The Asian Development Bank (ADB) is to help rebuild Tajikistan's cotton industry with a loan and grant package worth US$12m.

Tajikistan's cotton sector is its top source of farm income, agricultural exports, and rural employment, but has recently been underperforming, mainly because of rising cotton farm debt.

The package will complement the government's Cotton Farm Debt Resolution Strategy, aimed at tackling the decline in yields and reversing cotton farms' debt, which totalled an estimated $292m at the start of this year.

"An unprofitable cotton industry is inextricably linked to poverty," said Lourdes Adriano, an ADB senior rural development economist.

"Thus, there is an urgent need to support the recovery of the sub-sector. Its turnaround is the agriculture sector's path to equitable pro-poor growth."

The funds will feed into a pilot scheme which will tackle cotton farm debt in four selected districts in the two main cotton-producing regions - Sughd and Khatlon - where three-quarters of the country's poor live.

A team will analyse 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 cotton farms.

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

"Through this project, ADB will support the government's commitment to genuine development change by addressing the crucial and immediate concerns affecting the agriculture sector," said Neeraj Jain, ADB's country director for Tajikistan.