Agricultural Land Use in Northwest Uzbekistan: A Linear Programming Model for Mapping Agricultural Incentives

This study uses a linear programming model ofa representative state farm in the region Karakalpakstan in the republic ofUzbekistan to evaluate how producer incentives and cropping patterns may change given both changes in state pricing policy and changes in the availability and cost of irrigation water. Cotton has long been the dominant crop in this area, and Uzbekistan is currently the world's second largest exporter. Cotton production has expanded tremendously over the past 30 years almost entirely through the extension ofvery large state sponsored irrigation projects. However, despite large investments and production increases, productivity and efficiency remain low. Agriculture in the region is characterized by state control at all levels of agricultural production, while extensive cotton monocropping has created a myriad of environmental problems that have attracted international attention. Should policy reforms be implemented in the form ofthe removal ofstate controls together with changes in water management, it is likely that relative incentives for the production ofmajor crops would change significantly. There are two primary objectives ofthis paper. First is an evaluation ofhow production incentives for different crops change as state intervention in the agricultural sector is reduced and/or eliminated. Second, the study evaluates how producer incentives change based on different assumptions about the availability and cost of irrigation water which at present is provided free ofcharge. Results indicate that if state interventions were to be reduced, there would not necessarily be a significant change in cropping patterns from those currently practiced. However, a supply function for cotton output is generated and shows an elasticity consistently greater than one indicating that, at least according to model parameters, area planted to cotton - is highly responsive to changes in output price. Results also demonstrate that the elimination of state intervention may not result in an increase in farm income which indicates that taxes extracted from the sector in the form oflow prices for farm output are, at least to a first order of approximation, offset by subsidies for other farm inputs which occur mostly in the form of no fee for irrigation water. Model results also demonstrate that changes in water availability have a significant impact on the optimal cropping pattern. With large quantities ofwater available rice production is favored. However, with reduced quantities ofwater, the optimal cropping pattern quickly shifts away from rice toward other less water consumptive crops. Model results also indicate that the marginal value product ofwater is significantly positive, indicating that implementing fees would not necessarily cause producers to alter existing cropping patterns. A version ofRybczinski's theorem is shown to hold for the relation between water availability and there area planted to water intensive crops.