Regional: Innovative Financing for Agriculture and Food Value Chains

Sovereign Project | 45073-001

Summary

Consultations with the ADB regional operations and private sector deaprtments confirmed that access to finance for agriculture and food value chains (AFVCs) development was a widepsread binding constraints among DMCs. This technical assistance (TA) will be about improving access to AFVC finance of smallholder farms and small and medium agro-enterprises (SMAEs) engaged in agriculture and agribusiness related activities.

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Project Name Innovative Financing for Agriculture and Food Value Chains
Project Number 45073-001
Country Regional
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7996-REG: Innovative Financing for Agriculture and Food Value Chains
Technical Assistance Special Fund US$ 1.50 million
TA 7996-REG: Innovative Financing for Agriculture and Food Value Chains (Supplementary)
Technical Assistance Special Fund US$ 225,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector Agriculture, natural resources and rural development - Agricultural production
Finance - Small and medium enterprise finance and leasing
Industry and trade - Small and medium enterprise development
Gender Equity and Mainstreaming No gender elements
Description Consultations with the ADB regional operations and private sector deaprtments confirmed that access to finance for agriculture and food value chains (AFVCs) development was a widepsread binding constraints among DMCs. This technical assistance (TA) will be about improving access to AFVC finance of smallholder farms and small and medium agro-enterprises (SMAEs) engaged in agriculture and agribusiness related activities. The TA will address the following issues: (i) lack of knowledge about and limited understanding of the different AFVC financing supply modalities and the effective demand for these modalities by AFVC typologies (traditional, transitional, modern); (ii) limited analysis of policy and institutional constraints to AFVC financing development and the limited technical capacity to conduct policy analysis and evidence-based policy dialogues; and (iii) need to address information asymmetry about the effective supply and demand situations for AFVC financing as well as need for promoting viable AFVC financing models that may be applied in ADB operations.
Project Rationale and Linkage to Country/Regional Strategy

While many studies on AFVC models have emerged, the focus has been on understanding the AFVCs at cross-sectional level- those that are traditional and modern AFVCs. The drivers and nature and extent of these drivers that lead to the transformation from traditional, to transitional, to modern AFVCs are not well documened. There is especially limited understanding of the transitional or the "middle AFVCs", which are important to understand as these essentially serve as stepping stones for expanding to modern AFVCs and key to synergizing the rural-urban links. Understanding the developmental impacts of the AFVC's structural transformations would be a signficant value addition to identifying their contributions to inclusive growth.

One of the instrumental drivers that enable AFVCs to transform is the availability of and access to innovative financing approaches. The array of financing instruments that may be available to AFVCS is not new. Rather, it is the application of various institutional, contractual, managerial, and technological approaches in the use of the financing approaches to adapt to the AFVC needs of ensuring stronger and more demand-driven value chain coordination that are quite innovative. However, for these to be available and ready for application, there would need to undertansd the effective supply and demand for financing AFVC instruments across crops, value segments, and for different AFVC typologies. Asymmetry of information and lack of technical capacities are lacuna that will be addressed in the TA.

The TA will follow on the value chain studies that have been done under TA-6489REG and are currently being worked in-depth for rice markets under TA-7648REG.

Impact Smallholder farms and small and medium-sized agro-enterprises (SMAEs) have improved access to agriculture and food value chain (AFVC) financing in participating low-income developing member countries (DMCs) by 2016.
Project Outcome
Description of Outcome Innovative agriculture and food value chain (AFVC) financing framework developed
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Policy report for inclusive and sustainable agriculture and food value chain (AFVC) financing is submitted to the Governements of Bangladesh and Cambodia

Innovative AFVC financing business models for smallholders and SMAEs in participating low income DMCs are developed for deliberation by AFVC financial providers

Knowledge platform on innovative AFVC financing is operational in Bangladesh and Cambodia

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services The TA will require an estimated 33 person-months of international consultants and 63.5 person-months of national consultants in the areas of irrigation management, design, and performance benchmarking, groundwater and conjunctive use, irrigation institutions and policy, participatory irrigation management, operation and maintenance, irrigated crop agronomy, and economics.
Procurement Procurement of goods and related services for the pilot-testing proposals.
Responsible ADB Officer Michiko Katagami
Responsible ADB Department SDCC
Responsible ADB Division SDCC-AR
Executing Agencies
Asian Development Bank6 ADB Avenue, Mandaluyong
Metro Manila, Philippines
P.O. Box 789, 1099 Manila,
Philippines
Timetable
Concept Clearance 19 Oct 2011
Fact Finding -
MRM -
Approval 15 Dec 2011
Last Review Mission -
Last PDS Update 11 Nov 2011

TA 7996-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
15 Dec 2011 - 15 Dec 2011 31 Dec 2013 31 Aug 2016 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,725,000.00 0.00 0.00 0.00 0.00 0.00 1,725,000.00 15 Dec 2011 489,749.72
Title Document Type Document Date
Innovative Financing for Agriculture and Food Value Chains Technical Assistance Reports Dec 2011

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