Lao People's Democratic Republic: Smallholder Development Project (Additional Financing)

Sovereign Project | 31351-014

Summary

The agriculture and forestry sectors remain Lao PDR's primary source of livelihood and play a key role in reducing national poverty. The Smallholder Development Project (current project) has therefore been promoting sustainable commercial smallholder agriculture and associated agribusiness through strengthening extension services, enhancing access to information and markets, capacity building, and increasing investments in agribusiness. The proposed additional financing, which will consolidate and expand well-performing investments initiated under the current project, covers 8 districts in four provinces.

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Procurement Documents


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Project Name Smallholder Development Project (Additional Financing)
Project Number 31351-014
Country Lao People's Democratic Republic
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2809-LAO: Smallholder Development Project (Additional Financing)
Asian Development Fund US$ 5.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Agriculture, natural resources and rural development - Agricultural production

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The agriculture and forestry sectors remain Lao PDR's primary source of livelihood and play a key role in reducing national poverty. The Smallholder Development Project (current project) has therefore been promoting sustainable commercial smallholder agriculture and associated agribusiness through strengthening extension services, enhancing access to information and markets, capacity building, and increasing investments in agribusiness. The proposed additional financing, which will consolidate and expand well-performing investments initiated under the current project, covers 8 districts in four provinces.
Project Rationale and Linkage to Country/Regional Strategy The Asian Development Bank (ADB) approved the Smallholder Development Project for $12 million equivalent from its Special Funds resources in November 2002. The completion date was stated as 28 February 2011 and the closing date as 31 August 2011. The purpose of the current project was to establish sustainable smallholder agribusiness. The current project focused on (i) effective agricultural extension and training mechanisms, (ii) improved physical infrastructure and marketing of agricultural goods, and (iii) effective primary market networks. The current project has (i) established 162 farmer production and marketing groups (FPMGs) and organized training on agricultural production techniques and post-harvest practices; (ii) developed agricultural extension services to assist farmers groups, processors, and traders with the establishment of contract farming; (iii) upgraded 89.5 kilometers of access roads and built 70.8 kilometers of new feeder roads; (iv) delivered an agriculture and marketing information system; (v) constructed six markets; and (vi) provided post-harvest technology and associated equipment. These investments created a favorable environment for the development of commercial agribusiness and contributed to the improvement of farmers incomes. As a result, the outcomes of the project have been achieved. An average beneficiary smallholder household income in Khammouan province, poorest among the project provinces, increased from $280 in 2002 to $675 in 2010. The same trend has been observed in the other project provinces.
Impact Improved agricultural productivity in four provinces
Project Outcome
Description of Outcome Improved sustainability of smallholder commercial agriculture in the provinces of Champassak, Khammouan, Savannakhet, and Vientiane
Progress Toward Outcome Farmer Production and Marketing Groups are able to supply their products to markets. The 30 R3 rice seed production groups are able to supply quality rice seeds of 700 tons in the wet season and 853 tons in the dry season. The average yield of wet and dry season rice in project areas has increased to 3.7 tons/ha and 3.9 tons/ha against the targets of 3 tons/ha and 3.2 tons/ha, respectively.
Implementation Progress
Description of Project Outputs

1. Strengthened FPMGs in 24 districts by 2014

2. Replicated post-harvest technology and practices in the new project areas

3. Strengthened extension services of ATEC

4. Improved FPMGs' knowledge on agribusiness practices

5. Strengthened human resource capacity for project implementation

Status of Implementation Progress (Outputs, Activities, and Issues)

1. Strengthened farmer production and marketing groups:

A total of 221 FPMGs were established and registered, exceeding the target of 190. The Project classified 221 FPMGs into four stages based on group development, among which 109 groups (49%) demonstrated that they are able to sustain the productions and have established market linkages, functioning group management and group revolving funds.

2. Replicated post-harvest technology and practices:

The Project expands the post harvest technology and practices in 8 new districts based on lessons learned and best practices from implementation of the original project. Provision of agriculture inputs including post-harvest equipment, training on post harvest technology and practices and maintenance of equipment were completed. The introduced technologies are being applied by the farmers.

3. Strengthened extension services of the Agriculture Technical Extension Centers (ATEC):

Partnerships with Sebangfay ATEC in Khammuane, Thasano Rice Seed Research and Seed Multiplication Center in Savannakhet, and Lao-China Agriculture Cooperation Center in Champasack are progressing well. These centers continue to provide training and extension services on rice seed production, commercial rice production, organic vegetable plantation, fish farming and livestock raising to to 400 villages.

4. Improved farmer production and marketing groups knowledge of agribusiness practices:

As of 30 March 2015, a total of 52 contract farming agreements have been signed among rice seed, commercial paddy rice production and other crop production and rice millers and other organizations for about 61,029 tons, this include 21 CFs in Khammouane, 7 CFs in Savannakhet, 21 CFs in Champasak and 3 CFs in Vientiane province. The contract farming arrangements have over-achieved the performance target of 20, a significant accomplishment.

5. Strengthened human resource capacity for project implementation:

The provincial and district project staff were trained on (i) project management, financial management, procurement; and (ii) agricultural production technologies and agribusiness. Majority of project activities were implemented as scheduled. The procurement of rice seeds, construction materials for renovation of small scale irrigation systems were handled by provincial project offices. A monitoring and reporting system was well in place and the quality of quarterly progress reports have been improved.

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The Project is categorized as environmental category B. None of the proposed activities directly impinge upon the environment. The Project will have limited environment and social impacts which are site-specific, few if any of them are irreversible, and in most cases effective mitigation measures can be designed. Promotion of organic farming and associated marketing activities will have beneficial environmental impacts and the scattered, small-scale village post harvest operation will have no negative environment impact due to their small-scale. Awareness raising activities will increase community consciousness of the need to follow sustainable practices. No new construction facilities and/or physical infrastructure is planned.
Involuntary Resettlement All infrastructure under the component has been fully completed. The additional funding will not go towards any further land acquisition or compensation, thus rating a Category C for IR.
Indigenous Peoples Analysis during fact-finding confirmed constraints and capacity to benefit from the Project are not defined by ethnicity, but rather by the socio-economic strata in which households may fall. This being the case, there remains no need for formal ethnic minority or indigenous action plans under ADB's IP policy. The Project is Categorized C for IP.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultation have been conducted with key stakeholders and agencies in the Government of Lao PDR at national, provincial and district levels including Ministry of Agriculture and Forestry, Ministries of Planning and Investment, and Ministry of Finance. Consultations have also been held with the participating provinces with the private sector involved with commercial agriculture to determine their constraints, assistance need, and capacity. A number of meetings have been conducted with village-based organizations focusing on agriculture production techniques and agribusiness. This requires appropriate levels of consultation for subproject proposal preparation have been developed.
During Project Implementation
Business Opportunities
Consulting Services Recruitment of consultants will be undertaken in accordance with the ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). The proposed Project will finance 36 person-month national project management specialist, 96 person-moth national farmer support specialist, and 18 person-month national financial and administrative specialists through of the ongoing contract with Lao Consulting Group. In addition, one international specialists (1 person-month post-harvest evaluation specialist and 2 person-month monitoring and evaluation expert), a national gender development specialist (3 person-month), a national Environmental Safeguarding Specialist (3 person-month), International PCR Economist (1 person-month), and 6 national district based project implementers (216 person-months) will be recruited using individual consulting selection method.
Procurement All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines (2010, as amended from time to time). They will be procured through the national competitive bidding (NCB), shopping, and direct contracting methods. Some specific goods such as rice dryers, rice seeds graders, etc may be procured through direct contracting. National competitive bidding procedure will be used for civil works contracts estimated to cost more than $ 100,000, shopping will be used for contracts for procurement of works and equipment worth less than $100,000. The NAFES's procurement capacity assessment was prepared. The result of the assessment shows that NAFES in general has good tracked record and experience in managing of procuring of goods and works of small contracts using national competitive bidding and shopping methods. However, recruitment of consultants is still need to be improved through providing capacity building. The volume of the procurement activity under the proposed Project to be significant for the five individuals in the finance division. Therefore the proposed Project will hire a senior finance and administration officer with solid experience and knowledge in procurement and recruitment procedure to assist and support the ONPD in procuring of goods, works and consulting services.
Responsible ADB Officer Phoxay Xayyavong
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Lao Resident Mission
Executing Agencies
Ministry of Agriculture & Forestry-Irrigation DepDIDMONPD@LAOTEL.COMDIDMP, Irrigation Department, Ministry
of Agriculture and Forestry
P.O.Box 5192, Chao Anou Road
Timetable
Concept Clearance 03 May 2011
Fact Finding 09 May 2011 to 19 May 2011
MRM 01 Jul 2011
Approval 22 Nov 2011
Last Review Mission -
Last PDS Update 31 Mar 2015

Loan 2809-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
22 Nov 2011 24 Jan 2012 10 Feb 2012 30 Jun 2015 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 5.50 Cumulative Contract Awards
ADB 5.00 22 Nov 2011 4.63 0.00 97%
Counterpart 0.50 Cumulative Disbursements
Cofinancing 0.00 22 Nov 2011 4.77 0.00 100%

Evaluation Documents

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