Terms of Reference- Agriculture Trade Expert

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1 Position Title: Agriculture Trade Expert Contract Duration: 25 days Terms of Reference- Agriculture Trade Expert Reports to: SMDA at Market Development Facility Location: Timor-Leste Australian Aid Adviser Remuneration Framework Classification: Short Term C3 Background: The Market Development Facility (MDF) stimulates investment, business innovation and regulatory reform in order to create jobs for, and increase the income of, poor women and men in rural and urban areas in the Indo- Pacific region. MDF commenced operations in Fiji in 2011, expanded to Timor-Leste in 2012, to Pakistan in 2013, and to Papua New Guinea and Sri Lanka in MDF is funded by the Department of Foreign Affairs and Trade (DFAT) and is implemented by Palladium. Although 70% of Timor-Leste s 1.2million population resides in rural areas with vast majority engaged in agriculture, GDP contribution of agriculture is only 9%. Timor-Leste continues to be heavily dependent on the oil revenue, which accounts for 45% of the GDP in With the looming threat of declining oil revenue and increased withdrawals from the petroleum fund; the need for economic diversification has never been higher. Since 80% of the households are engaged in agriculture in some scale, increasing agricultural revenue is an essential way forward in reducing poverty and ensuring food security. However, majority of the population is practicing subsistence farming; commercial agriculture or households growing agricultural commodities primarily for sale is only 3% (according to 2015 Population and Housing Census). As a result, though the vast majority are engaged in agriculture, only few (mainly coffee and vegetable) are actually earning an substantial income from agriculture. The product basket is also quite small which limits the marketability for the farmers. The two possible ways of increasing income for the agricultural household is: (i) Diversifying the product basket by growing new products with greater profit margin and urban demand - There has been some progress in the first category, in certain areas farmers have been introduced to new crops (e.g. vegetable, spice) for cash income. But limited grower capacity as well as limited support infrastructure (inputs, extension information etc.) limit the pace of this growth; (ii) increasing the volume of sales of the existing products, which has been limited due to lack of value addition and/or processing opportunities. The small domestic market combined with high cost of production dis-incentivise companies to invest because goods will not be price competitive to imports. Therefore, the processors focus on high value niche product. For any mass consumables, processors need to target the export market in order to achieve economies of scale This particular assignment is relevant to the second category identifying export pathways for commodities currently grown by a large number of farmers with the aim of increasing their agricultural revenue. There has been ample research to identify crops that can be grown in different regions of Timor-Leste and practices to maximize productivity. But without offering market access, farmers have little incentive to improve productivity or change practices. So this study aims to define the route to export for selected agricultural products that have already been identified to have high potential, this will involve identifying destination markets, type/level of pre-processing and necessary partnerships. For this assignment, MDF will engage two other partner organizations: TOMAK (To'os ba Moris Di'ak, or Farming for Prosperity) is an agricultural livelihoods program supported by the Australian government to increase income and nutrition of farming families across the country.

2 TOMAK has already conducted extensive research on selecting value chains that have potential for improved productivity and increasing farmer s income. Once the market access is validated, TOMAK will work on strengthening production of the selected crops. TradeInvest is the main government agency responsible for investment and export promotion in Timor- Leste. To support TradeInvest s investment and export promotion effort, the agency has recently signed a technical cooperation with National Centre for Scientific Research of the National University of Timor- Leste (UNTL) to conduct a baseline study with main objective to identify local products from three municipalities (Baucau, Covalima and Oecusse) that have potential for export and to attract more foreign investments in agriculture sector. The study will gradually be expanded to other municipalities across Timor-Leste next year. Finding from that assessment will provide some useful foundation to this exercise. Upon completion, TradeInvest can utilize the study finding in their investment and export promotion activities. This research is an opportunity to foster a cohesive approach among public and private sector effort in promoting investment in the selected value chains. Objective: The objective of this exercise is to recommend export pathways for selected agricultural commodities, the report from the study should contain the following information: Market selection: Identifying possible export destinations for each product and preliminary assessment of market and product specific entry barriers and opportunities Entry point selection: Identifying the type of pre-processing necessary and destination specific partners or entry points Investment planning: Development of a preliminary investment plan needed for initiating export Responsibilities of the Expert: The expert will be provided with a list of commodities that the study should focus on along with relevant secondary research. As of now, two of the products have been finalized peanut and purple sweet potato. Other possible products are - mung beans, red rice, and cassava; this list will be finalized prior to the assignment. The expert can also make recommendations on other crops based on secondary literature but it has to be mutually agreed upon with MDF. a. Market Selection: Though there are few emerging commercial/semi-commercial market linkages in mature export sectors such as coffee (global importers like MTC and Olam), agricultural export from Timor has been largely opportunity-driven. Primary export destinations for Timor-Leste are Japan (coffee and tea), Australia (coffee), New Zealand (coffee), USA (spice, candlenut oil, and coffee), India (spice) - personal relationships and developmental linkage are some of the key triggers behind these trade linkages. Therefore, the expert will need to be creative and nuanced in identifying suitable markets. While s/he needs to take account of logistics, shipping and official trade relationships; other socio-political factors, existing relationships and linkages also need to be considered. For the suggested destinations, the expert needs to look into the import trends and import readiness for the targeted products as well. This will include but is not limited to regulatory framework related to backward linkage, certification, quarantine, quality control, import tariff and customs. This will also require looking into local export support infrastructure such as testing facility, phytosanitary requirements etc. Economies of scale is a key determinant in price competitiveness for export. But considering the challenges in production and aggregation, it is likely the initial volume will be small. So, there needs to be a segment in the destination markets for small volume/high value/niche products so that the products can withstand the competition.

3 b. Entry point selection: This is related to the selection of market, based on the product and destinations, market access will vary based on the product category the item will fit into. For example, Timor Leste has a unique variety of purple sweet potato, as a fresh unprocessed root crop it may not be price competitive unless sold in large volume. But sweet potato powder can be exported as food supplements/ food coloring which may have a greater opportunity as a niche product. But the demand maybe high in particular countries and will require targeted export marketing. The expert will also need to recommend the type of partners/value chain players that can be targeted for partnerships, in wholesale and/or retail. Here it is expected the expert will be able to name and facilitate some specific companies or linkages in the destination markets which can be pursued for future trade. The expert will also need to do an estimation on the projected export volume in medium to long term, this will be key in assessing capacity in the supply side such as the number of farmers to engage with, required aggregation infrastructure, shipping cost etc. c. Investment planning: Based on two steps above, the expert will conduct a preliminary investment plan for growing and exporting the selected crops for the corresponding markets. Since there are multiple products, the expert is not expected to make an exhaustive investment planning. But the finding should be sufficient to guide the understanding and comparison of relative return on investments. This will include Investment in capital and operations, including machinery/ equipment needed for production, aggregation, pre-processing, storage, technical staff and other operational cost. Study Methodology This assignment will be conducted in four stages over a period of 25 working days (maximum): First, the expert will conduct preliminary assessment through secondary research and his/her prior market contacts which will feed into a study plan s/he will submit to MDF. This will be a very important step in this assignment since few other studies have been conducted on export feasibility of agricultural goods (3 working days) Second, the expert will conduct primary research in Timor-Leste (7 working days). This involves but is not be limited to: o Consulting with local experts, development organisations, traders, shipping companies and businesses to understand production and logistical issues. o Consulting with regulatory bodies such as TradeInvest, MCI, MAF, customs, export bureau to understand the local policy environment and infrastructural support for export. After completion of the in-country research, the expert will make an initial presentation to MDF and other country stakeholders on the finding and the subsequent strategic direction s/he is recommending. This will be an opportunity to provide feedback to him/her to inform the development of the report. Third, the expert will contact stakeholders in market space to evaluate the export feasibility against in country finding. This includes quality testing labs, global or country specific traders/importers, retail chains etc. This step can happen in conjunction with the other activities at any stage of the assignment. This may involve secondary research as well as direct conversations with possible buyers. What needs to be made sure is the expert s recommendations are vetted by the industry players and actual traders, so it s relevant and implementable rather than being theoretical or abstract. Modalities of this step will be agreed upon with MDF.(8 working days)

4 Fourth, finalizing the report and remote submission. The expert will first share the draft; MDF will give feedback/input (if any) and the expert will submit the final report incorporating those feedback (7 working days) It is important to state here that this is not a theoretical research assignment, it is a practical market linkage assignment. The expert should provide input with due considerations to this fact. Deliverables 1. Study Plan: The expert will share his/her assignment plan and overall strategic direction at least a week before arriving in Timor-Leste to conduct the primary research. Scoping study plan and initial direction derived from remote research need to be approved by MDF. 2. Initial Presentation: At the end of the in-country mission, the expert will present the major finding to MDF and other country stakeholders for feedback and initial verification. This will be an opportunity to get feedback so that the final recommendation are pragmatic and relevant. 3. Final report: Based on the feedback, the expert will submit the first draft within 20 working days after the incountry visit which will be finalized based on feedback. The report will identify markets, entry points and provide preliminary investment plan. All reports and presentations shall be written in English and submitted to MDF within the specified time frame. The consultant is also expected to submit timesheet during the assignment period. Duration and location The length of the total assignment is 25 working days, which include 7 days in Timor-Leste and 18 days of remote research, facilitation and writing. During the stay in Timor-Leste, the expert will primarily be based in Dili. It is expected the consultant will be able to do the in-country visit in January 2018; so the final report can be submitted and approved by end of February Technical Direction MDF will be the primary contact on this assignment. MDF will support the expert with technical direction and facilitate consultations with local experts and relevant private and public stakeholders. Resource to be provided to the expert will be communicated in the interview and will be outlined in the contract. Application Requirements The ideal candidate for this assignment must meet the following requirements: to 15 years of private sector experience in import and export of agricultural products in Asia (China, Singapore, Hong Kong) and/or Australia 2. Have active contacts in international agriculture trading (i.e. shipping, quality control, importers) 3. Excellent professional knowledge on global trends and practices in agricultural trade 4. Applicants can apply as individual(s) or team(s) or organization(s). 5. Academic qualification in agriculture will be an advantage but that on its own, will not be sufficient in absence of the private sector experience stated above 6. Have experience in engaging with policy makers and government organizations related to trade policy 7. Experienced in and exposed to trading to/from developing country context 8. Strong interpersonal skills

5 9. Excellent organizational and project management skills. 10. Good written and verbal communications skills in English; Ability to communicate in Tetum or Bahasa Indonesia will be an advantage. To Apply To apply, please submit a CV and Cover Letter describing your experiences, understanding of the ToR and how and why you or your institution is the most appropriate to perform this task, to the following account: MDF- Recruit@thepalladiumgroup.com