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Afghanistan: Horticulture Value Chain Development Sector Project

Sovereign (Public) Project | 51039-002 Status: Active

The proposed project will help strengthen the horticulture value chain in Afghanistan by (i) improving the processing efficiency and marketing capacity of domestic agro-business enterprises (ABEs); (ii) modernizing crop production through better planting material, trellising, modern greenhouses, and on-farm facilities; and (iii) contributing to the national effort in establishing internationally recognized brands of Afghan horticultural produce. It will increase value addition for horticultural commodities produced in 11 provinces in the central, southern, and eastern parts of Afghanistan. As such, the project will contribute to increasing the supply of fresh and processed fruit and vegetables, and expanding exports of high-value fruit, vegetables, and nuts in which the country has a comparative advantage.

Project Details

Project Officer
Bui, Giap Minh Central and West Asia Department Request for information
Country
  • Afghanistan
Sector
  • Agriculture, natural resources and rural development
 
Project Name Horticulture Value Chain Development Sector Project
Project Number 51039-002
Country Afghanistan
Project Status Active
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0620-AFG: Horticulture Value Chain Development Sector Project (formerly Agriculture Business Market Development Project)
concessional ordinary capital resources lending / Asian Development Fund US$ 75.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Agriculture, natural resources and rural development / Agricultural production - Agro-industry, marketing, and trade

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed project will help strengthen the horticulture value chain in Afghanistan by (i) improving the processing efficiency and marketing capacity of domestic agro-business enterprises (ABEs); (ii) modernizing crop production through better planting material, trellising, modern greenhouses, and on-farm facilities; and (iii) contributing to the national effort in establishing internationally recognized brands of Afghan horticultural produce. It will increase value addition for horticultural commodities produced in 11 provinces in the central, southern, and eastern parts of Afghanistan. As such, the project will contribute to increasing the supply of fresh and processed fruit and vegetables, and expanding exports of high-value fruit, vegetables, and nuts in which the country has a comparative advantage.
Project Rationale and Linkage to Country/Regional Strategy Afghanistan is one of the least-developed countries in the world. In 2016, its poverty rate was 55%, while 44% of inhabitants were considered food insecure. Between 2011 and 2016, the average annual per capita gross domestic product (GDP) was $630, ranking Afghanistan 168th of the 183 countries reported by the World Bank. Agriculture is Afghanistan's major source of livelihood, employing 62.2% of the national workforce of 10.9 million people in 2017 and contributing 21.9% of the national GDP, with sector value addition of $4.1 billion in 2016. Historically, the sector was a significant source of foreign exchange because of the country's unique agro-climatic conditions. Of the total export earnings of $771 million in 2016, export earnings from agriculture were $375 million, accounting for 48.6%. Export earnings from fruit and vegetables alone amounted to $331 million (42.9% of total exports). Within the agriculture sector, the horticulture subsector has been a major contributor through the production of a wide array of crops, unique varieties, and an extended range of maturity periods, providing a strong comparative advantage in export markets. In 2016, licit horticulture crops were grown on 360,000 hectares (ha) that included 14% of the total irrigated area and generated $1.4 billion equivalent annually, representing 34% of agriculture GDP. Labor requirements for production and harvesting are the equivalent of 200,000 full-time equivalent jobs (seasonal income for about 2 million people). Many horticulture crops provide a good source of revenue for commercial farmers compared with alternative crops to the extent that they are widely promoted by the government and development partners as an alternative to poppy cultivation. Grapes generated the greatest income of any crop with nearly $150 million for fresh grapes and $280 million for raisins in 2016. Almonds generated $120 million, while pomegranates generated $100 million in that year. About one-third of Afghanistan's horticulture crops are exported, primarily to India and Pakistan, although significant quantities of raisins are exported to the Russian Federation, Iraq, the United Arab Emirates, and central Asian countries. Vegetable production also contributes significantly to horticulture GDP (estimated at $475 million per annum) but remains highly seasonal. During the off-season, the country relies on imported vegetables particularly onions, potatoes, and tomatoes from neighboring India and Pakistan. Growth in the horticulture subsector is constrained by a large number of small-scale producers that are geographically scattered. On-farm productivity is low and post-harvest losses are high because of (i) limited access to water largely because of dilapidated irrigation infrastructure and lack of on-farm distribution and application systems; (ii) old orchards with low-productivity varieties; (iii) limited access to quality production inputs, including planting material but also fertilizers and agro-chemicals for pest and disease control; (iv) a predominance of traditional production technologies; (v) lack of access to finance to modernize production systems and processing for value addition; (vi) absence of national certification and/or branding strategies for horticultural produce, particularly outside the traditional export markets of India and Pakistan; and (vii) insecure land tenure, which discourages farmers to invest in on-farm facilities and land improvement. Post-harvest losses for fruit and vegetables are in the range of 30% 60% of total production. The main causes include (i) lack of precooling facilities, cold storage, refrigerated transport, and packhouse facilities; (ii) inadequate processing facilities; (iii) poor transportation facilities and high transportation costs; and (iv) a lack of farmers' knowledge of good post-harvest practices.The banking subsector in Afghanistan has a narrow base with weak governance and low intermediation and outreach. In 2017, the subsector consisted of 15 banks with total assets of $4.0 billion, customer deposits of $3.6 billion, and a gross loan portfolio of less than $0.7 billion. Credit to the private sector is low just 4% of GDP and the loan asset ratio is below 15%. Only 2% of enterprises use bank loans to finance investments because (i) loan interest rates are extremely high (12% 20% per annum); and (ii) loans are mainly short term, with an average maturity of 10 months. While there is a high demand for medium- and long-term loans, banks are not able to extend loans of the same terms because of their lack of equivalent medium- and long-term funding sources, and access to finance for individuals and enterprises is constrained by limited branch networks. In this context, and given public mistrust of domestic banks since the Kabul Bank collapse in 2010, project financing interventions through financial intermediation are currently not an appropriate choice.
Impact Agricultural productivity and food security improved
Project Outcome
Description of Outcome Production and value addition of horticultural products increased
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Horticulture value chain infrastructure and facilities improved

National capacity for export expansion developed

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

Preparation, review and approval of subproject investment reports are ongoing.

Preparation, review and approval of subproject investment reports are ongoing.

Preparation, review and approval of subproject investment reports are ongoing.

Preparation, review and approval of subproject investment reports are ongoing.

Ongoing activity

Ongoing activity

Ongoing activity

Ongoing activity

Ongoing activity

Ongoing activity

Ongoing activity

Geographical Location Bamyan, Ghazni, Kabul, Khost, Kunar, Laghman, Logar, Nangarhar, Paktia, Paktika, Wardak
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Bui, Giap Minh
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, CWRD
Executing Agencies
Ministry of Agriculture, Irrigation and Livestock
Jamal Mina, Karte Sakhi Square,
Kabul,
Islamic Republic of Afghanistan
Ministry of Finance
Pashtunistan Watt,
Kabul,
Islamic Republic of Afghanistan
Timetable
Concept Clearance 13 Sep 2017
Fact Finding 10 Jul 2018 to 18 Jul 2018
MRM 10 Aug 2018
Approval 30 Oct 2018
Last Review Mission -
Last PDS Update 26 Jan 2020

Grant 0620-AFG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Oct 2018 22 Nov 2018 19 Dec 2018 30 Jun 2025 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 118.66 Cumulative Contract Awards
ADB 75.00 30 Oct 2018 5.06 0.00 7%
Counterpart 43.66 Cumulative Disbursements
Cofinancing 0.00 30 Oct 2018 4.39 0.00 6%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - Unsatisfactory Unsatisfactory - Unsatisfactory

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

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Title Document Type Document Date
Horticulture Value Chain Development Sector Project: Date Orchards in Khost Province Social Safeguard Due Diligence Report Safeguards Due Diligence Reports May 2020
Horticulture Value Chain Development Sector Project: Date Orchards in Nangarhar and Laghman Provinces Social Safeguard Due Diligence Report Safeguards Due Diligence Reports May 2020
Horticulture Value Chain Development Sector Project: Eastern Zone Provinces Social Safeguard Due Diligence Report Safeguards Due Diligence Reports Feb 2020
Horticulture Value Chain Development Sector Project: Southern Region Social Safeguard Due Diligence Report Safeguards Due Diligence Reports Feb 2020
Horticulture Value Chain Development Sector Project: Central Kabul Region Social Safeguard Due Diligence Report Safeguards Due Diligence Reports Jan 2020
Horticulture Value Chain Development Sector Project: Bamyan Province Social Safeguard Due Diligence Report Safeguards Due Diligence Reports Dec 2019
Horticulture Value Chain Development Sector Project: South Eastern Region Social Safeguard Due Diligence Report Safeguards Due Diligence Reports Nov 2019
Horticulture Value Chain Development Sector Project: Environmental Assessment and Review Framework Environmental Assessment and Review Framework Jul 2018
Horticulture Value Chain Development Sector Project: Initial Environmental Examination Initial Environmental Examination Jul 2018
Horticulture Value Chain Development Sector Project: Resettlement Framework Resettlement Frameworks Jul 2018
Horticulture Value Chain Development Sector Project: Social Safeguard Due Diligence Report Safeguards Due Diligence Reports Jul 2018

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
0620-AFG: Horticulture Value Chain Development Sector Project (HVCDSP) [MAIL/HVCDSP/FA-013] Invitation for Bids Active 24 Jun 2020 25 Jul 2020
0620-AFG: Horticulture Value Chain Development Sector Project (HVCDSP) [MAIL/HVCDSP/FA-004] Invitation for Bids Active 01 Jun 2020 15 Jul 2020
Facilitation Partner (FP) Firm - Consulting Closed 21 Sep 2019 20 Oct 2019
Implementation Support Consultants (ISC) Firm - Consulting Closed 26 Aug 2018 24 Sep 2018

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
IMPLEMENTATION SUPPORT CONSULTANTS (ISC) Grant 0620 19 Dec 2019 SOCIETA ITALIANA DI MONITORAGGIO SRL IN ASSO. ROME ITALY ITALY Ministry of Finance 3,729,062.50

Procurement Plan