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Boosting Grain Production in Five Provinces of Uzbekistan

MANILA, PHILIPPINES (17 November 2003) - The Asian Development Bank (ADB) has approved a US$26 million loan to boost farm incomes in Uzbekistan by promoting more efficient and sustainable wheat production.

The Grain Productivity Improvement Project will provide assistance to five wheat-producing provinces, covering wheat breeding, introduction of new wheat varieties, disseminating improved farming technologies, and strengthening the pest-monitoring program.

The project area stretches from north to south in the central part of the country, in Tashkent, Syrdarya, Djizak, Samarkand, and Kaskadarya provinces (oblasts).

More intensive and integrated assistance will be provided to three districts within the project area - Zamin in Djizak, Katakurgan in Samarkand, and Kuyi-Chirchik in Tashkent. This will include credit funds for private seed companies and enterprises, farm support services, capacity building for farmer-owned advisory extension centers, and the repair of irrigation facilities.

The project will introduce reforms in the three districts, including the reduction of mandatory volumes of wheat and wheat seeds that farms are required to sell to the state.

It will also help local government to facilitate private sector investments in seed production, provision of farm inputs, and agro-processing and marketing. Reforms introduced in the three districts are to be expanded nationwide in a phased manner.

The project assistance will address key challenges in wheat cultivation in Uzbekistan. Although the country is self-sufficient in wheat production, crops are susceptible to local pests and diseases because the varieties used are not well adapted to the local climate.

Wheat production has relied excessively on fertile, well-irrigated land that could be made available for higher-value crops. Existing regulatory control over cropping patterns and marketing has also constrained farm income growth.

The project will build capacity of a wheat-breeding institute and a crop variety-testing agency to accelerate the release of new varieties that are better suited to Uzbekistan.

It will also help promote the adoption of new varieties and improve farming practices, particularly in crop rotation and off-farm oil and water management by research institutes and rural business advisory centers.

"The project will improve the standard of living for over 200,000 rural people in the five provinces by reducing vulnerability to food shortages, creating jobs, and boosting incomes," says Emile Gozali, an ADB Project Economist.

"In irrigated areas, a higher wheat yield will allow substitution of wheat for cotton, fruits, and vegetables. In the less irrigable and rain-fed areas, improved resistance and enhanced soil fertility will stabilize wheat cultivation areas."

The total project cost is estimated at $40 million, of which the Government will provide $10.6 million and the beneficiaries will contribute $3.4 million.

ADB's loan in the amount of US$26 million comes from its ordinary capital resources and carries a 25-year term, including a grace period of five years. Interest is determined in accordance with ADB's LIBOR-based loan facility.

The Rural Restructuring Agency is the executing agency for the project, which is due for completion by the end of 2008.

A complementary technical assistance (TA) grant will demonstrate the benefits of competitive private business operations in agriculture in the three districts, and assist the Government in reviewing its food security strategy.

The TA amounts to $600,000, of which $400,000 is funded by ADB's Japan Special Fund, financed by the Government of Japan, and the remaining $200,000 equivalent will come from the Government. The TA will be carried out in the first year of project implementation and will take about 10 months.

More at adb.org/media

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