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Central Asia

Mar 5, 2005

The curse of cotton
By Emad Mekay

WASHINGTON - Medieval practices in Central Asia's cotton industry, which feeds demand from some of the world's largest agribusiness firms, are aggravating economic stagnation, environmental damage and political repression, says a leading research group.

"Without structural reform in the industry, it will be extremely difficult to improve economic development, tackle poverty and social deprivation, and promote political liberalization in the region," says the International Crisis Group (ICG), a conflict-prevention organization, in a new report.

The group warns powerful international financial institutions like the International Monetary Fund, the World Bank and the Asian Development Bank that if they do not do more to overhaul the industry, social instability will get much worse - especially in countries like Uzbekistan, Tajikistan and Turkmenistan. The report, "The curse of cotton: Central Asia's destructive monoculture", also refers to the negative role played by major Western corporations.

Cotton is traded internationally by European and US corporations. Production is financed by Western banks, and the final goods end up in well-known clothes outlets in Western countries. The companies with large investments in the region include Cargill Cotton UK, which buys US$50-60 million of cotton from Uzbekistan alone every year.

"The economics of Central Asian cotton are simple and exploitative. Millions of the rural poor work for little or no reward growing and harvesting the crop," says the report. "The considerable profits go either to the state or small elites with powerful political ties. Forced and child labor and other abuses are common." This system is only sustainable under conditions of political repression, which can be used to mobilize workers at less than market cost, it adds.

The ICG notes that Uzbekistan and Turkmenistan are among the world's most repressive states, with no free elections. Opposition activists and human-rights defenders are subject to frequent persecution. According to the group, the industry relies on a pool of cheap labor, which includes schoolchildren. In Uzbekistan, for example, students are still frequently required to spend up to two months in cotton fields. Child labor is also rampant in Tajikistan and Turkmenistan. Students in all three countries are forced to miss their classes to pick cotton, the report says. "Little attention is paid to the conditions in which children and students work. Every year some fall ill or die."

ICG has urged the international community to take measures to punish officials in Uzbekistan, Tajikistan and Turkmenistan, which continue to use or turn a blind eye to child labor. The group has also called on those nations to increase cotton procurement prices to approach international rates as a way to alleviate rural poverty and provide market incentives to growers. It also recommends that the European Union and United States phase out or substantially reduce subsidies to their own domestic cotton industries.

The report also urges the international financial institutions - as contributors to (and sometimes architects of) economic policies that affect the lives of millions - to be better informed of the situation "on the ground" in the communities directly affected by their business strategies. But the World Bank says it is doing just that. "The World Bank certainly agrees that the cotton sector in Uzbekistan, Tajikistan and Turkmenistan is in need of reform," said Merrell Tuck, a spokesman, pointing to Bank reports that found cotton yields in Uzbekistan have fallen by about 20% since the early 1990s and cotton exports by about 30%.

As to the abuses, the bank argues that ending them requires local political will. "It's selfish criminal elements that have gravitated to this sector since the Soviet time," said Joseph Goldberg, the bank's sector manager for rural restructuring for Europe and Central Asia. The bank says it is helping reform the industry through promoting privatization of farmland. In Tajikistan, which the bank says is the worst case at the moment, the bank launched a project where it pushed the privatization of 10 large collective farms out of 200 engaged in cotton production. "Our project has managed to do this as a model for what should be done for the whole country," Goldberg said. "But it would still require some political struggle. We cannot do it by ourselves."

The ICG report also urges international cotton traders to implement a policy of social due diligence with regard to local middlemen and cotton producers. According to the report's recommendations, those companies will also have to consider ending business dealings with growers shown to be engaged in abusive or exploitative practices. "The cotton industry remains in many ways old-fashioned and introverted," says the report. "It needs to act to head off public dissatisfaction earlier rather than later ... The sweatshops issue has caused endless headaches for Western consumer outlets, and it seems likely that issues surrounding the cotton industry will increasingly appear on the agenda of consumer groups."

World Bank experts downplayed the impact of foreign companies on the industry. "Cotton is going to be sold in some way in Europe to somebody who doesn't care where it comes from," Goldberg said. "If they didn't buy, somebody else would. I don't think that's the source of the problem." The bank official, however, said some sort of business certification from buyers might be a good idea. "Maybe I am underestimating the impact that buyers could have, if you are going for some kind of humanitarian cotton versus exploitative cotton," he said. "So maybe it is possible."

(Inter Press Service)

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