Agriculture sector growth has made apowerful contribution to post-war economic recovery inTajikistan, accounting for approximately one third ofoverall economic growth from 1998 to 2004. Sector outputincreased by 65 percent in real terms during this period,and has now returned to the level extant at independence in1990. Total Factor Productivity (TFP) has also increased, by3 percent per year. Despite this progress, there islegitimate concern that this growth is unsustainable.Evidence suggests that it has been driven largely by theexternal factors noted above, rather than substantivechanges to resources, incentives and the behavior of factorand commodity markets. First, an extensive program of policyreform, particularly in the area of land ownership, has yetto make a substantial impact on the incentive structure foragricultural workers cultivating the majority of arableland. Second, sustainable growth requires positive netinvestment. Third, commodity markets remain weak, with alimited capacity to translate increased demand into improvedproduction incentives. And fourth, growth in crop productionhas been largely driven by low value food and cereal crops.A sustainable increase in access to rural finance willrequire much greater emphasis on the development ofalternative sources of finance for all of agriculture, inaddition to resolution of the cotton debt crisis. Thecapacity for agricultural loan appraisal and management alsoneeds to be strengthened, new collateral instrumentsintroduced and new loan products developed, which are suitedto agriculture in general and small-scale farmers in particular.
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