22619 - SEF SugdAgroServe

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Environmental Review Summary

Project Number

22619

Company Name

Sughdagroserv OJSC

Date ERS Disclosed

Feb 17, 2004

Country

Tajikistan

Region

Central Asia and Turkiye

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 7, 2004
Signed : Jun 25, 2004
Invested : Sep 14, 2004

Sector

Natural Fibers (Cotton, Sisal, Jute, etc.)

Industry

other

Department

Regional Industry MAS MCT

Project Description

The project consists of expanding the Farmers Ownership Model (FOM) from its pilot size of about $500,000 to about $1.5 million in capital. In 2002 IFC helped establish the first FOM to alleviate poverty among the cotton farmers of Tajikistan. FOM is a pilot project with about 350 farmer-owners owning a joint stock company, SugdAgroServe (SAS), that allows them to finance crop inputs at affordable prices, sell their cotton in greater quantities and on better terms, and capitalize profits. This expansion will allow new shareholders to join the company and SAS to finance the production of a further 2,000 to 2,500 hectares of SAS shareholder crop production. As in the original pilot project, IFC’s Private Enterprise Partnership (PEP) will continue to manage a parallel trust fund supported technical assistance program to help farmers run their own business on a commercially viable and sustainable basis.

Environmental and Social

The sponsor is addressing the issues listed above and will ensure that the project complies with all the relevant laws and regulations of the Government of Tajikistan as well as IFC requirements. The information about how these potential impacts will be addressed by the project is summarized in the paragraphs that follow:

- Irrigation and salinity management: the current evenness of the field grade is very poor and this results in uneven and inefficient water application; excessive drainage and leaching of fertilizers; water logging and increased salinity; and reduced crop yields. Laser leveling of irrigation land is an internationally proven technology that will contribute significantly to reducing these problems. The SAS financing and technical assistance (TA) programs are very keen to have this technology introduced to Tajikistan. As a result of the pilot project a group of contractors are now offering laser leveling services to farmers. These contractors have been hired first through the TA program to level demonstration plots to show the benefits of this technology to the farmers. SAS will then be in a position to provide additional loans to farmers to commercialize this service more broadly. Previous international experience has shown that laser leveling of land will reduce irrigation water consumption by about 40% and improve cotton and other irrigated crop yields by 30% to 50%;

- Erosion control and watershed protection: the implementation of laser leveling of land, the introduction of minimum tillage practices by farmers, and the improvement in irrigation practices will result in improved soil erosion control and contribute to watershed protection. The TA program has established demonstration plots to show the benefits of minimum tillage in reducing soil erosion and improving cotton yields.

- Pesticide and chemical fertilizer handling and operation: while the project will finance the necessary input costs including pesticides and chemical fertilizers, the TA program is aimed at introducing modern agronomic practices to farmers to increase yields and the quality of the cotton and to do so in a sustainable manner. The TA program will address the proper handling and use of pesticides and chemical fertilizers and ensure this information is readily available to farmers. While overall pesticide use is small, FOM will assess the need for the development of an Integrated Pest Management (IPM) program and if needed will develop and implement such a program;

- Worker health and safety: agricultural operations are considered high risk when it comes to worker health and safety. FOM will develop a worker health and safety program for use by the local farmers and together with the TA program provide necessary training to farmers in safe work practices;

- Labor issues: child labor is frequently used on farms particularly for the picking of cotton. FOM will develop a labor policy and action plan to ensure compliance by farmers with the laws of Tajikistan, including international agreements ratified by Tajikistan, and the IFC Policy on Forced and Harmful Child Labor. FOM’s policy and action plan will clearly state the principles and actions that will be undertaken to achieve the objectives and compliance, monitor performance, and report results; and

- SAS Code of Ethics: the management of SAS has adopted a detailed Code of Ethics. The major requirement of this Code is that SAS, their shareholders and staff, strictly obey the legal requirements of the Republic of Tajikistan. One of the other major requirements of the Code relates to the promotion of an environmentally sustainable farm sector.

Conclusion & Monitoring

IFC will evaluate the project’s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering the ongoing performance of project-specific environmental, health and safety, and social activities. Periodic site supervision visits will also be conducted.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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