Making Uzbek Farms Sustainable

Every morning Ergash Holmatov has tea with his extended family. He breaks Uzbek bread, "non," made with wheat he has grown. Holmatov thinks there is nothing in the world tastier than bread that comes from his own farm close to the capital Tashkent.

Five years ago, when agricultural cooperatives were abolished and private farms established, Holmatov decided to become a farmer. He got 72 hectares of irrigated land, and started growing wheat. It was not an easy transition for the former accountant.

"When we got the land, we faced a lot of problems as the equipment we had was old and often broke down. We lacked plows and equipment to treat the land before sowing plants," he says.

He wanted to buy a new tractor for 99 million Uzbek sum, or about $60,000, but did not have the capital and could not afford payments on a conventional bank loan.

"Then I heard that the World Bank-financed Rural Enterprise Support project could help with purchase of machinery, but I would need to develop a business plan. I prepared my business plan and submitted it to Microcreditbank," he explains.

With the loan, he and his son Ulugbek bought the tractor. Ulugbek—also an accountant with few farm skills—took tractor driving courses. The Holmatovs now cultivate their own land and also earn money by using their tractor on farms that don't have machinery. "In 2011, we earned about 20 million Uzbek sums from these services. This is helping us pay the interest on our loan," says Ergash Holmatov.

New private farms like the Holmatovs' are benefiting from a $68 million project supported by the World Bank that was initiated to increase farmers' productivity and profitability. The Rural Enterprise Support Project gives credit lines to local commercial banks, which in turn lend to farmers. In addition to teaching farmers how to work with banks, the project is training farmers to run a business and apply new agricultural techniques. It is also improving irrigation and drainage, which is crucial in a country with scarce water resources.

World Bank credit lines differ from those provided by local commercial banks. They are longer term, up to ten years, including a three year grace period. Major local banks provide credit only for three years. And unlike other loans which are issued only in Uzbek sums, these funds are loaned in either sums or US dollars, which allows farmers to buy equipment outside the country. Local banks benefit from the low interest rate and long repayment term and are able to increase their number of loans.

Umarali Kholjonboev, Microcredit bank officer says: "In total, 20 projects were funded across the Tashkent region, 14 of which were funded to purchase agricultural equipment. The loans are extended to farmers for a long-term period of ten years including three years grace period. The Interest rate is lower and very competitive as compared to the average Uzbek commercial bank interest rate."

In addition to equipment, farmers use the lines of credit to buy poultry, livestock, and to stock fish ponds, or plant new fruit tree varieties that bear more and more quickly.

Like the Holmatovs, most people running newly established private farms come from non-agrarian backgrounds. They needed to learn how to farm. The project held seminars on different topics ranging from pest control, sowing seeds and saving water, to laws and business planning. Long-time farmers share their experiences with newcomers at farm schools and demonstration plots established under the project.

Khudoyberdy Abdujabborov, agronomist and former kolkhoz chairman, heads one of these schools. "We teach how to properly supply, distribute and save water." With the help of the Swiss Agency for Development and Cooperation, water meters have been built on about 100 farms and are already changing farmers' behavior.

"In the past, we used water very liberally; now all the water is metered. We used 3,800-4,200 liters of water per hectare. We now scientifically reassess the amount of water needed and put this into practice, thus using 15-20% less. If we replicate this across the whole district, oblast and country, it will result in large water savings," Abdujabborov says.

Water users associations have been reorganized and are now based on geography rather than administrative boundaries. Abdunabi Siddikov, project coordinator, says: "In Buka we had 21 water users associations: the farms located on the upper reach (of the river) never cared about the water needs of the farms located in the lower reaches."

This meant downstream farms watered their seeds too late and were not productive. Twenty one existing associations were reorganized into just six located along the water flow. Now all the farms have water when their crops need it.

As farms become more productive farmers' lives will improve. And this will allow Ergash Holmatov's son and grandson to keep growing wheat. So that one day Holmatov's grandson can break "non" for his kids at breakfast.