ADB is helping Mongolia develop high-value agricultural products to support the rural economy. The project will help agribusiness enterprises develop supply value chains to deliver premium products that command high prices in international niche markets. It will also fund investments in rural infrastructure and services that support the agribusiness sector.
|Project Name||Agriculture and Rural Development Project|
|Project Type / Modality of Assistance||Grant
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Private sector development
|Sector / Subsector||
Agriculture, natural resources and rural development - Agricultural production - Agro-industry, marketing, and trade - Livestock
|Gender Equity and Mainstreaming||Effective gender mainstreaming|
|Description||The Project will develop value chains to deliver unique premium value products to niche markets. The Project will deliver these outputs through three components: (i) value-chain development under which it will establish a deposit account to guarantee 50% of the total amount of loans made by private commercial banks to agribusiness enterprises for value-chain development investment plans (selected by the bank from among a group of prequalified plans with high public goods elements), (ii) a local grant and infrastructure development facility to develop rural infrastructure and services, and (iii) project management. In a break with traditional approaches, the Project will provide private enterprises with resources to undertake value-chain investments that have typically been undertaken by public agencies.|
|Project Rationale and Linkage to Country/Regional Strategy||Agribusiness development is essential for developing agriculture and improving rural incomes in Mongolia. While Mongolian agribusiness enterprises have little quality- or price-based comparative advantage in international markets, they do have a comparative advantage derived from the distinctive qualities of Mongolian agricultural products. This provides the basis for developing a brand that could command a premium in niche markets. However, realizing niche market potential will require comprehensive coordinated value-chain development. The Project will achieve this development by providing private enterprises with the resources to undertake investments in the value chain coordinated with investments in their own processing facilities.|
|Impact||Premium value differentiation for Mongolian products sustained|
|Description of Outcome||At least 10 Mongolian enterprises have produced premium value agriculture products for selected niche markets.|
|Progress Toward Outcome||12 agro-processing enterprises received subloans and technical assistance to develop respective value chains, which enabled some of them to produce higher value products for international buyers and others to do so for national buyers.|
|Description of Project Outputs||
Value chains able to deliver unique premium value products to niche markets, and rural infrastructure and services development.
Fully defined process and institutional arrangements for collaborative brand development and management developed and demonstrated.
|Status of Implementation Progress (Outputs, Activities, and Issues)||
Twelve enterprises have been granted subloans to develop their respective value chains to deliver high value products domestically and/or internationally or both. The allocation for this category was subsequently reduced from $11,000,000 to $10,285,994.
Business Plan for a Mongolian Brand Management Agency has been submitted
to authorities and enterprises.
Brand partnership with Mongolian Noble Fibre; partnership agreements with 6 other enterprises in fiber sector almost concluded; 24 enterprises from the leather sector expressed interest.
The Mongolia Textile Institute, with support under the project, was awarded the 2015 accreditation from International Association of Wool Textile Laboratories . Certification mark for animal fiber and its products called "Mongolian Noble Fiber" has been registered with Mongolian intellectual property office and has been registered at Intellectual Property Right Office of Mongolia . The certification mark has been used for the partnership agreement.
Summary of Environmental and Social Aspects
|Environmental Aspects||"Environmental impact assessment and monitoring and mitigation planning have not become yet regular practice in private business enterprises of Mongolia, although the country has relevant laws and legislations. The project management unit has been carrying out environmental due diligence of all value chain development subprojects of participating enterprises. The unit also provide capacity building to participating enterprises.|
|Indigenous Peoples||"Indigenous people's imapct assessment, monitoring and mitigation planning have not become yet regular practice in Mongolia, although the country has relevant laws and legislations. The project management unit has been carrying out relevant due diligence of all value chain development subprojects of participating enterprises. The unit also provide capacity building to participating enterprises.|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||A participatory process was adopted during project design to understand the needs and constraints of stakeholders. Five stakeholder groups were identified and consulted during project preparation. Primary stakeholders include herders and changers; secondary stakeholders include staff from the local governor's office, representatives of nongovernment organizations, and local residents. Consultation consisted of an extensive participatory rural appraisal conducted in Bayankhongor, Hovd, Selenge, and Sukhbaatar aimags. During each of the field trips, participatory workshops were organized to identify stakeholders' interests, understand linkages between the major project participants, and develop a participation strategy during project preparation and implementation.|
|During Project Implementation||During project implementation, a participatory approach has been adopted to enable different stakeholders to be represented at the project steering committee and other project structures. To increase the exposure of the rural poor and vulnerable groups such as women and remote herders to the benefits of the Project, special care has been given to enhance their participation through intense dissemination activities and a focused awareness campaign by the project management units (PMUs).|
|Consulting Services||The Project will require 436 person-months of consulting services: 42 person-months international and 394 person-months national. All consultants will be selected and engaged in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time). Technical experts will be recruited individually by the value-chain development PMU as requested by project enterprises to support enterprises in the implementation of their investment plans. Recruitment will be through a cost-sharing arrangement whereby enterprises requesting experts will bear 60% of the costs of engagement. The project manager, both project directors, and staff of both PMUs will be engaged individually. The remaining consultants will be recruited through firms under two packages (one package each for the value-chain development, and for the rural infrastructure and services development components) following quality- and cost-based selection procedures using an 80:20 quality:cost ratio.|
|Procurement||With the assistance of the value-chain development PMU, where applicable, project enterprises will be encouraged to follow ADB's Procurement Guidelines, Section 3.12 (2007, as amended from time to time), and undertake procurement in accordance with established commercial practices acceptable to the Government and ADB. To be acceptable, the enterprises will (i) demonstrate that procedures are appropriate in the circumstances; (ii) ensure that goods and services financed using project funds are purchased with consideration to economy and efficiency at a reasonable price, given time of delivery, quality, and efficiency; and (iii) ensure that goods and services to be financed by project funds are procured from ADB member countries. Enterprises will be encouraged to procure goods through international competitive bidding and shopping when applicable in the interest of economy and efficiency. The Government has agreed to use ADB procurement procedures with regard to economy and efficiency. The PMU will oversee procurement by enterprises to ensure that ADB guidelines are followed. In case of noncompliance, the Government will have the right to recall the loan to the violating enterprise. For all other procurement, contracts for goods and works estimated to cost $1.0 million or more will be procured using international competitive bidding. Contracts for goods and works estimated to cost less than $1.0 million but more than $100,000 will be procured through national competitive bidding in accordance with standard government procedures subject to modifications agreed with ADB. Contracts for goods and works estimated to cost $100,000 or less will be procured using shopping. Any necessary modifications or clarifications to the recipient procurement procedures will be documented in the procurement plan. The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all procurement documents and contracts.|
|Responsible ADB Officer||Ueda, Takeshi|
|Responsible ADB Department||East Asia Department|
|Responsible ADB Division||Environment, Natural Resources & Agriculture Division, EARD|
Ministry of Finance
Negdsen Undestnii gudamj-5/1
Ulaanbaatar-210646, Mongolia Ministry of Food and Agriculture
Mongolia Ministry of Food, Agriculture, and Light Industry (MOFALI)
Strategic Planning and Policy Department
MOFALI, Peace Avenue, Ulaanbaatar, Mongolia
|Concept Clearance||27 Oct 2005|
|Fact Finding||02 Jul 2007 to 06 Jul 2007|
|MRM||21 Sep 2007|
|Approval||29 Sep 2008|
|Last Review Mission||-|
|PDS Creation Date||23 Oct 2008|
|Last PDS Update||30 Mar 2016|
|Approval||Signing Date||Effectivity Date||Closing|
|29 Sep 2008||24 Oct 2008||07 Jan 2009||31 Dec 2012||29 Feb 2016||13 Apr 2016|
|Financing Plan||Grant Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||47.50||Cumulative Contract Awards|
|ADB||14.72||29 Sep 2008||14.72||0.00||100%|
|Cofinancing||0.00||29 Sep 2008||14.72||0.00||100%|
|Status of Covenants|
|Approval||Signing Date||Effectivity Date||Closing|
|29 Sep 2008||24 Oct 2008||24 Oct 2008||31 Dec 2010||31 Jul 2013||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|2,000,000.00||0.00||200,000.00||0.00||0.00||0.00||2,200,000.00||29 Sep 2008||1,928,742.34|
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