48409-002: Climate-Friendly Agribusiness Value Chains Sector Project | Asian Development Bank

Cambodia: Climate-Friendly Agribusiness Value Chains Sector Project

Sovereign (Public) Project | 48409-002 Status: Proposed

Recent studies have shown that investing in agriculture is one of the most cost-effective strategies to reduce poverty and hunger. The proposed Climate-friendly Agribusiness Value Chains Sector Project (the project) will invest in pro-poor and inclusive agricultural value chains in Cambodia. 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 policy and capacity support services. Sector lending is proposed, as it will enable improving agribusiness policies and supporting reforms while financing investments in multiple subprojects.

Project Details

Project Officer
Ancha, Srinivasan Southeast Asia Department Request for information
Country
  • Cambodia
Modality
  • Grant
  • Loan
Sector
  • Agriculture, natural resources and rural development
 
Project Name Climate-Friendly Agribusiness Value Chains Sector Project
Project Number 48409-002
Country Cambodia
Project Status Proposed
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Loan: Climate-Friendly Agribusiness Value Chains Development
concessional ordinary capital resources lending / Asian Development Fund US$ 90.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development - Agricultural production - Agro-industry, marketing, and trade - Land-based natural resources management

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

Recent studies have shown that investing in agriculture is one of the most cost-effective strategies to reduce poverty and hunger. The proposed Climate-friendly Agribusiness Value Chains Sector Project (the project) will invest in pro-poor and inclusive agricultural value chains in Cambodia. 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 policy and capacity support services. Sector lending is proposed, as it will enable improving agribusiness policies and supporting reforms while financing investments in multiple subprojects. Cambodia has experience in sector modality in terms of identifying and carrying out subprojects during project implementation period and meets criteria for sector lending, as it has (i) agricultural sector development plan, (ii) reasonable institutional capacity to implement the plan, and (iii) suitable policies applicable to the sector. Furthermore, capacity building will be integral to the investment.

The impact will be increased productivity, quality, value addition and rural household income in the project areas. The outcome will be development of climate friendly agribusiness value chains. The project will have three outputs. Output 1 (Critical agribusiness value chain infrastructure improved) will include rehabilitating and modernizing critical infrastructure (e.g. farm roads, water storage and small scale irrigation systems, drying, storage, milling and packaging facilities, by the public and private sectors. These activities will reduce post-harvest losses and improve efficiency. Output 2 (Bio-energy use and sustainable biomass management expanded) 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 price competitiveness by lowering production costs. Output 3 (Agribusiness policy and capacity support services strengthened) will include agribusiness policy/regulatory development, identification of opportunities for linking private sector companies to farmers or farmers' groups, 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 PPPs, and financing options. It will also include consultant's support and institutional strengthening for subproject preparation, procurement, financial management and safeguards, and diffusion of knowledge and technologies for agribusiness value chains.

Project Rationale and Linkage to Country/Regional Strategy

Cambodia supplies a range of critical agricultural commodities for the GMS and beyond. Several development partners, including ADB, had supported initiatives to improve farm productivity. Yet, Cambodia's 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 Cambodia 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 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) creating an enabling environment for agribusiness through targeted policy, technical and marketing information support. The project aims to develop value chains for rice, maize, cassava and mango in 4 provinces (Kampong Cham and Tbong Khmum provinces along the Southern Economic Corridor, and Kampot and Takeo provinces along the South Coastal Economic Corridor). 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 identify opportunities for the private sector and will foster public-private partnerships (PPPs) 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.

Impact Productivity, quality and value addition of agricultural products, and rural household income in the project areas increased by 2027
Outcome Climate-friendly agribusiness value chains in Cambodia, Lao PDR and Myanmar developed
Outputs

1. Critical agribusiness value chain infrastructure improved

2. Bio-energy use and sustainable biomass management expanded

3. Agribusiness policy and capacity support services strengthened

Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects The project is categorized as B. It is expected to achieve significant environmental benefits, including substantial reduction of GHG emissions, improved resilience and increased crop diversity in the project areas.
Involuntary Resettlement The project is categorized as B for involuntary resettlement. The project will not finance any category A subprojects. During project preparation, some irrigation subprojects were identified that would require acquisition of small strips of land to accommodate improvement of distribution canals. These small strips of land may be acquired through negotiated settlement based upon the market value of the asset. In some cases, and in order to secure the subproject, it is possible that some HHs may voluntarily donate small strips of land in order to secure a clear benefit. However, given that some subprojects will only be prepared after ADB Board approval, involuntary resettlement impacts cannot be ruled out at this stage.
Indigenous Peoples The project is categorized as B. There were no indigenous peoples or ethnic minorities in areas of the representative subprojects. However, there are some ethnic minorities living in project provinces and districts who could be impacted by subprojects identified during project implementation. An Ethnic Minority Development Framework (EMDF) has been prepared that will ensure inclusion and full consultation and participation of ethnic minority households and communities.
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations with government staff, private sector and development partners in four target provinces (Kampong Cham, Tbong Khmum, Kampot and Takeo) were conducted from November 2015 to June 2016. A workshop was held in Phnom Penh on 16 February 2016 to identify opportunities and challenges for effective private sector involvement in inclusive agribusiness value chains of 4 target provinces. Feasibility studies on maize, rice and cassava involved consultation with several local stakeholders. Interim workshop took place in June 2016 to receive feedback from stakeholders. A mission was fielded from 9 to 11 Jan 2017 to consult with the government representatives, civil society organizations and development partners regarding project design and implementation arrangements. Fact-finding mission followed from 16 to 25 Jan 2017.
During Project Implementation
Responsible ADB Officer Ancha, Srinivasan
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, SERD
Executing Agencies
Ministry of Agriculture, Forestry & Fisheries
# 40 Norodom Blvd.
Phnom Penh
Cambodia
Timetable
Concept Clearance 12 May 2015
Fact Finding 09 Jan 2017 to 25 Jan 2017
MRM 03 Nov 2017
Approval -
Last Review Mission -
Last PDS Update 30 Mar 2017

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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