In November 2020, the EastFruit team published a high-profile article about the problems greenhouses in Uzbekistan face when connecting to gas supply. Too complicated, bureaucratic and non-transparent connection procedures or the inability to obtain gas caused numerous complaints from farmers. For those of them who managed to connect to the gas network, the gas supplier did not guarantee its uninterrupted supply. Moreover, the gas was very often turned off, which in some cases led to the loss of the entire harvest. Natural gas is the main export commodity of Uzbekistan, although in our material we showed in figures that the exports of greenhouse vegetables grown using natural gas is much more profitable for the country.

The most common alternative to gas is coal. However, the generation of heat using coal significantly increases the cost of production in comparison with the usage of gas. In addition, burning coal leads to much more severe environmental pollution, harms the health of people and reduces the transparency of the film or glass of greenhouses. But besides heat, plants need light. Moreover, the lack of sunlight in winter is one of the main problems for greenhouse complexes in Uzbekistan. Therefore, coal is far from the best alternative.

Therefore, investors who have invested millions of dollars in their enterprises are forced to look for some way out. For example, the greenhouses of the Tutzor mahalla in the Tashkent region of Uzbekistan have found a very “innovative” way to reduce the production cost in the context of complicated connection to gas and interruptions in its supply to greenhouse complexes. They decided to use household waste, a mixture of sawdust, coal and dung (dung is dried or processed manure used as fuel for burning in a kiln, EastFruit note) as fuel for heat greenhouses.

Read also: How will the collapse of the Turkish Lira affect the vegetable, fruit and nut markets in Eastern Europe and Central Asia?

Obviously, the consequence of this “innovation” is the fetid smell of burning, which constantly spreads across the entire residential area in autumn-winter in recent years. In other words, this method of reducing the cost of greenhouse vegetables and greens production in the cold season has created a local environmental problem for people living both in the Tutzor makhalla and in nearby settlements. As you know, air pollution is one of the main causes of deteriorating health and reducing the life expectancy of the global population.

A group of residents of the Yunusabad district of the city of Tashkent and the Tutzor mahalla of the Tashkent region contacted the editorial office of the Academy of Sciences Podrobno.uz because of the air poisoning by greenhouse complexes. The media outlet published this appeal, below we give it in an abbreviated form:

“We, the undersigned, residents of the Yunusabad district of Tashkent and residents of the Tutzor mahalla of the Tashkent region, inform that every day over the past several years in the autumn-winter period on the territory of the Yunusabad district (Tashkent city) and the Tutzor mahalla (Tashkent region), there is a fetid smell of burning from the evening until the morning hours of the next day. We cannot open the windows of apartments and houses, whole neighborhoods are smothered in acrid fetid smoke… Because of this, the life of residents of Yunusabad region and the Tutzor mahalla turned into a real nightmare.

… Residents revealed that the source of air pollution are the greenhouse complexes located behind the Tashkent ring road… One of these greenhouses was visited by residents, where they discovered that all waste is used to heat greenhouses – plastic, lamps, and so on, as well as a mixture of sawdust, coal, dung and other unidentified elements.

… This is not a horror film, but the current realities of the Yunusabad district that used to be one of the cleanest districts of Tashkent… Only after the publication of the photo and video on the Facebook social network, the inspectors of the State Committee for Ecology of the Tashkent District arrived at the scene and drew up a protocol on an administrative violation not against the owners of the greenhouse, but against a handyman. The penalty was only 270 thousand UZS (at the current exchange rate – $25).

The owners of the greenhouse assured that this would not happen again, and henceforth they would be heating exclusively with coal. But, a few days later, residents of Yunusabad again began to breathe a pungent smell of burning … the systematic poisoning of people continues to this day…”.

In their appeal, residents of the Yunusabad district of Tashkent and the Tutzor mahalla of the Tashkent region call on the local authorities to conduct a survey of all greenhouse farms located in the Tashkent district of the Tashkent region and impose a ban on the operation of greenhouses  that systematically poison the air, as well as hold guilty officials of greenhouses polluting the air.

Obviously, the problem of uninterrupted gas supply to the greenhouse sector  in Uzbekistan is still not resolved. The most high-tech branch of agriculture in the country, which one could be proud of, is forced to survive as best it can. Meanwhile, the greenhouse business in neighboring Turkmenistan gets natural gas at an incredibly low price without interruption, which allows it to develop rapidly. In just a few years, Turkmenistan almost caught up with Uzbekistan in terms of supplies of greenhouse tomatoes to Russia, the main export position of Uzbek vegetable growing.

According to our estimates, the volume of supplies of greenhouse vegetables from Turkmenistan to Russia in 2022 may exceed the volume of exports from Uzbekistan. Of course, it will happen unless the state makes a strategic decision on increasing the added value in the country and creating new jobs in high-tech segments of agriculture, without damage to the environment. Both the population and the promising and important industry, generating multimillion-dollar export earnings, are suffering now. Thus, in addition to direct economic losses from the slowdown in the development of the greenhouse industry and uncreated new jobs, Uzbekistan also incurs in additional costs for the health care system.

Сообщение Why are greenhouses in Uzbekistan forced to pollute the air and damage the health of people? появились сначала на EastFruit.

EastFruit often reports on Uzbekistan’s tremendous successes and significant potential in the development of new markets for fruits and vegetables and the greenhouse sector of the country is the most technologically advanced segment of horticulture, exporting tomatoes, cucumbers, peppers, eggplants, and other greenhouse produce. Greenhouse industry participants invest the most money per hectare of cultivation, but they also ensure highest revenues from each hectare, and provide jobs to a the largest number of people per hectare.

That is why it is difficult to understand the logic of the country’s officials currently putting enormous stress on the greenhouse industry of Uzbekistan. In this article, we will try to understand what is happening to their greenhouse industry, why the did the government create such unfavorable conditions for the industry, and how much Uzbekistan stands to lose if the situation does not improve. After all, competitors are alert and they will not miss any chance of winning more of their piece of the pie.

Greenhouse producers in Uzbekistan have repeatedly complained to EastFruit about the complicated bureaucratic and non-transparent procedure to connect (and re-connect annually) the gas supply necessary for heating their greenhouses. Even the lucky ones who manage to accomplish a gas connection are faced with an unstable supply of natural gas, which leads to disruptions in production processes. Therefore, greenhouse growers are then forced to spend huge sums to create additional infrastructure for the use of alternative sources of heat if their gas supply fails. To make matters worse, not everyone can afford to prepare for gas shortages. For example, East Fruit recently received information about another complete loss of harvest in greenhouses due to the gas supply being shutoff.

After forwarding these concerns to the appropriate authorities, the response from the Ministry of Energy of Uzbekistan is perplexing. It stated: “Greenhouses are seasonal consumers of natural gas, which is declared in their contracts with gas supply organisations. According to the documents, in the autumn-winter period, seasonal consumers must have a supply of an alternative type of fuel, in this case, it is a coal, to use for at least three months.”

The logic is confounding since greenhouses in Uzbekistan require gas in autumn and winter, not in summer. Therefore, it begs the question: what purpose does a gas supply contract serve if gas cannot be guaranteed when greenhouse producers need it most?

Why can’t Uzbekistan guarantee gas supplies to their consumers? Exports of natural gas are the most important source of budget revenues for Uzbekistan and the key sector for improving the country’s trade balance. In 2019, according to TradeMap data, Uzbekistan supplied 13.5 billion cubic meters of natural gas to foreign markets earning $2.6 billion.

Gas is a raw material and the government of Uzbekistan regularly declares the need to increase value to their exported products. Furthermore, fruit and vegetable production is officially considered one of the country’s priority sectors. Entire regions of Uzbekistan have shifted from growing cotton and grain up to 2013, to growing fruits, berries, grapes, nuts, and vegetables today.

When we look at the dynamics of Uzbekistan’s exports, gas exports tend to decrease while fruits and vegetables exports have nearly doubled over the past three years. Why, then, does the state fail to support the sector providing more jobs and better revenues while the demand for natural gas globally is falling?

Let’s calculate which is more profitable for Uzbekistan: exporting natural gas or exporting tomatoes and peppers grown in a greenhouse using natural gas?

To heat a hectare of greenhouses in Uzbekistan during the winter growing cycle, one needs an average of 220,000 cubic meters of natural gas. Domestic industrial consumers pay about $96 per 1,000 cubic meters of gas. Based on the TradeMap data, the average export price of gas last year was $193 per 1,000 cubic meters. We know that in 2020, global gas prices have dropped dramatically.

Thus, to heat 1 hectare of greenhouses, a grower needs to spend about $21,500 per season. With Uzbekistan’s growing technologies, it will be possible to harvest about 350 tons of tomatoes per hectare of such greenhouses. When exporting these products to Russia, a grower can receive on average at least $1,500 per ton of tomatoes or more than $500,000 per hectare.

Therefore, exporting gas required for heating 1 hectare of greenhouses, the country earns only slightly more than $42,000. If the same amount of gas were used to heat greenhouses instead, Uzbekistan’s earnings would exceed $500,000. Simply put, exports of greenhouse tomatoes for Uzbekistan are 10 times more profitable than the exports of natural gas! Supplying gas to the greenhouses means adding value to the exports of raw materials and increasing the country’s export earnings, which is what the country’s leaders are already striving for.

Additionally, the greenhouse industry is very knowledge intensive. It’s continually evolving and requires constant improvement, which means development of greenhouse technologies leads to an overall increase in the technological level of the country’s agricultural business. The benefits of this progress would be enormous, despite the difficulties to accurately assess it.

Why don’t greenhouses in Uzbekistan just switch to coal instead of gas when growing greenhouse vegetables? Why not just give up using gas altogether?

Complete transition to coal in greenhouses is possible. However, heating with coal will have the following negative consequences for Uzbek greenhouses:

1. Increase in heating costs by 12-17% resulting in lower producer’s income and products competitiveness;
2. Increase in the volume of capital investments per hectare since it would require purchases of more land, large warehouses for coal storage, equipment for coal logistics, and expensive filters to reduce emissions from coal combustion;
3. Higher costs for working capital since coal needs to be purchased for future use upfront – and this means frozen money and additional costs for servicing the loans;
4. Higher labour cost since coal usage requires hiring additional workforce;
5. More money spent on replacing the filters;
6. Decrease in productivity and product quality loss due to reduced transparency of glass or film on greenhouse surfaces caused by ash and soot buildup from burning coal. Using expensive filter systems (and their regular replacement) reduce this issue, but it can decrease selling prices and increase production costs affecting the competitiveness of greenhouse products from Uzbekistan.

“Both the regional and the global markets for greenhouse vegetables are very competitive. No one is guaranteed a share of this market. Moreover, the world trade in greenhouse vegetables has been stagnating for several years in a row. Thus, with the increasing production, international trade is not growing or is even declining,” says Andriy Yarmak, an economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO).

“Uzbekistan’s main target market for exporting greenhouse vegetables is Russia, even if produce gets there via neighbouring countries. In Russia, production of greenhouse vegetables is growing at a very high pace, so the demand for imported products, including those from Uzbekistan, is constantly decreasing. Besides, the neighbouring countries also stay alert. In Kazakhstan, the greenhouse business is actively developing and their producers have no problems with gas access, and the gas is 30-40% cheaper than gas in Uzbekistan. Even Russian greenhouses spend much less on gas than Uzbek ones. Turkmenistan provides gas to local greenhouses about 100 times cheaper than Uzbekistan and they also need less gas for heating! It is not surprising that Turkmenistan is increasing the export of greenhouse vegetables much faster than Uzbekistan does,” explains Andriy Yarmak.

Uzbekistan has the highest price of gas for greenhouses in the region. Even at this high price, it is still not easy to buy it and supplies are not guaranteed. If Uzbek producers switch to heating greenhouses with coal, then competitors will get even more advantages over Uzbekistan. This means that they will be able to offer better prices, pushing Uzbekistan out of the markets. Also, competitors will use the additional margin to accelerate the development of their technological level and will strengthen their positions in the market very quickly.

The Russian market is attracting a lot of competitiors in greenhouse vegetable supplies. After the ban on supplies in 2016, Turkey is starting to recover its leading position in Russia by rapidly increasing export volumes. Exports of greenhouse tomatoes and other greenhouse vegetables from Iran is growing very rapidly even if supplied via Azerbaijan. Turkmenistan is very rapidly increasing the volume of greenhouse vegetable exports to the Russian Federation. Thus, it is getting crowded there.

We are not experts in the oil and gas market, and we admit that other internal reasons may not allow Uzbekistan to allocate more gas for the local greenhouse business. Such reasons may include long-term export contracts with guaranteed volumes, depletion of gas deposits, or agreements with private companies that own gas wells.

However, from the point of view of the fruit and vegetable business and a common sense, Uzbekistan’s government should pay attention to this promising industry and try to lend it a hand. After all, market experts believe that more and more agricultural crops will gradually move into greenhouses. Today, many world countries started growing most of the berries and even cherries for the fresh market in greenhouses. Greenhouse production allows for extending the season, but also significantly improves quality, reduces losses, increases yields, and improves the purity and environmental friendliness of products thereby minimising the use of chemical plant protection.

Сообщение Why is Uzbekistan killing their successful greenhouse industry? появились сначала на EastFruit.