Uzbekistan Agribusiness Overview

June 2006

Prepared by Mr. Jahangir Kakharov,
BISNIS Representative, Tashkent, Uzbekistan

Summary

Slightly bigger than the State of California, Uzbekistan is the fifth largest country in the former Soviet Union with a territory of 477,400 sq km. Agricultural land occupies more than 4.8 million hectares about 10% of which is arable land.

Russia conquered Uzbekistan in the late 19th century. During the Soviet era, intensive production of "white gold" (cotton) led to overuse of agrochemicals and the depletion of water supplies, which have left the land poisoned and the major rivers half dry.

Since Uzbekistan’s independence in1991, the government has actively pursued a policy of diversifying the country's agriculture. A major policy objective has been to achieve domestic food security, promoting expansion of grain production at the expense of feed/fodder and cotton. The government has also expressed commitment to the phased privatization of farming and the development of a market-oriented economy.

Under the Soviet Union, Uzbekistan was designated as a main producer of cotton with 80% of total irrigated land devoted to that crop. Although wheat accounted for 85% of staple food consumption, Uzbekistan produced less than 20% of the wheat it consumed. After independence in 1991, Uzbekistan's access to wheat became less secure because of the abolition of subsidies and of the centrally administered barter system, and because of the instabilities of the regional economies. A landlocked country with limited access to international markets, food security in Uzbekistan has been a major concern.

Agriculture Overview

Agriculture has a pivotal role in the Uzbekistan economy, accounting for about 30 percent of gross domestic product, 45 percent of employment, and 60 percent of export earnings. The sector is dependent on irrigation, and there is little scope for further expansion of the arable area. The short growing season typically restricts agriculture to a single crop each year.

With an average annual rainfall of 100–200 millimeters, crop farming in Uzbekistan is heavily dependent on irrigation. About 88% of the country’s 4.8 million hectares (ha) of arable area is irrigated. Irrigation water supplies come almost entirely from the Amu Darya and Syr Darya rivers.

Major Developments and Government’s Policy in Agriculture Sector

The agricultural development strategy of Uzbekistan is chiefly guided by a “Program for Strengthening Reforms in Agriculture,” developed in March 1998. Reflecting major sector concerns, the program pursued three main goals: (i) generate robust foreign exchange earnings, mainly through the sale of cotton; (ii) improve food security; and (iii) promote rural employment, enhance living standards, and ensure social stability.

According to Bearing Point report “Tendencies in Uzbekistan Farm Production”, from about ten different organizational units and types of ownership, the government has identified the three most appropriate for conditions in Uzbekistan. The main condition limiting land reform and farm reorganization is the prohibition of private ownership of land. In addition, it is forbidden to use land as collateral for receiving bank loans or to sell land plots. The government as a main reformer assumes that private ownership of land causes fragmentation of the area under cultivation, destroying the irrigation systems, which results in declining cotton and grain production – an important source for the state budget. In addition, it is presumed that the creation of large land ownership could become a factor of instability and a reason for conflict in society. Therefore three types of farming have been deemed appropriate for reorganizing agriculture in Uzbekistan and are currently operating in the country: Agricultural Cooperatives (Shirkats), Dekhkan Farms and Private Farms.

Agricultural Cooperatives (Shirkats) are the legal successors of former kolkhozes and sovkhozes, dealing mainly with the production of the strategic crops cotton and wheat. This is the biggest production unit: the average size of farms in Sirdarya province were1554 ha and in Bukhara province 896 ha. The agricultural cooperative consists of smaller units called oilavii pudrat – family contractors (previously brigads). Land is owned by the state and the cooperative receives land for unlimited use for agricultural purposes. There are two types of contract agreements shirkats have with contractors. One is a production contract with a family of contractors for one year. The contract usually includes the production amount of the main crops – cotton and wheat. Shirkats are obliged to guarantee the supply of all necessary material and technical resources. The other is a land rental agreement, which is usually made for a longer term. At the beginning of each year the shirkat administration receives a state order plan from a top-level government organization, which identifies the amount of production and area to be sown. It is prohibited to grow crops different from the state order. The average size of family contractors in Bukhara province was 15.9 ha, while in Sirdarya province it was around 18.2 ha. The labor intensity per unit of arable area also differs by region. In Sirdarya province it is 0.41 worker per ha, while in Bukhara province it is 0.23. The main share of employees in oilavii pudrat are family members, with both provinces having about the same share, about 83%.

Private Farms – Fermer Khohajaligi are considered a new market-oriented production unit. Private farms (averaging about 20 hectares nationally) increased in number quickly in the late 1990s (reaching about 63.000 in 2002), accounting for almost 1.2 million hectares in 2002. Private farms received land from the state for a long- term lease of up to 50 years. However, investigations show that in Sirdarya province only 16.9 % of farmers have leased land for 50 years, with 80 % of farmers receiving land for 10 years and only 2.1 % receiving land for 20-30 years. According to the Law on Farms (1992), private farmers are fully independent from local authorities and shirkats in organizing agricultural production. However, studies show that private farmers also have to produce state ordered crops, limited not only to cotton and wheat, but also including fruit, vegetables and melons.

Dekhkan Farms – Shirkat employees and private farmers have an additional source of income from personal household plots of less than 0.35 hectare call tomorka. Since independence the total area under these smallholdings has increased significantly and has reached 750.000 ha. The tomorka are usually located on former shirkat lands and are geared primarily towards agricultural production. According to the law, house construction is prohibited on these lands. Since 2000, the state has encouraged farmers to register their tomorka as dekhkan farms on the basis of long term (50-year) leasing. The registration helps farmers to receive credit, however at the same time it increases state control on income through taxation; therefore, farmers participate unwillingly in this program. This type of production could be considered as a purely private type because farmers make independent decisions on production and marketing. Limiting factors are the size, location of farm and irrigation.

Uzbekistan has a comparative advantage in growing cotton, making it currently the world’s fifth largest producer and the second largest exporter of cotton. Cotton is grown on about 42% of the total cultivated area, and accounts for close to 40% of Uzbekistan’s export earnings. Uzbekistan has used foreign exchange proceeds from cotton exports to support its import substitution policy and continues to depend on these earnings to sustain its industrial production. Wheat is also regarded as a strategic crop and is grown on 33% of the total cultivated area. As a landlocked country with limited physical access to international markets and with food security as a major concern, Uzbekistan has put wheat production at the center of the Government’s policy of food security.

According to Asian Development Bank, since independence in 1991, the overall performance of agriculture sector has been disappointing. Continued declines were observed in the production and productivity of the main cash crop—cotton. While the total national output of cotton was 4.6 million tons in 1991, it dropped to 3.17 million tons in 2002 because of declines in both area and per hectare yield. The decline in cotton production also coincided with the Government’s active promotion of policy of food security through state-controlled pricing and procurement systems. Between 1991 and 2002, wheat production increased from 0.6 million tons to around 4.7 million tons. Much of the increases in wheat production were achieved by expanding the land area previously used for cotton and by increasing inputs on per hectare basis.

Cotton Production

In line with IMF conditions and the intention to ease the state monopoly in cotton marketing, the Government adopted a resolution in December 2002 to allow private sector participation in cotton wholesale and export. Issuance of the resolution was followed by the release of the Presidential Decree on Deepening Reforms in the Agricultural Sector in March 2003. The decree directed the Government to accelerate the formation of private farms and extend the reforms advocated by ADB and World Bank to abolish cropping pattern restrictions nationwide. To improve farm receipts, a price premium has been introduced for state procurement of cotton and cotton byproducts.

Uzbekistan exports 800/900 000 tons of cotton fiber annually, which ranks the country the 2nd largest cotton exporter in the world. Along with cotton fiber the country also produces about 3.5 million tons of cotton seed annually. It is estimated that cotton accounts for approximately 8% of Uzbekistan’s GDP and 30% of agriculture sector GDP. The share of cotton fiber in Uzbek exports decreased from 27.3% in January-March 2005 to 26.7% in the same period of 2006. At the same time, the volume of export of cotton-fiber increased by 2.1% year-on-year. 1.6 million hectares are cultivated annually in cotton and around 40% of irrigated land is devoted to cotton.

According to the recent study of cotton sector of Uzbekistan accomplished by World Bank and called “Cotton in the Global Context”, the Uzbek government has been implementing policies aimed at reforming the cotton sector. This brought in some results: price for raw cotton is established taking into account world cotton prices, commodity exchange system is in place for cotton fiber exports, farm privatization is in progress, farmers are not dependent on ginneries for financing, and quality control system for fiber exports is established. However, there are many remaining issues and problems that cotton sector facing. Among these are complications in marketing system for cotton that create disincentives for traders, inputs and credit allocation are still under state control, existence of production quotas, lack of alternative marketing channels for raw cotton, late announcement of producer prices, lack of competition at ginning level, little/no foreign investment, issues related to taxation of the sector.

Another recent World Bank study – “Cotton Taxation in Uzbekistan study” estimates in detail the major taxes and subsidies in the cotton sector over the period 2000-2004. The study estimates major explicit (or visible) and implicit (or hidden) taxes and subsidies. This study estimates net transfers (taxes minus subsidies) at around 20-22 percent of farmers’ gross cotton revenue in 2003-2004. Net of debt forgiveness, net transfers were at around 30 percent of farmers’ gross cotton revenues in 2003 and 2004. This is higher than the corporate income tax rate of only 18 percent, or the maximum personal income tax band of 30 percent. The study concludes that cotton is over-taxed relative to other crops, therefore creating disincentives for farmers to produce cotton relative to other crops.

However, the problem is more than just the level of taxation. The study argues that the current tax structure has perverse incentives which cause inefficiencies and cotton production could be increased at no cost to the budget if input subsidies and output taxes were reduced by equivalent amounts. The study presents a reform proposal which is fiscally neutral and would create a net welfare gain to Uzbekistan.

More information on the cotton sector is available at:

1. Cotton Taxation in Uzbekistan: Opportunities for Reform AND

2. Cotton in the Global Context

Grain Production

According to Asian Development Bank, before 1991, Uzbekistan produced less than 20% of the wheat it consumed and suffered food shortages. Wheat on average accounts for 85% of household consumption of staple foods in Uzbekistan,which comprise mostly of wheat, rice, and potatoes.

After independence in 1991, Uzbekistan’s access to wheat became less secure because of the cessation of the centrally administered barter system under the Former Soviet Union (FSU) and a growing instability of the region’s economies. As a landlocked country with limited physical access to international markets, food security became a major concern, and Uzbekistan embarked on a wheat self-sufficiency program. From 1993 to 2002, aggregate wheat output grew from 0.6 million to 4.7 million tons. With domestic consumption estimated at 4.5 million tons, the country is becoming self-sufficient in wheat

Despite impressive gains in grain output, the grain production sector faces some key challenges. First, wheat production is still vulnerable to sudden drops because the recent output growth has relied on imported high-yielding wheat varieties (mostly from Russia) that adapt poorly to local conditions. As a result, standing crops are prone to high summer temperature, unstable water supply, drought, diseases, and pests (e.g., locusts). Second, production costs are still relatively high due to inefficient farm input use, excessive land preparation, and untimely application of fertilizers. Third, wheat seed production has been overly concentrated in the eastern part of the country (Andijan province), resulting in expensive seed transport, mixing of varieties, and poor seed adaptability to other agroclimatic zones. Poor seed germination leads to costly re-sowing that increases farm costs by an average of 16%. Fourth, intensive cultivation of wheat in rain-fed areas and wheat and cotton crop rotation in irrigated areas are harming soil fertility and structure. Fifth, the agriculture sector suffers from chronic shortages of fertilizers and machinery services due to low farm profits and inefficient delivery of farm inputs. State-owned enterprises still play a dominant role in the supply of agrochemicals, seeds, machinery services, and preproduction financing. In an environment of predetermined market shares and prices, the enterprises have limited incentives to upgrade or expand services. The use of poorly adapted wheat varieties and imbalanced application of fertilizers have lowered the quality of domestically produced wheat flour, yielding bread with low protein content.

National wheat output has also increased largely due to the state order system, which has regulated cropping patterns (land allocation for various crops) and the volumes of wheat and cotton farmers must sell to the state, known as the state procurement quotas. Although the system has helped stabilize crop outputs, it has limited farmers’ options to adjust crop production in response to market conditions and to improve income. The national program for wheat self-sufficiency requires the allocation of an estimated 0.8 million ha (25%) of well-irrigated land for intensive wheat production, thus, foregoing the land’s full economic potential for growing higher-value crops such as cotton, vegetables, fruits, and seeds (including wheat seeds). Overall, impediments to improving farm incomes have hampered farmers’ ability to reinvest their earnings to increase farm productivity.

As a part of its food security strategy, Uzbekistan aims to stabilize wheat production and prices. With outputs exceeding domestic consumption in 2002, the Government has implemented a buffer stock management system to stabilize wheat price. The State also intends to lessen the aggregate state procurement of wheat in the coming years below the present level of 2.7 million tons. The abolition of prescribed cropping patterns nationwide would allow wheat production to adjust more readily to market demand.

Fruits and Vegetables

According to an Uzbek agricultural exporter, Univestaff, and a BISNIS Search for Partners participating company (see: http://www.bisnis.doc.gov/bisnis/lead.cfm?1500), fruits and vegetables are one of the main export items of Uzbekistan. Univestaff estimates that annually Uzbekistan produces about 5 million tons of fruits and vegetables. Approximately half of the production is consumed locally. Favorable weather conditions allow production of fruits and vegetables without preservatives. Currently, major importers of Uzbek fruits and vegetables are Russia, Kazakhstan and other FSU countries. Official statistics indicate that Uzbekistan exported 1,405 tons of fruits and vegetables worth US$210,000 to Kazakhstan during January – May 2006 compared with 238 tons worth US$38,000 in the same period of 2005.

Animal Husbandry and Stock Breeding

Uzbekistan has over 6.47 million heads of cattle, including 2.82 million of cows, 1.21 million sheep and goats, 81,300 heads of pigs and 1.93 million of poultry in January-March 2006. Dehkan and private farms produced 96.4% of meat, 99.1% of milk, 58.3% of eggs, 98.3% of wool and 67.8% of karakul.

According to earlier mentioned Bearing Point research, since independence, the number of cattle has increased by 5% in all types of farming, while the number of sheep and goats has fallen by 12 %. Government policy has mainly been directed to maintaining the number of livestock even with negative effects on productivity. Therefore in comparison with other CIS countries Uzbekistan has maintained its quantity of livestock at levels of the pre-reform period.

Agriculture Machinery and Equipment: Market Highlights and Best Prospects

A major part of the agricultural machinery currently used in Uzbekistan is obsolete and needs to be replaced, which requires a significant investment to the tune of several hundred million dollars for renovation. The lack of modern agricultural machines and equipment is considered one of the major constraints preventing the sector’s effective development.

Best prospects include tractors, grain and cotton harvesters. There are a number of plants in Uzbekistan producing various items of agricultural machinery, equipment and parts. However, local production doesn’t fully satisfy the demand.

In 2006, a Russia-based manufacturer Rostselmash presented its grain harvester Don-1500B and a harvester of new generation Vector in Navoi region of Uzbekistan on June 1, 2006. Rostselmash and UzDonMash, which is official dealer of Russian company in Uzbekistan, organized presentation. Elmar Agaev, director on regional development of department on sales of harvesters of Rostselmash, said that the interest of farmers in Rostselmash products is increasing and added some 40 new equipments were delivered to Uzbekistan within two years. Russian company's manager also said some 1,700 harvesters participated in wheat harvesting in 2005 in Uzbekistan. He said currently agreements on supply of 300 machines were signed and equipment of Rostselmash used in all regions of Uzbekistan.

Also in 2006, another Russian company Agromashholding open joint-stock company delivered Volgograd-made crawler-mounted tractors to Uzbekistan. The release of Agromashholding said some 129 units of equipment of Volgograd Tractor Plant were delivered to Uzbekistan in line with agreement between Agromashholding and Uzprommashimpeks, signed in April 2006. The release said Agromashholding fully and in time implemented conditions of agreement signed with the importer - Uzprommashimpeks. Tractors that were delivered to Uzbekistan are VT-150D with capacity of 150 horsepower. The releases added that the company started to train to machine-operators to use VT-150D in Surkhandarya, Kashkadarya, Samarkand, Syrdarya and Tashkent regions.

Russian exports are likely to keep a strong position on the Uzbek agricultural machinery market due to competitive prices, extensive network of local dealers and service centers throughout Uzbekistan, as well as rapid delivery of spare parts.

However, it is likely that at certain point the market will get saturated with cheaper machinery, and there will be a growing number of clients wishing to purchase more expensive but higher quality agricultural machinery and equipment of U.S. origin, such as grain and cotton harvesting machines, tractors, seeders, sprayers, and cultivators.

Further growth in demand for agricultural machinery and equipment is based on the strengthening of private farming, improvement of financial and leasing schemes, arable lands extension, and improved access to the credit resources.

At present, Case represents the bulk of the current U.S. exports of agricultural machinery to Uzbekistan. For instance, in June 2003, Case New Holland Global N.V. (NYSE:CNH) announced the sale of agricultural equipment totaling over $22 million to Uzbekistan, backed by a $20 million loan guarantee from the Export-Import Bank of the United States (Ex-Im Bank). Under the terms of the agreement between CNH and the government of Uzbekistan, CNH provided 100 Case IH 2366 AF combines and 50 Case IH MX240 Magnum tractors. CNH also provided 100 Model 1010 grain headers, full parts and service support, and on-site operator and service engineer training. Ex-Im Bank has provided more than $400 million in financing to support Case IH agricultural equipment sales to Uzbekistan over the past 10 years.

Case New Holland’s affiliates in Uzbekistan include:

UzCasmash LLC (Tashkent, Uzbekistan)
UzCasetractor LLC (Tashkent, Uzbekistan)
UzCaseservice LLC (Tashkent, Uzbekistan)
UzCaseagroleasing LLC (Tashkent, Uzbekistan)

These are joint venture companies between CNH Global N.V. and various Uzbekistan entities. CNH holds a 60% equity share in UzCashmash and a 51% equity share in UzCasetractor and Uzselhozmash-Holding holds a 40% equity share in UzCasemash and a 49% equity share in UzCasetractor. UzCasemash manufactures and distributes combine harvesters; UzCasetractor manufactures and distributes agricultural tractors. CNH holds a 51% equity share in UzCaseservice, a company that services agricultural products in Uzbekistan, and Association of Uzagromashservice holds the remaining 49% equity share in that joint venture company. CNH holds a 51% equity share in UzCaseagroleasing, a company that finances agricultural equipment in Uzbekistan and Banking Association of Uzbekistan holds the remaining 49% equity share in that joint venture company.

Food Processing Industry Market Highlights and Best Prospects

According to the report “Best Export Markets for U.S. Food Processing and Packaging Equipment, 2004-05”, compiled by the El Camino College Center for International Trade Development (CITD), in Hawthorne, California, Uzbekistan’s food processing and packaging industry holds interesting opportunities for U.S. investors and represents one of the best prospects for exports among other sectors of Uzbek economy. Agriculture, which dominates Uzbekistan’s economy, continues to be one of the Government’s highest priorities. According to the report, Uzbekistan has the potential to develop into one of the major food exporters in Central Asia and the CIS. Therefore, demand for sophisticated, high-tech packaging and processing equipment will greatly expand if and when the agricultural sector is reformed.

Currently, food processing and packaging equipment and technology is very antiquated. Packaging in Uzbekistan was not developed before independence, because the packaging industry was disbursed throughout the Soviet Union. After the break-up of the USSR, Uzbekistan was left with only a small packaging industry, which was geared towards chemical packaging, not food packaging.

Even though a considerable amount of food is processed in Uzbekistan, it is still below Western standards in terms of packaging, shelf life, hygiene, and nutritional value. Most Western food products have more prestige than those produced locally. Local food products are advertised; however, the marketing strategies are frequently ineffective. Nonetheless, economic reforms and the process of integration into the world economy require local food processors to raise the standards of their product to world levels.

Swiss-owned Nestle, one of the world’s largest food packaging and supply companies, is one of the top foreign investors in Uzbekistan. The Uzbekistan government, together with the EBRD, World Bank, ADB, USAID, and TACIS (Europe AID), is putting greater emphasis on agricultural reforms to improve the long term potential of the agricultural and food processing sectors. Coca Cola operates the largest plant in the whole Central Asia. There is also greater interest from Russian food processing and packaging equipment companies with vast interests in juice processing and tomato processing, as well as meat and milk processing.

This sector presents tremendous opportunities for U.S. manufacturers of equipment to process fruits and vegetables, labeling, and packaging. Thus the food-processing industry is now among the leading and most rapidly developing sectors in Uzbekistan. Moreover, food processing is Uzbekistan's second-largest industry, based on the country abundant production of fruits and vegetables. The sector is also in need of investment to modernize its processing and packaging equipment.

According to Nizam Yuldashbaev, an official of the US agriculture department, the food processing industry is composed of small- and medium-sized companies. Almost two-thirds are small family-owned businesses or one-person operations. In 2000, investments in Uzbekistan’s food processing industry approached $200 million. By 2001, the industry was estimated to have processed over $250 million worth of products, with almost half ($120 million worth) being exported. Canned vegetables and fruits, fruit juices and tomato paste number among the most popular exports.

While many Uzbek companies are familiar with European and Turkish food processing and packaging equipment, there is a general lack of familiarity with U.S. equipment. There is, however, great interest in it. While the current situation in Uzbekistan makes it difficult to do business, long-term opportunities are numerous for those companies willing to make a commitment to the market. European producers of food processing and packaging equipment are already in the market, waiting for the time when the economy will pick up.

Imported processed foods in attractive packaging has given the population a new taste for a wide assortment of foods. Imports have also shown local businesses that use of Food Processing and Packaging equipment that they need to upgrade their technology. Most businesses were once state owned and had few incentives to be concerned about the quality, efficiency or appearance of processed products. In the new market economy these factors all matter for a businesses' survival. An industry that once produced generic looking products in bulky glass and metal containers is now seeking the capital and technology essential to produce high quality goods and package them in convenient and hygienic containers.

Market Access and Financing Options

Uzbek entrepreneurs have several options to finance purchases of the equipment, including leasing, commercial bank financing, or SME credit lines of multilateral financial institutions in Uzbekistan. The recently adopted leasing law provides much better ground for farmers and enterprises to lease machinery and equipment.

a) Leasing

According to IFC’s Central Asia Leasing Project, until 2002, almost all leasing companies in Uzbekistan were established under separate Government Resolutions, which granted individual tax preferences. The Presidential Decree No. 3122 “On Measures for the Future Development of Leasing” on August 28, 2002 created a strong basis for the sector’s growth. This Decree removed leasing’s major impediment by expanding all of the credit tax benefits available to include leasing. The Decree was then followed in 2002 - 2003 by over 40 legislative amendments to the Civil Code, Tax Code, Civil Litigations Code, and the Laws on Leasing and on Customs Tariffs. With this substantial overhaul, the legislative framework for leasing in Uzbekistan is now progressive and provides significant incentive for growth in the sector.

Uzselkhozmashleasing’s (a state owned leasing company financed from a special Fund at the Ministry of Finance to stimulate replacement and improvement in agricultural equipment) market share is gradually declining, though still remains at a relatively high level. If in 2001, the share was 93% and 84% in 2002, by 2004, it had decreased to 64%.

Agricultural equipment continues to dominate the leasing industry in Uzbekistan. In 2003, 70.3% of leases written were for agricultural equipment (75.2 in 2003). This is, of course, mainly due to Uzselkhozmashleasing; however, even excluding Uzselkhozmashleasing, agricultural equipment accounted for 17% of the market.

In Uzbekistan, the average lease term is up to three years (except for Uzselkhozmashleasing where 80% of its transactions are for 7 years). This can be explained by the high interest rates charged by several lessors (clients are eager to make the repayment as soon as they can in order to pay less interest) and also the lack of long-term financing available in Uzbekistan.

Leasing companies in Uzbekistan:

1. Asia-European Trust Company

4, Musa Djalil Passage, Tashkent, 700077

Tel.: +998 (712) 67-74-39, 67-94-28

Fax: +998 (712) 67-73-46

2. Association of Business Women of Karakalpakstan

21, Musaev Street, Nukus, 742000

Tel.: +998 (761) 223-97-33

Fax: +998 (761) 223-97-33

E-mail:kkayol@mail.ru

3. Baraka

1A, A. Khodjaev Street, Tashkent, 700027

Tel.: +998 (71) 138-69-23, 138-69-33

Fax: +998 (71) 138-69-13

E-mail: baraklk@sarkor.uz

4. Business Leasing

6, Mahmud Tarobiy Street, Tashkent, 700100

Tel.: +998 (71) 120-44-93, 120-44-94, 120-30-40

Fax: +998 (71) 120-44-93

E-mail:blco@mail.ru

5. Karakalpakstan Business Incubator

112A, A.Temur Street, Tashkent, 742000

Tel.: +998 (761) 222-19-02, 222-03-08

Fax: +998 (761) 222-03-08

E-mail:kkrbi@rol.ru

6. Poytaht-Leasing

79A, Nukus Street, apart. 1-2, Tashkent, 700015

Tel.: +998 (71) 120-58-55, 120-58-56

Fax: +998 (71) 120-77-12

7. Kurilish-Leasing

16, Uzbekistan Street, flour 3, Tashkent, 700027

Tel.: +998 (71) 139-49-95, 139-12-75, 139-18-61

Fax: +998 (71) 139-12-75, 139-18-61

8. Uzbekleasing

1, Turab Tula Street, flour 4, Tashkent, 700003

International Banking and Financing Center

Tel.: +998 (71) 139-16-54, 114-64-46

Fax: +998 (71) 120-67-29.

E-mail: uzlease@sarkor.uz

Web-site: www.uzbekleasing.com

9. UzCASEagroleasing

2, Ahangaran Highway, Tashkent, 700091

Tel.: +998 (71)120-70-02

Fax: +998 (71) 120-74-84

10. Uzselhozmashleasing

4A, Abaya Street, Tashkent, 700011

Tel.: +998 (71) 144-62-73, 144-61-98, 144-64-87

Fax: +998 (71) 144-51-03

11. Zomin Invest

15, Nakoshlik Street, Tashkent, 700081

Tel.: +998 (71) 120-63-63, 116-38-84

Fax: +998 (71) 120-63-63

E-mail: info@zomin-invest.uz

12. Alokabank

30, Oybek Street, Tashkent, 700000

Tel.: +998 (71) 152-78-85, 152-78-74, 137-49-35

Fax: +998 (71) 152-78-74

13. Asaka Bank

67, Nukus Street, Tashkent, 700015

Tel.: +998 (71) 120-81-83, 120-82-23, 120-81-11

Fax: +998 (71) 120-81-73

b) Commercial lending

Commercial bank financing is also gradually becoming a viable option for large Uzbek agricultural producers and processing enterprises. One specific character of the Uzbek banking system inherited from Soviet times is the existence of banks specialized in financing different branches of the economy. The banks that are specialized specifically in agriculture sector are Pakhta (Cotton) Bank and Galla (Grain) Bank. Below are contact details of these banks:

Joint-Stock Commercial Pakhta Bank

Mr. Abdurakhmat Baymuradov
Chairman of the Board
30, Mukimi Street
Tashkent, 700 096
Uzbekistan

Tel:: 998 71 1208818
Fax: 998 71 1732506
Email: pakhtabank@sovam.com

pakhtait@sovam.com

Galla Bank

Mr. Shukhrat Tashmuradov

Chairman of the Board

36, Lakhuty Street

Tashkent, 700060,

Uzbekistan

Tel: 998 71 1334225

Fax: 998 71 1363829

c) International Institutions and US government agencies

International organizations and development institutions, including Asian Development Bank, EBRD, World Bank and others are substantially contributing and providing on-going support to the macroeconomic reforms and development incentives in Uzbekistan’s agribusiness sector.

European Bank for Reconstruction and Development (EBRD)

The EBRD strategy for Uzbekistan approved in 2005 states that the Bank would seek opportunities to provide financing to small fruit and vegetable processing plants, using the tools available under the Early Transition Countries (ETC) initiative. According to EBRD, this sector of agribusiness is especially promising, due to the high quality raw materials available locally, the established position of Uzbek products on foreign markets – mostly in CIS countries – and growing interest from multinationals, like Coca Cola.

The Bank will also continue to investigate the possibility of working with foreign strategic partners in agro-processing as a way to promote foreign investment and knowledge transfer in a way similar to a framework guarantee facility of EUR 7.5 million to Nestlé Uzbekistan (signed in July 2003).

With regard to upstream activities in the sector, the Bank will examine the introduction of an agricultural financing scheme, such as the Grain Warehouse Receipt Program by which the Bank will share the risk of a local borrower with local participating banks, supported by the collateral of new crops stored in the grain warehouses. The implementation of reforms to the marketing of key cash crops, such as grain and cotton, will be a necessary precondition for the Bank to start developing structured trade finance operations in the sector.

Asian Development Bank

ADB is assisting the Ministry of Agriculture and Water Resources of Uzbekistan in three projects that will help reform the state procurement system, boost agricultural productivity, and rehabilitate irrigation infrastructure. The land improvement project planned for Board consideration in 2006 will work with local governments and rural communities in implementing policy reforms and supportive investments for improved agricultural productivity. Under the ADB-led Central Asian Countries Initiative for Land Management (CACILM), policy and program actions are planned to reverse land degradation with significant grant co-financing from the Global Environment Facility.

ADB Country Strategy Program for Uzbekistan states that the bank will continue to support a sustainable cost recovery policy in the water sector initiated under the Amu Zhang Irrigation Rehabilitation Project. To advance the transition in agriculture, ADB will support market infrastructure and farm support services. Complementary financing for market infrastructure and farm support services will be considered under rural small enterprise development project that will include various rural financing options such as leasing.

U.S. Trade and Development Agency (TDA)

The U.S. Trade and Development Agency (TDA) is an independent federal agency that helps American companies increase exports to middle-income and developing countries. The agency funds feasibility studies, training programs, and other project planning services as well as assists in overcoming hurdles to project implementation, including regulatory obstacles, limited access to financing, and inadequate technical information.

Agribusiness is one of several key sectors in which TDA supports both international development and U.S. exports. Many countries are trying to expand production of agricultural commodities, both to meet their domestic food needs and to boost revenues from their specialty crops. In addition to grower-oriented services, a key element of such policies is the modernization of processing and storage facilities, as well as distribution systems. More information is available at: http://www.tda.gov/

U.S. Export-Import Bank

The U.S Export-Import Bank supports the financing of U.S goods and services exports, assuming credits and country risks through its main three programs: Working Capital Guarantee Program, Export Credit Insurance Program and Direct Loans and Guarantees Program. For more information please visit www.exim.gov/contactus.html

The U.S. Department of Agriculture

Specific inquiries regarding Uzbekistan could be addressed to the Agricultural Specialist with US Embassy in Uzbekistan Mr. Nizam Yuldashbaev.

Nizam Yuldashbaev
Agricultural Specialist
Foreign Agricultural Service
US Embassy
3, Moyqorghan Steet, 5^th block

Yunusobod District,

Tashkent, Uzbekistan
Office 120.54.50, 120.54.47
Fax 120.63.35
Nizam.yuldashbaev@usda.gov

BISNIS/U.S. Department of Commerce:

Mr. Jahangir Kakharov

BISNIS Representative in Uzbekistan

Uzbekistan Banking Association Building, 13th floor,

1, Khodjaeva Street, Tashkent,

Uzbekistan, 700027

Tel.: 998 71 138 69 76

Fax: 998 71 138 69 77

E-mail: bisnis.tashkent@bcc.com.uz

http://bisnis-eurasia.org/

For more information on Uzbekistan, visit BISNIS online at:

http://www.bisnis.doc.gov/bisnis/country/Uzbekistan.cfm

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov)