document of the world bank · document of the world bank report no: icr0000840 implementation...

Document of The World Bank

Report No: ICR0000840

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-30620; COFN-04210)

ON A

CREDIT

IN THE AMOUNT OF SDR 11.1 MILLION (US$ 14.98 MILLION EQUIVALENT)

TO THE

KYRGYZ REPUBLIC

FOR AN

AGRICULTURAL SUPPORT SERVICES PROJECT

December 15, 2008

Sustainable Development Sector Unit Central Asia Country Unit Europe and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 15, 2008)

Currency Unit = Kyrgyz Som Som 1.00 = US$0.0254 US$1.00 = Som 39.4

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AISP Agricultural Investments and Services Project Aiyl Okmotu Rural Municipality Administration APIU Agricultural Projects Implementation Unit ARAS Association of Rural Advisory Services ARIS Community Development and Investment Agency ASSP Agricultural Services Support Project ATC Advisory Training Center (later: TAIC) CIMMYT International Maize and Wheat Improvement Center CLAR Center for Land and Agrarian Reform (oblast/raion level) CRI Crop Research Institute CSF Community Seed Fund DCCP Department of Chemicalization and Crop Protection DFID Department for International Development (UK) EPPO European Plant Protection Organization FFS Farmer Field School FPRI Forage and Pasture Research Institute (later: LVPRI) FMS Financial Management System FY Fiscal Year GOK Government of the Kyrgyz Republic GTZ Gesellschaft für Technische Zusammenarbeit (Germany) HPAI Highly Pathogenic Avian Influenza ICARDA International Center for Agricultural Research in the Dry Areas IFAD International Fund for Agricultural Development IPM Integrated Production Management (formerly Integrated Pest

Management) ISF International Seed Federation KAFC Kyrgyz Agricultural Finance Corporation KAMIS Kyrgyz Agricultural Market Information Service KSBA Kyrgyz Sheep Breeders Association TAIC Technology, Advisory and Information Center (formerly ATC) LRF Land Redistribution Fund LSG Local Self-Government LVPRI Livestock, Veterinary and Pasture Research Institute MAWR Ministry of Agriculture and Water Resources (later: MAWRPI)

MAWRPI Ministry of Agriculture, Water Resources and Processing Industry M&E Monitoring and Evaluation MIS Management Information System MOF Ministry of Finance MTR Mid-Term Review NPOZ Industrial Association for Crop Research O&M Operation and Maintenance RAS Rural Advisory Service RADC Rural Advisory and Development Center RADS Rural Advisory and Development Services RADSF Rural Advisory and Development Services Foundation RASCO Rural Advisory Services Coordination Office RSSI Republican State Seed Inspectorate SAK Seed Association of Kyrgyzstan SALMLR State Agency for Land Management and Land Resources SCVT State Commission for Variety Testing SDC Swiss Development Cooperation SIDA Swedish International Development Agency SIPQ State Inspectorate of Plant Quarantine SVD State Veterinary Department TA Technical Assistance TACIS Technical Assistance for the Commonwealth of Independent States

(European Union)

Vice President: Shigeo Katsu

Country Director: Mehrnaz Teymourian (acting)

Sector Manager: Dina Umali-Deininger

Project Team Leader: Brian Bedard

ICR Team Leader: Brian Bedard

KYRGYZ RPUBLIC

Agricultural Support Services Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

B. Key Dates ................................................................................................................... v C. Ratings Summary ....................................................................................................... v D. Sector and Theme Codes .......................................................................................... vi E. Bank Staff .................................................................................................................. vi F. Results Framework Analysis .................................................................................... vii G. Ratings of Project Performance in ISRs ................................................................. viii H. Restructuring (if any) ................................................................................................ ix I. Disbursement Profile ................................................................................................. ix 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 9 3. Assessment of Outcomes .......................................................................................... 18 4. Assessment of Risk to Development Outcome ......................................................... 22 5. Assessment of Bank and Borrower Performance ..................................................... 23 6. Lessons Learned ....................................................................................................... 28 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 29 Annex 1. Project Costs and Financing .......................................................................... 30 Annex 2. Outputs by Component ................................................................................. 31 Annex 3. Economic and Financial Analysis ................................................................. 45 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 46 Annex 5. Beneficiary Survey Results ........................................................................... 48 Annex 5. Beneficiary Survey Results ........................................................................... 48 Annex 6. Stakeholder Workshop Report and Results ................................................... 49 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 50 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 51 Annex 9. List of Supporting Documents ...................................................................... 52 Map

A. Basic Information

Country: Kyrgyz Republic Project Name: Agricultural Support Services Project (ASSP)

Project ID: P040721 L/C/TF Number(s): IDA-30620, COFN-04210

ICR Date: 11/18/2008 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVT. OF KYRGYZ REPUBLIC

Original Total Commitment:

XDR 11.1M Disbursed Amount: XDR 9.6M

Environmental Category: C

Implementing Agencies: Ministry of Agriculture, Water Resources and Processing Industry (MAWRPI) Kyrgyz Agricultural Finance Corporation (KAFC)

Cofinanciers and Other External Partners: (a) Cofinancier: International Fund for Agricultural Development (IFAD) (b) Other External Partners:

Swiss Development Cooperation (SDC), parallel financing for the RAS component DFID (UK), technical assistance for LAR and RAS components TACIS (EU), technical assistance for Seeds and Market Information components SIDA (Sweden), technical assistance for Seeds component UNDP, technical assistance for micro-credit group formation FAO, technical assistance for IPM in the RAS and CP&PQ components

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 04/26/1994 Effectiveness: 09/21/1998 09/21/1998

Appraisal: 06/02/1997 Restructuring(s): 12/07/2001 12/15/2003

Approval: 05/07/1998 Mid-term Review: 03/14/2001

Closing: 12/31/2003 06/30/2008

C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies:

Satisfactory

Overall Bank Performance:

Satisfactory Overall Borrower Performance:

Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance

Indicators QAG Assessments (if

any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

Moderately Unsatisfactory

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

Satisfactory

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Agricultural extension and research 54 54

Agricultural marketing and trade 8 8

Central government administration 38 38

Theme Code (Primary/Secondary)

Land administration and management Primary

Personal and property rights Secondary E. Bank Staff

Positions At ICR At Approval

Vice President: Shigeo Katsu Johannes F. Linn

Country Director: Mehrnaz Teymourian (acting) Kiyoshi Kodera

Sector Manager: Dina Umali-Deininger. Joseph Goldberg

Project Team Leader: Brian Bedard Mohinder Mudahar

ICR Team Leader: Brian G. Bedard

ICR Primary Author: Gotz Schreiber

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The objective of the project is to improve the incentive framework for, and the productivity, profitability and sustainability of, Kyrgyz agriculture by assisting the Borrower in: (a) implementing land and agrarian reforms and providing support for farm restructuring; (b) providing emerging private farms with advisory and development services and training in appropriate improved production technology and practices; (c) promoting the development of a viable seed industry; (d) establishing the legal framework, institutions and procedures for plant protection and plant quarantine services; (e) establishing an agricultural market information system; and (f) enhancing the institutional capacity of the Ministry of Agriculture (MAWRPI). Revised Project Development Objectives (as approved by original approving authority) Additional objective, added in March 2004: “Improving and securing the sustainability of river flood protection along the Kugart river.” This reflected the addition of the flood repair component. Additional objective, added in January 2007: “Minimize the threat posed to humans and to the poultry industry by Highly Pathogenic Avian Influenza (HPAI), and in preparing for, the control and response to HPAI and other infectious diseases.” (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Number of rural households having received land shares (cumulative) Value (quantitative or qualitative)

No baseline data established No target established at appraisal

No revised targets established

532,000

Date achieved 12/31/1998 12/31/2006 Comments (incl. % achievement)

Almost all rural households have received a land share, and 91% of all available arable land has been distributed to private owners

Indicator 2 : Villages covered by Rural Advisory Service (annual) Value (quantitative or qualitative)

0 No target established at appraisal


978


The number of villages/settlements regularly covered by RAS is about 52% of the country total

Indicator 3 : Households receiving direct RAS advice (annual) Value (quantitative or qualitative)



42,933

Date achieved 12/31/1998 12/31/2007

Comments (incl. % achievement)

More than 21% of all farms are regularly reached

Indicator 4 : Social Collateral Credit Groups receiving microcredit from FDF (cumulative) Value (quantitative or qualitative)



4,574


More than 33,000 individual poor households, otherwise not creditworthy, have received credit based on social collateral

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Groups formed and supported by RAS (aggregate) Value (quantitative or Qualitative)

No baseline established No target established at appraisal


2,197


The number of groups peaked at 2,853 in 2006.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual Disbursements

(USD millions) 1 06/29/1998 Satisfactory Satisfactory 0.00 2 09/10/1998 Satisfactory Satisfactory 0.00 3 03/30/1999 Satisfactory Satisfactory 0.73 4 12/17/1999 Satisfactory Unsatisfactory 1.22 5 12/22/1999 Satisfactory Unsatisfactory 1.22 6 12/28/1999 Satisfactory Unsatisfactory 1.22 7 06/26/2000 Satisfactory Unsatisfactory 1.90 8 06/30/2000 Satisfactory Unsatisfactory 1.90 9 09/22/2000 Satisfactory Unsatisfactory 2.39

10 12/15/2000 Satisfactory Satisfactory 2.75 11 05/24/2001 Satisfactory Satisfactory 3.94 12 12/27/2001 Satisfactory Satisfactory 4.54 13 01/14/2002 Satisfactory Satisfactory 4.57 14 06/19/2002 Satisfactory Satisfactory 5.00 15 12/27/2002 Satisfactory Satisfactory 5.93 16 06/10/2003 Satisfactory Satisfactory 6.77

17 12/24/2003 Satisfactory Satisfactory 7.56 18 06/21/2004 Satisfactory Satisfactory 8.49 19 12/16/2004 Satisfactory Satisfactory 9.61 20 06/02/2005 Satisfactory Satisfactory 10.45 21 11/14/2005 Satisfactory Satisfactory 11.16 22 07/06/2006 Satisfactory Satisfactory 12.03 23 04/06/2007 Satisfactory Satisfactory 12.58 24 05/30/2008 Satisfactory Satisfactory 13.39

H. Restructuring (if any)

Restructuring Date(s)

Board Approved PDO

Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

12/12/2003 S S 7.44 Closing date extended to Dec. 2005

03/25/2004 S S 7.70 Financing percentages increased; SDR 1.4 million canceled

06/30/2004 S S 8.40 Flood repair component added

12/21/2005 S S 10.72 Closing date extended to June 2007; Financing percentages increased

06/29/2007 S S 12.50 Closing date extended to July 2007

07/26/2007 Yes S S 12.53 HPAI component added; closing date for HPAI component extended to June 2008

I. Disbursement Profile

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1. Project Context, Development Objectives and Design (this section is descriptive, taken from other documents, e.g., PAD/ISR, not evaluative) 1.1 Context at Appraisal (brief summary of country and sector background, rationale for Bank assistance) Land and Agrarian Reform (LAR). The land reform and farm restructuring process, initiated immediately after the country’s independence, was the cornerstone of the government’s rural and agrarian reform program. It aimed at replacing the centrally controlled collective and state farms by private farms, establishing a market environment, improving farm profitability and providing opportunities for all types of private farms and farm enterprises to develop. After an initial spurt of progress, the reform process stagnated in 1993. The Government of Kyrgyzstan (GOK) responded in 1994 by ordering all remaining former state and collective farms to distribute shares of their land and their non-land assets to their farm residents and employees. These farms covered approximately 25% of the land not yet distributed and were mainly located in Chui oblast. GOK also created a large reserve of land, eventually comprising 25% of all arable land and named the Land Redistribution Fund (LRF), which was to be used to rectify inequities resulting from oversights and flaws in the initial land distribution process; of the remainder, half was to be auctioned off, and half was to be rented out through short-term leases. This second phase of the reform process, which was to be supported by the project, emphasized the completion and consolidation of land and asset distribution, rectifying inequities and errors that had occurred during the first phase, and completing the transformation of those farm enterprises that still remained under collective management. This required addressing several key concerns. (i) The existing legal framework impeded the reform progress; legal mandates and functions of the institutions involved overlapped; a policy and objectives for land auctions were lacking; and many specific aspects, such as inheritance arrangements for land use rights, needed clarification and definition. (ii) The Republican Center for Land and Agrarian Reform (RCLAR), the Centers for Land and Agrarian Reform (CLARs) at the oblast and raion levels, and the State Agency for Land Management and Land Resources (SALMLR) lacked adequately trained staff and modern equipment, and coordination and information sharing among them were weak. (iii) There was a large backlog in land shares still to be issued (25% of all land shares covering 220,000 ha, mainly in Chui, representing 77% of the total land to be distributed) and in replacing ‘temporary’ land certificates (which comprised 90% of all certificates issued up to that time and usually did not include even a sketch map identifying the land parcels) by permanent ones. (iv) The distribution of non-land property shares had not been carried out in 131 (90 of these in Chui oblast) of the original 518 state and collective farms, and in many locations non-land farm assets were still managed by ‘service centers’ run by local administrations or the previous farm managers. (v) Many farm managers and local officials were reluctant to replace the pre-reform management structures which therefore continued to remain in place. (vi) Adequate post-privatization farm support services critically needed by newly created farms (e.g., advisory services, credit, input providers) were almost totally absent, except for several small pilot operations supported by bilateral donors. Rural Advisory Services (RAS). The break-up of the collective farms and the creation of private farms where none had existed before drastically changed the needs for rural advisory services. The new farmers, previously employees of collective farms or other industrial or service

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collectives, had either no or only very specialized knowledge of one or two aspects of large-scale agricultural production, but none in farming and in operating a private farm enterprise in a market environment. An urgent need existed for advisory services oriented towards small-scale private farming. Several small pilot projects supported by other donors and a small livestock-focused extension program under the IDA-funded Sheep Development Project had demonstrated the lack of two main types of advice: firstly on general farm management issues, including financing, taxation, how and where to obtain information and inputs, and marketing; and secondly on technical issues such as seed and crop management, soil conservation, irrigation management, animal husbandry and the like. The lack of an appropriate advisory system was compounded by the virtual collapse of the old agricultural research system that had been designed to support the state and collective farms. Moreover, the technologies needed for small-scale farming in the emerging market economy differed fundamentally from those of the former large-scale farms where little attention was paid to economic and financial aspects of farming. Location-specific recommendations, based on farmers’ needs and developed with participation of the farmers, were now needed, along with planting materials and technologies adapted to local ecological and socio-economic conditions. To be able to reap the benefits of the land reform and respond to the recommendations of the rural advisory services, farmers also needed access to credit for the purchase of key inputs such as seed, fertilizer, spare parts, animal feed, etc. Seed Industry. Quality seed was in very short supply, posing a major obstacle to raising farm productivity. The seed industry was under-funded and poorly equipped and lacked the capability to produce marketable varieties, and quality control was weak. On the demand side, the lack of input credit and of distribution channels hampered the development of a viable private seed industry. Farmers used genetically highly variable, untreated, locally saved seed, contaminated with seed-borne diseases and weeds, and generally poor in terms of germination and vigor. To help revive the seed sector, GOK had developed a national seed strategy, defining the roles of the state and the private sector, with an emphasis on the development of seed production and distribution by the private sector, with regulatory functions to be carried out by the state. A seed law was enacted, but it required compulsory certification of all varieties, which significantly impeded the development of a market-based seed industry. GOK also intended to introduce a Law on Plant Breeders Rights, in order to create an enabling environment for private investment in plant breeding, and to become a member of the International Union for Protection for New Varieties of Plants (UPOV). Beyond the level of breeding (super elite, elite), seed production was to be privatized and the state monopoly dismantled. Crop Protection and Plant Quarantine. The country lacked an effective registration system for pesticides, and the import, sale and use of pesticides were uncontrolled. Plant quarantine services were severely underfunded, and major quarantine service facilities were in need of rehabilitation. A sound legislative framework and effective organization and procedures for crop protection and plant quarantine services needed to be established to (a) detect and monitor disease and pest threats, (b) provide early warning of possible threats and disseminate information, and (c) deploy counter-measures, strategies and methods for protection.

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Agricultural Market Information. One of the major lacunae with respect to agricultural marketing was the lack of access of producers, traders and consumers to market information. A successful pilot to collect and disseminate market information was already underway, financed by the British Know-How Fund, but operating in only two oblasts. Rationale for Bank Involvement. The CAS of May 1998 supported interventions in four main areas: (1) restoration of growth, particularly in the rural sector, (2) poverty alleviation, (3) institution building, and (4) strengthening of public finances. The revival of the agricultural sector was a critical element of IDA’s assistance strategy. It included support for the liberalization of trade and price policies, the improvement of the regulatory framework for private sector development, land reform and farm restructuring, provision of rural credit, as well as irrigation and drainage system rehabilitation. The ASSP was intended to help establish and/or strengthen post-privatization support services for the growing private farming sector and thereby increase the agricultural contribution to economic growth and rural incomes and contribute to the alleviation of rural poverty. It also was expected to help consolidate structural reforms and strengthen institutional capacities. The Bank, as the major provider of external assistance to the Kyrgyz Republic, was well positioned to take the lead in providing sector-wide support, having just completed a comprehensive sector analysis and policy reform study for the country. Other donors were targeting their support on more narrowly focused projects, but welcomed the Bank’s initiative to tackle some of the fundamental and sector-wide issues within a more comprehensive policy and operational framework that would also provide a reference frame for their own support activities. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The objective of the project is to improve the incentive framework for, and the productivity, profitability and sustainability of, Kyrgyz agriculture by assisting the Borrower in: (a) implementing land and agrarian reforms and providing support for farm restructuring; (b) providing emerging private farms with advisory and development services and training in appropriate improved production technology and practices; (c) promoting the development of a viable seed industry; (d) establishing the legal framework, institutions and procedures for plant protection and plant quarantine services; (e) establishing an agricultural market information system; and (f) enhancing the institutional capacity of the Ministry of Agriculture (MAWR). Key project outcome indicators were identified, but no baseline or target values were established:

(i) Physical outcomes in terms of land and property shares distributed; number of farms restructured and new farms created; farm management changes in terms of greater use of private (as against collective) management structures;

(ii) Improvements in farm productivity, profitability, (viability), and sustainability of private farming;

(iii) Improvements in farmers’ access to inputs including credit, quality seeds, advisory and adaptive research services; crop protection; and market information.

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1.3 Revised PDO (as approved by original approving authority) and Key Indicators In March 2004, the following additional objective was added: “Improving and securing the sustainability of river flood protection along the Kugart river.” This reflected the addition of the flood repair component. In January 2007 a further addition was made: "Minimize the threat posed to humans and to the poultry industry by Highly Pathogenic Avian Influenza (HPAI), and in preparing for, the control and response to HPAI and other infectious diseases." This reflected the reallocation of some project funds to provide additional financing in support of the Avian Influenza Control & Human Pandemic Preparedness & Response Project approved by the Bank’s Board at the same time. The restructured ASSP was to contribute to achieve the outcomes of the HPAI Project. 1.4 Main Beneficiaries (original and revised, briefly describe the "primary target group" identified in the PAD and as captured in the PDO, as well as any other individuals and organizations expected to benefit from the project) The primary project beneficiaries were the new owners of land and non-land farm assets attempting to establish and operate private farms. Activities under the LAR and RAS components benefited mainly farmers, but also state agencies and institutions responsible for service provision (CLARs and local administrations) which were targeted for capacity-building. Extension advice was to be provided to groups of farmers, including both men and women, and credit resources were targeted through the Farm Development Fund (FDF) towards groups of poor farmers. Investments and training under the Seed and the Crop Protection and Plant Quarantine components were to support private seed farms and essential state institutions (Crop Research Institute [CRI], Forage and Pasture Research Institute [FPRI], Republican State Seed Inspectorate [RSSI], State Commission for Variety Testing [SCVT], crop protection and plant quarantine laboratories), and the legal changes and institutional capacity building efforts were to benefit the seed sector and farmers in general. Starting in 2001, groups of poor farmers benefited from quality seed distributed for multiplication and on-farm use. Primary beneficiaries of the Integrated Production Management (IPM) IPM activities were both trainers and farmers. Market information was provided for the benefit of farmers, but also traders, agro-businesses, and government institutions. The flood repair works benefited about 23,000 people threatened by destructive floods, and the HPAI activities are of potential benefit to the entire population. 1.5 Original Components (as approved) The project was intended to be implemented over a period of 5 years (1998-2003) and comprised the following six main components: (1) Land and Agrarian Reform (LAR). This component was to support four main areas: (i) completion of the distribution of land and non-land assets throughout the country so that there would be complete private use-rights or ownership of land and non-land assets at the end of the project period; (ii) establishment of policies and procedures for auctions/leasing of land from the Land Redistribution Fund (LRF); (iii) capacity building of government agencies and farming communities to support agricultural enterprise restructuring, including the Republican Center for Land and Agrarian Reform (RCLAR) and oblast and raion level CLARs, in program

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coordination and implementation, preparation and dissemination of public information, monitoring and evaluation, and the management of the LRF, as well as overall policy development, monitoring, outreach and capacity building, including of support service providers, local governments and farmers; and the capacity of the State Agency for Land Management and Land Resources (SALMLR) in physical demarcation of land boundaries and issue of land certificates; and (iv) establishing a legal and regulatory framework for land market development. The component was to be implemented nationwide, initially focusing on Chui oblast where the reform process was lagging the most. The British DFID was to provide important international and local TA under a separate agreement. (2) Rural Advisory and Development Services (RADS). This component, funded entirely by IFAD, but with parallel financing and international TA from the Swiss SDC, was to assist the newly created, mainly small-scale private farms to develop into profitable farming units by providing and transferring the necessary farming and farm management knowledge and by increasing access to credit. The RADS Foundation (RADSF), through a network of rural advisory and development centers (RADCs), to be supported by a national-level Secretariat, was to: (i) provide advice to farmers in farming techniques, location-specific technology development through field trials, demonstrations and adaptive research; and (ii) assist farmers in preparing business plans for credit applications and in group development (credit, water users, machinery, marketing). To increase farmers’ awareness and understanding, but also to ensure sustainability, the advisory service was to be integrated, demand-driven and moving towards self-financing (expect for those services specifically targeted at the poor). Funding was also to be provided for RADC office rehabilitation, equipment, vehicles, TA and training, and incremental operating expenses of RADS staff. Several pre-existing smaller and regionally focused extension services were to be absorbed and integrated into the RADSF. This component included a sizeable micro-credit facility, the Farm Development Fund (US$1.5 million), to be administered by the Kyrgyz Agricultural Finance Corporation (KAFC) and targeted at groups of very small farmers. In addition, it included a small micro-credit pilot program (US$0.3 million), the Financial Advisory Services subcomponent, which was expected to be implemented through micro-finance NGOs and to test new experimental approaches to micro-crediting. (3) Seed Industry Development. This component was to support the establishment of a viable, self-sustaining seed industry, with emphasis on commercialization, and to provide farmers with good quality seed of improved varieties. Support was to focus on five main areas. First, a wide range of germplasm of cereal and forage crops was to be acquired to provide the foundation for the development of new varieties; cereal seed development was to be undertaken by the CRI and forage crop development by the FPRI. Second, the facilities for cereal and fodder seed production, processing, storage and distribution at the state breeding farms responsible for the production of super elite and elite seed were to be rehabilitated by providing incremental investment and working capital. Third, the development of private commercial seed production was to be fostered by supporting three of the newly privatized seed farms as models of good practice. These were to serve as demonstrations to encourage the establishment of private seed companies. Project funds were to be provided on credit terms for capital investments (repair of essential buildings, purchase of seed cleaning and farm equipment). Fourth, the capacity of

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MAWR for developing and implementing a seed policy and its regulatory services for variety testing, registration and seed certification was to be strengthened by rationalizing and streamlining service provision, introducing modern experimental and data analysis procedures, adequate variety testing, and publication and dissemination of test results. The project also supported the development of a legal framework and procedures for the protection of plant breeder rights and sought to ensure satisfactory implementation of the Seed Law regulations governing seed certification (shifting from compulsory to voluntary certification). This was to be achieved by strengthening the Republican State Seed Inspectorate’s capacity, adequately equipping the central/regional seed laboratories to allow ISTA accreditation, and TA and training in certification procedures. Support was also to be provided for developing and implementing seed policies, maintaining a registry of plant variety rights, liaison with international seed organizations, and the development of a National Seed Association. Lastly, the component provided funding for the publication and dissemination of official variety testing results and seed industry information. (4) Crop Protection and Plant Quarantine. This component aimed at assisting with the development of a modern pest management system that ensures user safety, public health and environmental and agronomic sustainability. This was to be achieved by supporting GOK in developing the legal and regulatory framework and the administrative tools to ensure the use of appropriate and safe pest control methods, but also by educating farmers in safe and sustainable pest prevention and control. The project therefore supported the development and implementation of a pesticide registration system, of regulations and procedures governing the safe distribution and use of pesticides, and of procedures and technical capacity for monitoring pesticide use and residue content. It did so by providing support for: (i) establishing the legal framework for regulation of pesticide use and putting in place the requisite regulatory structure, (ii) the implementation and application of the pesticide registration system, (iii) rehabilitating key plant quarantine centers and improving the quarantine control procedures for imported plants, and (iv) Kyrgyz membership in the European Plant Protection Organization. Funding was provided for the rehabilitation of critical facilities and laboratories, equipment, technical assistance, staff training and incremental operating costs. (5) Agricultural Market Information. This component was intended to increase the coverage of the existing agricultural market information system from two oblasts to the entire country. It was to support the collection, processing and dissemination of agricultural market information for the benefit of farmers and producers, processors, traders and policy makers. Over time, the initially limited scope of information was to be expanded to include all major agricultural inputs, outputs and processed products at various levels (farmgate, wholesale, retail, etc.), to cover local, national and international markets, to refine coverage to specific commodity standards and grades, and to prepare and issue specialized topical reports. The objective was to increase the transparency of market transactions, transmit market signals to producers and traders, improve producers’ bargaining position, and expand processors’ and consumers’ choices in product selection. Financing was to be provided for equipment, TA, training and operating expenses. (6) Project Implementation Unit. The project supported the establishment and operation of a Project Implementation Unit (PIU, later renamed APIU) within the MAWR, responsible for

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overall project coordination, including essential staff, equipment and operating costs. Actual implementation of project activities was to be the responsibility of the respective component-specific implementing agencies (RCLAR, RADSF, KAFC, CRI, etc.). 1.6 Revised Components (1) Land and Agrarian Reform Pasture Management Pilot. Under the LAR component, a one-year pilot program for Pasture Management Improvement (July 2006 to June 2007) was added in 2006, to introduce and test community-based pasture management. The objective was to identify suitable approaches for pasture management that reduce degradation, improve pasture productivity and provide equitable access to this critical resource by increasing the level of involvement and the capacity of local communities (pasture users, local governments) in planning, managing and monitoring pasture resources. Funding was provided for: a review of existing pasture legislation and the development of a new (draft) pasture law and regulations; mobilizing and training communities and local governments in four pilot communities and establishing community-based pasture management institutions and processes; an inventory of the communities’ pasture resources and the preparation of pasture maps; and the development, based on the experience gained during the pilot, of training material for decentralized community-based pasture management. This new subcomponent was implemented by the APIU and the Pasture Department of MAWRPI, in close cooperation with the Community Development and Investment Agency (ARIS), the RASs, the TES Center (a non-governmental agricultural extension provider), and in collaboration with the USAID-funded Land Reform and Market Development Project. (2) Rural Advisory and Development Services (RADS) FDF Subcomponent. The originally envisaged Financial Advisory Services (FAS) pilot micro-credit line (US$0.3 million) was canceled in 1999, based on the recommendation of the task team of the IDA-supported Rural Finance Project and in agreement with IFAD, the financier of this project component. The funds were reallocated by IFAD to the main micro-credit line supported by the project, the Farm Development Fund, in 2002, after the condition of an acceptable group lending manual had been satisfied. RADS Machinery Centers. A second modification, also agreed upon in 1999, soon after the project start, was the elimination of a large package of farm machinery that had been envisaged for equipping a RADS-managed regional farm machinery demonstration center in each oblast. Such centers were no longer considered to be essential or viable, nor germane to a rural advisory service targeted at small and medium-sized farmers. (3) Seed Industry Development. Component Redesign. The Seed component was redesigned at the end of 1999 to adapt to changes in the economic and institutional environment of the seed sector, while maintaining and further reinforcing its original objective of establishing a viable, self-sustaining seed industry with emphasis on private sector development. The original design focused on the production of super-elite and elite cereal and fodder seeds and the demonstration of best-practice commercial

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seed production at the seed farm of the state-owned Industrial Association for Crop Research (NPOZ) and three selected privatized seed farms. However, the NPOZ farm was found to be an obstacle to the development of a competitive seed industry, as it blocked direct access by seed companies to breeders’ seed, and the three privatized seed farms selected for the production of super-elite and elite seed were unwilling to borrow the credit funds provided under the project, because cereal and fodder seed production was not commercially viable at that time in the country and the anticipated revenues from seed production were not sufficient to repay these credits. The focus was therefore shifted from concentrated support for only four farms to assistance to a broader range of seed producers and to developing a competitive, rather than a vertically structured seed industry. Greater emphasis was therefore placed on liberalizing the regulatory environment for the seed industry and, at the same time, offering less capital-intensive support to a substantially larger number of farms/enterprises. At the same time, the envisaged substantial TA support was sharply reduced in response to MOF objections regarding the use of credit funds for international TA. To cover this important need, TACIS agreed to provide two years of TA for the seed component on grant terms. When the TACIS support ended, Swedish SIDA agreed to step in and to finance continuing valuable TA for five more years. Pilot Program for Poverty Alleviation and Seed Bank Establishment. Following the Mid-Term Review in 2001, a new activity was added to this component. In response to severe droughts and early snowfall in 2000, GOK and IDA agreed to include specific support for farmers in poor mountainous regions particularly affected by these natural calamities, by providing them with quality seed for multiplication and on-farm use. Farmers were to establish cooperative Community Seed Funds (CSFs) which would receive and distribute the seeds, collect repayments (in the form of seed, with a 25% “fee” added) and redistribute these seeds to more members each subsequent year. The project financed the initial start-up capital in form of seed grants and the operational expenses of a group of competitively selected local NGOs that provided initial institutional support to the new CSFs. Important objectives, in addition to the immediate relief and poverty alleviation aspects, were the dissemination of improved technology as embodied in high-quality seed, increased food security, crop diversification, generating farmer awareness of the benefits of quality seeds, and improving incomes of poor farmers. The subcomponent was to be implemented by the APIU with support of local NGOs responsible for the distribution of seeds and monitoring, with RAS providing technical advice on seed and crop production. Emergency Flood Recovery CSFs. In response to severely damaging floods in the spring of 2003, IDA agreed to a GOK request for an emergency recovery program benefiting several thousand small farmers whose fields had been destroyed and crops lost. Utilizing the Community Seed Fund approach, the project provided about 4,000 affected small farmers with seeds, fertilizer and tree saplings and two local machinery service cooperatives with equipment to serve these farmers.

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1.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) The project closing date was extended several times: first in December 2003 to December 2005, in December 2005 to June 2007, in June 2007 to 31 July 2007, and finally in June 2007 to 30 June 2008 for the newly added HPAI component only. Two additional components were added to the project during implementation. Their financing was made possible by substantial savings realized by (a) the elimination of major procurements of agricultural machinery for RAS demonstration centers and (b) the mobilization of grant-funded TA from other donors which freed project funds that had been intended for TA. Flood Damage Repair and Rehabilitation. Upon the request of GOK, a new component was added in March 2004 to support the repair of critical flood control works along the Kugart River, which had been seriously damaged during the 2003 spring floods, posing a severe future risk for the population in the area. No other financing instrument was immediately available, and IDA therefore agreed to reallocate US$2.5 million from other components to finance the repair and reconstruction of the river bank protection embankments, river-bed cleaning, check dam rebuilding, the development of a siltation model, and capacity building for the Project Implementation Unit of the MAWRPI Department of Water Resources. Avian Influenza. In early 2007 the project was restructured to support GOK’s efforts to address the threat of Highly Pathogenic Avian Influenza (HPAI). The Kyrgyz Republic, located on the flight path of many migrating birds, is at high-risk for HPAI, and several neighboring countries had already experienced outbreaks, but there was little capacity to detect or respond to any outbreak. The project’s development objective was therefore amended and a component added to minimize the threat posed to humans and to the poultry industry by HPAI and to prepare for, control and respond to this threat. Savings from other project components were utilized to supplement the financing provided by IDA for the Avian Influenza Control and Human Pandemic Preparedness and Response Project (HPAI Project, P099453). ASSP funds were used to rehabilitate the buildings of four veterinary laboratories and to procure urgently needed equipment for them as well as to construct safe animal carcass disposal facilities in various locations throughout the country. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigations identified, and adequacy of participatory processes, as applicable) Both the Bank and GOK had little experience with investment lending in the Kyrgyz Republic at the time of ASSP preparation. This contributed to an overly optimistic sense on both sides on what should and could be tackled in the project. Extensive background analyses had been undertaken, but the design of the seed component and of several activities in other components proved inadequate to achieve the intended objectives. If alternative approaches had been vetted more carefully, major delays and significant redesign efforts during implementation might have

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been prevented. The large number of implementing institutions involved also caused difficulties, not only because almost all of them were unfamiliar with the demand of a market-based economy on themselves and with Bank projects, but also because many of them underwent various changes in structure and mandate during the early years of project implementation. A key aspect that would have benefited from a more realistic assessment was the likely capacity of GOK to provide counterpart funding; this capacity was significantly overestimated. This problem became particularly acute after the Russian financial crisis of August 1998 which occurred soon after the project had been approved by the Bank’s Board and before it became effective, and which had substantial repercussions for the Kyrgyz Republic. The Kyrgyz Som depreciated sharply from Som 17.5/US$ in mid-1998 to Som 42/US$ in mid-1999. Inadequate counterpart funding from the start therefore severely impeded and delayed project implementation and eventually had to be addressed by increasing the IDA and IFAD financing percentages for project expenditures. In 2004 IDA increased its financing percentages retroactively, and in 2005 both IDA and IFAD raised their financing to 100%, in line with the new country financing parameters established earlier that year. Budgetary problems also caused MOF to impose an almost complete prohibition on the use of IDA and IFAD credit funds to pay for international TA; the task team’s ability to mobilize TA financing from other donors (DFID, TACIS, SIDA, FAO) on grant terms largely alleviated this problem. 2.2 Implementation (including any project changes/restructuring, mid-term review, Project at Risk status, and actions taken, as applicable) In response to changes in the institutional and economic environment, and in order to respond effectively to implementation bottlenecks and newly emerging needs, various modifications were agreed upon by GOK and IDA/IFAD in the course of project implementation. Early difficulties also resulted from the change in the leadership of MAWR almost as soon as the project became effective, which led to a much diminished institutional commitment to the project objectives and content. This problem was only effectively overcome with a change in the Ministry’s leadership in 2001 and the subsequent appointment of a new PIU Director; implementation performance improved substantially thereafter. The Revolution of March 2005 did not significantly affect implementation, because the APIU and the key implementing institutions were able to maintain their momentum. (1) Land and Agrarian Reform. Implementation of the LAR component encountered several serious initial obstacles, most of them attributable to flawed pre-project reform activities. The main problem was the hasty, incomplete and partly non-transparent and inequitable initial distribution of land and non-land assets prior to project start-up. This was compounded in the early project years by continued resistance to true farm restructuring in several quarters, especially among local officials and farm managers in Chui oblast. A large number of families had not received any land share certificates; many land shares had been distributed in a manner not conforming to the prescribed legal norms and procedures; and many had been issued without parcel plans, maps or even names on the ownership certificates. This created many conflicts that needed to be resolved. The distribution of non-land property shares proved even more challenging, as many former state and collective farms were heavily indebted and the issue of how to deal with their debts had not yet been resolved. Illegal asset privatization had been

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widespread, influential individuals had obtained disproportionate shares, and the condition of many assets was so poor that they were considered unfit for distribution. This complicated the completion of the LAR reform, because many disputes, complaints and conflicts needed to be addressed: 50% of the disputes reviewed under the project related to property shares. Restructuring of the farms where land shares had not yet been distributed or had been issued incorrectly (mainly in Chui) proved significantly more difficult than had been anticipated at appraisal, due to strong local resistance by vested interests. Early reports of progress in restructuring and the issuance of land certificates proved misleading, because many of the farms were only restructured pro-forma, but without any change in management structure and/or any real effort to let individuals take out their shares and operate independently. Progress in covering these farms with training and public awareness to pave the way for surveyors to map plots was initially slow in the face of resistance from farm managers who sought to maintain the status quo, with two of the 22 targeted flatly refusing to cooperate and restructure. Progress improved measurably when more resources were targeted at this problem. Although to a lesser extent, counterpart funding shortfalls experienced until 2001 also impeded progress. Even when funding was provided, none was included for an entire year for critical training and legal awareness activities. Once project funds were focused on an intensive public information, awareness and training program for the affected farm populations, implementation of the restructuring, surveying, mapping and title issuing program accelerated. The imposition of a moratorium on land sales and lease auctions by GOK shortly after project start-up, and lifted only in September 2001, also proved a serious hurdle on the way to establishing appropriate land policies and transactions procedures that were needed to foster the development of a land market. While the moratorium was in effect, many informal lease and sale transactions took place without the benefit of an appropriate legal framework, and no pilot auctions as foreseen at appraisal could be carried out to test and refine the relevant procedures. The land market has since then begun to develop, albeit slowly, but there still are a number of restrictions (intended to safeguard the interests of small local farmers vis-a-vis those of outsiders) that limit sales of agricultural land. An important modification to the original design was the decision to assign the bulk of land surveying through competitive tendering to newly established private survey companies, rather than to the state agency. This resulted in substantial cost savings and at the same time provided a strong boost to the development of the private surveying business. It also allowed surveying, mapping and land titling to proceed more rapidly. (2) Rural Advisory and Development Services (RAS). Two major implementation issues constrained the coverage and quality of the services provided by the RAS. The first was the almost complete lack of counterpart funding during the first three years of the project. As a result, RAS activities could only be effectively provided in the three oblasts that received parallel financing from the Swiss SDC (Issyk-Kul, Naryn, Jalalabad). Staff left the service, because salaries were not paid for a long time, and DFID ended its supplemental support earlier than planned because its funds could not be utilized as planned for the envisaged TA. The unequal provision of funding and the unequal access to TA between oblasts receiving Swiss support and those that did not led to sharp differences in RAS service coverage and quality in the different

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oblasts. A significant increase in the IFAD financing percentages finally overcame the problem of inadequate counterpart funding, and an agreement with the SDC to restructure the Swiss financial and TA support for RAS ensured that the available assistance was subsequently distributed equally among all oblasts. Second, while the quality of services improved steadily over time, the number of clients regularly contacted only reached satisfactory levels from 2002/2003 onward. It was difficult to establish the RADSF as a truly farmer-driven service provider, and this only began to happen when the institutional structure was decentralized in 2001 in an effort to make the service more client responsive. Traditional top-down management practices -- with more emphasis on quantity than quality, and with no experience and little inclination to elicit client views and respond to client needs – proved hard to overcome. The steering councils established to provide a voice to the farmer-clients were not very representative of the vast majority of smallholder farmers. Traditional attitudes and expectations concerning the provision of public services free of charge also explain the low initial client identification with RAS. Only in the last few project years was it possible to collect meaningful amounts of farmers’ membership fees and direct client payments for advisory services received; by 2005 these covered between 3 and 7% of total RAS expenses in the seven oblasts. Considerably more promising has been the growth in revenues generated through service contracts with institutional clients; by 2005 these contributed 20% to the RASs’ income, with RAS Chui and RAS Jalalabad covering well over one third of their total expenses through such contracts.1 Cost cutting efforts since 2006 have further reduced the dependence of the RASs on external donor support, so that for 2008 it is estimated that self-generated revenue will cover approximately 40% of total RAS expenditures. Nevertheless, financial sustainability of the RAS system has not yet been achieved. It will require GOK and MAWRPI to contribute to the funding of public-good advisory activities. A number of steps were taken during project implementation to move the RAS towards the goals of institutional and financial sustainability. These included an administrative decentralization, replacing the original RADS Foundation by the Association of RASs (ARAS), that gave much operational and financial autonomy to the seven oblast-level RASs, the transformation into a membership organization (a step that was not, however, as effective as had been hoped), the adoption of an institutional “mandate” system that linked funding to specific activities, the introduction of a (partially) performance-based payment system for staff, and the legal right to contract with third parties for providing advisory services. In the final project year, a major review was carried out to help define a future course of action that would allow the individual RASs to achieve longer-term sustainability without continued direct budget support from external donors. This restructuring is now being carried out under a new project supported by IFAD, SDC and IDA, the Agricultural Investments and Services Project (AISP). FDF Subcomponent. This component started out very vigorously and successfully, with the strong collaboration of the UNDP’s Poverty Alleviation Program in group formation. Difficulties began to mount, however, from the first half of 2000 onward. First, KAFC failed to develop an acceptable group lending manual, which blocked additional disbursements to KAFC 1 Opportunities for such third-party contracts are more limited in other oblasts.

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and therefore restricted lending to reflow funds; new disbursements were frozen by IFAD until the situation was rectified in late 2002. A governmental decision in the spring of 2000 to provide an interest rebate on KAFC loans for spring planting caused IDA in June to place a moratorium on further disbursements for group lending activities under its Rural Finance Project, because this step threatened the financial viability of KAFC; IFAD followed suit, and disbursements into the FDF resumed only when the moratorium was lifted in October 2000. Almost immediately thereafter MOF imposed a ceiling on ASSP funds that could be disbursed, and this again limited the volume of FDF lending. Lending volume rose sharply in 2001, and IFAD agreed in 2002 to provide additional resources for the FDF through an internal reallocation of its Loan funds from the unutilized provisions for RADS farm machinery demonstration centers. This led, however, to protracted disagreements between MOF and KAFC – as MOF wanted these new funds treated as an MOF loan to KAFC, while the IFAD Loan Agreement specified these to be a capital infusion into KAFC. The issue was only resolved in KAFC’s favor in late 2003, and these additional resources were therefore effectively available for on-lending only from early 2004 onward. Even then, lending remained at disappointingly low levels in 2004 and 2005, because KAFC had diverted FDF reflows from the FDF revolving fund to other lending operations. Only in 2006 did the volume of lending significantly increase again, once the diverted funds were, under pressure from the task team, restored to the FDF group lending facility. The shortfalls in utilization of the credit facility limited both the volume of lending and the number of poor reached. This was compounded by a unilateral decision taken by KAFC, in violation of the legal agreements with IFAD, requiring partial collateral for credits financed from the FDF, although the facility was purposefully designed to be non-collateralized so as to reach and serve the rural poor. Nevertheless, more than 33,000 poor households, a substantial share of the rural poor, received credit. Repayments were 100%. (3) Seed Industry Development. A significant redesign of several subcomponents was required to adjust to a rapidly changing economic and institutional environment, and wavering commitment within MAWRPI (and Parliament) to develop a truly private and competitive seed industry much delayed the adoption of essential legal and regulatory reforms. Two of the subcomponents (seed industry rehabilitation, and demonstration of best practice commercial seed production) required a substantial redesign to ensure that investments made were financially viable, while placing the support for the seed industry on a broader base. The international TA envisaged for seed development and breeding through an institutional link with ICARDA did not materialize, mainly because the leadership of the Agrarian Academy, at the time parent agency of both CRI and FPRI, adamantly opposed foreign TA. There also was growing opposition within MOF to the use of borrowed funds for international TA. This hurdle was overcome by obtaining TACIS agreement to attach a grant-funded two-year TA project (Dec. 2001 - Nov. 2003) for the seed sector to the ASSP; when this project ended, Swedish SIDA agreed to continue this support (2004-2008). Particularly throughout the initial implementation phase serious delays occurred due to the lack of ownership and commitment within MAWR and its Seed Unit. The policy guidelines for compulsory seed certification were not prepared, and the National Seed Association was not established as required by the end of 1998, causing non-compliance with two legal covenants. A full year was lost for variety testing due to delayed procurement of seeds; after two years of

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project implementation no suitable building for the Republican State Seed Inspectorate (RSSI) had been acquired; the Seed Law amendments were only finalized and approved in 2005; the law on Plant Breeders Rights was submitted to Parliament only in 2005, instead of mid 1998; and laboratory refurbishments were held up due to late procurement. Most importantly, there was a lack of interest and commitment by MAWRPI to reorient its role from directly managing to overseeing and regulating the seed sector. Throughout the project period MAWRPI continued to purchase and distribute large quantities of seed, interfered with pricing, and pressured aiyl okmotus (local self-governments) to give farms that were “registered” as seed farms preferential access to LRF land. Combined with its continuing practice of certification, registration/attestation and preferential treatment of a limited number of seed farms and its attempts to directly allocate special equipment to specific farms, these practices posed a lingering obstacle to the development of a competitive seed industry and seed market. As a result, small farmers began to benefit only in the later project years from the support provided to the seed farms when more and better seeds became available; more immediate benefits were realized by those roughly 26,000 poor farm families who participated in the Community Seed Funds introduced during the course of project implementation. The legal and regulatory reforms envisaged directly collided in several areas with the vested interests of influential stakeholders and this explains, to a considerable degree, the slow pace of progress in this area. Persistent efforts by the Bank’s team, supported with TA from the FAO and SIDA, were required to see these reforms carried through. The amendments to the Seed Law, particularly the removal of the requirement that seed farms be licensed by MAWRPI, was only approved in 2006 by Parliament, and the revised Plant Variety Protection Law only in March 2005. The Seed Association of Kyrgyzstan (SAK), established to represent the interests of private firms active in seed production and marketing, initially did not fulfill its avowed mandate, because MAWRPI officials occupied key leadership positions within SAK and exerted effective control over it; this was only corrected in the later project years after intensive efforts by the Bank’s task team. Nevertheless, MAWRPI’s frequent and large purchases of seeds and their distribution through administrative arrangements explain why many nominal SAK members continue to regard MAWRPI as their major client and source of income and show little interest in the development of a competitive seed market. (4) Crop Protection and Plant Quarantine. Most activities foreseen under this component were completed by 2003, albeit after much delay. Preparation of the rationalization plan for plant quarantine laboratories and of the manual on pesticide management, application, crop protection and plant quarantine were much delayed, causing non-compliance with legal covenants until they were provided to IDA in 1999. Due to difficulties in preparing feasibility studies for the rehabilitation of buildings, problems encountered during construction and late procurement of major equipment, the laboratories were only finished with considerable delay. (5) Agricultural Market Information. The Kyrgyz Agricultural Market Information Service (KAMIS) suffered from the repeated shortfalls and delayed provision of GOK counterpart funding and its initial inability to generate and retain revenues of its own. This caused a number of key staff to leave the service when their salaries were not paid for extended periods of time. Information provision and coverage had to be curtailed. Radical cost cutting and the decision,

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advocated by the Bank and implemented in 2003, to transform KAMIS from a ministry service into a private company that would operate under contract to MAWRPI finally opened the way to an institutionally and financially sustainable arrangement. Only then was KAMIS legally able to charge for services rendered, but it also compelled KAMIS to cut its expenditures so as to match its revenues. Since then, GOK funding for the public-good service provided by KAMIS has been provided through annual contracts between MAWRPI and KAMIS. Revenue from services provided to other private and institutional clients in 2007 amounted to about 30% of the total. (6) Flood Damage Repair and Rehabilitation. The unusually lengthy process of governmental ratification of the necessary amendments to the DCA considerably delayed the start of implementation. The procurement process, managed by the Irrigation PIU, for the modeling contract and unanticipated early (2005) and heavy (2006) spring floods caused further delays, as did the contractor’s inability to mobilize a sufficient number of heavy trucks to bring stones to the work site on time. Nevertheless, all activities planned under this additional component were satisfactorily completed within the allocated budget. (7) Avian Influenza. The investments financed under this newly added component in the final project year were carried out as planned. The central and two regional veterinary laboratories and that at the Livestock, Veterinary and Pasture Research Institute were rehabilitated and furnished with urgently needed equipment, and a number of safe animal carcass disposal facilities (“Bekkari holes”) were constructed and/or rehabilitated in various locations throughout the country. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The M&E system was inadequately designed during appraisal. No concrete measurable outcome indicators were identified, and no baseline and target values were established -- either for the PDO outcome indicators or for component-specific outputs and outcomes. Instead, the M&E system, still to be established, was to provide location- and institution-specific baseline and target indicators based on annual project work programs, which had not been finalized. Given that this was one of the first rural operations financed by IDA in the Kyrgyz Republic, the lack of in-country capacity to develop and monitor project outcomes, the complexity of the project and the intertwined nature and impact of various projects supported by different donors in the rural sector, more emphasis should have been paid during appraisal to develop the M&E framework fully, including an adequate measurement methodology. Component outputs and (some) outcomes were monitored, but the quality of monitoring varied substantially. Information provided during early supervision missions was not always reliable, particularly with regard to the LAR component, in effect concealing problems faced in implementation. The RAS system, by contrast, effectively collected, disseminated und used a considerable number of output and outcome indicators throughout. Data for other indicators could not feasibly be collected by the APIU or needed to be adjusted during implementation to reflect changes in project activities. Extensive efforts were made starting in early 2001 to strengthen capacity for monitoring project outputs and outcomes and to develop and implement an appropriate M&E system. APIU staff participated in international training, which substantially strengthened the M&E capacity of the

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APIU. In the subsequent project years, output indicators were effectively compiled and used to gauge implementation progress. More emphasis was also placed then on the collection of qualitative outcome indicators measured through beneficiary surveys, notably for the RAS system, to help gauge changes in service orientation and quality. 2.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution, as applicable) The project was rated as a Category “C” operation, and the main safeguards issue was the expected positive impact on the environment through improvements in soil quality, waste management, and the more effective use of seeds, fertilizer and agricultural chemicals. The crop protection and plant quarantine services were expected to reduce the risk of new pests and regulate the quality, supply and use of pesticides. These activities were combined with field trials and demonstrations of the IPM approach that was successfully introduced by the project. Compliance with fiduciary requirements was in considerable jeopardy in the early stages of project implementation. The project’s financial management and accounting system had major deficiencies, and several initial attempts to hire a qualified financial manager failed, resulting in non-compliance. The lack of counterpart funds and the loss of substantial PPF funds in 1999 (due to the collapse of the bank where they were deposited) not only caused several disruptions in project implementation, but also led to a diversion of IFAD funds in 2000 to cover GOK counterpart obligations. Disbursements from the IFAD Special Account had to be suspended until these ineligible expenditures were recovered to the Special Account. There were two other incidences of improper financial management and procurement. Approximately US$6,000 provided for the procurement of seeds in 1998 were not accounted for and were only recovered after a lengthy investigation. And RAS engaged for some time in 2000 in activities outside its mandate, while its financial management and accounting system was so poor that auditors refused to express an opinion in their audit reports. Hiring of an international financial management specialist was instrumental in correcting the deficiencies in the system (including manuals, software, training). From 2001 onwards, significant efforts by the APIU, under new leadership, brought the financial management and accounting system in full compliance with Bank policies and procedures. Thereafter, financial and procurement matters were managed very satisfactorily. 2.5 Post-completion Operation/Next Phase (including transition arrangement to post-completion operation of investments financed by present operation, Operation & Maintenance arrangements, sustaining reforms and institutional capacity, and next phase/follow-up operation, if applicable) Post-completion support for the investments financed and institutions established is being provided through three main channels: (i) a follow-on operation, the Agricultural Investments and Services Project (AISP), co-financed by IDA and IFAD and with parallel financing from the Swiss SDC, (ii) other rural sector operations financed by IDA and by other donors, and (iii) government support and funding.

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Outstanding issues concerning the land and agrarian reform are being addressed under the ongoing IDA-supported Land and Real Estate Registration Project (LRERP) and a follow-up project recently approved by the Bank’s Board. This Second LRERP will provide support for the development of the land and real estate market, by further developing a reliable and efficient registration system. This will include addressing such issues as the regularization of problematic ownership rights cases and cases where conflicts have arisen. The AISP contains a major component designed to introduce, country-wide, an environmentally and socially sustainable and economically productive system of improved management of pasture land which accounts for about 90% (9.2 million hectares) of all agricultural land. Adequate transition arrangements have also been put in place for the Rural Advisory Services within the AISP which will support, with annually declining funds, the final phase of institutional development of the RAS. Improvements in the RAS governance, staffing and management arrangements are intended to enhance client responsiveness and financial sustainability and to improve service quality, range and outreach. The objective is to put the system in a position where it can function without further budgetary support from external donors. Project funding will be provided directly to farming communities, who will be responsible for defining their own extension needs, contracting with an eligible service provider, monitoring service delivery, and paying for services received. KAFC is in the process of being privatized, with one or more strong international partners as major shareholders, and this is expected to strengthen its capacity to extend credit to rural clients. The successful program of Community Seed Funds is being significantly expanded under the AISP, with a particular emphasis on improving food security and raising the productivity of poor farmers. The private seed industry and the Seed Association continue to receive technical support under a project funded by the Swedish SIDA, in continuation of the assistance provided within the framework of SIDA-IDA collaboration during the implementation of the ASSP. The AISP will also expand the scope of IPM activities to cover more crops as well as livestock and to spread awareness and adoption of IPM to all oblasts of the country. Current provisions by GOK for the maintenance and operations of the facilities rehabilitated under the Crop Protection and Plant Quarantine component are inadequate. Major investments, totaling US$1.1 million, were made to rehabilitate and upgrade key laboratories. After the end of ASSP support in 2003, when all project investments and activities were satisfactorily completed, GOK was to finance the recurrent costs of these services, including the operation and maintenance of the modernized laboratories. Site visits in early 2008 to the two central laboratories for the crop protection (toxicology) and plant quarantine services revealed, however, that MAWRPI has failed to ensure adequate funding and staffing of these essential facilities, rendering both laboratories inoperative. MAWRPI has since then assured IDA in writing that future budgets will include adequate funding for staff and laboratory operations. The Kyrgyz Agricultural Market Information Service will receive some financial support, for two more years and on a declining scale, under the AISP on the basis of an annual service contract with MAWRPI. MAWRPI will gradually assume the entire cost of the annual contracts.

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The funding provided for HPAI control and prevention activities was only a comparatively small contribution to the larger nation-wide and multi-year effort to enable the national veterinary and human health services to deal effectively with the threat of HPAI. The bulk of this effort is being funded by the ongoing HPAI Project. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) The development objectives of the ASSP and the priorities identified were fully aligned with the government’s policy priorities and the Bank’s CAS at the time of appraisal and continued to remain so during project implementation. The 1998 CAS placed heavy emphasis on restoring the agricultural sector as a key element to foster growth and reduce poverty. The ASSP, as one of several rural operations initiated during that time, was to establish critical support services for farmers and a suitable legal and institutional framework for an agricultural sector based on efficient, market-driven private farming. It was part of a cluster of Bank projects that sought to underpin the reform and recovery of Kyrgyz agriculture – along with the Sheep Development Project, the Irrigation Rehabilitation Project, the Rural Finance Project, and the Land and Real Estate Registration Project. Sustaining agricultural growth and raising farm productivity and rural incomes remain key priorities of GOK. The agricultural policy concept of the Kyrgyz Republic for the period until 2010 highlights the importance of further strengthening agricultural advisory and information services. Likewise, the Joint Country Support Strategy 2007-2010 adopted by the Bank jointly with the ADB, SDC, DFID, and the UN Group focuses on providing support to GOK in implementing the agricultural sector strategy and the development of rural support services and on fostering strong and sustained pro-poor growth. The key objective of the Bank’s Country Development Strategy 2009-2011 is the alleviation of poverty with high emphasis placed on increasing agricultural productivity and income growth. In addition, the project has been responsive to changing needs and priorities (flood emergency, HPAI) of the Kyrgyz Republic, and project design and institutional and implementation arrangements were modified several times (notably in the RAS and Seeds components) to serve better the project’s and the government’s development objectives. 3.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in Annex 2) The project achieved its development objectives, albeit with some shortcomings in several areas. It laid down the foundation for the market-based economy in the agricultural sector by modernizing legislation, rationalizing the regulatory framework and significantly improving the incentive environment across a range of key areas. It established policies and procedures for land auctions and guidelines and regulations for the management and leasing of state-owned LRF land. It achieved the adoption of critical amendments to the Land Code, the mortgage law, the law on management of agricultural land and 14 subsidiary regulations. It was instrumental in

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modernizing the Seed Law, developing and adopting the laws on plant breeders’ rights and on chemicalization and plant protection, modernizing the laws on plant variety protection and on plant quarantine, and developing a number of associated regulations, standards and implementation guidelines in the seed, plant protection and pesticide management areas. It established the groundwork for the development of grassroots-based farmer cooperatives by establishing group credit self-help groups and community seed funds and developing the procedures for their legal registration. The project contributed to increasing the productivity, profitability and sustainability of Kyrgyz agriculture by supporting the implementation of policy and institutional reforms and the establishment of essential farmer support services. It promoted and deepened the land and agrarian reform, provided critical advisory services for the newly emerging private farms and small-scale loans for poor farmers, supported the modernization of the key public and private sector institutions in the seed sector and the creation of farmer groups collaborating in community seed banks, facilitated Kyrgyz membership in several essential international agricultural regulatory bodies and schemes which in turn opened access to world markets for Kyrgyz producers, developed the legal basis and upgraded the institutions for crop protection and plant quarantine, and established a country-wide, well-functioning agricultural market information system. It repaired seriously damaged flood protection works on the Kugart River and greatly improved the safety of the local residents. And the ability of the national veterinary services to respond to the threat of highly-pathogenic avian influenza has been much strengthened through laboratory upgrading and the provision of urgently needed equipment and facilities. While the transition from centrally planned to privately and competitively managed agricultural production is not yet fully complete, the institutions and services set up with project support are providing critically needed services to the farmers and rural population. The project contributed substantially to moving the land and agrarian reform towards completion and, in particular, to the distribution of land and non-land assets to farmers. With direct project support about 240,000 ha of agricultural land were distributed to private farming units, increasing the total area distributed from 766,000 ha in 1997 to 1,007,000 ha in 2006, equivalent to 90.8% of the land available for distribution. By the end of 2006 a total of 531,818 permanent land share certificates, with parcels demarcated on the ground and parcel plans included in the certificates, were issued. The project supported the reorganization and distribution of land and property shares in 20 of the 22 former state and collective farms that had not yet been restructured, and it initiated the privatization of the former state seed and breeding farms. The reorganization of these 20 state and collective farms led to the creation of initially 905 new farms, agricultural cooperatives and other types of enterprises, but further structural changes continue to take place as land owners decide either to withdraw their holdings from larger units and operate on their own or, conversely, to join with neighbors or relatives in larger ventures. Country-wide, private farm management structures now prevail almost universally. Farmers are benefiting from project activities through improved access to critical inputs including seeds, credit, market information and advisory services which much improved their ability to establish and operate private farms. During the almost nine years of project implementation, a total of 4,574 groups of poor farmers with 33,052 members received loans from the FDF. High-quality seed was provided to approximately 26,000 farmers through CSFs.

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Crop and fodder varieties developed or acquired from abroad increased productivity and also introduced profitable new crops such as soybeans. Critical market information is now available to all farmers, free of charge. The RAS system is the only extension service provider with a nationwide network and substantial outreach; by the end of 2005 it was working in 55% of all villages, directly reaching 6% of all farm households and (since most farms are jointly operated by a group of families) about 21% of all farms. Productivity, profitability and sustainability of private farms have improved notably. In 2002, private peasant farms already generated seven times the value added per hectare and five-and-a-half times the value added per worker as did the remaining unrestructured state and collective farms.2 Additional specific productivity gains resulted from the use of high-quality seeds by CSF members and from the adoption of IPM methods disseminated by the project. 3.3 Efficiency (Net Present Value/Economic Rate of Return, cost effectiveness, e.g., unit rate norms, least cost, and comparisons; and Financial Rate of Return) The project was primarily focused on supporting policy, legal and institutional reforms and strengthening. No ex-post estimation of its economic or financial efficiency was undertaken. 3.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency) Rating: Satisfactory The project was relevant and timely. It responded to critical needs in the Kyrgyz agricultural economy and to strategic priorities indentified as such in the CAS. Weakness in initial project design were recognized and effectively addressed very early during implementation. The intended objectives were achieved, even if in several cases only with considerable delay. The project made a substantial contribution to raising agricultural productivity, reducing poverty in the rural areas, strengthening key institutions, and promoting private enterprise in farming. 3.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) Cooperation with multiple other donors and projects was very productive and important. The

ASSP was widely regarded as providing an overarching operational and institutional framework for other donors’ support in the agricultural sector, and a number of them essentially attached their own topically focused projects to the ASSP, either to provide specific additional or more intensive support to an ASSP-assisted institution or program (SDC, DFID, UNDP, TACIS, SIDA, FAO), or to build upon an activity initiated or an institution established/strengthened by the ASSP (GTZ, which picked up some of the CSFs and helped them develop into full-fledged cooperatives).

The switch from state to private surveyors in the LAR component provided a crucial initial boost to the development of the private surveyor industry.

2 World Bank, Kyrgyz Republic: Agricultural Policy Update – Sustaining Pro-poor Rural Growth (Report No.

31040), 2004

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In the seed sector, some results achieved exceeded those anticipated at appraisal: no other country in Central Asia, for example, has as yet become a member of ISTA or UPOV, and the SAK has taken the lead in establishing a regional seed association for Central Asia.

The flood relief support could be provided quickly and effectively because the project had gained prior experience with CSFs and could readily replicate this model. In addition, good working relations with GTZ and its agricultural cooperatives project allowed for rapid provision of critical farm machinery to two local cooperatives serving the flood victims, a process that might otherwise have taken years to arrange.

(a) Poverty Impacts, Gender Aspects, and Social Development The privatization of farm land and its distribution to all members of the former collectives

was an enormously important and effective instrument to support the poor. The small farm plots provided them with a critically needed basis for making a living when most other employment options in the rural areas had disappeared in the aftermath of the collapse of the Soviet system.

The CSF program and the flood victim rehabilitation program modeled after it were limited to poor households, owning less than 2 ha of farm land.

The targeting mechanism, eligibility criteria and loan conditions under the FDF group lending facility ensured that credit was targeted towards the poorest and most vulnerable. Target villages were identified by the UNDP Poverty Alleviation Program, based on poverty level, giving priority to the poorest and most remote. Only groups whose members’ income did not exceed US$20 per month (at the time of group formation) were eligible to receive FDF loans. And loans were based on group-based social collateral. (Unfortunately, this targeting mechanism was for some time rendered ineffective when KAFC unilaterally introduced physical collateral requirements. The extent of the negative impact can, however, not be quantified.)

Special and effective efforts were made to ensure that women’s legal rights concerning land were safeguarded.

A noteworthy aspect of the project is the improved access to extension services for women, who accounted for 51% of all training participants, 47% of the regular RAS clients and 42% of all regular client contacts.

Women’s groups were explicitly targeted under the Community Seed Fund (CSF) program to receive high-quality vegetable seeds.

Group formation, although usually not formalized in a legal manner, proved difficult at first, due to lingering fears of a renewed collectivization, but gradually took hold in the FDF, RAS and CSF components and helped pave the way for more formal cooperative structures that have since been successfully established under several other projects supported by IDA and others (e.g., Village Investment Project, GTZ Cooperatives Project).

(b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) Institutional strengthening and capacity building was an integral part of most of the project components. In the case of the RAS system the achievements are not yet such that their longer-term sustainability can be regarded as being assured, but the foundation has been laid; a final

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phase of external support, now being provided under the Agricultural Investments and Services Project, will seek to complete this task. The key governmental institutions in the seed sector – RSSI, SCVT, CRI, FPRI -- have been successfully strengthened to the point where the first two meet international standards and the other two are performing effectively. The efforts made in the Crop Protection and Plant Quarantine component have been in considerable measure undone by MAWRPI’s failure to cover O&M costs and staff salaries; it will be difficult to rectify this, because the capacity embodied in the laboratory staff who have left will not be easily recovered. KAMIS has successfully been transformed into a commercially operating private entity. The Many of the CSFs are thriving as viable farmer self-help groups, and the first and most dynamic among them have developed into full-fledged cooperatives. The Seed Association of Kyrgyzstan has become an active promoter of Kyrgyz seed producer interests. MAWRPI itself has gained an Agricultural Projects Implementation Unit that is exemplary in its professionalism and effectiveness and is managing multiple operations. (c) Other Unintended Outcomes and Impacts (positive or negative) Not applicable. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes) No ex-post beneficiary surveys or stakeholder workshops were conducted. 4. Assessment of Risk to Development Outcome Rating: Moderate The risk that development outcomes will not be sustained is low with respect to the achievements under the LAR, Seeds, KAMIS, Flood Repair and HPAI component, but significant for the RAS and the Crop Protection and Plant Quarantine components. This risk to the latter two components is due to concerns over their financial sustainability. Government commitment to, and financing of, the public-good elements of the services provided has been inadequate so far and this is likely to remain so, given the precarious governmental budget situation. In the case of the central toxicology and plant quarantine laboratories, MAWRPI failure to provide O&M funding and to maintain adequate staffing has already caused both facilities effectively to function; MAWRPI has committed itself to rectifying the funding problem, but the staff capacity already lost will not be easily and quickly regained. In the case of the RASs, their future will increasingly rest on their ability to generate revenue through direct contracts with community-level farmers’ organizations and other clients. Generating sufficient demand for their services will in turn depend on further improving their service coverage and quality, and the final phase of support being provided to the RASs under the ongoing AISP is intended to achieve this. It is notable, that the rural population is willing and able to pay for critical self-identified needs, as the experience under the First and Second Village Investment Projects has shown.

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A second risk is that of a possible reversal of some of the key reforms in the legal framework governing the agricultural sector; concerns in 2008 over rapid food price increases seem to have triggered revived interest in some quarters in restoring greater governmental control over the production and distribution of essential agricultural commodities. 5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues)

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase) Rating: Moderately Satisfactory Bank performance during project identification, preparation, and appraisal was moderately satisfactory. The task team took into consideration the available sector reviews and analyses and appropriately identified the key issues and problems faced in Kyrgyz agriculture at the time. Lessons learned from other donor’s activities were incorporated. The project objectives were fully in line with the government’s policy and structural reform objectives. However, there were also several significant shortcomings. Given that GOK, and MAWR in particular, had very little experience with agricultural sector reform, institutional arrangements and work programs should have been vetted and spelled out more carefully. The seed sector component, for instance, had to be completely redesigned shortly after the project became effective, because a number of activities envisaged could not be implemented as planned and/or were inadequate to address the key issues identified. The project design was complex and covered multiple sectors and even more implementing institutions and numerous separate activities. This posed a serious risk of overload for institutions that were young and inexperienced, especially with respect to internationally funded projects. Most project staff had no experience outside the former Soviet Union and therefore lacked a reference frame against which to gauge what they were expected to do and to achieve. Kyrgyz agriculture faced a host of problems, but it was a challenging task to tackle all of them at once. In retrospect, the task team did not adequately assess the capacity of MAWR to implement a substantial policy, institutional and operational agenda across such a broad spectrum of subsectors. Neither did it fully recognize GOK’s severe budget constraints which caused major problems with respect to counterpart funding and eventually led to the virtual prohibition on using project funds for international TA. The fact that three different task team leaders succeeded each other in short order during preparation/appraisal was probably not conducive to maintaining continuity and focusing on greater in-depth assessments of local capacity at the level of the many individual implementing institutions. A number of project components lacked detailed and agreed-upon work plans for the first year of implementation. This placed a heavy burden on the PIU to implement the project. FMS, procurement and M&E arrangements and plans were only partially in place, and no baseline indicators and target were established.

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(b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Satisfactory Bank performance during supervision was satisfactory. The quality of supervision, the focus on development impact, and the attention paid to resolving design and implementation problems were high. Supervision missions were carried out regularly, with an adequate skill mix to cover the various components. Bank management provided above-average supervision budgets in recognition of the project’s complexity and the problems that needed to be addressed. Supervision missions were complemented by detailed reviews and analyses of particular subjects (e.g., assessment of women’s rights to land, 2000; study on competitive inputs marketing, 2000; tri-partite RAS Review, 2006), by utilizing other sources of funds. Bottlenecks were identified and addressed with vigor. Supervision reports balanced critical assessments constructively with practical advice for solving problems. This was complemented by continuous communications with the APIU on all essential aspects of project implementation, with proactive support provided to the APIU to respond to problems encountered (counterpart funding, financial management, M&E, seeds component redesign, RAS decentralization, KAMIS privatization). The very close cooperation between the APIU and the Bank team was critical for achieving the project’s development objectives. Bank support was focused on achieving the project’s development objectives and on maximizing project impact on poverty reduction, while pursuing cost-effective solutions, sustainability and ensuring high quality of the services provided. When implementation progress was unsatisfactory from late 1999 until September 2000, the Bank made special efforts to assist the Borrower in overcoming the bottlenecks and adjusting project design and implementation arrangements to match the new realities. The Bank also responded rapidly and effectively to GOK requests to help address critical emerging needs (flood damage, HPAI threat), by restructuring the project. The MTR and the subsequent project restructuring were appropriately utilized to address problems encountered. Adequate project follow-up support and transition arrangements have been ensured. The Bank team maintained a continuous and intensive dialogue with the MAWRPI leadership. This was instrumental in sustaining and deepening commitment to the sectoral reform agenda and led MAWRPI to look to the team in helping to develop the ministry’s rural sector strategy and its contributions to GOKs Comprehensive Development Framework and its Poverty Reduction Strategy. The team’s good rapport with the other project financiers (IFAD and SDC) and with other donor and project teams in Kyrgyzstan was a major factor in securing complementary grant assistance from other donors and reaping important synergy benefits from effective cooperation.

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(c) Justification of Rating for Overall Bank Performance Rating: Satisfactory The good performance during supervision made up for the only moderately satisfactory performance during preparation and appraisal. The initial design shortcomings were proactively and effectively addressed, and the project achieved its development objectives. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory While there were significant shortcomings in the Borrower’s performance at the beginning of the project, these were largely rectified during implementation, and overall Borrower performance is therefore assessed as moderately satisfactory. The lack of adequate counterpart funding seriously affected project implementation until other donors agreed to provide essential TA with grant funding and IDA and IFAD raised their respective financing percentages. The protracted and slow process of implementing the agreed changes in the legal framework (particularly in the seed sector) and the very time consuming and lengthy ratification process of legal documents (e.g., DCA amendment for the flood damage repair component) hindered effective project implementation. The Borrower was very late in complying with several legal covenants. The key issues that remain to be addressed by the Borrower after project completion are to re-establish and ensure adequate funding of the laboratories that were rehabilitated under the Crop Protection and Plant Quarantine components, and funding the contractual arrangements with the RASs and with KAMIS to continue to provide their essential public-good services to the rural population. (b) Implementing Agency or Agencies Performance Rating: Satisfactory The performance of the implementing agencies, taken together, is rated satisfactory, notwithstanding the fact that in some instances the performance of individual agencies was not commensurate with that rating. The main implementing agency was MAWRPI, with its various departments and subsidiary institutions. The performance of the Seed Unit, responsible for the moving the legislative and regulatory reform agenda forward and for coordinating project activities in the seed sector as a whole, was unsatisfactory. The Unit lacked the vision, commitment and drive to fulfill its mandate. By contrast, the performance of the RSSI and the SCVT was highly satisfactory; both carried out their agreed work programs as planned, the RSSI achieved ISTA accreditation, and the SCVT operates in full compliance with UPOV requirements. The performance of the Department of Chemicals and Crop Protection (DCCP) and of the State Inspectorate of Plant Quarantine (SIPQ) was satisfactory until about 2005, when MAWRPI essentially ceased to finance their respective laboratories. The performance of the CRI and the FPRI (both initially

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under the Agrarian Academy, but since 2002 under MAWRPI, the latter then folded into the LVPRI) was satisfactory, having improved substantially after their transfer from the Agrarian Academy to MAWRPI. The performance of the Department of Water Resources (DWR) and its Irrigation PIU was satisfactory, notwithstanding the somewhat delayed completion of the flood damage repair works on the Kugart River. MAWRPI itself received very substantial ongoing budget support for its recurrent expenditures (excluding staff salaries) from the European Union, and this proved to be a considerable disincentive to decisive internal reform and refocusing the Ministry on its new role as an oversight and regulatory institution, rather than an institution directly managing the agricultural sector. The Ministry’s performance was moderately satisfactory: satisfactory performance from 2001 through 2005, when the Ministry generally, but cautiously pursued a path of market-oriented policy reform, was sandwiched by moderately unsatisfactory performance in the initial project years and only moderately satisfactory performance in the final two years when there were frequent changes at the top. The failure to fund the staff and operations of the toxicology and plant quarantine laboratories modernized at considerable expense under the ASSP is indicative of that deteriorating performance in recent years. The performance of the APIU was satisfactory. Initial weaknesses were outweighed by highly satisfactory performance from 2002 onward, when its commitment to achieving the PDOs and its energetic leadership were a driving force for successful project implementation. Implementation issues were addressed proactively and in a timely manner. Financial management and procurement were handled effectively. Strong leadership was provided for all components, and after the initial start up problems, the project was managed effectively, particularly given its complexity and the multitude of components. The level of interaction with the task team (keeping IDA informed at all times, alerting the Task Team to anticipated bottlenecks and problems) and the coordination with the various donors supporting or collaborating with the project were outstanding. Particularly noteworthy was also the flexibility to adopt and incorporate changes in design and scope of project activities, which was substantially more demanding on the APIU than on other project PIUs. The two areas where the APIU’s performance initially showed shortcomings related to fiduciary and M&E issues; with the appointment of the new APIU Director, these were rigorously addressed. The Republican Center for Land and Agrarian Reform (RCLAR) and the oblast- and raion-level CLARs performed satisfactorily, leading the effort of providing clear and comprehensive information to the members of state and collective farms regarding the LAR objectives and procedures, their rights and their options. Their work was much appreciated by the clients. They produced and disseminated large quantities of informational material, held hundreds of public information meetings to explain and to answer questions, and actively supported numerous farmers in resolving legal disputes and securing their rights, The performance of GosRegister, the agency that absorbed the State Agency on Land Management and Land Resources (SALMLR) almost as soon as the project became effective, was moderately satisfactory. While it pushed ahead very forcefully in the initial project years -- with its own funds and outside the project framework -- with the issuance of land ownership certificates to the new farm families, it did so with notable disregard for the quality of its work.

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Many of the land certificates issued were subsequently found to be flawed, because they lacked plot maps etc. Its performance improved measurably once it agreed to use the project funds earmarked for its work and to work in accordance with the agreed project parameters. Overall, the performance of the various agencies that initially comprised or today comprise the rural advisory services system is rated moderately satisfactory. The original RADSF did not overcome the legacy of top-down centralism and failed to develop a client-oriented service. It did, however, succeed in consolidating several pre-existing smaller, regionally focused and differently structured and managed extension services into a single coherent service and in establishing the essential institutional structures and deploying the necessary staff to deliver rural advisory services throughout the country. This new service also performed well in helping poor farmers organize themselves into Self-Help Groups that were then able to obtain group loans from KAFC. The performance of the subsequently established decentralized oblast-level RASs varied considerably among RASs and across different aspects of their activities, but was on the whole moderately satisfactory. Shortcomings ranged from initially inadequate financial management in several cases to unsatisfactory performance in establishing contractual relationships with new institutional clients and other donor projects looking for advisory service providers (Osh); the effort to develop into genuine membership organizations was largely unsuccessful; and the farmers’ steering councils were neither adequately representative of RAS clients nor effective oversight bodies for the RAS managers. On the positive side were the adoption of a work planning system that linked tasks to identified needs and to budget lines, the upgrading of staff skills, the implementation of a partially performance-based remuneration system for staff, and the increasing reliance in a number of RASs on part-time community agents living in the villages. The national coordination unit, RASCO, performed only moderately satisfactorily, focused more on administrative matters and an effort to reassert itself as an oversight body rather than on representing the RAS system vis-à-vis MAWRPI and MOF and on identifying and mobilizing new opportunities for the RASs to generate income. The ATC, finally, performed satisfactorily until it became embroiled in protracted internal management conflicts in the final project year; its performance in managing the IPM program was very satisfactory. KAFC performed marginally satisfactory. This rating is based on the fact that KAFC was late in complying with legal conditions (group lending manual), several times failed to adhere to agreed project conditions (imposition of collateral requirements, diversion of funds to other lending facilities), and the rather low levels of lending, relative to the funds provided by IFAD, from 2002 onward. These deficiencies were counterbalanced by KAFC’s effective loan administration and supervision, its successful efforts to develop many poor farmers into creditworthy and responsible borrowers, and its success in helping a number of associations of Self-Help Groups to develop into micro-credit associations that are now able to operate as micro-credit intermediaries. The non-MAWRPI institutions in the Seed component performed satisfactorily. The Seed Association of Kyrgyzstan started out poorly, but over time and under new leadership became energetic and proactive; its leadership in establishing a Central Asian seed association is indicative of this. The Community Seed Funds, with a few exceptions, performed satisfactorily

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or even highly satisfactorily. 56% of them continue to expand in membership and range of activities, and only 21% are slowly declining. Their national federation (established in 2006) performed satisfactorily in supporting its members. KAMIS performance was highly satisfactory. It established what is widely regarded as the most effective agricultural market information system in the CIS, successfully managed the transformation from a governmental service into a private service provider, attracted contract revenue from other clients, and is poised to attain financial sustainability – provided MAWRPI lives up to its commitment to finance the annual contracts for the public-good service provided by KAMIS. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory In the aggregate, Borrower performance was satisfactory. The project was complex and none of the implementing agencies except MAWRPI itself had any prior experience with Bank projects or, for that matter, with any externally support project. Substantial learning was therefore required, and implementation performance improved as experience was being accumulated. 6. Lessons Learned (both project-specific and of wide general application) Project design and implementation arrangements need to be tailored to the client’s

capacity, and work plans for at least the first year of all project components need to be in place and agreed to before the start of implementation.

Major policy and legislative reform across multiple sectors or subsectors, which require prudent management of the political processes and of multiple stakeholders, should not be expected to be accomplished in only a few years.

Establishing baseline and target values for key indicators are and having an effective M&E system are essential for measuring progress and impact.

Proactive supervision and implementation support can overcome project design weaknesses.

A multi-component project covering an entire sector of the economy can be an effective tool to address issues across a range of related subsectors and thereby generate important synergies. It also provides more flexibility than a more narrowly focused project to respond more quickly and readily to unforeseen new needs and requirements, by allowing resource reallocations, shortening decision-making processes and facilitating inter-agency coordination and collaboration.

Effective donor cooperation at the country and project levels significantly improves the prospects for achieving development objectives by generating positive synergies, minimizing duplication and overlap, avoiding conflicting and/or confusing advice, and facilitating mutual support across projects.

Support services for primarily poor clients, such as a rural advisory service, are unlikely to attain financial viability and complete self-financing in a transition economy and do require public funding for their public-good aspects for a considerable time.

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7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies None. (b) Cofinanciers None. (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) None.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate

(USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

LAND AND AGRARIAN REFORM

4.01 3.39 85

RURAL ADVISORY & DEVELOPMENT SERVICES

10.68 7.50 70

SEED INDUSTRY DEVELOPMENT

7.66 5.71 75

CROP PROTECTION/PLANT QUARANTINE

1.33 1.12 84

AGRICULTURAL MARKET INFORMATION

1.51 1.29 85

MAWR (PROJECT IMPLEMENTATION UNIT)

0.77 0.90 117

FLOOD DAMAGE REPAIR 0.00 2.22 -- HPAI PREPAREDNESS 0.00 1.13 --

Total Baseline Cost 25.97 23.26 90

Physical Contingencies 1.23 Price Contingencies 2.96

Total Project Costs 30.16 23.26 Front-end fee PPF 0.00 0.00 Front-end fee IBRD 0.00 0.00

Total Financing Required 30.16 23.26

(b) Financing

Source of Funds Type of Co-

financing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

International Development Association (IDA)

Credit 14.98 13.39 89

International Fund for Agricultural Development (IFAD)

Loan 7.92 7.51 95

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Annex 2. Outputs by Component (1) Land and Agrarian Reform. The project contributed substantially to the distribution of land and non-land assets, but the land and agrarian reform process is not yet fully completed. During project implementation 240,000 ha of agricultural land were distributed to private farming units, increasing the total amount of land distributed from 766,000 ha in 1997 to 1,007,000 ha in 2006, equivalent to 90.8% of the land available for distribution. ASSP support was mainly concentrated in three oblasts: Batken, Chui and Issyk-Kul. Countrywide, these land assets were distributed to approximately 523,000 families. Nevertheless, the distribution of land remains incomplete; major backlogs still exist in Chui (16.6%), Issyk-Kul (5.6%) and Osh (9.8%).

Table 2.1: Farm Land Distributed (ha)

Total

'000 ha LRF

Seed and Breeding

Farms

Land Distributed by Shares

Land not yet Distributed

Land distributed

under ASSP (1998-2006) Total

1997Batken /a 0 0 0 0 0 0Jalalabad 191,464 47,836 27 134,116 9,485 143,601Issyk-Kul 186,258 38,206 24,370 123,682 0 123,682Naryn 178,859 37,831 47,000 94,028 0 94,028Osh 360,225 90,758 10,467 233,054 25,946 259,000Talas 134,101 26,871 17,173 90,057 0 90,057Chui 447,610 111,909 59,603 91,534 184,564 276,098

Total 1,498,517 353,438 158,613 766,471 219,995 986,4662006

Batken 86,031 20,902 314 62,022 2,793 35,886 64,815Jalalabad 186,611 42,813 5,305 134,262 4,231 138,493Issyk-Kul 192,195 33,956 5,273 144,427 8,539 17,344 152,966Naryn 142,320 27,864 20,974 93,482 0 93,482Osh 244,405 56,691 5,048 164,757 17,909 182,666Talas 113,493 27,017 2,534 81,010 2,932 83,942Chui 498,148 82,843 23,672 326,502 65,131 18,542 391,633

Total 1,463,203 292,086 63,120 1,006,462 101,535 71,772 1,107,997/a Included with Osh.

Land for Distribution by SharesLand not for Distribution

By the end of 2006, a total of 531,818 permanent land share certificates with parcel plans, and with parcels demarcated on the ground, had been issued. The ASSP funded the issuance and registration of 30,355 of these certificates, mainly in Chui and Issyk-Kul. Cadastral works for the determination of the physical boundaries of parcels (mainly in Chui and Issyk-Kul, where there was the most resistance to restructuring) were financed for 179,621 plots for which the new owners had previously received certificates that lacked sketch maps or had maps that did not correspond to a defined parcel on the ground. In addition, 10,148 villagers who received legal assistance under the project to settle conflicts over land shares successfully obtained land plots as a result of the assistance provided to them. The project directly supported the reorganization and distribution of land and property shares (worth 95.7 million Som) in 20 of the 22 remaining former state and collective farms that had not

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yet been restructured. In addition, the project and the CLARs supported and facilitated the privatization (not yet fully completed) of the former state seed and breeding farms. Project activities focused mainly on information campaigns and on training conducted on each collective farm to raise awareness about land reform and to initiate the reorganization and asset distribution process. The reorganization of these 20 state and collective farms led to the creation of 905 new peasant farms, joint stock companies, agricultural cooperatives and other types of farming enterprises. Private farm management arrangements are now the general norm throughout the country. The project also established policies and procedures for land auctions as well as the legal framework for the development of the rural land market. Project staff actively contributed to the development of the legal basis in the area of land management, including: (i) guidelines and regulations for lease, management and use of LRF land and pastures, which were subsequently adopted by Parliament; (ii) changes in the Land Code, (iii) in the mortgage law, (iv) in the law on management of agriculture land and (v) in fourteen associated by-laws. Training materials on the land and agrarian reform were developed, a collection of fifty of the most important legal documents was compiled and published (1991-2006), and a compendium of answers to “Frequently Asked Question” was put together, based on actual questions received and handled by the LAR team. The materials collected and developed were utilized for training and publicly disseminated to improve access to critical information on issues of the land and agrarian reform and to raise awareness on legal rights – particularly for women. Leaders of 100 aiyl okmotus were trained, 1,981 seminars with approximately 83,520 participants were held across all oblasts, jointly with RAS and ARIS. Information sheets on 88 different topics were published, and LAR information was disseminated through some 165 newspaper articles, 217 radio programs, and 81 TV video spots. Approximately 5,000 copies of the weekly newspaper (81 issues) and 1,000 copies of the monthly journal ‘AgroPress’ (20 issues) were published and disseminated. With the legal basis for land market development now established, the number of auctions, sales, mortgages and leases of agricultural is gradually increasing. Three pilot auctions were carried out before the project start, but the moratorium on sales and auctions in effect from 1999 until 2001 prevented the sale and lease of land. Thereafter, 10 land auctions of LRF land were held between 2001 and 2007 (covering 15,101 ha), but the vast majority of LRF land has been leased to farmers. Annually, between 61 and 71% of the available LRF land has been leased, with an average of about 8,600 lease contracts annually and tenures of up to 5 years. The number of sales, leases and mortgages has increased significantly over the last few years. In 2007, 48,140 sales, 4,666 leases and 43,324 mortgages were registered; however, the majority of mortgage loans remains concentrated in urban areas, and many land transactions in the rural areas are informal and not registered. (2) Rural Advisory and Development Services (RADS). The Rural Advisory and Development Services Foundation (RADSF) was established in 1998 as a non-governmental organization with project support (IFAD-financed) and the Swiss Government. It had a Secretariat and seven subordinate oblast centers and was governed by a National Steering Council (NSC) and by oblast steering councils comprised of representatives of farmers’ organizations. In 2001, RADSF was

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restructured and renamed Rural Advisory Service Foundation (RASF), with the NSC as its supreme governing body. Responsibility for service delivery was decentralized to the oblast level. The previous RADSF Secretariat was divided into the Rural Advisory Service Coordination Office (RASCO) and an Advisory Training Centre (ATC). The ATC became responsible for the development of training material and training of trainers, while RASCO assumed the functions of a secretariat for the NSC. In 2005-2006 the system underwent further institutional change, with the seven oblast RASs registering as autonomous public membership associations, each governed by a council. The seven regional RASs then initiated the establishment of an Association of Rural Advisory Services (ARAS) at the national level, but its legal registration was never completed. RASCO functioned as the Secretariat to the National Steering Council. The ATC became a legally autonomous institution, governed by a council comprising its primary clients, the managers of the seven regional RASs. At the end of the ASSP, the RAS system consisted, thus, of seven oblast-level RASs, the ATC, and the ARAS with its RASCO. The RASs deliver a wide range of rural development services, including: crop and livestock production training, demonstrations, consultancy and advisory services, information dissemination, facilitation of livestock purchases and artificial insemination, support for establishment of small agribusinesses for seed supply or machinery contracting, handicraft development, farm business planning, facilitating access to credit, and establishment of savings groups. The RAS network is independent of Government and has been a critical source of information for farmers, most of whom became farmers only after Independence.

Table 2.2: Coverage Indicators of the Rural Advisory Services

Indicator Unit 1999 2000 2001 2002 2003 2004 2005 2006 2007 TotalVillages in KR No 1,657 1,663 1,663 1,628 1,708 1,778 1,816 1,815 1,835 1,835Villages served by RAS No 901 1,060 901 727 787 854 930 992 978 978Village Coverage % 54 64 54 45 46 48 51 55 53 53Rural Households No 523,087 540,098 529,988 559,922 611,638 654,587 697,273 700,776 714,785 714,785Rural Households served by RAS No 21,673 30,561 35,272 34,616 24,432 36,050 41,752 51,513 42,933 42,933Rural Household Coverage % 4 6 7 6 4 6 6 7 6 6Groups Formed and Supported No 1,084 1,836 2,256 2,050 2,135 2,434 2,690 2,853 2,197 2,197

newly created No 892 988 936 998 1,064 1,193 1,050 1,386 888 888existing groups No 0 737 1,190 1,052 1,071 1,241 1,640 1,467 1,309 1,309UNDP groups No 192 285 456 183 139 87 25 20 69 69

Training Courses Conducted No 1,358 3,573 5,234 9,237 13,427 7,936 9,902 8,875 4,506 64,048Participants of Training Courses No 18,607 40,867 47,873 87,304 84,639 63,356 79,292 74,717 35,079 531,734

of which Women No 7,998 16,975 19,621 48,302 43,811 34,885 41,791 41,388 17,265 272,036of which Women % 43 42 41 55 52 55 53 55 49 51of which Members of UNDP groups No 900 1,339 1,563 3,130 2,182 592 142 106 341 10,295

Demonstrations Conducted No 180 555 1,140 1,485 795 936 1,017 1,111 390 7,609Adaptive Research (JAC/JDT) No 309 188 236 166 209 70 1,178Farmer Field Schools (FFS) established No 0 0 0 0 4 14 40 18 20 96Farmers trained in FFS No 0 0 0 0 100 284 673 370 300 1,727

Regular RAS Clients No 18,106 23,831 20,011 19,455 18,828 22,075 25,227 27,764 20,849 20,849of which with Women No 4,020 7,421 6,951 6,512 9,127 9,056 10,493 14,282 9,829 9,829of which with Women % 22 31 35 33 48 41 42 51 47 47

Client Contacts No 58,189 73,200 66,786 111,420 137,159 154,155 184,388 187,368 98,808 1,071,473of which with Women No 13,749 27,793 25,412 42,644 57,626 61,191 86,490 91,838 41,771 448,514of which with Women % 24 38 38 38 42 40 47 49 42 42

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The RAS system is the only extension service provider with a nationwide network and substantial outreach, working in 55% of all villages, directly reaching 42,933 of the 0.7 million rural households (6.0%)3 and 21% of all farms. RAS formed, in many cases jointly with the UNDP, and then supported a total of 2,197 groups and delivered 64,048 training courses with 531,734 participants. Approximately 7,600 demonstrations, 1,178 adaptive research projects, and 96 Farmer Field Schools providing training for 1,727 farmers were carried out. By the end of the project, RAS had 20,848 permanent clients, and 1,071,473 direct contacts with clients were recorded since the project start. Particularly noteworthy is the much improved access to extension services for women, who accounted for 51.2% of the training participants, 47.1% of the RAS clients and 41.9% of the client contacts. The financial viability of the RASs remains uncertain, as long as GOK and MAWRPI do not yet pay for the important public good aspect of rural advisory services. Revenue from paying clients has risen measurably over the past few years, and non-donor funding now averages about 40% of the regional RASs’ expenses. Nevertheless, longer-term sustainability will require increasing outreach as well as further institutional reform that simultaneously strengthens the system’s responsiveness to its clients and its ability to generate revenue from them. At the same time, GOK and MAWRPI will need to acknowledge the important public-good aspect of effective advisory services for the predominantly poor farming households and provide a budgetary contribution for it on an annual contract basis. Against this background, the joint SDC/IDA/IFAD review undertaken in December 2006 identified the challenges faced by the RASs: (i) increase client contributions to payments for services; (ii) increase coverage while reducing costs and improving quality; (iii) improve responsiveness to clients; (iv) reduce costs by rationalizing staff; (v) improve quality and cost efficiency by exposing the RASs to competition; (vi) transfer control for key decisions such as staffing from oblast councils to managers; (vii) abolish redundant national level bodies RASCO and NSC; and (viii) improve technical and business management support to RASs from ATC. While the effectiveness of RAS in terms of technology adoption rates and impact at the farm level has not been systematically monitored, a sample survey of farmers provided useful indications. RAS is the most important source of extension information, and about 80% of the RAS members and 65% of the RAS clients consider the quality of its services to be good (or even excellent), and 80% stated that they meet their needs. At the same time, 62% of the respondents noted that RAS services need to be improved and be made more responsive to client needs. Some of the advice provided is considered too basic and repetitive and does not respond to the specific needs of the farmers. Access to RAS services also needs to be improved, with clients citing a notable focus on middle-income farmers, leaving the really poor underserved. Overall, the farmers interviewed noted that they had improved their knowledge of crop and animal diseases and that they had achieved yield increases based on the advice received.

3 The increasing fragmentation of rural households, as larger family units are being replaced by smaller nuclear

households, disguises to some extent the significant increase in the number of households contacted each year when this is expressed in percentage terms.

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Farm Development Fund. The project provided critically needed access to credit for the newly emerging small farmers, but it could have supported more beneficiaries if the funds provided to KAFC had been more effectively, fully and continuously utilized. Of the two instruments for the provision of rural credit initially planned under the project, only the Farm Development Fund was established, while the pilot Financial Advisory Services (FAS) facility was canceled and its funds were rolled into the FDF. A total of 4,574 groups of small farmers with 33,052 members received loans from the FDF, with an average group loan size of approximately Som 10,624 (between US$250 and US$300, depending on the exchange rate prevailing at the time). These groups were formed by both UNDP and RAS, which supported them in preparing business plans and loan applications.

Table 2.3: FDF Operation 1997-2007 (Som, unless otherwise indicated)

1999 2000 2001 2002 2003 2004 2005 2006 2007Cumulative at

Project Closing

Annual Avarage at Project Closing

Funds provided for the FDF 11,870,460 69,672,067 69,672,067 69,672,067 69,672,067 98,049,697 101,726,035 101,726,035 101,726,035 101,726,035 77,087,392

Credits issued for the period 12,485,758 48,168,060 58,926,280 36,188,000 17,734,000 30,148,000 36,748,000 70,716,000 40,021,000 351,135,098 39,015,011

Repayment of principal for the period 2,008,547 11,216,812 31,439,156 37,815,375 49,526,821 32,971,748 20,586,049 34,882,462 53,431,861 273,878,831 30,430,981

Outstanding principal amounts 10,477,211 47,428,459 74,915,583 73,288,208 41,495,387 38,671,639 55,784,183 91,732,183 78,307,616 78,307,616 56,900,052

of which:

on balance sheet 10,477,211 47,428,459 74,182,041 69,719,755 36,264,180 35,858,619 53,417,738 91,576,923 78,174,555 78,174,555 55,233,276

out of balance sheet - - 733,542 3,568,453 5,231,207 2,813,020 2,366,444 155,260 133,061 133,061 1,666,776

Funds utilization rate, % 88% 68% 108% 105% 60% 39% 55% 90% 77% 77% 77%

FDF funds still available 1,393,249 22,243,608 5,243,516- 3,616,141- 28,176,680 59,378,058 45,941,852 9,993,852 23,418,419 23,418,419 20,187,340

Balance in the FDF revolving account 73,852 140,287 - - 23,793

FDF funds not used for group lending 1,393,249 22,243,608 5,243,516- 3,616,141- 28,176,680 59,378,058 45,868,000 9,853,565 23,418,419 23,418,419 20,163,547

Groups (No.) 352 763 785 542 239 357 426 733 377 4,574 508

Groups, cumulative (No.) 352 1,115 1,900 2,442 2,681 3,038 3,464 4,197 4,574 4,574 2,640

Group members (No.) 2,464 5,341 5,495 3,794 1,673 2,367 2,499 6,159 3,260 33,052 3,672

Group members, cumulative (No.) 2,464 7,805 13,300 17,094 18,767 21,134 23,633 29,792 33,052 33,052 18,560

Average credit per group 35,471 63,130 75,065 66,768 74,201 84,448 86,263 96,475 106,156 76,768 76,442

Average credit per member 5,067 9,019 10,724 9,538 10,600 12,737 14,705 11,482 12,276 10,624 10,683

Repayment rates, % 100% 98% 96% 97% 95% 99% 99% 99% 100% 100% 98% FDF lending volume fell short, however, of the funding made available under the project. The utilization rate of the funds provided to KAFC averaged only 77% over the lifetime of the project and was as low as 39% in 2004 (see graph below).

FDF Funds versus Lending Volume

‐

20

40

60

80

100

120

1999 2000 2001 2002 2003 2004 2005 2006 2007

Million Som

FDF Funds L ending Volume

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There were several causes for this less than satisfactory lending performance. First, KAFC failure to develop an acceptable group lending blocked new IFAD disbursements into the FDF and therefore restricted lending to reflow funds until the manual was prepared and accepted. A Presidential Decree in early 2001 imposing a ceiling on interest rates that would have rapidly eroded the FDF capital base forced the Bank and IFAD to impose a moratorium on FDF lending until this decision was rescinded. This was followed by the imposition by MOF of a ceiling on ASSP disbursements, which again affected lending volumes. When IFAD provided additional funds through a reallocation in 2002, MOF blocked their utilization until early in 2004 by demanding that these funds not be treated as a capital infusion into KAFC, but as a loan from MOF. A further problem arose when KAFC failed to restore FDF reflows to the facility’s revolving fund and diverted them instead to other uses. FDF lending therefore remained far below its potential levels from 2002 through the end of 2005. Only in 2006, when most of the diverted funds had been restored, did it again reach satisfactory levels, but even then it amounted to only 90% of the available loanable funds. The FDF targeting mechanism, eligibility criteria and loan conditions ensured that credit was targeted towards the poorest and most vulnerable. Firstly, target villages were selected by UNDP, based on poverty levels, giving priority to the poorest and most remote. Secondly, only groups whose members’ income did not exceed US$20 per month (at the time of group formation) were eligible to receive FDF loans. Thirdly, since the program was intended to support farmers who could not access other credit sources due to lack of collateral, the FDF loans were based on group-based social collateral. Unfortunately, this targeting mechanism was for some time rendered ineffective when KAFC unilaterally introduced physical collateral requirements. The extent of the negative impact can, however, not be quantified. (3) Seed Industry Development. The legal and institutional structure for the seed sector has been developed, and the Kyrgyz Republic has become a member of the main bodies governing the international seed trade (ISTA, UPOV, ISF, OECD) – the only Central Asian country to achieve this. Significant productivity gains have been achieved through the development and distribution of improved varieties and seeds, but have not yet had widespread impact. Entry into seed production remains restricted by MAWRPI procedures, which provide considerable scope for rent seeking by farms that obtain MAWRPI certification as seed farms. Nevertheless, the better seed farms have improved their management and marketing skills, are selling a reasonable proportion for domestic use, and are developing arrangements with foreign companies for seed production and export. All investments and activities planned in support of germplasm acquisition, variety development, seed breeding, testing and certification were undertaken and completed. The CRI and LPRI facilities were renovated and modernized, laboratory and field equipment provided, and institute and seed farm specialists trained in modern methods of seed selection and breeding. A substantial amount of germplasm was acquired for testing, and a small number of new varieties have been developed and submitted for official variety testing (see Table 2.4).

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Table 2.4: Germplasm Acquisition and Variety Development

CropGermplasm

AnalyzedVarieties

RegisteredVarieties Officially

Tested

Wheat >10,000 4 1Barley 6387 3 5Maize 111 1 -Alfalfa 204 1 -Sainfoin 43 1 3Soybean 24 2 -

The newly developed varieties are definite improvements over those traditionally grown, and not only with respect to yields. For the first time in 20 years a facultative wheat variety (‘Jamin’) is now available which can be planted both in spring and winter. Another new wheat variety (‘Kairak’) can be cultivated on non-irrigated land, as can two of the new barley varieties, ‘Kylym’ and ‘Bestam’. ‘Bestam’ is also highly resistant to lodging and ‘Kylym’ to powdery mildew and helminthosporosis. Particularly noteworthy was the project’s introduction of soybean, which was not grown in the country before; yields have been very high, and a soybean processing industry has developed. Critical in the area of fodder production have been the new varieties of sainfoin and alfalfa, for which no seed development had been undertaken since 1963 and 1987, respectively. The quantities of cereal and fodder super elite and elite produced under the project are summarized in Table 2.5.

Table 2.5: Production and Yield Gains of new Cereal and Fodder Varieties

tons/ha (%WheatFacultative Winter Wheat Jamin 0.5 48.0 0.39 6.14Winter Wheat Asyl 0.5 42.0 0.94 14.80Winter Wheat Adyr 0.5 60.0 0.36 5.67Winter Wheat Kairak 0.5 - 0.79 12.44BarleySpring Barley Kylym 1.5 - 0.25 4.08Spring Barley Bestam 1.5 - 0.30 4.90Winter Barley Gaukhar 1.5 - 0.56 9.15SoybeanSoybean Amantai 7709 2 2.4 1.26 78.75Soybean Amantai Ak-Jol 43 59.0 1.21 75.63AlfalfaAlfalfa Manas 8 0.5 - -Alfalfa Bereke 20 1.6 - -SainfoinSainfoin Belek 81 1.5 2.10/a Standard varieties, e.g. Intensivnaya (winter wheat), Ardak (barley).

CropYield Increase over

standard /aPrimary Seed

Production Area (ha)

Super Elite/Elite Seed Production

(tons)Variety

Project support for the development of private seed farms was redesigned very early on to assist more farms and to minimize the financial burden on them that the initially intended provision of capital equipment on credit terms would have posed. Project support for commercial seed

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production was therefore provided through two main channels: (i) the distribution of elite seed for multiplication to a large number of private farms (see Table 2.6) and (later) to Community Seed Funds, and (ii) the provision of credit for essential seed cleaning equipment.4 30 of the 158 then registered seed farms expressed interest in participating in the credit program for the purchase of seed processing equipment, and a total of 29 seed dressers and bag sewing machines were procured and distributed in 2004 on credit terms (2 years grace, 7 years repayment, interest 1% above inflation).

Table 2.6: Elite Seed Provided for Multiplication to Commercial Seed Farms

Amount of Seed (tons)

Number of Varieties Number of Farms Area Sown (ha)

Wheat 20 3 7 3300

Soy 52.3 2 1 411

Potato 200 4 17 60

Safflower 20 1 26 insignificant

Barley 140 1 26 na

Carrot 160* 1 not multiplied not multiplied

Sunflower 4105* 1 17 na

Winter Oil Rape 150* 3 na na

*=kg The Seed Association of Kyrgyzstan (SAK), representing the commercial seed producers, has become increasingly more active and effective in representing its approximately 175 members. SAK activities have included market promotion; a regular program of field days and variety demonstrations; monitoring seed production and disseminating information on seed availability; and lobbying on behalf of its members. The SAK is a full member of the International Seed Federation (ISF) and played a leading role in the establishment of the Central Asia Seed Association in 2006. SAK activities have helped raise the profile of Kyrgyzstan seed producers and established a number of potentially valuable contacts with international seed producers. The project also helped improve seed availability by establishing and supporting Community Seed Funds (CSFs), which also played an important role in supporting poor farmers affected by the 1999 drought and the early snow in 2000 and in assisting the victims of the 2003 floods along the lower Kugart River. Introduced in 2001 on a pilot basis, the program provided institutional support to poor farmers for forming community-based self-help groups, developed regulations and charters for their legal registration, distributed high-quality seeds to them, and provided agronomic advice. Seeds provided are returned (in cash or in kind) each year, with a 25% “fee” added, and used the next year to service even more farmers. 75 legally registered CSFs were established under the project, and approximately 26,000 poor farmers have been direct beneficiaries of the program. 43 CSFs continue to expand and 16 are stable, while 16 were, at the end of the project, found to have declined. A GTZ project “adopted” a number of the more dynamic CSFs, assisting them to develop into multi-purpose farmer cooperatives. In 2006 the CSFs formed a National Federation to provide support, liaise with public institutions and donors, and generally promote the interests of its member CSFs. To finance its operations, the members agreed to contribute an annual fee equivalent to 5% of the harvested seed.

4 Heavy machinery was provided to a number of seed farms by MAWRPI through a Japanese commodity grant.

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Table 2.7: Seeds Provided to Community Seed Funds

2001 2002 2003 2004 2005 2006 2007 Total

Farmers Benefiting 1709 1623 1186 1216 760 658 7,152Seed Distributed (tons) 889 1063 952 964 910 712 5,490Area Sown (ha) 4,453 4,792 3,074 3,904 3,337 2,453 22,013

Farmers Benefiting 34 49 77 102 120 382Seed Distributed (tons) 9 25 47,5 76 119 229Area Sown (ha) 35 107,3 179 303 475 992

Farmers Benefiting 430 526 480 399 353 345 2533Seed Distributed (tons) 200 246 266 240,3 167 164 1042Area Sown (ha) 975 1,203 1,148 959 680 654 5,618

Farmers Benefiting 289 1172 679 456 410 3006Seed Distributed (tons) 6 17 19,3 6 6 35Area Sown (ha) 433 1,398 1,505 402 452 4,189

Farmers Benefiting 564 518 400 227 207 96 2012Seed Distributed (tons) 5 5 4 3 2 1 20Area Sown (ha) 835 798 708 443 415 220 3,418

Farmers Benefiting 82 104 29 10 12 237Seed Distributed (tons) 35 31 4 2 3 74Area Sown (ha) 412 390 40 25 31 898

Farmers Benefiting 526 1008 962 994 629 4119Seed Distributed (tons) 76 826 729 793 602 3026Area Sown (ha) 28 305 246 226 201 1,006

Farmers Benefiting 675 691 4725 129 134 110 6464Seed Distributed (tons) 43 60 84 10 8 6 211Area Sown (ha) 1,718 2,407 3,352 394 336 237 8,444

Seed Distributed (tons) 14 15 11 11 51

Winter Wheat

Corn

Cotton

Spring Wheat

Spring Barley

Sunflower

Sugar Beet

Soybean

Potato

Table 2.8: Status of CSFs at the end of 2006

Growing Fast

Growing Slowly

Stable Declining Slowly

Failing

Batken 4 - - 1 3 /a -Jalalabad 8 - 4 4 /a - -Issyk-Kul 9 3 2 3 1 -Naryn 10 4 - 1 5 /b -Osh 13 1 4 3 /a 5 /a -Talas 10 9 1 - - -Chui 21 8 7 4 /a 2 /a -Total 75 25 18 16 16 -% 100 33.3 24 21.3 21.3 -/a Heat and drought in spring and summer 2006 suppressed winter wheat yields.

/b Frost and inadequate storage negatively affected seed potatoes, and drought affected spring barley yields.

OblastRegistered

CSFs

Assessment of Progress

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The third main thrust of project support in the seed sector focused on (i) strengthening MAWRPI’s regulatory services for variety testing and seed certification, (ii) establishing a suitable legal framework, and (iii) publishing and disseminating variety testing results and seed industry information. Most of the activities and investments to be financed were undertaken and completed, although often with much delay. Seed Testing. The rehabilitation of the central and three regional (Suzak, Ak-Suu, Kara-Suu) RSSI laboratories was completed in 2002; the main cause of delay was the difficult process of acquiring a suitable building for the central laboratory. As soon as the rehabilitation of the central laboratory was completed and the office and laboratory equipment purchased and installed, the RSSI became a provisional member of ISTA in 2003. Full ISTA accreditation, allowing the issuance of orange certificates required for the export of seeds, was obtained in January 2006. The seed certification system was further strengthened through the preparation and adoption of modern standards and regulations. A number of new standards on cereal crops, fruits, berries and sugar beet have been developed and published. Regulations for cereal and sugar beet certification/cultivation have been developed, and the weed (420 samples) and forage crop (80 samples) collections have been expanded and updated. In 2006, the cotton seed inspectorate and cotton seed laboratory in Kara-Suu, previously a separate agency, were placed under the RSSI; their facilities have been refurbished and adequately equipped. Additional SIDA support is planned to develop modern standards for cotton inspection and testing and in developing improved operational procedures. Variety Testing and Trials. The capacity to undertake variety testing was improved through the rehabilitation of buildings, purchase of laboratory equipment and staff training. The central laboratory and office buildings of the SCVT as well as four regional sites (Sokuluk, Bakai-Ata, Ak-Suu, Kara-Suu) were refurbished and equipped with office equipment and with the field equipment required to carry out variety testing. The SCVT is now capable of utilizing international experimental and data analysis procedures and has introduced tests for DUS and VCU. These tests are in accordance with the UPOV requirements, of which the Kyrgyz Republic became a member in 2000. A substantial number of variety trials were conducted at four sites in different parts of the country. Information about varieties and hybrids permitted in the country is disseminated annually, and workshops on new varieties and on cultivation technologies are held for seed farm managers, specialists, farmers, traders and students at the regional variety testing sites; 56 field days were conducted during project implementation, with approximately 3,000 participants. TA and Training. The technical and organizational capacity for seed certification and variety testing was further strengthened through technical assistance and training of key staff. A total of 126 staff of the Seed Inspectorate and 22 of the SCVT received in-country training, while 12 and 6, respectively, participated in international training courses. In addition 10 staff of the RSSI and 3 of the SCVT were trained to work in the new laboratories, and international consultants delivered training at both institutions. Legal Framework. New and adequate laws and regulations governing seeds and plant breeders’ rights have been adopted, albeit after a long process that lasted until the end of 2006. The necessary amendments to the 1998 Plant Variety Protection Law were finally adopted in 2005,

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the changes to the law ‘On Legal Protection of Selection Achievements (Plant Breeders Rights)’ in 2005, and those to the Seed Law (conforming with ISTA, OECD and other international requirements) became effective at the end of 2006. Regulations concerning the Republican Interdepartmental Seed Council were developed and approved in 2004, and ‘Seed Farm Regulations’ were introduced in 2006. The project also supported the preparation of the application for membership in the OECD Seeds Scheme, which has been submitted. More than 20 new crop varieties have been patented so far, but the protection of plant breeders’ right remains an issue because the royalty collection system is still weak. (4) Crop Protection and Plant Quarantine. An appropriate legal framework for the regulation of pesticide use has been established under the project, adequate regulatory structures have been put in place, and a pesticide registration system has been developed and implemented. The law on ‘Chemicalization and Plant Protection’ was adopted in 1999. An interagency commission for testing and registration of pesticides was established in 1998 and has developed and approved a list of pesticides and agrochemicals permitted in the Kyrgyz Republic. A number of relevant regulations were put into effect, including on: (i) testing and registration of pesticides and agro-chemicals, (ii) sanitary standard content for residual pesticides in soil, water and the air, (iii) supervision and control of safe use of pesticides and agrochemical, phyto-sanitary and agrochemical conditions, and (iv) safe use, storage and warehousing of pesticides in agricultural production. These have been complemented by four regulations developed by the State Committee on Standards and Meteorology, including: (i) rules and procedures for certification of pesticides and chemical fertilizers, (ii) guidelines and procedures for certification of organic fertilizer use, (iii) temporary procedures for certification of fields and greenhouses, and (iv) guidelines for the development and use of technical regulations on chemicalization and plant protection. Beginning in 2003 the project supported, with crucial TA provided by the FAO, the introduction of Integrated Production Management (IPM) in the country, beginning with a program of training-of-trainers and subsequently expanded to a series of farmer field schools (FFS) and to cover an increasingly broader range of crops. MAWRPI’s Department for Chemicalization and Crop Protection (DCCP) and the ATC jointly developed a handbook on IPM as well a training program for trainers and farmers which is utilized in the FFS. 75 FFS were organized, with trainers and farmer groups working together throughout the season in an interactive fashion. A solid cadre of experienced master trainers now exists, ready to disseminate IPM know-how further; they have formed several professional associations in different parts of the country. The program addresses Integrated Production Management (e.g., for cotton, potatoes, vegetables, etc.), rather than merely Integrated Pest Management. It is coordinated by the ATC, which also publishes a very useful monthly newsletter describing progress and activities, and has been implemented in a number of partnerships, including with the regional RASs, the Swiss-funded Agricultural Vocational Education Project, a number of NGOs, and several local agro-processing companies. The participation of processing industries is a particularly positive enhancement of the program. One company has a contract with farmer participants to supply vegetables, and the company is now funding an FFS trainer. Another processor has contracted an FFS group to supply tomatoes and is providing pre-season financing for the purchase of seeds and other inputs. Farmers participating in IPM Farmer Field Schools and utilizing the IPM approach substantially increased their gross margins per hectare.

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Table 2.9: Comparison between Integrated Production Management (IPM) and Farmers’ Practice (FP)

IPM FP IPM FP IPM FP IPM FPProduction cost (Som/ha) 60,500 36,750 32,750 17,200 71,700 45,448 20,344 21,648Yield (kg/ha) 44.8 t 27.7 t 18.8 t 8.6 t 29.3 t 17.9 t 3.68 t 3.16 tOutput price (Som/kg) 4 4 6 6 4 4 14 14Income (Som/ha) 179,400 110,800 112,800 51,600 117,148 71,700 51,520 44,240Gross margin (Som/ha) 118,900 74,050 80,050 34,400 45,448 9,369 31,176 22,592

/c Cotton, Jalalabad, based on 200 m2 plots.

Tomatoes /a Cucumbers /a Potatoes /b Cotton /c

/a Tomatoes and cucumbers, Kyzyl Kia, based on 200 m2 plots./b Potatoes, Naryn, based on 43 m2 plots.

The central toxicology laboratory near Bishkek and the regional laboratory in Osh were rehabilitated and equipped to internationally recognized standards to monitor implementation of the pesticide regulations. Laboratory and DCCP staff were trained abroad on critical aspects of pesticide use and in operating modern laboratory equipment. However, the failure of MAWRPI to budget adequately for laboratory maintenance and operating costs has effectively shut down operations since 2005, and the majority of laboratory specialists have left. MAWRPI has assured the Bank that the situation will be rectified, but at present the toxicology laboratory’s future is in serious doubt. The investments foreseen and activities to be financed in the plant quarantine subcomponent were completed. The rehabilitation of the Plant Quarantine Inspection laboratory in Bishkek and of the regional laboratory in Osh were completed in 2002, and all necessary equipment was purchased and installed. The long delay experienced in Bishkek was the result of lengthy investigations into the earthquake safety of the building. Plant quarantine procedures have been developed, including a handbook on risk criteria analysis, a glossary of phyto-sanitary terminology and an updated list of quarantine objects. Staff received specialized training both internationally and locally. The Law on Plant Quarantine was amended to conform with international standards and regulations, thereby facilitating Kyrgyzstan’s participation in the European Plant Protection Organization (EPPO) and accession to the International Plant Protection Convention (IPPC). Unfortunately, MAWRPI has failed since 2006 to provide the necessary budgetary resources for operating the laboratories. The decision to remove laboratory specialists from the list of state employees resulted in the departure of almost all of them. In the spring of 2008, when last visited by a Bank team, there were no laboratory activities at all. (5) Agricultural Market Information. The Kyrgyz Agricultural Market Information Service, (KAMIS) has been fully developed and is operational in all oblasts of the country. Seven oblast offices were established and equipped in 1998, and they remain fully functional, with well qualified and motivated staff, 14 of whom received training under the project. The service was developed as a MAWRPI service on the basis of a small pilot project initially supported by the British Know-How Fund. From the very beginning, the information collected, analyzed and disseminated was of high quality, and KAMIS became recognized as one of the best in the entire CIS. Its information benefits farmers, traders, processors and policy-makers, disseminated through multiple news media (7 TV programs, 9 radio programs, 15 newspapers) as well as by means of a weekly bulletin and weekly information sheets that are posted in public places

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throughout the entire country. This basic market information is of particular benefit to small farmers, who thereby have an opportunity to see input and product prices of relevance for their own operations. Specialized and more detailed market analyses are provided to commercial clients under fee-based contracts. KAMIS also supplies market information and analyses to government bodies, external aid agencies and projects. On average, 70 analytical reviews and/or information requests on market dynamics are provided to public sector institutions each year. KAMIS information is also available on its own and on two other web-sites that are continually updated, as well as via SMS on mobile phones. Its weekly bulletin ‘Bazar Tamrin’ contains, in addition to market prices, agricultural news and practical farming advice, with contributions provided also by other ASSP-supported institutions such as RAS. The range and depth of the information collected and disseminated are extensive, reflecting the needs of the various audiences. KAMIS collects information on more than 500 types and grades of commodities in 15 markets throughout the country (covering wholesale, retail and farmgate prices); prices in neighboring countries are also provided. Prices are published for different varieties and grades of major products, including the lowest, highest and average prices of all goods. For particularly important products prices are differentiated by quality, variety and size. Initially KAMIS was governed by a steering group with representatives of several other public institutions that contributed information to the service: the National Statistics Commission, the Anti-Monopoly Commission, and RADSF. This became increasingly unnecessary as KAMIS matured and its own information gathering made inputs from others redundant. Since KAMIS also suffered from the repeated shortfalls and delayed provision of GOK counterpart funding and its initial inability to generate and retain revenues of its own, it was agreed in 2003 to transform it into a private company that would operate under contract to MAWRPI. This allowed KAMIS’ management to charge for services rendered, but simultaneously forced it to align its expenditures with its revenues. Since then, GOK funding for the public-good information service provided by KAMIS has been provided through annual contracts between MAWRPI and KAMIS. Revenue from services provided to other private and institutional clients in 2007 amounted to about 30% of the total. (6) Flood Damage Repair and Rehabilitation. All activities, including the reconstruction of the embankments and check dams, the de-silting of the river bed, and the development of the siltation and flood model, were satisfactorily completed. 184,000 m3 of silt were cleaned from the bed of the lower Kugart River. Both embankments (3.1 km on the right bank and 2.7 km on the left bank) were reconstructed and strengthened. 51,600 m3 of excavations, 119,400 m3 of embankments, 59,900 m2 of slants and 69,900 m3 of stone timbering were undertaken and 91,756 m2 of Reno mattresses put in place. A computer simulation model of the siltation and wash-out process of the Kugart river bed was developed, allowing adequate flood risk and siltation analysis. By providing this critically needed emergency assistance, the project significantly increased the safety of the communities living in the area and eliminated the need for resettlement and the human hardship and economic costs associated with resettlement. Two large communities, with a combined population of 23,182 inhabitants, with 3,559 houses, 957 ha of agricultural land, numerous farm animals, and various public infrastructure assets (40 km of electricity lines, 2 km of water pipes, 45 social/cultural clubs) have been protected against future floods.

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(7) HPAI. The investments financed under this belatedly added component, which was intended to supplement the funding provided under the HPAI Project, were implemented as planned. They involved the partial redesign and rehabilitation of veterinary laboratory facilities, the provision of urgently needed laboratory equipment and consumables, and the rehabilitation of existing and construction of additional facilities (“Bekkari holes”) throughout the country for the safe disposal of animal carcasses. (8) Pasture Management Pilot. The pilot operation to develop and test community-based pasture management achieved all of its objectives. It was instrumental in fostering legislative changes to introduce community-based and decentralized pasture management in the Kyrgyz Republic. A review of the existing pasture legislation was carried out, roundtables with all major stakeholders were held to identify key areas requiring attention, a working group for drafting a new pasture law and regulations was established, consultations with key experts and representatives of government and society were held, and a draft pasture law and a draft regulation for Pasture User Committees were developed, discussed in roundtables and widely disseminated. The new pasture law was submitted to Parliament in early December 2008. Jointly with ARIS and the RAS, the project supported pasture users in four aiyl okmotus in mobilizing, organizing, implementing and monitoring community-based pasture management plans. Introductory meetings were held in each community to familiarize everyone with the objectives and tasks of the pilot, and focus groups discussions were held to identify priority problems in the management of the local pastures. This was followed by several rounds of village-wide meetings to discuss the results of the focus group discussions, elect Pasture Committee members and discuss and approve the Pasture Management Plans developed by these committees. Local capacity for community-based pasture management was increased through training regarding sustainable pasture management, pasture rotation, pasture monitoring, animal husbandry and health issues, as well as pasture legislation. The project supported the communities and local self-governments in developing their own locally appropriate and agreed pasture management plans, emphasizing the importance of equitable allocation of use rights, of long-term sustainability and of pasture improvement measures. Funds were provided to all four pilot communities to carry out an inventory of their pasture resources and to produce pasture resource maps, and small block grants were provided to the communities to finance selected small pasture improvement projects. A combined total of about 200,000 ha of pastures were managed by the rural communities and their local governments. The experience gained subsequently served to guide the development of the country-wide pasture management component of the new Agricultural Investments and Services Project.

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Annex 3. Economic and Financial Analysis (including assumptions in the analysis) Not applicable.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/

Specialty Lending John Cole Sr. Agriculturalist ECSSD TTL Mohinder Mudahar Pr. Agricultural Economist ECSSD TTL

Ramesh Deshpande Pr. Financial Operations Officer ECSSD TTL

Sarina Abdysheva Operations Officer ECCKG Operational issues Malcolm Childress Consultant (Land Reform Specialist) ECSSD LAR Francois Dauphin Agronomist FAO RAS, Seeds P. Dickie Consultant (Seed Specialist) ECSSD Seeds Dinara Djoldosheva Operations Officer ECCKG Operational issues Rohan G. Selvaratnam Consultant (Finance Assistant) ECSSD Project costing Jitendra P. Srivastava Sr. Agriculturalist ECSSD RAS, seeds Benoit Villerette Agr. Economist FAO LAR, RAS, seeds

Supervision/ICR Gotz A. Schreiber Lead Economist ECSSD TTL Maurizio Guadagni Rural Development Specialist ECC08 TTL Brian G. Bedard Sr. Livestock Specialist ECSSD TTL Gavin P. Adlington Sr. Land Administration Specialist ECSSD Land reform Roque Ardon Financial Management Specialist ECC08 Financial mgmt. Jennifer Corso Team Assistant ECSSD Project budget issues

Ramesh Deshpande Consultant (Financial Oper. Spec.) ECSSD Implementation arrangements

Almaz Djanaliev Procurement Specialist ECCKG Procurement Antoon S. van Engelen Consultant (Agriculturalist) ECSSD RAS Kees Eveleens IPM Specialist FAO IPM Ranjan Ganguli Sr. Financial Management Spec. ECSSD Financial mgmt. Renee A. Giovarelli Consultant (Land Lawyer) ECSSD Land reform David Gisselquist Consultant (Inputs Policy Specialist) ECSSD Seed policy J. Jones IPM Specialist FAO IPM Kubat Jumaliev Operations Officer ECCKG Operational issues Naushad Khan Lead Procurement Specialist ECSPS Procurement Hannah M. Koilpillai Sr. Disbursement Officer LOA Disbursement Talaibek T. Koshmatov Operations Officer ECSSD FDF, project issues Ainura Kupueva Operations Officer ECSSD Operational issues Nurbek Kurmanaliev Procurement Specialist ECSPS Procurement David G. Lugg Agriculturalist FAO Agronomic aspects Chris Matthias Consultant (Market Information Spec.) FAO KAMIS Javed Musharraf Country Portfolio Manager IFAD IFAD liaison John O. Ogallo Financial Management Specialist ECSPS Financial mgmt. Evgeny Polyakov Agr. Economist ECSSD Seed policy

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T. V. Sampath Sr. Agriculturalist ECSSD CSF, seeds Sandra Schnellert Junior Professional Associate ECSSD FDF, M&E Orunbek Shamkanov Operations Officer ECSSD FDF, LAR, KAMIS Bekzod Shamsiev Agricultural Economist ECSSD LAR, RAS, KAMIS E. John Stevens Consultant (Seed Industry Specialist) ECSSD Seeds Asyl Undeland Operations Officer ECSSD Project issues Nico van Wageningen Consultant (Extension Specialist) ECSSD RAS Peter Zara Junior Professional Associate ECSSD Project issues Alma Zhandautelova Financial Management Specialist ECC08 Financial mgmt. Willem Zijp Extension Specialist ECC08 RAS Tian Ya Country Portfolio Manager IFAD IFAD liaison (b) Staff Time and Cost

Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY96 18.40 FY97 401.46 FY98 247.16

Total: 667.02 Supervision/ICR

FY98 26.70 FY99 175.07 FY00 44 122.07 FY01 40 129.44 FY02 38 218.90 FY03 34 134.33 FY04 35 119.06 FY05 28 119.81 FY06 21 119.17 FY07 15 88.78 FY08 5 18.29

Total: 260 1271.62

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Annex 5. Beneficiary Survey Results (if any) Not applicable.

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Annex 6. Stakeholder Workshop Report and Results (if any) Not applicable.

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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Letter from the Ministry of Finance of the Kyrgyz Republic:

Ministry of Finance of the Kyrgyz Republic 12.12.2008 # 16-1-2-10088

Unofficial translation

Country manager of the World Bank Office in the Kyrgyz Republic Mr. Roger Robinson Dear Mr. Robinson,

Having reviewed the Implementation Completion Report for the Agricultural Services Support Project the Ministry of Finance expresses its gratitude to the World Bank for the objective appraisal of the result of the project and its overall impact on the agrarian sector. We fully agree with your opinion of ASSP as one of the most challenging projects as it was implemented during the years of economic reforms including land agrarian reform in our country. This in its turn had required extra effort both from the side of the World Bank and Government of the Kyrgyz Republic for the timely changes, correction of tasks and responses to the implemented reforms. Nevertheless we note with satisfaction that the objectives of the project are met and its impact on the agrarian sector is obvious.

We highly appreciate that the World Bank objectively appraised the risks and evaluated

the work of the project’s team from the side of the World Bank as moderately satisfactory as the work of the Government of the Kyrgyz Republic. However, taking into account all of the objective difficulties of the economic reform period in the Kyrgyz Republic and continuous coordination of actions from the side of the Government of the Kyrgyz Republic on the ASSP and achieved results of the project we propose to evaluate the work of the Government of the Kyrgyz Republic as satisfactory.

Sincerely Acting Minister Kojoshev A.

Executed by N. Japarova

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders IFAD endorsed the draft ICR without further comment.

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Annex 9. List of Supporting Documents Agricultural Support Services Project (ASSP) Kyrgyz Republic, Implementation Completion

Reports for all project components, Bishkek, 2007 Agricultural Support Services Project (ASSP) Kyrgyz Republic, “Report on Post Project

Monitoring and Evaluation: Seed Industry Development Component”, Bishkek, 2006 Agricultural Support Services Project (ASSP) Kyrgyz Republic, “Report on Post Project

Monitoring and Evaluation: Plant Quarantine and Crop Protection Component”, Bishkek, 2006

Kyrgyz-Swiss Agriculture Project, “RAS/KSAP Kyrgyz-Swiss Agriculture Programme: Programme Document for RAS/KSAP Phase VII, 7/2007 to 12/2010”, Bishkek, May 2007

Rural Development Fund, “Survey on Level of Ownership of Kyrgyz Farmers towards the Rural Advisory Service Network”, Bishkek, 2006

SDC/WB, “Joint External Review: Rural Advisory Service and Kyrgyz-Swiss Agricultural Program”, final report, December 2006

World Bank, “Kyrgyz Republic: Agricultural Support Services Project” (Staff Appraisal Report), Report No. 17312-KG, 3 April 1998

World Bank, Supervision Mission Aide Memoires, Project Status Reports, Implementation Status Reports, Back-to-Office Reports, Mid-Term Review Report, 1999-2007

World Bank, “Kyrgyz Republic: Agricultural Policy Update -- Sustaining Pro-poor Rural Growth: Emerging Challenges for Government and Donors,” Report No. 31040, 2004

World Bank, “Kyrgyz Republic: Agricultural Investments and Services Project,” (Project Appraisal Document), Report No. 43107-KG, 2008

World Bank, “Kyrgyz Republic: Second Land and Real Estate Registration Project,” (Project Appraisal Document), Report No. 44045-KG, 2008