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Cotton oil is back in Tajik plov

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Pure cotton oil returns to Khujand.

Mr Akhmedov now has all the cotton seeds he needs to keep his factory running.

The end of the Soviet Union meant independence for the central Asian state of Tajikistan – and almost a decade of civil war. The ensuing chaos, terror and economic deprivation were bad enough, but the precipitous decline in the country’s manufacturing sector in that period dealt a cultural and culinary blow as well. People could no longer access safe, reliable supplies of cottonseed oil for cooking the national rice specialty, called plov.

But every problem presents an opportunity, and by 2004 entrepreneur Tofik Akhmedov had decided it was time to make pure cottonseed oil as “it used to be during Soviet times”, in the days before machinery was abandoned, factories closed down, people lost jobs and good old cottonseed oil became dangerous to eat.

Mr Akhmedov had long seen potential profit in cottonseed oil. “My foreign friends often wonder whether cottonseed oil is worthy of investment,” he says. “Olive oil, sun flower oil, sesame oil: of course, there is a taste for everybody. But we Tajiks like cottonseed oil and so do our neighbouring countries” which have their own national plov recipes for special occasions.

Oil a source of pride

With his cottonseed oil business financed by the EBRD, he has put his northern Tajik hometown, Khujand, on the map. Sixteen years ago, Khujand was called Leninobot (the city of Lenin) and prided itself on having the second highest statue of Lenin in central Asia. Now his company’s pure cottonseed oil has become the city’s pride.

Once Mr Akhmedov had hit on the idea of making cottonseed oil, it took two long years for him to buy an old ex-Soviet property where the refinery was to be built, import equipment from the US, buy cotton seeds, hire staff and start production. Halfway through the process, in March 2005, he set up Komron Agro Holding to refine cottonseed oil.

“My partner, Khujand Invest Cotton, sponsored this business, although my dream was to walk on my own feet and have enough funds to be able to call this business mine,” says Mr Akhmedov.

But cash is king, and Mr Akhmedov didn’t have enough of it to fuel his business. Komron Agro Holding had the money for just 8,000 tonnes of cotton seeds a year, meaning the plant operated at 30 per cent of its capacity. Often farmers would agree to advance seeds to Mr Akhmedov in return for a percentage of his oil production – but then they would forget that agreement and instead sell the seeds to the first buyer with cash in hand.

No cash, no seeds

“I was a man with tied hands,” says Mr Akhmedov. “The refinery had a bigger capacity but I could not buy more seeds. The reality was simple: seeds were given to the first who offered cash. No production, no jobs. And that is how I ended up firing 60 employees.”

Mr Akhmedov’s worries are now left behind thanks to an EBRD loan of $1.4 million, agreed in April 2006. With these funds he will be able to buy 24,000 tonnes of cotton seeds that will keep the refinery working during the 10-month season.

The loan was granted after the Bank undertook a careful technical and legal examination of Komron. Such examination is essential both in determining a potential borrower’s creditworthiness and in guiding their future business plan; usually this ‘due diligence’ is paid for by the client but few of them in poor countries have the capacity or funds for it. So Komron’s due diligence and technical assessment were funded by the 12 donors that support a special EBRD fund for the ‘Early Transition Countries’ – the seven poorest in the former Soviet Union. By the end of 2005, €32.1 million had been pledged to this fund.

Komron Agro Holding is now able to more than double its cottonseed oil production to 3,000 tonnes per season. The 30 farms that sell him seeds now receive cash and can invest it in their own best interests. Komron Agro Holdings’s 180 employees no longer need to emigrate in order to feed their families. And Khujand can now pride itself to have the best quality cottonseed oil in Tajikistan.

Advertising pays

With his everlasting enthusiasm, Mr Akhmedov tells about his cottonseed oil’s future: “I will soon start a second advertising campaign. The first helped to increase sales by 20 per cent. People are now aware that we produce quality oil and that our Tajik traditional dish, plov, tastes better with Komron oil.”

When the Tajik president visited Komron Agro Holding refinery in summer 2005, he urged Mr Akhmedov to help establishing refineries in the south because “the south needs pure cottonseed oil too”. Mr Akhmedov took his president’s words seriously and is now assisting companies in the south of Tajikistan to build up cottonseed oil refineries.

Written by Marjola Xhunga, an EBRD Communications Adviser.

Photos: V.Pirogov

Contact:

EBRD Tajikistan Office

11 May 2006