Afghanistan: Enhanced Value Chains

Sovereign Project | 45259-001

Summary

The expected project impact is a sustained increase in farm incomes in the project areas by enabling farmers, agri-processors and traders to engage in profitable production, processing, and marketing industries. The project will achieve this by developing value chains for a number of commodities: fresh fruits, vegetables, edible oils, and honey. The project outcome is that farmers, agri-processors and marketers undertake business in more efficient value chains for selected commodities. This will be reflected by decreased production losses at post-harvest and through improved efficiency of production and agri-processing. The project will promote the establishment of commercial farming operations, processing, quality improvement, and will facilitate linkages to high value markets. The Project will consist of two components: (i) improved agriculture value chains of selected commodites, and (ii) project management.

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Project Name Enhanced Value Chains
Project Number 45259-001
Country Afghanistan
Project Status Approved
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 9167-AFG: Enhanced Agricultural Value Chains for Sustainable Livelihoods
Japan Fund for Poverty Reduction US$ 18.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change Partnerships
Sector / Subsector Agriculture and Natural Resources - Agricultural production
Gender Equity and Mainstreaming Some gender elements
Description The expected project impact is a sustained increase in farm incomes in the project areas by enabling farmers, agri-processors and traders to engage in profitable production, processing, and marketing industries. The project will achieve this by developing value chains for a number of commodities: fresh fruits, vegetables, edible oils, and honey. The project outcome is that farmers, agri-processors and marketers undertake business in more efficient value chains for selected commodities. This will be reflected by decreased production losses at post-harvest and through improved efficiency of production and agri-processing. The project will promote the establishment of commercial farming operations, processing, quality improvement, and will facilitate linkages to high value markets. The Project will consist of two components: (i) improved agriculture value chains of selected commodites, and (ii) project management. The project will focus on 10 provinces in the Central, North and North-east, and Eastern Regions.
Project Rationale and Linkage to Country/Regional Strategy

Afghanistan is a poor rural country and according to the latest National Risk and Vulnerability Assessment (NRVA), rural households accounted for 80% of the total population and rural poverty accounted for 84% of the poverty nationwide (NRVA 2007/08). The national poverty rate is 36%; however there is significant regional variation with poverty levels exceeding 57% in some provinces. Agriculture is an important sector to Afghanistan as 36% of all households rely on farming with another 6% depending upon farm wages as their main source of income. Following decades of conflict and neglect many agricultural industries have low productivity and much of the market infrastructure and systems are in a serious state of disrepair. This is a major constraint to the successful implementation of initiatives to increase incomes in rural communities.

The Government recognizes that economic growth is key to reducing poverty and that agriculture is an important sector in this process. While the causes of poverty in Afghanistan have yet to be thoroughly studied, there is consensus that poverty is linked to low economic growth and inadequate income-generating opportunities, particularly in rural areas. The Ministry of Agriculture Irrigation and Livestock's (MAIL) Agriculture Sector Development Master Plan emphasizes that rising farm incomes drive the rural nonfarm sector and that efforts to stimulate its growth without increasing demand for agricultural products will not bring about the targeted results. MAIL prioritizes activities that rapidly stimulate employment and thus increase farm incomes and wage rates. The ministry supports the development of the private sector, a key pillar of the Afghanistan National Development Strategy (ANDS).

The premise behind this project is that incomes across the rural sector are improved when all elements of the value-added chain are addressed. Consequently, project interventions should not be confined to just on-farm technologies and capacity building, but should also consider reducing constraints elsewhere in the value chain such as post-harvest storage/handling, processing, and marketing. The project will focus on the entire chain rather than a component such as production, and thus will ensure that all the parts required to stimulate and sustain economic development are in place.

Impact Incomes of vegetable farmers (Bamyan, Kabul, Panjsheer provinces) and oilseed producers (Nangahar and Balkh provinces) are improved
Project Outcome
Description of Outcome Production of marketable outputs of selected vegetable and oilseed commodities in target provinces is increased
Progress Toward Outcome Works are ongoing for the community-level and on-farm pilot storage for both onions and potatoes. All on-farm demonstration sites have been established: 20 in Bamyan; 10 in Kabul Province; and 11 in Parwan Province. Construction works of edible oil facilities in both Nangarhar and Balkh are completed. Delivery of equipment/machinery is underway and installation is expected to commence once the equipment are delivered on-site.
Implementation Progress
Description of Project Outputs

Production management capacity of participating communities is improved

On-farm storage losses of potatoes and onions are reduced

Two oil-processing facilities in Jalalabad and Mazar-e-Sharif produce high-quality edible oil for human consumption

Project is managed, monitored, and evaluated properly

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

2,180 farmers (21.8%) have been trained from a total of 10,000. Consultant firm has been recruited and will develop guidelines and train ToT and beneficiaries, the training will be continued by project specialists and other trainers soon.

Baseline surveys were completed Q1 2014 and the feasibility study report shows that to-date potato storage losses have reduced from 42% to 1.3%, while reduction in onion storage losses will be determined in spring of 2015 where the stored onions are brought to market.

PMU submits quarterly reports to ADB to record progress of project implementation.

Geographical Location Bamyan, Kabul, Panjsheer, Nangahar and Balkh provinces
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The Project will construct on-farm and community level vegetable storages (potatoes, onions). These will be made of natural materials. The project will provide additional equipment to further refine edible oil to improve quality for human consumption. The project will not increase oil processing capacity. Development of any facilities that may have a negative impact on the Environment will be excluded. Based on the REA checklists the Project has been categorized C therefore, no Environmental Assessment is required.
Involuntary Resettlement The project will improve the value chains of selected agricultural commodities. Project activities will include construction of on farm and post-harvest facilities (eg. poultry layer facilities, cool rooms, grading equipment). A set of criteria will be established to assess feasibility of facility interventions. Proposed facilities or construction activities that have potential for involuntary land acquisition and resettlement will be excluded from the project. Procedures for voluntary land donation will be prepared to be applied by the implementing consultant.
Indigenous Peoples The project will improve the value chains of selected agricultural commodities. Project activities will include construction of on farm and post-harvest facilities (eg. poultry layer facilities, cool rooms, grading equipment). The project will not trigger the application of ADB SPS (2009) on Indigenous People. Farmers from various ethnic backgrounds will benefits from the improved chain of rural commodities.
Stakeholder Communication, Participation, and Consultation
During Project Design The project concept is based on a proposal by Ministry of Agriculture Irrigation and Livestock discussed initially between the Afghanistan Resident Mission, the Embassy of Japan in Kabul and representatives of the Japan International Cooperation Agency based in Afghanistan.
During Project Implementation The project is in the initial stages of implementation. Stakeholder consultation is being done by the PMU.
Business Opportunities
Consulting Services

Feasibility studies - $360,000 (ICS)

M&E specialist - $150,000 (ICS)

Implementing partner consulting firm - $1,096,000 (QCBS)

Financial systems specialist - $60,000 (ICS)

M&E specialist - $45,000 (ICS)

Audit - $40,000 (LCS)

Procurement

Oil refining equipment - $1,400,000 (ICB)

Oil refining storage facilities - $600,000 (NCB)

Pilot on-farm storages - $320,000 (shopping)

Pilot community storages - $250,000 (shopping)

On-farm demonstration equipment - $360,000 (shopping)

Equity scheme (on-farm storages) - $10,475,000 (community participation)

Responsible ADB Officer Mohammad Hanif Ayubi
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Afghanistan Resident Mission
Executing Agencies
Ministry of FinanceINFO@MOV.GOV.AFPashtunistan Watt,Kabul,Islamic Republic
of Afghanistan
Timetable
Concept Clearance 26 Oct 2011
Fact Finding 28 Nov 2011 to 04 Dec 2011
MRM -
Approval 19 Sep 2012
Last Review Mission -
Last PDS Update 24 Mar 2015

Grant 9167-AFG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Sep 2012 21 Nov 2012 21 Nov 2012 31 Dec 2016 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 29.48 Cumulative Contract Awards
ADB 0.00 19 Sep 2012 0.00 9.57 52%
Counterpart 10.98 Cumulative Disbursements
Cofinancing 18.50 19 Sep 2012 0.00 10.71 58%

Safeguard Documents

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Evaluation Documents

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