Regional : Climate-Friendly Agribusiness Value Chains Sector Project

The proposed Climate-friendly Agribusiness Value Chains Sector Project (the project) will invest in pro-poor and inclusive agricultural value chains in three countries of the Greater Mekong Subregion (GMS) Kingdom of Cambodia (Cambodia), the Lao People's Democratic Republic (Lao PDR) and the Republic of the Union of Myanmar (Myanmar). The project will enhance rural household incomes and agricultural competitiveness by (i) providing improved critical production and post-harvest infrastructure, (ii) reducing energy costs by promoting bio-energy use and sustainable biomass management, and (iii) offering targeted agribusiness support services for selected value chains.

The project has been conceptualized through consultations of the GMS working group on agriculture and Phase 2 of the Core Agriculture Support Program. It will build on lessons from the ADB evaluation on agricultural value chains, the Climate-resilient Rice Commercialization Project in Cambodia, and the Sustainable Natural Resource Management and Productivity Enhancement Project in Lao PDR. The lessons include the need for (i) strengthening critical rural infrastructure, (ii) supporting enabling policy environment, (iii) promoting public-private-community partnerships, (iv) building technical and business development capacity of stakeholders, and (v) promoting climate smart agriculture practices. The project will strengthen regional cooperation by targeting investments along the GMS economic corridors, and complement initiatives such as Trade Facilitation: Improved Sanitary and Phyto-sanitary (SPS) Handling project, and the GMS Core Environment Program.

The impact will be increased productivity and rural household income in the project areas in Cambodia, Lao PDR and Myanmar. The outcome will be more efficient resource utilization and climate resilience for competitive and inclusive agribusiness value chains in Cambodia, Lao PDR and Myanmar. The project will have four outputs. Output 1: Improved and climate resilient critical agribusiness value chain infrastructure will include rehabilitating and modernizing critical infrastructure (e.g. farm roads, water storage and small scale irrigation systems, drying, storage, milling and packaging facilities). Output 2: Expanded bio-energy use and sustainable biomass management will include installation of agricultural waste to energy infrastructure (hard and soft) such as bio-digesters, bio-fertilizer facilities, and improved cook stoves for effective biomass management. These activities will increase value chain price competitiveness by lowering production costs. Output 3: Strengthened agribusiness policy and capacity support services will include enabling agribusiness policy/regulatory development focusing on selected value chains, provision of information on climate-friendly agriculture and resource efficient practices, harmonization of standards, and capacity building for productivity and quality improvement and reduction of post-harvest losses, marketing, potential public-private partnerships, and financing options. Output 4: Effective project implementation and knowledge management will include consultant's support and institutional strengthening for subproject feasibility preparation, procurement, financial management and safeguards, as well as diffusion of knowledge and technologies for agribusiness value chains.

A project preparatory technical assistance (PPTA) is required to conduct technical, financial and economic feasibility and due diligence of priority investments and prepare relevant documents for approval of funding. The main outputs of the PPTA will include detailed reports on feasibility assessment, including technical, economic and financial due diligence, of priority agribusiness value chains in CLM countries. The PPTA will produce an agreed project design in relation to the four outputs of the investment project (agribusiness value chain infrastructure, bio-energy use and sustainable bioma

Recent studies have shown that investing in agriculture is one of the most cost-effective strategies to reduce poverty and hunger. Cambodia, Lao PDR and Myanmar (CLM countries) together supply a range of critical agricultural commodities for the GMS and beyond. Yet, their agriculture sector is not competitive in several dimensions. First, their agricultural value chains are not well-developed in comparison with neighboring countries and with respect to domestic as well as export markets. Second, the sector as a whole suffers from a range of infrastructure constraints. Third, production and distribution costs are high largely due to high energy and transport costs, and high post-harvest losses in weight and quality. Although over 60% of inhabitants are engaged in farming, with women accounting for 70%, agriculture sector investments in CLM countries have not yet translated into substantial benefits to these sections. Private sector investments remain low due to unfavorable business environment. Market liberalization and changing global trade rules that require stringent quality and food safety standards are constraining smallholder farmers to access competitive markets. Despite a strong market demand, agribusiness value chains in CLM countries remain fragmented, leading to sub-optimal efficiency with poor geographic reach, and low transmission of retail prices to the producer. Key constraints include low level and quality of production and post-harvest infrastructure, high energy costs, insufficient access to agribusiness input and output markets and support services, and increased vulnerability of agribusiness value chains to climate change impacts.

The project will address the above constraints by (i) rehabilitating and improving climate resilience of critical production and/or distribution infrastructure, (ii) increasing the use of bioenergy to reduce energy and fertilizer input costs, and (iii) providing enabling environment for agribusiness through targeted policy, technical and marketing information support. The project aims to develop value chains for a bulk crop such as rice in all countries, and a cash crop like pepper in Cambodia, cashew nuts or coffee in Lao PDR and fruits in Myanmar. Project areas will be chosen in such a way that they complement ADB investments on transport and irrigation infrastructure along the GMS economic corridors. By providing critical infrastructure, targeted agribusiness support and capacity building, the project will enhance crop diversification and farm productivity, diversify livelihood options, and thereby assist smallholders' transition from subsistence to commercial agriculture in project areas. The project will foster public-private partnerships (PPPs) through identification of opportunities for the private sector particularly in agribusiness input and output markets and marketing. It will promote trade and deeper economic integration within the GMS through harmonization of standards for delivery of safe and value-added agri-food.

The project is included in the GMS Regional Investment Framework (RIF) for agriculture endorsed by the GMS Ministers in December 2013, and prioritized in the RIF implementation plan for 20142018, which was endorsed by the GMS Summit in December 2014. It will contribute to the goals of National Poverty Reduction Strategies, National Adaptation Programs of Action, and Nationally Appropriate Mitigation Action plans. It is aligned with the GMS Strategy 20122022, ADB Country Partnership Strategies, and strategic priorities identified by the mid-term review of ADB Strategy 2020, with regard to (i) poverty reduction and inclusive economic growth, (ii) environment and climate change, (iii) regional cooperation and integration, (iv) infrastructure development, (v) private sector development, and (vi) knowledge solutions. The project is consistent with ADB's draft Operational Plan for Sustainable Food Security, which aims at increasing value addition and expa

An international consulting firm (with three country teams - one each for Cambodia, Lao PDR and Myanmar) using quality-and cost-based selection (90:10) and full technical proposal. Requirement International: 52 person-months; National: 110-person-months).

Consulting firm was mobilized in November 2015; Inception workshops conducted in Cambodia (19 Jan 2016) and Lao PDR (11 Feb 2016);

An international specialist on spatial information systems for two-person-months up to three addtional international specialist for a total of six persons-months, and up to three national specialists for a total of 15 person-months may be recruited as individual consultants.

All consulting services under the TA would be engaged on out-put-based (lump-sum) contracts.