Integrated Safeguards Data Sheet (Updated)

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized THE WORLD BANK GROUP U.- '-InfoShop Integrated Safeguards Data Sheet (Updated) AWorld Frec of PoV*rky O Date Prepared/Updated: 12/20/ Section I-Basic Information December 20, 2002 A. Basic Project Data Country: BOSNIA-HERZEGOVINA Project ID: P Project: SMALL-SCALE COMMERCIAL Task Team Leader: Rapeepun Jaisaard AGRICULTURE DEVELOPMENT PROJECT Authorized to Appraise Date: September 26, 2002 IBRD Amount ($m): Bank Approval: March 13, 2003 IDA Amount ($m): Managing Unit: ECSSD Sector: Agro-industry (29%); Irrigation and drainage Lending Instrument: Specific Investment Loan (SIL) (25%); Agricultural marketing and trade (17%); Status: Lending Crops (15%); Agricultural extension and research (14%) Theme: Rural markets (P); Rural non-farm income generation (P); Rural policies and institutions (P); Rural services and infrastructure (P) I.A.2. Project Objectives: To develop private, market-integrated commercial agriculture in selected low-income, high-potential areas of Bosnia and Herzegovina (BH). The project would (1) encourage farmers to adopt more productive and profitable production systems and increase the marketability of their surplus production, (2) assist them in marketing their produce through the formation of new-style cooperatives and other marketing associations, (3) create a dynamic commercial agriculture by strengthening the linkages among farmers and markets through the promotion of private sector investment in and credit for farming, agro-processing and trading, (4) facilitate the export of agricultural products, including those aimed at niche markets, through information and technical assistance and (5) support measures and investments to strengthen the physical and institutional infrastructure of rural communities. Through all these activities, the project would create a more conducive business environment at.farm, company, and municipal levels. The increased production and productivity resulting from the project would increase farming and other rural incomes and reduce unemployment and poverty. I.A.3. Project Description: The project would concentrate its activities in Southeastern Bosnia and Herzegovina which includes Trebinje Popovo Polje, Trebinje Polje Ljubinje, Berkovici and Bileca (RS) and Dubrava Plateau, Ljubuski, Capljina and Stolac (FBH). The population in the project area is estimated at 137,600. Of the total, 75,900 are in FBH (Mostar 9,900 SE, Capljina 26,000, Ljubuski 28,000 and Stolac 12,000), and 61,700 are in RSlrebinje 37,500, Ljubinje 5,500, Bilewea 14,700 and Berkovixi 4,OOOJThe area has a Mediterranean climate, which is favorable for early production of fruit and vegetables, has

2 2 potential on-farm irrigation resources and continues to have traditional trade links with neighboring countries. This area was impoverished by the war but has the potential to respond readily to a revitalization program. The focus of the project is thus on commercial agriculture as a mechanism for revitalizing the local economy. Background inforamtion for the project area can be found in Annex 2. The project would have four components: Market Integration, Private Agri-Business Support, Commercial Farmer Support, and project management. (1) Market Integration Component (US$ 1.5 million) This component would strengthen the linkages among farmers, private agri-business producers and markets that are necessary for a dynamic commercial agriculture and promote the development of local farmer, processor and trader associations and new-style cooper 0 atives. (a) Market development. The project would improve provision of market information to all participants in the value chain. This would principally be achieved by assisting farmer organizations, new-style cooperatives, processor and trader associations and government agencies.in developing market information services and in techniques for dissemination of this information. Support would include market syudy, training, workshops, publications, and technical assistance. (b) Quality Improvement.The project would assist in the development of quality specifications and food safety that would be consistent with market opportunities and the legal requirements of the EU and other international markels would assist in the development of optimum quality throughout the production and marketing chain, which would be consistent with market opportunities and food safety requirements in domestic and international markets and with producer resources. The project would finance technical assistance for quality specifications and training programs in sanitary and phytosanitary (SPS) and Hazard Analysis Critical Control Point (HACCP) subjects. The project would also finance innovative quality improvement programs and certification systems for potential export products. (c) Cooperative and Association Development. The project would strengthen existing and develop new farmer groups, associations and marketing cooperatives to enable small farmers to effectively participate in high-quality agricultural markets. These organizations can schedule production, collect farmer output, grade and pack produce and provide market information, quality control, technology and credit. The project would finance review and disseminate the experience of the more advanced groups, associations and cooperatives in and outside project areas and in other countries, train farmer groups, associations and cooperatives and support a pilot program to establish and strengthen associations for bee-keepers, fruit and vegetable producers and meat and dairy producers in the two entities. Cooperatives could apply both for competitive grant funds and credit from commercial banks and MCOs and receive periodic short-term technical assistance and training. (II) Private Agri-Business Support Component (US$ 4.06 million) This component would strengthen the roles of private agricultural business so they could provide effective demand for primary output and add value to agriculture products. This component has three subcomponents as follows: (a) Development of Bankable ProposalsThe project would facilitate access to bank credit by commercial farmers, processors, packers, traders, cooperatives and private wholesale markets to

3 finance profitable agricultural production, processing and marketing investments. Potential agri-business project participants would be required to meet project eligibility criteria for inclusion in the program and would develop proposals to be presented to commercial banks for appraisal. In particular, the processors, packers and traders selected would have to have sustainable market prospects back-linked to production capabilities in the project area. The project pxiliie training and assistance in setting up and training a group of economists and financial analysts to provide advice and assistance to farmers, agro-processors and traders in preparing business plans to obtain loans from commercial banks. (b) Enterprise Credit. The project would provide funds to participating commercial banks, which would onlend to agriculture enterprises in the project areas. Participating banks would be selected from an approved short-list of commercial banks that have passed due diligence tests, meet project criteria, have expressed willingness to lend to agriculture, have branches in the project areas and have staff available to be trained in appraising agriculture loans. (c) Technical assistance would be provided to participating banks for training staff in appraising agriculture project proposals and the design of loan terms suited to agriculture and agri-business. (III) Commercial Farmer Development Component (US$ 6.8 million) The project would focus on improved technologies to support market-led producer diversification, specialization and intensification, facilitate access of commercial farmers to micro-credit and improve reliability of water supplies. (a) Technology Development Through a Competitive Grant Program (CGP), this sub-component would support individual producers, community groups and agricultural processors to test and develop technology appropriate to identified market opportunities. The Grant Program would build institutional capacity of public and private rural service providers to support farmers, agricultural processors and other rural entrepreneurs. The project would provide approximately 30 applied research grants, of up to US$20,000, for new crop varieties, improved farm practices, higher yields, improved quality, reduced production costs, and value adding strategies for existing and new products and markets. It would also support 30 technology demonstrations on farmers' fields and in assembly markets and processing industries to test or transfer new and adapted technology clearly linked to defined market opportunities. The ceiling on demonstration projects is US$5,000. Technology demonstrations, to test or transfer new and adapted technology, would be managed by farmer groups on members fields under the guidance of an agricultural advisor. Processing demonstration would also be done in participating processing plants or institutions in the project areas. Demonstration projects proposed during project preparation ranged from new crop variety demonstration, new livestock production technologies to new materials for packaging and processing and improved quality of final products; greenhouse production; and improved packaging. Evaluation criteria, found in the Competitive Grant Program Operations Manual, include environmental impact. (b) Micro-Credit. The project would facilitate access for individual small and medium-sized farmers to finance for small capital improvements and working capital through existing eligible micro-credit organizations (MCOs). Producers in the project area see lack of micro-credit as a major constraint to increasing their commercial farming activities. It is anticipated these credits would be used primarily for equipment, e.g. tractors, and agriculture inputs, e.g. seeds. Sub-loans by the MCOs

4 4 for agriculture-related activities in the project areas, would be in the range of 1,000 E - 30,000 E with the MCOs assuming all of the risk. The project would also include provision for technical assistance to (1) design, test and introduce micro-credit products more suited to agriculture, (2) to strengthen the capacity of MCO's to appraise agricultural loans, and (3) to strengthen the capacity of MCO's to manage loan portfolios with a higher proportion of agricultural loans. Terms of Reference for this TA can be found in the Project Implementation Plan (PIP). (c) Irrigation Rehabilitation The project would finance improvements in irrigation where these would be used by private farmers to increase productivity and the quality of their commercial production. It would involve redesign, repair and improvement of existing irrigation systems serving private farmers. The improvements proposed in Lubushki and Trebinje would include (i) cleaning of main canals, drains and removal of debris, (ii) repair of diversion weirs, structures, flood banks, and canal and drainage channel banks, (iii) repair of gates at the main diversion, control and drainage structures, (iv) improvement of access to control structures and to gates (v) improvement in outlets to farms and (vi) assistance in water management and the formation of water users groups. The initial works proposed for each area would act as the catalyst to small farmers to improve on-farm channels by ensuring reliable water delivery near to their farm gate. Irrigation investments financed by the project would be designed to be economic by avoiding capital- and electricity-intensive systems in favor of low-cost systems already in use in the project areas. The project would strengthen capacity of existing water user associations in management of the on-farm irrigation system including operation and maintenance and to assist farmers to form new effective self-financing water user groups. (IV) Project Management (US$ 1.76 million) The project would strengthen project implementation units in both the FBH and RS. It would increase existing capability to manage day-to-day project activities and coordinate work with local implementation units. The project would finance consultants, incremental staff, office equipment, vehicles and other operating expenses related to the project. I.A.4. Project Location: (Geographic location, information about the key environmental and social characteristics of the area and population likely to be affected, and proximity to any protected areas, or sites or critical natural habitats, or any other culturally or socially sensitive areas.) The focus of the. project is on commercial agriculture as a mechanism for revitalizing the local agricultural economy. The project area is a small region in Southeastern Bosnia and Herzegovina and includes Trebinje Popovo Poije, Trebinje Polje Ljubinje, Berkovici and Bileca (RS) and Dubrava Plateau, Ljubuski, Capljina and Stolac (FBH). The area of Ljubuski is within the catchment of the Trebizat. The area of Trebinje is within the catchment of the Trebisnica river. Both of these rivers are tributaries of the Neretva river. The Neretva River flows from central Bosnia, through Herzegovina and Croatia into the Adriatic Sea along some 230 km. There are no protected areas, critical natural habitats or culturally secsitive areas in the project region. This region was selected because of its potential to rapidly recover and participate in demand-driven agriculture, horticulture and livestock production. It has suitable soil, water and climatic conditions; adequate or rehabilitate local infrastructure; and straightforward access to markets. The most pressing needs in the project area are investment to upgrade the existing facilities, improvement of the management skills of private producers and new-style cooperatives, creation of modern value chains to

5 5 integrate them into the new markets for agricultural goods, and support for producer organizations to provide services and promote producer interests. B. Clheck Environmental Classification: B (Partial Assessment) Comments: Project components with potential for negative environmental impacts are: Component 11 Sub-component B - Enterprise Credit Component Ill Sub-component A - Technology Development Component III Sub-component B - Micro-Credit Component III Sub-Component C - Irrigation Rehabilitation With the exception of Component III.C, the environmental impacts of the other sub-components cannot be determined at this time as the activities which will be funded will only be identified during project implementation by the financial intermediary, making these category "Fl" sub-components. The Fl for Component 11 Sub-component B - Enterprise credit, will be a commercial bank. The Fl for Component III Sub-component B - Micro-credit will be an existing micro-credit organization with experience with other similar World Bank financed projects. The FT for Component III Sub-component A - Technology Development, will be the State Competitive Grants Committee. Investments under Component IIl Sub-Component C - Irrigation Rehabilitation, have been identified, are the subject of an environmental assessment, and place the project in Category "B". The project would finance the rehabilitation of deteriorated irrigation and drainage systems in the project areas. No new structure of significant size would be built under the project. There is also no new land acquisition and no resettlement of people because of the rehabilitation activities. C. Safeguard Policies Triggered Policy Applicability Environmental Assessment (OP/BP/GP 4.01) * Yes C, No Forestry (OP/GP 4.36) 0 Yes * No Natural Habitats (OP/BP 4.04) C Yes * No Safety of Dams (OP/BP 4.37) C Yes * No Pest Management (OP 4.09) O Yes * No Involuntary Resettlement (OP/BP 4.12) 0 Yes * No Indigenous Peoples (OD 4.20) OYes *No Cultural Property (OP 4.1 1) 0 Yes 0 No Projects in Disputed Territories (OP/BP/GP 7.60)* * Yes C No Projects in International Waterways (OP/BP/GP 7.50) 0 Yes 0 No *By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas Section II - Key Safeguard Issues and Their Management D. Summary of Key Safeguard Issues. Please fill in all relevant questions. If information is not available, describe steps to be taken to obtain necessary data. Il.D.la. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts. This project is designed to support investment in agri-businesses to develop local agriculture through the

6 6 support of farmers within a wide range of fruit, vegetable, herb and livestock products. This will result In a relatively small number of medium-scale loans to agri-businesses through a financial intermediary bank (Fl) and credit to small farmers and agri-businesses through micro credit organizations as the Fl. A small grants program will be administered by the State Competitive Grants Committee. These sub-components of the project are in the "Fl" category. It is not possible to review the environmental aspects of the sub-loans, credits and grants at present. For the loans and credits, the project operations manual includes an appendix on "General Guidelines for Identification and Analysis of Environmental Impacts of Project Loan Activities" which includes the mechanisms and responsibilities for environmental screening and review of proposals. For the grants, the guidelines related to environmental screening, review and monitoring are provided in an apendix to the project operations manual, "Competitive Grants Program for Technology and Market Development." The Fls would be trained to evaluate loan applications based on Bank's Environmental Guidelines for Financial Intermediary Loans. The direct environmental impact of the irrigation rehabilitation sub-components is expected to be small to insignificant. The project would rehabilitate existing small irrigation facilities, which are unlikely to create adverse environmental impacts. However, negative impacts of the project could potentially come from: (i) increased agrochemical pollution and surface water contamination, resulting from increased use of pesticides and fertilizers and increased circulation of irrigation water; (ii) soil erosion associated with existing practices of agricultural production due to increased production; (iii) indiscriminate dumping of excavated sediment deposits and other materials from the canals, drains and structures during construction and maintenance; and (iv) environmental damage caused by contractors during construction activities. Livestock are not seen as a potential environmental threats as they will be held in small numbers and by widely distributed private farmers, mostly under losse housing conditions and their excrement will be collected for field fertilization. On the other hand, the project is expected to have positive environmental effects through: (a) cleaning of main canals, drains and removal of deposited debris and other unwanted materials; (b) repair and improvement of flood banks, and canal and drainage channel banks; (c) promotion of improved land use practices and farming methods; (d) modernizing and improvement of agricultural product processing; (e) removal of areas of stagnant and standing water through cleaning of drainage canals and drainage systems; (f) reduction of areas of potential erosion hazard around structures, diversion weirs, outfalls from structures (g) improvement of water management by providing better access to control structures and to gates, improvement of outlets to farms and the formation of water users groups and other assistance in water management; and (h) strengthening local capacities in environmentally sustainable approaches to agricultural development through training and capacity building. The project would provide training programs in farm and business management, co-operative management, agricultural marketing, water management, and participatory monitoring and evaluation. II.D. I b. Describe any potential cumulative impacts due to application of more than one safeguard policy or due to multiple project component. II.D. I c Describe any potential long term impacts due to anticipated future activities in the project area. II.D.2. In light of 1, describe the proposed treatment of alternatives (if required) II.D.3. Describe arrangement for the borrower to address safeguard issues

7 7 li.d.4. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The key stakeholders are the small and medium-scale private operators - farmers, agro-processors and traders of agricultural products; and farmer cooperatives and processor and trader organizations who can realize substantial benefits from participating in cohesive and effective associations promoting their common interests. The project would strengthen the roles of stakeholders by supporting Water User Associations (WUAs) in on-farm water management. In the past operation and maintenance (O&M) have been the responsibilities delegated, in RS, to municipal authorities or AKs and, in FBH, cantonal and municipal governments. Under the proposed project, WUAs would be given some responsibility for O&M, including collection of water charges to pay for it. A public consultation on the project and the EA was held in the Ljubuski region with a range of stakeholders including governmental authorities, residents of the project region, representatives of various agricultural companies in the area, water distribution sector representatives, communal-solid waste collection and disposal representative, independent experts and representative of the Cantonal chamber of commerce. This consultation was held on 31 July 2002 in Ljubuski. In addition, the EA team met informally, in the field, with farmers in the project region to discuss the project's irrigation rehabilitation sub-component and its potential environmental impacts. E. Safeguards Classification. Category is determined by the highest impact in any policy. Or on basis of cumulative impacts from multiple safeguards. Whenever an individual safeguard policy is triggered the provisions of that policy apply. [ ] SI. - Significant, cumulative and/or irreversible impacts; or significant technical and institutional risks in management of one or more safeguard areas [X] S2. - One or more safeguard policies are triggered, but effects are limited in their impact and are technically and institutionally manageable [ ] S3. -No safeguard issues [ ] SF. - Financial intermediary projects, social development funds, community driven development or similar projects which require a safeguard framework or programmatic approach to address safeguard issues. F. Disclosure Requirements Environmental Assessment/Analysis/Management Plan: Expected Actual Date of receipt by the Bank 8/16/2002 Date of "in-country" disclosure 9/24/2002 9/20/2002 Date of submission to InfoShop 9/23/ /2/2002 Date of distributing the Exec. Summary of the EA to the ED (For category A projects) Resettlement Action Plan/Framework: Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Indigenous Peoples Development Plan/Framework. Expected Actual Date of receipt by the Bank

8 8 Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan. Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Dam Safety Managemient Plan: Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop If in-country disclosure of any of the above documents is not expected, please explain why. Sisgned and submitted by Name Date Task Team Leader: Rapeepun Jaisaard Project Safeguards Specialists 1: Rita Klees Project Safeguards Specialists 2: Stan Peabody Project Safeguards Specialists 3: Approved by: Name Date Regional Safeguards Coordinator: Jane Holt 09/19/02 Sector Manager/Director: Joseph R. Goldberg 09/19/02 For a list of World Bank news releases on projects and reports, click here SEARCH FEEDBACK k~j~4~i R7RwAnkN I