Annex. 1. IDENTIFICATION Accompanying Measures for Sugar Protocol Countries (AMSP) for Tanzania CRIS No TZ/DCI-SUCRE/

Transcription

1 Annex 1. IDENTIFICATION Title/Number Accompanying Measures for Sugar Protocol Countries (AMSP) for Tanzania CRIS No TZ/DCI-SUCRE/ Total cost Aid method / Method of implementation EUR (EU Contribution) Project approach Partially Decentralised management DAC-code Sector Industrial crops 2. RATIONALE 2.1. Sector context Tanzania is a country in Eastern Africa with an estimated population of 40 million. The sugar sector, which is largely held by private companies, is an important employer in the country's agricultural sector and accounts for approximately 2% of national GDP and 7.7% of agricultural GDP. Tanzania produces 250, ,000 tonnes of sugar annually and consumes approximately a total of 480,000 tonnes. As a former Sugar Protocol country, Tanzania benefits from the accompanying measures for countries affected by the EU sugar reform of In response to Tanzania's National Adaptation Strategy (NAS) for Sugar of 2006, EU support for the period aims at improving the relative situation of the Tanzanian sugar industry and increasing its competitiveness (reduction of production costs and increase of productivity). EU support is specifically targeting outgrower schemes and is seeking to improve the welfare of smallholders. The EU Multiannual Adaptation Strategy is implemented through two successive Multi-annual Indicative Programmes (MIPs) covering the periods (EUR ) and (EUR ) respectively. The Tanzanian Sugar Industry Development Plan and Strategy (SIDPS) for aimed at promoting efficiency in sugar cane production, processing and marketing through the establishment of an enabling environment, adequate resource management and environmental protection. It focused on self sufficiency, sugar exports, employment, contribution to Government s revenue, poverty alleviation, environmental conservation and sustainability of the industry. A new SIDPS for has been drafted and is currently in the approval process, to guide the industry towards self-sufficiency in sugar mainly through rehabilitation and expansion of existing factories; rehabilitation and strengthening of small scale sugar production projects in rural areas by using simple technology; investment in new sugar projects and through expansion and improvement of sugar cane cultivation by outgrowers Lessons learnt The implementation of the MIP has been closely monitored by the EU Delegation, who regularly attended meetings of the Board of Directors. The Sugar Board of Tanzania has been able to play a crucial role in bringing main stakeholders together in addressing key issues pertaining to the sector. Two Result-Oriented Monitoring missions were organised. 1

2 Despite the late start of implementation, tangible results under the MIP can already be observed, in particular in terms of feeder roads development (62 Km of gravel roads built), the introduction of block farming to consolidate land and optimise larger plots of land (3 block farms set up, an estimated 70 hectares), and the development of capacities of smallholder famers associations. These developments are having a direct impact on smallscale sugarcane growers' production costs and benefits, hence an impact on the livelihoods of outgrowers communities. Additional efforts will be paid to monitor programme performance based on the definition of a clear baseline and key outcome indicators. Some of the limitations observed relate to the industry and their willingness to engage with small scale producers. Some industries have understood the value of developing positive forms of cooperation with outgrowers, including through the payment of a fair price for their sugar cane, others have not. The programme will continue to promote dialogue among key stakeholders through the Sugar Board of Tanzania Complementary actions The Sugar programme will be consistent with the other European Development Fund (EDF) funded programmes supporting the agriculture sector and poverty alleviation, as it also aims at increasing the agricultural competitiveness and smallholder farmers' income. There will be strong complementarity with the 10 th EDF Trade and Agriculture Support Programmes (TASP I and TASP II), whose objective is to increase agricultural production and trade, with a focus on five sub-sectors with strong potential for growth and poverty reduction (horticulture, coffee, tea, cotton and fisheries). TASP I includes support to setting up and developing clientoriented research, where stakeholders are involved in management and decision-making processes. The two research institutions supported under TASP I (Tea Research Institute and Coffee Research Institute) are operating outside the public service structures, which have often proved to be ineffective in the past. The future structure for Research and Training on Sugar (STRIT) will build on this and focus mainly on capacity development for outgrowers. Measures under the AMSP will be complementary to the future EU support to the Southern Agriculture Growth Development Corridor initiative (SAGCOT) in which the Kilombero district has been indicated as a focal cluster. In line with the approach under SAGCOT, the sugar value chain has been identified as having a potential for further significant development by means of a partnership and investment framework involving key stakeholders. Support under the AMSP will also complement the financial contribution that EU is providing to the Common Fund for Commodities CFC (an intergovernmental financial institution established by the United Nations), which also provides support to extension services delivery in the sugar sector for the introduction of new imported varieties. Future EU assistance will continue to be implemented in close coordination with the Government of Tanzania, which is providing field extension services and technical inputs, and lending support to public-private partnerships Donor coordination In general, international donors are not actively supporting the sugar sector. Opportunities for donor involvement in the sugar sector in Tanzania could arise within the sugar partnership framework being established under the SAGCOT initiative. 3. DESCRIPTION 3.1. Objectives In line with the 2006 National Adaptation Strategy, the overall objective of the proposed programme is to contribute to sustainable development of the Tanzanian economy by 2

3 supporting local efforts to increase the competitiveness of the Tanzania sugar sector, while specifically targeting small scale farmers in the sugar production chain. The specific objective is to increase the efficiency of outgrower schemes, and thereby improve living standards of small scale farmers, reduce poverty and ensure the sustainability of the Tanzanian sugar sector whilst safeguarding the environment. The proposed programme has been designed in line with the MIP and it takes stock of the new Sugar Industry Development Plan and Strategy (SIDPS) currently being finalised. It has been prepared in close consultation with the sugar sector stakeholders Expected results and main activities 1) Outgrower Infrastructure development The need for infrastructure development has been expressed in both the NAS, and the SIDPS. Support will continue to go to public good type of investments at out grower level, for which commercial loan funding is not available. The programme will continue to improve feeder roads in outgrowers areas as a way to reduce transport costs to the factory and increase efficiency of smallholders production. Particular attention will be paid to consolidating existing block farms and supporting the creation of new farms, with a view to address fragmented farming systems. This will entail the construction of feeder roads and drainage systems; this will facilitate the provision of extension services and technical support, reduce incidents of fire thanks to firebreak systems, facilitate cane harvest and reduce the unit costs. The EU financed a feasibility study 1 assessing the technical and financial viability of irrigated sugarcane outgrower block farming in Kilombero and Mtibwa. One of the main conclusions of the study was that the success of an outgrower irrigation scheme is dependent on a combination of factors that also critically include management aspects and social factors. In line with the recommendations of the study a civil education programme will be implemented under the ongoing programme to strengthen stakeholders knowledge and understanding to enable them to make free and informed decisions. At same time an Environmental Impact Assessment will be carried out to consider the possible environmental impacts of outgrower irrigation schemes and the issue of water use rights will be further assessed. 2) Outgrower capacity building in a sustainable manner The objective is to strengthen the managerial and technical capacity of outgrower associations, so that they can fulfil their role in a more efficient and sustainable manner. The programme will focus on their advocacy and negotiation role and on their service delivery to outgrowers, e.g. access to inputs, access to finance and training on agriculture and the business aspects of cane cultivation. Particular attention will be paid to the sustainability of outgrower schemes with the establishment of community trusts to cover, in particular, the costs of infrastructure maintenance and provision of social services to smallholders. Kilombero Sugar Company Ltd successfully supported establishment of a trust in Kilombero and there are plans to strengthen this trust and to develop similar ones in the Mtibwa and Kagera outgrower areas. The trust s primary sources of revenue are the community trust farms. 2 The income generated by the community trusts will be directed toward community development and cover financial needs for infrastructure maintenance/improvements, health care projects, micro-finance programmes and programmes in education, water supply and forestry. The community trust can also be used in the future to assist outgrowers in accessing loans from financial institutions. 1 Technical assistance for the design and sustainable management of irrigation systems in outgrower sugarcane areas in Kilombero, Ruembe and Mtibwa, Morogoro, April The community trust farm is an arrangement under which the trust leases or owns at least 50 hectares of cane-producing land and contracts a company to manage the farming of cane on the property. Profits from the trust farm are channelled into community development programmes. 3

4 Building on previous support, the programme will develop a comprehensive mapping system and registration system for the outgrower areas. The system will map all the areas, including the feeder roads and bridges, so that it can be used as a tool for future maintenance planning. Also, a monitoring system will be developed, after an initial baseline assessment to define the right type of indicators to be used to measure the outcomes of the programme. 3) Research and training for outgrowers The programme will contribute to the new structure created with the restructuring of sugarcane research and training in Tanzania and the merging of the Sugar Training and Research Institute and the National Sugar Institute into one single Sugar Research Institute of Tanzania (STRIT). The restructuring aims at strengthening capacities to deliver demanddriven services as well as promote greater efficiency and accountability to stakeholders in the sector. STRIT main's source of funding will be the Sugar Industry Trust Fund 3. EU assistance will focus on both research, transfer of technology and training/extension services for outgrowers. This will include training of trainers and the provision of equipment and means to enable technology transfer to outgrowers schemes based on the research of plant material developed by STRIT. The EU Delegation in Tanzania will build on its experience with similar programmes, where research and training have been shifted from purely public arrangements to private arrangements with funding from both private and public sources. The main expected results are to increase outgrowers' access to new case varieties from applied research developed by STRIT and to increase agronomic training for small holders Risks and assumptions Risks are considered to be limited as the proposed operation intends to build on support provided to the sector over the last five years through well-established national partners and with encouraging results. The success of the programme will critically depend on the continued ownership by the Tanzanian counterparts and beneficiaries and a commitment among key stakeholders (industry, outgrowers, public and private sector institutions, etc.) to cooperate for the achievement of common objectives. This kind of cooperation has been demonstrated in some of the areas of intervention (Kilombero) and remains a challenge in other areas (Kagera, Mtibwa). The EU will continue to promote partnership principles in its dialogue with sector stakeholders. In order to ensure that outgrowers receive a fair price from the millers for their sugar production, the Sugar Board of Tanzania (SBT) will maintain an active dialogue and advocacy role vis-à-vis the millers and will monitor closely the returns from outgrower sugar production Cross-cutting Issues A key challenge for the sugar sector is the environmental sustainability of cane production. Concerns have to do with water availability (irrigation) and land degradation as well as deforestation. The pressure of the sector on the environment is particularly evident in the wetlands of the Kilombero food plain. The Kilombero sugar factory has adopted measures in response to the problems of air and water effluent from the factory, and resource use including water, gravel and firewood. The programme will continue activities targeting environmental protection already started under the MIP. The programme will promote strategies for efficient resources use, including production wastes (molasses and bagasse) and for an expanded utilisation of agricultural good practices. A number of environmental impact assessments are already 3 The longer term financial sustainability of STRIT should be ensured by the sugar levy from the industry paid to the sugar industry development fund. 4

5 foreseen to be carried out under the current support phase.. The implementation of their findings and recommendations will receive support as appropriate under the new programme. Moreover, the programme will address social and health issues that are important in this sector, in particular the risk of HIV transmission, which is very high in periods of seasonal work. Support will be provided for health and education measures, such as awareness raising and information for the workforce. Women participating as beneficiary farmers and in the management of local associations will be actively monitored and promoted Stakeholders analysis The Tanzanian sugar sector involves the industry, the Sugar Board of Tanzania, research institutions, and outgrowers. In mainland Tanzania, the sugar industry consists of four factories and estates, owned respectively by four private companies (1) Kilombero Sugar Company (2) Mtibwa Sugar Estate, (3) TPC Limited and (4) Kagera Sugar Ltd. The Zanzibar Sugar Factory (ZSF) started sugar production on a trial basis in 2009, but rehabilitation work is still ongoing. The regulatory institution for the sugar sector is the Sugar Board of Tanzania (SBT), a parastatal body under the responsibility of the Ministry of Agriculture. SBT was established by the Sugar Industry Act of 2001 and entrusted with a broad mandate to promote the expansion and development of the sugar cane cultivation, production and marketing of sugar and the use of by-products. It is run by a Board of Directors composed of representatives of value chain stakeholders, i.e. sugarcane producers associations, sugar cane growers, manufacturers, consumers, together with the Ministry of Agriculture. The Sugar Training and Research Institute of Tanzania, STRIT, created in September 2011 from the merge of two previously existing institutions dealing with training and research respectively, is providing both research and transfer of technology and training/extension services. The STRIT is an autonomous, not-for-profit organisation, incorporated as a company limited by guarantee, responsible to its stakeholders. Members of the STRIT are the Sugar Industry Development Fund (SIDTF) and the Sugar Board of Tanzania. SIDTF is a trust and its members are the Tanzanian sugar producer association, the SBT and the Ministry of Agriculture. STRIT is run by a Governing Council that appoints a CEO. Sugar cane outgrowers are small-scale producers who are an integral part of the value chain. There are an estimated outgrowers in Tanzania. The development of sugar cane outgrower schemes and related support services presents a significant opportunity to contribute to the economic and social development of rural communities living in sugar cane producing areas. EU support will continue to focus mainly on this group of stakeholders. The strengthening of capacities of the target stakeholders (smallholders farmers, outgrowers) is one key objective of the programme. This concerns training and research needs, continued support to farmers' associations both in terms of small scale infrastructure development and in terms of business and negotiation skills as well as environmental management skills. 4. IMPLEMENTATION ISSUES 4.1. Method of implementation and programme management Partially decentralised management, through the signature of a Financing Agreement with the United Republic of Tanzania (represented by the Ministry of Finance in accordance with Articles 53c and 56 of the Financial Regulation). 4 In October 2011, SBT contracted the Sokoine University of Agriculture to develop a plan for awareness training campaign on HIV/AIDS and Gender issue mainstreaming for all stakeholders in sugar production areas in Tanzania. 5

6 The Commission controls ex ante all the procurement and grant procedures. All payments are executed by the Commission. The change of management mode constitutes a substantial change except where the Commission "re-centralises" or reduces the level of tasks previously delegated to the beneficiary country, international organisation or delegate body under, respectively, decentralised, joint or indirect centralised management. The envisaged modalities of implementation are: - Works, services and supply contracts for component 1 with the Ministry of Finance as contracting authority and the Sugar Board of Tanzania as supervisory body. - Action grant contract (direct award on a de jure monopoly ground) with Sugar Board of Tanzania (SBT) mainly for component 2. It is envisaged to have a 95% co-financing for the grant with SBT as the Government Body has limited available resources. - Action grant contract (direct award on a de jure monopoly ground) with Sugar Training and Research Institute of Tanzania for component 3. It is proposed to have an 80% co-financing as STRIT has resources available from the industry to co-finance the action. The SBT and STRIT will appoint programme coordinators responsible for overseeing activities implemented under the action grants. Sugar Board will also ensure that a dedicated function is put in place to monitor performance in terms of key indicators. The supervision of the works contracts will be attributed through service contracts. A programme steering committee will oversee and validate the overall direction and policy of the project. It shall meet 3-4 times a year. It shall be made up of: A representative of the beneficiary country's Ministry of Finance A representative of Ministry of Agriculture Food Security and Cooperatives, A representative of the Sugar Board of Tanzania (SBT) A representative of the Sugar Research and Training Institute of Tanzania (STRIT) A representative of the Head of EU Delegation A representative of the Sugar Industry with a regular statutory involvement in the project may also sit on the project steering committee. A representative of the Outgrower Farmers' Association 4.2. Procurement and grant award procedures 1) Contracts All contracts implementing the action must be awarded and implemented in accordance with the procedures and standard documents laid down and published by the Commission for the implementation of external operations, in force at the time of the launch of the procedure in question. Participation in the award of contracts for the present action shall be open to all natural and legal persons covered by DCI- Regulation. Further extensions of this participation to other natural or legal persons by the concerned authorising officer shall be subject to the conditions provided for in Articles 31(7) and (8) DCI. 2) Specific rules for grants The essential selection and award criteria for the award of grants are laid down in the Practical Guide to contract procedures for EU external actions. They are established in accordance with the principles set out in Title VI 'Grants' of the Financial Regulation applicable to the General Budget. When derogations to these principles are applied, they shall be justified, in particular in the following cases: 6

7 Financing in full (derogation to the principle of co-financing): the maximum possible rate of co-financing for grants is 95 % of the total accepted costs of the Action financed by DCI. Full financing may only be applied in the cases provided for in Article 253 of the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the Financial Regulation applicable to the General Budget. Derogation to the principle of non-retroactivity a grant may be awarded for an action which has already begun only if the applicant can demonstrate the need to start the action before the grant is awarded, in accordance with Article 112 of the Financial Regulation applicable to the General Budget Budget and calendar The total budget is EUR (100% of the MIP), broken down as follows: Component Indicative amount (EUR) Outgrower infrastructure development Outgrower capacity building Research and Training Type of Contract Works, Service, or supply contracts Grant to SBT Grant contract to STRIT Audit and Evaluation Service contracts Contingencies Total The operational implementation period for the programme is estimated at 60 months as from signature of the Financing Agreement Performance monitoring The programme will be monitored regularly by the EU Delegation through periodic field visits and participation in steering committee meetings, and ad hoc meetings with project coordinators and contractors. The annual ROM missions contracted by Headquarters will be of particular importance and will be requested accordingly. Capacities of main programme partners to monitor results, outcome and impact indicators will be enhanced Evaluation and audit Financial audits for programme components will be carried out on an annual basis and reports will be submitted to the European Union Delegation to Tanzania, together with payment requests and technical reports. Ad hoc audits will be carried out when deemed appropriate by the European Commission or other relevant EU institutions such as the Court of Auditors. In such cases the EU will act as contracting authority. Mid-term and end-of-programme evaluations will be undertaken under the responsibility of the EU Delegation 4.6. Communication and visibility Communication strategy and visibility activities will be developed extensively in the grant contract with the Sugar Board of Tanzania and STRIT. Provisions on visibility will be included in all contracts, in accordance with the 'Communication and Visibility Manual for European Union External Actions. 7