Document of
The World Bank
Report No: 20237-KOS
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED TRUST FUND GRANT
IN THE AMOUNT OF US$10.0 MILLION EQUIVALENT
TO THE UNITED NATIONS INTERIM ADMINISTRATION IN KOSOVOFOR THE BENEFIT OF KOSOVO, FEDERAL REPUBLIC OF YUGOSLAVIA
(SERBIA AND MONTENEGRO) (KOSOVO)
FOR AN
EMERGENCY FARM RECONSTRUCTION PROJECT
June 5, 2000
Environmentally and Socially Sustainable Development UnitEurope and Central Asia Region
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CURRENCY EQUIVALENTS
(Exchange Rate Effective June 2, 2000)
Currency Unit = Deutsche MarkDM 1.0 US$0.49US$1.0 = DM 2.1
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS AND ACRONYMS
AAH - Action Against HungerEFRP - Emergency Farm Reconstruction Project
FAO - Food and Agriculture Organization of the United NationsFAO/ECU - FAO Emergency Coordination Unit in Kosovo
MCI - Mercy Corps IntemationalMTS - Mother Theresa Society
NGO - Non Governmental OrganizationPIP - Project Implementation PlanPMT - Project Management Team
SDC - Swiss Development CorporationSOE - Statement of Expenditures
UNMIK - United Nations Interim Administration in KosovoTSS - Transitional Support Strategy
Vice President: Johannes F. LinnCountry Manager/Director: Christiaan J. Poortman
Sector Manager/Director: Laura Tuck, Kevin M. CleaverTask Team Leader/Task Manager: Severin Kodderitzsch
KosovoFederal Republic of Yugoslavia
(Serbia and Montenegro) (Kosovo)Emergency Farm Reconstruction Project
CONTENTS
A Project Development Objective ................................................................ 2
1. Project development objective ................................................................ 22. Key performance indicators ................................................................ 2
B Strategic Context ................................................................ 2
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project .........22. Main sector issues and Government strategy ............................................................... 33. Sector issues to be addressed by the project and strategic choices .............................. 5
C Project Description Summary ................................................................ 6
1. Project components ................................................................ 62. Key policy and institutional reforms supported by the project ...................................... 93. Benefits and target population ................................................................ 94. Institutional and implementation arrangements .......................................................... 10
D Project Rationale ............................................................... 14
1. Project alternatives considered and reasons for rejection ................................. .......... 142. Major related projects financed by the Bank and/or other development agencies ........ 153. Lessons learned and reflected in the project design .................................................... 174. Indications of borrower commitment and ownership .......................... ....................... 175. Value added of Bank support in this project .............................................................. 18
E Summary Project Analysis .............................................................. 18
1. Economic .............................................................. 182. Financial .............................................................. 203. Technical .............................................................. 214. Institutional .............................................................. 245. Environmental .............................................................. 246. Social .............................................................. 257. Safeguard policy .............................................................. 29
F Sustainability and Risks .............................................................. 30
1. Sustainability .............................................................. 302. Critical risks .............................................................. 313. Possible controversial aspects .............................................................. 32
G Main Grant Conditions .................................................. 32
1. Effectiveness conditions .................................................. 322. Other .................................................. 32
H Readiness for Implementation .................................................. 32
I Compliance with Bank Policies .................................................. 33
Annexes
Annex 1 Project Design Summary ................................................ 34Annex 2 Detailed Project Description ................................................ 40Annex 3 Estimated Project Costs ................................................ 49Annex 4 Cost Benefit Analysis Summary ................................................ 50Annex 5 Financial Summary ................................................ 53Annex 6 Procurement and Disbursement Arrangements ................................................ 55
Table A Project Costs by Procurement Arrangements ................................................ 56Table Al Consultant Selection Arrangements ...................... .......................... 57Table B Thresholds for Procurement Methods and Prior Review ........................ ............ 60Table C Allocation of Grant Proceeds ................................................ 61
Annex 7 Project Processing Schedule ................................................ 63Annex 8 Documents in Project File ................................................ 65
Kosovo
Emergency Farm Reconstruction Project
Project Appraisal Document
Europe and Central Asia Regional OfficeECSSD
Date: June 5, 2000 Team Leader: Severin KodderitzschCountry Manager/Director: Christiaan J. Poortman Sector Manager/Director: Laura Tuck, Kevin CleaverProject ID: P069325 Sector: AL- Livestock, AY - Other AgricultureLending Instrument: Grant from Trust Fund for Kosovo Theme(s): Rural Development, Poverty Reduction
Poverty Targeted Intervention: N
Project Financing Data[ ] Loan [] Credit [X] Grant [] Guarantee [] Other [Specify]
For Loans/Credits/Others:Amount (US$m): 10.0Proposed terms: N/A
Grace period (years): N/AYears to maturity: N/ACommitment fee: N/A
a Nt L 1L- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.....GOVERNMENT 0.00 0.00 0.00SPECIAL FINANCING 1.30 8.70 10.00GOVERNMENT OF THE NETHERLANDS 0.00 1.80 1.80BIILATEA AGENCIES (UNIDENTIFIED) 2.40 10.80 13.20Total: 37 13 50
Recipient: UTNITED NATIONS INTERIM ADMINISTRATION IN KOSOVO (UNMIK)Responsible agency: UNMIK THROUGH FAO/UNDepartment of Agriculture under the Joint Interim Administration Structure (JIAS)Address: Government Building, Pristina, KosovoContact Person: Mr. M. Farinelli, Co-Head of the JIAS Department of AgricultureTel: 1-212-963.84.42, ext5671 Fax: 1-212-963-8603 Email: farinelliaun.org
Other Agency(ies):Food and Agriculture Organization of the United Nations (FAO/UN)Address: Viale delle Terme di Caracalla 00100 Rome, ItalyContact Person: Mr. L. Thomas, Sr. Operations Officer, Special Relief Operations Service, Technical CooperationDepartment, FAOTel: 39-06-557.55.042 Fax: 39-06-57.05.31.52 Email: 1aurentjacques.thomas(ifao.or=
Estimated disbursements (Bank FY/US$M):
Annual 8.2 1.8Cumulative 8.2 10.0
Project implementation period: 18 months (1.5 years)Expected effectiveness date: 07/01/2000 Expected closing date: 12/31/2001
A. Project Development Objective
1. Project development objective: (see Annex 1)
The Emergency Farm Reconstruction Project (EFRP) has the objective of helping jumpstart agriculturalproduction over the next two to three cropping seasons and to support re-launching of the rural economy byinvesting in key farm assets (cattle and farm mechanization) and key agricultural services (veterinaryservices, and policy analysis and formulation capacity). In doing so the project would support vulnerablehouseholds in targeted villages and municipalities in attaining minimum levels of agriculture production andfood security through replaced farm assets and improved veterinary services.
2. Key performance indicators: (see Annex 1)
Key performance indicators of the development objective would include the following:
* Increase of share of land cultivated for agricultural production in targeted villages.
* Increase of yield levels for crop and livestock production in targeted villages.
Increase in number of vulnerable households in targeted villages consuming adequate amount ofmilk and bread according to dietary standards.
* High share of distributed anirnals and their offspring still in beneficiary households and used forrestocking purposes at project end.
Number of veterinarians operating in Kosovo (ratio per animal and area); increased use of, and satisfactionwith, veterinary services; reduction in number of animal death resulting from unavailability of veterinaryservices or required veterinary equipment; increase in artificial insemination (AI) services provided andused.
B. Strategic Context1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: not applicable Date of latest CAS discussion: not applicable
The Transitional Support Strategy (TSS, document number: R99-178, which substitutes for the CAS in thecase of Kosovo) was endorsed by the Board on October 7, 1999. The TSS identifies an emergencyagriculture restart operation as part of the Bank's financial assistance program for FY00 in the area ofeconomic restart and private sector development (one of four key strategic areas of Bank support inKosovo).
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2. Main sector issues and Government strategy:
Conflict Damages. As a direct consequence of the conflict in Kosovo between March and June 1999, some75 percent of the rural population was subject to mass migration: some 43 percent of the rural populationtook refuge abroad and a further 32 percent became internally displaced. By September 1999, around 85percent of families that had previously left their homes had already retumed to their village of origin. As aresult of this disruption (and prior months of rising and often violent tensions in 1998) agriculturalproduction as well as related processing industries almost came to a standstill in 1999: the spring croppingseason of 1999 was largely forgone and the 1999 wheat harvest was a fraction of normal levels (45 percentof 1997 production). Kosovo currently relies on commercial imports (mainly from Macedonia, Albania,Montenegro and Greece) and large-scale donor relief aid to meet its food demands.
Farm assets were damaged on a systematic and massive scale in the course of the conflict. The replacementvalue of losses of animals, destroyed farm buildings, and agricultural machinery is conservatively estimatedbetween US$750 and 800 million. The majority of livestock (cattle: 50 percent, small ruminants: 65percent, poultry: 85 percent) which contributed around half of the value of agriculture production has beenlost or killed. Over half of the agriculture mechanization (tractors: 55 percent, combine harvesters: 75percent ) are lost or need repair. Many farm buildings (stables, sheds and storage space) have beendestroyed, as have the dwellings of many rural families. While fallow land and the loss of cattle can beobserved throughout Kosovo, the loss of agriculture mechanization and farm buildings is moreconcentrated in the western municipalities. Results from a farm damage assessment commissioned by theFood and Agriculture Organization of the United Nations (FAO) and the World Bank suggests that thefollowing group of eight municipalities has been the most severely damaged : Skenderaj/Srbica,Gllogoc/Glogovac, Decan/Decani, Vushtrri/Vucitm, Kline/Klina, Peje/Pec, Istog/Istok andGjakove/Djakovica.
Past Legacies. Beyond the immediate damages of the conflict, Kosovo is also struggling to address pastlegacies. The first relates to a backlog on the economic transition agenda. Prior to the severe curtailment ofKosovo's autonomy status within FRY in 1989, the agriculture sector was subject to numerous economicdistortions over a long period of socialist planning. A system of (partly implicit) subsidies and taxes onvarious economic activities resulted in inefficient farm structures by 1989. A majority of small familyfarms (limited by law to 10 hectares) were integrated by contractual arrangements with the large-scaleagrokombinat and cooperative sector which provided subsidized farm inputs and protected markets forprimary produce. These arrangements have ceased since the early 1990s. Though many instruments of thepast economic regime have been largely abolished (for instance, high levels of trade protection and activeprice policies, input subsidies and subsidized credit), structural issues persist. At the farm level this isreflected in the continued prevalence of small farm size, little marketed surplus, and low labor productivity;and on the part of the processing industries in terms of a pending privatization process for thesocially-owned agrokombinats, and often outdated and uncompetitive technologies. Secondly, a 'decade ofneglect' has severely compounded conflict damages to the sector. The near standstill in the agriculturesector is compounded by some 10 years of neglect. Around the early 1990s, experienced staff in keymanagerial and technical positions in the processing industries but also the agriculture administration werereplaced. The new cadre managed and maintained the enterprises poorly. Almost no formal services (suchas veterinary and advisory services) were provided to the pre-dominantly privately owned farms. Access tofarm inputs (such as fertilizers and agro-chemicals) was severely limited. Investments into farm andprocessing equipment were curtailed during that period resulting in an aging of farm machinery assets andthe obsolescence of processing technologies. Land markets slid into infornality because of high transactioncosts, compounded by laws that prevented ethnic groups from selling land to each other and poorperformance by land agencies. Two major irrigation schemes constructed in the late 1970s with Bank
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funding have fallen into disrepair since 1990.
Opportunities. Kosovo has shown impressive resilience based on private sector initiatives in the face ofadversity. Kosovars developed informal parallel structures of considerable extent covering a wide range ofagriculture services such as input and mechanization supply, veterinary services, and processing facilities.These parallel structures, mnarked by an impressive capacity for private initiative and which were able toaddress some though certainly not all constraints during the 1990s, are now coming into the open and willbe a key factor driving the recovery of the rural economy and the agriculture sector. A tradition of privatefamily-based agriculture, the presence of an emerging dynamic private sector associated with processingand input supply, and limited reliance on public sector support, all augur well for the re-launching of arural economy.
Government Strategy. Further to UN Security Council Resolution 1244, Kosovo is currentlyadministered by a UN-managed civil administration, the United Nations Interim Administration in Kosovo(UJNMK). To assist UNMIK in re-launching civil and economic life in Kosovo, the Bank and theEuropean Union Commission have jointly prepared a medium tern program for the economicreconstruction of Kosovo ("Towards Stability and Prosperity - A Program for Reconstruction andRecovery in Kosovo", November 3, 1999), which highlights as a high priority the jump-starting of the ruraleconomy. This medium term program became the basis of donor aid mobilization and coordination inNovember of 1999.
As an input to this medium term reconstruction and recovery program in support of UNMIK, the Bank incollaboration with FAO, prepared an agriculture and rural sector note which provides a detailed analysis ofthe constraints and opportunities facing the rural economy and the agriculture sector in Kosovo in theaftermath of the conflict waged in 1999, and suggests a medium-term (four year) program of policy actionsand public investments to re-launch the rural economy on a path of sustainable and widespread growth ("Kosovo: Re-launching the Rural Economy. A Medium Term Reconstruction and Recovery Program."ECSSD Working Paper No. 19. November 5, 1999). Based on this note, UNMIK has adopted its ownagriculture strategy based in key components on the recommendations provided by FAO and the Bank.
Objectives. The overall objective of the medium term program for agriculture and the rural economy is tosupport major structural changes in the rural economy over a phased transition. The goal here is not torestore agriculture to its pre-conflict state, nor to return to the pre-1989 conditions. The scope of damagesare too large, and potentially available resources insufficient to allow for a replacement of assets on a largescale. More importantly, farm structures and agriculture production have, as the result of long termeconomic policies, by the end of 1997 shown inefficiencies that should not be restored in aggregate to theirprevious state. Rather the objective is in the first instance to support the re-emergence of agricultureproduction to ensure minimum levels of income and food security to the rural community at large. Thenumber of people affected in rural areas are well beyond what can be sustainably supported by a socialwelfare program. As consequently altemative, non-agriculture employment becomes increasingly availableagain (in particular for those individuals that were forced into agriculture during the 1990s for lack ofaltemative employment possibilities) and factor markets (labor, land, capital) restart functioning, themedium term objective is to reach for productivity gains and structural changes in agriculture and the ruraleconomy.
The medium term rural and agriculture program envisages four sets of objectives - ranging from immediateto long term - that would contribute to reaching the above goal. In the immediate term (late-1999 tomid-2000) the aim is to assist the farming community at large (which represent the vast majority of the
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rural population) to re-start agriculture production in particular during the spring season of 2000 throughrelief operations ensuring access, in particular, to farm inputs. In the short run (mid-2000 to mid-2001) theobjectives of public support (both policies and investment) consist of assisting the re-launching ofagriculture production on a broader scale with the aim of replacing some of the conflict damaged assets(livestock, farm mechanization, farm buildings, irrigation). This would also contribute to there-establishment of non-agriculture employment in the food processing industries which (amongst others)require raw materials to restart operations, as well as the upstream farm input services. The aim is to assistthose farm households least able to recover from the conflict to reconstitute part of their assets, incomebase and food security. Support would hence be targeted to those heavily damaged farm households whichare without remittances, and so lack the resources to re-establish their core farm assets themselves. Partialcost recovery, mostly of an in-kind nature through sharing of donor-funded farm assets within ruralcommunities, would be introduced. The support provided would be of a one-time nature with a definedsunset clause. Establishing key agricultural services, such as veterinary services, and core elements of anagricultural administration able to analyze and address Kosovo-wide policy issues, also fall under the shortrun objectives.
In the medium term (2001 to 2004) the objective of the rural program is to establish the economicframework and instruments which would support employment creation and income generation for a largeshare of the population in Kosovo through agriculture and non-agricultural investments. This would includethe provision of a broad range of rural financial services on a commercial and sustainable basis to supporteconomically and financially viable investments in agriculture, agro-processing and other economicactivities in the rural economy. It would also include the registration and protection of private propertyrights in land and real estate. In the longer term (up to 2010), the aim would be to support the developmentof the rural economy towards activities in which agriculture has a comparative advantage and can competeintemationally as well as the establishment of a broad set of non-agriculture economic activities in ruralareas. Mobility of key production factors (labor, land, capital) and associated factor markets would be suchas to allow for allocation of resources to their most efficient use, resulting in a likely lower share of theactive population engaged in agriculture, and probably larger average farm size. Non-farm employmentboth in rural and urban areas would provide altemative income opportunities thus absorbing excess laborin the agriculture sector.
3. Sector issues to be addressed by the project and strategic choices:
Program Priorities for Agriculture and Rural Development. Based on the above objectives,Re-launching the Rural Economy" envisages a four year program (from 2000 to 2004) of policies andpublic investments grouped around three themes: (a) partial reconstruction aimed at jump-startingagriculture and the rural economy; (b) support to private sector development in rural areas; and (c) supportto agriculture institution capacity building. Activities need to be launched and implemented from the onsetacross all three themes and hence the themes do not imply a sequencing; rather, the emphasis is anticipatedto shift over time. The program aims to be selective, by postponing public investments that are not essentialto the re-launching of the rural economy to a later stage, such as the establishment of a comprehensiveagricultural administration, a complete public extension service, or land consolidation activities. Alsoactivities that are incompatible with the sustained development (including fiscal sustainability) of the sectorhave been excluded, such as financing of socially-owned enterprises or the pursuing of an activeagricultural price policy.
In line with the above objectives and program priorities for agriculture and rural development and toaddress key sector issues (conflict damages, past legacies) outlined above, the Emergency FarmReconstruction Project (EFRP) envisages to implement the following activities: (a) support tore-establishing the national cattle herd; (b) establishment of private and public veterinary services; (c) farm
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machinery repair and replacement; and (d) agriculture policy capacity building. The cattle restocking andfarm mechanization activities would be implemented in eight highly damaged municipalities (as a functionof donor funding becoming available). The veterinary services component would be implemented on aKosovo-wide basis; while the policy capacity building component would be carried out mainly through theDepartment of Agriculture, UNMIK in Pristina. Project activities build on the numerous agriculture reliefinitiatives in the area of farm input distribution (such as for seeds and fertilizer) currently being undertakenby Non Governmental Organizations (NGO) in coordination with the FAO Emergency Coordination Unitin Kosovo and funded by the European Union and bilateral donors. Project activities will complementon-going farm machinery repairs also implemented by NGOs. Given the experience on the ground acquiredby NGOs and the FAO over the past months, the EFRP will be implemented in close partnership with FAOand selected NGOs. To ensure allocation of farm assets in line with project objectives, and to minimizeconflicts between recipients and non-recipients in selected municipalities, a systematic approach tobeneficiary selection and consultation will be carried out at the municipality and community level.
C. Project Description Summary
1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):
The project comprises the following five components: (a) support to re-establishing the national cattle herd;(b) rehabilitation of veterinary services; (c) farm machinery repair and replacement; (d) agriculture policycapacity building; and (e) project management. Total project costs are estimated at US$25.0 million, ofwhich financing has been secured to date for US$11.8 million (US$10.0 million from the Bank's TrustFund for Kosovo, and US$1.8 million from the Netherlands). The Bank is currently aiming to mobilizebilateral and multilateral resources to address the funding gap of US$13.2 million. Project implementationcan go ahead in a meaningful way on the basis of the US$11.8 million currently available (the InitialPhase), as this funding will allow for the cattle restocking and new farm mechanization investments in thefirst three most damaged municipalities out of a total of eight envisaged municipalities (i.e.Skenderaj/Srbica, Gllogoc/Glogovac, Decan/Decane); as well as to carry out tractor and combine repairs insome six other municipalities. The available funding will also allow to fully finance the rehabilitation ofcore veterinary services (both veterinary practices and public animal health services) throughout Kosovo;and the agriculture policy capacity building program under UNMIK's Department of Agriculture.Resources provided from The Netherlands (US$1.8 million) will be allocated to finance the CapacitySupport Component in full (US$0.9 million) and to finance a major share of the Rehabilitation ofVeterinary Services Component (US$0.9 million out of US$1.3 million). All incremental funding madeavailable over and above the first US$11.8 million would be invested in re-establishing the national cattleherd as well as in farm mechanization repair and replacement in five additional municipalities (i.e.Vushtrri/Vucitm, Kline/Klina, Peje/Pec, Istog/Istok and Gjakove/Djakovica).
While the project is designed to address agriculture reconstruction in eight municipalities, detailed projectpreparation - in the absence of the full required funding - has focused on implementation arrangements onthe basis of US$11.8 million available to date. The focus on this first phase of project implementation isreflected fiurther in the subject Project Appraisal Document (PAD) and Project Implementation Document(PIP), in particular with regard to procurement and disbursement arrangements. In addition, PAD SectionC: Project Component Description Summary (see below) provides summary information on expandingproject activities to the remaining five out of eight municipalities, if and when additional resources becomeavailable; it is anticipated that the project activities in these five municipalities would be carried out alongthe same guiding principles as in the first three municipalities, either under co- or parallel financingarrangements. Project preparation activities are being funded through a grant (US$565,000) out of IDA'sTrust Fund for Kosovo, under a seperate Project Preparation Agreement signed on April 18, 2000.
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1.1 Project Components (Total Cost -US$25.0 million / Initial Phase -US$11.8 million)
Support to Re-establishing the Cattle Herd (US$11.8 million / US$4.4 million). Under the initial phaseand to assist in the restoration of food security of vulnerable farn families and in the rebuilding of thecattle herd, the project would finance the purchase of around 2,300 heads of imported cattle (this compareswith a cattle loss of some 200,000 animals). Animals would be distributed to families who have lost alltheir cattle during the conflict and have experience in caring for livestock, within three municipalities withthe highest incidence of agriculture damages (Skenderaj/Srbica, Gllogoc/Glogovac, Decan/Decane).Recipient farn families would be provided with after-delivery services (veterinary services, feedconcentrate, artificial insemination) to ensure proper care of animals.
Rehabilitation of Veterinarv Services (US$1.3 million / US$3.3 million). To rapidly restore critical animalhealth services in Kosovo, the project would provide basic kits of veterinary equipment to de facto privateveterinarians throughout Kosovo operating out of municipal veterinary stations. On the side of publicveterinary services, the project would equip a central diagnostic laboratory and rehabilitate some threeregional public animal heath centers. The project would also provide equipment to support artificialinsemination services, and a limited number of bulls to ensure natural regeneration in remote locations.
Farm Machinery Repair and Replacement (US$7.9 million / US$3.7 million). Roughly 50 percent oftractors have been lost or damaged throughout the province. Under the initial phase, repairs of more lightlydamaged tractors (some estimated 1,600 tractors), and combine harvesters would be carried out in fivemunicipalities (Prizren/Prizren, Rahovec/Orahovac, Gjakove/Djakovica; and two furither municipalities tobe determined). Some 120 new tractors would be provided under the initial phase in the three previouslyspecified municipalities, as would critical farm implements (ploughs, harrows, etc.) to ensure landcultivation, in villages where critical tractor deficits persist (taking into account potential repairs provided).
Capacity Building Support (US$0.9 million / US$0.9 million). To support UNMIK in analyzing andformulating a broad range of agriculture policy issues and responses, the project would provideinternational and national expertise to work within the UNMIK structures in the newly establishedAgricultural Department of the Joint Interim Administration. Capacity building would include training toKosovar professionals. It would also provide UNMIK with limited consultant staff (both international andlocal) to cooperate with key minorities. These institution building activities would establish key capacitiesin collecting and maintaining agriculture statistics and databases. The premises of the new UNMIKDepartment of Agriculture which were damaged during the conflict would also be refurbished.
Project Management Component (US$3.1 million / US$1.9 million). Implementing the above activities inthe current environment in Kosovo to acceptable technical and fiduciary standards poses considerablemanagement challenges. To meet these challenges, a Project Management Team (PMT) made up of a blendof local and intemational staff will be established and placed under the umbrella of the FAO EmergencyCoordination Unit in Pristina. The PMT will be supported by technical expertise, and will implementactivities in close collaboration with selected intemational and local NGOs.
Project Preparation. A project preparation grant (US$565,000) has recently been provided by IDA prior toproject approval to expedite preparation and initial start-up of project activities thus ensuring an effectivesubsequent implementation. The preparation grant is being used for the following purposes: (i) to set upand initiate the operations of a Project Management Team (PMT); (ii) to prepare procurement documentsfor goods and services, and to launch tenders; (iii) to select project beneficiaries in association withintemational and local NGOs through a consultative process in three municipalities agreed with UNMIK;(iv) to equip the quarantine station nearby Fushe Kosova/Kosovo Polje with the necessary installations to
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ensure safe holding of animals to be supplied under the project; (v) to define, in collaboration withUNMK, veterinary laboratory requirements to establish a central diagnostic laboratory and three regionallaboratories; (vi) to design and prepare a Request for Proposals to recruit consulting and technical servicesin cooperation with UNM[K's Department of Agriculture under the institution building component; (vii) tocarry out a baseline survey and establish a project monitoring and evaluation system to be applied in thecourse of project implementation; (viii) to make logistical and organizational arrangements to managedeliveries within relevant areas of the province for goods and services envisaged in the course of the projectimplementation; (ix) to finalize contractual arrangements with relevant non-governmental organizations tosupport the subsequent implementation of the Cattle Restocking Component and the Farm MechanizationComponent; and (x) to provide mentoring and on-the-job training of Kosovar experts, recruited during theinitial start-up phase to contribute to the preparation and implementation of this operation.
1.2 Expansion of Project Activities to Five Additional Municipalities (US$13.2 miDion)
Subject to additional funding becoming available, activities under (a) the Support to Re-establishing theNational Cattle Herd, and (b) Farm Mechanization Repair and Replacement would be expanded in thefollowing five municipalities: Vushtrri/ucitm, Kline/Klina, Peje/Pec, Istog/Istok and Gjakove/Djakovica.In each municipality, a beneficiary consultation and selection process would be carried out as will be thecase in the first three municipalities (see Section E7). Estimated costs to carry out these activities(including associated beneficiary selection and project management) amount to around US$2.6 million permunicipality, of which (i) cattle restocking comprises US$1.5 million per municipality; (ii) tractor repairsUS$200,000; (iii) new farm machinery US$700,000; and (iv) management US$240,000. The sameimplementation arrangements carried out in the first three municipalities are envisaged for these additionalfive municipalities.
The table below provides a cost breakdown on the basis of full project costs. See Annex 3 for details,including on costs of the initial project phase.
.... *.*. LI$$M~ ~~~~~~~~~~~~~ .~4Q .... fn...
1. Support to Re-establishing the Livestock 11.80 47.2 4.40 44.0Cattle Herd2. Rehabilitation of Veterinary Livestock 1.30 5.2 0.40 4.0Services3. Farm Machinery Repair and Annual Crops 0.00 0.0 0.00 0.0Replacement: of whicha) Tractor and Combine Repairs Annual Crops 2.40 9.6 1.30 13.0b) Replacements of Tractors and Annual Crops 5.50 22.0 2.00 20.0Implements4. Agriculture Policy Capacity Institutional 0.90 3.6 0.00 0.0Building Development5. Project Management Institutional 3.10 12.4 1.90 19.0
Development
Total Project Costs 25.00 100.0 10.00 100.0Total Financing Required 25.00 100.0 10.00 100.0
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2. Key policy and institutional reforms supported by the project:
One of the key challenges of re-launching the agriculture sector in Kosovo is achieving a balance betweenrapid physical reconstruction of farm assets and initiating institution capacity building early in the process.A second challenge consists in correctly assessing the current scope of private sector initiatives (and hencesupply side constraints) in order to complement rather than substitute for private sector activities. Thesetwo challenges are reflected in the project design as follows:
* Project support aims at re-launching agriculture production at the level of the private farmingcommunity, both for crop as well as livestock production. Support services (i.e. veterinary services) aredesigned to directly contribute to farmn production. Publicly-owned agriculture production is notsupported under this operation.
* Service delivery through the private sector will be emphasized. For instance, tractor repairs will beundertaken by local repair shops and spare part dealers. By supporting municipality-based, veterinarypractitioners animal health services would be mainstreamed in the private sector. While the provisionof new tractors and imported cattle will require public tendering, the contracts with intemationalsuppliers will require a high degree of collaboration between supplier and local service providers interms of delivery up to farmn gate and after-sale services.
While agriculture is an inherently private sector activity, in most countries, nevertheless, agriculture takesplace in a regulatory and services framework provided by the public sector. Core elements of such a publicregulatory framework will be established under the project. This would include support to the Departmentof Agriculture, agriculture statistics, and policy formulation capacities. It would also, critically, consist inestablishing limited public animal quarantine as well as animal diagnosis facilities.
3. Benefits and target population:
Project Benefits. The following project benefits are expected from this project.
(a) Increased agricultural production. As a result of gradually reaching restored agriculturemechanization capacity, crop production is expected to restart after the forgone 1999 season. Combinedwith providing dairy cattle and improved private and public veterinary services this will lead to increasedlivestock production (milk and food). To the extent that higher crop and livestock production translate intoa higher marketable surplus, increased agriculture production will provide the food industries with rawmaterials to re-launch processing activities in the course of 2000 and 2001.
(b) Employment generation. As increased agriculture production will take place on private farms, theproject will contribute to creating on farm employment opportunities in rural areas, providing farm income(either in-kind, or cash through sales of marketable surplus) and improved food security at the householdlevel.
(c) Reconstruction of dwellings and rural infrastructure. By contributing to farm household liquidityand through improved means of transportation (i.e. tractors to haul debris and construction materials) theproject would contribute to reconstruction of rural dwellings and rural infrastructure.
(d Improved institutional frameworkl Improved capacity to analyze and formulate agriculture policywill allow UNMIK to address many sector issues, in particular at the sub-sectoral level (including
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livestock, natural resource management, agrochemical regulations etc.). Project benefits would also consistin an improved delivery of agricultural support services through the private sector, in particular veterinaryservices and local farm mechanization workshops, which should be capable of effectively meeting furtherdemand from the farming community funded, for instance, from remittances or farm incomes.
eo Reduced dependency on food aid and less propensity for rural-urban migration. Helping that thevast majority of the rural population to sustainably earn family income (either in kind or cash) will reducethe demands on food aid programs and hence support the phasing out of donor-funded food assistance, andcontribute to reducing rural out-migration.
Target Population. The main target population will be farm households which have particularly sufferedfrom conflict damage and will not recover without extemal support to re-invest in their farm assets. As it isboth undesirable and unfeasible to compensate for all conflict damages (the project will replace only asmall fraction of aggregate assets damaged), a targeting mechanism will be carried out to identify andsupport the most needy communities and farm households in those communities. First, geographic targetingwill aim at defining the villages in which the project will concentrate its assistance, then, followed byhousehold targeting within the pTe-selected communities identifying farm recipients of the assets withinthese villages. The main objective of this targeting process is to identify those villages and households onthe basis of their unmet needs, to allocate resources along project objectives, and minimize conflict amongstpotential recipients (see Section E. 7 Participatory Approach).
4. Institutional and implementation arrangements:
Implementation Responsibility
UNMIK As the recipient of IDA and other donor co-financing under this project, UNMIK will haveoverall responsibility for the implementation of this operation. In the light of UNMIK's limitedimplementation capacity, the EFRP will be executed by the FAQ through the FAQ EmergencyCoordination Unit (FAO/ECU) in Pristina with support from FAQ Headquarters. Implementation will becarried out within the framework of a Project Service Agreement entered into by UNMIK and FAO andprocedures satisfactory to IDA - as is now the case during the on-going project preparation and start-upphase. While implementation and administrative arrangements (in particular with regard to procurement,financial management and disbursements) have been designed to make little if any demands on UNMIK'sstretched capacities for on-going project management, UNMIK through its Department of Agriculture willremain involved throughout project execution. This involvement will take place through regular briefingsand consultations between UNMIK Department of Agriculture and the FAQ/ECU on project progress andstrategic project decisions, and the approval of key project staff and NGOs, as well as on the technicalspecifications for goods procured under the project. UNMIK Departnent of Agriculture will also be closelyinvolved in the design, tender and selection of consultant services aiming to support agriculture policycapacity building within the UNMILK structures. UNMIvK has also been closely involved in the selection ofmunicipalities to be supported under this operation. In addition, UNMIK's Department of Agriculture willbe responsible for selecting beneficiaries who will receive up to ten percent of cattle and new farmmechanization equipment financed under the project. These beneficiaries will be selected frommunicipalities in addition to those already identified, and based on the same selection criteria to be used inselecting beneficiaries from the identified municipalities, as described in Section E6 of the PAD.
FAQ and FAO Emergency Coordination Unit. FAQ will be responsible for implementing and managingthis operation. FAQ, supported through the FAQ/ECU in Pristina, will implement all project components incoordination with UNMIK, and be responsible for procurement, financial management and disbursements.
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The FAO/ECU was established in Pristina shortly after the end of the conflict in Kosovo during July 1999,and has since had an impressive track record in executing FAO relief operations as well as in coordinatingnumerous NGOs implementing agriculture relief activities during the Summer and Fall of 1999. FAO iscurrently implementing key preparation and project-start-up activities for the EFRP under a serviceagreement between UNMIK and FAO, funded by IDA under a project preparation grant. As a result, theFAO/ECU will be considerably strengthened under the EFRP in terms of staff and office infrastructureover the coming months to ensure efficient implementation in a challenging post-conflict environment.UNMIK and FAO will enter a second service agreement for the implementation of this project (or agree toamendments to the service agreement covering the preparation and start-up phase).
Project Management Teamn. To strengthen the FAO/ECU to implement and manage the project, FAO isestablishing a Project Management Team (PMT) during the on-going preparation and initial start-up phase.The PMT will carry out implementation and project management under the responsibility of the FAOEmergency Coordinator in Pristina (who is the Head of the Kosovo-based FAO/ECUJ) and relevanttechnical departments at FAO Headquarters. The PMT will be managed by an international team leaderand a Kosovar deputy team leader, and provide for procurement and financial management expertise, aswell as support staff. To carry out technical implementation, FAO will recruit international and localexpertise in the following areas: (i) veterinary and livestock expertise, (ii) farm mechanization, (iii)monitoring and evaluation, and (iv) rural sociology.
To support building of Kosovar management capacity, the PMT under the FAO/ECU will provide, to theextent possible, for joint appointments of project management positions (with the exception of supportstaff) each comprising one international and one local Kosovar expert. The PMT will also be provided withoffice equipment and vehicles. PMT staff and of other technical expertise, including NGOs, will berecruited under the responsibility of FAO.
Implementation Partners
Beyond the partnership with FAO, a number of NGOs will be involved in carrying out the beneficiaryselection process (see Section E7) and in implementing the cattle restocking and the farm mechanizationcomponents at the municipality and village level. NGOs have played a key role in recent agriculture reliefefforts in designated geographical areas of responsibility (jointly agreed upon by the NGOs and theFAO/ECU) to ensure a coordinated approach in providing relief services. To build on the expertise gainedon the ground by NGOs over the past months, FAO will contract services with a number of internationaland local NGOs. During the on-going preparation and initial start-up phase funded by IDA under a projectpreparation grant, FAO will contract services with Action Against Hunger to undertake the selection ofvillages and beneficiaries in the municipalities of Skenderaj/Srbica and Gllogoc/Glogovac, with MercyCorps International in the municipality of Decan/Decane, and with Mother Theresa Society to carry out aninformation campaign as part of the consultation process associated with beneficiary selection. Thisbeneficiary selection process would be carried out under the supervision of a rural sociologist at the PMT.
During implementation it is envisaged that FAO will enter into agreements with four international NGOswho are on the one hand working in the respective municipality already as it is their designated area ofresponsibility or on the other hand have established a track record of the respective tasks as follows: (a)with Action Against Hunger in the municipalities of Skenderaj and Gllogoc, and (b) with Mercy CorpsInternational in Decan, to implement project activities which involve training of beneficiaries prior todistribution of cattle and farm machinery, the organization of the distribution of livestock and farmmachinery, follow-up on asset use subsequent to delivery, and monitoring of cost recovery features of thefarm machinery component as well as performance of the veterinary component; (c) with the Swiss
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Agency for Development (SDC), an organization registered as NGO in Kosovo, to handle cattle from theirarrival in the province until their final distribution in rural areas, which would include taking receipt ofheifers and bulls at the airport, transporting them to the holding station, providing maintenance in theholding station and transporting of cattle to the municipalities to distribution to final beneficiaries; and (d)with an NGO specialized in farm machinery repairs, such as GOAL to implement the tractor repairprogram in the three municipalities of Prizren/Prizren, Rahovec/Orahovac and Gjakove/Djakovica,including a survey based assessment of damaged tractors and combines, the supply of spare parts and themanagement of the payment of local suppliers and repair workshops through the issuance and monitoringof a simple voucher scheme.
Procurement
Procurement arrangements are described in detail in Annex 6.
Sole Source of FAO Management and Implementation Services in Kosovo. The decision to prepare andimplement this project through the FAO/ECU, based on a consensus agreement among all of the keyplayers, is likely to ensure efficient coordination between the various agriculture relief and reconstructioninitiatives being undertaken. This approach would also assist UNMIK in effectively addressing agriculturereconstruction in Kosovo. In addition, a UNMIK - FAO partnership to implementation of activities willprovide donors with a coordinated framework in which to support re-launching of the agriculture sector inthis province. Several options for the implementation of the project were considered, including (a) theestablishment of a stand-alone PmU; (b) implementation through a major NGO active in Kosovo and (c)implementation through the FAO Emergency Coordination Unit (FAO/ECU). The establishment of astand-alone PIU (or of an "umbrella" PIU managing a portfolio of projects) would have requiredconsiderable time (and costs) before becoming operational. A number of NGOs in Kosovo have doneimpressive work carrying out agricultural related activities, however, none of them are currently in aposition to manage the proposed project based on procedures satisfactory to the Bank (includingdisbursements, procurement and financial management). Thus, FAO/ECU is seen as the most suitableagency to implement the project. The FAO/ECU was established in Pristina in July 1999 in the directaftermnath of the conflict and has since successfully implemented a number of agriculture relief operationsin association with NGOs, and funded by bilateral donors. It has also provided coordination and technicalassistance to NGOs active in the agriculture sector. The FAO/ECU is associated with the World FoodProgram (WFP) in establishing an agriculture and food security data and surveillance system. FAO/EMU'strack record to date in terms of its implementation results and the quality interaction with NGOs andUNMIK has been impressive.
Financial management
Financial Management Assessment. The overall responsibility for the financial management of the projectwill rest with the FAO, with primary responsibility at its headquarters in Rome and secondaryresponsibility at its Emergency Co-ordination Unit (FAO/ECU) in Pristina . The FAO already has variousteams of accountants to support the needs of the other projects being implemented by the FAO, and thiscomplement has been increased for the project, particularly with the recruitment of additional accountingstaff into the FAO/ECU. The Bank conducted a financial management assessment of the FAO andconcluded that the FAO's financial management arrangements satisfy the Bank's minimum requirementsand is capable of producing the Bank's Project Management Reports.
Project Management Report (PMRs). The agreed indicative formats for the PMRs are included in theMinutes of Negotiations and the FAO will produce these PMRs for every calendar quarter throughout the
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life of the project. No move to PMR-based disbursements is envisaged due to the relatively short durationof the project.
Audit Arrangements. Agreement has been reached with UNIIK and FAO that FAQ's External Auditor(i.e. currently the Cour des Comptes) will carry out annual audits for the project, on terms of referenceacceptable to the Bank, as presented within the Minutes of Negotiations. The receipt by the Bank throughFAO of the Cour des Comptes' formal confirmation to this effect is included as a Grant effectivenesscondition. The project's audited financial statements will be submitted within six months of the end of everyfiscal year. The cost of the audit will be financed from the Grant funds.
Cost Recovery
While a partial grant element is foreseen in providing farm assets to beneficiaries, cost recovery of asignificant share of the asset value is nevertheless envisaged, depending on the type of asset provided. Theadministrative and financial sector infrastructure currently available in Kosovo is not conducive tocash-based cost recovery. Hence an in-kind approach to cost recovery aiming at sharing of assets within thelocal community is envisaged. Recipients of project goods would enter into a contract upon selection withtheir local community to provide a predetermined scope of use of received assets to community members inlieu of repayment of the asset received. The community would receive the asset on a full grant basis. Threedifferent approaches would be introduced, (i) for cattle recipients, (ii) for beneficiaries from farmmachinery repair or distribution, and (iii) for the private veterinarians receiving veterinary packsrespectively. The FAO/ECU together with NGOs working in municipalities will monitor and enforce - tothe extent possible - compliance with cost recovery. The envisaged approaches are believed to be the bestpossible compromise between conceptually providing for cost recovery with ensuring that private benefitsare shared within a given community; and pragmatically ensuring feasibility of these concepts in thechallenging environment of Kosovo.
(i) For cattle recipients, field research indicates that in food and milk deficit areas targeted under theproject, the traditional solidarity would lead to a voluntary sharing by cattle recipients of benefits either bydistributing some of the milk to relatives or neighbors, or in some instances providing a new-bom calf to aneighbor. The often large family size is also likely to consume the milk produced by a single cow with onlylittle market surplus being generated. Families receiving cattle under the project and their respectivecommunity will be informed that the second off-spring is expected to be made available by the recipientfamily to the community for allocation to other families in need within the community. The describedapproach of sharing of asset within a larger family and community context is an acceptable mechanism ofpartial in-kind cost recovery based on social cohesion within the community. It is recognized, however, thatthis type of cost recovery is clearly not enforceable from outside the local community and relies on socialcontrol.
(ii) In the case of farm machinery, a 50% in-kind cost recovery is expected from the beneficiary (which isequivalent to 100% cost recovery of the currently used 'IMT'-type tractors). Cost recovery on the assetvalue of the new tractor and set of implements will be provided by the primary beneficiary (i.e. the actualrecipient of tractor and imnplements) carrying out cultivation operations for a group of secondarybeneficiaries within a given village. This cultivation will be carried out without payment, except that thesecondary beneficiaries will provide fuel for the tractor. It is important that the correct balance is struckbetween the primary beneficiary's ability to earn an income from his machinery and his non-incomegenerating cost recovery obligations to the secondary beneficiaries. On the one hand, if the cost recoverytarget is set too low, secondary beneficiaries will forgo the full potential benefit of the new machinerysupplied under the project. On the other hand, if the cost recovery target is set too high, the primary
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beneficiary may fail to voluntarily share assets because such sharing will unduly compete with income tobe earned from rental services to be potentially undertaken with the new equipment. The proposed level ofcost recovery is to ensure cultivation on 15 hectares of secondary beneficiary land per season (based on oneploughing and two harrowing operations) for the first four cultivation seasons that is, 60 ha over the firsttwo years. Additional cost recovery is requested from the primary beneficiary in providing his tractor andtrailer for six days per year (for the first two years) for haulage tasks for the general benefit of thecommunity; details of these latter sharing obligations would be decided on by the village committee, whilefuel would be provided by the community for use of tractors).
(iii) Private veterinarians receiving basic veterinary equipment and drugs under the project would beexpected to partially reimburse in-kind the costs associated with this equipment. The capital contribution toequipment, veterinary drugs, artificial insemnination equipment and bovine semen to private practices in allmunicipalities will have a repayment in kind condition of 30% of the asset value through the provision offree veterinary visits and artificial insemination to non-project farmers. This will provide an estimated 250farmers per municipality with free veterinary visits and inseminations to non project cattle and generallivestock. Veterinary practices will be required to enter into formal contracts stipulating the aboveaforementioned obligations upon delivery of the equipment and goods. Distribution of veterinary drugs toveterinary practitioners will take place in two tranches; distribution of the second tranche of drugs isconditional on the veterinarian demonstrating satisfactory performance, including provision of qualityservice to remotely located and poor farmers. Compliance of these obligations will be monitored by NGOsworking in the project municipalities and by the FAO/ECU in municipalities in which NGOs do notoperate.
D. Project Rationale
1. Project alternatives considered and reasons for rejection:
Replacement of confict-damaged assets. The following alternatives had been considered with regard torepair and replacement of conflict-damaged assets: (a) line of credit to the farming community; (b) line ofcredit to input suppliers; (c) cash transfers to farming population; (d) compensation for conflict damages;and (e) voucher distribution to selected beneficiaries. In the absence of a functioning financial sector (i.e.absence of financial intermediaries in rural areas, and a nascent financial sector regulatory framework) atthe time of project preparation and appraisal a line of credit operation either to the farming community orto tractor or other farm dealers could not be implemented. In addition, the project aims to meet specificcriteria in the allocation of assets to selected beneficiaries which could not have been achieved using amarket based rationing mechanism (i.e. market interest rates). A line of credit to farm traders may haverelieved supply side constraints but would not have provided liquidity to farmers and associated purchasingpower to increase effective demand at the farm level. The latter would have been addressed with cash orvoucher transfers to farm households, however, accountability concerns on the part of donors for the use ofscarce funds and security issues in the absence of a payment system in Kosovo have excluded thisapproach. Compensating all rural households along the lines of an insurance indemnity for conflict-relateddamages to farm assets as a fixed percentage of aggregate donor resources over aggregate farm damageswas also considered. While such an approach would have provided all farmers with a uniform percentagecompensation (in the range of 5 - 15 percent of damages given limited donor resources anticipated and highcumulative damages to the sector), it would have been highly inequitable as farmers with large amounts ofpre-conflict assets would have received higher absolute compensation (though they may well have sufficientassets remaining to re-launch farming activities) than those with a smaller asset base (assuming the sameconflict-damage incidence). The outcome would have provided many smaller farm households with cash orvoucher-equivalents of a small fraction of a cow or a tractor. The latter, more of a one-time welfare nature,
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would not have provided the resources required to re-start a livelihood to those who do not have the meansto otherwise do so.
Re-launching veterinary services. One option considered was to re-integrate the staff and the assets ofthe 28 (dilapidated) veterinary stations into the public sector to ensure public provision of disease controland curative veterinary services. By re-integrating this staff into formal public veterinary services, theproject would have put onto the public payroll activities that are now being provided privately. A smallcore of public veterinary staff will be supported, however, to operate an animal disease diagnostic centerand administer public vaccination campaigns that will be contracted in the future to the network of privateveterinarians.
Vouchers. For the following goods a voucher-based svstem was considered for introduction under theEmergency Farm Reconstruction project: (1) farm inputs; (2) cattle after-delivery services: veterinaryservices and animal feed; (3) tractor spare parts and repair services; and (4) generic farm implements.Vouchers are commonly used in social assistance programs, and have been successfully associated withfarm inputs (fertilizer, seeds, fuel) in Romania. In addition, many elements needed for a potentialintroduction of a voucher based system seem to be in place in Kosovo. The printing, distribution andredemption of vouchers may well have been feasible, and farmers and traders are not unfamiliar with theconcept of vouchers as they were used in earlier times in Kosovo for state enterprise workers. However, theexperience with vouchers in a post-conflict is very limnited. Moreover, in Kosovo this proposal has finallybeen abandoned, because there was no assurance that goods would be available at competitive prices, as isthe case in an open, public bidding processes.
Input supplies and rehabilitation of irrigation infrastructure. At the project identification stage,provision of farm inputs, as well as rehabilitation of irrigation infrastructure was proposed. The formeroption was discarded given the broad scope of NGO implemented activities in providing farm inputs in thecontext of their relief operations, and concems associated with a possible growding out of local, privatesector initiatives in this field. The latter was rejected due to concerns associated with project complexity,unclear priority for irrigation rehabilitation early during post-conflict reconstruction, and the considerableinstitutional requirements in terms of reforming water enterprises and establishing water user associationsto ensure sustainability of irrigation investments.
2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).
Implementation Development
Bank-financed Progress (IP) Objective (DO)
Bosnia and Herzegovina S SEmergency FarnReconstruction Project(1996-1998)Yugoslavia Metohija I SMultipurpose Project
Other development agencies.See Table 3 below . . ..
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IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)Table 3: Major related projects financed by other development agencies
Activity Funding Status Donor[USS M]
Agriculture Relief Operations $23.4Fertilizer Distribution $2.1 on-going Netherlands, Finland through FAO
$8.0 identified EUSeed Distribution and Multiplication $3.5 on-going Netherlands, Italy, Luxemburg through FAO
$1.2 on-going FinlandAnimal feed distribution $2.9 on-going EU through FAOFarm Mechanization Repairs $2.8 on-going Sweden, Luxemburg through FAOLivestock Vaccination $1.0 on-going USA through FAOCattle Supply $1.3 completed SwitzerlandFood Safetey Surveillance $0.6 on-going USA through FAO/NFPA&roenterprise SupPort $8.8TA to input dealers and professional $0.8 on-going USA through IFDCassociations $4.0 appraised USA through IFDCAgroenterprise Restructuring $4.0 identified EURural Finance $2.0Micro Credit Scheme $2.0 appraised EU, FranceCooperative Develooment $1.5 appraised FranceForest Manaaement $1.3 on-going Norway through FAO
Note: While the above is not an exhaustive list, major donor supported operations are coveredas reported by UNMIK
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3. Lessons learned and reflected in the project design:
Many lessons of the successful Emergency Farrn Reconstruction Project in Bosnia (1997 - 1998) (Bosniaand Herzegovina: Emergency Farm Reconstruction Project. Implementation Completion Report. June 1998) arereflected in this operation. Similar activities (livestock, farm mechanization, veterinary support activities)were also undertaken under the agriculture component of the Emergency Reconstruction Project in Croatia(1995 - 1997). A first lesson is that simplicity of design is an important element in successfulimplementation of an emergency reconstruction project. Second, if full cost recovery is not feasible partialgrant-based support explained up-front to recipients is preferable to the moral hazard created byunenforceable credit arrangements. T technical lessons have been learned from the Bosnia experience:imported sheep and, in particular, goats experienced serious adaptation problems and are thereforeexcluded from the operation in Kosovo. Similarly, smaller motorcultivators and associated attachmentsdistributed under the project in Bosnia proved to be in low demand; in addition an agriculture damage andneeds assessment survey confirmed little interest in motorcultivators; as a consequence, this type ofequipment will also not be provided under the EFRP in Kosovo. Fourth, compliance with beneficiaryselection criteria established under the mentioned project in Bosnia was poor as the selection process wascarried out by the regional public administration which tended to allocate on the basis of political ratherthan technical/social criteria. In the case of the operation in Kosovo, a transparent and systematicconsultation process with community level participation and numerous checks and balances will helpcontribute to minimizing errors of inclusion or exclusion. Beyond the immediate implementation lessonsassociated with the Emergency Farm Reconstruction Project in Bosnia, an overall retrospective of theBosnia post-conflict experience [Bosnia and Herzegovina: 1996 - 1998 Lessons and Accomplishments. WorldBank. 1999.] indicates that key for re-launching economic activities consists of addressing developmentaland institutional issues up front, beyond striving for mere and immediate physical reconstruction targets.The Kosovo EFRP aims at doing so by including private sector (in particular veterinary services) andcapacity building elements (UNMIK Department of Agriculture) into the design.
4. Indications of borrower commitment and ownership:
UNMIK has repeatedly indicated that agriculture development is clearly a high priority on its post-conflictreconstruction agenda in Kosovo. In the absence of sufficient capacity to implement projects of complexitywithin UNMIK, the implementation of this operation through FAO and the FAO/Emergency CoordinationUnit finds broad acceptance at UNMIK. The technical assistance provided directly to UNMIK in supportof its newly established and co-administered agriculture department is very much welcomed. Projectownership on the part of Kosovars is harder to gauge with certainty. During the course of Bank missions,visits to various organizations (self-appointed shadow 'administration', the faculty of agriculture, etc.) andan informal seminar gathering key Kosovar interests in the agriculture sector in September 1999 wasundertaken to exchange views between professionals associated with agriculture. Feedback during thementioned consultations have indicated broad support for the EFRP.
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5. Value added of Bank support in this project:
The Bank adds value to rural development and re-launching the agriculture sector by having prepared anddeveloped a comprehensive medium tern reconstruction framework which addresses policy as well aspublic investment issues, together with a key partner in this field, the FAO. This proposed project preparedjointly by FAO and the Bank, takes key elements of the mentioned medium-tenn reconstruction franeworkand translates these elements into an operational concept. By providing a framework, together with therequired implementation arrangements, the Bank anticipates to leverage additional donor co-financing thatotherwise would not have been available. The Bank has also been instrumental in forging a partnershipbetween UNMINK and FAO under this operation. In addition, in the course of project implementation theBank will provide managerial and technical input during project implementation in its project supervisorycapacity - which has proven to be an irnportant element of project success in the case of the EmergencyFarm Reconstruction Project in Bosnia.
E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1. Economic (see Annex 4):* Cost benefit NPV=US$3.6 million; ERR = 21 % (see Annex 4)O Cost effectivenesso Other (specify)
In the absence of detailed agronomic data that reflect current farming practices, cropping patterns, farmasset use, etc. only a simple quantitative economic analysis has been carried out aiming to reflect maincosts and benefits associated with this project. The assumptions used for the analysis are presented inAnnex 4 and are considered to be conservative. The analysis is carried out on the basis of the initial projectphase implemented in the three most damaged municipalities (i.e. US$12.2 rnillion). Project activities inthese three municipalities (including province-wide rehabilitation of veterinary services, and capacitybuilding of the Agriculture Department) will benefit a estimated 12,000 families (refer to Table 4). Aroundfive-thousand households will directly benefit as primary or secondary beneficiaries from the cattlerestocking and farm mechanization activities. A further estimated 7,000 households will benefit fromimproved veterinary services provided. Each additional municipality included under the EFRP wouldincrease the number of beneficiaries by a further estimated 1,700 families.
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Table 4: Number of Beneficiaries (based on three initial municipalities)
Project Activities Number of BeneficiariesI Livestock and New MachineryCattle Restocking 2,300Tractors/ Implements (primary beneficiaries) 120Tractor service recipients (15 per tractor - secondary 1,800beneficiaries)Subtotal 4,22011 Tractor RepairsRepair Services 800Subtotal 5,020III VeterinariansVeterinarians receiving veterinary packs 28Beneficiaries of veterinary in-kind cost recovery 7,000Total 12,048
The main benefits and costs associated with the project have been considered in the economic analysis.These are the benefits and costs associated to (a) increased crop production through the supply of new andthe repair of broken machinery and (b) increased milk production and production of offspring. However,there are more benefits of the project which have not been included in the analysis as they are either verylimited in scope or difficult to quantify. These benefits are the veterinary component (the component is onlyconsidered to the extent to which it provides services to the distributed cows), the capacity buildingcomponent and the conduction of community services as part of the cost recovery scheme of the machinerycomponent. In the following the assumption for the cost-benefit analysis are presented. the calculationpresent a very conservative assumption on quantities and prices. The Net Present Value (NPV) is estimatedat around US$3.6 million (over a ten years period discounted at an opportunity cost of capital assumed at10 percent), while the Intemal Rate of Retum is estimated at around 21 percent.
Assumptions for Economic Analysis
Machinery Component:
* The replaced assets will result in a one-time, incremental 5,400 ha being cultivated annually. Anadditional 1,800 ha of cultivated land per year can be expected for every additional supportedmunicipality (45 ha per tractor per year).
* The machinery repair component is expected to repair around 800 tractors in three municipalitiesresulting in a fiurther, one-time incremental 24,000 ha that can be cultivated annually (30 ha per tractor- lower than for new machinery as productivity of machines is lower).
* It is assumed that the additional area will be planted with winter and summer grains at an average yieldof 3 tons per hectare (average yield in Kosovo) at an average price of US$105 per ton. The pricerepresent a world market price forecast for the upcoming 2000 harvesting season adjusted for transport
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and insurance.
* The production costs (including farm inputs, fuel and routine machinery maintenance, labor) for grainhave been assumed to be around 90% of their value of production.
Livestock Component:
* The livestock component will give direct benefits to 2,300 farm households who lost all their cattle.The component has two benefits: (i) the availability of milk and (ii) the cow and its offspring. Theincreased availability of milk will directly improve the diet of the more vulnerable households. The cowand the calf enable households to restart livestock production who would not be able to do sootherwise. Access milk, if marketed, creates an additional income source for the family.
* The reproductive rate of a cow has conservatively been assumed to be 1.3. This takes possible fertilityproblems of cows living in a difficult environment into consideration. A (higher than anticipated)mortality rate of 10% is assumed.
* It is assumed that 50% of the off-spring are female. The female calves give birth to their first calf andprovide milk at the age of around 24 months. Male calves are sold immediately upon birth - and hencevalued for the purpose of this analysis - at a price of US$200. Female calves are kept for re-breeding,contributing to the build-up of the cattle herd.
* The cows are assumed to produce 2,500 liters of milk on average per year. The economic value of milkis estimated at around US$0.25 per liter.
* The off-spring is assumed to consume 1,000 liter per calf annually (5 liter over 200 days). Besidesrooming on pasture (no economic costs have been imputed), the cows are additionally fed with hey andconcentrate (US$150 annually).
* The investment costs consist of the cost of the farm machinery repairs and replacements, the cost ofproviding livestock, and the cost of rehabilitating and providing veterinary services in threemunicipalities (US$8.6 million)
2. Financial (see Annex 5):NPV=US$ million; FRR = % (see Annex 4)
In the absence of quantitative data reflecting agronomic practices, farm asset use, cropping pattern, etc. andgiven the emergency nature of this operation, no quantitative financial analysis, based, for instance, onfarm models, is provided. Cost recovery levels have been established such that farm mechanization andveterinary services will be provided to the community while at the same time allowing a reasonable returnto owners; see Annex 5 for details.
Fiscal Impact:
All costs associated with the implementation of the activities envisaged under this operation will be donorfinanced, and as such UNMIIK will not contribute financially to this operation. Public recurrent costs afterthe project are associated with operating (i) a small public veterinary service (diagnostic laboratory, threeregional centers) and (ii) the Agriculture Department (though no additional permanent staff will beprovided under the project over and above the personnel that UNMIK currently envisages. The former are
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incremental costs associated with this project, while the latter is already funded by UNMIK. Overall,incremental public recurrent costs associated with this operation are low and sustainable.
3. Technical:
The technical approaches suggested under the project are robust and proven, and take technical experience- some of which has been negative - from similar post-conflict projects implemented in Bosnia and Croatiaexplicitly into account (see Section D.3 above). The import of livestock will be limited to cattle since sheepand, in particular, goats experienced serious transport and adaptation problems in the case of projects inBosnia and Croatia. Farm mechanization will be limited to the repair of tractors and combine-harvestersand replacement of tractors and implements, without providing new, smaller motorcultivators as the latterproved to be in low demand in Bosnia and this appears to be equally the case in Kosovo. To ensure thattechnical specifications for farm machinery and cattle meet the requirements of farmers in Kosovo, in depthdiscussions between FAO technical experts were conducted with Kosovar professionals but also withnumerous farmers, farm machinery dealers and NGOs in the field prior to finalizing the documentation. Afirst cattle distribution program is currently being implemented in Kosovo through the Swiss DevelopmentCorporation which will also be involved in carrying out the cattle restocking component under the EFRP.One intemational NGO (GOAL) has acquired significant experience in repairing tractors over the pastmonths and will equally participate in the tractor and combine harvester repair program under the EFRP.
Cattle Restocking. Based on experience in Bosnia and Croatia, and technical discussions held in Kosovo,in-calf pregnant heifers as well as a limited number of bulls of the Simmental Fleckvieh (70% of total) andBrown Swiss (30%) breeds will be imported and delivered to selected farm families. In addition, straws ofbovine semen will be imported to re-breed some of the animals and enhance Al in the rest of the province.Initially envisaged and demanded by a proportion of farmers, the Holstein Friesian and Jersey dairy breedswere considered unsuitable for import and distribution under the difficult management conditions prevailingin the province.
While the project will provide after-delivery services to distributed cattle (veterinary follow-up, artificialand natural insemination, nutrition support), the environment in which imported cattle is to perform inKosovo is relatively challenging compared to the conditions typically provided for animals in WesternEurope. This is compounded by the selection criteria which aims to support vulnerable families that havelost all cattle during the conflict, yet met minimum technical standards of ability to care for the cattle interms of experience and infrastructure - while the animals will in all likelihood survive and reproduce - theconditions for these animals will not be easy. Recipients will be operating in subsistence level farmconditions where forage quality is poor (i.e. low nutrient hay during the winter feeding period), and minimalconcentrates are available in Kosovo at present. These conditions are similar to the Bosnian alpine areaswith extensive pastures, and where dual purpose breeds such as the Simmental and Brown Swiss havesurvived and produced under adverse management conditions. Holstein Friesian, overall, are typically highperforning single purpose milk producing animals that perform very well in a conducive environment butoften experience dramatic drops of productivity once such an environment cannot be assured. While anumber of farmers have expressed a preference for Holstein Friesian, overall farmers are less aware of thetechnical suitability characteristics of these potentially new breeds in their farming conditions. HolsteinFriesian are in the mind of many farmers associated with high milk performance and hence seen asdesirable as reflected in a farm survey commissioned by FAO and the Bank. Holstein Friesian cattle maywell be suitable for a select group of better endowed farmers in Kosovo that are truly in a position toprovide the necessary conditions for these animals to produce. As mentioned above, this group of farmersis, however, not envisaged to be part of the targeted beneficiaries, i.e. the farmers interviewed under thesurvey are not fully representative of the envisaged group of beneficiaries to receive cattle under the
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project.
To ensure sustainability of distributed livestock under the EFRP, the following measures will be introduced(a) distribution of animals to farm families with past experience in animal husbandry; (b) logisticalarrangements including transporting cattle by air to Pristina airport; recovery period (includingvaccination) at an animal holding station nearby Pristina operated by the Swiss Development Cooperation;transport of animals to municipal distribution centers by local distributors having previously worked withthe SDC and under the supervision of the SDC (including insurance coverage up to point of delivery);allocation of animals in the municipalities to selected farners under the supervision of the above NGOs; (c)training of recipient farmers before and after distribution of cattle provided by NGOs supported by FAO;(d) training of veterinary practitioners in the three recipient municipalities; (e) supply of bovine semen aswell as equipment for artificial insemination (Al) as well as organizational arrangements to ensure core Alservices in the project municipalities and provision of some 45 bulls in more remote areas for naturalservicing; (f) provision of veterinary follow-up financed under the project to distributed cattle (i.e. six visitsper animal, including two for artificial insemination); (g) provision of supplementary concentrate feeding toensure reproductive performance; (h) tagging and record cards for imported animals and off-spring; and (i)NGO follow-up and monitoring of animal performance with recipient farmers for 6 to 12 months afterdelivery; and (j) overall implementation by FAO supported technical specialists in Kosovo with back-up ofrelevant technical departments at FAO Headquarters.
Tihe animals will be ear-tagged. The aim is to provide a central, traceable system of animal recording whichcan benefit animal health, livestock movement, slaughter record, milk and meat recording and futurenational genetic selection for improved breeding and export opportunities.
Roughly 20 - 25 percent of the costs associated with the cattle import and distribution are for after-deliveryservices to ensure reproduction of cows provided. Contrary to Bosnia (where animals often were distributedby the municipal authorities to demobilized soldiers without previous experience in animal husbandry),imported cattle would be distributed to farmers who have had past experience in raising animals. In thecase of cattle no formal cost recovery is envisaged - though it is anticipated that there is sharing of milk andoff-spring amongst the extended family or within a given community will take place - thus avoiding some ofthe problems experienced in Bosnia with early slaughtering of animals to provide cash for cost recovery orto avoid project foreclosing on the distributed animals. Clearly, handling cattle in a post-conflictenvironment is not totally risk free and it cannot be guaranteed that each and every animal distributed willlead the productive life that is hoped for. However, the major risks have been adequately contained withoutmaking the cost per animal prohibitively expensive and thus uneconomnical.
Rehabilitation of Veterinary Services. A list of basic veterinary equipment to support the work ofveterinary practitioners throughout the municipalities has been drawn up by FAO animal health specialistsin consultation with Kosovar veterinarians, including practitioners from the municipalities as well asacademics from the University of Pristina. A list of basic animal drugs for curative purposes will beestablished during the project preparation and start-up phase with the assistance of FAO technicalspecialists (with support from technical departments at FAO Headquarters), as well as the equipmentrequired for the central diagnostic laboratory and three regional public animal health control centers. Toavoid monopolizing veterinary services associated with the municipality-based, veterinary group practices,qualified individual veterinarians within a municipality are eligible to receive equipment and drugs and/orallowed to leave the group practice with a pro-rated share of the equipment and drugs provided by theproject to the group practice.
The limited amount of equipment provided to ensure basic artificial insemination services do not constitute
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a barrier of entry for others to supply Al services in the future. The urgent need for providing AI services inthe province as envisaged under the project is commensurate with the relatively small risk of contributing tomonopolizing theses services. To date no regulations exist that limit the rendering of Al services, includingthe importation of semen by the private sector and the rendering of Al services by non-veterinarians. Also,UNMIK does not intent to promulgate regulations restricting the provision of Al services. In addition, Altraining envisaged under the project is open to non-veterinarians and will seek to include women asparticipants.
Overall, no major technical problems are anticipated for this component, though distribution of veterinaryequipment and drugs in minority areas may prove to be a challenge and will need to be carried out in closeconsultation with minority leaders. The FAO/ECU is currently carrying out an emergency livestockvaccination campaign in Kosovo implemented together with Kosovar veterinarians and is thus developingsignificant expertise in the animal health sector in Kosovo.
Farm Mechanization. Detailed implementation arrangements have also been made for the farmmechanization component, including cost recovery through sharing of farm mechanization assets within acommunity. While tractors and irnplements are not as fragile as cattle, intemational NGOs together withFAO support and supervision will provide follow-up to tractor recipients and their communities, includingmonitoring of tractor use and compliance with cost recovery provisions. For the implementation of farmmechanization repairs, the project will contract one or two intemational NGOs operating in Kosovo todate and which are already now in the process of carrying out such repair activities in Kosovo. Technicallyrepairs envisaged under this approach are relatively straight forward (by extending on-going activities byNGOs into more villages), relatively cheap (as overhead costs are fairly low) and will contribute todeveloping the local private repair capacity since the repair works as well as the supply of spare parts willbe contracted to local entrepreneurs and repair workshops. The owner of the tractor will be required to signa contract with his/her community whereby he would commit himself to undertake specific activities forsome neighbors as a form of benefit sharing so that the entire community would benefit from thecomponent. With regard to farm mechanization replacements, the tractors would be distributed incommunities selected as the result of an open and widely shared consultation process which would result in:(i) agreeing upon the most urgent needs; (ii) designing the final recipients of the tractors; (iii) deciding onthe ownership of the tractor (private or shared property, leasing, etc.), and; (iv) agreeing upon the contractlinking the recipients with the rest of the community in terms of work free of charge to be undertaken forthe other members of the community (nature and quantities of work, deadlines, eventually names ofpersons, duration of the contract, etc.).
Department of Agriculture Capacity Building. The provision of technical assistance and training to thenewly established Agriculture Department under UNMIK's Joint Interim Administration is relativelystraightforward. The Agriculture Department is currently co-headed by one UNMIK staff and one Kosovarindividual. Several units under the Agriculture Department are being established along sub-sector lines(crop production, livestock, marketing, veterinary services, extension services and forestry services) andwill be managed by Kosovar staff. The scope of technical assistance to be provided will be establishedduring the preparation and start-up phase by an FAO agriculture policy and administration expert(supported by FAO Headquarters) in close consultation with UNMIK. During the preparation phase adetailed training program for the Kosovar staff of the Department of Agriculture will be developed,including overseas training and in-country courses to be carried out by intemational experts. Priority policyareas to be supported by the technical assistance under the project will include, inter alia, (a) agriculturetrade policies; (b) measures required to pave the way for investments in irrigation rehabilitation in the nearterm; (c) measures required to enable autonomous farm associations to thrive, and (d) measures required topermit the development of micro-finance, and possibly, commercial non-bank credit. The activities
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envisaged under this component, once adequately prepared and agreed with UNMIK, are technicallystraightforward. The same applies for minor civil works associated with the basic refurbishing of thepremises of the Agriculture Department.
4. Institutional:
Clearly, the institutional environment in which this project will be implemented is challenging and in somerespects differs from that encountered in many other post-crisis situation in other locations. Only a limitedKosovar representation is currently available through UNMWK/JIAS at the technical and administrativelevels, both in municipalities and the central administration in Pristina. While first promising steps havebeen undertaken to ensure Kosovar institutional representation, UNNIK continues to be responsible forgoveming most of the administrative and political life in the province. At the same time UNMIK is facedwith numerous political and policy challenges and has only limited capacity to follow-up, manage andimplement the many technical and administrative aspects associated with the EFRP. FAO together withmany NGOs active since nearly 10 months in carrying out agriculture relief initiatives have the experienceand expertise to assist UNMIK on many of the implementation and fiduciary aspects of the subjectoperation. On the other hand, UNMIK has demonstrated growing institutional support for this operationand a willingness to work with FAO and NGOs. While certainly challenging, the existing institutionalframework is considered adequate to mitigate against most of the institution-related risks associated withthis operation. While the Project Management Team will involve many Kosovar professionals in the courseof implementation, the PMT will be established for a limited time period, only, after which this team willcease to operate.
4.1 Executing agencies:
See Section C.4
4.2 Project management:
See Section C.4
4.3 Procurement issues:
Procurement will be carried out through FAO. No procurement issues are anticipated. See Annex 6 fordetails.
4.4 Financial management issues:
The financial management capacity within Kosovo has not been assessed, however, primarily because ofother implementation considerations, any weaknesses that may exist have been mitigated by the use of theFAO for project implementation, including financial management, drawing upon their experience ofoperations of this nature, and by the use of the FAO's External Auditor for the audit of the project. Inaddition, the risks in the developing Kosovo banking sector have been mitigated by the use by the FAO ofthe UNDP's cash facilities in Pristina.
5. Environmental: Environmental Category: C (Not Required)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.
No major environmental issues are foreseen for the project. The limited scope, relative to conflict damages,of new cattle, new farm mechanization and veterinary equipment provided does not raise environmentalconcems. Animals will only be given to farmers with experience of rearing livestock and who lost all theircattle in the conflict. The number of cattle being provided and the geographically wide-spread distributionacross many communities will not put pressure on pasture and grazing resources. This farm mechanization
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replacement and repair scheme does not entail environmental issues. The imnported tractors will be as closeas possible to existing mechanization levels. No environmental issues are envisaged under the capacitybuilding component. Minor civil works associated with the refurbishing of three veterinary stations and ofthe premises of the UNMIK Department of Agriculture will be carried out under conditions such that theyare acceptable to neighboring communities and with materials not presenting any currently foreseeableharm to health and the environment.
5.2 What are the main features of the EMP and are they adequate?
As this project falls under the Environmental Category C, no Environmental Mitigation Plan is required.
5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: Not applicable.
Not applicable.
5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?
Not applicable.
5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?
Not applicable.
6. Social:6.1 Summarize key social issues relevant to the project objectives, and specif-y the project's socialdevelopment outcomes.
There are many rural households that are in a position to rebuild their farm assets and re-launch economicactivities on their own either because damages to their assets have been limited and/or these families haveaccess to remittances from family members living abroad or otherwise have access to financial means. Thepriority need for family shelter has led to a remarkable speed in reconstructing housing. While casualobservation seems to confirm that many households have been able to reconstruct their dwellings on apriority basis, cash income of many of these families will not permit further reconstruction of economicassets. There is also a significant share of the farming families that have lost most or all of their farm assets(in particular in the westem municipalities of the province) and do not have access to remittances oraltemative, non-agriculture means of income. This is the group of families that is most vulnerable to slidinginto poverty or migrating out of rural areas. It is also this vulnerable strata of rural society that the projectenvisages to support to avoid a further sliding into poverty of rural families.
Minorities. The project is designed to support farm reconstruction in Kosovo, irrespective of ethnicity ofbeneficiaries. Therefore the proposed beneficiary selection criteria will, in principle, allow for minorities tobe included under the project, provided minority families meet the selection criteria which are gearedtowards high on-farm damage incidence and social vulnerability. This is likely to address agriculturereconstruction efforts in municipalities serviced by the project with a high incidence of Albanian Kosovarpopulation in a first instance, but also of Romas and other minorities. Similarly, as the rehabilitation ofveterinary services will be supported throughout Kosovo, in principle, the delivery of veterinary care shouldimprove irrespective of ethnicity. Also, the project will provide technical support to the AgricultureDepartment under UNMIK to carry out activities in cooperation with minorities, in particular, SerbKosovars.
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In addition, the Department of Agriculture under UNMK's Joint Interim Administration Structure will beresponsible for selecting beneficiaries who will receive up to ten percent of cattle and new farmmechanization equipment financed under the Project. These beneficiaries will be selected frommunicipalities in addition to those already identified, and based on the same selection criteria to be used inselecting beneficiaries from the identified municipalities, as described in Section E6. FAO will beresponsible for the distribution and monitoring of assets to such beneficiaries.
Gender Aspects. While the conflict in Kosovo resulted in the deaths of a number of men, the incidence offemale headed households is apparently low. An extended family situation is an integral part of Kosovosociety, particularly in rural areas. Many farms do not operate now, nor did they in the past, in a nuclearfamily sense. Farms often feature walled compounds and consist of a number of household units - parents,sons and daughters in law, and grandchildren - living in several large houses within the compound. A farmmay support more than 50 individuals. Farming systems are traditional, with mainly male management.
However, benefits from the livestock component of the project are skewed towards women. Provision of acow will be targeted to needy households with relatively high numbers of children. Given the traditionalsociety and extended family situations which incorporate widows, female headed households are morelikely to qualify to receive a cow under the project beneficiary selection criteria. Women also processlivestock products such as milk, yogurt, and cheese and thus cows will provide an income earning sourcefor female headed households with the surplus milk production to family requirements. Cows given tofemale headed households will also provide critical nutrient and protein dense inputs to children at risk ofmalnutrition. Caring for cattle also has a high female labor input in male headed households. Managementof the cow in terns of breeding and growing forage may be done by males but rearing calves and milkingare primarily female activities. This means that often women are most closely involved with the cow interms of time commitment and most sensitive to changes in a cow's well-being. As the cows delivered tobeneficiary households will be in-calf, women will be involved in raising the progeny. Both men andwomen, in male headed households, will be encouraged to attend the training sessions organized by NGOsprior to receipt of the cow.
Municipality-based veterinary practices will provide services to the fanning community as part of theircost-recovery obligations under the project. Female headed households who own cattle are therefore morelikely to qualify for free veterinary services. The project will also encourage the participation of women inAl training.
6.2 Participatory Approach: How are key stakeholders participating in the project?
Beneficiary Selection. A beneficiary selection methodology to be applied in municipalities selected underthe project and which aims at minimizing errors of inclusion and exclusion yet is sufficiently flexible toallow for effective implementation within the framework of an emergency-type operation is a key feature ofthis project. The methodology will be implemented by (two) intemational NGOs, Action against Hungerand Mercy Corps, and one national NGO, the Mother Theresa Society (MTS) under the supervision of anintemational rural sociologist with the FAO Project Management Team.
The following steps will be carried out to select beneficiaries associated with the cattle restocking and thedistribution of new farm machinery components: (a) selection of municipalities; (b) data collection oneconomic assets in each village of the selected municipalities; (c) preparing a preliminary list of possiblebeneficiary villages; (d) consultation at municipality level to finalize the list of beneficiary villages; (e)information campaign in the selected villages; (f) meetings and consultation at village level to selectbeneficiary farmers; (g) finalize the list of beneficiary farmers receiving a cow and those receiving atractor; and (h) one day training course for farmers receiving cattle and one for those receiving a tractor.
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The process is anticipated to require roughly three months to carry out. As the project expands intoadditional municipalities in the future, the experience gained from carrying out the beneficiary selection inthe first municipalities - which is being implemented during the on-going project preparation andinitial-start-up phase - would be used to improve and possibly stream-line the above steps. These steps aresunmnarized in the following.
Criteria for selecting municipalities. Municipalities have been selected considering an indicator thatcombines damages on houses, cattle and farm machinery in agreement with UNINK. The project will beinitially implemented in the first three most severely damaged municipalities according to the rankingcriteria: Skenderaj/Srbica, Gllogoc/Glogovac and Decan/Decani.
Data collection on economic assets in each village of the selected municipalities. The followinginformation will be collected at village level: population, nurnber of households, arable land, existingnumber of tractors in working conditions, current number of cows; current number of damaged tractors,number of households having lost all their cows. A list of villages belonging to minority groups in themunicipality will also be prepared.
Preparing a preliminary list of possible beneficiary villages. On the basis of the collected data apreliminary list of villages within the municipality will be prepared where the need for cattle andagricultural machinery is most urgent. The number of cattle and agricultural machinery to be distributedper municipality will be based on the size of the rural population in the municipality and will be decided upfront by the Project Management Team (PMT). The pre-selection of villages will be done by the NGO onthe basis of the collected data. The general criteria for this pre-selection will be:
1. for cattle: by village, the average number of cows per household. The preparation of the list ofpre-selected villages to receive cattle would be undertaken in the following iterative process: (i) ranking thevillages according to the cow per household ratio; (ii) pre-select villages with a ratio equal or lower to. 1(number of cows: number of households); (iii) pre-allocate a number of cows per pre-selected village inorder to reach the 1:1 ratio (with a minimum of 10 cows per village). If this ratio does not allow thedistribution of the predetermined number of cows for the municipality, the ratio will be adjusted. (iv)subsequently, establish the final threshold of the above ratio and thus pre-select villages; (v) adjust thevillage pre-list to take account of the specific conditions of villages with a low calculated ratio but with atraditional livestock vocation not related to cattle (e.g. sheep); (vi) finally, adjust the list of villages in amunicipal consultation processes to assure the inclusion of the villages perceived as most vulnerable by thecommunity;
2. for tractors: the number of usable tractors-arable land ratio. More precisely, usable tractor isdefined as the number of tractors in working condition plus the number of tractors that could be repaired atreasonable cost. The latter should be worked out in conjunction with the organizations implementing tractorrepair programs in the municipalities or, in the absence of such available information, by assuming that acertain proportion (half of the tractors that need repair) of broken tractors could be repaired before bringingin new ones. The first pre-selection criteria would, therefore, be one usable tractor per 20 ha of arable land.The same iterative process as described for the livestock component above should then be undertaken tofinalize the pre-selection of the villages.
Consultation at municipality level to finalize the list of beneficiary villages. Once the preliminary list ofpossible selected villages is ready, the international NGO in cooperation with Mother Theresa Society(MTS) will launch and organize a number of consultations at municipality level to discuss and eventually
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finalize the list of villages. This will include meetings with (a) UNMIK representatives; (b) municipalleaders and concerned technical specialists; (c) international and local NGOs active in the municipality; (d)women's organizations; (e) all village leaders of the municipality. The goal is to achieve a generalconsensus on the final list of villages where the distribution of cattle and new farm machinery will takeplace. The following aspects should be considered: (i) special attention given to minorities and enclaves; (ii)the willingness to avoid concentration of aid in specific villages; (iii) particular local conditions ofvulnerability of villages, not included in the pre-selection proposed by the international NGO; (iv) specificconditions of some villages such as the presence of mines or unavailability of pastures.
Information campaign. An inforrnation campaign in the selected villages will be implemented by theMother Theresa Society. The international rural sociologist under the PMT- together with the internationalNGO will supervise step by step this information campaign. The following steps will be undertaken:
* Preparation of posters, leaflets and booklets explaining, among other: - the aim of the project, thecriteria used for selecting possible beneficiaries or groups of beneficiaries; - the modalities used toattain the final list of beneficiaries; - the rules associated with cost recovery which future beneficiariesare expected to follow;
* Distribution of posters and leaflets in all the selected villages and in all the administrative bureau of themunicipality;
* Organization of a one day training course, prepared and conducted by the international sociologist, totrain 12 facilitators selected at municipality level by MTS. These facilitators will be eventuallyresponsible for the dissemination campaign held at village level;
* Organization of one meeting in each of the selected villages in order to explain directly to farmers therules of the project and to answer their questions;
* Identify and train a skilled person (resource farmer) in each village that can act as a furither point ofdissemination of information related to cattle and tractor allocation.
Meetings and consultation at village level to select beneficiary farmers. This will be done essentiallythrough a participatory method that will make the best use of intimate knowledge on householdcharacteristics shared within the community. Villages are often rather large units and in such cases it maybe better to consider neighbor units, the lagies, as a starting point of this process of decision making. Atleast three meetings will be organized in each of the selected villages. The major aims of these meetings willbe to foster villagers participation and to foster consensus in order to increase the level of acceptance of thefinal decision.
The criteria for the selection of beneficiaries will be discussed, amended and improved during thesemeetings. The starting point for establishing the criteria for families selection will be proposed by the NGOand include the following elements. For cattle: (a) families that have lost all cattle; (b) families with arelevant number of vulnerable members (children, old persons, pregnant women or widows, disabled); (c)limited ability to purchase milk due to lack of income. For tractors the procedure will be different as a costrecovery plan is foreseen. A group of farmers with little access to tractor power will be selected (secondarybeneficiaries). This group will select a farmer as the future owner of the tractor. The criteria for theselection of the primary beneficiary (the tractor owner) will be: (a) a farmer who used to operate a tractorbefore the war; (b) a farmer that receive the consensus of all the members of the group of secondarybeneficiaries. The criteria for the selection of the secondary beneficiaries will be that this group: (a) should
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not have functioning tractors or repairable ones; (b) should have limited access to land preparation servicesby others; (c) should have lack of income opportunities.
Finalize the list of beneficiary farmers receiving cattle and those receiving tractors. This exercise willinclude the public announcement of the final list of beneficiaries in the selected villages and grievancehearings. By end of July 2000 these lists will be submitted to the PMT for final approval.
One day training course for farmers receiving cattle and one for those receiving a tractor. Thesetraining seminars will be held in each of the selected villages in order to brief all the primary and secondarybeneficiaries on technical issues and on the commitment they will undertake by receiving project support. Inthe case of tractors a specific training course will be held on a municipality wide basis, gathering all theprimary beneficiaries in the municipality town. This course will deal only with technical specificity of thetractor and of its utilization in the field. The training for secondary tractor beneficiaries will be divided intotwo parts. A first very short part will introduce and explain technical specificity of the tractors to bedelivered. The second part will explain in details the contract that the group of farmers will sign; theobligation of the farmer to which the tractor will eventually belong and the penalties in case of breaking therules. In case of cattle the training courses will explain all the specific requirements the breed delivered willneed, focusing on shelter, nutrition, health, AI, delivery and how to take advantage from the veterinaryservice and other specific services the project will provide.
6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?
See Section 6.2 above
6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?
See Section 6.2 above
6.5 How will the project monitor performance in terms of social development outcomes?
See Section 6.2 above
7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?
El Envoluntar Resetlment _0BP _OP41E Yes E NoEl Natural habitats (OP 4.043 BP 4.37 P 4.04El ]Yes 1 NoO Forestry (OP 4.3ta GPo4.36) W Yes O NoEl Pest Management (IQ 4.09) LI Yes O No
ElCultural Property (OPN 11.03) El Yes (9 NoLIIndigernous Peoples LOD 4.20) El Yes 12 No
El Involuntary Resettlement (OD4.301 O Yes 12 NoCG Safety of Dams (OP 4.37, BP L.371 El Yes 1S NoEl Projects in International Waters (OP 7.50. BP 7.50.OP7.5~0 LI Yes 12 NoO Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) El Yes O No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
No specific safeguard policy applies to this project.
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F. Sustainability and Risks
1. Sustainability:
While work on this project was initiated by the Bank in conjunction with FAO in mid-July 1999 (i.e. somefour weeks after the end of the armed conflict in Kosovo), project preparation has taken longer thananticipated, resulting in largely forgoing the 2000 Spring/Summer crop season with respect to deliveringthe farm reconstruction support envisaged under the project. The delays have been caused by: (a)considerable effort on the part of the Bank to prepare adequate sector work in Fall 1999; (b) extendeddiscussions between the Bank and UNMIK (and other major partners, such as the European Union) onpriority activities to be undertaken in the agriculture sector; (c) uncertainty of project financing; and (d)protracted discussions, in the absence of a pre-agreed framework, between the Bank, UNMIK and FAO ondetailed fiduciary procedures associated with project management (including, inter alia, financialmanagement, disbursements and procurement). While these factors have resulted in delays forimplementation, they have also contributed to enhancing the quality of project design and of managementand implementation arrangements. Given the scope of damages incurred farm reconstruction will takeseveral cropping seasons to carry out. As such, the project objectives, design and component will remainhighly relevant to the agriculture sector in Kosovo over the coming 18 months.
Technical sustainability of delivered assets will be achieved through a careful selection of the types ofanimals and tractors which are suitable to local conditions and requirements of farmers: (i) cattle breedscombining adequate milk production and rusticity are known and appreciated by local farmers; and (ii) onestandard type of tractors and three types of implements which correspond to those mostly used andappreciated by farmers. In addition, the related services (veterinary services, artificial insemination,quarantine, diagnosis laboratory, repair services for machinery, private dealers of spare parts) will besupported by the project to ensure continued service of imported assets.
The social consultation process is designed to enhance cohesiveness at municipality and village level andonce established could be used for other types of support interventions either from donors or from futureadministrations. Local public and private institutions are strengthened through technical assistance,participation in project implementation, monitoring and evaluation, and on the job training. This willcontribute to improving the technical and managerial capacity of Kosovar professionals.
The types of assets being distributed by the project and associated follow-up activities suggest eminentsustainability. The project is making considerable provisions to provide after-delivery services to recipientsin terms of veterinary and nutritional follow-up for cattle, and monitoring of tractor use and sharing. Thedistributed cows will be pregnant heifers which will calf in 2 - 4 months. The received heifer will thenproduce milk for the family and calf until weaning. A bull heifer will provide natural servicing of heifers inthe community between 12 and 14 months after birth. A heifer calf will provide additional milk, forhousehold consumption or sale, around 2 years after birth assuming first calving at this time. So onepregnant heifer will provide the catalyst for a farmer to restock lost cattle. The life span of a tractor extendswell beyond the life of the project. The communrity involvement in the distribution and use of the tractorshould also ensure that it continues to be used as a community asset beyond the project cycle.Re-establishing veterinary services will also contribute to safeguarding the existing animal stock in theprovince and is likely to become an institutionally sustainable service.
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2. Critical Risks (reflecting assumptions in the fourth column of Annex 1):
From Outputs to ObjectiveThe distributed livestock and its offspring M Strong cattle after delivery service byare sold and not used for re-building of veterinarians, training and additional concentratecattle herd. feed ensure proper treatment, health and
reproductive capacity of the distributed livestockand their offspring. The, thus, continued highvalue of the animals reduces the risk of animalsbeing slaughtered.
Insufficient repair shops and skills M Proper assessment of available repair shops inavailable to conduct machinery repairs. the municipalities by the NGO and facilitating
of training and spare part delivery. Knowledgetransfer from other municipalities whereprogram is already active.
Farmers are not willing or able to pay for M Farmers are used to pay for the veterinarythe services of the re-equipped services and know about the necessity of theveterinarians. Veterinary service develops services for their livestock. Cost recovery ofslowly. veterinary component allows veterinarians to
treat a substantive amount of animals withoutpay. Availability of cash income will increaseafter harvest.
The social pressure at community level S The beneficiary selection is based on adoes not ensure the enforcement of participatory approach which should allow thesharing obligations of the mechanization identification of the intended beneficiaries. Thecomponent. involvement of MTS as the local NGO in the
selection allows the identification of possibleconstraints early in the process.
From Components to OutputsTechnical assumption on livestock are not S Careful supervision of the process by the PMT.correct: low mortality rate, good Knowledge on animal husbandry andadaptation of animals, sufficient feeding availability of shelter part of the selectionand shelter available; off-spring used to criteria. Additional after delivery services andre-build the provincial herd; training provided.The pieces of equipment are not suitable M Simple design of technical specifications ofto local needs for agriculture and tractors and implements based on identifiedtransport purposes. needs and requests by the farmers.
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The proposed consultation process is not S Start as soon as possible with the beneficiaryfeasible and socially accepted and the selection to ensure sufficient time forconsecutive contractual arrangement consultation and grievance hearings. Put asbetween the recipient and his/her much clarity and openness in the process ascommunity are not enforced so that possible. Involve local and international NGO tobenefits of scarce assets are shared in the facilitate consultation. Recruit experienced ruralconcerned communities. sociologists and economists to support the
process.Basic logistic infrastructure (airport, M Awareness of the constraint by the PMT andborder crossings) are not adequate for early discussion with responsible authorities toproject purposes or hinder delivery of ensure timely solutions if problems occur.goods.Insufficient coordination between M The FAO/ECU is coordinating all the efforts inagricultural projects leads to various agriculture. As the implementing partner, theyapproaches on distribution and handling can coordinate and facilitate betweenof beneficiary selection. organizations to strearnline approaches where
needed and possible. Continuos discussions withrelevant organization ongoing.
The ethnic tensions and political H The design of the project is relativelyinstability undermine the output of project independent of the present and future politicalinterventions. The security environment is structure involving mostly an independent PMTnot stable. and local traditional communities.
Overall Risk Rating S
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
3. Possible Controversial Aspects:
No major controversies are associated with this project.
G. Main Grant Conditions
1. Effectiveness Condition
A Project Service Agreement - satisfactory to the Bank - to be entered into between UNMIK and FAO.
2. Other [classify according to covenant types used in the Legal Agreements.]
Prior to requesting the Bank's no-objection to the above-mentioned Project Service Agreement, the FAOwill, inter alia, provide evidence to the Bank that FAO's Extemal Auditor (the Cour des Comptes) hasaccepted the request from the FAO Finance Committee to carry out audits of the project in accordance withterms of reference acceptable to the Bank.
H. Readiness for Implementation
O 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.
0 1. b) Not applicable.
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Z 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.
Z 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.
Z 4. The following items are lacking and are discussed under loan conditions (Section G):
Comments:
add 2. Bidding documents for the procurement of tractors and farm implements have been prepared andare ready to be tendered. Technical specifications and bidding documents for other goods are now beingprepared during the on-going project start-up phase, with the assistance of FAO technical specialists andthe FAO procurement adviser in Pristina. The letter of invitation and associated request for proposal fortechnical assistance services to the Agriculture Department at UNSIK will equally be prepared during thestart-up phase.
add 3. The Project Implementation Plan has been prepared during appraisal mission jointly with UNMIKand FAO. Beneficiary selection is planned to be carried out between mid-June and mid-August 2000.
add 4. Project Management Services Contract - satisfactory to the Bank - to be entered into betweenUNNIK and FAO prior Project Grant Effectiveness.
1. Compliance with Bank Policies
i 1. This project complies with all applicable Bank policies.El 2. The following exceptions to Bank policies are recommended for approval Tproject complies with
all other applicable Bank policies.
O"~~~~~~~~~~~~~~~~~~~~~-
Sever"n L. K~odderitzsch //1-evin M. Cleaver C aaistiaa o. oTeam Leader Sector anagerlDirector Country ManagerDi if
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Annex 1: Project Design SummaryKOSOVO: Emergency Farm Reconstruction Project
Sector-related CAS Goal: Sector Indicators: Sectorl country reports: (from Goal to Bank Mission)To support major structural Phasing out of food ESW report (periodic) The poor arechanges in the rural assistance in project areas. disproportionally involved ineconomy over a phased agriculturetransition through jumpstarting agriculture.
Increase of agricultural Agriculture is the onlyproduction in project areas means to support the rural
economy for the time being
Project Development Outcome / Impact Project reports: (from Objective to Goal)Objective: Indicators:Vulnerable households in Outcome indicators: Brief semestral report (at Adequate macro policytargeted villages and beginning of each planting framework in place.municipalities attain * Increase of share of season) to collect keyminimum levels of land cultivated for quantifiable parameters in Strong private contributionsagricultural production and agricultural production in all concerned villages through remittances supportfood security through targeted villages. (areas, number of animals, rehabilitation process.replaced farm assets and * Yield levels of crop houses re-built);improved veterinary and livestock production Other relief operations in theservices. return to pre-conflict levels More comprehensive reports agricultural sector are
in targeted villages. (baseline/interim/final) conducted according to their* Increase in number based on semi-opened initial plans.of vulnerable households in interviews with atargeted villages consuming representative sample ofadequate amount of milk villages and of householdsand bread according to (project/non-project) todietary standards. assess the economic and* High share of social impact of projectdistributed animals and their interventions: productionoffspring still in beneficiary levels, conditions ofhouseholds and used for animals; suitability ofrestocking purposes. project assets; level ofNumnber of veterinarians satisfaction; level of foodoperating in province (ratio security and income at farmper animal and area); level.frequency and satisfactionof veterinary services used;reduction in number of fatalcases resulting fromunavailability ofveterinarian or requiredequipment; in-crease in Alservices used.
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Output from each Output Indicators: Project reports: (from Outputs to Objective)component:1. Cattle Herd Targeting correctly For output 1.,2.,and 3.: * Distributed livestockRe-established implemented; High * PMT quarterly reports and its offspring usedSelected families in villages survival rate of distributed for monitoring the for re-building ofwho lost all their cattle cattle and calves; milk physical and financial cattle herd.gained access to new production by cow; implementation of thebreeding stock and are continued productivity of project. * Farmers demand andenabled to re-engage in cows and calves willing to pay forlivestock production. (re-conception rate). veterinary services.
2. Rehabilitate Veterinary High awareness of farmers * Semestral reports * Sufficient repair shopsServices (Kosovo-wide) on the availability of (same as above) for and skills available toAccess to veterinary Kosovo-wide veterinary direct physical output conduct machineryservices improved services among farmers; of the project such as repairs.throughout Kosovo. Share of vet stations crop and livestock
operational production, use of * Government seriouslyrepaired and newly considers new policiessupplied farm and intends adoptionmachinery, etc. and forthe identification of * Social pressure atbottlenecks or community levelconstraints requiring ensures enforcement offurther actions (related sharing obligationsto animal health,quality of repair oftractors, etc.)
3. Farm Machinery Repair 3. Targeting correctly * Report on performanceand Replacement implemented, No. of of organizationsSelected villages gained functioning tractors and involved in beneficiaryimproved access to combine harvesters selection andfunctioning agricultural available in relation to distribution process asmachinery and equipment to agricultural area; high level well as implementationaddress urgent needs in of satisfaction of farmers arrangements like theagriculture. with respect to access to voucher scheme
farm machinery and withcontractual arrangements.
4. Capacity Building 4. Favorable independent 4. Legal documents,Relevant agricultural issues evaluation of the analysis supervision mission reports,analyzed and policies conducted and the policies evaluation mission (audit)drafted. drafted (mid-term, final).
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Project Components I Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Cattle Herd 1. US$ 11.8 rnillion Quarterly project Technical assumption onRe-established management reports livestock correct: lowDistribution of 6,000 prepared by the Project mortality rate amongpregnant heifers and bulls Management Unit introduced stock
(procurement management,financial report, projectprogress report, i.e. physicaldelivery of goods andservices, number of villageshaving been informed,having undertaken theconsultation process andcompleted the distribution ofassets).
2. Rehabilitate Veterinary 2. US$ 1.3 million, of Quarterly disbursement Incentives are adequate forServices (Kosovo-wide) which: reports beneficiaries and
non-beneficiaries to allowfor consultation process tobe conducted andcontractual arrangements tobe established at communitylevel
* Equip de facto private - US$ 0.5 million Basic logistic infrastructureveterinarians (airport, border crossing)* Equip a Central suitable for projectDiagnostic Laboratory - US$ 0.4 million purposes.(CDL)* Re-establish public - US$ 0.3 millionanimal health services* Equipment and supply - US$ 0.1 millionof AI services3. Farm Machinery Repair 3. US$ 7.9 million, of Security environment stable.and Replace-ment which:* Repair Scheme - US$ 2.4 million Government is supporting* Supply of 320 sets of - US$ 5.5 million beneficiary selection processnew farm machinery and criteria throughout(tractors & basic project.implements)4. Institution Capacity 4. US$ 4.0 million, of Reasonable coordination ofBuilding which: all agricultural projects
within the province.
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* Technical assistance for - US$ 0.9 millionagricultural policy support,establishment of most urgentpublic services, training oflocal senior staff; mninorworks on office of Dept. ofAgri.
Project Management - US$ 3.1 million
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Annex 2: Project DescriptionKOSOVO: Emergency Farm Reconstruction Project
The Emergency Farm Reconstruction Project envisages to carry out the following components: (a) supportto re-establishing the cattle herd; (b) rehabilitation of veterinary services; (c) farm machinery repair andreplacement; and (d) agriculture policy capacity building. The cattle restocking and farm mechanizationcomponents will be implemented in some 3 to 8 highly damaged municipalities (as a function of donorfunding becoming available). The veterinary services component will be implemented on a Kosovo-widebasis; while the policy capacity building component will be carried out mainly at UNMIK in Pristina. Seethe Project Implementation Plan (PIP) for details.
By Component:
Project Component I -US$11.80 millionSuDDort to Re-establishing the Cattle Herd (Full cost: US$1 1.8 million / Initial Phase: US$4.4 million)
Under the initial phase of the project the aim is to assist in re-establishing the national cattle herd throughthe procurement of 2300 cattle, including 45 breeding bulls and the remaining 2,255 in calf heifers asfollows: 1,578 Simmental Fleckvieh (70% of total) and 677 Brown Swiss (30% of total). Initially envisagedand demanded by a proportion of farmers, the Holstein Friesian and Jersey dairy breeds were consideredunsuitable for the first imnportation under such difficult management conditions. In addition 28,000 strawsof bovine semen will be imported to re-breed some of the animals and enhance Al in the rest of theprovince. The implementation of this component will be coordinated by the FAO livestock specialist whowill also ensure good communication between all parties involved, in particular suppliers, airportauthorities, UNMIK, SDC, and NGOs in charge of distribution of animals and following up on animals inthe selected municipalities.
The animals will be procured through Limited Intemational Bidding. Technical specifications are providedin the PIP. Bidding documents have been prepared by FAO. The heifers will be selected in the country oforigin by a selection team comprising of 2 Kosovar experts (one veterinarian and livestock specialist, onefarmer representative with practical animal husbandry experience) jointly with an FAO livestock specialistwho, amongst other qualifications, has OLE veterinary regulatory experience.
The animals will be transported by air freight from the country of origin to Pristina airport. At about 65animals per aircraft and one flight per day, this should take about 40 days between early September andlate October 2000. The insurance from the supplier is effective from this point until 30 days post deliveryat Pristina Airport. It covers death, morbidity and subsequent slaughter and abortion.
The temporary UNMIK procedures for holding/quarantine periods for imported livestock require a 5 dayholding period at the Fush Kosovo Holding Station and a 25 day isolation period at the beneficiary farm toexclude contact with local livestock. These two holding periods, at the holding station and at the farm,would meet the UNMIK procedures of a 30 day quarantine period.
A contract is being discussed with the Swiss Development Cooperation (SDC, a registered NGO inKosovo) to take care of the animals from their arrival at the airport until their delivery to the farmers, i.e.including local transportation and stay in the Fushe Kosovo/Kosovo Polje farm. This holding center whichwill have been equipped during the project preparation and start-up phase, and will provide shelter, feedingand clean water, management of the imported heifers as well as veterinary follow-up by SDC veterinariansfor 5 days (confirmation of pregnancy) and vaccination of heifer. The SDC would also ensure
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transportation from the holding station to the municipalities by experienced stockmen.
The responsibility of SDC finishes with the off-loading of the animals at the delivery points in the selectedmunicipalities. The distribution of animals within the municipalities will be the responsibility of the NGOsthat have been in charge of beneficiary selection and are present in the respective municipalities, i.e. AAHin Skenderaj/Srbica and Gllogoc/Glogovac and MCI in Decan/Decane. These NGOs will have infornedfarmers on the date and place of delivery, implemented their pre-delivery training, prepared all necessarydocumentation and prepared the logistic of distribution. Each farmer will sign a delivery notice whichverifies: (i) the heifer/bull was received in a good healthy condition: no transit damage; (ii) the correctpedigree certificate; (iii) the correct consecutive ear tag; (iv) the veterinary certificate; (v) insurancedocument, if required; (vi) receipt of halter/rope; and (vii) farm record cards/evidence of training.
The animals will be ear-tagged. The aim is to provide a central, traceable system of animal recording whichcan facilitate monitoring of animal health, livestock movement, slaughter record, milk and meat recordingand future genetic selection for improved breeding and export opportunities.
About 45 breeding bulls will be procured as part of the imported cattle. These will be distributed toindividual farmers in the most remote villages with little access to artificial insemination services, due totransportation constraints. The recipient will be contracted to provide services to cows in his village as acost recovery measure. Detailed procedures and requirements will be further worked out during thepreliminary phase of project implementation.
Considerable emphasis is put on post-delivery monitoring and assistance to cattle recipients which will bethe responsibility of the above mentioned NGOs and local veterinarians under the supervision of the FAOlivestock specialists. High priority is placed on the re-breeding management of the imported heifers. Correctbalanced feeding is a key to improved fertility. In addition to training of all recipients in feeding and fodderconservation techniques, provision will be made for a concentrate feed delivery for each farmer whoreceives a heifer, for the critical post-calving period of 100 days (2 kg per day) as forage quality improvesand private sector mills re-establish access to local supply. A total of 460 tons (200 kg per animal) will beprocured locally and distributed by the NGOs.
In addition, the following veterinary services will be provided by local veterinarians who will be contractedby the FAO/ECU to carry out the following: (a) first visit for confirmation of pregnancy and holdingperiod/isolation; (b) second visit for calving/post calving assistance/ calf identification tag; (c) third visitfor re-breeding check / general nutrition/health check; (d) fourth visit for the confirmation of the secondpregnancy; (e) two artificial insemination visits; to include transport, labor, semen straws; and (f) toundertake monthly checks on the village breeding bulls, including venereal testing on a three-monthly basisduring the first year. One contract will be signed with each of the three municipality veterinary practiceswhich will indicate: number and names of cow owners, number and nature of visits, schedule of work andcosting of the services. Second and third payments will be subject to the satisfactory delivery of services asmonitored by the local NGOs.
Families receiving caffle under the project and their respective community will be informed that the secondoff-spring is expected to be made available by the recipient family to the community for allocation to otherfamilies in need within the community. The described approach of sharing of asset within a larger familyand community context is an acceptable mechanism of partial in-kind cost recovery based on socialcohesion within the community. It is recognized, however, that this type of cost recovery is clearly notenforceable from outside the local community and relies on social control.
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Project Component 2 - US$1.30 millionRehabilitation of Veterinary Services (Full cost: US$1.3 million / Initial Phase: US$1.3 million)
This component will be implemented through the FAO Project Management Team consisting of a Kosovarlivestock and veterinary specialist and technical support from the following FAO specialists on the basis ofrepeated shorter term missions: a veterinary policy specialist; a veterinary supply specialist, and; adiagnostic laboratory specialist.
Rehabilitation needs of veterinary services in Kosovo has been initially assessed on the basis of aconsultative process which involved various parties concerned, including private veterinarians, the facultyof agriculture, UNMIK as well as municipal administration. This process was initiated during FAO andBank missions in July and September 1999 and January 2000; was continued by the FAO/ECUveterinarians in-charge of an on-going animal vaccination campaign; and will be finalized under theguidance of an FAO veterinary policy specialist assisted by a Kosovar veterinary expert during theon-going project preparation and start-up phase. The outcome will reflect a consensus on the organizationand structure of private and public veterinary services, the clear definition of the functions and roles ofeach of these, as well as the needs of strengthening the public animal health and disease control services interms of training and public investment. In particular, the final stage of the consultation process willascertain the following: (a) disease control and epidemiology, (b) sanitary OIE standards for imnportation,(c) cross border control regulations for import/export; (d) slaughter house and meat inspection; (e) Kosovarcattle/livestock identification system (including EU compatibility); and (f) animal welfare regulations.Project investmnents and activities described below do not predetermine the long term policy stance in theanimal health field. Rather, these are indicative investments which could be financed to support thedevelopment of public veterinary services. They should be considered with flexibility so that the details canbe adopted during project implementation.
Private veterinarians are currently organized in veterinary practices which would be supported inequipment and drugs. Equipment would cover clinical and microscopic diagnosis, as well as medical andsurgical treatments for all farm animals. The plan is to strengthen the veterinary practices that have onaverage 2-5 qualified veterinarians and 2-4 supporting veterinary technicians/field staff. The equipment anddrugs would be procured through international shopping and distributed to the veterinary practices inSeptember and October 2000. To avoid monopolizing veterinary services associated with themunicipality-based, veterinary group practices, qualified individual veterinarians within a municipality areeligible to receive equipment and drugs and/or allowed to leave the group practice with a pro-rated share ofthe equipment and drugs provided by the project to the group practice. Distribution of veterinary drugs toveterinary practitioners will take place in two tranches; distribution of the second tranche of drugs isconditional on the veterinarian demonstrating satisfactory performance, including provision of qualityservice to remotely located and poor farmers, and meeting cost recovery obligations (below). Complianceof these obligations will be monitored by NGOs working in the project municipalities and by the FAO/ECUin municipalities in which NGOs do not operate.
Basic kits of veterinary equipment and drugs will also include 1000 straws of bovine semen of theSimmental (40%), Brown Swiss (40%), Holstein Friesian (15%) and Jersey (5%) breeds to encouragegenetic improvement and husbandry extension in all 28 municipalities on the remaining Busha cattle herd.The equipment packs include 30 litre storage flasks, 10 litre field flasks, inseminator kits. Refreshertraining courses on artificial Insemination will also be organized at the municipal level.
As a cost recovery measure, this significant capital contribution of equipment, veterinary drugs, Alequipment and Bovine semen to private practices in all municipalities will have a repayment in kind. This
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will correspond to about 30% of the asset value through the provision of free veterinary visits and artificialinsemination to non project farmers. This will provide an average of 250 farmers per municipality with freeveterinary visits.
In addition, private veterinarians would be provided with training in business management, reproductiveveterinary skills, new drug use and technology development. Together with technicians, they would alsoreceive Artificial Insemnination refresher courses.
Public veterinary services. The support to public animal health and disease control services would includethe establishment of a central veterinary diagnostic laboratory and three regional diagnostic laboratories, aswell as a facility to ensure artificial insemination services. The rehabilitation of a central veterinarydiagnostic laboratory in Pristina is a priority public service to support the re-emerging livestock industryand food safety. Technical specifications for the goods and works to be provided will be prepared duringthe project preparation and start-up phase.
The basic requirements for a an AI center are semen and liquid nitrogen storage tanks, handling equipment,basic laboratory for semen quality/motility testing, liquid nitrogen and semen collection/delivery vehicle(4WD 2 ton carrying capacity with 2000 litre removable tank.). The limited amount of equipment providedto ensure basic artificial insemination services do not constitute a barrier of entry for others to supply Alservices in the future. The urgent need for providing Al services in the province as envisaged under theproject is commensurate with the relatively small risk of contributing to monopolizing theses services. Todate no regulations exist that limit the rendering of Al services, including the importation of semen by theprivate sector and the rendering of Al services by non-veterinarians. Also, UNMIK does not intent topromulgate regulations restricting the provision of Al services. In addition, Al training envisaged under theproject is open to non-veterinarians and will seek to include women as participants.
Project Component 3 - USS 7.90 millionFarm Machinery Repair and Renlacement (Full cost: US$7.9 million / Initial Phase: US$3.3 million)
The objective of this component is to help rebuild the power capacity for agricultural production throughthe following two sub-components: (i) a tractor repair program to make workable in a cost effective mannersome of the large number of tractors which have been reported as damaged or broken down; (ii) thedistribution of new pieces of equipment, where a power deficit still remains in particular areas.
To implement this component, the FAO PMT will include a full-time Kosovar mechanization specialistsupported by short terns inputs of an FAO mechanization specialist visiting Kosovo during key periods.The tractor repair program will be sub-contracted to NGOs with proven successful experience in this field,such as possibly, GOAL. The procurement of new tractors will be the responsibility of the FAO/PMT, withlogistical and monitoring support provided by international NGOs active in the concerned municipalities(i.e. AAH in Skenderaj/Srbica and Gllogoc/Glogovac, MCI in Decan/Decane). In each municipality, theseNGOs will have recruited a Kosovar municipal mechanization technician.
Tractor Repair Program. (US$2.4 million / US$1.3 million) There are a number of on-going andplanned tractor repair programs implemented by NGOs in different regions of Kosovo. The purpose of thisrepair program is to identify geographic gaps and contract one or several of these NGOs to fill these gaps.This will first be undertaken in the municipalities of PrizrenlPrizren, Rahovec/Orahovac orGjakove/Djakovica where no organized program is currently implemented, and, in addition, in two furthermunicipalities, to be determined. In the first three mentioned municipalities, 1988 tractors were lost and
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1778 damaged, 34 combine harvesters were lost and 42 damaged, 1228 single-axle or pedestrian tractorswere lost and 500 damaged.
With a budget of about US$765,000 for the first three mentioned municipalities, it is estimated that about800 tractors and 30 combine harvesters could be repaired. The program will start with a survey andassessment of damaged machinery, followed by the implementation of the repair exercise: in general theleast expensive (Category I, i.e. replacement of tires, batteries, belts and hoses) tractors will be repairedfirst, followed by those more difficult (Category II, i.e. Category I plus engine peripherals (starter, injectorpump, alternator, radiator, etc.) plus minor damage). Category III tractors (Category II but with damage tomajor components (engine, gearbox, etc.) will be repaired only when there is an exceptional tractor deficitin a particular village.
GOAL, an NGO that will possibly provide farm mechanization repair services under the project, hasexpressed interest in being the implementing NGO for the program. GOAL is also the NGO that has thelongest track record on tractor repair (having started by repairing tractors belonging to refugees inAlbania). GOAL has built up a considerable technical expertise in assessment of damage, the least-costmeans of acquiring quality spare parts and in the supervision of repair work. This NGO has nurtured theexisting private-enterprise supply and servicing infrastructure by buying spare parts through local suppliersand by encouraging local mechanics and service outlets.The following process will be implemented by the NGO undertaking farm repair services:
(i) A survey of damaged tractors and combines in the three municipalities. This will include anexamination of tractors and identification of their categories as well as parts to be provided for their repair.The results of the survey of machinery status will be analyzed to produce a municipal work program and anindication of the order in which to proceed with repair. Combine harvester repairs will be given initialpriority. The tractor and combine harvester damage assessment report will include a list of spare partsneeded for each tractor and combine harvester in the respective municipality in which tractor and combineharvester repairs will subsequently be carried out.
(ii) The NGO will conduct a survey of suppliers of spare parts. The purpose of this survey will be to(i) collect unit prices of spare parts that will be need for tractor repairs, and (ii) register suppliers to supplyspare parts to farmers. The registration will be based on the demonstrated reliability of the suppliers, hisstock of spare parts, reliability and willingness to accept the payment procedure described below. Based onthe survey of prices and the NGOs own historical price data, the NGO will prepare a list of spare partsalong with their unit rates. This list will be made available to farmers and suppliers. Farmers will be able topurchase their spare parts from any of the registered suppliers.
(iii) A voucher will be prepared in triplicate for each individual beneficiary having repairs undertakento his/her tractor or combine harvester. The voucher will include the list of the spare parts needed for therepair of the beneficiary's tractor. One copy of the voucher will be given to the beneficiary, one copy willbe provided to the suppliers of the farmer's choice, and one will be retained by the NGO. The beneficiarywill collect its spare parts from the supplier in exchange for the voucher which the supplier willcounter-check with its own copy of the voucher. The supplier will submit an invoice to the NGO along withhis copy and the beneficiary's copy of the voucher. The NGO will validate the payment. The NGO will alsoconduct frequent spot checks to ensure that the spare parts are being used for the purpose intended and thetractors repaired and operational.
(iv) In cases where the damage to the tractor or combine requires the services of a mechanic, the NGO willinclude an estimate of the labor units in its damage assessment report. The NGO will develop a list of
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registered workshops within the municipality and maintain updated standard labor rates for routine repairtasks. Vouchers will be issued in the way described above with the difference that they would now beprepared in quadruplicate with an extra copy being given to the NGO-selected mechanic named on thefourth voucher. Spare parts will be supplied in the normal way (described above) and in addition themechanic will redeem his labor payment on completion of the job by submitting his voucher and the invoicedirectly to the NGO for certification. There will be close supervision (by NGO technicians) of a mechanic'sprogress in these jobs.
(v) In the few cases where specialized workshop services are required (machining for engine overhaul,diesel pump calibration) this will be authorized and the work supervised directly by the NGO. Again, astandard unit rate list will be maintained by the NGO who will certify the specialist service provider'sinvoice on satisfactorily completing the work.
(vi) The beneficiary will be asked to allow the use of his/her tractor in the field of neighbors for nomore than the cost of fuel as a cost recovery measure and in order to spread of benefits. However, there isno means to systematically enforce this from outside (other than through spot checks) and the complianceto this commitment will rely on the local social pressure of secondary beneficiaries;
(vii) The NGO will report monthly to the FAO PMT on the progress, including amongst others, numberof tractors and combines repaired and their unit costs, operational constraints.
Supply of new tractors and implements. (US$5.5 million / US$2.0). Type of equipment: A total of onehundred and twenty 45hp tractors (slightly larger than the current most popular tractor used in Kosovo),each with a set of implements (2 furrow plough disk harrow, spike tooth harrow and 3-tonne trailer) will bedelivered to the three municipalities of Skenderaj/Srbica, Gllogoc/Glogovac and Decan/Decane in threetranches between September and October. Tractors will be procured by Limited Intemational Bidding(LIB). A tractor and matching set of implements will ensure that new tractor recipients are entirely in aposition to undertake all major agricultural activities and therefore to carry out their cost-recoveryresponsibilities.
Logistics. The PMT will be in charge of procuring the tractors and implements and organize, in junctionwith the suppliers, the delivery to agreed points in the concemed municipalities. The contracted NGO willassist in the preparation of the pre-delivery documentation and the logistics of distribution: a securehard-standing area for the storage of machinery will have been arranged, as will the hire of a heavy dutyfork-lift truck for lifting implements and, if needed, a ramp for offloading tractors. Offloading will proceedand each tractor will be attached to its trailer on which the cultivation implements will be loaded. DeliveryNotes and Invoices will be checked against serial numbers and an inspection of each machine undertaken tocertify that it has been delivered complete and with no breakage or defects. Prior to distribution, thesupplier's instructor will provide a day's tuition to the primary beneficiaries.
Cost Recovery. Prior to the delivery, the consultation process will have resulted in the selection ofsecondary beneficiary groups for tractor services, i.e. people with little means of cultivating their land whowill be eligible to receive services from the pieces of equipment supplied by the project. These groups willeach have made their own selection of a primary beneficiary (recipient of the tractor and implements) onthe grounds that he/she is the most likely person to deliver cultivation services to them (i.e. the costrecovery program) in exchange for no more than the fuel consumed by the tractor for the service. Primarybeneficiaries will be bound by contract to carry out these cost recovery obligations, which can besummarized as the land preparation of 60ha of land in the first four cultivation seasons, i.e. 2 years. This isestimated to correspond to a value of about 50% of the value of the pieces of equipment which will have
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been distributed. This will provide a significant sharing of the benefits of the equipment within the village(around 20 secondary beneficiaries per tractor), but not excessive so as to allow the owner of the tractor tomaintain it properly by leaving himn/her enough time to generate additional income (his cost recoveryobligations are estimated to occupy about 2/3 of the capacity of the equipment).
Liability, insurance, ownership. The financial responsibility for the delivery and distribution of theequipment will remain with supplier until the distribution to the final beneficiaries. To coverafter-distribution risks, FAO will provide block cover by an international insurance broker. Ownershipcertificates will also be signed by project beneficiaries. These ownership certificates will indicate that titleto the tractor and implements will not pass on to the primary beneficiary until July 2002, and only if he/shehas fully satisfied his/her obligations to the secondary beneficiaries and the local community. Both,contracts and the ownership certificates will be retained by FAO PMT.
Means to ensure cost recovery. Each primary beneficiary will publicly sign a contract acknowledging hisobligations and will not get title to his tractor until the obligations have been fulfilled. A tractor logbook,which records the agreed cultivation program, names of recipients, plot sizes and the order of work will beused. Secondary beneficiaries will be given a voucher which the primary beneficiary will redeem whenhe/she has satisfactorily delivered agreed service. During the autumn and spring seasons the NGOmunicipal mechanization technician will spend extensive time supervising the activities of the primarybeneficiaries within his municipality. Signs of non-perfonnance will be spotted early. The whole processwill be transparent with copies of the cultivation timetable being on public display. Social pressure willalso be a factor in ensuring compliance.
Main tasks of the implementing NGO will include: (a) to meet regularly with both primary and secondarybeneficiaries to ensure a full understanding between the two parties and to work out a cultivation (costrecovery) program for the coming season; (b) to give full time assistance to the delivery and distributionexercise for farm machinery as required; (c) to closely supervise the performance of primary beneficiariesin carrying out their cost recovery services during the autumn and spring cultivation seasons; and (d)monthly reports to FAO, with weekly updates during the cultivation season.
Project Component 4 - US$0.90 million
Capacity Building Support (Full cost: US$0.9 million / Initial Phase: US$0.9 million)
UNMIK's current capacity to analyze agriculture issues, formulate sector policies, and translate them intoactions either through regulations or the design of programs is limited. UNMIK structures have nowevolved towards the sharing of responsibilities between the international staff of UNMIK and localKosovar in the form of 20 departments within JIAS (Joint Interim Administration Structure), of which theDepartment of Agriculture (DOA).
Under the Emergency Farrn Reconstruction Project, a small number of international agriculture policyanalysts would be recruited to work for the DOA on agriculture policy formulation, staff training andinstitutional capacity building. The international experts would be paired with Kosovar professionals fromthe DOA to ensure relevance and acceptability of future policies and to allow for on-the-job training ofnational experts. This core team of national and international policy analysts would also be responsible forcompiling a sound agriculture database within UNMIK based on survey and other information collectionefforts undertaken by different donors (such as under the ongoing FAO/WFP agriculture and food securitysurveillance project implemented under the umbrella of the FAO Emergency Coordination Unit in Pristina).
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During the preparation phase a detailed training programn for the Kosovar staff of the Department ofAgriculture will be developed, including overseas training and in-country courses to be carried out byinternational experts. Priority policy areas to be supported by the technical assistance under the project willinclude, inter alia, (a) agriculture trade policies; (b) measures required to pave the way for investments inirrigation rehabilitation in the near term; (c) measures required to enable autonomous farm associations tothrive, and (d) measures required to permit the development of micro-finance, and possibly, commercialnon-bank credit.
The team of international experts will subsequently be recruited by the PMT during July/August 2000 andstart to work under the DOA in September 2000. It will address immediate needs in terms of policydecisions, urgent regulations, price policy, public services, statistics, etc. and advise on these issues. Forspecific areas, additional specialized technical assistance will provide support for short term periods. Inaddition, the DOA is moving to premises that that have been damaged during the conflict; these premisesrequire some refurbishing which will equally be provided.
Project Component 5 - US$3.10 millionProject Management (Full cost: US$3.1 million / Initial Phase: US$1.9 million)
Implementing the above activities in the current environment in Kosovo to acceptable technical andfiduciary standards poses considerable management challenges. To meet these challenges, a ProjectManagement Team (PMT) made up of a blend of local and international staff will be established andplaced under the umbrella of the FAO Emergency Coordination Unit in Pristina. The PMT will besupported by technical expertise, and will implement activities in close collaboration with selectedinternational and local NGOs.
FAO and FAO Emergency Coordination Unit. FAO will be responsible for implementing and managingthis operation. With support from FAO Headquarters, the FAO/ECU in Pristina will implement all projectcomponents in coordination with UNMIK, and be responsible for procurement, financial management anddisbursements. The FAO/ECU was established in Pristina shortly after the end of the conflict in Kosovoduring July 1999, and has since had an impressive track record in executing FAO relief operations as wellas in coordinating numerous NGOs implementing agriculture relief activities during the Summer and Fallof 1999. FAO is currently implementing key preparation and project-start-up activities for the EFRP undera service agreement between UNMIK and FAO, funded by IDA under a project preparation grant. As aresult, the FAO/ECU will be considerably strengthened under the EFRP in terms of staff and officeinfrastructure over the coming months to ensure efficient implementation in a challenging post-conflictenvironment. UNMIK and FAO will enter a second service agreement for the implementation of this project(or agree to amendments to the service agreement covering the preparation and start-up phase).
Project Management Team. To strengthen the FAO/ECU to implement and manage the project, FAO isestablishing a Project Management Team (PMT) during the on-going preparation and initial start-up phase.The PMT will carry out implementation and project management under the supervision of the FAOEmergency Coordinator in Pristina (who is the Head of the Kosovo-based FAO/ECU) and relevanttechnical departments at FAO Headquarters. The PMT will be managed by an international tearn leaderand a Kosovar deputy team leader, and provide for procurement and financial management expertise, aswell as support staff. To carry out technical implementation, FAO will recruit international and localexpertise in the following areas: (i) veterinary and livestock expertise, (ii) farm mechanization, (iii)monitoring and evaluation, and (iv) rural sociology. To the extent possible, each of these positions andtasks (with the exception of support staff) will be co-administered by an international expert and a localKosovar, in consultation with UNMIK. The PMT will also be provided with office equipment and vehicles.
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PMT staff and of other technical expertise, including NGOS, will be recruited under the responsibility ofFAO.
Annex 2A Selection of Municipalities
The selection of the municipalities has been conducted in accordance with UNMIK on the basis of threeselection criteria:
(i) Damages on private houses: for each municipality the percentage of 'heavily damaged houses'(defined as the percentage of houses in damage categories m and IV defined by IMG) has been calculated(IMG housing damage survey).
(ii) The percentage of losses of cattle has been collected in the eight municipalities by UNMIK.
(iii) The percentage of losses of tractors was also gathered by UNMIK in the concerned municipalities.
As shown in the following Table, the three parameters have been combined by allocating a weight of 33%to each in order to obtain a 'rural damage indicator' (RDI) on the basis of which the eight municipalitieshave been ranked. On this basis and in view of not excessively diluting the limited available assets to bedistributed under this first project phase (US$11.8 million), the three first municipalities ofSkenderaj/Srbica, Gllogoc/Glogovac and Decan/Decane have been selected to receive cattle and tractors.
Selection of MunicipalitiesSkenderaj Gliogoc Decan Vushtrri Kline Peje Istog Gjakove Average
Srbica Glogovac Decane Vucitim Klina Pec -stok Diakovica
Damages on Houses 75% 59% 70% 52% 50% 63% 60% 45% 59%Damages on Cattle 67% 77% 70% 69% 65% 64% 71% 48% 68%Damages on FarmMachinery 81% 81% 64% 78% 81% 54% 41% 58% 69%Overall RuralDamage Indicator 74% 73% 68% 67% 65% 60% 57% 51% 65%Rank according toRDI 1 2 3 4 5 6 7 8
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Annex 3: Estimated Project CostsKOSOVO: Emergency Farm Reconstruction Project
Costs by Component
1.~ ~ Suprtt.e-establishing TLivestock 11.80 47% | 4.40 37% / 0 4.40 44%/the Cattle Herd 2. Rehabilitation of Veterinary Livestock 1.30 5% 1.30 11% 0.40 4%Services3. Farn Machinery Repair and Agriculture 7.90 32%0 | 3.30 28% 3.30 33%Replacementa)Tractor and Combine Repairs Agriculture 2.40 10%/0 1.30 11% 1.30 13%b) Replacement of Tractors and Agriculture 5.50 22% 2.00 17% 2.00 20%Implements4. Institution Capacity Building Instit. Dev. 0.90 4% 0.90 8% 0.00 0%S. ProjectManagement Instit. Dev. 3.10 12% 1.90 16% 1.90 19%
Total Project Costs 25.00 100% | 11.80 100% 10.00 100%The Netherlands Co-financing 1.80 _ 1.80Total Financing Still Required 13.20 0.00
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Annex 4: Cost Benefit Analysis SummaryKOSOVO: Emergency Farm Reconstruction Project
In the absence of detailed agronomic data that reflect current farming practices, cropping patterns, farmasset use, etc. only a simple quantitative economic analysis has been carried out aiming to reflect maincosts and benefits associated with this project. The assumptions used for the analysis are presented belowand are considered to be conservative. The analysis is presented for the initial project phase implementedin the three most damaged municipalities (i.e. US$11.8 million). Project activities in these threemunicipalities (including province-wide rehabilitation of veterinary services, and capacity building of theAgriculture Department) will benefit a estimated 12,000 families. Around five-thousand households willdirectly benefit as primary or secondary beneficiaries from the cattle restocking and farm mechaizationactivities. A firther estimated 7,000 households will benefit from improved veterinary services provided.Each additional municipality included under the EFRP would increase the number of beneficiaries by afuther estimated 1,700 families.
The Net Present Value (NPV) is estimated at around US$3.6 million (over a ten years period discounted atan opportunity cost of capital assumed at 10 percent), while the Interal Rate of Return is estimated ataround 21 percent.
Year I Year 2 ~Ye3 Year 4 Yea 5 Year 6 Year7 Year 8 Year 9 Yer 10
A. Incremental Benefits
Incremental value crop
,roduction (newmnery) 1,701,0001 1,701,00 1 70100 .. 1,701,00 0 1,701,00 1,17701,00 1701,00 1,701,0001 1,701,0001 1,701,000'
production (machinery
repair) 7,560,000 7,560,000, 7,560,000. 7,560,000. 7,560,000 7, 560000 7560,000 7,560,000 7,560,000 7,560,0001
incremental value oflIvestock 1,644500 1,516894 1,947,213 2177 806 2,505,994 2,86608 3282,058 3,757,439 4,301,9344
TotalBenefi.s 10,905,5 10,777894 11,208,213 1143880 11766 12?127,018 12,543,058 13,018,439 13,562,934 14186,269
B. Incremental Costs ....... ...... ...... ..... - ..... ............ .... . ..... .. ... ...... ...... ..... .- .... ...... ... .. ...... ........... ...... .-......... ...... ...... .. ... .....
I ncremental crop prodction
:costs(newmachinery) 1 15600 1,560 600 1,560600 1,560600 1560600 606 1,560600 1560600 1,560600 1560600Increased crop productionosts(machineryrepa.r) 6,936,000 6,936,000 6,936,000 6,936,00 6,93600 693600 693600 6936 0 6936000 6936000
Incremental livestock
productioncosts 1039600 874168 1122156 1,255043 1444174 1651652 1891411 2165368 2479153 2838374*Investments: cattle, new
;tractors, repairs, veterinary
* services . 8,600,000.
.TotalCosts 18136,200 9370768. 9618756. 9751643- 9940774-10148,252 10388011 10661968 10975753 11,334974; ....................... ~~~~~~~~~~~~~~~~..... . ... ;*- . ----*----... ----- ----
*NetIncrementalBenefits*(A-B) .- 7X230X700. 1,407,126> 1,589,457 1,687162- 1,826,219. 1978766 2,1550471 2,356472. 2587,181. 2851,295
Net Present Value 3,588694.
lRR 0.21*
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Summary of Benefits and Costs:
The main benefits and costs associated to the project have been considered in the economic analysis. Theseare the benefits and costs associated to (a) increased crop production through the supply of new and therepair of broken machinery and (b) increased milk production and production of offspring. However, thereare more benefits of the project which have not been included in the analysis as they are either very limitedin scope or difficult to quantify. These benefits are the veterinary component (the component is onlyconsidered to the extent to which it provides services to the distributed cows), the capacity buildingcomponent and the provision of community services as part of the cost recovery scheme of the machinerycomponent.
The benefits of the farm machinerv supplied and repaired is measured through its impact on the cultivatedarea. It is further assumed that sufficient input supply would then enable the farmers to grow crops.Therefore, benefits of the machinery component (repair and replacements) are reflected through theincreased production values generated by the use of the machinery. The benefits of machinery are limited totheir benefits in crop cultivation in the calculation. There are additional benefits through their use duringharvesting time and for transport purposes.
The benefits of the livestock component is measured in terms of (a) increased milk production, (b) cattlerestocking potential and (c) the value of male off-spring. These benefits are reflected through (a) the valueof the additional milk produced, (b) a simple herd model which quantifies the progressing of female calvesin the breeding process and finally provides for the value in growth of off-spring and milk; and (c) the valueof young male calves. It is assumed that the distributed cows will be used for re-breeding purposes and-able to produce low to average milk yields under the given circumstances in Kosovo.
All cost were estimated using prices for inputs and goods prevailing in Kosovo at year end 1999. The pricefor crops are border prices, i.e. international prices adjusted for transport and insurance. Internationalprices are taken from world market price forecasts for the year 2000. Crop yields and milk production dataare taken from average yields prevailing before the conflict. Local costs have been converted into US$using the exchange rate of 1 US$ = 2 DEM.
Main Assumptions:
Assumptions for Economic Analysis
Machinery Component:
* The replaced assets will result in a one-time, incremental 5,400 ha being cultivated annually. Anadditional 1,800 ha of cultivated land per year can be expected for every additional supportedmunicipality (45 ha per tractor per year).
* The machinery repair component is expected to repair around 800 tractors in three municipalitiesresulting in a fiurther, one-time incremental 24,000 ha that can be cultivated annually (30 ha per tractor- lower than for new machinery as productivity of machines is lower).
* It is assumed that the additional area will be planted with winter and summer grains at an average yieldof 3 tons per hectare (average yield in Kosovo) at an average price of US$105 per ton. The pricerepresent a world market price forecast for the upcoming 2000 harvesting season adjusted for transportand insurance.
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* The production costs (including farm inputs, fuel and routine machinery maintenance, labor) for grainhave been assumed to be around 90% of their value of production.
Livestock Component:
* The livestock component will give direct benefits to 2,300 farm households who lost all their cattle.The component has two benefits: (i) the availability of milk and (ii) the cow and its offspring. Theincreased availability of milk will directly improve the diet of the more vulnerable households. The cowand the calf enable households to restart livestock production who would not be able to do sootherwise. Access milk, if marketed, creates an additional income source for the family.
* The reproductive rate of a cow has conservatively been assumed to be 1.3. This takes possible fertilityproblems of cows living in a difficult environment into consideration. A (higher than anticipated)mortality rate of 10% is assumed.
* It is assumed that 50% of the off-spring are female. The female calves give birth to their first calf andprovide milk at the age of around 24 months. Male calves are sold immediately upon birth - and hencevalued for the purpose of this analysis - at a price of US$200. Female calves are kept for re-breeding,contributing to the build-up of the cattle herd.
• The cows are assumed to produce 2,500 liters of milk on average per year. The economic value of milkis estimated at around US$0.25 per liter.
* The off-spring is assumed to consume 1,000 liter per calf annually (5 liter over 200 days). Besidesrooming on pasture (no economic costs have been imputed), the cows are additionally fed with hey andconcentrate (US$150 annually).
3 The investment costs consist of the cost of the farm machinery repairs and replacements, the cost ofproviding livestock, and the cost of rehabilitating and providing veterinary services in threemunicipalities (US$8.6 million)
Sensitivity analysis / Switching values of critical items:N/A
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Annex 5: Financial SummaryKOSOVO: Emergency Farm Reconstruction Project
In the absence of quantitative data reflecting agronomic practices, farm asset use, cropping pattern, etc. andgiven the emergency nature of this operation, no quantitative analysis, based, for instance, on farm models,is provided. Cost recovery levels have been established such that farm mechanization and veterinaryservices will be provided to the community while at the same time allowing a reasonable return to owners.
Farm Mechanization: Cost recovery on the asset value of the tractor and set of implements will beobtained by the primary beneficiary carrying out cultivation operations for a group of secondarybeneficiaries within the community. This cultivation will be carried out without payment, except that thesecondary beneficiaries will provide fuel for the tractor. It is important that the correct balance is struckbetween the primary beneficiary's ability to earn an income from his machinery and this non-incomegenerating cost recovery obligations to the secondary beneficiaries. If the cost recovery target is set toolow, then the communities will not receive the full potential benefit of new machinery supplied under theproject. If the cost recovery target is set too high the primary beneficiary may fail to comply because hecannot cover the operating expenses from his/her other tractor earnings. The proposed level of costrecovery is to complete cultivation on 15 hectares per season (based on one ploughing and two harrowingoperations) for the first four cultivation seasons that is, 60 ha over the first two years. Additional costrecovery is proposed by the primary beneficiary providing his tractor and trailer for six days per year (forthe first two years) for haulage tasks for the general benefit of the community. Details of this obligationwould be decided on by the village committee (and fuel would be provided for the tractor). Using prevailingrates for land preparation operations the value of cost recovery can be calculated as follows:
Ploughing 60 ha at DM100 per ha DM 6,0001st harrowing 60 ha at DM75 per ha DM 4,5002nd harrowing 60 ha at DM75 per ha DM 4,50012 days haulage work with tractor and trailer DM 1,200at DM 100/dayless 15% for the tractor fuel supplied DM 2,430
Cost recovery DM 13,770or US$ 7,250
This is over 50% of the cost of the machinery to be provided in two years and would be close to 100% ofthe cost of the popular LMT 539 tractor. In terms of the capacity of the tractor 15 hectares of cultivation isequivalent to about 2/3 of the tractor's overall seasonal capacity. This would leave the primary beneficiarywith the opportunity to earn an income from the remaining third of his/her land preparation capacity andfrom haulage work with the trailer out of season. The income would be such that a surplus remains afterthe overall running costs of the tractor (including repair and maintenance for the cost recovery work) areaccounted for. The primary beneficiary will not make a high income from the tractor during the initial twoyears. However, once he/she has discharged his obligations to the secondary beneficiaries and thecommunity at the end of year 2 the tractor and implements become his own property. This in itself shouldbe sufficient incentive to fulfill his cost recovery obligations.
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Veterinary Equipment: This significant capital contribution of equipment, veterinary drugs, Al equipmentand bovine semen to private practices in all municipalities will have a repayment in kind condition of 30%of the asset value through the provision of free veterinary visits and artificial insemination services to nonproject farmers. This will provide around 250 farmers in each municipality with free veterinary visits andinseminations to cattle and general livestock, based on an average cost of DM 15 per visitation and AIservice. The 10%/o sample monitoring of the services to be provided by veterinarians free of charge will beundertaken by the FAO Project Management Team using farm and veterinary recording procedures detailedin the Project Implementation Plan. Services provided to farmers beyond those required under the costrecovery provisions will be paid according to the current prices for veterinary treatments in Kosovo. Theenvisaged level of cost recovery, therefore, allows the veterinarians sufficient possibility of incomegeneration through additional paid treatments.
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Annex 6: Procurement and Disbursement ArrangementsKOSOVO: Emergency Farm Reconstruction Project
Procurement
Procurement of goods, works, and technical services will be done in accordance with World BankGuidelines: Procurement under the IBRD Loans and IDA Credits (issued in January 1995, revised January andAugust 1996, September 1997, and January 1999). Consulting Services for technical assistance andtraining will be procured in accordance with the Guidelines - Selection and Employment of Consultants byWorld Bank Borrowers, January 1997, revised September 1997 and January 1999. The Bank's StandardBidding Documents, Request for Proposals and Forms of Consultants' Contract will be used. Procurementfinanced with funds provided from co-financing sources will also be conducted in accordance with the BankGuidelines. A General Procurement Notice (GPN) will be published in the Development Business of theUN in June 2000.
Procurement Resuonsibilitv. UNMIK has overall responsibility for project implementation, includingprocurement. For this purpose, UNMIK will enter into a service contract (on a sole-source basis) withFAO for implementing this project on UNMK's behalf. FAO is already managing several operations inKosovo for the reconstruction of agricultural activities, as well as the preparation of this project under acontract between UNMIK and FAO funded by a project preparation grant from IDA. The terms andconditions of the service contract will be satisfactory to the Bank. The contract will be fnanced withproject grant funds.
Since this is a co-financed project, more donor funds are expected to finance project activities. As and whenthese funds become available, UNMK and FAO will sign an amendment to the service contract referred toin preceding paragraph to ensure smooth implementation of project activities to be financed with suchfunds. Any amendment to the contract will be subject to Bank's prior review and acceptance.
Procurement methods (Table A)
The project includes procurement of goods, civil works, technical services, and consulting services.Procurement needs of the project have been identified and agreed during project appraisal. A detailedprocurement plan for these needs is prepared and included in the Project Implementation Plan (PIP). Duringproject implementation, the procurement plan will be updated every six months.
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Table A: Procurement Table
Expenditure Category(In US$ Million equilavent estimate)
ICB NCB Other N. B. F. Total Cost1. Goods - - 5.64 1.05 6.69
- (5.64) - a (5.64)2. Civil Works - - 0.06 0.15 0.21
- (0.06) - (0.06)3. Technical Services - - 1.20 - 1.20
- (1.20) - c (1.20)4. Consulting Services - - 1.65 0.60 2.25
(1.65) d (1.65)5. Increm. Operating Costs - - 1.45 - 1.45
(1.45) - (1.45)Totals - - 10.00 1.80 11.80Totals (IDA) - - (10.00) - (10.00)% IDA 0% 0% 100% 0% 85%% type 0% 0% 85% 15% 100%
Figures in parenthesis are the amounts to be financed by the Bank grant. All costs included contingencies. Figures may not total exady due to
rounding.
a Goods: 3 LIB contracts (US$6.17 million, of which IDA US$5.5 million); and 4 IS contracts (US$0.55million, IDA US$0.14)
b Civil works: 2 MW contracts (US$0.21 million, IDA US$0.06)C Technical Services: 3 DC contracts (US$0.44, IDA US$0.44); 1 contract for for tractor repairs
(US$0.75, IDA US$0.75) and 1 NS contracts (US$ 0.01, IDA US$0.01)d Consultant Services: 1 QCBS contract (US$0.6 million, IDA US$0); 1 QBS contract (US$0.52, IDA
US$0.52) 3 SS contracts (US$0.44 million, IDA US$0.44 million); several IND contracts (US$0.46million, IDA US$0.46 million); and Training (US$ 0.23, IDA US$0.23)
e Incremental Operating Costs: 1 management contract with FAO (US$1.45 million, IDAUS$1.45 million
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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)
A. Firms 0.60 0.52 0.00 0.00 0.00 0.67 0.00 1.79
(0.00) (0.52) (0.00) (0.00) (0.00) (0.67) (0.00) (1 .19)B. Individuals 0.00 0.00 0.00 0.00 0.00 0.46 0.00 0.46
(0.00) (0.00) (0.00) (0.00) (0.00) (0.46) (0.00) (0.46)Total 0.60 0.52 0.00 0.00 0.00 1.13 0.00 2.25
(0.00) (0.52) (0.00) (0.00) (0.00) (1.13) (0.00) (1.65)1\ Including contingencies
Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines),Commercial Practices, etc.
N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Grant.
Prior review thresholds (Table B)Thresholds
The following thresholds are proposed (the aggregates are given in the footnotes to Table A: ProcurementTable):
(i) ICB for goods = US$ 200,000 or more per contract
(ii) LIB will be used for the procurement of tractors, cattle, and veterinary equipment. A list ofsuppliers will be prepared and bidding documents will be sent to them by special courier. Bidderswill be allowed fifteen working days to prepare and submit their bids. Single currency will be used.No bid security will be required. In order to ensure a widespread geographical distribution, aminimum of 10 suppliers will be invited.
(iii) International Shopping will be used for contracts estimated at less than $200,000 per contract. (IScan be used to procure equipment and materials which are off the shelf and do not require after saleservice, warranties, etc.. The award shall be made on the basis of at least three Suppliers from twocountries.).
(iv) National Shopping = Less than US$20,000 per contract (based on minimum three quotations fromdomestic suppliers);
(v) Direct contracting will be used for the following technical services contracts:
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(a) Cattle holding station. This will be a single-source contract with the Swiss Developmentand Corporation Agency, a registered NGO in Kosovo, which manages and operates the animalquarantine station in the vicinity of Pristina airport. No other such facilities are available.
(b) Contract for veterinary services. In each of the municipalities where cattle is providedunder the project, one veterinary practice, consisting of 24 veterinarians, provides veterinaryservices within the administrative boundaries of the municipality. A service contract will be enteredseparately with each of the veterinary practices to provide veterinary and artificial inseminationservices for the cattle distributed under the project. The contract will be monitored by the NGOoperating in the respective municipality, i.e., Action Against Hunger in Skenderaj/Srbica andGllogic/Glogovac, and Mercy Corps International in Decan/Decani.
(c) Animal nutrition support contract. This technical services contract will involve training,specialist advice, and supplementary concentrate feeding of two kg per cow during 100 days afterthe delivery of the cow. These services will be provided by the Swiss Development and CorporationAgency, the only NGO available to provide these services.
(d) Distribution of farm machinery. Suppliers of new farm machinery (tractors andimplements) will deliver the goods to the municipal center towns. In the towns, one farmmechanization dealer workshop will be selected to provide technical services (assembly of parts,inspection of equipment) prior to distribution of the equipment to farners. The scarcity ofdealers/workshops within a given municipal center town requires sole-source selection.
Repair of Tractors and Combine Harvesters. An NGO experienced in farm machinery repairs will beselected. The NGO will prepare a tractor and combine harvester damage assessment report, including a listof spare parts needed for each tractor and combine harvester in the respective municipality in which tractorand combine harvester repairs will subsequently be carried out. The NGO will conduct a survey of suppliersof spare parts. The purpose of this survey will be to (i) collect unit prices of spare parts that will be need fortractor repairs, and (ii) register suppliers to supply spare parts to farmers. The registration will be based onthe demonstrated reliability of the suppliers, his stock of spare parts, reliability and willingness to accept thepayment procedure described below. Based on the survey of prices and the NGOs own historical price data,the NGO will prepare a list of spare parts along with their unit rates. This list will be made available tofarmers and suppliers. Farmers will be able to purchase their spare parts from any of the registeredsuppliers.
A voucher will be prepared in triplicate for each individual beneficiary having repairs undertaken to his/hertractor or combine harvester. The voucher will include the list of the spare parts needed for the repair of thebeneficiary's tractor. One copy of the voucher will be given to the beneficiary, one copy will be provided tothe suppliers of the farmer's choice, and one will be retained by the NGO. The beneficiary will collect itsspare parts from the supplier in exchange for the voucher which the supplier will counter-check with itsown copy of the voucher. The supplier will submit an invoice to the NGO along with his copy and thebeneficiary's copy of the voucher. The NGO will validate the payment. The NGO will also conductfrequent spot checks to ensure that the spare parts are being used for the purpose intended and the tractorsrepaired and operational.
In cases where the damage to the tractor or combine requires the services of a mechanic, the NGO willinclude an estimate of the labor units in its damage assessment report. The NGO will develop a list ofregistered workshops within the municipality and maintain updated standard labor rates for routine repair
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tasks. Vouchers will be issued in the way described above with the difference that they would now beprepared in quadruplicate with an extra copy being given to the NGO-selected mechanic named on thefourth voucher. Spare parts will be supplied in the normal way (described above) and in addition themechanic will redeem his labor payment on completion of the job by submitting his voucher and the invoicedirectly to the NGO for certification. There will be close supervision (by NGO technicians) of a mechanic'sprogress in these jobs.
In the few cases where specialized workshop services are required (machining for engine overhaul, dieselpump calibration) this will be authorized and the work supervised directly by the NGO. Again, a standardunit rate list will be maintained by the NGO who will certify the specialist service provider's invoice onsatisfactorily completing the work.
Procurement of Minor Works. Works will be procured through Minor Works underlump-sum, fixed-price or unit rate contracts awarded on the basis of quotations obtainedfrom at least three qualified local contractors in response to local advertisement . Thebidding document shall include a detailed description of the works, including basicspecifications, the required completion period, a basic form of agreement consistent withthe standard document cleared by the Bank, and relevant drawings where applicable. Theaward shall be made to the contractor who offers the lowest price quotation for therequired work, and who has the experience and resources to successfully complete thecontract. The contract will also stipulate that minimum environmental standards in civilworks are adhered to.
Procurement of Consultants. Consultants Services will be procured through the Quality and Cost BasedSelection (QCBS) procedures. These services shall be advertised in the GPN in the Development Businessand in a national newspaper for expression of interest, from which a shortlist will be drawn. Individualsexperts will be selected in accordance with Part V of the Consultants Guidelines. Project managementcontract with FAO will be concluded on a sole-source basis.
To coordinate agriculture relief and reconstruction efforts in Kosovo, intemational NGOs have agreed tooperate in defined geographical areas of responsibilities (AOR). Provided that a given international NGOcan provide services in its AORs, other international NGOs will not accept assignments in AORs outside oftheir own. The aforementioned and the detailed knowledge of NGOs of local conditions in their respectiveAOR provides the rationale to select international NGOs on a sole source basis to provide support servicesfor the following contracts:
(i) Contracts for distribution of cattle to farmers-recipients selected under a consultative beneficiaryselection process; livestock advisory service, including pre- and post-delivery training to farmers andveterinarians; monitoring of cattle conditions as well as supervision for veterinary services. Thesecontracts will be entered into with Action Against Hunger (AAH) for the municipalities of Skenderaj andGllogic, and with Mercy Corps International (MCI) for the municipality of Decan. These two internationalNGOS have been operating in Kosovo for nearly a year in this area of responsibility.
(ii) Contracts for distribution of agriculture machinery to farmers-recipients selected under a consultativebeneficiary selection process; monitoring and enforcement of contractual obligations on the part ofrecipient-farmers (i.e. cost recovery). These contracts will be entered into with AAH and MCI for themunicipalities mentioned in preceding paragraph.
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During appraisal, the task team held discussions with the intemational NGOs operating agriculture reliefand reconstruction efforts in Kosovo with a view to ascertaining their interest in the above-mentionedcontracts. Only the NGOs listed above expressed their willingness to undertake these services in theselected project municipalities. The NGOs have declined to operate outside their respective current AOR,and the task team feels that intemational NGOs not currently operating in the agriculture sector in Kosovowill not be interested in undertaking such assignments.
An NGO experienced in farm machinery rehabilitation will be selected through QBS. For this purpose anotice for expression of interest will be published in the Development Business (website) and ininternational press.
Prior Review Thresholds
(i) All ICB and LIB contracts for goods and technical services
(ii) All consultants contracts US$200,000 or more each (full review)
(iii) All contracts with consulting firms estimated to US$100,000 or more each (partial review)
(iv) All consultant contracts with individuals estimated to cost US$50,000 or more.
(v) All consultant contracts based on sole-sourcing
Table B: Prior Thresholds
Contract Value Contracts SubjectThreshold Procurement to Prior Review
Expenditure Category (US$ thousands) Method (US$ millions)1. Goods/TechnicalServices All LIB 6.14
All DC 0.44
2. Consulting Services >100 QCBS 0.6>100 QBS 0.69All SS 0.44
>30 IND 0.15
Total Value of contracts subject to prior review 8.31% of Total Cost 68%
Post Review Ratio. One in five contracts.
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Disbursement
Allocation of grant proceeds (Table C)The project is expected to be disbursed over a period of two years. The anticipated completion date is June30, 2001 and the closing date is December 31, 2001. Disbursements will follow normal Bank proceduresand will be made against eligible expenditures.
UNMIK as the recipient of the grant will delegate authority to submit withdrawal applications to FAO.FAO will operate under a service agreement concluded with UNNIIK which will have been reviewed by theBank. Due to the short duration of this project, disbursements will proceed under traditional disbursementprocedures. The FAO will be provided with an advance up to six months of anticipated expenditures(excluding expenditures associated with delivery contracts for cattle and tractors). This advance will bejustified to the Bank quarterly on the basis of full documentation for contracts above the prior-reviewthresholds and on the basis of Statement of Expenditures for expenditures below the prior-review threshold(see section on SOEs below).
Disbursements associated with delivery contracts for cattle and tractors with a minimum value of US$1.0million will be made using Bank Special Commitments, as described in the Bank's DisbursementHandbook, Chapter 4.
Table D
Amount inExpenditure Category US$million Financing Percentage
Goods, incl. technical services and 6.00 100%local transport
Consultant's services, incl. training 1.40 100%
Works 0.10 100%
Incremental Operating Costs 1.30 100%
Unallocated 1.20
Total IDA Grant 10.00TOTAL Project Costs 25.00
Note: It is possible to finance 100% of expenditures as all activities under this project will be exempt fromtaxes
Use of statements of expenditures (SOEs):
Statements of Expenditures (SOE) will be used for: (a) goods including technical services contractsestimated to cost less than US$200,000 each, (b) consultants contracts with firms less than US$100,000;(c) for services of individuals costing US$50,000 equivalent or less each; and (d) all incremental operatingcost, training expenditures and contracts for works. Full documentation in support of SOE will be retainedby FAO for at least two years after the closing date of the Grant. This information will be made available
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for review to the Bank during project supervision and for audit by the project's auditors (see section onproject's audit arrangements below).
Special account:
No Special Account will be used for this operation.
Financial Management
Financial Management Assessment: The overall responsibility for the financial management of the projectwill rest with the FAO, with primary responsibility at its headquarters in Rome and secondaryresponsibility at its Emergency Co-ordination Unit (FAO/ECU) in Pristina . The FAO already has variousteams of accountants to support the needs of the other projects being implemented by the FAO, and thiscomplement has been increased for the project, particularly with the recruitment of additional accountingstaff into the FAO/ECU. The Bank conducted a financial management assessment of the FAO andconcluded that the FAO's financial management arrangements satisfy the Bank's minimum requirementsand is capable of producing the Bank's Project Management Reports. More details in respect of theproject's financial management arrangements, including the project's flow of funds, may be found within theProject Implementation Plan (PIP).
Financial management risks: The financial management capacity within Kosovo has not been assessed,however, primarily because of other implementation considerations, any weaknesses that may exist havebeen mitigated by the use of the FAO for project implementation, including financial management, drawingupon their experience of operations of this nature, and by the use of the FAO's External Auditor for theaudit of the project. In addition, the risks in the developing Kosovo banking sector have been mitigated bythe use by the FAO of the llNDP's cash facilities in Pristina.
Project Management Report (PMRs): The agreed indicative formats for the PMRs are included within theMinutes of Negotiations and the FAO will produce these PMRs for every calendar quarter throughout thelife of the project. No move to PMR-based disbursements is envisaged due to the relatively short durationof the project.
Audit Arrangements: Agreement has been reached with UNMIiK and FAO that FAO's External Auditor(i.e. currently the Cour des Comptes) will carry out annual audits for the project, on terms of referenceacceptable to the Bank as presented within the Minutes of Negotiations. The receipt by the Bank throughFAO of the Cour des Comptes' formal confirmation to this effect is included as a Grant effectivenesscondition. The project's audited financial statements will be submitted within six months of the end of everyfiscal year. The cost of the audit will be financed from the Grant funds.
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Annex 7: Project Processing ScheduleKOSOVO: Emergency Farm Reconstruction Project
Time taken to prepare the project (months) 8First Bank mission (identification) 09/06/99Appraisal mission departure 01/11/2000Negotiations 05/22/2000Planned Date of Effectiveness 06/30/2000
Prepared by:
Food and Agriculture Organization of the United Nations under the FAO / World Bank CooperativeProgram
Preparation assistance:
UNNIK was provided with a project preparation and start-up grant in the amount of US$565,000 on April18, 2000 to be executed by the FAO
Bank staff who worked on the project included:
Severin Kodderitzsch (TTL) Agricultural EconomistFrauke Jungbluth Agricultural EconomistGloria La Cava SociologistNaushad Khan ProcurementRanjan Ganguli Financial Management SpecialistGennady Pilch Legal CounselBarbara Santos Legal CounselJoseph Paul Formoso DisbursementLynn Brown Agriculture Policy and Gender IssuesStan Peabody Rural SociologistJennifer Ngaine, Kathy Sharrow Team Assistants
The following staff from participating agencies worked on the project:
Benoist Veillerette Agricultural Economist, FAO/CPYoshiko Ishihara Rural Sociologist, FAO/CPLaurence Clarke Mechanization Expert, FAONicholas Buck Livestock/Veterinary Expert, FAO/CPSharon Holt Cost Recovery, FAO/CPPatrick Forrest Mechanization Expert, FAO/CPAndrew Friend Livestock and Veterinnay Expert, FAO/CP
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The following staff from the Kosovo Advisory Committee supported the project:
Christiaan J. Poortman Country DirectorAndrash Horvai Country OfficerMary Sheehan Country OfficerBarbara Santos Legal CounselSunil K. Bhattacharya Regional Procurement AdvisorBaelhadj Merghoub Operations AdvisorJohn Hegarty Financial ManagementMarc Blanc Regional Operations Advisor
The peer reviewers were:
Michael F. Koch TRFColin Scott SDVPC
A Quality Enhancement Review was carried out by
David Steeds Agricultural Specialist, QAGTjaart Schillhom van Veen Livestock and Veterinary Specialist (ECSSD)
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Annex 8: Documents in the Project File*KOSOVO: Emergency Farm Reconstruction Project
A. Project Implementation Plan
Emergency Farm Reconstruction Project - Project Implementation Plan - Main Text and Annex A-J
B. Bank Staff Assessments
1. Bank's Transitional Support Strategy for Kosovo2. Towards Stability and Prosperity - A Program for Reconstruction and Recovery in Kosovo3. Kosovo: Building Peace through Sustained Growth, The Economic and Social Policy Agenda4. Kosovo: Re-launching the Rural Economy5. Kosovo: Damage Assessment in Agriculture6. Financial Management Assessment - by Financial Management Specialist; April 30, 2000.
C. Other
Kosovo: Program for Reconstruction of Rural Economy (technical papers)* Livestock and Animal Health Services* Farm Mechanization* Agro-Industrial Sector* Irrigation and Water Management* Forestry* Rural Administration* Post-War Food Insecurity in Kosovo
*Including electronic files
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