THE PROJECT INCLUDES THE FOLLOWING COMPONENTS:

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Created on Sunday, 04 September 2016 17:47

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Component I.

Value Chain/Productive Partnerships Development (estimated budget - 2.50 million US$, all IDA).

The Project will support the development of a number of commodity-based value chains and productive partnerships. The various components of this activity will include market/demand research for the specific type of product to be sold, training of chain participants, technical advice on inputs and technologies, sales and marketing advice, etc.
Training and Advisory services (estimated budget - 4.20 million US$, all IDA). At the producer level, extensive training will focus on voluntarily organized groups of dekhan and household farmers with up to 2 ha of agricultural land per shareholder/farm member. The training will be complemented by the establishment of demonstration plots, to conduct comparisons/testing between conventional and modern production practices. On the marketing side, participation of farmer groups in trade fairs and other events will be supported. A separate training window will be designed for women beneficiaries (and interested men) as the main household caretakers. It will also include household nutrition topics. For larger, commercially-oriented enterprises - agro-processors and agri-business enterprises, demand driven training and advisory services will be provided on a range of subjects, including new technologies, food safety and quality standards, development of linkages with producer organizations, marketing, export requirements, preparation of business plans and investment proposals for productive linkages etc. Attendance at trade fairs and mentoring services will be supported to help agri-businesses understand market requirements. Agro-input dealers will receive training on business practices, sourcing and financing of farm inputs, and awareness and application of quality and safety regulations.

Component 2

Access to Finance for Agribusiness Enterprises and Small-Scale Commercial Farms (US$15.32 million, including US$11.4 million IDA)

This Component will support the commercialization of agricultural products by improving access to medium-term finance for the larger agri-business enterprises, providing start-up capital in the form of grants for small-scale farms involved in productive partnerships, and by ensuring the availability of financing for value chain support, which often requires short-term financing (such as, for contract farming schemes and post-harvest handling activities). Potential investments include: improved on-farm technology, storage, processing, new products, marketing, quality enhancement and food safety. An estimated 350 sub-financings (sub-loans, leases and grants) are expected to be provided under this component.
Credit Line for medium-term investment loans/leases, and support to value chains (US$11.17 million, including US$8.0 million IDA). The credit line will ensure access to finance for agricultural producers and their association, agro-processors and other agri-businesses involved in the selected value chains and other credit-worthy productive partnerships. The credit line will support the following products: (i) medium-term loans and leases for investment to finance modern technological plants and equipment; and (ii) value chain financing products for value chain and productive linkage support. The maximum exposure per beneficiary will be of up to US$400,000, with the total amount of financing for one entire value chain (all links/participants) of up to US$1 million. It is proposed that credit line proceeds be extended to the participating financial institutions for a period of 5 years, with a grace period of 4 years and 10 months, which can be extended upon the eligible PFIs meeting performance conditions acceptable to IDA. Such an arrangement will allow maximizing the benefits from this scarce long-term money, and PFIs to finance sub-projects for the needed period based on projected cash-flows. The credit line will be provided through commercial banking sector and micro-finance institutions which have qualified for participation in the project through a due diligence process. The Project will likewise work with smaller banks and microfinance institutions with a view to promoting private financial sector development.
Commercialization Grants (US$3.75 million, including US$3.0 million IDA). Commercialization grants will be provided to support investment (storage, agricultural machinery, trading, small-scale processing and other equipment for value addition) and input needs (such as high quality seed and fertilizer) by smaller, poorer farmers working in producer groups who do not have the ability to qualify for a commercial loan. The grants will be up to US$35,000 per partnership. At least 20% contribution from own resources will be required as well as engagement in activities to develop and strengthen linkages along the value chain. The beneficiaries of the grant scheme will be subject to a rigorous, transparent selection process, based on detailed operational guidelines. The international TA firm recruited under Component I will assist with the implementation of this program.
Capacity building for PFIs (US$400,000, all IDA). The PFIs will receive training on applicability of the new financial products in lending for value chain and productive partnership development activities, assessing the suitability and effectiveness of these new financial products, and on mitigation of the related risks. This training will be complemented by IFC’s specialized agri-risk management and lending tools, including leasing. In addition, all PFI lending staff will be required to undergo Environmental Safeguard Training.

Component 3

Institutional Capacity Building and Project Management (US$3.90 million, all IDA)

This Component will strengthen the critical elements of the institutional framework and the sector’s academic knowledge base required to support commercial activity:
Support to the Educational Establishments in the Agriculture Sector (US$85580,000, all IDA). Under this Subcomponent, the Tajikistan Agrarian University and two Agricultural Colleges will receive support towards curriculum modernization and re-orientation to the issues faced by the new generation of mixed, small-scale farms and commercial agri-business enterprises. At the colleges, the Project will support expansion of the farmer training program by financing measures to update their curricula, teaching material, equipment and facilities.
Market Information System for Farmers and Agribusinesses (US$200000, all IDA). This Subcomponent will provide TA to support the establishment of a public-private partnership between the National Statistics Agency (TAJSTAT) and a number of private service providers in the delivery of commercial market information to farmers and agribusinesses via short message service (SMS). Guidance on how to use this information system will also be incorporated into the training programs implemented under Component 1
Support for Policy and Regulatory Reform (US$350000, all IDA). This Subcomponent will strengthen the Ministry of Agriculture’s (MOA) capacity for policy and regulatory reform by funding selected studies on critical issues relevant to the commercialization of agriculture.
Project Management (US$2.50 million, all IDA). This Subcomponent will support the two Project Management Units (PMUs) for Project implementation, as well as the establishment and maintenance of the Grievance Redress Mechanism (GRM). The Project’s TA components (i.e., 1 and 3, as well as the Commercialization Grants Scheme) will be implemented by the Agricultural Entrepreneurship Development Project Management Unit (AED PMU). It will also implement the relevant procurement, financial management and Monitoring and Evaluation (M&E) activities, including the baseline study, mid-term and final impact surveys for the Project. The Project Management Unit for Access to Green and Rural Development Finance set up under the auspices of the Ministry of Finance (MOF PMU) for the purposes of implementing donor-financed credit lines will implement the Project’s credit line and the related TA to PFIs under Component 2. Additional staff, as necessary, will be hired in the MOF PMU to ensure efficient implementation and M&E of the Credit Line component.