cp: cambodia: climate resilient rice commercialization

Concept Paper

Project Number: 44321 November 2011

Cambodia: Climate Resilient Rice Commercialization Sector Development Program

(Formerly Agricultural Commercialization and Resource Conservation Sector Development Program)

I. THE PROJECT

A. Rationale

1. Development Context. During the last decade, Cambodia has achieved impressive economic growth with gross domestic products (GDP) averaging 10% per annum during the 2004-2010 period. Despite its declining GDP share from 46% in the 1990‟s to 34% in 2010, agriculture remains an important sector in the national economy. It is an important source of livelihood for 85% of the population. Paddy production covers 84% of cultivated land and contributes about 38% of agricultural value added or 13% of the national GDP in 2010. Paddy production has been crucial in creating employment and reducing the national poverty rate from 47% in 1993 to 30% in 2010. The Royal Government of Cambodia (RGC) set the annual GDP growth target of 7% and poverty reduction rate of 1% per annum from 2009 onwards. Given its significant share in the national GDP, rice continues to play a crucial role in enhancing macro-economic stability, food security, and poverty reduction. However, to achieve economic growth on a broader and sustainable basis, substantial constraints in rice value chain need to be removed.1

2. Key binding constraints 2 in rice commercialization observed include: (i) production is largely traditional and unorganized; (ii) value chains are weak and fragmented; (iii) agro-industry small and medium-sized enterprises (SME) are under-developed; (iv) intra- and inter-sector connectivity is limited particularly with energy, finance and transport constraining production and market access; and (v) domestic marketing standards are low and rice trading with regional and global markets is limited. These constraints are due largely to the lack of an enabling legal and/or regulatory environment for strengthening market linkages, productivity enhancement, organized production, and sustainable access to finance, among others. In terms of natural resources, while Cambodia is endowed with ample land and water resources favorable for paddy and other crop production, use efficiency of these resources is suboptimal due to limited capacity in agricultural land management and underinvestment in increasing total factor productivity. Therefore, it is critical for agricultural land to be managed efficiently and effectively by practicing sound agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping and management.3

3. The Climate Resilient Rice Commercialization Sector Development Program (SDP) is proposed to support and accelerate the efficient and effective implementation of the Strategy on Agriculture and Water (SAW) and the “Policy on the Promotion of Paddy Production and Rice Export” (the Rice Policy). It will address food security and rice commercialization by prioritizing: (i) strengthening the rice value chain; (ii) improving the legal and regulatory framework in agricultural land management; (iii) improving access to credit by paddy producers and rice millers/exporters; and (iv) enhancing paddy production and productivity through improved irrigation water use efficiency, establishment of paddy post-harvesting facilities, and paddy crop insurance pilots.4 The SDP will (i) address major strategic thrusts of the 2011–2013 Country Partnership Strategy, and sector strategies and roadmap; and (ii) complement the on-going sector initiatives by emphasizing the commercialization aspects of rice.

4. Innovative Features. The SDP is among the first initiatives in Southeast Asia that contemplates rice commercialization and simultaneously addresses resilience of its underlying agro-ecological system. As a matter of fact, the evolution and development of a commercial rice value chain will create pressure on natural resources which may cause degradation of the soil, loss of biodiversity or soil and/or water pollution. The SDP‟s interventions will increase resilience

1 Additional information on rationale, lessons learnt, and synergy maximization is in Supplementary Appendix A.

2 A problem tree is in Appendix 2.

3 To address these constraints, in April 2010, the RGC promulgated the 2010-2013 Strategy on Agriculture and Water (SAW), aiming to improve food security and economic growth. The RGC also issued the “Policy on the Promotion of Paddy Production and Rice Export” (the Rice Policy) in June 2010, elaborating strategies to achieve annual paddy surplus of 4 million tons for domestic staple food and annual export of 1.0 million ton by 2015.

4 The SDP will be designed within the context of Cambodia‟s SPCR with a particular focus on enhancing climate resilient agriculture and food security.

2

by promoting sound agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping. In this regard, the SDP, if implemented successfully, will be a role model for climate resilient cropping practices for rice in response to growing global food demand. Moreover, although the primary focus of the SDP will be on rice commercialization, the enabling legal, regulatory and institutional conditions put in place for rice will also create favorable conditions for the commercialization of other agricultural commodities. This will enable Cambodia to promote agricultural diversification and economic growth on a broader and sustainable basis.

5. Justifications for Adopting the SDP Modality. The proposed interventions include a policy reform component, an investment component, and an associated technical assistance. The SDP modality is preferred and proposed for the following reasons. Commercialization of rice that addresses resilience of its underlying agro-ecological system will entail adjustments in legal framework and relevant regulations coupled with institutional strengthening of relevant actors. While this is necessary, it will not be sufficient to unlock the potential of supply chain actors including private sector investors and individual households. Therefore, policy and regulatory reforms will have to be accompanied by well sequenced/timed investments that enhance factor productivity. In this regard, adopting the sector development program modality for the proposed interventions is not only desirable, but necessary. Moreover, the RGC is firmly committed to rice commercialization to enhance economic growth and food security. Significant adjustment costs are associated with its implementation.

B. Impact, Outcome, and Outputs

6. Impact and Outcome. The impact of the proposed SDP will be improved income of farming households and rice-related SMEs. The outcome will be climate resilient rice commercialization. A preliminary design and monitoring framework (DMF) is in Appendix 3.

7. Outputs and Activities. The proposed SDP will have five outputs. Outputs 1, 2 and 3 will be covered by the program component, while Output 4 will be financed by the investment component. Output 5 is efficient program management and implementation. The SDP‟s program activities will be applied at the national sector level and its investment activities will be planned for the GMS Southern Economic Corridor. Subject to further study during the project preparatory technical assistance (PPTA), the project investment is proposed to cover seven Tonle Sap basin provinces including Siem Riep, Banteay Meancheay, Kampong Cham, Kampong Thom, Kampong Chhnang, Battambang, and Pursat. Tentative scope of each output is in Supplementary Appendix A.

8. Output 1 – Rice Value Chain Strengthened. Assistance under this output will address constraints in enterprise formation and value chain defragmentation in the agricultural sector. It aims to improve and create enabling regulatory and business friendly conditions for rice commercialization. This will also create a solid foundation for developing more vibrant agro-industry entrepreneurship, promote stronger links between production and markets, and systematize primary production.

9. Output 2 – Agricultural Land Management Enhanced. Activities under this output will help improve the regulatory framework and institutional capacity for planning, implementing, managing, monitoring sound agricultural land use zoning, soil productivity potential mapping, and water use/irrigation efficiency management. This will help ensure that rice production will be implemented in a systematic and organized manner without compromising the natural resources base.

10. Output 3 – Access to Credit by Paddy Producers, Cooperatives, Rice-Millers, and Exporters Improved. This output aims to increase credit access to enable paddy producers to purchase required farm inputs such as quality seeds and fertilizers, help rice millers/exporters upgrade milling/packaging equipment, and make capital available for the millers/exporters to purchase paddy during harvest seasons for export processing and necessary inventory.

3

11. Output 4 – Paddy Production and Productivity Enhanced. The investment component will help improve agricultural infrastructure for paddy crops to be climate resilient and productive to enhance food security and increase rice surplus for export. The interventions aim to create a solid foundation for promoting investment of households and private sector entities in farm mechanization, post-harvest handling and crop insurance. Specifically, the investment component will assist the RGC in (i) enhancing irrigation water use efficiency; (ii) establishment of paddy post harvesting facilities; and (iii) pilot testing crop insurance using the weather-based index.

12. Output 5 – Efficient Program Management and Implementation. This output is to ensure smooth operation, effective monitoring, adequate implementation support, and technical expertise needed for subprojects and overall program management.

C. Cost Estimates and Financing Plans 13. The SDP‟s cost is estimated at $90 million.5 It is estimated that the program component will cost $40 million, of which ADB will finance $35 million in ADF loan and Global Agriculture and Food Security Program (GAFSP) will finance $5.0 million in grant. The investment component is estimated to cost $50 million, of which ADB will finance $20 million in ADF loan, GAFSP $9.6 million in grant, Strategic Climate Fund (SCF) $5.0 million in loan and $4.5 million in grant. ADB will administer GAFSP‟s grant and SCF‟s loan and grant. Co-financing sources will be utilized on a parallel basis. The RGC will contribute $10.9 million. The proposed financing plan is in Table 1.

Table 1: Indicative Financing Plan

Sources Amount ($ million) Share of

Total (%) Program Investment Total

Asian Development Bank - ADF Loan 35.0 20.0 55.0 61.1%

GAFSP – Grant 5.0 9.6 14.6 16.2%

Strategic Climate Fund (SCF) – Loana 0.0 5.0 5.0 5.6%

Strategic Climate Fund (SCF) – Grantb 0.0 4.5 4.5 5.0%

The Royal Government of Cambodia (RGC) 0.0 10.9 10.9 12.1%

Total 40.0 50.0 90.0 100.0% a b

Under the Pilot Program for Climate Resilience (PPCR). Total SCF grant is $5.0 million and $0.5 million is allocated

to cover part of the cost of the Project Preparatory Technical Assistance (PPTA).

Source: Asian Development Bank estimates.

D. Indicative Implementation Arrangements

14. The RGC requested ADB to align its support to the Rice Policy. Therefore, the preparation and implementation arrangements of the SDP will be aligned to the policy and regulatory structure stated in the Rice Policy. This will help avoid duplication and minimize implementation complexity. The SDP, therefore, will utilize the institutional structure already set up for implementation of the Rice Policy. Accordingly, the Committee on Economic and Financial Policies is proposed to assume the role as SDP‟s Steering Committee and will be chaired by the Senior Minister of the Ministry of Economy and Finance (MEF). MEF will be the Executing Agency (EA) and the Implementing Agency (IA) of the program component in close coordination with MAFF and, concerned line ministries and institutions. MAFF will assume the responsibility as the EA and IA for implementing investment component proposed under the SDP.

II. TECHNICAL ASSISTANCE

15. Subject to the SDP‟s detailed design, an associated technical assistance may be proposed to support capacity development and implementation of the investment component.

5 Adjustment costs of the underlying policy reform program are estimated at $500 million and the proposed financing is in conformity with the established overall financing requirements for the CPS period.

4

III. DUE DILIGENCE REQUIRED

16. A rice value chain analysis, together with detailed analyses on sector and cross-sector issues, and the legal and regulatory environment will be conducted. A policy matrix will be established to monitor the achievement of outputs and track performance indicators. A governance risk assessment for concerned EAs and IAs and engagement plans will be prepared. Technical inputs will be allocated to pre-screen and select eligible subprojects for financing to ensure that feasibility studies and detailed designs can commence immediately after the SDP is approved. Economic and financial viability will be evaluated to ensure that only subprojects with an EIRR of 12% or above will be selected for financing. A financial specialist will conduct financial management assessment for concerned EAs and IAs. Safeguard specialists will conduct analyses on environment, involuntary resettlement, and indigenous peoples. The SDP is categorized as effective gender mainstreaming (EGM). A social and gender specialist will analyze pertinent social and gender issues and set up a gender action plan to ensure the EGM requirements and other related social safeguards documents. The initial poverty and social analysis is in Appendix 4.

IV. PROCESSING PLAN

A. Risk Categorization

17. In accordance with OM/D11, the risk categorization is "Complex" since the sector development program modality is proposed and the aggregated loan and grants amount exceeds $50 million. B. Resource Requirements

18. A PPTA is proposed for ADB management approval. Cost estimates, financing plan, outline terms of reference, and consultant schedule are presented in Appendix 5.

C. Processing Schedule

19. The proposed processing schedule is outlined in Table 2.

Table 2: Proposed Processing Schedule

Milestones Expected Completion Date

Fact Finding Mission 10–30 Jul. 2012

Management Review Meeting (MRM) 30 Aug. 2012

Loan and Grants Negotiation 27-29 Sep. 2012

Board Consideration 26 Nov. 2012

Loan and Grants Signing 10 Jan. 2013

Loan and Grants Effectiveness 10 Apr. 2013

V. KEY ISSUES

20. The SDP will need to ensure that the impact of the proposed SDP will be maximized in coordination with other initiatives implemented by ADB, the RGC, and development partners.

Appendix 1

5

BASIC PROJECT INFORMATION

Aspects Arrangements

Modality Sector Development Program (SDP)

Financing Asian Development Fund (ADF) loan: $55 million; Global Agriculture and Food Security Program (GAFSP) ($14.6 million); Strategic Climate Fund (SCF) - loan $5.0 million, grant $4.5 million; and Royal Government of Cambodia: $10.9 million.

COBP/RCOBP The proposed Sector Development Program is included in the COBP for Cambodia in the 2011-2013 dated June 2011 in the indicative list of lending products for 2012. (ADB. 2011. Country Operations Business Plan: Cambodia. Manila).

Classification Sector (subsectors): Agriculture and Natural Resources Themes (subthemes): Economic Growth (GRO), Private Sector Development (PSD),

Governance (GOV), Environmental Sustainability (ENV), and Capacity Development (CAD)

Gender mainstreaming: effective gender mainstreaming (EGM)

Targeting classification: The proposed Program will be a General Intervention (GI). Location impact: High rural impact, medium regional impact and low urban and national impacts. Safeguards:

Environment: Category B

Involuntary Resettlement: Category B

Indigenous Peoples: Category B Risk categorization

Complex

Partnership(s) Strategic Climate Fund (SCF) under the Pilot Program for Climate Resilience (PPCR), and Global Agriculture and Food Security Program (GAFSP)

Use of a PBA Not applicable

Parallel PIU No parallel management unit is required to implement the proposed SDP since the management structure is already established within the RGC‟s own structure.

Department and division

South East Asia Department (SERD) Environment, Natural Resources, and Agriculture Division (SEER)

Team leader and members

Bui Minh Giap, Natural Resources and Agriculture Economist (Team Leader), SEER

Christopher Wensley, Lead Water Resources Specialist, SEER Nao Ikemoto, Senior Environmental Specialist, SEER/CARM Syarifah Aman-Wooster, Senior Social Development Specialist (Safeguards), SEER Pavit Ramachandran, Environmental Specialist, SEER Ancha Srinivasan, Principal Climate Change Specialist, SEER Oscar Badiola, Associate Project Analyst, SEER Piseth Long, Senior Project Officer, CARM Chanthou Hem, Senior Project Officer, CARM Sokunthea Sok, Senior Procurement Officer, CARM Sokha Ouk, Safeguards Officer, CARM

ADB = Asian Development Bank, ADF = Asian Development Fund, COBP = country operations business plan, PBA = programmatic based approach, PIU = project implementation unit, and RCOBP = regional cooperation operations business plan.

Appendix 2 6

PROBLEM TREE

Low value, under-diversified agriculture and agro-industry sectors with weak forward and backward economic linkages, and with continuing accelerating

degradation of the natural resource base

Limited value addition and profitability in the sector,

both at primary and

secondary levels, with only modest recorded

Long term sustainability of present patterns of

agricultural growth

increasingly in doubt

Limited growth of agro-enterprises, agro-industry

uncompetitive in both

domestic and foreign markets

Sector contribution to economic growth and to raising rural incomes is far below potential and the supporting natural resource base is under increasing threat of degradation

Largely traditional, low productivity technology

with variable, low quality

agricultural output

Weak intra- and inter-sector connectivity, low

domestic marketing

standard; limited regional and global agri-trade

Weak agricultural value chains, under-

developed agri-based

SME sector and largely unorganized primary

production

Poor natural resources management; agriculture

highly prone to the effects

of seasonal climate variability and impacts of

climate change

Adoption of improved, more productive agricultural technologies and farming systems restricted to a minority of farmers and fishers due to weaknesses in research and extension systems, particularly the link between them

Limited accessibility to/availability of good quality seeds and agricultural inputs and credit due to farmers' limited financing/borrowing capacity and under-developed input supply systems

Limited irrigation and drainage in fertile areas and large areas of relatively poor soils

Insecurity of land tenure, due to limited extent of „hard‟ titling in areas operated by small farmers

Poor infrastructure and utilities: inadequate road network, high transport costs; high cost and unreliable power supplies

Limited investment in capacity for handling, storing and processing agricultural products, relatively small and inefficient agro-industrial enterprises

Weak internal market organisation and regulation (standards, quality assurance, transactional oversight) and lack of market information

Poor physical international links (ports, roads, rail)

Limited export market information; lack of export facilities and services (bulking, bonding, forwarding, SPS, quarantine,

Absence of internationally-accepted quality standards

Limited horizontal integration and specialization among primary producers; weak links to larger-scale agribusinesses and market outlets

Limited value chain and agro-industry investment financing and business development services available

Poor regulatory environment for business; high cost of doing business; disincentives to invest in formal sector

Under-capitalization (trade and investment finance terms unsuitable for agriculture and agro-industry)

Domestic agri-food demand more price-sensitive than quality-sensitive

Weak institutions for natural resource management: inadequate capacity to plan, implement, monitor and evaluate NRM at national and local levels

Inadequate, incomplete and weakly enforced resource management laws and regulations

Under-development of resource-conserving agricultural production systems

Lack of sound practices in agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping

NATIONALIMPACT

SECTORIMPACTS

CORESECTOR

PROBLEM

MAINCAUSES

DEFICIENT SECTOR

OUTPUTS

Source: Asian Development Bank.

Appendix 3

7

PRELIMINARY DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Targets and Indicators with Baselines

Data Sources and Reporting Mechanisms

Assumptions and Risks

Impact Improved income of farming households and rice-related SMEs

Increase average annual income of rural household from US$400 in 2010 to US$540 by 2020 SMEs‟ net profit grows at least 10% annually during 2013-20 period

Statistical Yearbook by National Institute of Statistics

Assumption

Medium-term macro-economic policy for inclusive growth is maintained by RGC Risk

RGC fails to improve production incentives and market policies

Outcome Climate resilient rice commercialization

Increase milled rice exports from 200,000 tons in 2010 to 1.0 million tons in 2015 Reduce water volume required per hectare of production by 10% in 2018 Number of farmers drying paddy by solar powered facilities increased by 5% in 2018 (zero baseline)

Statistical Yearbook by National Institute of Statistics on rice export MAFF statistics on crop production published annually SDP baseline survey in 2013 and end-line survey in 2018

Assumption

Demand for agricultural products including rice grown in Cambodia remains strong Risks

Insufficient maintenance causes premature asset deterioration

Outputs 1. Rice Value Chain Strengthened

Law on Agricultural Cooperatives implemented by 2014 Sub-decree on Contract Farming reviewed and changes recommended with particular focus on paddy/rice by 2012. Implementation targets 45% women participants and/or beneficiaries

“Open Paddy Market” Pilots established in 4 locations by December 2013. Forty-five percent of participants in the pilots is female Law on Sanitary-Phyto-sanitary Handling for Agricultural Products implemented by 2014 Strategies and implementation plans to promote rice seed production by private sector organizations established by 2013

Regulatory system related to trading of agro-chemicals reviewed, changes recommended by 2013

SDP progress and monitoring reports produced annually by the Executing Agency (EA) and Implementing Agencies (IAs)

Assumption

Political parties and interest groups are supportive of the changes Risk

Enforcement is not strong enough

2. Agricultural Land Management Enhanced

Law on Agricultural Land implemented by December 2014

Agricultural land use zoning, soil productivity potential mapping, and water use/irrigation efficiency management plan by December 2013 Implementation of management plan targets 30% women participants or beneficiaries by December 2013.

SDP progress and monitoring reports produced quarterly by the EA and IAs

Assumption

Political parties and beneficiaries are cooperative in the process Risk

Enforcement is not strong enough

3. Access to A commercial financing vehicle for rice SDP progress and Assumption

Appendix 3 8




Credit by Paddy Producers, Cooperatives, Rice-Millers, and Exporters Improved

contract farming and export promotion established by 2013 5,000 farmers/producers access finance (cumulative microfinance loan accounts of holders domiciled in rural areas) by 2017, 45% of loan accounts are for female borrowers 100 cooperatives, rice-millers, and exporters access to finance (by cumulative number of active loan accounts) by 2017

monitoring reports produced quarterly by the EA and IAs

Cost of credit is affordable Risk

Geographical outreach is limited

4. Paddy Production and Productivity Enhanced

20,000 ha of paddy land leveled by 2017 20,000 ha of paddy land equipped with irrigation and drainage based on the irrigation zoning concept to enable water saving by 2017


Assumption

Priority infrastructure is identified by beneficiaries and selected for financing Risk

Catastrophic climatic events interrupt implementation and natural disasters damage infrastructure

20,000 ha of paddy land with all-weather post harvesting facilities by 2015, with built-in designs to facilitate female operators and workers. 45% of workers in the drying facilities are female by 2015


Assumption

Facilities are affordable to low-income farmers Risk

Farmers are not willing to apply new facilities

100,000 ha of paddy land in Program-invested areas covered by risk mitigation programs (crop insurance scheme) directed towards vulnerable groups by 2017 The crop insurance scheme targets 45% women participants by 2017


Assumption

Insurance premium are affordable to low-income farmers Risk

Farmers are not willing to participate in crop insurance schemes

5. Efficient Program management and implementation

Five key implementation consultants mobilized within 3 months of loans and grants effectiveness to support SDP implementation Baseline surveys completed within 3 months of loans and grants effectiveness SDP performance and monitoring system disaggregated by sex and ethno-linguistic group operational within 3 months of effectiveness Rapid impact evaluation (comparative analyses to baseline profile) 3 months before the SDP‟s closing date

Notice to proceed from EA and IAs Baseline survey reports produced by an expert institution endorsed by EA and IAs SDP progress and monitoring reports produced quarterly by the EA and IAs Rapid impact evaluation submission by EAs 3 months before the SDP‟s closing date

Assumption

The EAs can identify and appoint qualified staff to manage and implement the Program activities and investment subprojects Risks

Provincial absorption capacity is insufficient Staff turnover is frequent The availability of qualified staff is limited

Appendix 3

9




At least 35% of EAs staff (excluding secretarial and administrative staff) is female (within 6 months of loans and grants effectiveness)

SDP progress and monitoring reports produced quarterly by the EA and IAs Staff registry in EA and IAs

Activities with Milestones (preliminary) Inputs

1. Rice Value Chain Strengthening

Finalization of the Law on Agricultural Cooperatives and supporting legal documents by March 2014

Finalization of Law on Agricultural Cooperatives and supporting legal documents by June 2014

Changes recommendations for Sub-decree on Contract Farming with particular focus on paddy/rice by 2012

Establishment of the “Open Paddy Market” Pilots in 4 locations by December 2013

Finalization of Law on Sanitary-Phyto-sanitary Handling for Agricultural Products by 2013

Establishment of strategies and implementation plans to promote rice seed production by private sector organizations by 2013

Changes recommendations in regulatory system related to trading of agro-chemicals by 2013

2. Agricultural Land Management Enhancement

Law on Agricultural Land implemented by December 2014

Agricultural land use zoning, soil productivity potential mapping, and water use/irrigation efficiency management plan by December 2013

3. Improvement of Access to Credit by Paddy Producers, Cooperatives, Rice-Millers, and Exporters

Setting up a commercial financing vehicle for rice contract farming and export promotion by 2013

Launch of finance outreach program with a menu of products for farmers and other rice value chain actors by October 2014

4. Paddy Production and Productivity Enhancement

Feasibility studies and detailed designs for 30 subprojects are approved for construction/implementation by December 2013

Completion of 30 subprojects by December 2017

Installation of 100 drying facilities powered by solar energy by 2015

Crop insurance pilot scheme is set up and operationalize in four provinces in 2016

5. Efficient Program management and implementation

Mobilization of implementation consultants within 3 months of loans and grants effectiveness

Completion of subproject baseline surveys completed within 3 months of loans and grants effectiveness

Establishment of SDP performance and monitoring system within 3 months of loans and grants effectiveness

Completion of rapid impact evaluation (comparative analyses to baseline profile) 3 months before the SDP‟s closing date

Total cost: $90.0 million

1. ADB - $55.0 million Amount

($ million)

Program - Tranche 1 15.0


Investment - Civil Works 15.0

Project Management 2.0

Consulting Services 3.0

2. GAFSP - $14.6 million



Capacity Development 0.6

3. SCF (PPCR) – Loan $5.0 million


4. SCF (PPCR) – Grant $4.5 million

Crop Insurance Pilots 4.5

5. The RGC – $10.9 million

Resettlement 4.0

Incremental Staff Costs 4.0

Project Management 2.9

ADB - Asian Development Bank; ADF – Asian Development Fund; EA – executing agency; GAFSP - Global Agriculture and Food Security Program; IA – implementing agency; MAFF – Ministry of Agriculture, Forestry and Fisheries; RGC – Royal Government of Cambodia; SCF (PPCR) – Strategic Climate Fund (under Pilot Project for Climate Resilience); SDP – Sector Development Program; and SME – small and medium-sized enterprise. Source: Asian Development Bank.

10 Appendix 4

INITIAL POVERTY AND SOCIAL ANALYSIS

Country: Cambodia Project Title: Climate-Resilient Rice Commercialization Sector Development Program

Lending/Financing Modality:

Sector Development Program Department/ Division:

Southeast Asia Department Environment, Natural Resources, and Agriculture Division

I. POVERTY ISSUES

A. Link to the National Strategic Development Plan and Country Partnership Strategy

About 80% of Cambodia's population live in rural areas and 71% depend primarily on agriculture and livestock for their livelihood. About 90% of the poor live in rural areas. Income inequality has increased, particularly in rural areas, with slow agricultural growth exacerbating inequalities. Only 21% of land cultivated for food crops is under irrigation. Lack of controlled irrigation is a major constraint in raising agricultural production. Improving agricultural productivity and diversification is a key component of the Rectangular Strategy, underpinning the National Strategic Development Plan (NSDP). ADB‟s country partnership strategy (CPS) is in alignment with the Rectangular Strategy as it includes broad-based economic growth through investments in physical infrastructure; investments in agriculture and irrigation; community-based sustainable management and conservation of natural resources in the Tonle Sap basin; decentralization and de-concentration initiatives to strengthen local participation in government; and improvements in public service delivery. Since 1999, ADB has been providing assistance in the water resources sector in Cambodia through technical assistance (TA) and loan projects. Continued support to the sector, building on lessons learned, is in line with CPS. The Agricultural Commercialization and Resource Conservation Sector Development Program is an integrated sector approach, combining policy reforms, institutional support, and hardware and software infrastructure investment.

B. Targeting Classification

General Intervention Individual or Household (TI-H) Geographic (TI-G) Non-Income MDGs (TI-M1, M2, etc.)

Explain the basis for the targeting classification: Interventions are to promote medium and long term economic growth and food security

C. Poverty Analysis

Key Issues

The incidence of poverty in Cambodia was reduced from 35% in 2004 to 30% in 2007, but rural income distribution inequality has increased. More than 85% of the poor live in rural areas and about 70% depend on agriculture for their livelihoods. Based on the 2008 Commune Database, poverty in the project area averages 35%, with the highest poverty incidence of 45% in some areas of Kampong Thom province. The World Food Program Commune Level Poverty Index (2002) ranks the project provinces of Siem Reap, Banteay Meanchey and Kapmpong Thom provinces as second, seventh, and eleventh in terms of vulnerability to food insecurity among the 24 provinces. This is a reflection of poverty incidence. The multiple dimensions of poverty are reflected in the small land holdings per family, the shortage of household labor, low farm productivity, unreliable supply of water for agricultural production, inadequate knowledge in efficient farming practices, land holding insecurity, and lack of off-farm earning opportunities. The RGC has set ambitious targets in exporting of 1.0 million tons milled rice per annum by 2015. The objectives of the Agricultural Commercialization and Resource Conservation Sector Development Program (SDP) is to support the Rice Export Policy through enhanced productivity, higher value addition and less risky agriculture, strengthened agricultural value chains, and improved agricultural marketing and increasing exports. Design Features

The SDP will focus on agricultural productivity enhanced, agricultural value chains strengthening, and agricultural trade facilitation. It has strong interventions in poverty reduction with its overall impact being sustainably improved incomes of rural households in the Southern Economic Corridor. Poverty will be among key criteria in selecting investment subprojects. Policy reforms included in the program are expected to reduce poverty for SDP beneficiaries. Improved regulations, arising from revision of regulations, policies and institutional arrangements to promote agricultural productivity, value chains strengthening will have significant positive impact on poverty reduction. Detailed analyses will be conducted during the PPTA.

Appendix 4 11

II. SOCIAL DEVELOPMENT ISSUES

A. Initial Social Analysis

Land issues. Poverty is linked to lack of access to and ownership of productive land. The situation is worsening because of

increasing landlessness, land grabbing, land conflict, slow processing of land titling, and degradation of forestry and fishery resources. The average size of landholdings is 1.46 ha/household and the incidence of landlessness accounts for 7% of total households. The 2008 Commune Database indicates that more than 32% of households have less than 1 hectare of usable agricultural land. The project aims to increase both wet and dry season yields of agricultural production on 15,000 ha land through rehabilitation of existing small schemes. Households headed by women. The incidence of households headed by women is significant in Cambodia. Households headed

by women employ a range of livelihood strategies to cultivate their land: hire tractors (utilizing older children's funds from migration), depend on older male children to take up household agricultural labor shortages, exchange labor between households, and undertake informal credit arrangements with money lenders. As households headed by women get older and have fewer economically active members, poverty becomes more deeply entrenched than in households headed by men. Migration. Moving to other areas has been reported as a coping strategy to counter shortfalls in incomes and rice production. While

migration occurs throughout the year, it intensifies during May–November. Migration of male members of households hampers agricultural production, resulting in increased workloads for female members. Ethnic minority groups. It is envisaged that there are non-Khmer groups living in the prospective SDP area. Detailed analyses will

be conducted during the PPTA, especially related to indigenous people knowledge and rights.

B. Consultation and Participation

1. Stakeholder consultation will be conducted, comprising (i) an extensive round of meetings with ministries, agencies, nongovernment organizations (NGOs) and farmers in selected scheme areas; and (ii) multi-stakeholder group focus discussions on key issues. Discussions will be held by ADB mission with the EAs and line ministries in respect of key policy issues and financing proposals. In addition to national and provincial agencies, beneficiary consultations, using participatory rural appraisal will be conducted for all potential subprojects. IP groups, if any, will be consulted separately to solicit their ideas and concerns related to the SDP. 2. What level of consultation and participation (C&P) is envisaged during the project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment 3. Was a consultation and participation plan prepared? Yes No A consultation and participation plan will be prepared during the PPTA. The design of the SDP will incorporate a number of mechanisms to ensure participation by a wide range of government and non-government stakeholders.

C. Gender and Development Proposed Gender Mainstreaming Category:_____EGM_____

Key Issues. ADB project experience to date in Cambodia revealed that rural women are heavily involved in agricultural production.

Their contribution to the household economy is mainly as unpaid family labor. The incidence of households headed by women is significant. In relative terms, households headed by women are poorer, economically and socially. They face disadvantages in terms of access to land, lack of adult labor for income earning and agriculture cultivation and are therefore highly vulnerable to sudden shocks that may intensify and deepen poverty. Priority issues include lack of food security, indebtedness arising from crop losses, access to safe drinking water, women's heavy workload, and poor health. Women identified the following as key needs: food security, secured irrigation and water management for rice production, training and capacity building for new occupations, access to institutional credit, access to rural infrastructure (e.g., roads, markets, health centers), and access to extension and training for improved crop production. Women's contributions in the household economy and agriculture production tend to be overlooked. Key Actions. Measures included in the design to promote gender equality and women‟s empowerment are to achieve at least 45%

women being direct beneficiaries of investment activities and at least 35% of female staff (excluding secretarial and administrative staff) of EA involved in SDP implementation and management. A gender analysis will be conducted for all SDP components as part of the preparation of GAP. GAP will also look at the potential to improve women entrepreneur skills in agriculture value chains.

III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS

Issue Nature of Social Issue Significant/Limited/

No Impact/Not Known Plan or Other Actions Required

Involuntary Resettlement

Civil works to rehabilitate subproject irrigation schemes will be confined within acquired and demarcated rights-of-way of canals and reservoirs. Farmers

Limited impact

Resettlement Plan Resettlement Framework Environmental and Social Management System Arrangement

None

12 Appendix 4

affected by the seasonal inundation of rehabilitated reservoirs will be helped to adapt to a new cropping schedule. Potential for voluntary resettlement/contribution will be examined prior to establishment of post harvest facilities.

Uncertain

Indigenous Peoples

Ethnic minority groups are unlikely to be affected by rehabilitation and improvement of irrigation and rural infrastructure since their villages are located in the upland area of the commune. Further details will be documented during the PPTA.

No negative impact

Indigenous Peoples Plan Indigenous Peoples Framework Environmental and Social Management System Arrangement

None Uncertain

Labor

Employment opportunities Labor retrenchment Core labor

standards

The SDP will have positive impact in improving working conditions for farmers. Improvements in agriculture productivity will allow farmers to be involved in agriculture at home rather than migrate.

Moderate positive impact. Plan Other Action No Action Uncertain

Affordability Affordability for solar energy and other technology will be analyzed.

No impact. Action No Action Uncertain

Other Risks and/or Vulnerabilities

HIV/AIDS

Human trafficking

Others (conflict, political instability, etc.)

None No impact. Plan Other Action No Action Uncertain

IV. PPTA/DUE DILIGENCE RESOURCE REQUIREMENT

1. Do the TOR for the PPTA (or other due diligence) include poverty, social and gender analysis and the relevant specialist/s? Yes No If no, please explain why.

2. Are resources (consultants, survey budget, and workshop) allocated for conducting poverty, social and/or gender analysis, and C&P during the PPTA/due diligence? Yes No If yes, please provide details. If no, please explain why.

Appendix 5 13

PROJECT PREPARATORY TECHNICAL ASSISTANCE

A. Justification

1. The project preparatory technical assistance (PPTA) will be required to help define the scope and procedures for identifying policy interventions, identification of subprojects, cost estimates and financing plan, implementation and procurement arrangements of the proposed SDP.

2. The PPTA will conduct a comprehensive sector analysis to identify critical binding constraints in rice commercialization and resource conservation in Cambodia. It will help formulate a tranche-based policy matrix for the program component, and designing an investment component and an associated technical assistance. The PPTA will also (i) provide technical inputs in pre-screening subprojects for financing; and (ii) conduct economic appraisals, financial management assessments, and due diligence on social and environmental safeguards. The PPTA is critical in ensuring that the proposed SDP will include policy and regulatory reforms that are accompanied by well-sequenced investments that promote sustainable commercialization of rice while conserving its underlying agro-ecological system.

B. Major Outputs and Activities

3. The major outputs and activities are summarized in Table A5.1.

Table A5.1: Summary of Major Outputs and Activities

Major Activities Expected Completion

Date (Draft) Major Outputs

Expected Completion Date (Final)

Conducting sector analysis and preparing policy matrix

15 January 2012 Sector analysis and draft policy matrix

1 February 2012

Preparation of work program and methodology

15 February 2012 Work program and methodology 1 March 2012

Identification of three representative subprojects and commencement of feasibility studies

1 March 2012 Representative subprojects identified and feasibility studies commenced

15 March 2012

Designing preliminary SDP framework 1 April 2012 Preliminary SDP framework prepared

16 April 2012

Firming up the SDP design 30 May 2012 Final SDP design prepared 1 June 2012

Conducting feasibility studies and preparing bidding documents for three representative subprojects

1 July 2012 Feasibility studies and bidding documents prepared for three representative subprojects

15 July 2012

Preparing bidding documents for (i) SDP implementation consultants; and (ii) critical packages of goods and works for the first 18 months of implementation

1 July 2012 Bidding documents for (i) SDP implementation consultants; and (ii) critical packages of goods and works for the first 18 months of implementation prepared

15 July 2012

Preparing final report 20 September 2012 Final Report prepared in RRP and Linked Documents format

8 October 2012


C. Cost Estimate and Proposed Financing Arrangement

4. The TA is estimated to cost $1.5 million, of which $1.0 million will be financed by ADB‟s TASF-IV and $0.5 million by Strategic Climate Fund under the Pilot Program for Climate Resilience (PPCR) on a joint co-financing basis and administered by ADB. The detailed cost estimate is presented in Table A5.2.

14 Appendix 5

Table A5.2: Cost Estimates and Financing Plan ($)

Item

Total Costs

A. ADB Financinga

1. Consultants

a. Remuneration and per diem

i. International consultants (28 person-months)

634,000

ii. National consultant (42 person-months)

144,500

b. International and local travel

40,000

2. Equipment b

20,000

3. Workshops, training, seminars, and conferences c

15,000

4. Vehicles d

27,000

5. Surveys e

15,000

6. Miscellaneous administration and support costs f

25,200

7. Representative for contract negotiations

20,000

8. Contingencies

59,300

Sub-Total (A)

1,000,000

B. Strategic Climate Fund Financing

g

1. Consultants

a. Remuneration and per diem

i. International consultants (14 person-months)

308,000

ii. National consultant (11 person-months)

35,750

b. International and local travel

38,000

c. Reports and communications

10,000 2. Surveys

h

30,000

3. Miscellaneous administration and support costs i

24,000

4. Contingencies

54,250

Sub-Total (B)

500,000

Total 1,500,000

a Financed by Technical Assistance Special Fund (TASF-IV).

b Equipment include: 3 desktop computers with software, 2 laser printers, 1 photocopier, 2 steel cabinets, 1 digital camera, 1 GPS set, and other office equipment and furniture as required. Estimated costs are $20,000.

c Costs will be administered by the Consultant. Workshops include: (i) PPTA‟s inception, interim and final workshops ($8,000); and (ii) workshop on rural-urban and sub-regional linkages ($7,000). All workshops will be held in Phnom Penh.

d Includes vehicle rental of 180 vehicle-days at $150 per day for use in Phnom Penh and provinces.

e This budget will contribute to the cost of a farm investment climate assessment (ICA) led by CARM in association with ERD and the World Bank. The assessment will serve to inform the design of the SDP.

f Includes support staff (36 person-months at $700 per month): $25,200

g Under the Pilot Program for Climate Resilience, administered by ADB.

h Includes various productivity and climate change related studies

i Includes office operation costs of 12 months at $2,000 per month ($24,000)

Source: Asian Development Bank estimates.

D. Consulting Services

5. The PPTA will require 42 person months of international consultants and 53 person months of national consultant. The consulting services requirement is shown in Table A5.3. ADB will engage 4 international consultants and 4 national consultants on an individual basis. The remaining international consultants and national consultants will be engaged through a firm, or association of firms, based on simplified technical proposal procedures evaluated using the quality-and cost-based selection (80:20) method. The ADB will engage all the consultants in accordance with ADB‟s Guidelines on the Use of Consultants (2010, as amended from time to time).

Appendix 5 15

Table A5.3: Summary of Consulting Services Requirement

International National

Name of Positions PM Name of Positions PM

1. Engaged on an individual basis

1. Governance and Institutions Specialist/SDP Design Coordinator

5.0 1. Governance and Institutions Specialist/SDP Design Coordinator

5.0

2. Natural Resources Conservation Policy Specialist 3.0 2. Start-up Consultant – Procurement 2.0

3. Business-focused Resource Efficiency Specialist 3.0 3. Start-up Consultant – Monitoring and Evaluation 2.0

4. Geographical Information System (GIS)/Spatial Planning Specialist

2.0 4. GIS/Spatial Planning Specialist 3.0

Subtotal 13.0 Subtotal 12.0

2. Engaged through a firm or an association of firms

1. Rural Development Specialist (Team Leader) 6.0 1. National Deputy Team Leader 6.0

2. Rural Infrastructure Specialist/Civil Engineer 3.0 2. Rural Infrastructure Specialist/Civil Engineer 6.0

3. Agricultural Extension & Farmers‟ Organization Specialist 2.0 3. Agricultural Extension & Farmers‟ Organization Specialist

4.0

4. Agricultural Marketing & Value Chain Specialist 2.0 4. Agricultural Marketing & Value Chain Specialist 4.0

5. Agro-industry SME Development & Financing Specialist 2.0 5. Agro-industry SME Development & Financing Specialist

3.0

6. Crop Insurance Specialist 2.0 6. Legal Specialist 4.0

7. Agricultural Land Use Planning and Zoning Specialist 2.0 7. Environment and Climate Change Specialist 2.0

8. Environment and Climate Change Specialist 2.0 8. Subproject Screening & Procurement Specialist 4.0

9. Subproject Screening & Procurement Specialist 3.0 9. Social Safeguards and Gender Specialist 4.0

10. Economist and Financial Specialist 2.0 10. Resettlement Specialist 4.0

11. Social Safeguards and Gender Specialist 2.0

12. Resettlement Specialist 1.0


Grand Total 42.0 Grand Total 53.0

Sources: Asian Development Bank estimates.

6. The terms of references for the PPTA consultants are outlined in paras. 7-25. Details are in Supplementary Appendix B.

7. Rural Development Specialist (Team Leader) (international - 6pm) and National Deputy Team Leader (national - 6 pm). The TL, with support from the Deputy TL and in coordination with the whole consultant team, is responsible for the design details of the SDP, required documentation for Board consideration, and assistance in implementation readiness and startup.

8. Governance and Institutions Specialist/SDP Design Coordinator (international - 5pm, national - 5 pm). The specialists are responsible for macro-economic and sector analyses, SDP policy matrix with specific policy actions (by tranche), and monitoring indicators, governance risk assessment and engagement plans.

9. Natural Resources Conservation Policy Specialist (international - 3pm). (S)he is responsible for institutional and policy analyses with focus on resource-conserving agricultural commercialization, and proposal of related investment activities.

10. Business-focused Resource Efficiency Specialist (international - 3pm). (S)he is responsible for documentation of resource utilization profile with focus on paddy producers and rice millers, and proposed options for executing business-focused climate change adaptation.

11. Geographical Information System (GIS)/Spatial Planning Specialist (international - 2pm, national - 3pm). The specialists are responsible for the production of maps required for land use planning and zoning, forest cover and land use classification, environmental/social and climate change risk/vulnerability mapping, and cross-sector investment sequencing.

12. Rural Infrastructure Specialist/Civil Engineer (international - 3pm, national - 6pm). The specialists are responsible for design of the rural infrastructure investment component with scheduled activities, associated cost estimates and phasing.

16 Appendix 5

13. Agricultural Extension and Farmers’ Organization Specialist (international - 2pm, national - 4pm). The specialists are responsible for documentation and assessment on diffusion of irrigation water efficiency technologies, and proposals to increase adoption of technologies.

14. Agricultural Marketing and Value Chain Specialist (international - 2pm, national - 4pm). The specialists are responsible for documentation and assessment on agricultural marketing and value chains, and proposal of operation models for value chain strengthening.

15. Agro-industry SME Development and Financing Specialist (international - 2pm, national - 3pm). The specialists are responsible for assessing challenges faced by paddy producers, rice millers, and exporters in accessing finance from the formal financial sector; and formulating appropriate market-based financing options.

16. Crop Insurance Specialist (international - 2pm). (S)he is responsible for assessment of past and ongoing crop insurance initiatives in Cambodia and documentation of best practices and designing a pilot project to test the feasibility of crop insurance for farmers.

17. Legal Specialist (national - 4pm). (S)he is responsible for identification of the key legal and regulatory issues and proposals of appropriate legal, regulatory and institutional initiatives, or modifications required for successful execution of the SDP.

18. Agricultural Land Use Planning and Zoning Specialist (international - 2pm). (S)he is responsible for assessing agricultural land management, and proposing measures to enhance agricultural land use planning and zoning for various crops.

19. Environment and Climate Change Specialist (international - 2pm, national - 2pm). The specialists are responsible for formulating adaptation and mitigation options, and preparing environmental assessment and review framework following ADB‟s prevailing safeguards policy.

20. Subproject Screening and Procurement Specialist (international - 3pm, national - 4pm). The specialists are responsible for screening subprojects, procurement capacity assessment (PCA), and preparing procurement plan and key bidding documents.

21. Economist and Financial Specialist (international - 2pm). (S)he is responsible for preparing financial and economic analyses, cost estimates, financing plan, and financial management assessment (FMA) on SDP-related agencies.

22. Social Safeguards and Gender Specialist (international - 2pm, national - 4pm). The specialists are responsible for preparation of documents required for the RRP in compliance with ADB‟s prevailing social safeguards and gender mainstreaming policies.

23. Resettlement Specialist (international - 1pm, national - 4pm). The specialists are responsible for preparation of resettlement framework for the SDP as a whole and resettlement plans for the representative subprojects in compliance with ADB‟s prevailing safeguards policy.

24. Start-up Consultant – Procurement (national - 2pm). (S)he is responsible for assisting the EA/IAs in recruiting the SDP implementation consulting service to ensure timely start.

25. Start-up Consultant – Monitoring and Evaluation (national - 2pm). (S)he is responsible for assisting the EA/IAs in establishing monitoring systems for the SDP and subprojects.

E. Implementation Arrangements

26. MEF will be the EA for the PPTA. The MEF will provide office space and counterpart staff. Disbursements under the PPTA will be done in accordance with the ADB‟s Technical Assistance Disbursement Handbook (2010, as amended from time to time). The Consultants will procure equipment through shopping in accordance with ADB‟s Procurement Guidelines (2010, as amended from time to time). Upon completion of the PPTA, equipment procured under the PPTA will be transferred to the EA. The PPTA will commence on 01/12/2011 and complete on 30/08/2013. The proposed PPTA processing and implementation schedule is listed in Table A5.4.

Appendix 5 17

Table A5.4: Proposed Technical Assistance Processing and Implementation Schedule

Major Milestones Expected Completion Date

TA commencement 01/12/2011 Inception Report 01/03/2012 Interim Report 16/04/2012 Draft Final Report 01/06/2012 Final Report and Startup Support 08/10/2012–30/06/2013 TA Completion 30/08/2013 Financial Closure 30/10/2013

Source: Asian Development Bank

Supplementary Appendix A 1

SUPPORTING INFORMATION ON THE PROPOSED SECTOR DEVELOPMENT PROGRAM

A. Rationale

1. Development Context. During the last decade, Cambodia has achieved impressive economic growth with gross domestic products (GDP) averaging 10% per annum during the 2004-2010 period. Despite its declining GDP share from 46% in the 1990‟s to 34% in 2010, agriculture remains an important sector in the national economy. It is an important source of livelihood for 85% of the population. Paddy production covers 84% of cultivated land and contributes about 38% of agricultural value added or 13% of the national GDP in 2010. Paddy production has been crucial in creating employment and reducing the national poverty rate from 47% in 1993 to 30% in 2010. The Royal Government of Cambodia (RGC) set the annual GDP growth target of 7% and poverty reduction rate of 1% per annum from 2009 onwards. Given its significant share in the national GDP, rice continues to play a crucial role in enhancing macro-economic stability, long term food security, and poverty reduction. However, to achieve economic growth on a broader and sustainable basis, substantial constraints in rice value chain need to be removed.

2. Cambodia has achieved surpluses of paddy averaging 2 million tons per annum during the 2008-2010 period. However, nearly one-half of the provinces in Cambodia are food deficit. Access to rice is compromised by low income, poor infrastructure, limited marketing and distribution channels, and paddy production that is weather-dependent and utilizes low levels of technology. Many households face a deficit for one to two months per year since paddy crop productivity remains relatively low. Although Cambodia exports rice, over 90% of its export volume is in the form of unprocessed paddy leaving for Thailand and Viet Nam. The cost and logistics of moving products and processing them between the borders and final markets often compel farmers to sell products in raw or un/semi-processed form. Much of this foreign trade is informal and so unrecorded. In addition, the cost of complying with business regulations and the general inadequacy of both software and hardware infrastructure along the rice value chain are a significant deterrent to trading through formal channels.

3. A number of fundamental binding constraints in rice commercialization are observed: (i) production is largely traditional and unorganized; (ii) value chains are weak and fragmented; (iii) agro-industry small and medium-sized enterprises (SME) are under-developed; (iv) intra- and inter-sector connectivity is limited particularly with energy, finance and transport constraining production and market access; and (v) domestic marketing standards are low and rice trading with regional and global markets is limited. These constraints are due largely to the lack of an enabling legal and/or regulatory environment for strengthening market linkages, productivity enhancement, organized production, and sustainable access to finance, among others.

4. While Cambodia is endowed with ample land and water resources favorable for paddy and other crop production, use efficiency of these resources is suboptimal due to limited capacity in agricultural land management and underinvestment in increasing total factor productivity. This situation is exacerbated by the damages caused by droughts and floods due to unpredictability of rainfall and dry spells. In addition, three-quarters of Cambodia‟s agriculture is rain-fed and highly prone to the effects of seasonal climate variability and impacts of climate change, which will amplify food security issues in the long term. Water management is a particular challenge for dry land and irrigated cropping since the flatness of many prime rice-cropping areas makes it hard to control floods through drainage management and impounding water for irrigation use when needed. Therefore, it is critical for Cambodia to manage agricultural land efficiently and effectively by practicing sound agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping and management.

2 Supplementary Appendix A

5. To address these constraints, in April 2010, the RGC promulgated the 2010-2013 Strategy on Agriculture and Water (SAW), aiming to improve food security and economic growth through (i) enhancing agricultural productivity, diversification, commercialization, and (ii) improving water resources development and management. The RGC also issued the “Policy on the Promotion of Paddy Production and Rice Export” (the Rice Policy) 1 in June 2010, elaborating strategies to achieve annual paddy surplus of 4 million tons for domestic staple food and annual export of 1.0 million ton by 2015. These strategies, together with natural resources management and climate change adaptation/mitigation measures,2 reflect strong determination of the RGC in addressing critical sector binding constraints. While the objectives are sound, implementation will entail significant adjustment cost (estimated at $500 million). The ADB-financed Water Resources Management Sector Development Program (WRMSDP) covered part of the cost to enhance water resources management. There is a critical funding gap in addressing the commercialization aspects of rice and other agricultural commodities to ensure policy objectives are achieved in a sustainable manner.

6. The Climate Resilient Rice Commercialization Sector Development Program (SDP) is proposed to support and accelerate the efficient and effective implementation of the SAW and the Rice Policy3. It will address food security and rice commercialization by prioritizing: (i) strengthening the rice value chain; (ii) improving the legal and regulatory framework in agricultural land management; (iii) improving access to credit by paddy producers and rice millers/exporters; and (iv) enhancing paddy production and productivity through improved irrigation water use efficiency, establishment of paddy post-harvesting facilities, and paddy crop insurance pilots.4 The SDP will (i) address major strategic thrusts of the 2011–2013 Country Partnership Strategy, and sector strategies and roadmap; (ii) maximize impacts and economic returns of the WRMSDP; and (iii) complement the WRMSDP and other on-going sector initiatives by emphasizing the commercialization aspects of rice.

7. Innovative Features. The SDP is among the first initiatives in Southeast Asia that contemplates rice commercialization and simultaneously addresses resilience of its underlying agro-ecological system. As a matter of fact, the evolution and development of a commercial rice value chain will create pressure on natural resources which may cause degradation of the soil, loss of biodiversity or soil and/or water pollution. The SDP‟s interventions will increase resilience by promoting sound agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping. In this regard, the SDP, if implemented successfully, will be a role model for climate resilient cropping practices for rice in response to growing global food demand. Moreover, although the primary focus of the SDP will be on rice commercialization, the enabling legal, regulatory and institutional conditions put in place for rice will also create favorable conditions for the commercialization of other agricultural commodities. This will enable Cambodia in promoting agricultural diversification and economic growth on a broader and sustainable basis.

8. Justifications for Adopting the SDP Modality. The proposed interventions include a policy reform component, an investment component, and an associated technical assistance.

1 The implementation of the Rice Policy is being evaluated by the RGC. The final results will be presented to the Government-Private Sector Forum in November 2011. The SDP design will be informed by these findings.

2 These include: (i) Royal Decree on 10 April 2001 establishing the Tonle Sap Biosphere Reserve, and establishing Tonle Sap Authority in 17 August 2009, (ii) Sub-decree 197 on 29 August 2011 to set the boundary of the flooded forests in six of the Tonle Sap provinces; and (iii) National Adaptation Program of Action to Climate Change (NAPA) and Strategic Program for Climate Resilience (SPCR).

3 The preliminary SDP proposal takes into account lessons learnt from past and ongoing initiatives financed by ADB and development partners. It will also be designed to ensure synergy maximization and complementarily. Relevant information illustrated by initial GIS maps, is in Supplementary Appendix A.

4 The SDP will be designed within the context of Cambodia‟s SPCR with a particular focus on enhancing climate resilient agriculture and food security.


The SDP modality is preferred and proposed for the following reasons. Commercialization of rice that addresses resilience of its underlying agro-ecological system will entail adjustments in legal framework and relevant regulations coupled with institutional strengthening of relevant actors. While this is necessary, it will not be sufficient to unlock the potential of supply chain actors including private sector investors and individual households. Therefore, policy and regulatory reforms will have to be accompanied by well sequenced/timed investments that enhance factor productivity. In this regard, adopting the SDP modality for the proposed interventions is not only desirable, but necessary. Moreover, the RGC is firmly committed to rice commercialization to enhance economic growth and food security. Significant adjustment costs are associated with its timely and effective implementation.

B. Impact, Outcome, and Outputs

9. Impact and Outcome. The impact of the proposed SDP will be improved income of farming households and rice-related SMEs. The outcome will be climate resilient rice commercialization.

10. Outputs and Activities. The proposed SDP will have five outputs. Outputs 1, 2 and 3 will be covered by the program component, while Output 4 will be financed by the investment component. Output 5 is efficient program management and implementation. The SDP‟s program activities will be applied at the national sector level and its investment activities will be planned for the GMS Southern Economic Corridor. 5 Subject to further study during the project preparatory technical assistance (PPTA), the project investment is proposed to cover seven Tonle Sap basin provinces including: Siem Riep, Banteay Meancheay, Kampong Cham, Kampong Thom, Kampong Chhnang, Battambang, and Pursat.

11. Output 1 – Rice Value Chain Strengthened. The objective of this output is to relax constraints in enterprise formation and value chain defragmentation in the agricultural sector. It aims to improve and create enabling regulatory and business friendly conditions for rice commercialization. This will also create a solid foundation for developing more vibrant agro-industry entrepreneurship, promote stronger links between production and markets, and systematize primary production. Specifically, the program component will assist the RGC in:

Finalizing the Draft Law on Agricultural Cooperatives and issuing required supporting legal documents, and enforcing the Law with particular focus on business registration and capacity development of paddy production cooperatives;

Reviewing the Sub-decree on Contract Farming and establishing an appropriately composed review committee in order to improve the Sub-decree or supplement it with an additional Sub-decree, and enforcing the Sub-decree with particular focus on paddy/rice;

Piloting the development of the “Open Paddy Market” initiative to build the capacity of cooperatives in providing services to the members (including but not limited to input-related credit/advance, paddy mortgages scheme, paddy drying, quality classification and storage services);6

5 The focus will be on the Central Sub-Corridor (Bangkok - Phnom-Penh - Ho Chi Minh - Vung Tau), in order to gain maximum leverage for value chain strengthening from (i) ongoing market development in proximity to population centers and export points; and (ii) current input supply development of existing agricultural activities. It is also important to note that along this corridor, much of Cambodia‟s rice is moved to Phnom Penh, Sihanoukville, Thailand, and Viet Nam.

6 This will promote linking cooperatives and private sector firms to the rice producers through contract farming.


Preparing the Law on SPS Handling for Agricultural Products together with associated supporting legal documents, and developing appropriate implementation mechanisms to allow for better enforcement and monitoring of the Law, with particular focus on paddy/rice;

Reviewing the current status of local production and distribution of high yielding seeds and establishing strategies and implementation plans to promote rice seed production by private sector organizations to build a strong foundation for commercialization of rice seed; and

Improving the regulatory system for trading agro-chemicals to better ensure quality control. This will involve (a) reviewing progress achieved and identifying major outstanding issues and areas where progress has been slow; (b) proposing necessary additional/revised policy, legal and regulatory measures; and (c) implementing policy, legal and regulatory measures proposed.

12. Output 2 – Agricultural Land Management Enhanced. The objective of this output is to improve the regulatory framework and institutional capacity for planning, implementing, managing, monitoring sound agricultural land use zoning, soil productivity potential mapping, and water use/irrigation efficiency management. This will help ensure that rice production will be implemented in a systematic and organized manner without compromising the natural resources base. Specifically, the program component will assist the RGC in:

Finalizing the Draft Law on Agricultural Land together with associated supporting legal documents, and developing appropriate implementation mechanisms to allow for better enforcement and monitoring of the Law, with particular focus on paddy/rice;

Preparing the framework for agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and environmental and climate change risk/vulnerability mapping and identifying high priority areas for paddy production; and

Preparing institutional mapping (to include clear identification of roles and responsibilities and capacity building needs assessment) and implementation guidelines for planning, implementing, managing, and monitoring NRM with regard to land use zoning, productivity potential mapping, and water use/irrigation efficiency management.

13. Output 3 – Access to Credit by Paddy Producers, Cooperatives, Rice-Millers, and Exporters Improved. The objective is to increase credit access to enable paddy producers to purchase required farm inputs such as quality seeds and fertilizers, help rice millers/exporters upgrade milling/packaging equipment, and make capital available for the millers/exporters to purchase paddy during harvest seasons for export processing and necessary inventory. Specifically, the program component will assist the RGC in:

Commissioning a technical study, overseen by the Committee on Economic and Financial Policies, to assess the challenges faced by paddy producers, rice millers, exporters and other agricultural SMEs in accessing finance from the formal financial sector; and

Based on the results of the technical study, formulating appropriate market-based financing options to help paddy producers, rice millers, exporters and other agricultural SMEs access finance in a sustainable manner.

14. Output 4 – Paddy Production and Productivity Enhanced. The objective is to improve agricultural infrastructure for paddy crops to be more climate-resilient7 and productive to enhance food security and increase rice surplus for export. The interventions aim to create a

7 The design of this output will be aligned with the framework of the Pilot Program for Climate Resilience (PPCR) for Cambodia endorsed by the PPCR Sub-committee on 3 August 2011 and the PPCR Monitoring and Evaluation Framework.


solid foundation for promoting investment of households and private sector entities in farm mechanization, post-harvest handling and crop insurance. Specifically, the investment component will assist the RGC in:

Enhancing irrigation water use efficiency. These will consist of the following sub-activities: (i) land leveling to increase water productivity, and reduce energy consumption and costs; (ii) design of the irrigation systems based on the concept of irrigation zones; and (iii) installation and operation of water saving irrigation systems;

Establishment of paddy post harvesting facilities. This will involve identification of priority paddy production area in the proposed provinces and installation/construction of post-harvest handling facilities, including piloting post-harvest facilities powered by renewable energy (solar) paddy drying equipment; and

Pilot testing crop insurance using the weather-based index. This will involve the evaluation of recent findings from studies on crop insurance in Cambodia and the preparation of a plan for a pilot project to test a paddy producers‟ compensation scheme in selected provinces targeting the most vulnerable farming households. The pilot test will entail designing, developing and implementing an appropriate micro-level weather index insurance scheme.

15. Output 5 – Efficient Program Management and Implementation. The objective is to ensure smooth operation, effective monitoring, adequate implementation support, and technical expertise needed for subprojects and overall program management.

C. Lessons Learnt and Synergy Maximization

16. Lessons Learnt. In reviewing the past and on-going projects and programs, the 2011-13 CPS notes, among other things, that (i) “… a medium term approach is needed with greater understanding of the political complexity of reforms and the capacity of institutions to implement reforms”; (ii) “ … continuity in capacity building support is needed”; (iii) “simple designs are needed but recognizing project synergies, …”; and (iv) “interventions across a number of key constraints are necessary to address sector issues such as value chains and farm productivity, but any one operation should not be overly complex”.

17. Synergy Maximization. The preliminary SDP design and its geographical locations are proposed taking into account past, ongoing, and planned initiatives funded by ADB and development partners in order to avoid duplication and maximize resource efficiency (refer to preliminary GIS Map 1 and Map 2 for illustration).

18. The completed Agriculture Sector Development Program (ASDP) has achieved progress in (i) promoting access to productive land, water, improved seeds, and other quality agricultural inputs; (ii) improvement in the efficiency of rubber production, and the elimination of direct State interventions in the agricultural input and output markets; and (iii) assistance to agricultural commercialization by rationalizing agricultural institutions and improving access to effective research and extension services at the local level. However, major works remains to be done. First, while access to productive land has been improved by the enhanced regulatory and policy framework, further improvement in the regulatory and policy framework is needed to rationalize agricultural land use planning and zoning. Second, the ASDP focused on State-owned enterprises and rubber/ fish rather than paddy production while paddy is the mainstay of the majority of the population. Third, The ASDP addressed some constraints in productivity and production at the level of farm households rather than systematically addressing the rice value chains. Finally, the ASDP did not address constraints in access to credit by primary producers and other actors along the value chains. The SDP will fill in some of these critical gaps.


19. On natural resource protection and conservation in the Tonle Sap basin, the Royal Government of Cambodia (RGC) has been putting an effort in the form of issuing Royal Decree on 10 April 2001 to establish the Tonle Sap Biosphere Reserve, establishing Tonle Sap Authority in 17 August 2009, and issuing Subdecree 197 on 29 August 2011 to set the boundary of the flooded forests in six of the Tonle Sap provinces. ADB has been supporting the RGC‟s conservation effort under the Tonle Sap Initiative (TSI) by formulating the Tonle Sap Basin Strategy and providing a series of technical and investment support to address poverty, conservation and economic development issues in an integrated manner. Implementation experience indicates that there is a critical need for closer alignment of the TSI with the RGC‟s sectoral priorities in order to build the RGC‟s capacity to address natural resources management. The Water Resources Management Sector Development Program (WRMSDP) was formulated to enhance the RGC‟s capacity to manage water resources and deliver irrigation services. In this context, what needs to be enhanced further is the RGC‟s capacity to address resilience of the agro-ecological system, which is best achieved by practicing sound agricultural land use zoning, soil productivity potential mapping, water use/irrigation efficiency management, and managing environmental and climate change risk/vulnerability. The SPD will incorporate these interventions in its design.

20. A number of ongoing and planned ADB initiatives will reinforce the impact of the SDP. The interventions by SME Sector Development Program loan and the follow-on Program on Economic Diversification (PED) have assisted the RGC in SME business development services, food safety, and sanitary and phyto-sanitary (SPS), and planned to support in establishing an SME guarantee facility. The planned Greater Mekong Sub-region (GMS) Trade Facilitation Project will further address SPS issues. While access to credit by farmers and SMEs remain critical, the Financial Sector Development Program has helped address key structural constraints towards promoting market-based lending. ADB‟s Private Sector Operations Department (PSOD) has planned two trade finance credit lines to two commercial banks, viz., ACLEDA and Canadia Bank. The GMS Corridor Towns Development Project focuses on the Southern Economic Corridor (SEC) to develop priority urban infrastructure to help service the increasing populations and foster trade, private investment and local economic development.

21. The Rural Road Improvement Project (to start in November 2011) will help improve 505 kilometers of roads links to national roads in the same provinces of the SDP (except Pursat). The Rural Electrification Project plans to explore the expansion of electricity infrastructure along the National Road spanning from Siem Riep, Banteay Meanchey, Battambang, Kampong Thom and other provinces that may include Kandal, Takeo and Kampot. The Tonle Sap Smallholder Development and Poverty Development Project and Tonle Sap Lowlands Rural Development also cover the same geography of the SDP and focus on rural livelihoods improvement. The Water Resources Management Sector Development Program is currently supporting the RGC in enhancing capacity for sustainable water resources management and delivery of irrigation services as well as sustainable rehabilitation of small- and medium-scale irrigation schemes in Kampong Thom, Banteay Meancheay, and Siem Reap. The GMS Bio-diversity Corridors Conservation Project is assisting the RGC in conserving the resources in the upper river basins to ensure the longer term sustainability of essential ecosystem services, and water resources in particular. ADB have also been working closely with the RGC in its initiatives to address the Strategic Program for Climate Resilience with a focus on agriculture and natural resources, water resources development and rural infrastructure.

22. JICA has a significant number of loans and grants amounting to $500 million in upgrading and rehabilitating critical infrastructure in provinces located along the Central Sub-corridor of the GMS Southern Economic Corridor. Major JICA projects that enhance the impacts of future interventions by development partners include the improvement of national roads No. 1, 6 & 7 and bridges covering provinces of Kampong Cham and Kampong Thom, expansion of


electricity supply facilities in Siem Riep province, rehabilitation and expansion of Sihanoukville Port and strengthening its management and operation, improvement of Greater Mekong Power Network spanning from Sihanoukville to Kampot, improvement of Greater Mekong Telecommunication Backbone Network spanning from Sihanoukville to Kampong Cham, and irrigation system rehabilitation in Banteay Meanchey province.

23. With respect to value chain strengthening, the Cambodia Agricultural Value Chain (CAVAC) program financed by AusAID and Australian Centre for International Agricultural Research (ACIAR) started in 2010 to help accelerate growth in the value of agricultural production and smallholder incomes in Kampong Thom, Takeo and Kampot provinces through improved productivity of rice-based farming systems. The program provides assistance in priority research in selected value chains including rice, enhancement of extension services, and partnership initiatives linking researchers, extension practitioners, farmers and agribusiness. AFD is planning a EUR3.5 million TA from 2012-2014 to build capacity of various actors in the rice value chain and improve access to the domestic and export markets. The SDP will coordinate closely with CAVAC and AFD to ensure synergy and complementarity.

Map 1 Map 2

Supplementary Appendix B 1

DETAILED TERMS OF REFERENCES FOR CONSULTING SERVICES

1. The PPTA will require 42 person months of international consultants and 53 person months of national consultant. The consulting services requirement is shown in Table 1. ADB will engage, on an individual basis, four international consultants for a total of 13 person-months and four national consultants for a total of 12.0 person-months. The remaining international consultants (29 person months) and national consultants (41 person months) will be engaged through a firm, or association of firms, based on simplified technical proposal procedures evaluated using the quality-and cost-based selection (80:20) method. The ADB will engage all the consultants in accordance with ADB‟s Guidelines on the Use of Consultants (2010, as amended from time to time).

Table 1: Summary of Consulting Services Requirement International National

Name of Positions PM Name of Positions PM

1. Engaged on an individual basis

1. Governance and Institutions Specialist/SDP Design Coordinator

5.0 1. Governance and Institutions Specialist/SDP Design Coordinator

5.0

2. Natural Resources Conservation Policy Specialist 3.0 2. Start-up Consultant – Procurement 2.0

3. Business-focused Resource Efficiency Specialist 3.0 3. Start-up Consultant – Monitoring and Evaluation 2.0

4. Geographical Information System (GIS)/Spatial Planning Specialist

2.0 4. GIS/Spatial Planning Specialist 3.0


2. Engaged through a firm or an association of firms

1. Rural Development Specialist (Team Leader) 6.0 1. National Deputy Team Leader 6.0

2. Rural Infrastructure Specialist/Civil Engineer 3.0 2. Rural Infrastructure Specialist/Civil Engineer 6.0

3. Agricultural Extension & Farmers‟ Organization Specialist 2.0 3. Agricultural Extension & Farmers‟ Organization Specialist

4.0

4. Agricultural Marketing & Value Chain Specialist 2.0 4. Agricultural Marketing & Value Chain Specialist 4.0

5. Agro-industry SME Development & Financing Specialist 2.0 5. Agro-industry SME Development & Financing Specialist

3.0

6. Crop Insurance Specialist 2.0 6. Legal Specialist 4.0

7. Agricultural Land Use Planning and Zoning Specialist 2.0 7. Environment and Climate Change Specialist 2.0

8. Environment and Climate Change Specialist 2.0 8. Subproject Screening & Procurement Specialist 4.0

9. Subproject Screening & Procurement Specialist 3.0 9. Social Safeguards and Gender Specialist 4.0

10. Economist and Financial Specialist 2.0 10. Resettlement Specialist 4.0

11. Social Safeguards and Gender Specialist 2.0

12. Resettlement Specialist 1.0


Grand Total 42.0 Grand Total 53.0

Sources: Asian Development Bank estimates.

2. The major outputs and activities are summarized in Table 2.

Table 2: Summary of Major Outputs and Activities




Conducting sector analysis and preparing policy matrix

15 January 2012 Sector analysis and draft policy matrix

1 February 2012

Preparation of work program and methodology

15 February 2012 Work program and methodology 1 March 2012

Identification of three representative subprojects and commencement of feasibility studies

1 March 2012 Representative subprojects identified and feasibility studies commenced

15 March 2012





Designing preliminary SDP framework

1 April 2012 Preliminary SDP framework prepared

16 April 2012

Firming up the SDP design 30 May 2012 Final SDP design prepared 1 June 2012

Conducting feasibility studies and preparing bidding documents for three representative subprojects

1 July 2012 Feasibility studies and bidding documents prepared for three representative subprojects

15 July 2012

Preparing bidding documents for (i) SDP implementation consultants; and (ii) critical packages of goods and works for the first 18 months of implementation

1 July 2012 Bidding documents for (i) SDP implementation consultants; and (ii) critical packages of goods and works for the first 18 months of implementation prepared

15 July 2012

Preparing final report 20 September 2012 Final Report prepared in RRP and Linked Documents format

8 October 2012


3. The output-based terms of references for the PPTA consultants are described in the following paragraphs. In the SDP design, the Team Leader (TL), in coordination with team members, is responsible to incorporate design requirements and result frameworks of the Pilot Program for Climate Resilience (PPCR) and the Global Agriculture and Food Security Program (GAFSP). Specific reference should be made in to the Cambodia‟s SPCR prepared for PPCR and Cambodia‟s Proposal for Funding under the GAFSP.1

4. Rural Development Specialist (Team Leader) (international - 6pm) and National Deputy Team Leader (national - 6 pm). The Team Leader (TL) should have at least 15 years working experience in agricultural sector and rural development in developing countries and has extensive operational experience in the Greater Mekong Sub-region (GMS). Cambodia sector experience is strongly preferable. (S)he should also have been involved in at least 2 ADB‟s PPTAs as the TL. Familiarity with the ADB‟s streamlined business process, and sector and program lending policies is a must. The Deputy TL should have at least 10 years working experience in the agricultural sector with focus on Tonle Sap basin provinces and have strong leadership skills. The TL, with support from the Deputy TL and in coordination with the whole consultant team, is responsible for (i) the SDP design details and documentation, including RRP, PAM and other linked documents required for the SDP and a tranche-based policy matrix; (ii) feasibility studies for three representative subprojects; (iii) assisting the EA/IAs in conducting pre-implementation training workshops for central and provincial project staff for PAM familiarization; (iv) assisting the EA/IAs in identification of role-based project staffing required at central, provincial and district levels to ensure these incremental resources are fully budgeted and included in the POC scheme before the Loans/Grant s Negotiation with the RGC; and (v) administration of workshops, training, seminars and conferences and surveys.

5. Governance and Institutions Specialist/SDP Design Coordinator (international - 5pm, national - 5pm). The international specialist should have at least 15 years working experience in agricultural sector policies, governance, strategies and planning for developing countries and has extensive experience in Southeast Asia (SEA). Cambodia sector experience is strongly preferable. The national specialist must be familiar with organizational structure of the government agencies at central and local levels and have at least 5 years experience working for projects/programs in the agriculture and natural resources (ANR) sector. Experience

1 The ADB Mission Leader will provide the consultants all relevant documents related to design requirements and result frameworks of the PPCR and GAFSP.


working with ADB projects in the ANR sector is a must. The specialists are responsible for the following outputs: (i) macro-economic and sector analyses with clearly categorized binding constraints to sustainable rice commercialization and recommended options for relaxing these constraints; (ii) SDP policy matrix with specific policy actions (by tranche), and monitoring indicators; (iii) governance risk assessment and engagement plan for MAFF and key ministries involved in the SDP and recommended mitigation measures; and (iv) assisting the ADB Mission Team in revising SDP documentation throughout the processing stage. ADB will engage these specialists on an individual basis.

6. Natural Resources Conservation Policy Specialist (international - 3pm). The specialist should have at least 15 years working experience in the natural resources and environment sector and has extensive operational experience in the Greater Mekong Sub-region (GMS). (S)he is responsible for the following outputs: (i) natural resources and environmental institutional and policy analyses with focus on resource-conserving agricultural commercialization, with clearly categorized binding constraints and recommended options for relaxing these constraints; and (ii) proposal of related investment activities and inputs into the SDP policy matrix with specific policy actions (by tranche) and monitoring indicators. ADB will engage this specialist on an individual basis.

7. Business-focused Resource Efficiency Specialist (international - 3pm). The specialist should have at least 15 years working experience in environment financing with focus on resource optimization, cost-saving innovations, project conceptualization and execution. (S)he must have extensive operational experience in the Greater Mekong Sub-region (GMS) and be experienced in promoting private sector participation in business-focused climate change adaptation and replicating resource optimization models on a sustainable basis. (S)he is responsible for the following outputs: (i) documentation of resource utilization profile with focus on paddy producers and rice millers; (ii) proposed options for executing business-focused climate change adaptation with regard to irrigation water efficiency and post harvesting facilities; (iii) recommendation of innovative, sustainable and environmentally friendly initiatives that can be developed as pilot project(s) on a public private partnership (PPP) basis; and (iv) proposal of related investment activities for the SDP with cost estimates and investment phasing. ADB will engage this specialist on an individual basis.

8. Geographical Information System (GIS)/Spatial Planning Specialist (international - 2pm, national - 3pm). The specialist should have at least 8 years working experience in geographic information systems and data management in the natural resources and environment sector. (S)he must have extensive operational experience in the Greater Mekong Sub-region (GMS) and be familiar with common RS/GIS software packages used in Cambodia. (S)he must also be familiar with forest cover and land use interpretation from satellite imagery. (S)he must have demonstrated the capacity to train national staff in Remote Sensing (RS)/GIS concepts and methodologies, including raising awareness on data management and dissemination across different agencies. (S)he is fully responsible for the production of maps required for land use planning and zoning, forest cover and land use classification, environmental/social and climate change risk/vulnerability mapping, and cross-sector investment sequencing in the project provinces and the GMS Southern Economic Corridor. ADB will engage these specialists on an individual basis.

9. Rural Infrastructure Specialist/Civil Engineer (international - 3pm, national - 6pm). The specialist should have at least 15 years working experience in designing rural infrastructure projects including irrigation, rural roads, and post-harvest facilities in developing countries and has extensive experience in Southeast Asia (SEA). Cambodia sector experience is strongly preferable. The national specialist should have at least 10 years working experience in designing small-scale rural infrastructure, preferably in the Tonle Sap basin provinces. The specialists are responsible for the following outputs: (i) design of the rural infrastructure


investment component with scheduled activities, associated cost estimates and phasing; and (ii) inputs into representative subprojects‟ feasibility studies with regards to engineering designs.

10. Agricultural Extension and Farmers’ Organization Specialist (international - 2pm, national - 4pm). The international specialist should have at least 15 years working experience in agricultural extension and association in developing countries and has extensive experience in Southeast Asia (SEA). Cambodia sector experience is strongly preferable. The national specialist should have at least 10 years working experience in agricultural extension and association, preferably in the Tonle Sap basin provinces. The specialists are responsible for the following outputs: (i) documentation and assessment on diffusion of adaptive research and agricultural extension, including irrigation water efficiency technologies; (ii) proposal of options and measures to increase outreach and adoption of technology; (iii) proposal of program and investment activities with cost estimates and phasing; (iv) inputs into SDP policy matrix with specific conditions (by tranche) and monitoring indicators in respect of revision to the existing legislative and institutional framework for facilitating the voluntary formation of farmers‟ organizations.

11. Agricultural Marketing and Value Chain Specialist (international - 2pm, national - 4pm). The international specialist should have at least 15 years working experience in agricultural marketing and value chain in developing countries and has extensive experience in Southeast Asia (SEA). Cambodia sector experience is strongly preferable. The national specialist should have at least 10 years working experience in agricultural marketing and value chain, preferably in the Tonle Sap basin provinces. The specialists are responsible for the following outputs: (i) documentation and assessment on agricultural marketing and value chains with clearly categorized binding constraints and recommended options for relaxing these constraints; (ii) proposal of operation models for value chain strengthening taking into account high value products and appropriate markets, market information system, and contract farming practices; (iii) proposal of program and investment activities with cost estimates and phasing; (iv) inputs into SDP policy matrix with specific conditions (by tranche) and monitoring indicators in respect of value chain strengthening.

12. Agro-industry SME Development and Financing Specialist (international - 2pm, national - 3pm). The international specialist should have at least 15 years working experience in agro-industry SME development and financing in developing countries and has extensive experience in Southeast Asia (SEA). Cambodia sector experience is strongly preferable. The national specialist should have at least 10 years working experience in SME business development with a solid understanding of SMEs‟ difficulties in financial access. The specialists are responsible for the following outputs: (i) assessments of the challenges faced by paddy producers, rice millers, exporters and other agricultural SMEs in accessing finance from the formal financial sector, including (a) informal status of producer groups, rice millers and other agricultural SMEs; (b) need for collateral; and (c) capability to prepare business plans and financial statements (including cash flow statements) and to help commercial banks and microfinance institutions assess their capability to repay; (ii) reviewing and recommending necessary changes in the Law on Secured Transactions; (iii) formulating appropriate market-based financing options to help paddy producers, rice millers, exporters and other agricultural SMEs access finance in a sustainable manner; (iv) proposal of program and investment activities with cost estimates and phasing; (v) inputs into SDP policy matrix with specific conditions (by tranche) and monitoring indicators in respect of agro-industry SME development and financing.

13. Crop Insurance Specialist (international - 2pm). The specialist should have at least 10 years working experience in designing and operationalization of crop insurance in developing countries and has extensive experience in Southeast Asia (SEA). (S)he is responsible for the following outputs: (i) assessment of past and ongoing crop insurance initiatives in Cambodia


and documentation of regional and international best practices; and (ii) design a pilot project to test the feasibility of crop insurance for farmers in the Tonle Sap basin, based on the principle of compensation according to a multi-criteria weather index.

14. Legal Specialist (national - 4pm). The specialist should have at least 10 years working experience in domestic laws and policy advocacy. A good understanding of Cambodia‟s agricultural sector is strongly preferable. (S)he is responsible for the following outputs: (i) identification of the key legal and regulatory issues relevant to the SDP; and (ii) proposals of appropriate legal, regulatory and institutional initiatives, or modifications to legal, regulatory and institutional measures already existing or officially proposed by the RGC that are required for successful execution of the SDP; (iii) appropriate sequencing for the introduction of the proposals in the SDP policy matrix.

15. Agricultural Land Use Planning and Zoning Specialist (international - 2pm). The specialist should have at least 15 years working experience in land use planning and zoning in developing countries with solid understanding of rice market and has extensive experience in Southeast Asia (SEA). (S)he is responsible for the following outputs: (i) assessment of agricultural land management for crop production with particular focus on paddy crops; (ii) proposals to enhance agricultural land use planning and zoning for various crops; (iii) proposal of program and investment activities with cost estimates and phasing; (iv) inputs into SDP policy matrix with specific conditions (by tranche) and monitoring indicators in respect of land use planning and zoning.

16. Environment and Climate Change Specialist (international - 2pm, national - 2pm). The international specialist should have at least 10 years working experience in environmental safeguards in developing countries and has extensive experience in Southeast Asia (SEA). The national specialist should have at least 5 years working experience as an environmental specialist. Both specialists are required to be familiar with ADB‟s environmental safeguard policies and procedure. The specialists are responsible for the following outputs: (i) recommendations of climate-proofing options for newly constructed and/or rehabilitated rural infrastructure financed by the SDP; and (ii) preparation of environmental assessment and review framework for the SDP as a whole and initial environmental examination and environmental management plan for the three representative subprojects based on the SDP design in compliance with ADB‟s prevailing safeguards policy.

17. Subproject Screening and Procurement Specialist (international - 3pm, national - 4pm). The international specialist should have at least 10 years working experience in project management and procurement in developing countries and has extensive experience in Southeast Asia (SEA). The national specialist should have at least 8 years working experience in project management and procurement and as an expert-user in application of the RGC‟s Standard Operating Procedures (SOP). Both specialists are required to be familiar with ADB‟s 2010 procurement guidelines and related procedure. The specialists are responsible for the following outputs: (i) screening of subprojects proposed by the provinces for investment component and preparation of a list of recommended subprojects for ADB financing; (ii) procurement capacity assessment (PCA); (iii) an overview of supply market for the type of goods, works and services required for the SDP; (iv) preparation of the SDP procurement plan in collaboration with the Program/Project Economist; (v) preparation of bidding documents for SDP implementation consultants and critical packages of goods and works for the first 18 months of implementation for approval by ADB and EAs before loan negotiation; and (vi) providing support to the EA/IAs in recruiting the SDP implementation consultants including collecting EOIs, short-listing, and drafting RFP for ADB‟s approval before loan negotiation.

18. Economist and Financial Specialist (international - 2pm). The specialist should have at least 15 years experience working as an agricultural economist and financial specialist in


developing countries with solid understanding of factor productivity and has extensive experience in Southeast Asia (SEA). Familiarity with COSTAB is a must. (S)he is responsible for the following outputs: (i) preparation of the financial and economic analyses for the SDP as a whole and the three representative subprojects based on the SDP design in compliance with ADB‟s relevant guidelines; (ii) preparation of cost estimates, financing plan, procurement plans for investment components in COSTAB format, and estimation of adjustment costs for release in each tranche based on the SDP design; (iii) preparation of financial management assessment (FMA) on SDP-related agencies; (iv) designing the funds flow and disbursement mechanism based on such assessment; and (v) identification of further capacity building (financial management and ADB‟s disbursement procedures) that will be necessary for the project, based on the results of the FMA.

19. Social Safeguards and Gender Specialist (international - 2pm, national - 4pm). The international specialist should have at least 15 years working experience in community development, social safeguards, and gender development in developing countries and has extensive experience in Cambodia. The national specialist should have at least 5 years working experience in the field of social development. Both specialists are required to be familiar with ADB‟s social safeguards and gender mainstreaming policies and procedures. The specialists are responsible for (i) analysis of men and women's roles and tasks, their access to resources, technologies and services, gender based inequalities and constraints faced along the value chain, and recommendations to address these through our outputs or interventions; (ii) preparation of documents required for the RRP (including for the three representative subprojects) in compliance with ADB‟s prevailing social safeguards and gender mainstreaming policies. Specifically, the specialists (i) check and validate whether non-Khmer peoples are within and near the SDP area; (ii) confirm whether non-Khmer groups may be considered Indigenous Peoples and trigger requirements of the 2009 Safeguard Policy Statement; (iii) assess the potential positive impacts of the project on such groups, and recommend strategies to ensure that these groups equally benefit from the project; and (iv) identify any potential direct or indirect negative impacts on these groups, and recommend measures to mitigate and compensate such impacts, if at all.

20. Resettlement Specialist (international - 1pm, national - 4pm). The international specialist should have at least 15 years working experience in human settlement and safeguards in developing countries and has extensive experience in Cambodia. The national specialist should have at least 5 years working experience in the field of resettlement. Both specialists must be be familiar with ADB‟s safeguards policies and procedures. The specialists are responsible for preparation of resettlement framework for the SDP as a whole and resettlement plans for the three representative subprojects based on the SDP design in compliance with ADB‟s prevailing safeguards policy. Specifically, the specialists will (i) assess potential land requirements for irrigation/community canals and the drying facilities or other investment activities that may result to involuntary resettlement; (ii) determine potential restrictions on use and access to lands that will be used for SDP activities, including periodic intrusion for maintenance, (iii) recommend appropriate compensation or other forms of assistance that are in compliance with the 2009 Safeguard Policy Statement; and (iv) explore other options, if required, including land consolidation schemes to ensure for more equitable distribution of costs and benefits.

21. Start-up Consultant – Procurement (national - 2pm). The specialist should have at least 10 years working experience in project management and procurement and as an expert-user in application of the RGC‟s Standard Operating Procedures (SOP). (S)he is required to be familiar with ADB‟s 2010 procurement guidelines and related procedure. (S)he is responsible for the following: (i) providing support to the EA/IAs in recruiting the SDP Implementation consulting service including evaluating technical and financial proposals; (ii) assisting the EA/IAs in getting

http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf


ADB‟s no-objections on all required submissions (up to Submission 5 – Signed Contract). ADB will engage this specialist on an individual basis.

22. Start-up Consultant – Monitoring and Evaluation (national - 2pm). The specialist should have at least 10 years working experience in project management, monitoring and evaluation of performance. Working experience in baseline surveys is a must. (S)he is required to be familiar with relevant ADB‟s guidelines on result-based monitoring. (S)he is responsible for (i) assisting the EA/IAs in recruiting a team of experts to conduct baseline surveys in respect of the SDP‟s DMF indicators; and (ii) exercising quality control over survey methodology, sampling design, and output extrapolation; and (iii) assisting the EA/IAs in establishing the monitoring system for the entire SDP and subprojects. ADB will engage this specialist on an individual basis.

23. Implementation Arrangements. MEF will be the EA for the PPTA. The MEF will provide office space and counterpart staff to the PPTA consultants, logistical services, and available data and reports. Disbursements under the PPTA will be done in accordance with the ADB‟s Technical Assistance Disbursement Handbook (2010, as amended from time to time). The Consultants will procure equipment through shopping in accordance with ADB‟s Procurement Guidelines (2010, as amended from time to time). Upon completion of the PPTA, equipment procured under the PPTA will be transferred to the EA. The PPTA will commence on 01/12/2011 and complete on 30/08/2013. The proposed PPTA processing and implementation schedule is listed in Table 3.

Table 3: Proposed Technical Assistance Processing and Implementation Schedule

Major Milestones Expected Completion Date

TA commencement 01/12/2011 Inception Report 01/03/2012 Interim Report 16/04/2012 Draft Final Report 01/06/2012 Final Report and Startup Support 08/10/2012–30/06/2013 TA Completion 30/08/2013 Financial Closure 30/10/2013

Source: Asian Development Bank