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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Date ISDS Prepared/Updated: 05-Aug-2012 I. BASIC INFORMATION 1. Basic Project Data INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA1258 Country: Nepal Project ID: P Project Name: Additional Financing for the Project for Agriculture Commercialization and Trade (P128304) Task Team Gayatri Acharya Leader: Estimated Appraisal Date: 15-Aug-2012 Estimated Board Date: 18-Oct-2012 Managing Unit: SASDA Lending Instrument: Specific Investment Loan Sector: General agriculture, fishing and forestry sector (50%), Crops (25%), Animal production (25%) Theme: Rural markets (50%), Rural services and infrastructure (30%), Rural policies and institutions (20%) Financing (In USD Million) Financing Source Amount BORROWER/RECIPIENT 0.00 International Development Association (IDA) Financing Gap 0.00 Total Environmental B - Partial Assessment Category: Is this a Yes Repeater project? 2. Project Objectives The Project Development Objective remains largely unchanged, but in order to recognize a) very high demand for the project and b) comprehensively address the value chains of important commodities the PDO is proposed to be revised as follows: to improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains supported by the project. The revised PDO removes the restriction of 25 districts but maintains the focus on selected commodity value chains so that the project can have a meaningful impact on developing a few, commercially viable value chains. Page 1 of 8

2 3. Project Description The Project Development Objective is to improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains in districts supported by the project. This will be achieved by: (i) helping farmer groups and cooperatives engage in profitable market-oriented production and improved access to markets through the provision of technology and information services and critical public infrastructure and linkages to agribusiness; (ii) creating and strengthening industry-wide partnerships along the value chain, thus forging linkages between producers, traders, processors, and other stakeholders and, (iii) reducing existing obstacles to agriculture and food trade thereby increasing the ability of farmers and agribusiness to respond to sanitary and phytosanitary (SPS) and food-quality standards to meet domestic and international market requirements. Project components: 1. Component 1 (Agriculture and Rural Business Development) will finance demand-based subprojects proposed by farmer groups, cooperatives, agribusinesses and Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized other value chain participants to build strategic linkages with a view to increase competitiveness, productivity, quality and market access. The component will also finance the facilitation of value chain plans, sub-project proposal development and monitoring of sub-projects. The objective of this component is to enable farmers to engage in profitable market-oriented production and to promote partnerships and market linkages with other value chain participants and agribusinesses. The component will help agro enterprises, commodity associations, cooperatives and farmer groups to actively engage in the development of commodity value chains by partially financing demand-driven investment proposals through a competitive matching grant. The component will also support investments aimed at creating viable enterprise-based farmer institutions that are linked to other value chain participants and are actively engaged with the markets. The specific activities supported under this component are: (i) providing pre-investment and advisory support to enable FOs and value chain participants to prepare subproject proposals and business plans for grant funding under the project; (ii) direct financing of approved subproject proposals in technology and information support and market infrastructure; (iii) agribusiness development through partial financing of demand-driven investment proposals by agro enterprises, commodity associations and cooperatives that are actively engaged in the development of commodity value chains. All three types of activities noted above will be supported after a consultative process of value chain development. Value chain development plans will be developed through a consultative process involving different stakeholders. 2. Component 2 (Support for Sanitary and Phytosanitary Facilities and Food Quality Standards) will finance activities to strengthen the efficiency and effectiveness of sanitary and phyto-sanitary services in order to reduce existing obstacles to agricultural and food trade. It will also support the private sector s efforts to gain market advantage through improved food quality management. As such it provides critical backing to the value chain investments being supported by component 1 and other related projects by Development Partners. The component will finance (i) food quality and safety enhancing activities through improving laboratory facilities and certification capabilities and (ii) technical assistance and capacity building Page 2 of 8

3 measures to meet food safety and quality standards. It will also provide technical assistance to industries to help them meet hygiene requirements so as to earn the confidence of importing country authorities and private sector importers. 3. Component 3 (Project Management and Monitoring and Evaluation) will finance overall project management, monitoring and evaluation and reporting. This component will also support a Project Management Unit (Team) comprising of a Project Director, a Monitoring and Evaluation Officer, Finance Officer, Procurement Officer, Accounts Officer and two accountants. A Tehnical Secretariat, recruited as a firm, will be responsible for the overall functioning of the competitive grant program and will report to the PMT. A public awareness company will be hired to manage local and national level awareness activities for the project. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) Unlike the original project, the Additional financing removes the restriction of 25 districts but maintains the focus on selected commodity value chains so that the project can have a meaningful impact on developing a few, commercially viable value chains. 5. Environmental and Social Safeguards Specialists Drona Raj Ghimire (SASDI) Bandita Sijapati (SASDS) 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ Yes BP 4.01 Natural Habitats OP/BP 4.04 No Forests OP/BP 4.36 No Pest Management OP 4.09 Yes Physical Cultural Resources OP/ No BP 4.11 Indigenous Peoples OP/BP 4.10 Yes Involuntary Resettlement OP/BP Yes 4.12 Safety of Dams OP/BP 4.37 No Projects on International Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP 7.60 No No II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues Page 3 of 8

4 1. Describe any safeguard issues and impacts associated with the Restructured project. Identify and describe any potential l arge scale, significant and/or irreversible impacts: The PACT is an AE Category B project, given that significant adverse environmental and social impacts are not expected as a result of project activities. The social and environmental assessment carried out in sample districts reveal that the project activities proposed related to production, processing, testing, trading and marketing of different agro-based commercial commodities are relatively small in size with limited adverse social and environmental impacts. The Environmental and Social Management Framework (ESMF), prepared by the GoN and endorsed by the Bank, is currently being used in the ongoing PACT. Progress on the implementation of social issues in the project has been satisfactory to date. The additional financing activities will continue to use the established frameworks for the mitigation of social impacts like the Framework for Indigenous People Development Plan and the Resettlement and Rehabilitation Policy Framework. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Land Acquisition and Resettlement: To date, land has been made available for the sub-project by farmers and members of cooperatives at market price thus preempting the need for land acquisition, compensation and resettlement. However, as large scale projects are envisaged to be supported through additional financing, it is likely that the provisions contained in the Resettlement and Rehabilitation Policy Framework will become more paramount. This will require closer scrutiny and enhanced social assessment and implementation capacity through: (i) additional human resources and training; (ii) incorporation of social issues in the Environmental Codes of Practice by developing a joint Environmental and Social Codes of Practice ; and (iii) periodic social auditing/third-party monitoring of sub-project activities to check for social safeguards compliance. Indigenous Peoples and Vulnerable Communities: In accordance with the Framework for Indigenous People Development Plan, the project, to the extent possible and applicable, has been organizing regular consultations with members of farmer s organizations and cooperatives, including with Dalits, Janajatis, and women. However, for the additional finance, documentation and reporting on social management needs to be strengthened through: (i) regular monitoring and supervision of sub-projects to ensure implementation of the Indigenous People Development Plan; (ii) documentation of findings from monitoring and supervision visits to examine progress, record good practices and lessons learnt which if necessary, can be used to take corrective actions; and (iii) systematic analysis of beneficiary data to monitor and ensure that women and other disadvantaged groups are benefiting from the project. The latter can be done effectively through the comprehensive MIS system that PACT has developed. Similarly, as per the ESMF, there is also the need to continue focusing on developing the capacity of vulnerable groups by defining training/income generation activities based on the identified needs and priorities of vulnerable people in the subproject area, providing targeted assistance/ training to vulnerable groups aimed at enhancing their participation in PACT subprojects, and increasing their access to resources to carry out commercial agriculture. Environmental Safeguards: The additional financing activities will also be subject to the existing ESMF s provisions, processes and procedures for environmental screening, assessment and monitoring. Activities supported under the ongoing PACT until MTR (July 2012) have been Page 4 of 8

5 relatively small scale and have low environmental risks: none of the activities required Environmental Assessments beyond screening and preparation of Environmental Code of Practice. The type and size of investments/activities being considered under the proposed additional financing such as rehabilitation of the Kalimati Wholesale Fruit and Vegetable Market a cut flower market and larger agribusinesses, are larger in size and may also have higher environmental risks than the ongoing activities. It is likely that these activity/subprojects require either Initial Environmental Examination (IEE) or Environmental Impact Assessment (EIA) depending on the location and activities. This needs be confirmed by conducting a formal environmental screening of the proposed activity/subproject once more detailed information about the subproject/activity and location is known. The provisions in the ESMF of the parent project are adequate to provide environmental guidance to the type of subprojects being considered. However, considering the higher environmental risks of the proposed larger size activities, a provision needs to be made for adequate support from environmental specialist in addition to orientation and training. The Government has provided for this specialist in the additional financing budget. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Based on an assessment of legal and regulatory framework and institutional arrangements for social and environment management, and the observed environmental and social issues in agriculture sector at large, the borrower has prepared an Environment and Social Management Framework (ESMF) with the objective of minimizing project risks and impacts through design suggestions and/or mitigation and management measures. The ESMF is developed through a consultative process with potential beneficiaries in selected district and subproject site. The assessment included primary beneficiary survey of 450 households, focus group discussions with various stakeholders including vulnerable members of the community, group meetings, institutional surveys, and consultations with local government bodies, private and civil society organizations, and secondary stakeholders at district and village levels. SWOT analysis was carried out to fully realize the strengths and weaknesses, and constraints and opportunities of the existing institutions both at national and local level. Stakeholders consultation: As part of IESA, stakeholder consultations were held prior to the start of the original project with different social groups, NGOs, local government bodies and staff of relevant line agencies. Feedback from these consultations provided input to the development of the ESMF. The process of stakeholder consultations will continue during implementation. The ESMF prepared for the project takes into account the field level situation and the existing GON policies and requirements of the Bank s operational policies. The guidelines included in the ESMF relate to (i) environmental and social screening of subprojects; (ii) environmental codes of practices; (iii) integrated pest and nutrition management plan; (iv) social policies and strategies on resettlement and rehabilitation, indigenous or vulnerable people development plan, strategy for gender development, and community consultation and communication, (vi) institutional arrangement, and (vii) monitoring and evaluation. All subprojects proposed to be covered under the project will undergo environmental and social screening to determine their inclusion under the project. For subprojects that may result in negative environmental and social impacts activities, appropriate Environmental and Social Management plans (ESMP) would be prepared and implemented. Page 5 of 8

6 Planning and implementation capacity is weak with the Borrower both within the project executing Ministry and its major departments. By and large there is lack of trained manpower with basic knowledge on emerging environmental and social issues, weak linkage between agricultural and other institutions directly or indirectly involved in ESMP and weak monitoring and evaluation. Therefore, the project includes an institutional strengthening component to develop and strengthen technical and managerial capacity both within the Ministry and its associated institutions and agencies. 5. 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 potential value chain participants including farmer organizations and farmer groups (commodity associations, cooperatives, women groups, etc.), traders, processors, input suppliers, agribusinesses and other service providers. Public sector entities such as the MOAD and its departments, local government authorities, private sector entities and NGOs, are also important stakeholders. As part of project preparation and undertaking IESA, specific consultations were held with various stakeholders including potential affected communities, farmers organizations, traders, processors, exporters, transporters and project implementers and facilitators. Besides making this available to farmer organizations who might participate in project activities, ESMF will be available at the District Development Councils, District Agriculture, Livestock Services Offices, District Chamber of Commerce and Industry, etc. The public and private sector entities will have access to copies of the ESMF for distribution among their staff who will be involved in project implementation. During project implementation, the Borrower will continue to hold consultations with various stakeholders at different levels on planning and implementing project activities. A major awareness campaign about the project is envisaged at the district level involving potential value chain participants and this will also be used as a forum for disclosure and consultation. In addition, the TA component (supporting subproject planning, formulation and implementation) that is aimed at strengthening the capacity of farmer groups and participants in the value chain will continue to be a vehicle for consultation on social and environmental issues. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Indigenous Peoples Development Plan/Framework Date of receipt by the Bank Date of "in-country" disclosure 05-Feb Apr Apr Feb Apr Apr Feb Apr-2009 Page 6 of 8

7 Date of submission to InfoShop Pest Management Plan Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop 28-Apr-2009 Yes 05-Feb Apr Apr-2009 If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP Environment Assessment Are the cost and the accountabilities for the EMP incorporated in the credit/loan? OP Pest Management If yes, has the PMP been reviewed and approved by a safeguards specialist or SM? Are PMP requirements included in project design?if yes, does the project team include a Pest Management Specialist? OP/BP Indigenous Peoples If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Development Unit or Sector Manager? OP/BP Involuntary Resettlement If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Page 7 of 8

8 Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? III. APPROVALS Task Team Leader: Gayatri Acharya Approved By Regional Safeguards Name: Sanjay Srivastava (RSA) Date: 15-Aug-2012 Coordinator: Sector Manager: Name: Simeon Kacou Ehui (SM) Date: 13-Sep-2012 Page 8 of 8