World Bank Document

 
The World Bank 
Agriculture Modernization Project (P158372) 
Page 52 of 70 
interested group of farmers, build up their technical and managerial capacities over time, and assist with provision of 
external finance as well as external agronomic and business inputs needed for the orchard farms to succeed. These pilots 
will involve commercially-driven farmers and executed as turn-key services provided by competitively-recruited private 
companies by the project. 
26. 
Component 2: Supporting Investments in High-Value Horticulture Value Chains (US$200 million). The objectives 
of this component are to facilitate farmers’ participation in the new growth and investment opportunities created by 
economic liberalization and agricultural diversification, support collective actions among farmers, and enable productive 
partnerships/clusters between farm groups and agribusinesses. This objective will be achieved through a mix of technical 
support provided under sub-component 1.4 and piloting of two credit windows that would offer a long-term financing 
tailored to the needs of farmers and agribusinesses. This kind of financing is still lacking in the domestic banking sector 
and the project will offer the following special financing windows to promote inclusion of small farmers in value chains: 
a. Credit window for farm cooperatives and cooperations in horticulture sector (US$50 million): This window 
will provide loans to farm cooperatives and participants of the cooperations in horticulture sector for 
investments in infrastructure, machinery and equipment, and other assets to promote their collective actions. 
Typical investments would be in intensive orchards and greenhouses; energy efficient irrigation systems; solar 
water heating systems; water lifting using photovoltaic stations; adoption of other climate-smart water saving 
and mechanization technologies; and processing and storage facilities, including to reduce exposure to 
extreme weather conditions. Farm cooperatives will be supported by sub-component 1.4 that seeks to 
strengthen their business capacity and help them prepare bankable climate-informed business plans to 
receive loans.
b. Credit window for productive partnerships (US$150 million): Many agribusinesses have informal 
arrangements with farmers. This informality reduces the value of cooperation and creates market failures in 
the form of foregone economic opportunities for both agribusinesses and farmers. This window will provide 
loans to agribusinesses, who will be entering into formal contract agreements with farmers and farm 
cooperatives, through productive partnerships, including the provision of advisory services to farmers for 
amongst others better understanding of climate risks and available adaptation measures (e.g. use of CSA 
technologies and practices) and mitigation opportunities (e.g. energy efficient irrigation systems; solar water 
heating systems and water lifting using solar photovoltaic stations, support the conversion of some land from 
production of annual cotton and wheat crops to perennial fruits and vineyards), and provide technical 
assistance and/or value chain financing such as a working capital within a supply chain. Farmers participating 
in productive partnerships can also borrow. Value chain financing can help address an input credit constraint 
faced by small producers, who would have contractual links to an ago-processor or exporters. 
27. 
The credit line will be implemented through PFIs, building on the satisfactory experience on using credit lines 
under HDP and LSDP. Potential PFIs for participation in AMP include those participating in HDP: Aloqabank (2 percent
66
), 
Asia Alliance Bank (1 percent), Asaka Bank (23 percent), Hamkornbank (1 percent), Qishloq Qurilish Bank (7 percent), 
Ipak Yuli Bank (4 percent), Ipoteka Bank (6 percent), the National Bank of Uzbekistan (27 percent), Turon Bank (8 percent), 
Uzpromstroybank (10 percent), and Xalq Bank (10 percent). The credit line will be implemented according to a project 
specific operational document, “the Credit Line Guidelines,” that will be agreed with MOF and will be compliant with WB 
Guidance for Financial Intermediary Financing. Terms and conditions of the credit line will be articulated in the Credit 
Line Guidelines and their fulfillment will be a condition for any disbursement of credit line funds. PFIs will sign SLAs with 
MOF based on terms agreed in the Credit Line Guidelines. Investment eligibility criteria for the credit windows, including 
preference for climate resilient investments, will be outlined in the Guidelines. The credit line will make credit available 
66
In parenthesis is the share of the PFI in total loan disbursement under the HDP as of October 2019. 

---