Tajikistan - Farm Privatization Support Project

Document of The World Bank Report No. 19318 TJ PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF SDR 14.8 MILLION(US$20 MILLION EQUIVALENT) TO THE REPUBLIC OF TAJIKISTAN FOR FARM PRIVATIZATION SUPPORT PROJECT May 19, 1999 Environmentally and Socially Sustainable Development Azerbaijan, Tajikistan, Uzbekistan and Aral Sea Country Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS (Exchange Rate Effective April 1999) Currency Unit = Tajik Rubles (TR) I TR= US$ 0.001 US$ I =TR 1000 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS - Country Assistance Strategy CIMMYT - International Institute for Maize & Wheat CIP - International Center for Potatoes F'SU - Former Soviet Union GOT - Government of Tajikistan Ha - Hectare IDA - International Development Association ICR - Implementation Completion Report ICARDA - International Center for Ag - Research in the Dry Areas rImI - International Irrigation Management Institute M & E - Monitoring and Evaluation MOA - Ministry of Agriculture MOF - Ministry of Finance MOWR - - Ministry of Water Resources NGO - Non-Governmental Organization PAD - Project Appraisal Document PIP - Project Implementation Plan PMU - Project Management Unit PPF - Project Preparation Facility SLC - State Land Committee TA - Technical Assistance TAAS - Tajikistan Academy of Agricultural Sciences GLOSSARY Giprozem - State land Institute Goskomzem - State Land Committee Hukumat - Raion Administration Jomat - An administrative unit - below Raion Nasbank - National Bank of Tajikistan Oblast - An administrative unit of Region or Province Raion - An administrative unit - below oblast Sovkhoz/Kolkhoz - State farm/ Collective farm Tajiksberbank - Savings Bank of Tajikistan Vice President: Johannes Linn Country Manager/Director: Ishrat Husain Sector Manager/Director: Kevin M. Cleaver Task Team Leader/Task Manager: T. V. Sampath / S. Janakiram  TAJIKISTAN FARM PRIVATIZATION SUPPORT PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Govemment strategy 2 3. Sector issues to be addressed by the project and strategic choices 3 C. Project Description Summary 1. Project components 3 2. Key policy and institutional reforms supported by the project 12 3. Benefits and target population 12 4. Institutional and implementation arrangements 13 D. Project Rationale 1. Project alternatives considered and reasons for rejection 16 2. Major related projects financed by the Bank and other development agencies 17 3. Lessons learned and reflected in proposed project design 17 4. Indications of borrower commitment and ownership 17 5. Value added of Bank support in this project 18 E. Summary Project Analyses 1. Economic 18 2. Financial 20 3. Technical 22 4. Institutional 22 5. Social 23 6. Environmental assessment 23 7. Participatory approach 24 F. Sustainability and Risks 1. Sustainability 24 2. Critical risks 25 3. Possible controversial aspects 26  G. Main Loan conditions 1. Effectiveness conditions 26 2. Other 26 H. Readiness for Implementation 27 I. Compliance with Bank Policies 27 Annexes Annex 1: Project Design Summary 28 Annex 2: Detailed Project Description 31 Annex 3: Estimated Project Costs 51 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 52 Annex 5: Financial Summary 55 Annex 6: Procurement and Disbursement Arrangements 56 Annex 7: Project Processing Schedule 67 Annex 8: Documents in Project File 68 Annex 9: Statement of Loans and Credits 69 Annex 10: Country at a Glance 72 Annex 11: Letter of Development Policy 74 MAP(S)  TAJIKISTAN Farm Privatization Support Project Project Appraisal Document Europe and Central Asia Region Environmentally & Socially Sustainable Development Unit (ECS SD) Date: May 14, 1999 Team Leader: Thirumangalam V. Sampath Country Manager/Director: Ishrat Husain Sector Manager/Director: Kevin M. Cleaver Project ID: 49718 Sector(s): AD - Rural Development, AA - Agriculture Lending Instrument: Specific Investment Loan (SIL) Theme(s): Rural Development Poverty Targeted Intervention: No Project Financing Data El Loan M Credit D Grant OZ Guarantee El Other (Specify) For Loans/Credits/Others: Amount (US$m) $20 Proposed Terms: El To be defined El Multicurrency C: Single currency El Standard Variable O Fixed El LIBOR-based Grace period (years): 10 Years to maturity: 40 Commitment fee: % Service charge 0.75% Fin`andcing ,Plan:- ElT be de'fined Sour-e Local o.f . Tot I Governrent 2.70 0.00 2.70 IBRD 0.00 0.00 0.00 IDA 2.60 17.40 20.00 PRIVATE FARMERS 0.80 0.00 0.80 Total: 6.10 17.40 23.50 Borrower: Republic of Tajikistan Guarantor: Responsible agency: State Land Committee, Ministries of Finance, Agriculture, Water Resources and Tajiksberbank, Nasbank. Implementing agency(ies): Project Management Unit Address: No: 44, Rudaki Street, Dushanbe, Republic of Tajikistan, Contact Person: Tohir Ostanaev Tel: (7-3772)+ 211-367 Fax: (7-3772)+ 51-01-17 Email: Estimated disbursements ( Bank FYIUS$M): --;.F -Y [- 1>99 --2. 000 . L .2Q01 2002,- .; 2-0G3 ; . . X.4: Annual 0.40 4.00 5.10 5.20 4.00 1.30 Cumulative 0.40 4.40 9.50 14.70 18.70 20.00 Project implementation period: 60 months Expected effectiveness date: 09/16/99 Expected closing date: 06/30/2004 OCS PAD F..: OdSe9. 19  A: Project Development Objective 1. Project development objective: (see Annex 1) The main objectives of the Farm Privatization Support Project are to assist the Government to: (i) develop procedures and institutional mechanisms at the state level and selected regions to ensure fair, secure and equitable transfer of land and other farm assets to private individuals or groups; (ii) test and implement these procedures in ten selected former state and collective farms in order to provide representative models which could serve as a basis for wider geographical replicability; and (iii) create sustainable private family farming units and provide them with the enabling conditions to operate independently in a market economy. 2. Key performance indicators: (see Aninex 1) The key performance indicators for the achievement of project objectives would be monitored through a Monitoring and Evaluation (M & E) system which would measure: (i) number of certificates for lifelong land use rights issued to : (a) farm members in each of the selected farms and (b) the existing Dekhan farms (clan or group of individuals) in the selected raions; (ii) number of family and other types of farm organizations established, and numbers of private family farms which are commercially viable; (iii) increase in water use efficiency; (iv) initiation of cost recovery of irrigation and drainage services; (v) number of water user's associations formed; (vi) changes in cultivable agricultural area under private and public ownership according to the main land use types; (vii) number of former state and collective farms restructured; (viii) utilization of rural information and advisory services; and (ix) changes in private family farm incomes, cropping intensity and productivity. B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: CAS document number: 18075 TJ Date of latest CAS discussion: 06/25/98 The proposed project is consistent with the Bank's Country Assistance Strategy which identifies agriculture as one of the priority sectors for stimulating economic growth in the country. The project directly supports the Government's program to transform the agricultural sector into a competitive market oriented system. The project complements the on-going Bank operations, which have focused on creating an enabling policy environment and building institutional capacity in various sectors. The strategy recognizes that only modest progress has been made in land privatization and farm restructuring which could be partly attributable to civil conflict and uneven political commitment and resistance by vested interests, as well as to a lack of demonstrated successful models. The activities proposed in this project would provide the foundation for those being envisaged under proposed future lending operations of IDA; viz., rural infrastructure rehabilitation ($20 million) in FY2000 and post privatization agricultural support credit ($20 million) in FY 2001. 2. Main sector issues and Government strategy: The rapid decline in agricultural production levels and farm incomes during the last few years appears to have reached a bottom last year and is showing signs of reversal, especially through increased production in the newly created Dekhan (private) farms and associations. However, realization of the full potential of Tajikistan's natural resources and comparative advantage in the agricultural sector would depend on the Government's ability to address the following critical issues facing the agricultural sector: -2-  a. Farm Privatization: The Constitution of the Republic of Tajikistan, at the present time, does not provide for outright ownership of farm land by citizens. However, the land code provides for the allocation of life long and inheritable land use rights to individuals. Land privatization, in this document, refers to the legitimization and registration of these land use rights. Noticeable changes have occurred and steps have been taken for the provision of land use rights to members of the former state and collective farms since 1997. Private use of land, is occurring throughout the country with varying degrees of success and is more dependent on the initiatives of the raion administrations and others concerned than on legal processes. Presidential decrees (Numbers 499, 522 and 1021) are being implemented in various raions. The targets set for the privatization of 120 former state and collective farms into Dekhan farms by December 1999 are ambitious in light of the weak administrative procedures and unprepared land registration services. If not managed carefully, this situation would result in the lack of fair and transparent processes and inequities in land distribution. Alternatively, superficial adjustments might result by merely changing the nomenclature of collective farms as joint stock companies or associations and maintaining centralized management. In general, several different types of private land use have evolved: (a) creation of new private Dekhan farms based on nuclear families (husband, wife, children) or extended families, often as a second-stage break-up of "Brigade Farms"; (b) retaining the existing 'Brigade' structure of the old Sovkhozl Kolkhoz farms; and (c) reorganization of the former state and collective farms into structures such as Joint Stock Companies, Lease Enterprises, Dekhan Associations or Collective Farms. There has been little effort to explain the differences to the people concerned in terms of their rights or the alternatives that they could have. To date, the process of re-organization appears to have been a "top-down" process. Nevertheless, during the field visits undertaken during the preparation of this project, the project team found that some of the Dekhan Farms visited, based on natural family ties and internal trust and cooperation, represented a genuine form of private farming with true feelings of ownership of their new land holdings which is a very positive development - one that needs to be encouraged and would be done in this project. The current appraoch emphasizes the creation of brigade based Dekhan Farms and the establishment of Associations of Dekhan Farms in order to help with inputs and outputs marketing. The cost of obtaining land use right certificates has been high and the process which the potential Dekhan farmers have to follow is convoluted and time consuming. A new Dekhan Farm could be expected to pay in excess of $200 for the issuance of a Certificate of Land Use Right, about ten times the cost in other countries of the former Soviet Union. The process is also unnecessarily complex and involves obtaining the necessary permissions from the Hukumat, Jomat (local Governments), Commission for Restructuring Agricultural Enterprises, Land Committee, Notary, Ministry of Justice, Bank, Statistics Agency and Tax Authority. Some of these agencies charge additional fees. This process needs to be simplified and the Government should take steps to implement mechanisms to reduce the fees. This is being addressed by the Government and during appraisal for this project, the project team found that the Government had taken steps to remedy this situation. Land use rights are manually recorded at the State Land Committee and kept in hand written ledgers, making them difficult to retrieve. The system is not parcel based and suffers from the associated drawbacks that allows duplication of entries for the same parcel. Secure land registration and titling services and supporting mechanisms do not exist at present. Tackling this issue requires the implementation of transparent and widely advertised procedures for land and asset allocation. This involves designing and implementing "bottom up" approaches, establishing a simple and inexpensive land registry system and comprehensive information services to increase people's awareness of all aspects of allocation, distribution -3-  and registration of land use rights and farm restructuring processes. Cheaper alternatives would be sought to reduce the cost of issuance of land certificates, e.g. replacing expensive high quality imported paper with a cheaper one (as this was one of the main factors contributing to the high charges). Clear procedures for entries and changes in the register itself with juridical endorsement, and providing easy access by the public to this information are essential for the establishment of a secure and efficient land registration system. b. Agricultural Support Services The support services for the privatized farm units to increase crop productivity, obtain fair market prices, retain incomes and increase opportunities for re-investment are at a rudimentary stage. Due to lack of budgetary resources, the Government is unable to continue providing the required farm inputs and support services to the reorganized farms. Further, the unstable political and economic situation has led to a lack of enforcement mechanisms for legal contracts and raion and oblast border controls restrict free movement of goods and services. Absence of a functioning rural credit mechanism, and collateral based lending of banking institutions with the required capability to lend to the rural sector, and of supporting infrastructure have added to the severity of the problem. The launching of successful farm businesses depends on optimizing the utilization of existing facilities and improving the application of production inputs. In this regard, the farmers are already exploiting the plentiful supply of labor on the new farms through manual cultivation and harvesting. This would restrict expenditures on farm machinery to essential spare parts for tractors and related equipment. Improving Dekhan farm productivity and incomes in the short to medium term would require deepening the reforms in the agricultural sector, developing alternative marketing and financing mechanisms for input and output supplies, introducing new types of tested agricultural technologies from other similar agro-ecological zones in the world, removing artificially created trade barriers, and providing the much needed farm inputs and incentives to sustain privatized farm units. c. Agricultural Policy Environnment Since the peace accord, the Government has managed to intensify its commitment to economic reforms and macro-economic stabilization. One of the key achievements over the past two years has been the growth in GDP - nearly 2 percent in 1997 and an estimated 5 percent in 1998: the first increase since independence. Other indicators have also shown similar signs of revival, such as drop in fiscal deficit from 5.8 percent of GDP in 1996 to 3.2 percent in 1998, and together with a tight monetary policy, bringing the inflationa rate to about 3 percent in 1998. The expected continuation of these policies provides a favorable environment for developing the private sector role in the agricultural sector - which still is in its infancy. Prices of fruits, vegetables, grain and livestock products and inputs have been fully liberalized and Government quotas have been abolished. However, the cotton sector continues to be controlled, with the cotton ginneries largely in the public sector, low raw seed cotton producer prices due to high levels of taxation and high transaction costs involved in the marketing, transport and export of lint cotton by financing and marketing intermediaries. These factors combined with the low irrigated cotton yields - which are in the range of 2 to 3 t/ha as compared to the potential of over 4 t/ha - have resulted in reduced foreign exchange earnings to the economy and reduced farm incomes. Transparent processes for price setting, and informing seed cotton producers before planting season, written agreements assuring the price to be received at the time of delivery between the farmer and the prospective buyers, and promoting competition in the processing and marketing of cotton are the main measures which need to be introduced for the speedy recovery of this most important sector. The Government has submitted a letter describing the policy for agricultural developnzent in the Republic of Tajikistan, dated 12 May 1999 signed by the President of the Republic of Tajikistan (see Annex 11), acceptable to IDA, therebyfulfilling the condition -4-  of Board Presentation. d. Irrigation Systems in Project Farms Agriculture in Tajikistan is dependent on irrigation, which in some regions, is highly energy intensive due to the high-lift pumping schemes. It is dependent on the low cost availability of electric power Presently, the cost of electric power is highly subsidized. The agriculture sector pays only 0.4 Tajik Rubles/kwh or 0.05 Cents/kwh.. Irrigation water is diverted from rivers by gravity. In most cases, the canal water level is lower than the agricultural land, which makes it necessary for water to be lifted by large pumping stations into main canals. These canals supply water to a number of former state and collective farms. It was observed that water pumped to comparatively higher elevations is sometimes used for high-value fruits such as apricots, plums and grapes, where the soils are light-textured and well drained. Combined with very favorable weather, these lands are suitable for growing high-value fruit crops. Given that electricity, pumping, and operation and maintenance of irrigation and drainage systems have historically been provided free to the farms, water use is excessive in Tajikistan agriculture, and particularly in pumping schemes. The farms selected in the project are dependent on both gravity systems and lift irrigation. Most of the area, about 74 percent is irrigated using lifts up to 150 meters, and 20 percent is gravity fed, with the remaining 6 percent of the area dependent on lifts of 150 meters and above. The economic feasibility for the rehabilitation of very high lift irrigation and drainage systems would be subject to careful analysis, especially where the farmers grow only one crop of cotton and some winter wheat and with market prices charged for electricity. Most of the agricultural lands are located in bowl shaped valleys with gentle slopes. Water is pumped to the main canals which are aligned on the higher contours, and the water application to the land is down the slope. Excess water, or return flow, from the higher lands is frequently captured and reused for irrigation of lower lands. The lower elevation lands have higher clay content and do not drain well naturally. Drainage facilities have been provided in many such lands, and often the drainage water is pumped back and reused for irrigation after mixing it with fresh surface water. Salt content of the groundwater is low. Land salinization is rare, and even in the lands where water table is close to the surface, salt deposits are not visible. However, pumping stations for removing drainage water are not in working condition frequently, which could lead to increased water logging and salinization in the future. This makes it imperative to maintain drainage facilities in working condition, especially in the land at lower elevations. The main irrigation system facilities in most of the project farms have deteriorated to the extent that water supplies have been reduced by about 40 percent. The pumping stations are not functioning according to design standards. On an average, only three out of five pumps may work in a typical pumping station and even these require constant repair and the parts are not available. Many of the pumps and electric motors will need to be replaced and the remaining repaired. Pump house buildings need to be rehabilitated and secured. The main canals would benefit from better sediment removal and rehabilitation of channel shape including dykes. Most turnout gates to the tertiary channels are not functioning properly and will need to be replaced. Also, flow measuring devices are limited and where existing, would need extensive repairs or replacement. Additional flow measuring devices would need to be installed for better system performance monitoring. Main collector drains need to be cleaned and reshaped. Most pumps for recycling drainage water need to be replaced. Timely and adequate provision of water, institutional mechanisms for setting, collection and use of water charges and transfer of responsibility of operation and maintenance to the "water users" are measures essential for sustainable increase in crop productivity. The Government is in the process of reforming the irrigation sector, has passed the Water Code, is preparing the procedures for the formation of water users' -5-  associations (WUAs) and is taking initiatives to gradually increase the water charges to recover operation and maintenance (O&M) costs, based on the water users' ability and willingness to pay. 3. Sector issues to be addressed by the project and strategic choices: The project has been designed to address the above issues in a comprehensive manner and is based on evaluation of the following strategic choices: a. Transparent versus ad-hoc approach to land distribution and farm restructuring: The Government initiated the program to develop private farming by distributing lands from former state and collective farms in an adhoc manner. This resulted in increasing the influence of the Hukumat and creation of "unsustainable" forms of private farming structures. Recognizing the adverse effects of such an approach, the choice of developing a systematic "bottom-up", participatory approach, though time consuming, has been adopted. This would involve public awareness campaign informing the farm members about their rights, obligations, procedures and steps to be followed for obtaining their allocation of farm land; open general body meetings where the farm member's views and opinions are heard and decisions taken in an open and transparent manner. b. Simple and single versus complex and multi-component program: Creation of sustainable forms of independent private farms from a controlled group farm situation requires the simultaneous provision of support services in an integrated and timely manner. Mere issuance of land titles and creation of land registry, while reducing project complexity, would not lead to the creation of sustainable forms of private family farms, especially if wider geographical replicability is to be achieved. The minimum package consisting of the most important elements, viz. land registration, information and advisory services, rehabilitation of critical irrigation and drainage works, and provision of one-time grants ( somewhat similar to homestead grants in US history) has been chosen. However, the project scope has been simplified by restricting the scope and limiting the targeted interventions to ten representative farms, which would serve as demonstrations and draw lessons for possible expansion to other regions of the country. c. Grant and pilot savings and credit mechanisms versus only credit led restructuring: The absence of rural savings and credit mechanisms, well developed banking infrastructure, and low levels of crop profitability due to civil disturbances and the stalling of political economic transition, do not create the conditions for credit led restructuring at the present time. It is therefore, proposed to provide a one time grant to the newly privatized farm units for the purchase of essential farm inputs to start independent farming operations; and simultaneously initiate in a pilot scale the establishment of rural savings and credit associations in selected project raions. Lessons learnt from this experience would be used to develop a more comprehensive rural credit delivery system in the country. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project consists of four components. These are: (a) Farm Restructuring Services; (b) Rehabilitation of Critical Main and Field Level Irrigation and Drainage Works; (c) Provision of On-time Grant and Creation of Rural Savings and Credit Association; and (d) Project Management and Implementation Units. Each component is described below: -6-  Component One: Farm Restructuriniw Services: (US$ 5.65 Million) This would consist of the following sub-components: ( i ) Land Use Rights Registration Services: The Land Use Rights Registration Services component has been designed to ensure that farmland is allocated in a fair and transparent manner and that the ensuing land rights are recorded accurately, effectively that would encourage the emergence of a transparent, competitive and fair land use rights market in the future. While it is necessary to initially concentrate on farm land that the SLC would register, the general aim would be to provide a comprehensive service that would include all land in the land registers and ensure the system can be used for both land and buildings. The present system is not parcel based, which has several drawbacks, such as allowing for the duplication of entries, time consuming searches and retrieval difficulties. Neither the ledger nor the Land Use Certificates record the interests of members of the private individual farms other than the leader (Dekhan leader) and do not record third party rights that may include water riglhts, rights of way, pledges, restrictions, etc. A unique parcel numbering system is not being practiced for the individual parcels, which leaves scope for substantial improvement. This will be necessary for the ultimate development of a land market in the future and to be able to deal with disputes in those areas. This component will not only ensure that the ten farms in the six raions are privatized and land is properly registered, but also will establish a national land registration system and training center that will enable all land rights to be registered in a modern and effective registration system throughout the country. The system should be remodeled to include an unique parcel numbering system as the basis for efficient land registration. The training center, national office, oblast offices and six rayon offices will be fully equipped and functional to cope with the wider privatization program. Future developments will only require equipment and in-service training for the remaining forty-six rayon offices. The following activities would be undertaken: Survey/Mapping. Existing aerial maps in the scale of 1:20,000 and 1:10,000 (include latest aerial maps, if available) with the Land Committee/Land Institute (Giprozem) will be utilized, updated and enlarged to 1:5000 for each of the project farms after a detailed ground survey. This will result in redefining the existing boundaries of the farm and other features of the farm. Modern survey equipment will help increase the rate of the current privatization and ensure sufficient accuracy to limit the number of future disputes. Where necessary, existing parcels will be re-surveyed in order to improve the accuracy of location, thus preventing future boundary disputes. Land allocation. Each of the ten farms will undergo an analysis of the privatization activity and be involved in a public awareness campaign that clearly specifies the rights and possible structures that members could choose. Decision making by public consensus will lead to acceptance of distribution of land in an open and transparent marner. The next stages will involve parcel survey, preparation of an allocation plan and public display for general acceptance. Land registration. The land registration system will be based on parcels or units of land that have been allocated in accordance with the bottom up procedures being developed and implemented in this project. Existing and new rights existing in other farms; garden plots; and other land plots of the raion will be also be included in the registration system gradually by the raion level SLC staff. The central office of the State Land Committee at Dushanbe and the land registration offices in the project raions, where the pilot farms are located, would be strengthened with the minimum -7-  equipment, training of staff and operating materials necessary to carry out their new functions. Initially, these raion level offices would serve the needs of the representative state and collective farms and then support the requirements of all other farms in the raion. Existing maps would be scanned into the system and be readily available for updating, plotting farm boundaries and printing land certificates each with a coded parcel number. Training. The training program will commence with a "training the trainers" program. The Tajik Agricultural University will be equipped and trainers trained to conduct all the training for the project. In service training, which has already begun during preparation, will be conducted for the immediate needs of the project and long term training for future needs of the national system. (ii) Rural Information and Advisory Services: The following activities would be undertaken: (a) Strengthen MOA's institutional capacity for provision of rural information and advisory services: MOA's institutional capacity will be developed to select and train advisors, and private extension workers to identify extension needs and develop private extension services over a period of time. Initially, the training program will start with the "Training of Trainers" from MOA, the Tajikistan Agriculture Academy, Department of Agriculture staff of oblasts and the six project raions: (Leninski, Shahrinau, Kalkhozabad, Yavan, Macha, and Zafarabad) and other crop research institutes in modern training approaches and methodologies by international consultants. The Project's Management Unit (PMU) at Dushanbe, MOA along with the Academy of Agricultural Sciences (AAS), and international consultants, would prepare the necessary need based training modules for the newly emerging private farming groups. Capacity would be built in the MOA for providing training and information for development of private extension services. (b) Field level demonstrations in appropriate teclnologies: Demonstrations in the application of improved seeds, optimal use of fertilizer, proper pesticide use; inter cropping; improved cultural practices and post-harvest technologies would be carried out in a few representative private farms through the research institutes. New and improved local crop production technologies for major crops (wheat, cotton, potatoes, onion, maize, sunflower, peanut, sesame or other oilseeds and pulse crops like cow peas and mungbean and chick peas ) would be demonstrated in selected Dekhan farms in blocks of 10 ha in the former sovkhozJkolkhozes. High yielding varieties of oil seed crops such as Brassica Napus, Brassicajuncea, Sesames orientale, that would help introduce effective crop geometry, hold good promise in the plains of Vaksh river valley. Inter-cropping or relay cropping systems in cottoin - wheat based crop systems, and short duration pulse and/or oil seeds crops in wheat-cotton rotation to enhance cropping intensity would be introduced. Selection of Block Demonstration Farms will be on the basis of criteria developed by the PMU on the advice of the Bank and the consultants. The objective of the demonstrations is to teach farmers to evaluate improved practices/machinery and become more self reliant and commercially oriented. These demonstrations would make use of special equipment (local improved and imported), including the use of the latest generation of fuel efficient 4WD tractors. In some cases, private companies would be encouraged and invited to demonstrate farm machinery for small farm production technologies. Block demonstrations of 10 ha each in 30 places (to a total of 300 ha) will be organized over two years, using off-the shelf modern varieties developed by the international crop research institutes (i.e. ICARDA, CIMMYT, CIP, etc.), multiple cropping systems, economically optimal rates of agricultural inputs of fertilizers, use of pest and drought resistant photo-insensitive early maturing high quality and high yielding varieties seeds, pest -8-  control-chemicals. Better on-farm water management practices will also be demonstrated (involving IIMI), including some improved drip and sprinkler components. (c) Establishment of a farmers' information services desk in the MOA: This would provide regular information on critical agricultural issues related to production and marketing through the existing news media of TV, radio, video, brochures and "Farmers' Weekly" paper. The agro-technical topics and contents for the broadcasts and papers will be generated by the consultants and technical specialists of MOA and staff of agricultural research institutes, who will pass it on to the newly established MOA's Information Unit's Press Center. MOA already has some experience in providing TV and Radio broadcasting to farmers and this would be strengthened. Under the project, page space will be bought for the "Dekhan Farmers' Weekly" edition on a weekly basis for the next two years and later priced and sold. Eventually sufficient agricultural information will be readily available to farmers so that these papers do not need direct support from MOA, with the Dekhan Farmer's Association at the national level taking over the full responsibility of publishing all the demanded Dekhan farmers' information themselves in due course. Component Two: Relhabilitation of Critical Main and Field Level IrriRation and Drainaze Works: (US$ 8.53 Million) The main objectives of this componenit are to repair or replace the critical irrigation and drainage facilities in the selected farms so as to create and sustain privatized agriculture at the raion and farm levels; to assist in the establishment of water users' associations (WUAs) that are self-sustaining and can effectively manage irrigation facilities; and to establish performance monitoring and evaluation of irrigation water use. The following activities would be undertaken: (i) Strengthen existing tecmnical, design and planning capacity in the selected raions; (ii) Rehabilitate and repair of the most critical pumping stations used for irrigation water supply and for removing drainage water; (iii) Repair or replace water control gates at the diversion site; and turnout gates which regulate the flow from the main canal into tertiary channels; (iv) Clean main irrigation canals and drainage collectors; (v) Replace and repair existing water measurement devices by weirs and flumes; (vi) Introduce drip and sprinkler irrigation systems as demonstrations in selected areas; and (vii) Create water user's associations (WUA's) to operate and manage field level irrigation and drainage systems. These WUA's need to be empowered, both legally and financially, so that they can collect irrigation service fees from system beneficiaries and be able to use the funds for proper system operation and maintenance. -9-  Component Three: Provision of One-time Privatization Grant and Creation of Rural Savinus and Credit Association: (US$ 5.46 Million) This component would consist of the following: (i) Provision of one-time priva. ization grant: The project would provide a one-time grant to the private "family farms" to enable them to obtain a minimal amount of the most critical agricultural inputs to increase crop and or animal productivity as soon as possible. This grant would be limited to $300 (three hundred) per hectare of arable land to each family farm subject to a maximum of $600 (six hundred) per farm family. For the purposes of providing the one-time grant, the farm family is defined as a family unit consisting of a husband and wife and their children; with/without their grandparents, and immediate relatives all living in one household. This is referred to as "oila" in Tajik language. This grant component will also include those farm families who have not yet been allocated land use rights in accordance with the Presidential decrees to ensure equity, but who would be provided with land shares in reserve lands. Only those family farms which meet the following eligibility criteria shall be provided with this one-time privatization grant: (i) possession of a clear land use rights certificate; (ii) account in the Tajiksberbank (Savings Bank of Tajikistan); (iii) membership in the WUA and an access to assured and timely supply of water for agricultural activities; and (iv) engaged in agricultural activity as the main source of livelihood. The grant would be provided in the form of cash to each household and deposited directly into their respective household accounts, which are maintained at the raion branch of Tajiksberbank. (ii) Creation ofpilot rutral savings and credit associations (RSCA). The main objective of this component is to initiate the creation and development of grass-roots, member owned local savings and credit associations that would meet the short and medium term credit needs of its members. The National Bank of Tajikistan has passed a resolution recently (January 1999) permitting the establishment of such savings and credit associations, which would form the basis for this component. As this would be the first of its kind in Tajikistan, it is proposed to test this participatory approach in a few of the newly created Dekhan Farm Associations. Such initiatives are being implemented in Bank and donor financed projects in some of the Former Soviet Union countries and Eastern Europe, for example, Moldova and Albania. A short study tour to these countries for senior officials involved in banking and finance from the National Bank of Tajikistan, (NBT), Ministry of Finance and for potential organizers of such associations from the project farming units in the participating raions would be undertaken to gain first hand overview and learn from the lessons of experience. The project would support the following activities: (i) development of appropriate rules, regulations, registration requirements and eligibility criteria governing the operations of RSCA's; (ii) training in supervision and enforcement of guidelines for the staff of NBT; (iii) creation of rural savings and credit associations in interested newly created associations of Dekhan farms in the pilot project areas; and (iv) provision of start up capital and a credit line. Initially, the services of a suitable international Non-Governmental Organization (NGO) whichi has successfully designed and implemented rural based savings and credit associations would be recruited to create, train, manage and operate the RSCA's. Funds would be provided to the RSCA's at the prevailing National Bank of Tajikistan rediscount rate denominated in Tajik Rubles which, in turn, would be made available as loans to members, at interest rates determined by the members of the association based on market conditions, risks and type of security. The -10-  Government would bear the foreign exchange risk. It is expected that initially, most of the loans would be for working capital, though some medium term loans for farm equipment, tube wells, rehabilitation of field irrigation and drainage works, etc could also be financed. Only those RSCA's which meet the following eligibility criteria shall be provided with the start up capital and access to the credit line: (i) it is registered by the National Bank of Tajikistan in accordance with the regulations of NBT number 83, dated January 26, 1999 and/or amendments thereof; (ii) maintain accounting standards according to established standards of saving and credit associations and acceptable to the Association; (iii) has received training acceptable to the Association; and (iv) is in compliance with prudential rules established by NBT for RSCA's activities. The rural savings and Credit Associations meeting these eligibility criteria would be provided with: (i) an amount of up to $50,000 (fifty thousand US Dollars) as start up capital; and (ii) access to a credit line of up to US$150,000 (one hundred and fifty thousand US Dollars) to each RSCA for subsequent on-lending to the members. Based on the results of these pilot activities, including credit and repayment performance of the RSCA's and implementation of the statutes, regulations and eligibility criteria for loans to its members, additional support to expand this activity to the raions, oblast, and national levels could be considered in a subsequent operation by the World Bank. Component Four: Project Manarement Unit in Dushanbe and Proiect Implementation Units in six project raions: (USS 3.86 Million) This component would provide support for the establishment and operations of the Project Management Unit in Dushanbe and in Project Implementation Units in each of the six project raions. The Project Management Unit would be responsible for overall coordination of the project, preparation of annual work program and budget, providing overall guidance and assisting the Project Implementation Units (PIU's) in the project raions in thie preparation, design and implementation of project activities, carrying out all the work related to procurement, disbursement, accounts, audit, monitoring, evaluation, and reporting. The project will provide the necessary equipment, vehicles, rehabilitation of offices, training and technical assistance in the areas of procurement, finance and accounting systems, project management and operating cost. E CrponeM ! Secbr ~~Indicativ a o Bank Xo Compone n't Sector, Cots~ %/ Of; fnnin a (US -M) Total - JS$M. finan.ing 1. Farm Restructuring Services: AD - Rural 5.65 24.0 5.45 27.3 Land registration services and Rural Development Information and Advisory Services 2. Rehabilitation of Irrigation Works Al - Irrigation & 8.53 36.3 6.55 32.7 and Water User's Association: Drainage 3. Grant and Rural Credit AC - Agricultural 5.46 23.2 5.20 26.0 Credit 4. Project Management Unit/Project BI - Institutional 3.86 16.4 2.80 14.0 Implementation Units Development Total Project Costs 23.50 100.0 20.00 100.0 Total Financing Required 23.50 100.0 20.00 100.0 -11-  2. Key policy and institutional reforms supported by the project: The proposed project would support the implementation of the Government's program for farm privatization and restructuring, which is aimed at providing security of land tenure to individuals in the near term and creation of land rights markets in course of time. The willingness of the Government to make appropriate changes in the legislative framework and implement the necessary institutional mechanisms provides the basis for undertaking the proposed project. The continued cormnitment of the Government to pursue agrarian reforms have been expressed in the policy letter for agricultural development. Rehabilitation of critical irrigation infrastructure and transferring responsibility to water users for operation and maintenance are consistent with both the Government's and Bank's emphasis on removing critical bottlenecks and implementing cost recovery mechanisms. 3. Benefits and target population: The proposed project would yield principally two broad types of economic benefits, creating and promoting a privatized form of agriculture, and, increasing individual farm family incomes. The estimated population expected to directly benefit are about 28,000 persons who depend on agriculture as their principal means of livelihood. Creation and development of privatized agriculture: This would result from the following project activities: (a) land registration system: Establishment of a modern and secure land registration system with appropriate procedures would provide clarity of land titles, instill confidence in individuals regarding legal rights to land use, and form the basis for land mortgaging and creation of land rights markets in the future; (b) rural information and advisory services. The Project's emphasis on providing timely and wide dissemination of various types of information, would increase the awareness of the opportunities presented by a market economy, and would enable farmers to evaluate the relative profitability of altemative crop and livestock activities and to enter new markets. The use of mass media and participatory workshops would help build consensus in favor of private farming and build confidence in claiming land rights by nuclear and extended families. Increase individual farm family incomes: The provision of a one time grant in cash towards procurement of essential agricultural inputs, viz., seeds, fertilizer, agricultural tools, along with the timely availability of water are expected to have a positive effect on crop productivity and farm family incomes. Cropping intensity is expected to increase from the present 80% to 120%, as a result of introducing multiple-cropping through cultivation of improved varieties of high yielding cotton, wheat, cold tolerant and disease resistant potatoes, early maturing legumes, short duration vegetables, etc. Average per capita incomes in the privatized farms are expected to increase between 25 and 50 percent as a result of increased yield levels; for example the wheat crop yield is expected to increase by 2.5 tons/ha from the present level of 1.8 tons/ha and yield levels of "raw" cotton are expected to increase from the present level of 2.2 tons/ha to 3 tons/ha. Such yields were commonly exceeded in the past. -12-  4. Institutional and implementation arrangements: The implementation period for the project is five years from January 1999 to June 2004. The executing agencies are: State Land Committee, Savings Bank of Tajikistan (Tajiksberbank) Ministry of Water Resources (minvodkhoze), Ministry of Agriculture (Minselkhoze), raion administrations (Ispolnitol vlast raiona) and raion level department of agriculture (Selkhozeupravleniya), and non-governmental organization (NGO). The Government has established a Prime Ministerial level steering committee to manage the farm restructuring program. The Government has also established a Project Management Unit (PMU) for the implementation of this project under this committee. Following are the implementation arrangements for the proposed project activities: Overall project coordination: The project management unit has been established in Dushanbe with the director and key staff in place, offices have been renovated, and the office equipment has been procured and is operational. The Director reports to the Prime Minister. The PMU is responsible for overall coordination of the project, preparation of annual work program and budget, providing overall guidance and assisting the Project Implementation Units (PIUs) in the raions in the preparation, design and implementation of project activities, carrying out all the work related to procurement, disbursement, accounts, audit, monitoring, evaluation and reporting. Project Implementation Units (PIU) in each of the project raions would be established for coordinating project activities at the raion level. A Project Preparation Facility (PPF) advance for $600,000 and a Japanese PHRD grant for $400,000 are being used to initiate start up project activities and to procure the essential initial equipment, office supplies, operating services, training and technical assistance. Implementation of individual components: (a) Land Registration: This would be carried out by the State Land Committee at Dushanbe and its offices in each of the project raions. The State Land Committee (SLC), as provided in the Land Code, has the mandate for the land registration and land administration. Implementation of the privatization of state and collective farms, rural land registration and land record maintenance is the responsibility of the SLC. The ultimnate responsibility for carrying out of land reform and farm restructuring rests with the SLC at Dushanbe. While the SLC has primary responsibility in the Republic for land management and administration tasks, it is also responsible as a technical executor of land reform policy established by the Government of Tajikistan. The SLC uses the State Land Institute (GIPROZEM) for technical expertise and contracting geodetic work when required to Geodesy (FAZO). The Land Code also provides many of the land management functions to the raion administration. State and raion offices of the State Land Committee are staffed by competent technical personnel. Although few in number and lacking in equipment and facilities there is little reason to doubt their ability given sufficient training and resources. At the raion levels, the raion administration (HUKUMAT), supported technically by SLC raion branch, define the direction and scope of land reform activities. The raion level SLC provide technical guidance and clarity to raion and Jomat level Land Commissions, and councils, resolving conflicts and helping to implement the farm privatization and the land use right distribution process. Jomat and Raion level officials and SLC staff responsible for land and agrarian reform implementation need training in the procedures for allocation of land parcels. With respect to issue of land use right certificates and their registration, currently the responsibility is of SLC. The Notaries, appointed and approved by the Ministry -13-  of Justice, at the raion level act as a juridical registration authority for the private farmers associations as an enterprise (dekhan farming enterprise). The key issue which needs to be addressed is the maintenance of orderly records of the newly issued land use certificates and their registration. This is essential for the smooth introduction of the permanent registration system and attention need to be given to the careful and systematic storage of these land use registration data, with suitable precautions against theft, fire and loss (e.g. by keeping duplicate records under fire proof custody). Land use-right distribution needs to be followed with state guaranteed registration to ensure fully secured property rights and an efficient, formal land market in future. The State Land Institute has two sections. (i) The cadastre section dealing basically with soils and land use maps. (ii) The survey section dealing with land survey. Under this project the land institute will be helped to combine these two activities to take up the technical responsibility under the SLC for the privatization of Sovkhozes and Kolkhozes. Presently, the land institute uses for survey works telescopic alidades, plane tables and measuring tapes. They have no theodolites and no modem survey equipment. The maps of farms are hand drawn although look to be of excellent quality are not accurate. The archives are meticulously kept and detailed plans, soil surveys and other data are readily available. The Land Institute would be equipped under this project to enable them to prepare accurate maps more efficiently and produce land certificates accurately depicting the land parcels initially for the six project raions. Based on this experience recommendations would be made to geographically expand this activity for enabling to cover the entire country. (b) Rural Information and advisory services: The Project Management Unit (PMU) would be responsible for carrying out the rural information and advisory services component. The MOA along with the Academy of Agricultural Sciences (AAS), and international consultants of the PMU would prepare the necessary need based training modules for the newly emerging private farming groups. Capacity would be built in the MOA for providing training and information for development of private extension services. PMU would also contract local crop development and research institutes to carry out field level demonstrations of modern off-the-shelf proven varieties and cropping systems, and also make collaborative arrangements with international agricultural research centers, such as ICARDA, CIMMYT and IIMI to bring in latest production and farm management technology. These works would be executed under contracts procured through local competitive bidding. (c) Rehabilitation of critical irrigation infrastructure: This component would be implemented by local/international contractors procured through competitive bidding procedures, under the supervision of the Ministry of Water Resources and an internationally recruited quality control irrigation engineer. An overview of the different works proposed under the irrigation infrastructure rehabilitation component (categories A to I ) that would be executed following the competitive bidding process as per the bank guidelines for procurement of works is explained in Amnex 2 Section B. These works would be executed under contracts procured through competitive bidding. (d) Provision of one-tinie privatization grants: The Savings Bank of the Republic of Tajikistan, Tajiksberbank, would be used as an agency bank to channel the funds to eligible private farm families. It is a state owned institution with no outside sharelholders. Its charter was adopted on 8 January 1992 by the Council of Ministers. An in-depth -14-  financial study of the Tajiksberbank was undertaken by Arthur Andersen in May 1998. The study identified several areas of strengths and those needing substantial improvement. Among the strengths were consumer and citizens trust in the bank; presence of a massive branch and agency network, role as a payroll provider for state agencies and pensions and it is backed by a government guarantee. Areas needing improvement include the need for the development and implementation of a business strategy for future growth and profitability; strengthening of internal audit and controls; improvement in its management information system and provision of training to staff. Given the absence of other financial institutions and its experience in channeling Government funds, Tajiksberbank is presently the most suitable institution to undertake this task. In order to carry out this function. Tajiksberbank would receive a commission of 3 percent of the grant amount processed and deposited in the farm family household account. An agency agreement between the Ministry of Finance and the Tajiksberbank was reviewed and finalized during negotiations. The detailed procedures for the implementation of this sub-component have been described in Annex 2. (e) Pilot Rural Savings and Credit Association: This pilot activity would be implemented by a qualified NGO, which has adequate experience and shown a track record of establishing successful community based rural savings and credit associations, especially in similar countries which are in transition. In light of the on-going reforms in the financial sector, the involvement of other financial institutions at a later stage, would be considered. While most of the emerging private family farms are highly skilled in the traditional methods of growing various types of crops, they lack the knowledge and the experience to design, operate and manage a rural savings and credit association. The NGO would provide essentially two functions - First it will be responsible for the design and implementation of the operating rules and procedures and the establishment of pilot rural savings and credit associations; and Second; it will assist with the operation and management of the credit line to be provided to these associations. The results of this pilot exercise would be evaluated during its operation and the lessons used for the preparation of a larger project focused on rural credit for possible financing by the Bank in the future. The supporting regulatory framework, supervision capacity and enforcement mechanisms are being strengthened in the National Bank of Tajikistan with the assistance of the IMF and the World Bank. Tajikisberbank would be used as an agency bank to channel a portion of the funds received as credit for the Project from IDA to provide sub-loans to rural savings and credit associations. The main functions would be: (i) on-lending and recovery of sub-loans made to the rural savings and credit associations; (ii) repayment to the Ministry of Finance of the interest and principal received from the RSCA (which would be used for servicing the IDA credit); and (iii) maintaining proper custody of these sub-loan funds and proper accounts, separated from its own accounts, which would be subject to audit twice a year by an auditor acceptable to IDA. TSB shall receive a fee of one percent of the sub-loan amount provided to the RSCAs and another one percent from the total amount of interest and principal collected from the RSCAs in cash on an arrears basis. The execution of the Agency Agreement between the Ministry of Finance and Tajiksberbank would be a condition of credit effectiveness. -15-  D: Project Rationale 1. Project alternatives considered and reasons for rejection: The main rationale of the project is to respond to the urgent request of the Government of Tajikistan to assist them to create the necessary supporting institutional mechanisms for land privatization and farm restructuring and to actually implement these new procedures in a few representative former state and collective farms. Lessons learnt from this would form the basis for the development of a larger nationwide program. The project design which has been selected has two main features; the first being the development of transparent and participatory approaches for land distribution and the establishment of a secure land registration system; and the second being the support services and assistance required to create and sustain a privatized form of agricultural system. This has resulted in the proposed project components described in Section "C" of this PAD. Project alternatives considered and reasons for rejection. a. A project focusing only on development of land allocation procedures and land registration system: While this would be easy to implement and a valid option, the project would not immediately lead to increased farm production, develop the private sector, and finally, would find difficulty to obtain Government's support for what would be largely a technical assistance type operation. While this was the basis for the rejection of what could be a stand alone operation, the proposed project has incorporated the farm and land privatization as its main component. b. A project focusing on rural credit: Although rural credit is much needed in Tajikistan, the macro-economic environment, legislative framework and the present farm profitability levels are not adequate to launch a stand alone rural credit operation at this time. However, recognizing the importance of providing working capital to the newly emerging private farmers, the project team has proposed that a one time grant for the purchase of essential agricultural inputs and farm implements, be given to the newly privatized farms, who meet the eligibility criteria. Besides providing immediate assistance, the timely use of improved inputs could jump start the farming activity and result in the much needed increase in farm productivity in the privatized plots to seal acceptance of private fanning nationwide . c. Linmited or nation wide project scope: The scope of any of the project components could vary from a few raions to the whole country and the number of farms to be included in the project could be a few to many. While the scope is limited by the availability of Government, IDA and beneficiary funds, other main factors influencing the limited scope of the project were : the limited institutional capacity of the Government and the various agencies; the unstable political and economic environrment, and the need to demonstrate quick results in a few selected farms who are willing to implement transparent and participatory approaches to distribute land and property assets and to establish the financial viability of private farming. The farms chosen for undertaking the privatization and restructuring process represent the major agro-ecological systems; have different cropping patterns; different farm sizes which are representative of regions of the country and most important, the selected farm and raion administrations are committed to privatize and restructure the farm operations. Therefore, the project scope is limited to six raions and ten farms. -16-  2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings I__ ___ ___ ___ ___ ___ ___ ___ __ ______ _(Bank-financed projects only) Implementation Development Bank-flnanced Progress (IP) Objective (DO) 1. Agricultural Recovery and Social IDA S S Credit Institution Building and Technical IDA S S Assistance Project (IBTA) Pilot Poverty Alleviation Project IDA S S Structural Adjustment Credit 1 IDA U S Emergency Flood assistance IDA S S Rural Infrastructure Project IDA NA Other development agencies IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: Experience in countries which are undergoing transition from a centrally planned to a market economy has proved that land privatization and farm restructuring is best undertaken in a phased manner consistent with the development of markets, functioning financial intermediaries and overall macro-economic stabilization to yield desired results. The process is accelerated as the distortions in the economy are eliminated, procedures refined, legal systems developed and supporting institutions evolve to provide timely support services. Fundamental to this program is to give titles to farm land and property in the hands of farm members - with an opportunity to voluntarily decide how to use these newly acquired rights. Assistance programs should address the severe constraints faced by the privatized farms, in particular: a). the lack of appropriate information on re-organization laws and procedures; and b). inadequate institutional capability to effect the transfer, limited technology choices, need for focused social services, lack of working capital and investment funds for restructuring production systems appropriate for private small-scale farming, and the poor state of irrigation and road infrastructure. In all these respects, successful initiation of private farming in Azerbaijan under the Azerbaijan Farm Privatization Project (Cr- 2933-AZ) has been a major source of lessons learned for this project. The proposed project takes into consideration these factors and the components have been designed to address the critical constraints identified from the lessons of experience. 4. Indications of borrower commitment and ownership: The main indications of borrower commitment to the project are: a. Establislunent of Prime Ministerial level committee for farm restructuring: Realizing the danger of increased poverty and potential for social conflict resulting from unfair allocation of land lease rights in selected regions, the Government has established a Prime Ministerial level committee to manage the farm restructuring process and has committed itself to making future land distribution fair and equitable; b. Issuance of a Presidential resolution on the establishment of the coordinating center for the Farm Privatization Support Project, recruitment of staff for project implementation, provision of office -17-  facilities and directing the Ministries, Governors of Khatlon and Leninabad oblasts, towns and regions to extend full cooperation for carrying out activities required for the farm privatization support project; and c. Utilization of a Project Preparation Facility (PPF) advance: The Governnent of Tajikistan applied for, signed on September 8, 1998, and is now using a PPF advance for the establishment of the Project Management Unit, training of staff in procurement, financial and accounting systems, and for initiating critical start up activities required for implementation of project components. 5. Value added of Bank support in this project: The IDA's support to the Government of Tajikistan in the agricultural sector would provide the needed impetus to formulate and implement transparent procedures (an area where IDA involvement has already had an impact) for the distribution and allocation of farm lands and to create sustainable private farming. This would also provide the IDA with an opportunity to advise and find ways to remove key obstacles in both the legislative and institutional mechanisms which currently hinder the process of land privatization and farm restructuring. The IDA has a comparative advantage in this area as it has been deeply involved in sustaining the peace efforts and creating the conditions for macro-economic stability following several years of civil conflict. It also has the experience in farm privatization to draw on (both successful and otherwise) from virtually every other former republic of the FSU, including particularly those of Central Asia. The activities proposed in the proposed project would, therefore, build and complement the IDA's program being currently undertaken and also those being undertaken by other donors and multi-lateral agencies. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (supported by Annex 4): o Cost-Benefit Analysis: NPV=US$ million; ERR = 26 % O Cost Effectiveness Analysis * Other The main benefit of this project is the development of new models of farm restructuring, farm support and production structures necessary for the transformation of the agricultural sector into a competitive market oriented system and which could be replicated in other parts of the country. This requires reasonably secure and registered land rights; improved information and advisory services; favorable relative agricultural input and output prices; a combination of credit/grants to provide for seasonal working capital requirements, longer term finance for essential farm equipment, land development including leveling and rehabilitation of irrigation systems to provide reliable water supply to farms and relief from the obligation to finance social assets. The Government's reforms in the policy areas have been aimed at providing producer incentives through : (i) the removal of price controls on all agricultural commodities; (ii) elimination of the state order system; and (iii) commencing the privatization of cotton ginneries. While the agricultural producers have benefited from these reforms, a letter of development policy with the minimum set of policy conditionalities to ensure farm profitability and agricultural competitiveness has been agreed upon for board presentation. Economic Benefits: The project would yield two broad types of economic benefits, one, create and promote an enabling environment for privatized agriculture and two, increase in farm incomes. Enabling environment for privatized agriculture: This would result from the following project -18-  activities: a. Land Registration Services. The modernization and security of the land registration system with appropriate procedures would provide clarity of land use right titles, instill confidence in individuals over legal rights to land use, and form the basis for land use right mortgaging terms, which would contribute to the development of land use right markets. During the project period, it is expected that about 5000 - 6000 land use titles would be issued to dekhan farms (private individuals); b. Rutral Information and Advisory Services. The farm information and advisory services component is critical for ensuring that farmers are well informed about business and organizational alternatives and how to function in a market economy. The project's emphasis on timely and wide dissemination during the privatization and restructuring process beyond the project raions is expected to have a significant impact on similar processes in other farms. The use of mass media and participatory workshops to build consensus and to develop community based programs is expected to promote "project ownership" by the beneficiaries and the various agencies - critical elements to ensure speedy project implementation. Increasing awareness of market economy would enable the privatized farm units to evaluate relative profitability of alternative crop and livestock activities and to enter new markets. The training and tecluhical assistance being provided is expected to result in a large number of trained people in the privatization process, modem farm and enterprise management practices appropriate to a market economy; c. Creation of Pilot Rural Savings and Credit Associations: This would be the first of its kind in Tajikistan, to test this participatory approach in a few of the newly created Dekhan Farm Associations with its own size, timing, scale, procedures, terms and conditions for obtaining credit. Training would be imparted to the members in credit appraisal methods, risk evaluation and techniiques for financing working capital and investment requirements for privatized farm structures, puffing in place appropriate accounting systems and providing credit on the basis of financial, economic, social and technical viability. These are expected to provide valuable lessons in the development of a community based rural financial system; and d. Reorienting thle Functions of Agricultural Agencies. The management approach suggested for this project is expected to begin the process of transformation of the traditional functions of the Ministry of Agriculture at the state and raion levels. At the state level, it would help to instill a team work ethic, while the collaborative work of MOA, MOWR, SLC is expected to improve work efficiency and reduction in duplication of tasks. At the raion level, the new irrigation and drainage systems based on hydrological boundaries would encourage greater efficiency and sustainability and make it easier to collect of water charges and foster the formation of water user's associations. Quantification of these institutional benefits would be made through periodic monitoring of select indicators. Increase in farm incomes: Given the nature of this project, and the difficulties in predicting the exact number of privatized individual sub projects to be financed, a project wide economic rate of return is necessarily indicative. However, preliminary analysis of farm models indicates increase in crop profitability and positive impact on farm incomes. With privatization, changes in the present cropping pattern are expected to occur which will involve an increase in perennial forage legumes, introduction of maize, intensification of cotton, wheat, fruits and vegetables. Improvement in the irrigation and drainage system would increase the cropping intensity from the presen1t 70 percent to 120 percent, which would result from the cultivation of early maturing pulses, oilseeds, corn and vegetables in addition to traditional wlheat, -19-  cotton or fodder. 2. Financial (see Annex 5): NPV=US$ million; FRR = 21 % Project Cost, accounting, audit, financial and reporting arrangements Project Costs: The project is estimated to cost US$23.5 Million. The cost of various components, sub-components and detailed cost tables are in the project files. The foreign exchange component has been estimated at US$ 17.0 Million or 72 percent of the total project cost. This cost includes physical and price contingencies of US$1.39 Million and US$2.36 Million respectively. The project costs exclude duties and taxes, as the goods and services to be procured under the project would be exempted. Physical contingencies vary between 0 percent to 20 percent depending on the items. Local costs have been converted to their US$ equivalent using an exchange rate of 1000 Tajik rubles to one US Dollar. Price contingency estimates assume an increase in local currency costs of 10, 9, 8, 7, and 6 percent per year from 1999 to 2003 (which is the projected inflation rates); and 2.5, 2.6, 2.7, 2.8 and 2.9 percent from 1999 to 2003 for foreign currency cost. Project Financing: The project would be financed by an IDA credit of US$ 20 million, by the Government of Tajikistan and beneficiaries. Funds from IDA would be used to finance a portion of the goods, civil works, training, technical assistance, grant, credit and operating costs required for implementation of the project components. Due to the tight budgetary constraints and fiscal difficulties faced by the Government at the present time, the IDA will finance 100 percent of the foreign exchange costs and 46 percent of the local costs. This would result in an IDA contribution of 85 percent of the total project costs, and the remainder 15 percent would be financed by the Government and beneficiaries. The operating costs would be financed on a declining basis during the project implementation period. All taxes and duties for the goods, works and services required for project implementation would be financed by the Government of the Republic of Tajikistan. Agreement was reached during negotiations on the project financing plan; budgetary provisions and allocation of counterpart funds, and deposit of an amount of $50,000 (fifty thousand) equivalent in local currency in the project account established in Tajprombank to meet the initial requirement for counterpart funds for project implementation. Project Preparation Facility: A project preparation facility is currently being executed for US$600,000. This is being used to start up project activities and procure essential equipment needed for strengthening land registration services, vehicles, office equipment, computers and related accessories, operating materials, establishment of the Project Management Unit and the Project Implementation Units in two raions; training and technical assistance in the areas of land registration, farm information and advisory services, project management, accounting and finance. Financial Management and Accounting A certified Financial management specialist (FMS) has evaluated the current financial management and accounting practices and the steps necessary to institute an adequate financial management and accounting systems to meet OP/BP 10.02. The evaluation was prepared on the basis of consultants reports -20-  and discussions with the project team and the financial management officer for the project who has been involved in the preparation of this project from its early stages. Financial Management arrangements for the project are detailed in Annex 6. All necessary steps would be taken to ensure that the project complies with the relevant Bank policies (OP/BP 10.02). Accounting. Tajikistan does not have any established accounting systems which adheres to International Accounting Standards although there are standard principles and procedures to be followed in presenting accounting schedules to the Governrment. Consultants have reviewed the project requirement and have recommended an internationally acceptable accounting system, which would be implemented for the project. Separate books of accounts would be established at the six raions which form the project sites and would be integrated into the PMU accounts on a monthly basis. The proposed accounting system is being developed by a consultant using an off the shelf software. The accounting for this project would be maintained in accordance with International Accounting Standards. Given the dearth of local expertise in the areas of finance and accounting, an international consultant would be recruited for the first two years of the project to assist the PMU to keep its book of accounts in a computerized accounting system and to provide training to the accounting staff on accounting, financial management and use of computer software. Audit Arrangements: Steps would be taken to appoint an external auditor for the Project as a condition of its effectiveness. This would include (i) advertising in the local newspapers to invite "expressions of interest" from local audit firms; and (ii) short-listing of at least five audit firms. The auditor's first task would be to audit funds employed under the Project Preperation Facility. An Auditor acceptable to the IDA would be appointed within the first four months of effectiveness of the project. During Negotiations, agreement was reached that the audit of the project would be undertaken in accordance with International Auditing Standards. Audited financial statements for the project would be sent to IDA within six months after the end of every fiscal year. Reporting Arrangements: In addition to submission of annual audited financial statements, unaudited financial statements would be submitted to the Bank within tlree months after the end of every fiscal year. The PMU would also be required to submit to the IDA quarterly project management reports per guidelines issued by the IDA under (OP/BP 10.02). Disbursements: Disbursements under the project will initially be based on traditional disbursement procedures, due to lack of institutional capacity in financial and project management, as the present accounting systems do not adhere to international standards, and banking infrastructure is in its early stages of development. A project financial management system (FMS), conforming to the LACI guidelines, will be designed and completed during the first year of implementation through a time bound action plan (see annex 6 of this -21-  PAD). The project financial management reports (PMRs) will be generated from the FMS from third year onwards. All necessary steps would be taken to ensure that the project complies with the relevant Bank policies (OP/BP 10.02). The proposed accounting and finance system would have the built-in capacity to ensure a submission of simplified PMRs until PMRs meet the requirements of the Loan Administration Change Initiative (LACI) as at section 3.02 (a) of LACI implementation Handbook. During the negotiations, agreement was reached on the implementation of satisfactory procedures for financial and accounting systems, internal control ofproject accounts; appointment of external auditors acceptable to the Bank for the project; submission of six month work program and budget for the project to IDA for review and approval at least one month before the commencement of each proposed work progranm. Fiscal Impact: 3. Technical: The activities proposed in all the components use simple and tried technologies. The land registration system being proposed is based on existing land cadastre maps, farm boundaries would be surveyed using GPS or triangle based ground survey techniiques, compilation of legal cadastral base maps would use existing topographic maps, and demarcation of individual parcels would use simple markers, such as wooden stakes, etc. The land register would be maintained on personal computers, equipped with easy to use software and security systems. The irrigation works involve rehabilitation using standard engineering design and teclmiques. The project would promote locally adapted varieties for the most important crops, viz Atey 85 and Mahmoody varieties of wheat; Vaksh-9326 and Meliergaon varieties of cotton; and Cardinal variety of potatoes. These seed varieties would be ensured to be of foundation/elite level, so that they could be used for the next five crop seasons by the farmers. The stocks being held by the seed multiplication centers in Tajikistan would be processed and tested for vigor and germination characteristics (which should be of at least 94%). The involvement of International Research Institutes such as ICARDA, CIMMYT, CIP and IIMI in conjunction witlh the Tajik Academy of Agricultural Sciences and local agricultural research institutes would bring new agricultural and irrigation technologies in the project areas; principally in the areas of multiple cropping, agronomic practices for small holder agriculture, water management, sustainable farming systems, etc. 4. Institutional: a. Executing agencies: b. Project management: The establishment of the Project Management Unit and the appointment of key staff early oni during project preparation has had a positive impact on getting the most important activities underway. All the concerned implementing agencies, viz.; State Land Committee, Ministry of Water Resources, Ministry of Agriculture, Ministry of Finance and Savings Bank of Tajikistan; oblast and raion administrations and Departments of Agriculture in each of the project raions hiave been involved during the processing of this project. Timely achievement of project objectives would depend on the continued cooperation between the PMU and the concerned agencies, providing performance based incentives to project staff, provision of counterpart funds by the GovernmT-ent and building the necessary skills and implementation capacity in PMU and PIU's at the raion level. -22-  5. Social: Social assessment was carried out by CARE International (Tajikistan) to prepare a socio-economic and demographic profile of those living in the project farms proposed for privatization. The team completed the assessment of Haqiqat Dekhan farm association - one of the pilot farms chosen under this project. The survey found that there was a general lack of information and awareness among the farm members about the charter of the dekhan association, their rights and responsibilities and how to operate as a family farm. The most vulnerable families were identified to be those witl big families with only one working member and consisting of father, mother and seven or more children. No access to the banking system exists and about 60 percent reported that they were not familiar with aniy type of banking services. Most of the farm members operating as a private family farm continue to be inexperienced in family farming, and most of the farm members at present do not have the requisite skills to operate and manage their own farm lands. The main recommendations of the team are: (i) provide information and advisory services to the newly emerging farm units on individual rights, legal reforms and regulations associated with land distribution, allocation, and land use rights; (ii) develop monitoring and institutional mechanisms to ensure that the one-time privatization grant be used for agricultural purposes; (iii) standard processes and procedures be developed for land distribution and allocation, especially in those project farms where the process has yet to take place; (iv) create a viable, local credit system, which would cater to the needs of the newly emerging private farmers; and (v) for the most vulnerable group, besides the provision of one-time grant, providing access to land, credit and training in farming techniques would be essential. During negotiations agreement was reached to include programs which would protect the interests of socially vulnerable groups such as priority in the allocation of grants, access to land use, credit and vocational training. 6. Environmental assessment: Environment Category El A El C 1X B UI Fl a. The environmental impact of the proposed project is expected to be small, but positive. The proposed project would help improve water use efficiency, check the process of salinization, water logging and arrest the process of land degradation. It is expected to foster more prudent use of privatized agricultural land. The ownership of land assets is expected to instill a greater sense of individual and comrnunity responsibility, perhaps sufficient to collectively take measures to protect the environment. The land use maps using modern aerial survey will enhance the ability to integrate data sets into the land register with possible beneficial applications for monitoring and control of the environment. b. Justification/Rationale for category rating: Though the environmental impact of the proposed project is expected to be positive, Category "B" is selected because of the possible indirect impact of the privatization and restructuring of the former state and collective farms in possibly leading to over grazing and degradation of the pasture, as private farmers seem to save in the form of livestock. New challenges may also emerge in the water and land resources usage with the restructuring of the farms. Use of pesticides by the restructured farms may also increase from the present depressed levels utilizing the grants under the project. In these circumstances, Category "B" has been selected because of the need to monitor the possible indirect impact of the farm privatization under the project. During Negotiations, agreement was reached on measures to be taken to provide advice on the sustainable management of the grazing lands, prudent management of land and protection against degradation, development and implementation of Environmental Management Plans for sub-projects, and measures for the judicious use of agricultural chemicals. Project funds shall not be used to purchase environmentally hazardous agro-chemicals. -23-  7. Participatory Approach (key stakeholders, how involved, and what they have influenced or may influence; if participatory approach not used, describe wlhy not applicable): a. Primary beneficiaries and other affected groups: The project design advocates a participatory and transparent approach for the allocation of land and property assets. The project would build in the following features in order to strengthen this approach and to consistently involve the beneficiaries in the implementation of the project: (i) representation of the private farmers in the committee for farm restructuring at the state, oblast and raion levels; (ii) creation of water user's associations and groups to ensure farmer's participation in decision making for water scheduling, distribution, cost recovery for operation and maintenance, etc., and (iii) wide-spread dissemination and awareness campaign using different mass media of the privatization procedures, individual rights, etc. b. Other key stakeholders: F: Sustainability and Risks 1. Sustainability: The project has been designed to ensure that the process of land privatization and farm restructuring takes place in a systematic, transparent and equitable manner, consistent with the strategy outlined in the CAS and agreed with the Government. The following factors would be critical to the sustainability of each of the project interventions proposed: (i) the ability and the speed with which the newly created private farming units are able to increase their farm productivity and incomes - sufficient enough to implement cost recovery mechanisms related to water user fees, land tax, fee based advisory services, and other measures to be identified during project implementation; (ii) the degree to which volunteer groups of private farmers could be formed to undertake minor irrigation rehabilitation and other needed support services required for farming - which could be more cost effective than conventional methods; and (iii) potential savings which could be realized in the Ministry of Agriculture as a result of redefining its role and reduction in staff (this is also being addressed by the proposed Second Institution Building and Technical Assistance Project). However, the fiscal sustainability of giving one-time grants as incentives to start private farming and needs of the farming community for such external infusions of cash to start up private farming, would have to be revisited and allocations changed as necessary during project execution. The project's design would offer such a flexibility. -24-  2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure From Outputs to Objective 1. Political stability and continued H Government's recent actions to give the peace opposition key positions and continued support by international donors for restoring macro-economic stability. 2. Government's willingness to accept M Government commitment has been transparent procedures for equitable obtained, which would be supported by distribution of land use rights and strengthening of the State Land legitimize the rights of dekhan farms Committee with the necessary powers, already issued. personnel, equipment, supplies, etc. as soon as possible. Conducting mass media campaign to promote awareness among the people about their rights to obtain land lease rights. 3. Ability of the newly privatized farms M Providing information, advice, on-farm to undertake farming and to realize full demonstration, and periodic visits and benefits from the initial grant being follow up by local agricultural provided specialists. 4. Provision of timely and adequate S Design and tender documents and water for irrigation procurement procedures to be initiated as soon as possible for rehabilitation/restoration of irrigation works, esp. starting with those which require minimum repairs. 5. Institutional capacity and S Project steering committee established coordination between various agencies at the Prime Minister level, PMU to be and others involved strengtlhened with appropriate staff; provide adequate incentives based on skills and job performance to attract qualified local staff, and additional compensation to be provided for those stationed in the project raions. From Components to Outputs Overall Risk Rating 5 Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) -25-  3. Possible Controversial Aspects The main controversial aspect is the possibility of creating inequities among the new private farmers in terms of allocations of land, start - up grants, etc; and resistance by the local governments towards incorporating the participatory approaches for the allocation and distribution of land use rights to those farm members in the project farms who have not yet received their land Shadatnama (certificates). G: Main Loan Conditions 1. Effectiveness Condition (i) Appointment of an external auditor, acceptable to IDA to carry out the audit of the advance received under the Project Preparation Facility; (ii) Deposit of an amount of US$50,000 (fifty thousand dollars) equivalent in local currency in the project account established in Tajprombank to meet the initial requirement of counterpart funds required for project implementation; (iii) Conclusion of the Agency Agreement between the Ministry of Finance and Tajiksberbank; (iv) Establishlment of financial management system satisfactory to IDA; and (v)Establishnient of a procurement management system, satisfactory to IDA, in the Project Management Unit. Condition of Disbursement: Submission of the first six month work program and budget for the project to IDA for review and approval, at least one month before the commencement of the proposed work program; 2. Other [classify according to covenant types used in the Legal Agreements.] Audits and Accounts: (i) Standard auditing covenants will apply; and (ii) The Borrower will open and properly maintain a Special Account Management: The Project Management Unit and Project Implementation Units would be maintained and adequately staffed. Counterpart Funds: A line item would be provided in the National Budget annually for the provision of local funds required for the implementation of each of the project components. Monitoring, Review and Reporting: -26-  (i) Standard reporting covenants will apply; (ii) Project Management Unit would report to IDA on a half yearly basis the status of the agreed key monitorable indicators; and. (iii) A project design and implementation review would be undertaken by IDA in December 2000 to determine the lessons learnt and make appropriate changes if needed, in the project objectives and components. H. Readiness for Implementation 1 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. 0 1. b) Not applicable. E 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 3 4. The following items are lacking and are discussed under loan conditions (Section G): The Govermnent of Tajikistan has appointed a Project Director and allotted office spaces in the Ministry of Agriculture for the Project Management Unit for the proposed project. A short term international procurement consultant is assisting the Project Management Unit to obtain the necessary office and other essential equipment, vehicles, supplies, furniture, rehabilitation of offices and provide on the job training to newly recruited staff. The process recruitment of the additional key staff for the PMU is in process and is expected to be completed by the end of June 1999. A short two week training was provided during in October 1998 by the International Land Information Services, Arnheim, the Netherlands to ten specialists from the State Land Committee and its affiliated departments on basics of computer operating systems, MS Office, GIS and an overview of Arcview, how to digitize small maps, and scanning aerial photographs. 1. Compliance with Bank Policies Z 1. This project complies with all applicable Bank policies. El 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Thirunlangal .ampath uin M. Cleaver Ishrat Husaan -- Team der Sector ManagerlDirector Country Manager/Director -27-  Annex 1: Project Design Summary TAJIKISTAN: Farm Privatization Support Project ;~~~~~~~~~~~~~~~~~~ Sector-related CAS Goal: Sector Indicators: Sectorl country reports: (from Goal to Bank Mission) Fair and equitable land - degree of people - periodic surveys measuring - Changes in land legislation, allocation and distribution participation level of public satisfaction. as needed, supported by processes and mechanisms - size distribution of land - size distribution of land implementation mechanisms holding holdings - Government commitment to - level of public understanding implement participatory of processes and individual - monitoring of court cases approaches for land allocation rights and resolutions related to land and distribution and - decrease in land disputes, disputes dissemination of information incidence of social conflicts through mass-media. arising out of land allocation - Guiding by central government of local Hukumats in allocation of land Development of land use - number of transactions records of trades in land use - Legislation allowing the rights/ lease markets. rights creation of land use rights markets - government role limited to regulatory function to ensure fairness and competitiveness- Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: Development of private - number of land lease titles - land registration records - timely establishment, farming issued operation and maintenance of - number of individual/family land registration offices & private farms established records - changes in crop and livestock yields Increase farmer incomes - changes in farm incomes - periodic surveys of farm - distortion-free price and household production, marketing policies consumption and incomes Develop representative models - Number of non-project farms - periodic surveys - no trade restrictions and for wider geographical adopting similar processes and internal border controls on replicablity procedures movement of goods and services -28-  Output from each Output Indicators: Project reports: (from Outputs to Objective) component: - Privatization of former state - Number of state and Progress reports and IDA - conducive policy and and collective farms collective farms privatized supervision legislative framework for - Reconstruction and - Length of canals development of private rehabilitation of critical rehabilitated, no. of pumps farming irrigation and drainage works restored, water control - Establishment of water user' structures, sub-surface drains, Use of appropriate technology, s associations area effectively irrigated timely completion of works, - Establishment of land - Number of WUA's ensuring quality during registration services - Number of fully functional construction land registration offices necessity for group consensus Decentralized system, public disclosure of information - Establishment of rural - Number of fully functional Timely provision of adequate information and advisory RIAS centers supplies of key agricultural services (RIAS) inputs, farm implements for private farmers to practice improved farming techniques - One-time grants to newly - Number of independent Compliance with agreed created private farmers benefited and amount eligibility for providing grants independent/family farmers of grant provided and implementation mechanisms and support from Ministry of Finance. -29-  Project Components JI nus bdo o ec rjc eot (from Components to Sub-components: component) Outputs) 1. Farm Support Services All inputs would be monitored Qualified staff in place in land (i) Land Registration 3.31 and evaluated through regular registration offices in each of Services progress and disbursement the project raions and in reports Dushanbe; Trained and motivated staff (ii) Rural Information with communication skills; and advisory services 2.33 Support for creation of WUA' s and cost recovery mechanisms to ensure sustainability 2. Rehabilitation of irrigation 7.76 Continued security in areas and drainage works, and where rehabilitation works are to take place Water Users' Associations 0.77 3. Grant to privatized 3.71 Preparation of satisfactory farms designs, qualified contractors to undertake construction works and availability of materials 4. Rural credit associations 1.75 Measures to prevent leakage and misuse of grants. Support from MOF 5. Project Management Unit 3.86 and Implementation Units -30-  Annex 2: Project Description TAJIKISTAN: Farm Privatization Support Project By Component: Project Component i - US$5.7 million A. Farm Support Services Component: The main objective of this component is to provide the necessary support services for the development of procedures and institutional mechanisms at the state and selected regions to ensure fair, secure and equitable transfer of land and other farm assets to private individuals or groups; and to create sustainable family farms. A. 1. Land Registration Services: Background and Scope This sub-component would assist the State Land Committee (SLC) to improve existing land privatization and land registration systems for rural areas. The system to be developed is national in scope and therefore requires institutional development at the central level in Dushanbe; the establishment of a national capacity for in-service training; and a program for training for the future requirements of the SLC. The project will be implemented initially in ten farms. These farms are located in six raions (see Map ) . The sub-component will ensure that the farm privatization process in each of the ten farms is fair and publicly acceptable. The component will also help the SLC to improve the working conditions and practices of the two Oblast and six rayon offices involved in the project. The National Commission on reorganization of Agricultural Enterprises, established by a Presidential Decree # 522 of along with the accompanying regulations issued in June 1996, has begun its work on a program of land reform and privatization by initiating privatization of the Kolkhozes and Sovkhozes wherever the workers union evinced interest and expressed desire to form private farm units (Dekhan). Many farms have reorganized into structures such as Joint Stock Companies, Lease Enterprises or Collective Farms and there is often a lack of understanding by the people concerned of their rights or the alternatives that they could have been offered. The process is strongly controlled in a "top-down" privatization process. The cost of privatization is excessive and the process through which the potential Dekhan Farmers have to go is convoluted and time consuming. A new Dekhan Farm can expect to pay in excess of $200 before collecting a Certificate of Land Use Right and deal with the Hukumat, Jamot, Commission for Restructuring Agricultural Enterprises, Land Committee, Notary, Ministry of Justice, Bank, Statistics Agency and Tax Authority prior to becoming the registered User. In view of the low national income the cost and complicated process is a substantial deterrent to privatizing. Land records are kept both in SLC Dushanbe and at the local offices, but they are not kept in a format suitable for easy access or for enabling the future land market. Use rights are recorded at the SLC in hand written ledgers. They are listed chronologically and require laborious searching when trying to locate entries. When the stage is reached that records are listed in tens of thousands instead of hundreds it will be impossible to use this system. The system is not parcel based and suffers from the associated drawbacks that allow duplication of entries for the same parcel, time consuming searches and difficulty to computerize. While it is necessary to initially concentrate on land that the SLC has been involved with, it -31-  would be a general aim to include all land in the land registers and ensure the system can be used for both land and buildings. This will be necessary for the future land market and to be able to deal with disputes in those areas. Detailed Description of the Sub- component The sub-component will not only ensure that the ten farms in the six raions are privatized and registered, but will establish a national land registration system and training center that will enable all land rights to be registered in a modern and effective registration system throughout the country. The training center, national office, Oblast offices and six rayon offices will be fully equipped and functional to cope with privatization wherever it may occur. Legal Review. In addition to the Constitution of Tajikistan the legal framework for the land reform and farm privatization process has been provided by a number of Laws and Presidential decrees enacted during the recent years. The most important of them are: the Law on Dehkan (Private) Farm, the Law on Land Reforn, the Law on Payment for Land, the Land Code, and the Decree of the President of Tajikistan On the Reorganization of Agricultural enterprises. Redistribution of land to private farmers after transformation of collective farms, denationalization and privatization of state farms is one of the main elements of Government policy in agricultural sector. Under the Constitution of Tajikistan land is an exclusive ownership of the state. The existing land legislation drafted and adopted in response to changing economic needs since the dissolution of the Soviet Union is designed rather to reform land tenure system to the benefit of private farms then to change the entire land ownership system. Nevertheless it provides a sufficient basis for the implementation of the proposed project. Under the Law on Land Reform and the Land Code land can be granted to an individual for a life-long inheritable possession for the purposes of private farming. In addition to that land for agricultural use can also be obtained by private farmers under lease arrangements with other primary land users or from state land reserve. A serious drawback of the existing legal environment for the purposes of the project is the lack of regulation of land rights transactions, including mortgage, and retardation of land market. In this regard the Decree of the President of Tajikistan On the Disposition of Land Use Rights" dated June 22, 1998 represents a very irnportant first step for the development of land rights market in Tajikistan. During the implementation of the project a legal consultant will be engaged to review the current legal framework and regulations in rural land relations, to make recommendations on necessary changes and amendments to the existing legislation, and to assist SLC in specific legal drafting. Survev/ Mapping. Survey requirements for privatization and registering rights to land relate to the base mapping needed for decision-making and design of a plan for land allocation. The properties allocated would then be surveyed in such a way that the boundaries can be relocated in time of dispute. This will also ensure that the same parcel of land is not allocated to different parties and ensure equity in parcel allocation. In Tajikistan the base mapping for rural areas is provided at 1:10,000 scale (or 1:25,000 scale for more remote areas) by a joint venture called 'Fazo'. The maps are regularly updated and are used as the base by the SLC for: recording farm boundaries; land use; irrigation channels; soils types; allocation of land to Dekhan farms; erosion problems; etc. Existing professional staff were trained in Akmola (Kazakhstan) or -32-  Russia. Future requirements for professional staff are to be recruited following training provided by the Tajik Agrarian University Fazo is the old "Geodezia" that has become a joint venture with Russian partners. The office in Dushanbe used to be the Viskhagi unit in Moscow. Fazo and the SLC staff currently use only optical theodolites and optical tacheometric methods that are long outdated. The work output would be increased dramatically with the use of total stations and/or GPS equipment. Total station equipment would be used by local staff quickly with little additional training. GPS runs on coordinates based on WGS84 and can not be used on coordinates based on Krazovski without additional work transforming coordinate systems. This does need to be done to bring Tajikistan into conformity with much of the rest of the world and so that new satellite based equipment can easily be used. Processing of the data requires at least one high level technician familiar with intricate survey calculations and computer programming. GPS is required to develop the capacity for its use and design a program for converting the existing coordinate system to one based on WGS84. The GPS would also be used for confirming the accuracy of Kolkhozl Sovkhoz boundaries, for control points in flat terrain and for training. One set of precise GPS equipment and associated hard- and software will be purchased for research and development and to begin transforming the Geodetic Coordinate Network. Further, less precise, sets will be purchased for additional survey work. Both sets would be used for training purposes. Each rayon will be provided with one set of equipment for their regular work. When intensive periods of work occur in the Land Institute (GIPROZEM) assist with survey work and sufficient equipment would be provided at the SLC central office and the Leninabad Oblast Land Committee office in Khojand to allow this support. The equipment can also be hired out to private contractors when necessary. The total station surveying equipment and associated hard- and software will be purchased for the SLC central office and for rayon offices. They will also be available for their contractors to use on a lease basis. Funds for private contracting of survey work are available. Training will also be provided. It should also be noted that there are an estimated 100 unemployed surveyors in Tajikistan. Private contracting of survey work may bring them back into employment either with Fazo or as independent private practitioners. The Land Committee would be provided with a black and white AO scanners, AO digitizer, AO plotter and computers to run ArcView, MapInfo and other modem software suitable for providing both digital mapping and associated databases for recording ownership rights. Existing maps can be scanned into the system and be readily available for updating, plotting Dekhan boundaries and printing results. In order to make use of the result it would be useful to transfer the map images and associated data to rayon offices. This could best be done with a CD writer. Existing mapping will be utilized and updated with equipment provided under the project. Modem survey equipment will rapidly increase the rate of the current privatization and ensure sufficient accuracy to limit the number of future disputes. Training. Establishment of a successful training program is key to the long term success of the privatization process, land registration and land market activity. The Tajik Agrarian University is well staffed and has an excellent relationship with the SLC. A great deal of training would be provided under the project. The University would be designated as the training center for the project In addition to the current courses on geodetic and land survey, courses on land registration and land markets would be included. Basic computing courses and courses for advanced work would be developed. Short courses would be developed for graduates and persons currently in-service. This will be required for project implementation. The staff at the University have the capability and capacity to provide these courses once they themselves have -33-  received training. A computer center consisting of computers, printers, a plotter and a scanner will be provided under the project. Standard software for digital mapping, GIS and networking will be included. Access to Internet will also be provided. The GPS equipment mentioned above plus three total stations and associated hard- and software will be purchased for training purposes. The training program will commence with a " training the trainers" program. The Tajik Agricultural University will be equipped and trained to conduct all the training for the project. In service training will be conducted for the immediate needs of the project and long term training for future needs of the national system. Technical Assistance will be provided to advise on existing courses and develop new short courses for the University. "Training of Trainers" courses will be given by the Technical Assistance. Funding for Post-Graduate degree courses in automated cadastral systems for one or two members of staff would be located from bilateral donors. A counterpart to the Trainer would be nominated by the University before June 1999. A study tour will be organized to the SLC and University staff to acquaint them with the land markets, and role of institutions in land registration systems and courses being conducted in western universities and to visit establishments involved in land registration, land taxation and land management. Land use rig-ht allocation. Each of the ten farms will undergo an analysis of the privatization activity that has occurred and be involved in a public awareness campaign that clearly specifies the rights and possible structures that they could choose. Decision making by public consensus will lead to acceptance of the previous land distribution or a new (or renewed) distribution of land in an open and transparent manner. The stages will the following: * Farm Analysis. This is a review of the current status of the farm and the privatization work already done. This will involve discussions with farm members as well as officials. A comprehensive report would be prepared and a full list of all farm members and their share is required. It may be that at this stage it is decided that previous privatization methods and results are acceptable. In this case the analysis would decide if new survey work is required to ensure that future boundary disputes are avoided. The next stages will only be used if appropriate. * Farm survey. This will involve collecting the existing map sheets for the farm and comparing them with the ground situation. All natural field boundaries, irrigation channels, water courses, roads and built up areas would be included. Any corrections that may be required will be surveyed so that an accurate Map is available for the development plan. If additional survey control points are required these will be surveyed. * Information campaign. This will involve a series of meetings, discussions, etc. to ensure all farm members are aware of their rights. Pamphlets will be distributed and it must be ensured that all parties are free to present their arguments at an open forum. This stage would not be rushed through. It is a key to transparency and openness of the whole program. The procedure for dividing the farm would be decided during this period. Each individual would be given sufficient information to decide if s/he wishes to farm alone or as a group. * Decision of Farmers. The farmers will decide on whether they want to be independent or farm with a group. If they decide to work as a group or continue as an existing brigade they must elect a person to represent them during the plot allocation. The results will then be collected -34-  and collated so that farm groups are known. Once the groups are known the farmers will have a short period to change their decisions. (A group will have all the shares of the individual members). Preferences can also be taken into account, for example a group may want to concentrate on orchard land and only be included in the orchard areas. * Development (or allocation) plan. A plan would be prepared to show all shares to be allocated such that it conforms to good land husbandry and/or other criteria agreed by the farmers. For example, it may be decided to allocate two plots per group if two areas have different productivity or to allow a weighting dependent on productivity or location. * Allocation of Plots. The location of each piece of land per individual or group is selected by lottery or other means agreed by the members. * Survey of Plots. The names of farmers and farm groups are added to the development plan, their plot boundaries are marked on the plan and it is put on display. If there are no immediate objections the plots are marked on the ground with permanent marks and the coordinates of these points noted. If there are objections these would be resolved. * Public Viewing. A new farm plan is drawn up and placed on public display for all members to check and agree. They would sign their agreement on forms provided. The period for public viewing would be well displayed and advertised. It would continue for at least two weeks at the farm. At the end of the public viewing period the fnalization of the work can be officially declared, preferably at a public meeting hosted by the Hukumat or another senior official. * Issue of State Certificate for Land Use Rights. After the public viewing period Certificates are issued. * Registration. The maps, copies of State Certificates of Land Use Rights and information about other land rights are recorded at the Land Committee central office and Rayon Land Committee office registration systems. Land registration. The record of land use rights are kept centrally by a self-financing enterprise established within the Land Committee. Use rights are recorded in hand written ledgers that are hand ruled and hand written. They are listed chronologically with separate pages for separate raions. Two ledgers are kept, one for recording the applications and one for recording the details of the State Certificates when issued. They are listed chronologically and require laborious searching when trying to locate entries. When the stage is reached that records are listed in tens of thousands instead of hundreds it will be impossible to use this system. Registers, using the same format, are also kept at the Rayon level SLC office. The system is not parcel based and suffers from the associated drawbacks that allow duplication of entries for the same parcel, time consuming searches and difficulty to computerize. Rayon offices suffer from the same drawbacks as they keep a copy of the records. A unique parcel numbering system would be designed. The system will be remodeled to include a parcel numbering system as the basis for efficient land registration. The new system would be implemented on a computer system to be designed. This will require the help of experienced Technical Assistance in Land Registration. Technical Assistance in Information Technology with a GIS background will also be available. -35-  Implementing Agency The SLC will be responsible for implementing this sub-component of the project. The SLC has a central office in Dushanbe that also acts as the Oblast office for Raions under Republican Subordination. Oblast Land Committee offices exist in both Khatlon and Leninabad Oblasts and there is a Land Committee office in every rayon. Thus, the basic structure is already in existence to implement the sub-component. The SLC is supported by two state enterprises that function on a commercial basis. The State Land Institute (GIPROZEM) has offices in both Dushanbe and Khojand. They provide the technical expertise to undertake the survey work required in farm privatization. Fazo Institute provide the base mapping required by the Giprozem and the SLC as a base for the cadastral mapping. The work of the SLC will be coordinated by one specialist in the Project Management Unit. The component will ensure that the Land Committee are provided with the training, equipment and procedural guidelines to enable successful project implementation and the capacity to continue the work at other sites in the coming years. Technical Assistance and Training Technical assistance would be provided in those critical areas which would facilitate speedy implementation. These are in the areas of Land Registration, Training, Cadastral Survey, Information Technology and Legislation. Most of the assistance will be provided in the first year of the project, with occasional supervisory visits in succeeding years. (i) The Land Registration Expert would advise on all aspects of the work and to coordinate the activity of the other foreign consultants. The expert will be based at the Land Committee central office and work in close cooperation with Land Committee personnel responsible for the project. He will be responsible for ensuring that a sustainable training program is established at the Tajik Agrarian University. Input will be extensive in the first few months of the project. The Specialist would be based at the PMU in Dushanbe and work with SLC and the University; (ii) the Cadastral Survey Expert will be responsible for ensuring that the technical experts working for the Land Committee are efficient in the use of new technology in the practical work of mapping, parcel identification and survey. He will be based at the SLC and work in collaboration with the PMU land expert; (iii) Information Technology Expert will be responsible for ensuring that the information technology supplied is effectively utilized and that software development and the management of information systems is well catered for. He will be based at the SLC and work with the PMU land expert; (iv) Legal Expert will make brief visits to review and advise on legislation being developed under the legal sub-component. The majority of the work will be undertaken by local legal experts. The Expert will be based at the SLC and PMU land expert and (v) Local Legal Experts would be recruited on a contract basis to advise on, and develop, legislation for land reform and land registration. They will work under the direction of the expatriate Land Registration Expert and Legal Expert. -36-  Sub-component Outputs The component will have the following outputs: * Training Center providing short and long term courses suitable for existing and prospective Land Committee staff. * Effective procedures for land allocation during farm privatization and the subsequent land registration. * One National and two Oblast Land Committee offices equipped and functioning as administrative centers for land allocation during farm privatization and the subsequent land registration. * Six rayon Land Committee offices equipped and functioning as centers for land allocation during farm privatization and the subsequent land registration of the rights allocated. * Ten farms fully privatized with all legal rights registered at the rayon Land Committee office. * Set of specific recommendations and draft laws for consideration by parliament. A. 2. Rural Information and Advisory Services To justify the investments in privatization of the Large State and Collective farms, into Dekhan farms and to undertake rehabilitation of the irrigation and drainage system, the economic productivity of these farms need to be increased. To this end, Rural Information and Advisory Services Sub-component, need to be included in the Project to intensify and improve present agricultural production systems of not only the emerging Dekhan farms from the ten state and collective farms proposed for dismantling under this project but also to facilitate the privatization of the other farms in the selected raions. This sub-component will establish a farm information and advisory services unit in the Ministry of Agriculture (MOA). It will consist of three main activities: (a) provide training to Dekhan farmers in a variety of agricultural areas, economics, marketing, accounts, fnance, and technical fields and commercial farm management; (b) demonstration of improved and modern farm production technologies to increase farm production, improve water use efficiencies and reduce environmental degradation, and (c) provide relevant information through different means (pamphlets, videos, radio, TV, weekly papers) to Dekhan farmers to advise them how to make their farms more productive and more sensitive to emerging market demands. A farmer advisory center will be set up in the MOA which will eventually reach a much broader agricultural community in the country through video, radio, TV, technical brochures and a 'Farmers' Weekly" paper editions in easy to understand local language. It is foreseen that after this initial project, a follow up national roll out program might be developed, covering not only irrigated, but rain-fed agriculture and pasture management as well to create and sustain private farming in the country. Under this follow-up project, it is anticipated that a more farmers' oriented (public and private) agricultural research and extension services system would emerge. The main elements of the Rural Information and Advisory Services component, are: (a) Dekhan Farmer Participatory Training Program; (b) Block Demonstration for Technology Dissemination; and (c) Farmers' Information Services. (a) Dekhan Farmers' Participatory Training Program -37-  The training program and information services would be oriented towards solving farmers' farming problems and to facilitate the privatization and commercialization of the farms. Such training is not currently provided by the traditional education institutes and requires therefore special training of the trainers. Therefore the training program will start with the "Training of Trainers" from MOA, the Tajikistan Agriculture Academy, Departrnent of Agriculture staff of oblast and the six Project Raions and crop research institutes ( Institute zemlyadelia) will be trained in modern training approaches and methodologies by the project expatriate consultants. The Project's Management Unit (PMU) at Dushanbe, The MOA along with the Academy of Agricultural Sciences (AAS), with the assistance of international training and farm management consultants, the necessary training modules for the target groups will be developed and used. These short courses would be modified when necessary to suit the farmers' needs best. Initially the primary responsibility for the quality of the training program will be with the expatriate consultants, assisted by PMU and relevant training counterpart staff in MOA/Agricultural Academy. This responsibility, however, will be gradually transferred within two years to a more permanent training unit. The target groups and their specific training needs are: (a) National, Oblast and Rayon Agricultural Department (Selkhoz upravleniva staff involved in the project will be receiving the necessary basic orientation and training to implement the project successfully and assist Dekhan farms in their efforts to become more economically viable farms and thereby making agricultural production more sustainable under the prevailing conditions, and helping the process of farm restructuring; (b) Brigade Leaders and Progressive farmer Leaders in the project Raions will receive extra training on the application and transfer of improved and new technologies to farmers to increase production in sustainable ways and will be subjected to discussions on how to establish Water Users' Associations, Credit Unions, Farmers'. It is expected that members out of this target group will form the source of farm leaders for the eventual leadership to form farmers' associations at the grass root level in the country; and (c) Individual Private Farmers will be the biggest group benefiting from the participatory training. Since most farm workers individuals from this group have mainly school education (some may have higher education) and but have only limited skills as practical farmers, tractor drivers, mechanics, accountants, farm irrigators, store managers, etc. These farm workers emerging after receiving the share in the farms in land use rights need the broadest training in technical crop and livestock production and basic farm management. In the short term, they would remain dependent on the advisory services of the technical specialists. Eventually, independent private farmers would emerge from this group, while others would be quite happy to remain farm hands or otherwise. For this group, short training courses need to be conducted as much as possible through existing agricultural training facilities in winter time and in-formal evening or week-end classes in summer time. They would particularly benefit from the scheduled on-farm demonstrations. Programs The training program under this sub-component all the three elements of training, demonstrations and information services will be totally integrated into one approach and action plan towards the participating Dekhan farmers in the project, and in coordination and synchronization with the up coming Rural Infrastructure- irrigation and Drainage Rehabilitation Project. The total base training costs over two years, including those for travel/transportation, accommodation, training equipment and materials and local trainers fees, would be provided. However, most training activities will be carried out under the ministry's regular training program. In cases where farmers are not able to pay for the special course expenditures, -38-  the PMU will bear the extra costs under the project. In total some 3,500 beneficiaries of the proposed project ten project farms and about 6000 beneficiaries from the six project Raions would be targeted for special farmers' training under the project. MOA would be responsible for the implementation of this component under supervision of the Director PMU assisted by expatriate consultants. The procurement of training equipment and other support will be done by PMU on the advise of the Bank and the consultants. (b) On-Farm Demonstrations for Technology Dissemination As part of the technical training and to increase production, new and improved local crop production technologies for major crops (wheat, Cotton, Potatoes, onion, maize, sunflower, peanut, sesame or other oilseeds and pulse crops like cow peas and Mung-bean and chick peas ) would be demonstrated in selected Dekhan farms in blocks of 10 ha in the former sovkhoz/kolkhozes. There is a limited scope to expand the area under cultivation, but there is considerable scope for improvement in irrigation water management and for stepping up productivity of Dekhan farmers. There is urgent need for replacement of currently used absolete low yielding wheat varieties which are susceptible to rust disease. Off-the-shelf proven high yielding early maturing wheat varieties from International Research Institutes lice CIMMYT or ICARDA would be brought in and demonstrated, steps to introduce hybrid corn varieties in place DM susceptible local corn varieties. Introduction of available high yielding varieties of oil seed crops, for example Brassica Napus, Brassica juncea, Sesames orientale, that would help introduce effective crop geometry, holds good promise in plains of Vaksh river valley. Inter-cropping or relay cropping system in cotton - wheat based crop systems, introduction of short duration pulse crops in wheat cotton rotation to enhance cropping intensity and farm income at the same time improve crop rotation and soil fertility. 1.30. Selection of Block Demonstration Farms will be on the basis of the criteria developed by the PMU on the advise of the Bank and the consultants. The objective of the demonstrations is to educate the emerging farmers to evaluate improved practices/machinery and become more self reliant and commercially oriented. These demonstrations would make use of improved farm equipment (local improved and imported), including the use of the latest generation of fuel efficient 4WD tractors. In some cases, private companies would be encouraged and invited to demonstrate farm machinery for small farm production technologies. It is estimated that some 24 demonstration of 10 ha block each (to a total of 240 ha) will be organized over two years, using off-the shelf modern varieties developed by the international crop research institutes (i.e. ICARDA, CIMMYT, CIP, etc.), multiple cropping system, economic optimal rates of agricultural inputs of fertilizers, use of pest and drought resistant photo-insensitive early maturing high quality and high yielding varieties seeds, pest control-chemicals. Better on-farm water management practices will also be demonstrated (involving IIMI), including some improved drip and sprinkler components. Where justified, demonstrations would be smaller or larger than 10 ha. Extra financial benefits to the farms, as a result of the demonstrations, will be plow back and used by the Dekhan farm groups themselves for further adoption of the technology including the HYV seeds in the subsequent years and to gradually buy the recommended equipment and crop production inputs. The block demonstration plan for each year indicating what type of demonstrations and how many will be where executed, will be drafted and monitored by the consultants and training team, together with PMU. These plans will be developed in consultation with the Dekhan Farmers Associations( DFAs) and WJUAs, who will then execute the demonstrations themselves under the guidance of the Research institutes (National and International) and the Selkhoze upravleniya of the rayon. Initially Dekhan farms would need more direct assistance from the Agricultural Academy, consultants and MOA to set up a viable demonstrations. PMU/MOA, however, would be responsible for making available the demonstration equipment and for the procurement of the necessary production inputs as recommended by the team. The Rayon Agricultural Department and the PMU consultants will also be responsible to organize "Farmers Field Days" on the demonstration sites in consultation with the DFAs and WUAs concerned and those -39-  nearby. These field days would be held at least once per cropping season at the most appropriate time to maximize the demonstration effect of the practices recommended and shown. At these field days, the demo's will be evaluated in comparison with existing practices and analyzed for their cost-benefit ratios. New successful practices would be widely publicized by MOA's Farmers Information Unit through the common news media and "Farmers' Weekly" news paper editions for broader adoption. Farm block demo production inputs will be procured through prudent local or international shopping. (c) Farmers' Information Unit In conjunction with the training and demonstration components, there is a crucial need for farmers' information on many agricultural issues, in particular by emerging Dekhan farmers. Up till now, however, this information has not been readily available and accessible by the farmers in remote places, in particular information on more efficient crop and livestock production technologies, farm management and accounting practices and market information. Most information in the past came from research institutes directly to the farm directors and specialists, who applied the recommendations by order of the State. With the on-going privatization and farm restructuring, the need for broader and more farmers' and market oriented information would increase considerably. To meet this need, MOA will establish a central farmers' information services desk under the project to provide regular information on critical agricultural issues related to production and marketing through the existing news media of TV, radio, video, brochures and" Farmers' Weekly" paper. The technical topics and contents for the broadcasts and papers will be generated by the consultants and technical specialists of MOA and staff of agricultural research institutes, who will pass it on to the newly established MOA's Information Center. MOA already has some experience in providing TV and Radio broadcasting to farmers and is very eager to participate in the Project. It also prepares press releases on behalf of MOA. Under the project, page space will be bought for the "Dekhan Farmers' Weekly" edition on a weekly basis for the next two years and later priced and sold. Eventually sufficient agricultural information will be readily available to farmers so that these papers do not need direct support from MOA any longer but the Dekhan farmer's Association would take over the full responsibility of publishing all the demanded Dekhan farmers' information themselves. To take up this activity under this sub-component special equipment (estimated at US$ 130,000 is required to equip the MOA Press Center's, including those for the preparation of videos and technical bulletins. Training videos would be prepared locally, reflecting the basic thrust of the training program and broadcast through MOA's regular agricultural transmission hours. The procurement of all the equipment and materials will be carried out through Local/International Competitive Bidding procedures of the Bank by the consultants with the assistance of PMU. Technical Assistance and Consultants Requirement To implement the Dekhan Farmers' Information Services Component, the PMU will be assisted for two years by international farm management and agricultural training consultants and local specialists or consultants. Under the project a total of US$ 1.1 million will be available to cover the base costs for some 50 foreign and 250 local consultants man-months to implement the Program. The consultants will be fully responsible for all the training, demos and technical farmers' information services within the two years of the project, after which the responsibility for the daily implementation of the program is transferred to MOA and the local consultants. Local specialists/consultants may be subcontracted in by the PMU in consultation with MAO under Tajik salary guidelines, norms and conditions. The foreign lead consultants will also be responsible to train the local specialists and consultants and continue to provide their services -40-  up till the end of the second year of the project -41-  Project Component 2 - US$8.5 million B. Irrigation and Drainage system Rehabilitation Component Present status of Irrigation and drainage system at the farm level. The ten project State and collective farms, selected by the Government for piloting the farm privatization and distribution of Land use rights among farm workers under the proposed Project, are situated in six raions that represent the three main agro-ecological regions in Tajikistan (southern/centralSnorthern). See map IBRD 30059. The ten State and Collective project farms has a total area of 37,490 and range in size from 607 ha to 13916 ha. Currently these farms have a total cultivable area of about 17,307 ha. The total area under irrigation in these ten farms is 14,000 ha and range between 212 ha in Varzob farm to 4393 ha in Ch. Yergashev farm. (see Table - 2.1 ) With the moves toward private management, the farms have so far divided into 218 dekhan farm units - with varying degrees of autonomy. Table -2.1 Resources of the Project farms Name of the Rayon Farm Arable Irrigated Total House- Total Farm Area (ha) Area Area (ha) working Holds in Population (ha) Brigades the Farm villages Guliston Kalkhozabad 3955 2259 1699 33 1837 14676 Ittifok Kalkhozabad 1565 525 518 11 668 4196 Firdousi Yavan 604 406 406 13 279 3180 Sh. Rahimov Yavan 5806 1831 707 32 673 11831 Hakikat Shahri Nau 660 427 427 7 813 7480 Leningrad Shahri Nau 4126 1516 801 13 1308 10938 Varzob* Leninski 1620 438 221 0 216 15297 Vafo Macha 2787 1999 1999 35 1525 12400 Ch. Yergashev Macha 13916 5927 4393 52 1033 4867 Kanz Zafarabad 2451 1979 1979 22 1021 8500 ITOTAL Six ravons 37490 17307 13150 218 9373 93365 *_/ Lands have been distributed to Dekhan Association hence no Brigades exist The most advanced of these farm units such as in Varzob farm of Leninski Rayon and Hakikat farm of Shahrinau are split into privatized farms or dekhan farms based on voluntary groupings involving family clans and previous working brigades. On this basis, individual dekhan farms have an average cultivable area of 66 ha, while actual sizes of individual (non-juridical) household farms range from 2 to 12 ha to and that of registered (juridical) dekhan farms range from 12 to 140 ha. With improvements resulting from irrigation and drainage works as envisaged under the project, it is estimated that farmland which is currently impeded would be opened up and the total cultivable area would increase to over about 17,500 ha. and the cropping intensity would be expanding from the present level of 70% to well over 120%. -42-  General Status types of Irrigation system Tajikistan has developed a unique irrigated system of gravity and pumping. Of the ten project farms Hakikat and Varzob are 100% gravity irrigated. About 1876 ha out of 1944 ha of the Leningrad farm is gravity irrigated. In all almost 20 % of the ten project farms area 17152 ha is irrigated by gravity. Pumping stations lift irrigation supplies from canal systems to high lands far distant from valleys in a series of lifts from gravity canals (locally called cascades). Table 2.3 summarizes the irrigation system of the project farms. Table 2.3. System of Irrigation in the Project Farms Name of the State! Total Gravity Total pumped Pumped Irrigation area in Ha Collectve Farm Irrigated Irri