Farmers' Ownership Model

completed

The project company is Farmers Ownership Model (FOM). FOM will be financed on a commercial basis by IFC, and on a grant basis by the Swiss State Secretariat for Economic Affairs (SECO). The project will be located in the Nov and Zafarabad regions of Northern Tajikistan and may expand thereafter to other regions. The Zafarabad Mcht Association of Farmers of the Zafarabad region and the Andarasoy Association of the Nov region are the most likely candidates to become farm shareholders in the joint stock company. Together, the two associations account for approximately 1,940 hectares of irrigated lands. IFC selected farmers who are least indebted and will eventually expand membership to adjacent farmers, and to others in Southern Tajikistan should the pilot program prove to be successful.The total project cost is estimated at US$502,000. The proposed IFC investment is a US$250,000 A loan for IFC''s own account. The balance is capital reserve made available through Swiss grant funds and share capital paid in by farmers.This is an innovative pilot attempt by IFC to alleviate the acute poverty of cotton farmers in Tajikistan by enabling them to take control of their own commercial activities. FOM, which will be owned by the farmers, will use the IFC Loan and the SECO grant to: (i) purchase and deliver to the farmers a complete input bundle (including seeds, fertilizers, agrochemicals, tools, implements, grain bags, crop storage, equipment rental, picking charges and transport); (ii) arrange for processing the farmers'' crop; (iii) sell through its marketing service the farmers'' crops directly on the market; (iv) identify and develop market opportunities and enterprises to assist with improving farmer viability and enterprise diversification; and (v) provide finance for the farmers to make physical improvements to the irrigation system (e.g. laser land leveling) that will reduce water use and improve water quality and crop yields. The proposed project will bring management skills and financial support to the agricultural sector and demonstrate the economic benefits to be gained by upgrading the quality and quantity of the cotton crop. The technical assistance will be managed by Private Enterprise Partnership (PEP), who will train the farmers in proper production, irrigation, fertilization and financial management, in addition to appointing the manager. The technical assistance is part of the overall Swiss-IFC Central Asia technical assistance Partnership for Central Asia that has been recently approved by SECO and that will be implemented by PEP. The project is expected to increase cotton yield and revenues for farmers currently living in abject poverty. The venture will also bring an increase of foreign exchange in the country, as over 80% of Tajikistan''s cotton is exported.