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Horticulture Value Chain Infrastructure Project (RRP UZB 51041)

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Horticulture Value Chain Infrastructure Project (RRP UZB 51041) Horticulture Value Chain Infrastructure Project (RRP UZB 51041) Supplementary Document 15: Detailed Sector Assessment – Agriculture, Natural Resources, and Rural Development TABLE OF CONTENTS 1. INTRODUCTION 1 2. AGRO-ECOLOGICAL CONDITIONS IN THE PROJECT PROVINCES 3 A. Agro-ecological features .................................................................................................... 3 B. Climatic features of Andija Province .................................................................................. 5 C. Climatic features of Samarkand Province .......................................................................... 6 3. ORGANIZATION OF THE HORTICULTURE MARKET SECTOR 7 A. The Current Market institutions .......................................................................................... 7 1. Market Institution at National Level .................................................................................... 7 2. Market Institution at Provincial Level ............................................................................... 12 3. Market Institution at Municipal Level ................................................................................ 13 B. Stakeholders at Large ...................................................................................................... 13 C. Other Stakeholders .......................................................................................................... 14 4. KEY HORTICULTURE PRODUCTS 15 5. SECTOR PERFORMANCE 16 A. Crop Areas ....................................................................................................................... 16 B. Production ........................................................................................................................ 17 C. Consumption .................................................................................................................... 19 D. Horticulture Share in the Agro-industry ............................................................................ 20 E. Export of Horticulture Products ........................................................................................ 23 F. Share of Horticulture Products in the National Production .............................................. 31 G. Share of Horticulture Products in the Wholesale Trade .................................................. 31 H. Losses in the Horticulture Chain ...................................................................................... 31 1. Crop Losses ..................................................................................................................... 31 2. Transportation Losses ..................................................................................................... 32 3. Overall Losses ................................................................................................................. 32 6. CURRENT MARKET INFRASTRUCTURE 33 A. Existing Wholesale Markets ............................................................................................. 33 1. Wholesale horticulture markets at National level ............................................................. 33 2. Andijan Markets ............................................................................................................... 33 3. Samarkand Markets ......................................................................................................... 33 4. Tashket Markets............................................................................................................... 34 B. Horticulture Chain Analysis .............................................................................................. 34 1. The structure of fruit value chain in Uzbekistan ............................................................... 34 2. Transportation .................................................................................................................. 35 3. Horticulture Processing .................................................................................................... 35 4. Cold Storage .................................................................................................................... 36 C. Norms and Standards ...................................................................................................... 38 D. Assessment of Needs ...................................................................................................... 40 E. Required Improvements for Sustainable Sector Development ........................................ 41 7. MARKET DEMAND ANALYSIS 42 A. Structure of the horticulture marketing ............................................................................. 42 B. Domestic Markets ............................................................................................................ 42 C. Supermarkets ................................................................................................................... 42 D. Use and Distribution of the Horticulture Produce ............................................................. 42 E. Export Markets ................................................................................................................. 43 8. SECTOR FORWARD STRATEGIES 44 A. Key strategies in the Agriculture Subsector ..................................................................... 44 B. Diversification of traditional agriculture ............................................................................ 45 C. International donor Funded Projects ................................................................................ 46 D. ADB Recommended Roadmap for Horticulture ............................................................... 46 1. ADB Sector Experience and Assistance Program ........................................................... 46 2. ADB Assistance to Uzbekistan in the Sector ................................................................... 46 APPENDIXES Appendix 1: Sector Regulatory Framework – Selected Items ................................................ 48 Appendix 2: List of Projects Implemented, being carried out or under study by the RRA ...... 65 Appendix 3: Characteristics of Horticulture products markets in Andijan province ................. 67 LIST OF ABBREVIATIONS ADB Asian development bank CPS Country Partnership Strategy DCM Decree of the Council of Ministers EBRD European Development Bank EU European Union FAO Food and Agriculture Organization ha hectare IBRD International Bank for Reconstruction and Development IDA International Development Aid IFAD International Fund for Agricultural Development IFI International Funding Institution JICA Japan International Cooperation Agency JSC Joint Stock Company RFP Request for Proposal RCM Resolution of the Cabinet of Ministers RoU Republic of Uzbekistan RRA Rural Restructuring Agency TOR terms of reference 1. INTRODUCTION 1. The Republic of Uzbekistan (RoU) is endowed with particular agro-ecological conditions which provide favorable basis for its horticulture subsector. Consistent implementation of measures to develop and diversify the industry has allowed over the past 5 years ensuring the expansion of the resource base and increasing the volume of products. In particular, fruit and vegetable products increased, in particular grapes increased 160%, meat products by 140%, and dairy products by 140%.1 Figure 1.1 Map of Uzbekistan 2. Policy reforms which took place in horticulture subsector in recent years provide incentives to support private investment and efficient markets and promulgate policies that promote the optimum valorization of horticulture resources. Such as the Presidential Decree PP- 2505 dated 5 March 2016 "On measures to further develop the raw materials base, deepen the processing of fruit and vegetable and meat and dairy products, increase production and exports of food products in 2016–2020" and PP-2716 dated 6 January 2017 "On additional measures to further deepen processing and create capacities for storage of fruit and vegetable products in 2017–2018" provides for the implementation of 434 projects in the amount of $740.1 million in the following areas: (i) 163 investment projects focused on creating new production facilities for processing of fruits and vegetables in specialized areas (districts); 1 Press release on the theme: Reforms and prospects for processing agricultural products. Tashkent. 4 April 2017. https://mineconomy.uz/ru/node/1539 (ii) 159 projects for the construction of warehouses equipped with refrigerating chambers for storing export-oriented fruit and vegetable products; (iii) 36 projects to establish enterprises for the production of packaging materials; and (iv) 39 investment projects for the processing of meat and dairy products. 3. In accordance with the Strategy Action plans of the country, there were envisage modernization and intensive development of agriculture, providing reduction of crop area under cotton for 49,000 ha and 10,000 ha of grain areas. In the shortened fields, it is planned to sow crops such as potatoes for 8,100 ha, vegetables for 27,200 ha, intensive gardens for 5,900 ha, vineyards for 2,900 ha, fodder crops for 10,900 ha, and 4,000 ha of oilseeds (footnote 1). 4. The structural reforms emphasize the (i) expansion of the raw material base of the food industry, (ii) development of deep processing of agricultural products, (iii) full provision of domestic market with domestic products, and (iv) export of finished products with
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