Viet Nam: Quality and Safety Enhancement of Agriculture Products and Biogas Development Project

Sovereign Project | 39421-013

Summary

The Project will (i) create effective regulatory institutions for state management of agro-product safety and quality systems to meet domestic and export requirements; (ii) accelerate the development of agroproduction, processing, and marketing to ensure the safety and quality of vegetable, fruit, and tea products for domestic consumption and export; and (iii) improve the quality of physical environment for quality and safety by reducing environmental pollution and greenhouse gases from livestock waste in agricultural areas through increased utilization of biogas technology. It will have four main components: (i) a regulatory framework and fully operational quality and safety system for agro-products; (ii)

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Project Name Quality and Safety Enhancement of Agriculture Products and Biogas Development Project
Project Number 39421-013
Country Viet Nam
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2513-VIE: Quality and Safety Enhancement of Agriculture Products and Biogas Development Project
Asian Development Fund US$ 95.00 million
TA 7251-VIE: Strengthening Project Management and Developing Strategies and Options for Biogas Development Program Expansion
Technical Assistance Special Fund US$ 1.50 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development
Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The Project will (i) create effective regulatory institutions for state management of agro-product safety and quality systems to meet domestic and export requirements; (ii) accelerate the development of agroproduction, processing, and marketing to ensure the safety and quality of vegetable, fruit, and tea products for domestic consumption and export; and (iii) improve the quality of physical environment for quality and safety by reducing environmental pollution and greenhouse gases from livestock waste in agricultural areas through increased utilization of biogas technology. It will have four main components: (i) a regulatory framework and fully operational quality and safety system for agro-products; (ii)

infrastructure and facilities for safe, quality agro-products; (iii) improved safety and reduced health hazards from livestock waste through support for development of biogas plants by small livestock farmers; and (iv) project management support for effective and timely implementation of project interventions. The Project will cover 16 provinces in Viet Nam that have significant fruit, vegetable, and tea production.

Project Rationale and Linkage to Country/Regional Strategy

Consumers in Viet Nam's major population centers require that certain quality and safety standards be met in the fruit, vegetable and tea products they consume, but poor regulatory management, unsafe production environments, and excessive levels of agro-chemicals and fertilizers, including application of pesticides by Viet Nam's farmers, are major hindrances to achieving the required standards. This will affect the longterm growth prospects of these crops in a competitive production and trading regime. Viet Nam has one of the highest input use rates among countries in the Asia and Pacific region. In the absence of management and regulations, these high input levels are affecting product quality and safety. In addition, unsafe disposal of livestock waste in densely populated areas has contaminated soils and the water used for agricultural products. Consequently, improved livestock waste disposal and promotion of technologies for effective waste treatment and management is a prerequisite to enhancement of the quality and safety of agro-products.

These issues are not being effectively addressed due to the lack of a domestic "safe food" supply framework and/or strategy, and will have continuing negative impacts on the environment and public health if not addressed. Increasing integration of Viet Nam's agricultural production, processing and marketing with international markets makes it critical that

improvements in product quality and food safety be made, if Viet Nam is to maintain and/or increase its international market share. Improving global competitiveness will require strengthening of the capacity of concerned institutions at all levels of government to address the following issues, all of which constrain further growth in the agriculture sector: (i) numerous small and fragmented agricultural production units, (ii) low product quality and safety, (iii) inefficient marketing, and (iv) weak bargaining power. These cause inefficiencies in product marketing and input procurement, and increase the costs to the Government and the private sector of providing agricultural support services.

The Government acknowledges the urgent need to improve agricultural production and marketing quality and food safety to a level comparable with neighboring countries and trade competitors. The Government is gradually introducing measures to improve the performance of state-owned enterprises under the State-Owned Enterprise Law, but constrained access to financial and other resources remains a serious obstacle to the promotion of viable private business opportunities in Viet Nam.

The proposed Project is consistent with the ideals of the Government's strategies and policies, including the Government's Socio-Economic Development Plan (SEDP) 2006-2010, which seeks to achieve middleincome status for Viet Nam by 2010 through improvements in the quality and safety of agricultural and processed products that meet domestic and

international requirements.

Impact The expected impact is sustainable and equitable growth of the agriculture sector through increased livelihood opportunities and improved human health.
Project Outcome
Description of Outcome The expected outcome is quality and safety improvements in Viet Nam's agricultural outputs, which thereby meet domestic and international requirements.
Progress Toward Outcome

The Project has achieved good progress toward an establishment of a comprehensive regulatory framework that was a high priority under the action plan for food safety, 2008-2012. Regulatory framework for tea, fruits and vegetables are harmonized and institutional responsibilities for certification, monitoring, inspection and enforcement have been clarified. Water and soil testing capacity of the 6 laboratories have been strengthened. The project provinces are effectively implementing the CFSMS and provincial food safety index to ensure benefits are realized.

A total of 178,780 ha of SAZ schemes have been identified for safe agricultural production for tea, fruit and vegetables for the period 2010-2020 in the 16 project provinces. Significant infrastructure investment support is needed to implement SAZ models. As the regulatory and institutional framework for safe agriculture production is in place, continued and additional investment support beyond what can be provisioned under the Project to expand SAZ models is needed as it would generate significant positive economic, social and environmental impacts. Initial proposals for additional financing have been brought to the attention of ADB, who expressed willingness to explore the possibility of additional financing. In addition to health benefits, the SAZ models are expected to generate significant other benefits such as increased production of tea, fruits and vegetables (20-60% increase in productivity on average) due to land consolidation and improved infrastructure, reduced post-harvest losses, increased value of agriculture production due to even quality and food hygiene and safety, and increased employment opportunities for unskilled labors. However, the impact of project interventions is constrained by limited resources, which are distributed over so many provinces. Targeting fewer provinces will focus project resources to generate greater impacts and achieve more significant coverage of identified needs.

The Project currently finances the cost of VietGAP certification for beneficiary farmers. To ensure the sustainability of SAZ models, products generated from these areas need to be certified under VietGAP. Benefits of these certifications need to be communicated and realized to motivate farmers to absorb this additional cost. Demand for certification will depend on the level of fees, market opportunities (e.g., steady buyers), level of consumer knowledge on safe food production. Continued support in these areas is also needed.

The biogas development support under the Project has generated important lessons learned for the biogas development activities funded by ADB. These include the compatibility of the size of the digester to the heads of pigs/cattle in stock, so that all the animal manure can be treated by the biogas digester. Close monitoring of livestock population fluctuations will be needed to mitigate the risks associated with potential unmanaged surplus biogas (small size digester compared to the numbers of heads), which could harm the environment. The utilization of bio-slurry is influenced by the conditions of each household's set up; where households having agriculturally productive plots adjacent to their houses are able to more effectively utilize bio-slurry as organic fertilizer. For households who do not have large plots near their house, constructing additional facilities for bio-slurry storage (or compost pits) attached to the digester is necessary to avoid overflow of bio-slurry in the surrounding areas and/or discharging to the water body.

Implementation Progress
Description of Project Outputs

1. Improved regulatory framework and fully operational quality and safety system for agroproducts.

2. Infrastructure and facilities for quality and safety of agroproducts.

3. Biogas development for clean energy, improved agroproduct safety and reduced health hazards from livestock wastes

4. Effective project management support established at central and provincial levels.

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

Review on 28 existing decrees, policies, and strategies for ensuring safe and quality agro-products in Vietnam is completed.

Ten (10) documents including 3 national standards/ technical regulations were formulated/ amended/ revised. An additional five documents are being finalized.

On June 2010, MARD issued a decision to establish a steering committee to apply VietGAP in producing vegetable, tea, and fruit under the chairmanship of Vice Minister Bui Ba Bong. In December 2010, the first meeting of the Committee was held in Can Tho city. The second Steering Committee meeting was conducted in VungTau and during the meeting chaired by Vice Minister Bui Ba Bong, the Committee carried out a review on implementation of the VietGAP application movements in vegetable, fruit and tea production.

Units for food safety control have been established in NAFIQAD, DCP, and in each DARD of the 16 participating provinces.

Based on the guideline on pilot implementation of the crop food safety management system (CFSMS) developed by IPMU, 14 provinces are monitoring and reporting on food safety from their respective crop production through a provincial food safety index (PFSI) established under the Project.

To date, 718 staff in relevant agencies under MARD and DARDs departments are trained in food safety and quality certification system.

As of 2011, 29 certification agencies have been accredited for safe vegetables, fruits, and tea to service the project provinces. Since then, a new regulation on certification of fisheries, crop and livestock products which are produced and/or primarily processed in conformity with Good Agricultural Practices in accordance with the Circular no. 48/2012/TT-BNNPTNT has taken effect on 10 November, 2012. Since then, more than 20 VietGAP certification bodies have been re-accredited and are allowed to operate nationwide.

To date, two national GAP standards and 2 technical regulations related to conditions for safe production and primary processing of fresh vegetables, fruits, and tea products have been issued while one more national standard is being finalized and is expected to be issued in 2015.

A total of 95 SAZ models have been identified based on the soil and water quality testing to suit the crop production requirements. Civil works contracts to carry out these investments are at various stages of implementation.

The Safe Agricultural Zone (SAZ) planning schemes identified under the Project cover a total area of 178,780 hectares (ha) across all 16 participating provinces, accounting for 58% of the total agriculture area for tea, fruits and vegetables being targeted by the Project (i.e., 307,029 ha).

Based on the approved SAZ planning schemes, 95 production locations under the schemes have been selected for investment in infrastructure and equipment for safe agricultural production. To date, investments cover a combined area of 2,189 hectares. Infrastructure and equipment upgrades include among others; market access roads, access to electricity and safe water, waste disposal and packing/primary processing facilities, and suitable marketing infrastructure.

To date, certification services carried out by the Project have covered a total of 6,525 hectares of vegetable, fruits and tea production areas. 17,264 household-based producers have been granted with VietGAP certificates.

To date, 14,369 staff have been trained on GAP food safety system management and certification. 34% of participants trained are women.

The replacement of crop varieties was carried out in 10 of the 16 project provinces that produced tea and fruit; and covers a combined area of 14,959 ha. These expected outputs accounts for approximately 19% of the total area of tea and fruit production in need of new varieties (78,959 ha). Based on the updated indicator for this target (i.e., 14,000 ha), the activity is assessed to have been completed.

To effectively monitor, analyze, and certify agriculture products, the Project upgraded key regional laboratories with new laboratory equipment. Six laboratories were re-equipped and included those under the Department of Crop Production (1), Department of Plant Protection (1), and the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD) (3); which are spread across Viet Nam's northern, central and southern regions.

The Project through 16 PPMUs has constructed 30,849 biogas digesters. Of these households, only 29,949 households have so far been technically accepted and received financial assistance.

The BPMU and PPMUs have conducted 2,170 various training courses for 54,201 participants, among who include managers, technicians, builders, and biogas works users. Female participants accounted for 22%. Households trained on the safe construction, operation, and maintenance of biogas digesters have exceeded 30,000.

During implementation, the Project realized that the locations of SAZ models for crops are not necessarily compatible with where livestock farms are situated. Application of bio-slurry to crop production at the identified SAZ models is also not straightforward due to complicated logistic arrangements in safely transporting the bio-slurry and the corresponding costs required. The Project supported the household level biogas digester construction only. A possible linkage between SAZ and medium to large biogas digesters can be assessed under the LCASP. Therefore, the ADB Review Mission agreed to drop this indicator.

Pilot demonstration of 40 medium and 10 large biogas digesters is included in the ADB financed Low Carbon Agriculture Support Project (LCASP). Preliminary discussions have been made in carrying out a market study to assess the demand for medium- and large-scale biogas plants in the five provinces that overlap with Loan 2968-VIE: Low Carbon Agriculture Support Project. The terms of reference for that study have been developed and are under ADB's review. To avoid overlapping, the Mission agreed with the CPMU to remove this indicator from the Project targets.

The CPMU reported that 13,794 households received loans from VBARD and CCF. The target number of households aimed to avail the Project's biogas credit line is not expected to be met due to: (a) overestimated original demand, (b) increased subloan amounts due to price increase of materials and labor, and (c) low repayment rate that makes it difficult to expand the credit coverage. The Mission agreed with the CPMU to reduce the target to 12,000 households.

The Project M&E Consultants has been contracted and mobilized. They are tasked to assist the CPMU and other project implementation units with strengthening of the M&E system for the whole project, and at the same time perform baseline survey and assessment activities for preparing regular and monitoring reports as well as an end-of-project report (project completion report).

Geographical Location Bac Giang, Ben Tre, Binh Thuan, Da Nang, Ha Noi, including Ha Tay, Hai Duong, Hai Phong, Ho Chi Minh City, Lam Dong, Ninh Thuan, Phu Tho, Son La, Thai Nguyen, Tien Giang, Vinh Phuc, and Yen Bai
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Eleven consultation meetings were held, attended by a total of 81 people, or an average of 7 or 8 people per meeting. About 41% of the participants were women. Five of these meetings were conducted among ethnic minorities. One meeting was conducted among women.
During Project Implementation
Business Opportunities
Consulting Services tbd
Procurement tbd
Responsible ADB Officer Charles David Salter
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, SERD
Executing Agencies
Ministry of Agriculture & Rural Development (MARD)Pham Quang Toanqseap@vnn.vnAgricultural Projects Management Board
3rd Floor, Agricultural Exhibition Ctr
No.2,Hoang Quoc Vie Str.,Cau Giay Dist
Central People's Credit FundImplementing Agency
1 F Thai Ha, Dong Da
Ha Noi, Viet Nam
Viet Nam Bank for Agriculture and Rural Dev't.Implementing Agency
No. 2 Lang Ha Street
Ba Dinh District, Ha Noi, Viet Nam
Timetable
Concept Clearance 26 Sep 2008
Fact Finding 08 Sep 2008 to 19 Sep 2008
MRM 11 Nov 2008
Approval 18 Mar 2009
Last Review Mission -
PDS Creation Date 29 Oct 2008
Last PDS Update 31 Mar 2015

Loan 2513-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Mar 2009 30 Jun 2009 26 Aug 2009 31 Dec 2015 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 109.04 Cumulative Contract Awards
ADB 95.00 18 Mar 2009 83.10 0.00 89%
Counterpart 14.04 Cumulative Disbursements
Cofinancing 0.00 18 Mar 2009 76.76 0.00 82%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

TA 7251-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Mar 2009 15 Oct 2009 15 Oct 2009 30 Jun 2010 31 Dec 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,500,000.00 0.00 300,000.00 0.00 0.00 0.00 1,800,000.00 18 Mar 2009 1,488,186.75
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

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