Uzbekistan is returning to the utopia of manual control over export prices for vegetables and fruits. According to experts from EastFruit, on February 29, 2024, the Cabinet of Ministers of Uzbekistan issued a resolution that is causing serious concern for the country's fruit and vegetable business. Now, the government of the country will set recommended export prices for vegetables and fruits, and if the actual selling price is 20% or more below that, it seems that exporting the products will not be possible.
At the moment, it is unknown which vegetables and fruits fall under regulation because the list must be approved by May 1, 2024. However, according to market participants, all major export positions of the country are likely to be included in the list of prices subject to government regulation.
Interestingly, the recommended prices are proposed to be updated weekly, and the mechanism for their determination is described in the broadest terms. In particular, it is mentioned that even Uzbekistan's diplomatic missions abroad will be involved in setting prices in external markets.
Experts from EastFruit point out the impracticality of implementing such price control for vegetables and fruits for several reasons:
- Prices for vegetables and fruits, especially for early produce, which Uzbekistan specializes in exporting, often change several times within a week.
- Prices for the same type of vegetables or fruits vary greatly depending on the variety, size, packaging, and many other parameters, and can differ by 3-5 times or more. Therefore, setting a single recommended price for hypothetical "tomatoes" or "apples" simply seems impossible.
- Uzbekistan lacks the necessary specialists to conduct quality price monitoring of international markets, and training them will take at least 6 months and will not come cheap.
- The costs of creating and administering a system for such price monitoring, which will absolutely yield nothing, will exceed the potential income from "shadow exports". Moreover, the losses from worsening conditions for the export of vegetables and fruits could be significant.
Against the backdrop of serious problems faced by Uzbekistan in the export of vegetables and fruits, complicating the lives of exporters and, to be frank, creating new opportunities for corruption in exports, does not seem very logical. As we have already written, Uzbekistan has practically yielded its place in the external markets of greenhouse vegetables to Turkmenistan. In addition, another major source of export revenue – table grapes – suffered greatly from frost last year. Also, the grape varieties grown in the country do not have very promising prospects in external markets.
Moreover, the main market for Uzbek vegetables and fruits remains a country suffering from macroeconomic instability, where the real incomes of the population are declining. Accordingly, a more logical solution, in our opinion, would be to simplify export opportunities and diversify the export supplies of fruit and vegetable products from Uzbekistan.
For more information: east-fruit.com