World Bank Document

II. 
Financial Analysis 
3. 
The project will generate direct economic benefits in the areas where farmland is reallocated from production of 
cotton and wheat to production of fruits and vegetables, which would immediately increase the income of farmers. 
Horticulture production is 5-7 times more profitable than cotton/wheat production. Yet, farmers could generate such 
high incomes from horticulture production only if they can sell horticulture produce fresh (during a short period of time) 
at the expected (high) prices. In case of overproduction and logistical bottlenecks for storage and exports, the saturation 
of import markets or the inability to meet the strict import requirements, farmers would need to sell their rapidly 
perishable products for processing or local markets at discounted prices. Even in this case, however, the profitability of 
horticulture production would on average exceed the profitability of cotton or wheat production. The benefits on the 
converted farmland is not included in the project’s estimates as they are likely to occur in any case. 
4. 
What is less ensured are economic and financial benefits of the project investments on the existing land under 
horticulture production. Several illustrative models were prepared to demonstrate the likely choice of crops and 
technologies to be financed with support of the project, and their benefits. The net flow of benefits “with the project” in 
these models are deducted from the net flow of benefits “without the project” scenarios, because without the project 
farmers are likely to produce these crops using traditional, less productive technologies. The exchange rate is fixed at 
9,500 UZ Soms/US$ (as of October 2019). The financial models for potatoes, open field tomatoes and cucumbers, 
greenhouse tomatoes and cucumbers, traditional and intensive apple orchards, sweet cherry orchards, and apricot 
orchards all show the positive net present value well above investments.