A Micro-Economic Analysis of Farm Restructuring in the Khorezm Region, Uzbekistan

Ever since its independence several reforms in agriculture of Uzbekistan have been taken as part of a gradual transition process towards a market-based economy. These processes include: market liberalization, reformation of land relations, structural changes, and creation of supporting market infrastructure. Furthermore, there has been considerable promotion of input market liberalization, abolishment of state procurement system, introduction of water charges and improvement of the livestock sector. The understanding of the effects of these reforms on the agricultural producers and consumers is very important for further decision making. This work is part of ZEF’s project in development research on the ’Economic and ecological restructuring of land and water use in Khorezm, Uzbekistan’. In order to formalize the key aspects of sectoral decision making, the major task of this research is to develop a model for policy analysis which reflects the unique features of the agricultural sector of Khorezm. The developed model integrates linear supply and non-linear demand modules at the point of partial equilibrium under observed values from 2003. The supply module consist of the regional crop and animal production activities over three farm groups. The demand module is based on a Normalized Quadratic – Quadratic Expenditure System which specifies both an Engel curve and relative price effects consistent with microeconomic theory. The demand module consists of food and manufactured commodities including leisure time with endogenous prices over two consumer types. A large amount of aggregated and micro-economic data on the regional agriculture sector is used for providing the necessary information to understand the construction of the model and the results. To ensure that the base solution of the model fits the observed values of modeled activities and that the model simulations include the characteristics of regional demand and supply, the model parameters both for demand and supply modules are adjusted separately. This study contributes to the field of known calibration techniques for positive mathematical programming models. The developed method solves the overspecialization problem, maintains model flexibility, and allows the model exactly replicate the observed situation by recovering its original specification. The model results eventually show that, despite higher input prices and water pricing being introduced, positive effects of water use efficiency and market liberalization may dominate. Furthermore, it could be shown that the livestock sector serves as a security tool in rural households for maintaining their income level. Moreover, the improvement in livestock productivity shows the potential to decrease water consumption in the agricultural sector of the region. The market liberalization will not necessarily lead to an increase in the regional production of cotton. In general, the market liberalization has a positive effect on the regional rice sector which can be cultivated on land released from the procurement quotas in case the land is suitable for rice cultivation.Eine Mikroökonomische Analyse des Landwirtschaftlichen Strukturwandels in der Region Khorezm, Usbekistan Seit der Unabhängigkeit von der ehemaligen Sowjetunion fand in Usbekistan eine Vielzahl von wirtschaftspolitischen Reformen statt, die auf einen schrittweisen Umbau der Wirtschaftsordnung, einschließlich des Agrarsektors, in Richtung Marktwirtschaft abzielten. Diese Reformen betrafen Gütermarktordnungen, Eigentums- und Nutzungsrechte landwirtschaftlicher Flächen, sowie infrastrukturelle Maßnahmen. Darüber hinaus wurden insbesondere die Märkte für landwirtschaftliche Vorleistungen liberalisiert, die staatliche Intervention weitgehend abgeschafft, Gebühren für Wassernutzung eingeführt und Maßnahmen zur Förderung der Tierproduktion ergriffen. Ein tieferes Verständnis der Auswirkungen dieser Reformen auf die landwirtschaftlichen Betriebe wie auch auf den gesamten Agrarsektor ist von grundlegender Bedeutung für die Formulierung weiterführender politischer Strategien. Die hier vorgelegte Studie wurde im Rahmen des Projekts ’Economic and ecological restructuring of land and water use in Khorezm, Uzbekistan’ am Zentrum für Entwicklungsforschung der Universität Bonn durchgeführt. Im Zentrum der durchgeführten Analysen stand die Entwicklung eines quantitativen Modells, das die relevanten politischen Maßnahmen und die Besonderheiten des regionalen Agrarsektors in formalisierter Weise darstellt. Das hierzu entwickelte Modell verbindet ein lineares Angebotsmodul mit einem nicht-linearen Nachfragemodul mit Hilfe eines partiellen Gleichgewichtsmodells. Das Angebotsmodul beinhaltet landwirtschaftliche Produktionsverfahren dreier standardisierter Betriebstypen auf regionaler Ebene. Das Nachfragemodul basiert auf einem normalisiert quadratisch-quadratischem Ausgabensystem (NQ-QES), welches Einkommenseffekte wie auch relative Preiseffekte konsistent mit mikroökonomischer Theorie abbildet. Das Nachfragemodul berücksichtigt als endogene Variablen den Konsum von Nahrungsmitteln und weiterverarbeiteten Gütern, wie auch die Nachfrage nach Freizeit und damit das Angebot und den Preis für landwirtschaftliche Arbeitskraft. Es werden zwei Haushaltstypen unterschieden. Der enorme Datenbedarf des Modells wird durch offizielle Statistiken für den Agrarsektor und eigene Erhebungen gedeckt. Die strukturellen Parameter des Nachfrage- und Angebotsmoduls wurden in einem zweistufigen Verfahren so kalibriert, dass die Beobachtungen des Basisjahrs 2003 vom Modell repliziert werden. Diese Studie leistet mit der hierzu angewendeten Methode einen Beitrag im Bereich der positiv-mathematischen Programmierung und der Anwendung von Kalibrierungstechniken für partielle Gleichgewichtsmodelle. Die Modellrechnungen zeigen, dass die Einführung von Gebühren für Wassernutzung, wie auch die Verringerung der staatlichen Beihilfen für landwirtschaftliche Vorleistungen, durch Steigerung der Wassereffizienz und weitere Marktliberalisierung kompensiert werden können. Darüber hinaus wurde deutlich, dass Tierhaltung einen großen Beitrag zur Stabilisierung der ländlichen Einkommen leistet. Eine Verbesserung der Produktivität in diesem Bereich würde daher zu einer Verminderung der Abhängigkeit von pflanzlicher Produktion führen und potentiell den regionalen Bedarf nach Wasser verringern. Die regionale Produktion von Baumwolle würde durch eine Liberalisierung der Marktordnung eher sinken, so dass die frei werdenden Flächen zum Teil zum Anbau von Reis genutzt werden könnten.</p

Farmers’ social media groups for better extension and advisory services

The spread of information and communications technology (ICT) in Central Asia has reached a point where most farmers use smartphones with mobile internet access providing an opportunity for a low-cost and timely access to agricultural information and advisory services. When extension service is poor and does not cater to the farmers’ needs, farmers seek other sources of information, such as exchanging knowledge with their peers and engaging in social media groups using instant messaging applications (apps) such as Telegram and WhatsApp. Analysis of a farm-level survey conducted in 2022 in Kazakhstan and Uzbekistan, suggests that farmers’ participation in online groups for information exchange is influenced by the enabling environment rather than by the type of cultivated crops or farm size. The findings are relevant for developing private sector strategies and public policies to spread digital technologies among Central Asia’s farmers with a holistic plan for a digital transformation. When introducing smartphone- or web-based digital technologies, policymakers are recommended to start scaling up with younger and more technologically-savvy farmers who on the one hand rely on their own knowledge but on the other hand are more open to embracing new ways of farming and interaction. Decision-making autonomy is an important factor to facilitate digital transformation in agriculture in the Central Asian context

Фермерские группы в социальных сетях для повышения качества услуг по распространению знаний и консультаций

Распространение информационно-коммуникационных технологий (ИКТ) в Центральной Азии достигло уровня, при котором большинство фермеров получают необходимую им своевременную и доступную информацию и консультационные услуги непосредственно из Интернета, используя смартфоны. В настоящее время фермеры активно ищут альтернативные источники информации в условиях, когда качество официальных служб распространения сельскохозяйственных знаний не отвечает спросу. Например, фермеры используют соцсети, такие как Telegram и WhatsApp, для обмена сообщениями и знаниями в тематических группах. Исследование фермерских хозяйств, проведенное в Казахстана и Узбекистана в 2022 году, выявило, что участие фермеров в онлайн-группах по обмену информацией в основном обуславливается возможностью быстрого доступа к необходимой информации. В то же время вид возделываемых культур или площадь земель фермерского хозяйства имеют меньшее значение. Результаты исследования актуальны для разработки стратегий частного сектора и государственной политики по распространению цифровых технологий среди фермеров Центральной Азии с комплексным планом цифровой трансформации. При широком внедрении цифровых технологий на основе смартфонов и интернета рекомендуется делать ставку на молодых и технологически подкованных фермеров, которые, с одной стороны, полагаются на собственные знания, а с другой – более отзывчивы к внедрению новых подходов ведения сельского хозяйства и взаимодействия c другими фермерами. Самостоятельность фермеров в принятии решений является одним из важных факторов в цифровой трансформации сельского хозяйства региона. "English title: Farmers' social media groups for better extension and advisory services

Determinants and impact of farmers’ participation in social media groups: Evidence from irrigated areas of Kazakhstan and Uzbekistan

The spread of information and communications technology (ICT) in Central Asia has reached a point where most farmers use smartphones with mobile internet access, providing an opportunity for a cost-effective and timely access to agricultural information and extension services. When extension service provision is poor and does not reflect farmers’ immediate needs, farmers often seek other sources of informaton, such as exchanging knowledge with their peers via social media groups in instant messaging applicatons (apps). Using the findings of a farm-level survey conducted in 2022 in irrigated areas of Kazakhstan and Uzbekistan, we study behavior and attitudes of farmers in terms of participation in smartphone-based social media groups and its impact of farm performance. We find that in the two country contexts, underlying reasons for participation in social groups differ. In Kazakhstan, participation decisions are made by those who have better access to a mobile internet connection, are younger, have agriculture-related education, have a wider communication circle on phone with more than four individuals, cultivate fewer crops, have lands with low soil quality and poor irrigation water access, as well as located in remote areas. In Uzbekistan participation decisions are made by those who see the relevance of mobile internet for their farm business, have their own agronomic knowledge, are open to new things, care less about the opinion of other farmers, have higher perception about freedom in crop choice, have of-farm work, as well as poor irrigation water access. These fndings suggest farmers' participation in agricultural information-sharing groups (AISG) is influenced less by the type of cultivated crops or farm size, but by their institutional environment. The findings are relevant for developing private strategies and public policies to spread digital technologies among Central Asia’s farmers. When introducing smartphone-based digital advisory services policymakers are recommended to start scaling up with younger and more educated farmers who rely on their own knowledge and are more open to embracing new ways of farming and interaction. Farmers’ decision-making autonomy will be crucial for converting digital transformation in agriculture into farm benefits

A Micro-Economic Analysis of Farm Restructuring in Khorezm Region, Uzbekistan

The paper analyses the response of the agricultural producers tointroduction of new agricultural policies in Khorezm, a region of Uzbekistan. Eversince its independence several reforms in agriculture of Uzbekistan have been takenas part of a gradual transition process towards a market-based economy. Theseprocesses include market liberalization, reformation of land relations, structuralchanges, and creation of supporting market infrastructure. Furthermore, there hasbeen considerable promotion of input market liberalization, abolishment of stateprocurement system, introduction of water charges and improvement of thelivestock sector. The understanding of the effects of these reforms on theagricultural producers and consumers in Khorezm is very important for furtherdecision making. In order to formalize the key aspects of sectoral decision making,the major task of this research is to develop a model for policy analysis whichreflects the unique features of the agricultural sector of the study region. The modelresults show that the market liberalization may not lead to an increase in theregional production of cotton and may negatively affect the agriculturalemployment. Furthermore, the livestock sector may serves as a security tool in ruralhouseholds for maintaining their income level when the markets are liberalized

CDM afforestation for managing water, energy and rural income nexus in irrigated drylands

Rural livelihood in arid irrigated areas is hampered by water scarcity, land degradation and climate change. Studies showed a possibility to tackle these challenges by establishing tree plantations on marginal croplands as supported by the Clean Development Mechanism (CDM) forestation programs. Despite the environmental impact such projects would also affect the decision making of rural population by changing their land use activities, incomes and consumption structures. Thus, this study further analyzed the impact of CDM forestation on rural livelihood by considering rural interdependencies via wage-labor relations of agribusiness-operated farms and rural households in the Khorezm province and southern districts of Autonomous Republic of Karakalpakstan, Uzbekistan. We developed a farm-household dynamic programming model that jointly maximizes farm profits and rural households net incomes over a 15-years horizon under the scenario of decreasing irrigation water availability and plantation forestry with a seven year rotation period. The analysis showed that shortly following a land use change towards afforestation, the farm demand for rural households’ labor would decline thus decreasing the household incomes. Yet, later on after harvesting tree plantations, in year seven, the farm benefits would be transmitted to rural households via access to cheaper fuelwood and leaves as fodder, as well as via improved land use activities. The availability of fuelwood from tree plantations would significantly decrease CO2 emissions of households by substituting fossil fuels, while leaves would reduce expenditures for livestock fodder. These substitution effects would lead to the increase of income and in turn improve households’ food consumption. Besides, given the low irrigation demand of trees, a conversion of marginal cropland to tree plantations would increase the irrigation water availability for other productive croplands. These changes would lead that tree plantations would increase in year seven profits of farmer (up to 39,200 USD) and net incomes of rural households (up to 12,700 USD). Whereas when only conventional land uses are followed the decline in water availability would reduce profits of farm (from 13,000 USD to 9,850 USD) and net incomes of rural households (from 11,900 to 10,500 USD) over the modeled period. Overall, we argue that the implementation of the short-term CDM forestation could help cushion repercussions of water shortages on rural livelihoods, sustaining energy, income and food security, as well as mitigating climate change in drylands

Investment traps and resilience to shocks: An experimental study of Central Asian collective water governance

We theoretically and empirically investigate the investments of water users in a stylized local irrigation system. We model irrigation self‐management as an interdependent interaction of users in an evolutionary game and study the resilience of the irrigation system. The theoretical model implies multiple stable equilibria at different efficiency levels. Users may be trapped in a low level of collective investment or succeed by being locked in a high collective investment level, implying an irrigation system resilient against external shocks. The study seeks to empirically identify such lock‐ins in experimental interactions among Central Asian farmers. Furthermore, we inquire into whether a pre‐play cheap talk opportunity with peer‐monitoring or sanctioning treatments influence the self‐reinforcing dynamic. Our findings revealed several stable states. Among these states, there are both low and high levels of efficiency, which we measure in the size of public good. Communication among users results in higher collective investment levels. However, this does not guarantee the complete elimination of inferior conventions from best‐response play. Penalties crowded out the intrinsic motivation to cooperate as they reduced collective investment in both low‐ and high‐level equilibria. Our findings imply that institutional settings tailored to each community can improve resilience to climate‐driven perturbations in water resources.VolkswagenStiftung (Volkswagen Foundation) http://dx.doi.org/10.13039/501100001663Federal Ministry for Economic Cooperation (BMZ) http://dx.doi.org/10.13039/50110000166