Table 1: Project Data: Cr Board Approval June 5, 2015 Effectiveness Date September 5, 2016 Closing Date of IDA Credit September 30, 2021

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1 Bangladesh National Agricultural Technology Program Phase II Project (NATP-II) Implementation Support Review December 10-14, 2017 Aide Memoire 1. During December 10-14, 2017, the Bank and IFAD Team1 carried out an Implementation Support Mission for NATP-II. This Aide Memoire (AM) summarized the findings on the status of the project implementation, recommendations and agreements reached with the relevant agencies to take corrective measures and expedite implementation. The AM was discussed at the wrap-up meetings on December 14, 2017 with Mr. Mohammad Nazmul Islam, Additional Secretary, Ministry of Agriculture and Ms. Mahmuda Begum, Additional Secretary, Economic Relations Division, respectively. This AM would be classified for public disclosure under the Bank s Access to Information Policy. OVERALL STATUS AND KEY PROJECT DATA 2. The project took almost two years to start implementation on the ground due to delays in: (i) Preparation of the draft Development Project Proposal (DPP) and Project Implementation Manual (PIM) mainly caused by disagreement between the World Bank and the Government for payment of per diem and honorarium for training of government staff which was resolved in December 2016; (ii) Effectiveness: The Financing Agreement was signed on May 2016, 12 months after approval. Effectiveness was met at signing but the project became effective only in September 2016, 16 months after approval; (iii) Recruitment of a Project Director (PD) was effective in January 2017 only, 20 months after approval because it was difficult to attract a suitably qualified candidate; and (iv) Withdrawal of IFAD co-financing: Initial advance was approved in October 2017 only, 28 months after approval, to co-finance project activities with IDA credit because IDA and IFAD's Designated Accounts (DAs) needed to be aligned into DOSA like IFAD s DA. Now the project has started on the ground and can run smoothly. 3. The implementation has made visible progress as reflected in the Outcomes Indicators and Intermediate Outcomes Indicators in the Results Framework in Annex 2. Outcomes Indicators (OIs): (i) Increase in the yield of selected agricultural commodities: Target end project for rice: 5.4 t/ha; Result: 4.9 t/ha (91% achievement); (ii) Market Access: Volume (in tons) of agricultural commodities sold annually through new marketing structures/arrangements promoted by the project: Target end project: 8,400 tons; Result: 100 tons (1.2% achievement) - full data yet to collect; (iii) Project beneficiaries: Direct project beneficiaries, of which female: Target end project: 1,000,000; Result: 1,011,750 (101% achievement). All target farmers have been selected and mobilized under Common Interest Groups (CIGs) and receiving initial training and support. Intermediate Outcomes Indicators (IOIs): (i) Research sub-projects under implementation or completed: Target end project: 100 Competitive Research Grants; Result: 190 have been financed and started implementation (190% achievement). In addition, 22 Program-Based Research Grants have been approved by Executive Council Bangladesh Agricultural Research Council (BARC); (ii) Marketing solutions implemented by the project: Target end project: 140 Commodity Collection and Marketing Centers (CCMCs); Result: 2 CCMCs (1.4% achievement). Selection of 28 CCMCs is under process by Hortex Foundation; (iii) Client-days of training provided: Target end project: 4,300,000; Results: 513,180 (13.3% achievement). Table 1: Project Data: Cr Board Approval June 5, 2015 Effectiveness Date September 5, 2016 Closing Date of IDA Credit September 30, 2021 IDA Credit Amount $176.07M Amount Disbursed so far $12.35M 1 Manievel Sene (Senior Agriculture Specialist and Task Team Leader), Arafat Istiaque (Procurement Specialist), Mohammad Atikuzzaman (Senior Financial Management Specialist), Kirti Nishan Chakma (Social Safeguards Specialist), Md Istiak Sobhan (Environmental Specialist), Ijeoma Emenanjo (Senior Agriculture Specialist), Jinia Sultana (Program Associate) and Md. Saiful Islam (IFAD-Consultant). 1

2 4. The mission visited several crops, fisheries and livestock activities implemented by CIG and non-cig farmers in Jessore region and collected beneficiaries feedback: assessment, problems and suggestions for improvements. Overall field activities are running smoothly and farmers are satisfied but expressed concerns about participation in training program at upazila level, money transfer through bank, small amount of training allowance, low monetary incentives for the Community Extension Agents for Livestock (CEALs) and Local Extension Agents for Fisheries (LEAFs), infrastructure and marketing problem particularly at the peak season. The mission recommends Project Implementation Unit (PIUs) to provide all training activities at CIGs or at least union levels and expedite implementation of Agricultural Innovation Funds (AIF) 2 and 3 to address issues related to marketing. 5. At this stage, there is no proposed change in scope, restructuring, reallocation and alignment of these with the approved DPP. KEY POINTS DISCUSSED AND AGREED ACTIONS 6. The mission discussed key cross-cutting points to guard against further significant bottlenecks. These include: Opening of DOSA Designated Account (DA) for IDA which is pending at Ministry of Finance (MoF) to align with IFAD s DA; payment of allowances to farmers through bank; inadequacy of the amount of allowances paid to CEALs and LEAFs; lack of budget for selecting 270 field assistants from huge number of applicants; preparation and implementation of Agricultural Innovation Funds (AIF); importance of monitoring of project related activities on nutrition, employment, and climate change. The mission recommends that the PMU follow-up closely with MoF to ensure opening of DOSA DA for IDA financing before end January Considering that most of the farmers may not have bank accounts and that the amount of allowance, for everyone, may not be significant, the mission advises that payment can be made through mobile banking system. However, to ensure transfer of fund to the actual participant and to preserve audit evidence, in that case, a copy of the national identity card of each participant along with respective mobile phone numbers must be preserved at the project office for internal control purposes. The mission recommends PIU-DLS to expedite the selection process of the 270 field assistants at the Upazila levels. The mission recommends that the project team accelerate activities under AIF 2 and 3 to support farmers in engaging on value chains and establishing partnerships with private agribusinesses/investors for better access to market. The mission recommends that the PMU start monitoring and reporting on nutrition, employment, and gender disaggregated information within the monitoring and evaluation system and provided specific guidance and tools on climate co-benefits to the project team. 7. Continuous monitoring and knowledge management are needed to effectively manage climate change and its impacts in the NATP-II project areas. To this end, an intensive training program for climate displaced communities to adapt and cope with new climatic realities would be needed under NATP-II. The mission recommends the World Bank to support PMU in developing a climate resilience plan and performing a GHG accounting analysis using the EX-ACT accounting tool. Information for the GHG analysis as specified in Annex 3 in the Aide Memoire will be required to draft a plan for climate resilience activities under the project. Component 1: Enhancing Agricultural Technology Generation: 8. Research Project: Competitive Research Grant (CRG) and Program-Based Research Grant (PBRG). The CRG is financed by a USAID Financing Grant while the PBRG is co-financed 88% by IDA and 12% by IFAD. Out of 537 CRG proposals (sub-projects: SPs) submitted by research system (National Agricultural Research System (NARS) and Non-NARS, 190 CRG SPs of which 14% livestock, 16% fisheries and 70% crops, have been awarded to 27 NARS and non-nars including universities and Non-Governmental Organizations and started implementation. Given the delays in start-up of the project, since the USAID Grant will be closed by September 2018, the mission recommends that the Government request the extension of the USAID fund for one year to complete implementation of CRG SPs. Out of 30 targeted PBRGs, 22 have been selected for financing, each involving an average of 3 research services. Selected CRG and PBRG SPs are aligned with the priorities identified through bottom up consultation process with different stakeholders and with the government 2

3 agricultural policy thrust, and agricultural research and technology needs of the country. The selection mechanism involved a very rigorous process including 14 steps to be followed to come to final selection. The mission recommends starting implementation of the 22 PBRGs by January 2018 at the latest and speeding up the review, and awarding the remaining PBRG SPs to be financed by the project. 9. Human Resource Development Program. Out of 285 PhD applications received for 122 incountry and 163 for foreign, 119 have been awarded, of which 60 are for foreign and 59 are for incountry study. Other than these, the BARC PIU is doing training and seminars which are on track. Component 2: Supporting Crop Development: 10. Component 2 is led by Department of Agricultural Extension (DAE) in association with Hortex foundation which aims to increase farm yields, diversifying agricultural production, and improving market linkages for smallholder farmers. Significant progress has been made under this component. DAE has already completed formation, reformulation and mobilization of the targeted 27,150 Common Interest Groups (CIGs) of which 15,270 new CIGs and 11,880 pre-existing CIGs, and establishing 1621 Farmers Information and Advice Centers (FIACs). About 26% of CIGs have been registered, and 40% of total targeted Micro (union and upazila) Extension Plans (MEPs) have been prepared for CIGs. About 88% of CIG members have opened bank accounts and 90% savings deposit. With respect to Income Generation Activities (IGAs), 56% of CIGs (15,204) are investing in seed production, vermi-compost productions, small trade and micro-credit. Component 3: Supporting Fisheries Development: 11. Component 3 is implemented by Department of Fisheries (DoF) PIU which aims to increase productivity and quality of fish through technology transfer, as well as a better access to market opportunities for fish farmers including capture and culture fisheries. DoF has completed formation, reformulation and mobilization of 5,275 CIGs out of 5,430 target (97%) of which 2,997 are new CIGs and 2,278 are pre-existing, and 67% CIGs are registered. All CIGs have prepared extension plans and started savings. Preparatory stage is near completion for activities such as research-extension-farmer linkages, community based fisheries management, technology demonstration and adoption, FIACs establishment and strengthen, and AIF to be ready for implementation in January Component 4: Supporting Livestock Development: 12. Component 4 is implemented by Department of Livestock Services (DLS) which aims to increase productivity through improved technology transfer, service delivery, as well as a better access to markets for livestock farmers. DLS has completed formation, reformulation and mobilization of 8,097 CIGs (99.6%) against the total targeted 8,130 CIGs, of which 53% have been registered while more that 98% have opened bank account and started savings, and all have completed the preparation of extension plans. All the CIGs have prepared their micro extension plans for this year. As part of technology demonstration activities, DLS has arranged 2,668 vaccination and de-worming campaigns, established 1477 fodder cultivation demonstration plots, and provided training to 147,120 CIG farmers, 360 CEALs and 230 DLS officers. AIF fund 2 and 3 activities are under preparation and are expected to start implementation by January Component 5: Project Management: 13. As an apex component, this component is responsible for coordination among all project components and dialogue with Government and partners. The Project Management Unit (PMU) is in place and functioning with the recruitment of core staff including contractual staff and consultants, approval of annual work plan and budget by Project Steering Committee, official launching of the project and start-up implementation on the ground. Procurement of the first packages of furniture and information and communication technology equipment are in the final stage. FIDUCIARY COMPLIANCE 14. Procurement Performance: All procurement specialists are now on board in the PMU and in each PIU, except DAE. In the mission, it was discussed at length that all PIUs will coordinate with 3

4 PMU on pooled procurement package so that PMU can get information on specifications and delivery schedules to make them as harmonized as possible to prepare bidding document. The Bank will arrange trainings on Bank s Procurement Guidelines and Systematic Tracking of Exchanges in Procurement (STEP) for all relevant procurement staff of PMU and PIUs. 15. Financial Management (FM) Performance: Overall implementation has been delayed due to delays in the installation of an accounting software, submission of September quarter Interim unaudited financial reports (IUFRs) and appointment of FM staff for the Department of Livestock (DLS) because the project FM Team joined in late November, The Bank will arrange training on FM in January, 2018 for the FM team. 16. Internal Audit: To initiate the first round of internal audit by an external professional auditing firm, the project will share a draft Terms of Reference (ToR) with the Bank by January 31, IUFR: It was noted that submission of the IUFR for the quarter ended September 2017, which was due by November 15, 2017 has not yet been received. As the FM Team joined in late November, 2017, the project will submit the concerned IUFR by January 31, 2018 and continue to submit subsequent IUFRs within 45 days at the end of each calendar quarter. 18. Accounting and reporting: Currently the project is maintaining books of records manually and financial reports are prepared using spreadsheets. However, the project has agreed to initiate a procurement process for an accounting software package by January 31, DOSA Account: Given the urgency and importance of opening a DOSA account with Bangladesh Bank for disbursement of IDA and IFAD funds, the project was requested to complete all related formalities before January 31, Farmers allowances: Regarding payment to farmers, it was clarified that CIG Bank accounts should be used wherever possible, otherwise mobile money transfer mechanism may be pursued in case of individual participants. However, to ensure transfer of fund to the actual participant and to preserve audit evidence, in that case, a copy of the national identity card of each participant along with respective mobile phone numbers must be preserved at the project office. 21. External Audit: The external audit report for FY17 is due on January 31, In this connection, the respective PDs were requested to be present at the Audit Exit Meeting which is scheduled to be organized by the Foreign Aided Projects Audit Directorate (FAPAD) on January 24, This meeting is a platform to discuss the draft audit report and provides an opportunity to resolve draft audit observations. The project was alerted about implication of pending audit issues on disbursement as well as future follow-on projects. 22. Fund flow: For smooth monitoring of fund flow by the PMU and reliable projection of funding requirement of the PIUs, the Bank suggested the PIUs to submit subsequent six months forecast to the PMU at the end of each quarter. The mission shared a template to forecast six months expenditure with the PMU. 23. Disbursements Status: Due to late appointment of FM team, funds flow related issues significantly delayed the financing and implementation of overall activities, and disbursement was not satisfactory. However, the project has disbursed US$5.07M in FY17 and cumulative disbursement in SDR is 8.9 million equivalent to US$12.35 million. The project expects signification disbursement activity in the coming quarters. SAFEGUARD MANAGEMENT 24. Environmental Safeguards: The project team informed the mission that the environmental safeguard consultants for PIUs will be on board by March The mission met with focal persons of 4

5 all implementing agencies and discussed the environmental safeguard compliance monitoring protocols and reporting. The team agreed that further consultation is required on field level reporting formats and training necessities. Additional meetings are agreed to be held between World Bank s environmental safeguard specialist and implementing agencies in January 2018 on environmental safeguards and pest management issues. 25. Social Safeguards: The project team has organized several orientations and trainings and is currently formulating the annual work plans. About 35,277 beneficiary groups have been identified including 21,750 groups under DAE, 5,430 HHs under DoF and 8097 groups under DLS. At least onethird beneficiaries are women. About 2,000 indigenous people have been included in livestock CIGs by PIU-DLS in several districts including Rangamati, Bandarban, Khagrachori, Chapainobabgonj, and Dinajpur. NEXT REVIEW 26. The mission agreed with the Government team to schedule the next formal implementation support mission in July Meanwhile, the Bank Task Team and PMU will maintain regular progress monitoring meetings like in the past. Table 2: Summary of Agreed Actions Actions Responsibility Agreed timeline Bank to arrange Trainings on Bank s Procurement World Bank January 31, 2018 Guidelines and STEP for PMU and four PIUs Submission of TOR to IDA for hiring internal auditor PMU January 31, 2018 Bank to arrange Trainings on Financial Management World Bank January 31, 2018 for relevant staff of PMU and four PIUs Submission of Sept quarter IUFR PMU January 31, 2018 and subsequent IUFRs within 45 days after the end of the quarter Initiate procurement process of accounting software PMU January 31, 2018 Opening of DOSA with Bangladesh Bank PMU January 31, 2018 Submission of six monthly forecast to the PMU PMU Within 15 days after the end of each quarter Request for one year extension for CRGs ERD February 28, 2018 Implementing of 22 PBRGs PIU-BARC January 31, 2018 Financing remaining PBRGs PIU-BARC March 31, 2018 Participation at the Audit Exit Meeting at FAPAD PMU January 24, 2018 Selection of the 270 field assistants at the field level PIU-DLS and PMU May 31, 2018 Implementation of AIF 2 and 3 PMU, PIU-DAE, PIU- June 30, 2018 DOF, PIU-DLS Training, demonstration and other farmer-related activities to be conducted at the CIG or Union level PMU, PIU- BARC, PIU - DAE, PIU -DOF, PIU- Continuous Monitoring and reporting on nutrition, employment, and climate change Support PMU in developing a climate resilience plan and a GHG accounting analysis using the EX-ACT accounting tool Annex 1: Updated Results Framework Annex 2: Climate Change and Resilience DLS PMU, PIU-BARC, PIU- DAE, PIU-DOF, PIU- DLS June 30, 2018 World Bank July 31,

6 Annex 1: Updated Results Framework PDO: To increase agricultural productivity of small holder farms and improve small holder farmers access to markets in selected districts Outcome Indicators 1 Farm Productivity: Increase in the yield of selected agricultural commodities Baseline Value Target for 2017 (A) Achievements as of November 30, 2017 (B) Level of Realization of 2017 target (%) (B/A) *100 Target End Project in 2021 (C) Level of Realization of End Target (%) (B/C) *100 Remarks Rice(paddy) -t/ha % % Achievements recorded based on DAE's data. Tomato - t/ha n/a 36.0 Data not available. to be Dairy - ltr milk/day/cow n/a 3.9 captured in the hiring M&E Firm surveys Beef- kg live weigh n/a 225 Culture (ponds) - t/ha 3 3 n/a 4.8 Capture (beel) - t/ha n/a Market Access: Volume (in tons) of agricultural commodities sold annually through new marketing structures/arrangements promoted by the project Intermediate Outcome Indicators 3 Project beneficiaries: Direct project beneficiaries, of which female [CORE INDICATOR] 4 Research: Technologies demonstrated in the project area [CORE INDICATOR] * 50% % * includes only DAE's result 800,000 1,011, % 1,000, % The departments first completed selection of all farmers and mobilize them under CIGs PRGS sub- projects have been already selected and be launched soon. 6

7 5 Research: Research sub-projects under implementation or completed [CORE INDICATOR] Extension: Targeted clients satisfied with agricultural and rural advisory services [CORE INDICATOR] 6 Extension: Targeted clients satisfied with agricultural and rural advisory services [CORE INDICATOR] 7 Extension: Clients who have adopted an improved agricultural technology promoted by the project [CORE INDICATOR] 8 Market access: Marketing solutions implemented by the project (cumulative) 9 Agricultural Innovation Fund: Technology adoption and marketing sub-projects under implementation or completed 10 Client-days of training provided [CORE INDICATOR] % % These are CRG sub projects which are under implementation. tbd 74% n/a - 93% - Data not available. to be captured in the hiring M&E Firm surveys 226,000 n/a - 640,000 - No data available. The engagement of a Results Monitoring and Impact Evaluation (M&IE) Firm is under process. The Firm will conduct regular surveys and collect this data % % Target for DAE&Hortex 60 (30 CCMC, 20 collection points and 10 market renovation). The remaining targets are for for DLS and DoF 28 CCMC selection by Hortex Foundation is under process Annual target be 100% achieved before the end of FY 2017/18 1,000, , % 4,300,000** 13.3% To be 100% achieved before the end of FY 2017/18. ** figure is a cumulative one 7

8 Annex 2: Mainstreaming Climate Change Resilience Bangladesh is one of the most vulnerable countries to climate change because of its geographic exposure, low income, and heavy reliance on climate sensitive sectors, particularly agriculture. Climate threats include: sea level rise - approximately a fifth of the country consists of low-lying coastal zones within one meter of the high-water mark, droughts, floods, and cyclones. The impacts of climate change will continue to exacerbate the problems already facing the population. Agriculture in Bangladesh is influenced by seasonal characteristics and different variables of climate such as temperature, rainfall, humidity, day-length etc. Temperature and rainfall changes have already affected crop production in many parts of the country and the area of arable land has significantly decreased in the last three decades. Salinity intrusion in the coastal areas is creating a serious implication for the coastal land that was traditionally used for rice production. Floodplain land and water in Bangladesh are coming under ever-increasing pressure during the dry winter months, which are critical to the survival and propagation of the floodplain resident fish. However, a percent increase in flooded areas could raise total annual yields by 60,000 to 130,000 tons. These potential gains may be counter balanced by greater dry season losses due to lower dry season flows and greater demands on dry season water resources for irrigation, threatening fish survival and making the fish more susceptible to capture. The issue of climate change has assumed special importance because of the accumulation of evidence of the realized and potential impacts of global warming in Bangladesh. NATP will need to integrate appropriate scientific and strategic climate resilience initiatives/practices into its activities, adjusting priorities and trade policies, in the agricultural sector, while promoting training and education among its beneficiaries. The project should place emphasis on capacity building and disaster management, institutional and infrastructure strengthening, development of research and low carbon technologies to create an inclusive and truly comprehensive mitigation scheme. More attention should be paid to understanding the trade-offs between landuse and inland capture production, such as dry season trade-off between rice and inland fish production on the floodplains of Bangladesh. GHG Analysis Agriculture accounts for about a quarter of anthropogenic GHG emissions, mainly from deforestation and agricultural emissions from livestock, soil, and nutrient management (IPCC 2014). The agriculture sector accounts for nearly 50% of global emissions of nitrous oxide (N 2O) and methane (CH 4). Nitrous oxide is a powerful warming agent and is about 300 times more potent at heating the atmosphere than CO 2, and methane has a global warming potential about 21 times that of CO 2 on a 100-year timescale. Global emissions from agriculture and land-use change is increasing because of population growth, increasing meat and dairy product consumption, and the increased use of fertilizers. The estimates of GHG emissions and removals deriving from Agriculture, Forestry and Other Land Use (AFOLU) include: CO 2 emissions and removals resulting from C stock changes in biomass, dead organic matter (DOM), soil organic matter (SOM) of organic and mineral soils, and harvested woody products (HWP) for all managed lands; CO 2 from cultivated organic soils; non-co 2 emissions from fire on all managed land; CH 4 emissions from rice cultivation; N 2O emissions from all managed soils; CO 2 emissions associated with liming and urea application to managed soils; CH 4 emissions from livestock enteric fermentation; CH 4 and N 2O emissions from manure management systems. The data in the tables below are needed for the GHG analysis. 8

9 Table 1. Estimated Number of Livestock under NATP-II Head number (mean per year) Livestock Start Growth rate per year (%) Without project With project Dairy cattle Other cattle Sheep Swine (Market) Swine (Breeding) Poultry Goats Please add other livestock Table 2. Estimated Livestock Production in the Proposed Project Production (meat, milk, etc.) in tons of product per year Livestock Start * Without project*** With project Dairy cattle (milk) Other cattle (beef) Sheep (mutton) Swine (Market) (pork) Swine (Breeding) Poultry (chicken) Goats Eggs Honey Table 3. Flooded rice systems remaining flooded rice systems (total area must remain constant) Area (ha) Rice Start * Without project*** With project Rice after Deforestation Converted to A/R Rice after non-forest LU Converted to OLUC Table 4. Aquaculture (only emissions from N2O during fish production) Fish Production System Annual production (tons per year) Start * Without project*** With project 9