Mongolia: Vegetable Production and Irrigated Agriculture Project

Agriculture, natural resources and rural development / Agricultural production - Irrigation

The project is aligned with the following impact: income generation and enterprise support for smallholder vegetable farmers increased. The project will have the following outcome: efficiency of climate-resilient agricultural production and marketing increased.

Output 1: Efficient and climate-resilient irrigation infrastructure and management systems installed. The project team will focus on (i) upgrading, modernizing, and climate-proofing irrigation and drainage infrastructure; (ii) strengthening coordination and management of irrigation services, irrigated land, and irrigation infrastructure, including storage ponds to build resilience against prolonged droughts, to ensure efficient, reliable, and equitable irrigation supplies for agricultural land; and (iii) planting trees for shelter belts around the modernized irrigated areas. The team will upgrade, modernize, and climate-proof 12 selected schemes along with directly associated infrastructure to provide irrigation services for 7,000 ha. The project will finance the remodeling and improvement of main, secondary, and tertiary canals or pipes, drainage facilities, field application systems, such as high-efficiency center pivot sprinkler systems and drip irrigation for 240 ha, and associated structures; and, where needed, construction of new access roads and windbreaks. Soum (district) governments will be strengthened to conduct O&M of irrigation systems and will pilot a modern asset management system. The project will create 240 jobs during construction, of which 40% are earmarked for women and 10% for households headed by women; and ensure that all contracts for the 3,094 households to be involved in the farming of new vegetable plots will be co-signed by women.

Output 2: Environmentally sustainable agricultural production systems improved. The project aims to improve food safety, environmental sustainability, and climate resilience of agricultural production systems, focusing specifically on agrochemical residue testing and supporting the implementation of a new law on plant seeds by promoting the introduction of new high-yielding and climate-resilient vegetable seed varieties. The project will support the national Institute for Plant Protection (IPP) with testing equipment and reagents to boost its testing capacity; IPP will be able to handle an additional 4,000 tests to ensure the safety of imported pesticides and to monitor the residues in food products. This is expected to reduce the use of harmful agrochemicals and to build consumer trust in domestically produced vegetables. The project team will coordinate with the national extension center to support four regional crop research institutes (CRIs) by (i) providing equipment and facilities such as climate-controlled growth chambers, storage cool rooms, sheds, fencing, mechanization packages, seed cleaning and packaging equipment, conservation farming equipment, and teaching facilities; (ii) conducting small-scale irrigation rehabilitation and modernization; and (iii) providing greenhouses and low-carbon solutions to extend the cropping seasons and achieve high-value vegetable and quality seedling production. This is expected to increase the production capacity for vegetable seeds by 0.65 tons and for seed potatoes by 10 tons. A total of 20 women researchers and 192 women from CGGs will be given technical support and training on best practices.

Output 3: Technical, institutional, and management capacity and coordination strengthened. The project team will set up 48 CGGs in the 12 irrigation schemes, which target women for 40% of the membership and 25% of leadership positions; and provide training on improved vegetable production for 480 CGG participating farmers, including 40% women, in collaboration with the CRIs. The two main providers of extension services to vegetable farmers will be crop research centers such as the Institute of Plant and Agriculture Science, and a facilitation partner such as a local nongovernment organization. Project-supported CRIs will provide capacity building on good agricultural practice and integrated pest management for farmers' improved management of natural resources with less use of agrochemicals, more use of climate-smart agriculture practices, and better vegetable production, processing and marketing techniques. To further strengthen CGGs, the project will provide mechanization technology packages, all-weather greenhouses with solar-powered heating and long-life films, and small cool rooms for product storage. The equipment will be provided through a combination of ADB loan and JFPR grant to the soum governments, which can then make it available to the CGGs based on predetermined eligibility criteria.

Mongolia's economy has been characterized by rapid growth and transformation since transitioning from central planning in the early 1990s. Mineral exports were the main driver for achieving middle-income status in 2011. However, Mongolia's vulnerability to external shocks underscored the need for a more diversified and labor-intensive economic structure for the rural population. In 2018, agriculture's share in employment was 26.7% while it contributed only 10.8% of Mongolia's gross domestic product. In line with the government's focus to accelerate economic diversification and job creation, agriculture has become a priority for growth. It is the main source of livelihood in rural areas, where more than one-third of the total population lives. Poverty in rural areas (30.8% in 2018) remains higher than in urban areas (27.2% in 2018). Limited income-generation opportunities and lack of resilience to natural disasters increase the risk of rural-urban migration. Agriculture is not sufficiently diversified and relies heavily on imports for vegetables and fodder, which in turn threatens national food security and the disaster risk resilience of the livestock industry. Only about half of the country's vegetable demand was met by domestic production in 2008-2016. Vegetables are in high demand by more health-conscious citizens, and a more balanced diet can be expected to have considerable public health benefits.

Inefficient and climate-vulnerable irrigation services. More frequent droughts induced by climate change are a threat to food security, and particularly to vegetable production, which requires reliable access to irrigation services. In 2017, only 1% of Mongolia's land area (777,000 ha) was cultivated, of which only 1.1% (8,900 ha) was used for vegetables (mainly beets, cabbages, carrots, cucumbers, garlic, onions, tomatoes, and turnips). The country's irrigation systems are recognized as having low water productivity and lacking resilience to severe droughts and floods, although sufficient water resources are available--only 1.6% of the internal renewable water resources were withdrawn in 2014. The climate is trending toward a higher annual average temperature and less annual average rainfall, leading to a decline in river runoff. Existing irrigation infrastructure, and fodder and vegetable yields are threatened by water shortages in early spring, snowmelt river floods throughout spring, and flash floods from storms.

Environmentally unsustainable production systems. After the collapse of the former Soviet Union, the cropped area declined from its peak of 837,868 ha in 1989 to 162,040 ha in 2006, as government support through national and regional crop research and extension centers declined. The cultivation techniques are unsustainable in terms of water productivity and the use of agrochemical inputs with unknown levels of residue in marketed crops. The productivity of vegetable-growing systems is further limited by a lack of access to seeds of high-yielding, climate-resilient varieties. The absence of reliable quality assurance testing of inputs such as pesticides increases production costs and poses the potential risk of environmental pollution. The lack of agrochemical residue-testing capacity at government agencies threatens food safety and access to premium-price marketing opportunities.

Inadequate technical and institutional management capacity. Small farm sizes with inadequate access to efficient and climate-resilient irrigation limit the scope for productivity and quality-enhancing mechanization. Individual small-scale farmers lack access to improved production technologies, which require larger-scale operations to be profitable. About 300 cooperatives and 35,000 households in the country grow vegetables on plots of up to 100 ha, but the total sown area was only 8,904 ha in 2018.3 Cooperative and farmer incomes are low and opportunities curtailed. In the absence of post-harvest and storage facilities, and with low awareness of value-added opportunities and marketing, farmers sell their vegetables mainly to middlemen.

Government policy. Backed by its Sustainable Development Vision 2030, Government Action Plan, 2016-2020, and State Policy on Food and Agriculture and Crop Production Law, Mongolia is committed to improve vegetable production. The state policy stresses the need to strengthen agricultural productivity and production management through a value chain approach, adaptation to climate change, and capacity building for farmers. The government targets for local vegetable production to meet 70% of domestic demand by 2020, and 100% by 2025, through support for initiatives such as on-farm mechanization, climate-resilient greenhouses, and water-saving irrigation technology. Policies prioritizing smallholder farming offer an enabling environment for meeting these targets. Following on from Mongolia's National Programme for Food Security (2009-2016), the government intends to enhance water productivity and expand the country's irrigated land from 54,000 ha in 2019 to 120,000 ha by 2030.

Strategic fit. The project is in line with Strategy 2030 of the Asian Development Bank (ADB) by creating knowledge and promoting rural development and food security. Supporting a diversified agriculture sector with inclusive economic growth is a key strategic priority for ADB in its country partnership strategy for Mongolia, 2017-2020. The project will help improve the water productivity and climate resilience of irrigation systems, expand vegetable production and value chain links, and institutionalize residue testing for food safety, which is consistent with the four priority areas of ADB's Operational Plan for Agriculture and Natural Resources and ADB's Water Operational Plan 2011-2020.

Lessons. The project design incorporates lessons from previous and ongoing projects financed by ADB and others in Mongolia, as well as from project preparation. Accordingly, the project responds to the need to (i) support government executing and implementing agencies in developing their project implementation capacity; (ii) expand the capacity of design institutes to identify and apply modern water-efficient irrigation methods in subproject designs; (iii) enable the careful design of water-efficient irrigation systems that support climate-smart agricultural production; (iv) promote sound operation and maintenance (O&M) of upgraded systems, particularly through community grower groups (CGGs), to ensure their long-term sustainability; and (v) help set up CGGs and introduce them to climate-smart production technologies, particularly for vegetables.

Efficient and climate-resilient irrigation infrastructure and management systems installed

Environmentally sustainable agriculture production systems improved

Technical, institutional, and management capacity and coordination strengthened

As of 28 September 2020, the executing agency has initiated the selection of four consulting services (CS) packages as follows:

(i) CS-01 Legal support consultant. The consulting position was advertised on 20 August 2020. The evaluation report is expected to be sent to ADB's review by 30 September 2020;

(ii) CS-14 National biodiversity specialist. The package was initially advertised on 28 April 2020 and re-advertised on 20 August 2020. The EA submitted the first evaluation report to ADB on 2 September 2020 and the second report on 7 September. ADB reviewed the report and requested the EA to revise it. On 16 September, the EA accordingly submitted the revised evaluation report to ADB. On 18 September, ADB endorsed the report and selection recommendation;

(iii) CS-15 ecosystem-based adaptation (EBA) for nine subprojects, environmental impact assessment (EIA) for twelve subprojects. The package was advertised on 28 April 2020 and the shortlist was finalized on 30 July 2020. The request for proposal (RFP) was sent to the first-ranked candidate on 19 August 2020; and

(iv) CS-16 Detailed engineering design for ten subprojects. The package was advertised on 28 April 2020 and the shortlist was finalized on 13 August 2020. The RFP was sent to the first-ranked candidate on 19 August.