In the recent decades agricultural production in Uzbekistan has been facing problems in relation to environment and agricultural management systems especially with regard to the efficiency and the productivity of agricultural enterprises. The sharp decrease of total factor productivity after independency in 1990 can be traced back to inefficiency and misallocation of resources. Although statistical data shows steadily increasing partial productivity of land and labor since 1996 land degradation, low level of mechanization, partial water scarcity and the use of low-productive labor appear to prove the opposite. The specific feature of the current study is to estimate impact of environmental factors such as water availability and provision, soil quality on technical efficiency level of farms. Therefore the main question of the study is how efficient are wheat and cotton producing farms in Uzbekistan and what are the main sources of inefficiency? Other specific questions of the study are: • How do ecological factors such water scarcity, soil salinity and other farm-specific, farm-size specific and region-specific factors affect farm efficiency? • What is the pattern of input use and production output for wheat and cotton producing farmers? • How is the production of state-ordered commodities organized?