2008: A Microeconomics Analysis of Farm Restructuring

Abstract. The paper analyses the response of the agricultural producers to introduction of new agricultural policies in Khorezm, a region of 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 in Khorezm is very important for further decision 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 which reflects the unique features of the agricultural sector of the study region. The model results show that the market liberalization may not lead to an increase in the regional production of cotton and may negatively affect the agricultural employment. Furthermore, the livestock sector may serves as a security tool in rural households for maintaining their income level when the markets are liberalized