The Asian Development Bank (ADB) will help restore the productivity and profitability of Tajikistan's cotton industry through a loan and grant package totaling 12 million U.S. dollars, an ADB report said on Monday.

The cotton industry is the country's main source of farm income, agricultural exports, and rural employment. However, it has been underperforming, with yields and profitability on the decline, largely due to the substantial and increasing cotton farm debt, said the report.

This debt, estimated at 292 million U.S. dollars in early 2006, was incurred by cotton farms under a complex system of production credit from intermediaries outside the formal banking system.

The project will first resolve cotton farm debt on a pilot scale in four selected districts in the two main cotton-producing regions -- Sughd and Khatlon -- where three quarters of the country's extremely poor live.

A team will analyze the debt level and operations in each farm, then work to restructure and settle the debt. Realistic business plans for each farm will also be prepared.

At the same time, the project will make policy recommendations and farm debt resolution options to the Government, and support education and awareness measures to provide suitable financing products and services to the restructured pilot cotton farms.

The project will help develop the cotton market by promoting the adoption of internationally recognized quality standards for fiber cotton. It will also help establish two bonded warehouses to be operated by the private sector that meet international standards to expedite the export of baled cotton.

Source: Xinhua