\[TX\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Consumption 3](#consumption)

[Trade 3](#trade)

[Stocks 3](#stocks)

[Policy 3](#policy)

[Marketing 4](#marketing)

# Executive Summary

For the third consecutive year, the Government of Turkmenistan announced
a target for seed cotton production at or above 2 million tons. Post
estimates production to increase over the depressed levels of the past
two years, but only to about 200,000 tons of lint cotton. Area is
estimated at 500,000 MT. New investments are planned in the spinning and
textile sectors, which will increase domestic consumption significantly
in the next several years. Due to a lack of official statistics,
information on trade and stock levels is difficult to come by. Post
estimates Turkmenistan exports of cotton to increase in line with the
recovery in production.

# Production

President Niyazov recently announced the Government of Turkmenistan\'s
high targets for 2004 cotton production. The state order for cotton
production is 2.2 million tons (seed cotton), on an area of 650,000
hectares. This would translate to about 685,000 tons of lint production,
which is very unrealistic. While the President announces extremely high
annual targets for wheat and cotton production, a number of factors
contribute to significantly lower results. While wheat and cotton
compete for scarce resources, yields remain low and inputs are scarce. A
poor irrigation system is accelerating the degradation of the soil.

Considering all of these factors, post forecasts Turkmenistan's 2004
cotton area at 500,000 hectares and production at 200,000 MT. Of course,
much will depend on the area harvested, and there are already reports
that some of the crop was replanted due to heavy rains.

## 

# Consumption

Domestic consumption is estimated at approximately 90,000 tons which is
a slight increase over previous years. The Government of Turkmenistan
hopes to expand its textile industry to add greater value to cotton, and
create employment opportunities. Planned investments in the spinning and
textile sector have the potential to increase domestic consumption
significantly in coming years. Over the past year, the Government of
Turkmenistan has commissioned several spinning factories in various
provinces. If these investments are realized, domestic consumption will
easily surpass 100,000 tons.

There are three export-oriented textile factories: Ashgabat Textile
Complex, producing linen, underwear and sportswear; Kipchak textile
Complex, producing knitted fabric and clothes; and, Turkmenbashi Jeans
Complex. In 2003, Turkmenistan exported approximately 60% of its overall
textile production.

## 

# Trade

Turkmenistan cotton exports are difficult to estimate. In general,
cotton-trading companies sign contracts with the government for the
ability to purchase cotton for exports. Historically, manufacturers in
South Asia have been the major buyers of Turkmen cotton. Post estimates
MY 2004 exports to increase to 100,000 tons based on the forecast
increase in domestic production.

# 

# Stocks

Turkmenistan does not publish any trade, production or stock data, which
is considered quite sensitive. Stock estimates have been lowered in
recent years, first due to lower production in those years, and second
due to the high cost of holding stocks. Post estimates MY 2004 ending
stocks as a residual of 30,000 MT, which is in line with trade
expectations.

# Policy

The GOTX controls all aspects of the cotton industry. The President sets
an extremely high production target every year, which has never been
met.

# Marketing

A portion of the harvest traditionally is placed in the state reserves,
a portion is sold to domestic industry, and the remainder is contracted
to traders for export. The GOTX uses proceeds to pay farmers.

+-----------------+------+------+------+------+------+------+--------+
| *               |      |      |      |      |      |      |        |
| *Turkmenistan** |      |      |      |      |      |      |        |
|                 |      |      |      |      |      |      |        |
| **Cotton**      |      |      |      |      |      |      |        |
+-----------------+------+------+------+------+------+------+--------+
|                 | USDA | Post | USDA | Post | USDA | Post |        |
|                 | Offi | Esti | Offi | Esti | Offi | Esti |        |
|                 | cial | mate | cial | mate | cial | mate |        |
|                 | \[O  | \[N  | \[O  | \[N  | \[O  | \[N  |        |
|                 | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |        |
+-----------------+------+------+------+------+------+------+--------+
| ###### Ma       |      | 08/  |      | 08/  |      | 08/  | M      |
| rket Year Begin |      | 2002 |      | 2003 |      | 2004 | M/YYYY |
+-----------------+------+------+------+------+------+------+--------+
| Area Planted    | 0    | 53   | 0    | 50   | 0    | 50   | (HEC   |
|                 |      | 0000 |      | 0000 |      | 0000 | TARES) |
+-----------------+------+------+------+------+------+------+--------+
| Area Harvested  | 49   | 49   | 48   | 48   | 0    | 50   | (HEC   |
|                 | 0000 | 0000 | 0000 | 0000 |      | 0000 | TARES) |
+-----------------+------+------+------+------+------+------+--------+
| Beginning       | 10   | 7    | 8    | 5    | 8    | 2    | (MT)   |
| Stocks          | 2114 | 0000 | 3607 | 0000 | 6873 | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+
| Production      | 15   | 15   | 20   | 13   | 0    | 20   | (MT)   |
|                 | 0231 | 0000 | 4663 | 5000 |      | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+
| Imports         | 0    | 0    | 0    | 0    | 0    | 0    | (MT)   |
+-----------------+------+------+------+------+------+------+--------+
| TOTAL SUPPLY    | 25   | 22   | 28   | 18   | 8    | 22   | (MT)   |
|                 | 2345 | 0000 | 8270 | 5000 | 6873 | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+
| Exports         | 8    | 9    | 11   | 8    | 0    | 10   | (MT)   |
|                 | 7091 | 0000 | 4306 | 0000 |      | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+
| USE Dom.        | 8    | 8    | 8    | 8    | 0    | 9    | (MT)   |
| Consumption     | 1647 | 0000 | 7091 | 5000 |      | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+
| Loss Dom.       | 0    | 0    | 0    | 0    | 0    | 0    | (MT)   |
| Consumption     |      |      |      |      |      |      |        |
+-----------------+------+------+------+------+------+------+--------+
| TOTAL Dom.      | 8    | 8    | 8    | 8    | 0    | 9    | (MT)   |
| Consumption     | 1647 | 0000 | 7091 | 5000 |      | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+
| Ending Stocks   | 8    | 5    | 8    | 2    | 0    | 3    | (MT)   |
|                 | 3607 | 0000 | 6873 | 0000 |      | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+
| TOTAL           | 25   | 22   | 28   | 18   | 0    | 22   | (MT)   |
| DISTRIBUTION    | 2345 | 0000 | 8270 | 5000 |      | 0000 |        |
+-----------------+------+------+------+------+------+------+--------+