Desk Study: Rural Sector Reform and Legal Aid in Tajikistan June, 2008 KasWag AgriConsulting Worldwide Project 7F-00351.06.14 Executive Summary Agriculture is a key sector of the Tajik economy, accounting for 24% of GDP, 66% of employment, 26% of exports, and 39% of tax revenue (2004). Agricultural land in Tajikistan covers about 4.6 million hectares (ha), with 732,000 ha of irrigated area. Most rural households depend on their household plots for subsistence. Over 70% of horticulture output (about one million tons of fruits and vegetables) is produced on these household plots. The commercial livestock sector has essentially collapsed. Cattle, small stock, and poultry numbers have declined and livestock ownership has shifted to households, which own about 90% of all livestock, and are the dominant suppliers of milk, meat, and other livestock products. Under the Constitution, all land in Tajikistan is owned by the State and citizens receive various forms of use rights. Land reform has ostensibly been continuing for several years although the land reform program has failed to provide equitable and secure land-use rights to farmers due to fundamental flaws in the farm restructuring process and the continued command approach to farm management. Tajikistan’s economy is highly dependent on cotton production. Cotton is grown on 53% of the country’s irrigated farmland, and provides an estimated 60% of total agriculture output value. Key political and financial players are involved in the industry as processors and traders. However, cotton sector performance has been eroding due to pervasive market failures and strong government presence along the entire value chain. Significant debt accumulation is the most obvious symptom of the dysfunctional business model, with spillover effects to the economy. At the end of 2007 the Government of Tajikistan (GoT) claimed there was more than US$400 million outstanding debt of farmers to cotton investors, although the validity of much of the debt assigned to the farmers is questionable. In addition, the disclosure in late 2007 that the National Bank of Tajikistan had guaranteed key cotton sector loans with international banks with a face value of approximately $300 million resulted in the IMF mis-reporting events and link the central bank (and by implication the Government) to the debt obligations. Winter 2007/2008 saw the worst food security and energy crisis since the civil war. In May 2008, a joint donor Food Security Assessment revealed that the crisis in the agriculture sector has been ongoing since 2005/2006. Lack of appropriate land and water management, insufficient farmer skills and access to information, lack of access to credit, lack of access to fertilizer and pesticides, and an increase in animal and crop diseases and pests have serious implications for the agriculture sector. In addition, the current price rises in food and fuel (100% in 2007 and already 56% in the first quarter of 2008) are expected to further deplete rural communities’ meager income and livelihoods. Many farmers have lost hope in agriculture as the main source of income, resulting in increased labor migration, further depleting the badly needed manpower for the sector. There is no comprehensive agricultural sector policy or strategy approved by the GoT. Rather, the de facto sector structure and focus remain oriented to cotton production no matter the cost to rural livelihoods, productivity or the environment. However, GoT has stated a commitment to sector reforms and asked for help. On 5 March 2007 the President signed Resolution 111, The Action Plan (Road Map) for the Implementation of the Farm Debt Resolution Strategy in the Republic of Tajikistan for 2007-2009, which provides for: 2 • freedom to farm without Government interference, • improvement of secure land rights for farmers, • development of inputs and outputs markets, • improved and expanded agricultural credit, • removal of government interference in a variety of key areas, • improved public information access. The Government has made some progress in implementation of Resolution 111, such as the approval of amendments to the Land Code, the introduction of Universal Cotton Grading Standards and (minimal) steps toward allowing Freedom to Farm. However, a broader agricultural sector policy that includes diversification of crops, facilitating private sector development for inputs and finance, a sequenced land reform process and a revised role for the government is still needed. Regarding cotton, Tajikistan is currently in a transitional phase as financing shifts from the cotton investors to commercial credit. In 2008, only one large investor now dominates cotton financing and then only in 7 rayons in the south. The Government provided about US$40 million from the budget as a loan to commercial banks for on-lending to farmers. However, as the investors dominated not only credit provision but also inputs supply and marketing, there have been significant shortfalls of seed and fertilizer. Problems with energy and a shortfall of rain and snowmelt over the last year are having negative effects on agricultural production and a further food security crisis is imminent. Nevertheless, these crises provide an opportunity to introduce some fundamental changes in the sector and donors are working to coordinate their efforts carefully to take advantage of the possibilities. In the past two years donors have made efforts to improve donor coordination and communication with the GoT. In October, 2007 the Donor Coordination Council (DCC) set up a special sub-group on agriculture which meets regularly to discuss issues, to better coordinate programs and to hold unified discussions with the GoT. In addition, more than nine donors have initiated the process to develop a Joint Country Support Strategy (JCSS). At the June, 2008 JCSS key findings for the agricultural sector were presented, including the following specific recommendation: …..Better coordination in provision of farmer services Better coordination in farmer services (legal, business and agricultural extension) is critical, since this is the area where there are currently the most gaps and overlaps… Donors such as DfID, USAID, SDC, UNDP, UNFAO etc are strongly encouraged to support a more unified national Legal Aid Center Network as opposed to continuing support for separate centers. The pooling of donor resources will allow a unified approach for provision of farmer services, create a minimum standard of professional services, provide a single set of information materials for farmers, increase the likelihood of leaving behind a sustainable network and provide a unified approach for monitoring and for advocating farmer’s rights with the GoT. The national network or ‘coalition’ should build on what has already been developed over the past 5-7 years, not create yet another parallel system…. With specific reference to farmer services, there are several donor agencies involved in legal aid centers (LACs) and extension services. Currently, there are more than 90 offices in the country. 3 Each donor has set up and funded its own centers and the result is a relatively non-coordinated series of offices where various types of assistance are offered and varying levels of professional competency are evident. While substantial amounts of money have been spent, the overall sustainability of these services is questionable. The significant gaps/overlaps in geographic coverage also mean that many farmers most in need of assistance (i.e. in cotton rayons) have limited or no access to support at all or else receive different advice from the various donor supported offices. Under this current desk study, interviews with donors and their implementing partners highlighted the need for more coordination at all levels; this means donors must coordinate their programs and funding mechanisms amongst themselves and their implementers must ensure that field level activities are consistent throughout the country and coordinated to avoid gaps and overlaps in geographic coverage. Ultimately, the main objective is to achieve greater standardization in areas such as the development and publication of farmer information and training materials, contracts and other transaction documents. There is also a demand for a certification process for each of the local NGOs or other implementing partners to ensure a minimum level of service amongst LAC staff and a higher level of professionalism in service delivery. Better coordination can also increase operational efficiency, particularly in the dissemination of information and outreach capacity of LACs. This conclusion was reached after two years of informal coordination and a review of donor funding to farmer education and LACs. In 2006, USAID set up the Legal Aid Center Coordination Group (LAC CG) that includes members with offices funded and/or implemented by USAID, ACTED, EC, CIDA, OSCE, DfID, UNFAO, SDC, UNIFEM etc. To the extent possible, the LAC CG has exchanged information and even set up a database to record information on their respective activities, geographic outreach and funding time frames. The most significant coordination effort has been the development, publishing and distribution of the Freedom to Farm brochure. The members of the LAC CG collaborated to develop and distribute the brochure which has set the precedent for the development of a series of other brochures for joint development and use. However, even though coordination efforts amongst the implementers are well intentioned,