India: Improving Small Farmers' Access to Market in Bihar and Maharashtra

Sovereign Project | 43105-012

Summary

The impact of the Project will be the increased income of small-scale farmers in Bihar and Maharashtra through access to alternative higher-return markets. The outcome will be the

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Project Name Improving Small Farmers' Access to Market in Bihar and Maharashtra
Project Number 43105-012
Country India
Project Status Approved
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 9147-IND: Improving Small Farmers' Access to Market in Bihar and Maharashtra
Japan Fund for Poverty Reduction US$ 3.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Agriculture and Natural Resources - Agricultural production

Gender Equity and Mainstreaming Gender equity
Description

The impact of the Project will be the increased income of small-scale farmers in Bihar and Maharashtra through access to alternative higher-return markets. The outcome will be the

enhanced integration of small-scale fresh fruit and vegetable (FF&V) farmers, including female and scheduled caste (SC) and scheduled tribe (ST) farmers, into the horticulture value chains in those states. The outputs of the Project will be: (i) 2,000 small-scale farmers are organized into 20 effective farmer groups (6 in Bihar, 14 in Maharashtra); (ii) 4 well-performing farmer groups are developed into producer companies (1 in Bihar, 3 in Maharashtra); (iii) 20 farmer groups and 4 producer companies are trained in business, technical, and organizational management skills; and (iv) farmer groups and producer companies establish long-term mutually beneficial agreements with buyers.1 The activities comprise: (i) formation of farmer groups and producer companies; (ii) capacity development; (iii) facilitation of farmer-buyer linkages; and (iv) project management, monitoring, and evaluation.

Expected Key Performance Indicators (maximum 5 indicators):

(i) Twenty farmer groups (6 in Bihar, 14 in Maharashtra), comprising approximately 2,000 farmers, are successfully organized in a financially sustainable manner.

(ii) Four well-performing farmer groups are turned into self-sustaining producer companies (1 in Bihar, 3 in Maharashtra).

(iii) Members of farmer groups are trained in business, technical, and organizational management skills that enable them to interact with markets.

(iv) Farmer groups (at least 20% in Bihar and 50% in Maharashtra) enter into higher-value markets by the end of the Project.

(v) Project beneficiaries' income increases by 30% within 3 years after the Project.

Project Rationale and Linkage to Country/Regional Strategy

Until the recent international financial crisis, India had demonstrated strong economic growth, averaging 8.7% per annum since 2004. However, growth of the agriculture sector, which employs about 60% of the country's workforce, has stagnated at about 2% per annum since 2000. The rural non-farm sector, which is strongly correlated with the performance of the agriculture sector, has also been slow to grow. This is primarily because the present marketing and processing systems are riddled with long and fragmented supply chains, high wastage, poor infrastructure, and excessive market regulations. These factors have contributed to the slow agribusiness development, limiting off-farm employment generation and thus contributing to the widening rural-urban income disparity. Rural per capita household expenditure is estimated to be less than half that of urban households. Of the nearly 120 million farmers in India, roughly 40% are landless and about 28% are classed as marginal, with only 0.01 to 0.04 hectares of cultivated land.

Against this backdrop, the Government of India (GoI) has made inclusive growth its overarching goal in its 11th Five Year Plan (2008-2012). It prioritizes the reduction of regional and rural-urban disparity and of chronic poverty through inclusive growth. GoI highlights private sector-led agricultural growth, through greater crop diversification, higher value addition, and improved farmer-market linkages, as an important driver for poverty reduction and rural economic growth. Given the large number of small-scale farmers, GoI highlights the importance of giving the poor farmers adequate bargaining power through group formation. ADB's Country Partnership Strategy (CPS) (2009-2012) emphasizes the alignment of ADB's policy with GoI's 11th Five Year Plan. It highlights ADB's continued support for GoI's efforts to promote inclusive growth, with a special focus on India's relatively poor and weak-capacity states. Agriculture is listed as one of the priority sectors in the CPS.

Impact Improved livelihood of the rural poor through provision of on-farm and off-farm income generation opportunities in the target sites of Bihar and Maharashtra.
Project Outcome
Description of Outcome Enhanced integration of small-scale FF&V farmers into high-value horticulture value chains in the target sites of Bihar and Maharashtra.
Progress Toward Outcome The grant was extended until 30 April 2016 to make up for effectiveness and startup delays, allow adequate time to optimize farmer involvement particularly in the State of Bihar, and facilitate farmer-buyer linkages that has not been done given the delays in setting up value chain facilities under the associated projects. Maharashtra part is progressing well and will provide a key link to the integrated value chains to be supported under Loan 2837-IND. Bihar just completed recruitment of JFPR consultants in March 2015. Given the limited remaining period, restructuring of the JFPR is being looked into, to ensure full utilization of resources.
Implementation Progress
Description of Project Outputs

1. Enhanced ability of target farmers to provide consistent FF&V supply that meets the requirements of modern markets.

2. Improved linkage between target farmers and the market.

3. Project management system established.

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

Farmers' Producers Companies (FPCs) have been created in Maharashtra, well in excess of the original targets. FPCs are proving a very powerful means to enhance the ability of member farmers to access inputs, as well as to supply markets and agri-processors. Forward linkages for the FPCs are being established and strengthened, and once the IVC infrastructure under Loan 2669 and 2837 is established formal linkages will be facilitated.

Project management system for Maharashtra is in place, while in Bihar it is yet to be put in place, the consultants having been fielded only in March 2015.

Geographical Location States of Bihar and Maharashtra
Safeguard Categories
Environment C
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 During the first PPTA for the AIDIP (Jul 1007 to May 2008), crucial stakeholders in the public, private and cooperative sectors at the central and state levels, as well as farmers, entrepreneurs, trade organizations, and financial institutions at the state and local levels were consulted. Interviews were also carried out with selected communities during the field visits, which led to the identification of the high need to organize farmers into production groups to facilitate their integration into the value chain. During the JFPR design phase, an intensive consultation was held with the communities, community-based organizations/nongovernment organization (CBOs/NGOs), existing cooperatives/agro-enterprises, and governments to fine-tune the design of the Project. The actual activities will be implemented in a demand-driven appraoch with local NGOs.
During Project Implementation
Business Opportunities
Consulting Services 48 person months (pm) of individual consultants (national experts in project implementation and training) will be recruited individually by ADB, in accordance with ADB Guidelines on the Use of Consultants. In addition, 30 unallocated pm for a pool of experts or NGOs will be available on a demand basis. Should NGOs be identified as the IAs, they will be selected through quality-based selection to ensure that NGOs with appropriate skills and experience are selected, albeit with higher costs. This is especially important in India, where similar NGOs abound, but few actually possess the capacity to undertake the required tasks. Should additional consultants (both international and national) be deemed necessary, they will be recruited by the GIUs, following consultation with and approval of ADB, and in accordance with ADB Guidelines on the Use of Consultants (2007, as amended from time to time). Their qualifications and terms of reference will be developed by the project implementation specialist, based on the requirements of the private sector investors, and will require prior approval from ADB.
Procurement No major procurement is planned under the Project. However, all procurement under the Project will be conducted in accordance with ADB's Procurement Guidelines (2007, as amended from time to time). Contracts for goods estimated to cost less than $500,000, but more than $100,000, shall be procured on the basis of national competitive bidding (NCB) procedures. Contracts for goods estimated to cost $100,000 or less shall be procured using shopping procedures. There is no international competitive bidding envisaged under the Project. Before any procurement starts, ADB and the Grant Recipient will review the Grant Recipient's procurement procedures to ensure consistency with ADB requirements. The GIUs will procure the office equipment and hand them over to the EAs at the conclusion of the Project.
Responsible ADB Officer Paolo Spantigati
Responsible ADB Department South Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, SARD
Executing Agencies
Maharashtra Dept. of Cooperation, Mktng. & TextileMantralaya, Mumbai - 400 032
Maharashtra, India
Department of AgricultureV_RAGHAVAN@NIC.IN (MR. S. VIJAYARAGHAVAN, IAS)Govt of Bihar, Old Secretariat
Patna-1, Bihar-800001, India
Bihar Department of AgricultureDepartment of Agriculture
Barrack No. 13, Main Secretariat
Patna, India 800015
Timetable
Concept Clearance 25 May 2009
Fact Finding 03 Aug 2009 to 06 Aug 2009
MRM -
Approval 30 Jul 2010
Last Review Mission -
PDS Creation Date 30 Jun 2009
Last PDS Update 28 Jul 2015

Grant 9147-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Jul 2010 21 Nov 2011 21 Nov 2011 30 Jun 2014 30 Apr 2016 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 3.00 Cumulative Contract Awards
ADB 0.00 30 Jul 2010 0.00 1.21 40%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 3.00 30 Jul 2010 0.00 0.67 22%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

Safeguard Documents

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