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| Description of company and purpose of project |
| The project consists of expanding the asset base of SugdAgroServe (SAS or the company), an existing client of IFC, to help meet the growing demand for funding by cotton farmers in Tajikistan. In April 2002, IFC helped establish SAS on a pilot basis to alleviate poverty among cotton farmers. SAS allows farmers to become shareholders and capitalize on profits by financing crop inputs at affordable prices and selling their cotton in greater quantities and on better terms. The initial $502,000 was sufficient to provide crop input financing to about 1,200 hectares. As more farmers want to participate, the contemplated expansion and additional funding would enable SAS to service up to an estimated 3,500 hectares. |
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| Project sponsor and major shareholders of project company |
| SAS is presently owned by 365 cotton farmers, which belong to some fourteen Dehkan farms in the Nov and adjacent Zafarabad oblasts in Northern Tajikistan. Participating farmers were selected based on their land holding and financial condition. SAS is exploring with IFC the opportunity to expand its shareholding and services to an estimated 1,500 additional farmer-owners. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at $1.0 million. The proposed IFC investment is a $500,000 A loan for IFC’s own account. This is IFC’s second loan to SAS after approving in April 2002 a $250,000 A loan to help establish the company. The balance of the proposed financing is capital reserve made available through a second grant fund by the Swiss State Secretariat for Economic Affairs (SECO) and additional share capital paid in by new farmers. |
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| Location of project and description of site |
| The project is located in the Nov and Zafarabad regions of Northern Tajikistan and expands thereafter to other regions. |
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| Project Development Impact and IFC's Role |
The proposed expansion will continue to bring management skills and financial support to the agricultural sector and demonstrate the economic benefits gained by upgrading the quality and quantity of the cotton crop. The technical assistance is managed by Private Enterprise Partnership (PEP), who is training farmers in improved and sustainable crop production and land and financial management. PEP is also helping manage the day-to-day operations of SAS. The technical assistance is part of the overall Swiss-IFC Central Asia Technical Assistance Partnership for Central Asia provided by SECO and implemented by PEP.
The project expansion is expected to increase SAS’s profitability through economies of scale while at the same time raise cotton yields and revenues. By bringing together critical technical and financial resources, IFC continues to be instrumental in establishing and developing SAS. |
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| Environmental and social issues - Category B |
This is a category B project according to IFC's environmental and social review procedure. As a result of the initial investment in SAS, it is clear that the main environmental issues relate to:
- excess and inefficient water consumption and its impact on reduced river flows, raised groundwater tables, increased salinity, and reduced crop yields; and
- excess and inappropriate tillage by farmers.
The technical assistance program is geared to address these problems by:
- introducing laser leveling as a key technology for farmers to reduce water consumption, reduce drainage and increase crop yields; and
- demonstrating minimum tillage techniques. Labor issues such as worker health and safety as well as harmful child labor will be discussed with the client.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
Private Enterprise Partnership/International Finance Corporation
C/o SugdAgroServe
Building 85 A, Lenina Street
Khujand, Tajikistan
tel: 992 3422 67211 office |
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| To contact the project company, please write to: |
Mr. Hans Woldring, Project Manager
SugdAgroServe
Building 85 A, Lenina Street
Khujand, Tajikistan
tel: 992 3422 67211 office |
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