4    Production and marketing conditions

4.1 Sheep wool production

4.1.1 Kazakstan
4.1.2 Turkmenistan
4.1.3 Kyrgyzstan

4.2 Wool marketing and processing

4.2.1 Kazakstan
4.2.2 Turkmenistan
4.2.3 Kyrgyzstan

4.3 Camel hair
4.4 Goat fibre
4.5 Karakul pelts
4.6 National prices and export data

4.6.1 Wool prices
4.6.2 Goat fibre and cashmere prices
4.6.3 Karakul prices
4.6.4 Camel hair prices

Since the collapse of the USSR, a key production issue has been the dramatic loss of smallstock, particularly sheep, in the republics of Kazakstan and Kyrgyzstan. This has accordingly meant a steep drop in wool output (Figures 2 and 3). Smallstock populations in Turkmenistan have not declined. The data for wool production is nowadays mostly estimated, as state statistics are no longer kept on wool yields. Much of the wool in the mid- to late-1990s never entered the market as there was no demand, and was stored at producers' homes or simply discarded. Producers also use some wool and other fibres for making household items such as carpets and mattresses.

Source: FAO (2002).
Figure 2. Decline of sheep population in post-Soviet Central Asian countries, 1992–2001.

Starting in 1999, however, there has been a positive trend in the growth of smallstock populations in the two countries that experienced the main losses, as Figures 2 and 3 indicate. Smallstock populations can rebound fairly quickly from massive destocking, and producers are now trying to retain breeding stock as the economic crisis of the mid-1990s recedes. Goats are favoured by producers for restocking, due to their faster reproductive rate compared to sheep.

Source: FAO (2002).
Figure 3. Decline of wool production in post-Soviet Central Asian countries, 1992–2001.

4.1 Sheep wool production

4.1.1 Kazakstan

There were around 10 million sheep in Kazakstan in 2001. As shown in Figure 2, the number of sheep has fallen sharply by two-thirds since the mid-1990s, following dislocations associated with economic policy reforms and privatisation of state collective farms (Behnke 2002; Robinson and Milner-Gulland 2002). Production of wool has therefore fallen dramatically. Nearly all sheep are now held by private smallholders or in farmers' associations formed from state farms.  Approximately 40% of the remaining sheep produce fine wool, 40% coarse wool and the rest semi-fine to semi-coarse.

Few farmers have any defined wool production policy. Following the dissolution of the collective farms and loss of secure wool markets in the USSR, producers' first priorities were of necessity to slaughter sheep for meat for their own consumption and to sell sheep to earn much-needed cash. This has led to a very substantial reduction, proportionally as well as in absolute terms, in the number of superior wool-producing rams. Further, most farmers have little idea of the relative value of the wool of different breeds. The fleeces of all sheep are bulked, regardless of breed or quality, and sold only if they have a contact with a buyer or are within a short distance of an urban wool depot. Small- holders living in more remote areas often cannot sell the wool and skins from their animals, as traders do not visit these areas and the cost of transporting products to urban markets is prohibitive. Since 2000, however, larger-scale farmers have been seeking to upgrade the quality of their fine wool sheep, due to new demand for wool from domestic processing factories and buyers from China (Kerven 2001a).

4.1.2 Turkmenistan

There are around 6 million sheep in Turkmenistan, and there has not been the dramatic decline in sheep suffered by Kazakstan and Kyrgyzstan since independence in 1991 (Figure 2). About 16 thousand tonnes of sheep wool are currently produced annually, 73% (11.5 thousand tonnes) from Karakul sheep and the remainder from Saraja sheep which have white and finer wool. This is about two-thirds of production at the close of the Soviet period.

Karakul wool is curly and of different colours; black, brown, grey and whitish, though 80% of Karakul sheep are black. Karakul wool is used by pastoralists to make mats, woollen boots, and the covering for Turkmen yurts. The grey colour wool is used to make the warp of carpets. Karakul wool is also processed and made into army clothing.

Sheep are shorn in spring and autumn. The spring clip from white Saraja sheep is from 2000 to 2500 t, which is used to make carpets domestically. In 2000, the government livestock agency, Turkmen Mallory, collected 0.5 million sheep pelts and 4500 t of wool from the state livestock farms. Private traders buy the rest, mainly for export.

Wool production is less disorganised than in Kazakstan, principally because the former collective farm structure remains in the form of associations directed by the state organisation–Turkmen Mallory. This organisation still provides some, but decreasing inputs to producers in the form of subsidised animal feed, water transport, maintenance of water points and some veterinary services (Hodjakov and Wright 2002; Lunch 2002). The ratio of privately-owned to state-owned sheep is increasing but the state still intervenes in the marketing of wool from privately-owned sheep.

4.1.3 Kyrgyzstan

In 2001 there were between 3–4 million sheep, of which about half were fine wool Merino crossbreds. After the dissolution of the state farms in mid-1990s, the number of sheep fell from nearly 11 million to 3 million, but is now beginning to rise again (Figure 2). The various local fat-tailed sheep meat breeds have become more popular than Merino fine wool sheep due to their better marketability (Kerven 2001b).

Much attention has been given to the large World Bank-funded sheep project, which has sought to revive fine wool production after the dissolution of state farms, by importing Australian Merino breeding stock. For the majority of farmers, who have only small flocks, raising meat breeds remains more profitable. The fine-wooled Merino crossbreeds are of interest to larger-scale farmers who can recently earn significant income from selling wool.

4.2 Wool marketing and processing

Kazakstan, Turkmenistan and Kyrgyzstan are not members of the International Wool Textile Organization, which would require, among other things, the ability to certify wool and fibres to internationally-accepted standards.

4.2.1 Kazakstan

An estimated 25 to 30 thousand tonnes of wool are produced annually from various different breeds of sheep ranging from coarse-wooled Karakul to fine-wooled Merino crossbreds. Production has declined to about 15% of annual production at the end of the Soviet period.

There is no longer an organised wool marketing structure in Kazakstan. Existing farmers' associations are mostly bankrupt and are being dismantled, while state depots for wool collection no longer operate, leaving the farmers with no formal channels for marketing their wool (Kerven 2002c). A few buyers collect wool from some farms, but in most cases the farmers have to seek a buyer or deliver their fleeces to a commercial wool depot in the nearest city. At some city wool depots, the fleeces are graded by representatives from the country to which the wool is to be exported (mainly to Russia) and not by national wool classers.

There were three wool-scouring plants in the Soviet period, in Taraz (formerly Djambul), Aktobe and Semipalatinsk cities. There were also four spinning mills and two wool fabric mills, one in Kustenai, northern Kazakstan and one in Kargaly, Almaty Oblast. A wool- spinning mill now operates in Aiaguz city, eastern Kazakstan and a wool carpet factory in Almaty city. There are also several small knitting factories as well as numerous cottage industries making knitted garments and mattresses from wool and camel fibre.

The state-owned processing plants where wool was formerly scoured were closed for several years after the collapse of the Soviet Union; but some have recently reopened, operating at about 10% of previous capacity. The first attempts by national and foreign investors to reopen these plants failed because of local bureaucracy and a lack of credit facilities.

In the Soviet period the Semipalatinsk Wool Scouring Plant (north-east Kazakstan) used to scour and process 30 thousand tonnes of wool annually. The factory planned to scour 3000 t of wool in 2000, producing tops. The plant employs wool collectors, collecting wool in Pavlodar, Semipalatinsk, Taldy-Korgan and Ust-Kamenogorsk Oblasts in the eastern region. In 2000 the plant had an agreement with Mongolia to process Mongolian wool. In 2001 the plant was planning to produce yarn and install spinning equipment.

The Kustenai Wool Scouring Plant reopened in 2000. The Kargaly Wool Garment Factory recently won a government tender to produce military wear. The factory purchases 500 t of raw wool from surrounding areas and manufactures 100 thousand metres of fabric per year, in 2000.

In the Soviet period, the Taraz Wool Scouring Plant was the largest of its kind in Central Asia, with a capacity of scouring 150–200 t of wool per day. Wool was scoured in Uzbekistan, Kyrgyzstan and southern Kazakstan, as well as imported from Australia. Several years ago, a UK company invested in a joint venture project with this factory, but the local administration proved difficult and the UK company withdrew, having lost some of its capital. New foreign investment and technical expertise is now rehabilitating the scouring plant. In 2000 three scouring machines were in working condition with a total capacity of scouring 20–25 t of wool per day. The factory did not, however, have any funds to buy wool in 2001. Clients bring their own wool to the factory for scouring and dyeing. The factory had huge debts and was involved in legal disputes. However, the new foreign-supplied equipment, expertise and investment is expected to allow this factory to expand production in the near future.

4.2.2 Turkmenistan

There are two large state-owned wool-processing factories, both started operating in 2002. The Ashgabad Wool Spinning Factory is working at nearly full capacity, spinning and dyeing white Saraja wool into yarn used for carpet weaving. In 1999 the factory processed 3000 t of Saraja wool. There were about 300 employees. The factory is state-owned but is now leased to the manager. A new carpet-making venture has begun, with carpets being sold to Europe at US$ 70/m^2.

The Mary Wool Scouring Plant is government-owned, employing 1000 workers. In 2002 this factory was planned to be privatised, with foreign investment. The factory scours about 12 thousand tonnes per year, some of which comes from Uzbekistan. Some of the equipment dates from the mid-1930s and is no longer functioning; therefore the factory cannot work to maximum capacity of 17 thousand tonnes per year. Most of the washed wool is Karakul (80%), Saraja white wool (18%), and the remaining 2% is camel and goat hair. The washed white wool mainly goes to the spinning factory in Ashgabad. Only about 10–15% of the washed wool is used in Turkmenistan, the rest being exported to Russia, Pakistan, India and Poland. Karakul wool is exported mainly to Russia for making felt boots and to India for making blankets. The factory also has a carpet-making section.

The state-owned organisation, Turkmen Mallory, markets the wool from state-owned sheep. The prices paid to farmers are, however, very low, due partly to the many layers of administration in the state organisation and the consequently high overhead costs. Table 3 shows the gap between producer prices and those charged by Turkmen Mallory for export. Wool from the main carpet wool breed (Saraja) and from Karakul sheep is marketed separately, mostly through the state system, but there is no grading of fleeces of different quality within the two major breeds.

4.2.3 Kyrgyzstan

There is one large wool scouring plant and two large privatised wool spinning plants, none of which can operate anywhere near capacity due to the shortage in wool supplies since independence. The largest plant, Kasiet in the town of Tokmak, operated at only about 10% of its capacity in 2000, and had to purchase about 60% of the raw washed wool from Kazakstan and South America. A private wool manufacturing company in Bishkek operated at about one-third capacity in the same year. Formerly there were several other smaller state-owned wool-manufacturing factories, but these were mostly bankrupt by 2001.

Apart from an overall shortfall in wool supplies, the wool currently sold by producers is usually not sorted or of good enough quality, causing technical difficulties for processing at the factories. Under these conditions, the factories are unable to make high-value products, or to export to the most profitable markets in Europe. The main priority for the wool industry is to upgrade the quality of the raw product and train producers as well as traders in how to sort wool.

4.3 Camel hair

Government sources estimate the camel populations of Kazakstan and Turkmenistan at about 400 thousand and 110 thousand, respectively, although it is probable that these figures are considerable underestimates. Camels are not kept in Kyrgyzstan.

A factory in Almaty, Kazakstan, recently started processing camel hair and manufacturing this into blankets for export to the Far East, using new processing equipment. Most camel hair was bought from Mangistau Oblast in western Kazakstan, which has the main camel population.

Hair from the Bactrian camel is made up of three different fibre types that require specialist equipment to separate, that has not been available in Central Asia. According to scientists in Turkmenistan, 75–80% of camel hair is fine fibre, 15–20% is middle quality, and 5–10% consists of coarse fibres. The average diameter for fine fibre is 16–20 microns, for middle fibre is 25–30 microns, and coarse fibre 31–50 microns. The length of fine fibre is 3–5 cm, for middle fibre is 4–6 cm, and coarse fibre is 8–10 cm. One-year old camels yield finer fibre than these figures indicate. The finest diameter fibre comprises about 50% of the fleece and is worth more on international markets. At present no attempt is made to grade the camel hair either by age of animal (young camels produce finer fleeces than older animals) or by the area of the body from which the fibre is shorn (the fibre from the flanks is finer than that from the neck and legs). Farmers and scientists are aware of these differences in fibre quality, but it appears that the exporters are not, and offer only very low price regardless of quality.

4.4 Goat fibre

Cashmere down is produced from the native Central Asian goats (Millar 1986). With the goal of increasing yield per animal, state researchers started to breed a new type of downy goat in 1938 by crossing the native goat with Russian Pridon and Angora-type goats (Almeev 1973). These new breeds were distributed to most state farms in Kazakstan and Kyrgyzstan. The down was sent to Orenburg and Moscow for processing during Soviet times.

The price of cashmere on the world market is very sensitive to fibre diameter among other characteristics. The finer the diameter, the higher the value. The Pridon bred downy goat has a coarser fibre (between 18–21 microns) than the native Kyrgyz goat, with an average diameter of 14–15 microns (Almeev 2000). The native goat therefore produces a more valuable commercial fibre.

During and after the Soviet period, many of the native goats have interbred with introduced breeds. The effect will have been an increase of the fibre diameter in goats of mixed breed. Most farmers, now keeping goats privately, no longer have a pure strain of native cashmere-bearing goats. The down from these mixed breeds has accordingly little market value, compared to true cashmere which should have a fibre diameter of less than 16 microns. However, in a few remote areas, there was little or no interbreeding between the native and introduced goats. The down from the native goats which have not been inter-bred with Pridon-Angoras is, in fact, cashmere, and as such has considerable potential value.

Kyrgyzstan has around half a million goats, mostly crossbred with Angora types. Turkmenistan has an estimated 370 thousand native goats and 30 thousand Angora type. In Kazakstan, the population of goats has actually increased from 0.9 million in 1990 to 1.5 million in 2000, as newly-privatised farmers find goats easier and cheaper to keep than sheep.

Kazakstan has the capacity to produce annually between 80–100 t of high-quality down or cashmere, according to the leading national scientist (Aryngaziev 1998). About 75–80% of the goats are crossbred types. Animals with the highest down production were found in western Kazakstan (Eidrigevich 1951).

The genetic resources of Kazak local goats have been conserved better in the more arid regions designated in Soviet periods for fat-rumped and Karakul sheep breeding. During the Soviet period, regions with higher precipitation and better pasture (south- eastern, northern and north-eastern regions) were planned for wool production and were therefore stocked with fine-woolled and semi-fine-woolled sheep. In these regions, the number of goats was reduced sharply from 2.7 million down to 0.5 million head between 1955–68, when the fine wool industry was developed, as the government prohibited the keeping of goats in these regions to prevent the contamination of sheep wool with coarse goat fibres.

There has been no programme on selection and breeding of cashmere goats or on production and marketing of their down in these countries. In 2001, a small cashmere breeding project was initiated with British Embassy funding in Kazakstan and Kyrgyzstan, with technical advice from Macaulay Institute, UK. The worth of this cashmere fibre has not been appreciated until very recently, and indeed even now only a few national scientists realise that the fibre produced by their native goats is cashmere. This is surprising in that some of the world's highest quality cashmere comes from western China, (which borders eastern Kazakstan), Iran and Afghanistan, which lie immediately south of Turkmenistan. These regions have long been internationally recognised as cashmere-producing countries.

There is a need to conduct, in each country, an audit of the native goat populations with respect to numbers and fibre characteristics, principally weights of fibre produced per animal, fibre diameters, and ratios (by weight) of fine and coarse hair to determine the potential value of this resource.

4.5 Karakul pelts

There are approximately 4.4 million Karakul sheep in Turkmenistan, mainly owned by the state and leased to shepherds, and some 1.5 million in southern Kazakstan, almost all now in private hands. Karakul sheep, being adapted to arid desert conditions, are not kept on the predominantly highland pastures of Kyrgyzstan. Uzbekistan has a large population of Karakul sheep. Karakul sheep have been kept primarily for meat and the production of pelts (Astrakhan) from lambs slaughtered at birth or, in some cases, deliberately aborted before birth. Their coarse wool is of relatively low value compared with that from other breeds, and is mostly used to make felt.

During and before the Soviet period, large numbers of Central Asian Karakul pelts were exported to Russia and from there to western countries. This trade has now largely ceased in Turkmenistan due to a new presidential decree in 2000. The trade has also declined in Kazakstan as a consequence of the demise of the former USSR state purchasing and distribution system. Final processing and manufacture of pelts into garments was carried out in Russia in the Soviet period, and Russian buyers are still the main purchasers of raw pelts from Central Asia. It has been difficult for Central Asians to enter the profitable European market where the world's Karakul pelts are traded.

Since independence, Turkmenistan has produced some 750–770 thousand Karakul adult pelts annually until 2000. A small amount was used by private small industries for lining coats and the major amount was exported. Turkmenistan has a state-owned pelt processing plant, which can only process 15% of annual pelt production, while quality of products is poor. The small number of young animal pelts produced were exported mainly to Russia in the raw state. The depressed state of the Karakul industry in Turkmenistan has been exacerbated by the presidential decree in 2000 banning the slaughter of Karakul lambs until such time as the size of the breeding flock is signifcantly increased. Only pelts from stillborn lambs and lambs dying within a few days of birth are currently traded. One company interviewed said it handled some 100 thousand pelts in 1999; in 2000 it was able to collect only 15 thousand pelts and faced severe financial problems, having borrowed US$ 500 thousand to purchase processing equipment which is unlikely to be used in the foreseeable future.

Efforts are currently being made to increase the number of Karakul sheep in both countries. As indicated above, this is being achieved in Turkmenistan by a ban on slaughtering of newborn lambs. In Kazakstan herders are trying to increase Karakul sheep in the desert regions, as these are well adapted to the environment and their meat has a market premium. There is also a government-financed initiative in Kazakstan to bring 10 thousand Karakul sheep from Uzbekistan and southern Kazakstan.

Nationally there is still a considerable body of knowledge and expertise in the breeding of Karakul sheep. In Kazakstan there is an Institute of Karakul Breeding, near Shimkeynt city, and a Karakul Department at the Animal Husbandry Institute in Turkmenistan. The inheritance of rare and highly valued pelt types appears to be well understood by national scientists, although no breeding schemes to increase the proportion of these types in the national flocks seem to be practised. The scientists formerly working on Karakul breeding are adamant that the desirable genes for these rare pelt types have been retained in the depleted flocks, and that they have some highly valued types not found in other Karakul pelt producing countries such as Namibia. This resource has considerable potential for exploitation.

4.6 National prices and export data

Producer prices vary widely by distance from the export point or processing factories. Due to the sparse rural population and great distances between towns in these countries, there is considerable transport cost for collecting raw products. Thus wool and fibre prices are generally higher for farmers located nearer to processing factories or borders with China and Russia-two main destinations. Conversely, farmers living in remote areas far from the nearest city are either unable to sell their products at all or else receive very low prices from itinerant traders, due to the cost of transport. Costs would be lowered if producers contracted vehicles to transport their products to cities, but this is not practised except in Turkmenistan, where there is greater social cohesion.

The following prices (Tables 1 and 2) were obtained from producers in two regions of Kazakstan, one within several hundred km of Almaty, the main city and wool collection centre, and the other region more than 300 km from the nearest city and 500 km from Almaty. Lower prices are those in the more remote region.

Table 1. Kazakstan wool, animal fibre and pelt prices, 2000 and 2001 (US$ per kg or pelt).

The prices in Table 3 were obtained from producers in two regions of Turkmenistan, one within several hours drive of the capital, Ashgabad, the other more remote. Lower prices are those in the more remote region.

Table 2. Wool and animal fibre exports, Kazakstan.

Table 3. Turkmenistan wool, animal fibre and pelt prices in 2000 (US$ per kg or pelt).

4.6.1 Wool prices

Information on prices and trends from official national statistics has been unreliable since the mid-1990s when state farms were abolished. Most wool is currently sold by producers for cash to traders, with very little or no official documentation, in order to avoid high levels of taxation and extortion. Most wool being traded internationally from Kyrgyzstan and Kazakstan leaves via Russia or China. Often the deals are not made in cash, but involve barter of the wool for other products. Wool from Turkmenistan is exported mainly to the Indian sub-continent and Russia.

In Kazakstan by 2001, farm gate prices in Almaty Oblast (south-east Kazakstan) for fine wool had doubled from 1999/2000, to more than US$ 0.70/kg greasy wool. Buyers have indicated that they would be prepared to offer higher prices for larger lots. In 2000 the Semipalatinsk wool factory in north-east Kazakstan was paying from US$ 0.80/kg for coarse wool up to US$ 0.85/kg for fine wool. In the same year, the wool factory in Kustenai, north-west Kazakstan, was buying semi-fine wool at US$ 0.40/kg and reselling to Italy at US$ 1.50/kg without processing.

4.6.2 Goat fibre and cashmere prices

Since 1999, there has been a considerable rise in demand from Chinese manufacturers for goat fibre (including fine down or cashmere) from Kyrgyzstan and Kazakstan. Demand is less in Turkmenistan, which does not border with China. Chinese buyers purchase cashmere from local traders, who in turn buy and collect cashmere from goat producers in villages. Larger-scale traders grade by colour and appearance of the cashmere submitted by their smaller-scale collectors, according to prices offered from the Chinese buyers.

Traders first began buying cashmere from Central Asian producers in 1995, when there was a high demand and prices were good (see Figure 9 below). In 1996–98 demand declined. Prices rose in 1999, and in 2000 rose swiftly during the short buying season in March and April. In Kyrgyzstan, for example, at the beginning of the 2000 season when farmers start combing the down from their goats, the price was US$ 4.6/kg. Competing traders bid up the producer price to US$ 20/kg, by mid-April, when there was no more down left to buy. In March 2001, the opening price in Bishkek for the best black cashmere at the start of the season was US$ 17/kg and was expected by traders to reach at least US$ 24/kg.

One of the problems for poorer farmers in maximising their income from selling cashmere is the practice used by many traders of offering advance payments to farmers before the down collection season. If a farmer accepts the advance payment, he/she is then obliged to sell at a pre-arranged price. Since the demand for cashmere over the season means that new traders will continually raise the price, a farmer locked into an advance payment scheme loses out.

In Turkmenistan one buyer in 2000 was paying producers US$ 0.7/kg for shorn goat hair (including coarse outer and down), and after some rudimentary sorting and baling, was selling it to Afghan buyers for US$ 1.7/kg. This is a relatively modest margin, considering that he has to pay for the collection of the fibre from the farms and the costs of baling. By 2001, producers were selling mixed fibre with down at up to double the price of the previous year, due to increasing demand. Producers who were willing to separate the down from the coarse outer fibre obtained up to US$ 1.25/kg for the down. Herders noted that goat fibre has been in greater demand than sheep wool since about 1999. Nevertheless, producer prices in Turkmenistan were far below those in Kazakstan and Kyrgyzstan in the same year.

4.6.3 Karakul prices

Current domestic prices for Karakul pelts are low. Farmers in Turkmenistan received on average about US$ 3 per pelt, although rarer types command higher prices. In central Kazakstan, farmers received only US$ 1.4 per pelt in 1999 and there has been no demand for pelts since then. Some rare and highly sought-after types (e.g. the golden coloured 'sur' pelts) are quite valuable.

In Turkmenistan, processed Karakul wool was exported to Russia at a price of US$ 0.15 per kg in 2000.

The fleeces of adult Karakul sheep are sometimes traded internationally. This wool is black or dark brown, coarse, and used in the manufacture of low-quality carpets. It is worth about US$ 0.35/kg in the UK, which would not cover the cost of shipping (D.B. Holdsworth, personal communication).

4.6.4 Camel hair prices

In Turkmenistan substantial quantities of camel hair are exported. One buyer alone exported 200 t per year by 2000, of which 100 t went to an outlet in Germany at a price of US$ 1.10/kg. The price paid to producers in 2000 was between US$ 0.05 to 0.50/kg depending on quality.

In Kazakstan, the main camel hair factory exported 50 t of raw camel wool to Korea in 2000. Prices offered by the factory to traders for raw camel wool were US$ 1.50/kg, although the factory would pay US$2/kg for sorted camel wool. Local herders in Almaty Oblast, however, reported receiving only US$ 0.20/kg.

Marketing channels for Central Asian camel hair follow a similar route to cashmere. Turkmenistan is a more significant exporter of camel hair than Kazakstan, and most of the fibre is dehaired in China. Camel hair is a coarser product than cashmere. Internationally it is usually traded in three grades: Super Baby (18 µm), Medium Baby (20 µm) and Adult (23–24 µm). The higher mean fibre diameter of camel hair, and the more exacting processing requirements are reflected in a much lower price. According to UK importers, raw fibre prices quoted by traders in Central Asia in 2000 are in the region of US$ 2–3/kg greasy.