Climate Resilient Post-harvest Agribusiness Support Project (PASP) Joint implementation support mission report

Transcription

1 Climate Resilient Post-harvest Agribusiness Support Project (PASP) Joint implementation support mission report Main report and appendices Mission Dates: 20 May 6 June 2015 Document Date: 10-Nov 2015 Project No Report No: 3897-RW East and Southern Africa Division Programme Management Department

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3 Contents Abbreviations and acronyms iii A. Introduction 1 B. Overall assessment of project implementation 2 C. Project implementation progress with outputs and outcomes 2 D. Fiduciary aspects 12 E. Sustainability 14 F. Conclusion 15 i

4 Appendices Appendix 1: Summary of project status and ratings 17 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs 21 Appendix 3: Summary of key actions to be taken within agreed timeframes 27 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators 29 Appendix 5: Financial: Actual financial performance by financier; by component and disbursements by category 37 Appendix 6: Compliance with legal covenants: Status of implementation 39 Appendix 7: Knowledge management: earning and Innovation 41 Technical annexes Technical annex I: Smallholder post-harvest infrastructures 43 Technical annex II: Warehouse management system 48 Technical annex III: Dairy hub approach 54 Technical annex IV: Resilience analysis checklist for PASP capacity building interventions 61 Technical annex V: Financial management assessment 66 ii

5 Abbreviations and acronyms ADC ASAP BDF MCC MFI MINAGRI RAB RCA REMA RMA SACCO SMEs SPIU African Development Consultant Adaptation for Smallholder Agriculture Programme Business Development Fund Milk Collection Centre Microfinance institution Ministry of Agriculture and Animal Resources Rwanda Agriculture Board Rwanda Cooperative Agency Rwanda Environment Management Authority Rwanda Meteorology Agency Savings and Credit Cooperative Society Small and medium enterprises Single Project Implementation Unit iii

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7 A. Introduction 1. The Climate Resilient Post-harvest and Agri-business Support Project (PASP) is a five year project implemented by the Ministry of Agriculture and Animal Resources (MINAGRI). It is co-financed by IFAD (oan 427- RW, Grant DSF 445- RW, ASAP Grant 428- RW), the Government of Rwanda, commercial loans that will be leveraged from the financial sector, as well contributions from project s beneficiaries and other value chain actors. It became effective on 28 March 2014 and it is due for completion in March Project coordination is under the responsibility of the Single Project Implementation Unit (SPIU) for IFAD-funded projects under MINAGRI. PASP comprises the following three mutually reinforcing components: (i) HUB capacity development programme and business coaching; (ii) Post-harvest climate resilient agri-business investment support; and (iii) Project management and coordination. 2. The overall goal of the project is to alleviate poverty, increase rural income and contribute to the overall economic development of Rwanda. Fully aligned with PSTA III results framework, PASP development objective is to increase smallholder and rural labourer incomes (including women, youth and vulnerable groups) from CIP crops and dairy businesses by supporting aggregation of production for markets, transformation, and value-addition to enable smallholders to capture a higher share of the value. The project s primary focus is the facilitation of inclusive business activities that can thrive on increased agricultural production from CIP crops and dairy development. 3. PASP s primary target group comprises poor smallholder farmers either engaged in production and primary processing in the priority value chains (maize, beans, cassava, Irish potatoes and dairy), including poor farmers with some production potential and members of cooperatives who own small land plots and smallholders who supplement their income through agricultural wage work. PASP targets about 32,400 rural households in 11 districts (Musanze, Nyabihu, Rubavu, Kayonza, Nyagatare, Gatsibo, Ngoma, Kirehe, Kamonyi, Muhanga and Ruhango) where the project is intervening. 4. PASP financing is complemented by a grant from the Adaptation for Smallholder Agriculture Programme (ASAP) to cover the incremental costs associated with building a low carbon and climate resilient post-harvest agribusiness sector in Rwanda. ASAP funds facilitate a better understanding of how current and future agro-meteorological conditions influence harvest and post-harvest activities, so as to ensure that rural infrastructure and related investments supported by the project are resilient to these changing climate patterns. 5. The mission had the following objectives: (i) assess the overall progress in implementing the activities planned in the respective project s components; (ii) provide implementation support for activities undertaken within the 2014/2015 AWPB and propose key recommendations to be considered in the preparation of the AWPB for 2015/2016; (iii) identify and discuss actual and potential/emerging challenges and constraints, agree on solutions, changes or improvements; (iv) assess progress made on the establishment of HUBs, capacity development and business coaching aspects as well as financing HUBs through the investment support fund; and (v) assess the guidelines for allocation of ASAP climate risk management grants and follow-up with the recommendations from the recent ASAP progress review mission to Rwanda. 6. The mission held meetings with the Permanent Secretary of MINAGRI, the Director General of Rwanda Agriculture Board (RAB), Rwanda Environment Management Authority (REMA), Rwanda Meteorology Agency (RMA), Rwanda Cooperative Agency (RCA), the Business Development Fund, (BDF), Heifer International, other service providers, PASP beneficiaries and worked closely with the SPIU team responsible for managing IFAD-supported operations. This Aide Memoire reflects the mission s findings and agreed actions reached with the Government during the wrap-up meeting held on 5 June 2015 May It will be followed by an IFAD Management etter highlighting key mission findings and recommendations. IFAD is grateful to the Government of Rwanda, implementing partners and other stakeholders for their cooperation and support during the mission. 1

8 B. Overall assessment of project implementation 7. The main achievements during this first year of PASP implementation include: (i) recruitment of key staff specialized in post-harvest management and climate risk management; (ii) recruitment of service providers (iii) sensitization campaign on project objectives, goals and planned activities that will be implemented by service providers and government partners; and (IV) identification of 325 CIPformed cooperatives that could establish potential HUBs with the support of service providers. To date, 1283 farmers have been trained on post-harvest quality improvement and assurance by RAB, and 110 cooperatives have been trained by the Rwanda Cooperative Agency (RCA) in legal assistance, internal audit, financial management and cooperative leadership. 8. PASP activities aimed at facilitating access to financial services have had a promising start. The project has signed an MoU with BDF, for an amount of Rwf 978,250,000 that outlines the basic modus operandi of the grant and individual credit guarantee operations. Out of this fund, 337 million Rwf is allocated to guarantee funds. Currently, 29 business plans have been elaborated by farmers and cooperatives with the assistance of PASP field staff and the Business Plan Development service provider - African Development Consultant (ADC). To date, 9 business plans have been submitted to financial institutions and 2 of them related to the construction of maize warehouses and support to a dairy HUB have been financed. 9. To address the climate risks associated with project investments, PASP has successfully recruited an environment and climate specialist and an agro-meteorologist. Since taking office in October 2014, both officers have organized several activities related to mainstreaming climate risk management. These include meetings and workshops on project objectives, goals and planned activities with service providers and government partners, namely RCA, RAB, the Rwanda Meteorological Agency (RMA), Rwanda Environment Management Authority (REMA) and the Rwanda Energy Group (REG). This team has also initiated collaboration with these relevant partners on the identification of national gaps (e.g. improved seeds and forage varieties, bio-pesticides, etc.) that could be addressed within PASP scope. However, there are a number of ongoing challenges faced in ensuring that climate resilience is fully integrated across component 1 and 2 of the project. 10. The mission noted that support to cooperatives or SMEs should be done gradually in accordance to their level of maturity. For instance, some CIP-formed cooperatives supported by P4P programme of WFP have matured to a satisfactory level as they are able to organise collection of large quantities of produce acquired from consolidated land. They also own large storage facilities, meet required standards and have access to market (P4P programme, private sector and national strategic reserves). Such cooperatives or SMEs should be given priority in business plan preparation to address specific development needs. Similarly, dairy HUBs supported by Heifer International have graduated into business oriented entities that require investment support to develop their businesses at more commercial scales. The MCCs identified as potential dairy HUBs need capacity building and business coaching before benefiting from PASP investment support. 11. The total revised AWPB was of FRW 2.77 billion out of which FRW 1.15 billion or 41.5% was executed as of 30th April As most activities in the AWPB were to be implemented by the service providers for different value chains, the budget disbursement was delayed by the long recruitment process. Apart from the cassava value chain, recruitment has been recently completed for all other value chains and these are valued at FRW million. The total budget execution inclusive of commitments is thus estimated at 74.56%. C. Project implementation progress with outputs and outcomes 12. PASP comprises three components: (i) HUB capacity development programme and business coaching; (ii) Post-harvest climate resilient agribusiness investment support fund; and (iii) Project Management and Coordination. 2

9 Component 1: HUB capacity development programme and business coaching 13. PASP aims at establishing a total of about 200 HUBS: maize and beans (110), cassava (30), Irish potatoes (30) and milk (30) over the 5-year period of the project. Cooperatives, farmers organizations or SMEs associated with participating HUBs will be supported to address their skill and knowledge gaps and access specialized service providers to create viable and competitive businesses capable of delivering larger volumes of improved produce to the market chain and provide climate resilient and low carbon value adding to an expanding number of clients. 14. HUBs establishment. To date, about 325 potential cooperatives and some rural SMEs have been identified across the project area and could be developed into sustainable HUBs. Some of the identified cooperatives (27 in dairy; 43 in maize and Beans, 20 in cassava and 48 in Irish potatoes) have been provided with training in post-harvest management by RAB and general management training by the RCA. About 3,045 tarpaulins (plastic sheets) have also been distributed to some of the cooperative members while one cooperative producing maize on 830 ha of consolidated land in Nyagatare district benefited from 49 temporary drying shelters. 15. Challenges and recommendations. The district level campaign resulted in the identification of the 325 potential cooperatives and SMEs that could form HUBs. A single HUB can support a number of cooperatives and SMEs. It is possible that HUBs can be of various categories with different ownership structures but they should always be business oriented. While efforts are ongoing to develop business plans for possible financing under PASP, the mission noted that guidance by the SPIU regarding the process of business plan development and support could be improved. All Postharvest district officers and commodity-based technical service providers need to be trained by the SPIU and ADC on business plan identification, formulation and implementation. The mission also recommended that each commodity technical service provider in association with the Post-harvest officers develop maps of their respective value chains identifying business actors and relationships with PASP target groups. Based on these maps, the project can design the strategic approach and identify the key investments for supporting more effectively the particular value chains. The mission also recognized the need to undertake a climate risk analysis of each value chain in order to identify stages where climate constraints occur, where this has not been done, and thus propose adequate and appropriate measures to overcome those specific climate challenges. 16. Some cooperatives have been trained on post-harvest handling. However, this training is also required when warehouses are due to be operational or while being operated so that the training shows the importance of pre-storage processes in warehouse management and the marketing of crops. A review of the RAB training program showed that aspects such as packaging for storage, grades and standards, which are important in warehouse management and the linking of farmers to warehouses and markets were missing. The RAB training coordinator agreed with the importance of this aspect and assistance from FAO will be sought when developing the training module on prestorage grain handling. Agreed action Responsibility Agreed date Train technical service providers and SPIU, district officers, ADC Immediate district officers on business plan identification/formulation/implementation Mapping of each value chain to develop Service providers, district officers July 31 PASP strategic approach and identify key investments for individual value chains Develop training module to train farmers on warehouse use. Service provider for maize and beans /SPIU/ July Drying systems for grains. This is the most critical stage of the post-harvest system for the grains since farmers often harvest their crops in wet conditions. The drying infrastructure that is currently being promoted is for the drying of maize on cobs at cooperative level. Tarpaulins have also been provided by the project to some farmers but these are often used as roofs for temporary drying hangers and drying shelled maize. Beans is often dried in the pods on the ground and then shelled 3

10 manually. The mission noted that after training conducted by RAB farmers have adopted simple techniques of hanging beans. Observations from the field indicate that soon after harvesting and drying, farmers shell their cobs (still at high moisture levels) for sale. In some cases, buyers offer farmers relatively low prices in order to buy grain at high moisture levels which they will dry themselves. Without alternative markets for farmers, this serves as a disincentive for farmers to dry grain properly. 18. Challenges and recommendations. The existing drying infrastructure is inadequate given the increasing volumes of commodities produced due to various production support programmes for CIP crops. However, although drying at cooperative level may sound appealing for reasons of cooperation among farmers and cost reduction on drying systems when grain is aggregated, centralized drying may not be the best option in the long term. Actually, it encourages the movement of wet grain up the supply chain. This situation might become disastrous if drying facilities are overwhelmed resulting in accumulation of large volumes of insufficiently dried grain. To avoid such a scenario, it is recommended that the drying post-harvest activity be carried out by small groups of farmers to keep wet grain in small quantities. Therefore as a grain drying strategy, it is recommended that the focus be placed on supporting drying technologies and practices that are undertaken at decentralized group levels within cooperative's zones. Agreed action Responsibility Agreed date Identify, test and promote grain drying technologies targeting small groups of farmers 1 SPIU, RAB, WAKAA June Storage systems. The systems envisaged under PASP include warehouses, household silos, drum and sealed bags (hermetic). A number of business plans to construct warehouses have been developed and are being evaluated. The initial effort to procure hermetic bags to improve bag storage of maize and beans was not successful; the procurement process has been initiated again. 20. Challenges and recommendations. As it may not be possible for PASP to support establishment of warehouses in all participating districts, storage options should be carefully targeted in the respective communities to serve participating HUBs. The most practical approach that is recommended is to have grain dried by small groups of farmers and then stored and marketed collectively. In addition to large warehouses, there is an urgent need to provide both drying and storage solutions for smaller groups closer to their production sites. 21. A review of current operations at a warehouse visited by the mission revealed a lack of commercial understanding of investment in a warehouse and the business oriented management required to operate a commercial warehouse. Cooperatives need to appreciate the fact that a warehouse is a business investment that should earn its own returns. In addition, the warehousing M&E should track the following: (i) number of warehouses and aggregation points developed; (ii) warehouse storage capacity development and usage; (iii) quantities handled at each warehouse and aggregation points; (iv) value of commodities going through warehouses and aggregation points; (v) the quality of commodities going through warehouse and aggregation centers; and (vi) number of farmers using warehouses. Agreed action Responsibility Agreed date Expedite action on procurement of SPIU June 30 hermetic bags 1 Consult relevant mission Working Papers 4

11 Initiate procurement and testing of other storage technologies - household silos and drums, group storage solutions SPIU, RAB Continuous 22. Roots and tubers. In the case of cassava, there already exists a large processor at Kinazi with the capacity to process large volumes of cassava. Facilitation of linkages between the cassava growers and this processor is of primary concern. This may involve the provision of simple aggregation sites at vantage locations and transport facilitation. Where growers are very remote from this processor and transportation may not profitable, a HUB with a business model for processing cassava should be considered if that option is commercially viable. As the service provider for the cassava commodity is not yet in place, it is recommended that action is taken to expedite the recruitment process. A map of actors and business relationships in the cassava value chain should be prepared by the service provider once recruited. 23. The potato value chain is also well established in north and western provinces of Rwanda. However, farmers require more support with the handling and storage of both ware and seed potatoes. ike cassava, large processors of potatoes are emerging in the production areas. As such, the immediate approach will be to find mechanisms of linking farmers to processors. Some of the existing seed storage facilities can be rehabilitated and expanded for storage use to meet the needs of farmers. 24. Dairy. The mission visited some operational dairy HUBs developed by Heifer International through the East African Dairy Development Programme (phase I) in Nyagatare district and Milk Collection Centres (MCCs) identified as future HUBs in Nyabihu and Rubavu Districts. As noted by the mission, a fully functioning dairy hub serves as a dynamic cluster of services and activities that work in synergy to increase smallholder dairy farmers income. The bulking and chilling capacity of HUBs creates a secure value proposition to farmers within the dairy catchment, expands market access, provides consistent income to member farmers, incentivizes improvements in milk quality, and provides credit ( check off ) against milk supplied by farmers to enable greater access to necessary inputs and services. 25. The successful management of all related HUB services is critical to the profitability and ultimate sustainability of farmers owned agribusinesses. From the outset, considerable emphasis has to be placed on strengthening the capacity of cooperative leadership (Board of directors; BoD members and hub management) and to develop HUBs into financially viable and sustainable businesses. Key initiatives leading to increased management capacity include formal trainings, workshops and learning tours to share best practices. A sign of maturity among successful HUBs is that they have assumed greater responsibility for covering their own administrative and operational costs (e.g., extension staff, facility expansion, agro-vet supply contracts, transport, and repairs) and are confident about their ability to meet these costs in the future. 26. Challenges and recommendations. During the field visits and follow-up discussions with Heifer International, the dairy value chain service provider, some key challenges have been identified: Start-up HUBs do not necessarily have sufficient retained income or debt capacity to expand business services. They do not have access to debt capital financing for milk procurement (buying milk from individual farmers) and transport prior to bulk sale. Immediate requirements are cost-effective feed systems and technologies, milk delivery aluminum cans, motor-cycles for artificial insemination technicians and working capital for Agro-vet stores. There is a need to conduct a business plan for these mini-enterprises and develop strategies to access financing. For growing HUBs, the cash flow management is very critical: one challenge to HUBs is cash flow chronic late payments by milk buyers; this negatively impact on farmer s loyalty and ultimately the mobilization of required milk volumes needed to run a profitable business. 5

12 Stage Without a price incentive offered by milk buyers to dairy HUBs for milk of higher quality, quality interventions may be in vain. Quality-based pricing scheme and incentives locked into contracts between HUBs and buyers will increase self-regulation of milk quality by farmers. Getting dedicated leaders at HUB and farmers groups levels is crucial for the success of the system. Most activities are geared toward organizing the supply of extension services, yet the challenge is to set up a system to provide these services with no subsidies. One strategy is to create a demand for such services by first providing the services for free using the Training of Trainers (ToT) and Famers Trainers (FTs) approach. To ensure sustainable development of dairy HUBs, it is recommended to follow the different stages as per the table below: Recommended actions Start HUBs (evel 1) Focus on startup and getting governance procedures and structures in place Business planning (evel 2) Focus on getting business running, implementing initiatives Growing HUBs (level 3) Focus on adding value to farmers and markets Expanding HUBs (level 4) Focus on holistic business improvement Mature HUBs (level 5) Focus on long term sustainability and differentiation 27. Temporary drying grounds. The harvesting and drying period of the 2015A season was characterized by intense and more frequent rain fall. This created difficult condition for farmers to dry their crops, without adequate drying facilities. As a response PASP organized emergency support through the construction of 49 temporary drying shelters at a cost of 126,702,240 Frw equivalent to 181,000 USD co-shared with the recipient cooperative, KABOKU, in Nyagatare district. In the next AWPB , the SPIU must ensure this initial investment in temporary structures is capitalized upon and encourage the cooperative to leverage required funds to make these temporary structures permanent, as a key part of their business plans. 28. Strategic support to cooperatives, SMEs and potential HUBs. Following discussions with PASP staff and service providers, the mission considers that there is an urgent need to undertake a proper assessment of cooperatives in terms of (i) technical skills, (ii) financial management, (iii) entrepreneurship development, (iv) access to finance, (iv) business partnership with the private sector. This assessment must examine opportunities and challenges faced at every stage of the targeted commodities. Thus, service providers together with PASP staff have to categorize cooperatives on the basis of their needs and develop a work program accordingly. It is only on the basis of a sound and profound capacity assessment that the different types of support to be delivered by PASP (capacity building and business development) can be ascertained. 29. Climate Risk Management. To tackle climate issues that will have an impact on the sustainability of PASP investments, ASAP financing supports the integration of climate risk management in the planning and implementation of the investment undertaken by HUBs owners through the promotion and demonstration of climate resilient practices, structures and innovations. These innovations range from promoting crop and forage varieties with maturities periods better suited to the changing growing season length to demonstrating the use of solar power suppliers and biogas systems as cost-effectiveness approaches for all the focused commodities value chains. 30. Preparation and dissemination of early warning messages. The agro-meteorologist has initiated a satisfactory and evolving collaboration with RMA. This includes the distribution of the current climate information bulletins to PASP post-harvest coordinators at district level as well as district and sector agronomists. However, the information provided does not yet address specific issues for each PASP area. The bulletins are relevant scientific information that needs to be popularized so as to reach and engage all end-users (i.e. smallholder farmers) through different media channels. In an effort to address the shortcomings of the current climate information bulletins the agro- meteorologist has drafted an initial MoU with RMA that explores areas of collaboration including improved meteorological monitoring, appropriate information services for different targeted groups, analysis of historical meteorological data and vulnerability maps. 6

13 31. The mission members and the agro-meteorologist met with senior RMA staff and UK Met Service technical adviser to the new FONERWA project on climate information services to review the current draft. Key decision that will be captured in the revised MoU includes: (i) an innovative approach proposed by RMA to provide financial support to enable the integration and maintenance of the weather stations developed the REMA Early Warning project rather than buying new equipment that is not under RMA budget for maintenance and monitoring and (ii) building partnership with the FONERWA project to undertake climate information needs assessment of PASP stakeholders so that specific climate information products are developed that meet the needs of the different endusers. 32. Identification of climate resilient post-harvest technologies. The environment and climate officer has made good progress on the identification of appropriate post-harvest crop drying and storage techniques for focused commodities as evidenced by summary tables that have been shared with mission members. The IFAD Regional Climate and Environmental Specialist (RCES) has the opportunity to interact with the PASP team as this activity has developed and helped focus the review of technologies that are appropriate to the needs of HUBs. This work is an ongoing process as the various technologies will need to be matched with the business plans and matching grant requests as they are developed by the project s beneficiaries. To achieve this the environment and climate officer needs to work closely with African Development Consultant (ADC), as they support the development of the business plans to ensure technologies identified actually meet the needs of the target groups. ADC has initiated the development of 9 business plans, but their inception report failed to capture the climate resilience focus of PASP. Additional addendum of the business plans needs to make specific reference to the grant opportunities available to the HUBs under PASP. The mission also recognized the need to undertake a climate risk analysis of each value chain.the key stages where climate constraints occur within each value chain have been identified and adequate and appropriate measures to overcome those specific climate challenges will be mainstreamed during the next AWPB following the recruitment of a specialized consultant. 33. Improved seeds and forage varieties. The mission visited RAB plant breeding station and demonstration plots in Nyagatare. For maize and beans, there is a number of emerging varieties that reach maturity between 100 and 150 days and are more tolerant to drought. Such flexibility in harvest dates has an advantage in the increasingly wet harvest periods that need to be incorporated into the crop management plan of HUBs as they implement their harvest and post-harvest activities-especially drying of the crop after harvest to enhance storage quality. Six forage varieties, that are early maturing and more tolerant to drought and floods, have been identified and shared with number of MCCs for further evaluation and multiplication. To ensure all the lessons are captured and maximum exposure to farmers, the mission recommends integrating the new forage varieties into the FFS that are planned to support MCCS. This will reduce the possibility of elite capture. 34. Climate resilient infrastructures. The mission has had an opportunity to review the Rwandan Bureau of Standards Warehouse for bagged storage of cereals and pulses requirements. This document partially meets the recommendations on risk reduction provided within the working paper on climate resilient infrastructure, but fail to integrate rainwater harvesting as potential water source for the HUB facilities. There is a need to elaborate on the bills of quantity required to build warehouse ranging from 50 to 500 tonnes capacity and provide simple checklist so that HUBs staff can assess the quality of work undertaken by contractors. 35. Exchange study tours. During this fiscal year, five PASP staff participated in two study tours, the first one took place in Uganda within WFP special operation on Improving Grain Post-harvest handling and storage and the second was organized in Kenya within CCAFS project on enhancing climate smart agriculture through climate information services. Technical staff acknowledged the experiences acquired by other donor-funded projects and have already integrated some of the lessons learned from WFP project in the revised AWPB (e.g. tarpaulins and hermetic bags distributions). A key lesson learned by PASP staff is the need to prepare, at the local level, the harvest and post-harvest planning in close collaboration with farmers on the basis of seasonal forecast. 7

14 Agreed action Responsibility Agreed date Address the lack of integration of climate resilience SPIU Continuous in all aspects of the project: it is recommended that environment and climate specialist with support of the agro-meteorologist consult and review key documents, BPs and contracts for service providers and partners to ensure due recognition is given to climate issues. Reconcile performance criteria of the project, i.e. SPIU & MINAGRI Ongoing RIMS, outcomes and impact, with the performance criteria existing under the Ministry of Agriculture Review the training curriculum of ADC and propose necessary amendments to ensure the climate resilience aspects of PASP are captured. Environment and climate officer Immediate Translate RBS requirements into clear building codes that will allow bills of quantity to be estimated and checklist provided to the HUBs to ensure contractors meet the minimum building standards agreed on the contract All business plans for new and existing Hub structures must integrate rainwater harvesting technologies. The capacities of the RWH structures will vary with the roof area of the structure and local rainfall and will be designed on a case by case basis SPIU Engineer SPIU Engineer Ongoing Ongoing Component 2: Post-harvest climate resilient agri-business investment support 36. PASP aims at facilitating the financing of 200 HUB-proposed business plan that fit into the challenging profile of the project. For farmers and primary producers, the outcome of PASP supported financial facilitation translates into access to investment finance to strengthen post-harvest infrastructure and contribute to a process of rural transformation towards value addition and decommoditization of the major agricultural staple crops. But also for the financial institutions, banks, microfinance institutions (MFIs) and Savings and Credit Cooperative Societies (SACCOs), PASP opens possibilities for financing of new market segments and client groups (cooperatives). 37. Climate smart financial services for post-harvest infrastructure support. The project signed an MoU with BDF that outlines the basic modus operandi of the grant and individual credit guarantee operations. Operating modalities will be further refined in line with the recommendations as outlined below. 38. In all 11 PASP supported districts, the process of facilitation of access to financial services for post-harvest infrastructure support has already started even before the commodity based technical service providers are in place, and in some cases also prior to arrival of the ADC Consultants with their specific mandate to support farmers and cooperatives in their loan applications for climate smart post-harvest infrastructure. While FY1 targets for business plan development and submission to commercial banks (50 BPs) may have been ambitious, 9 PASP supported BPs are currently in process of review by different financial institutions and two loans have been already approved. There is presently no limit in terms of banks, MFIs and SACCOs that can participate in the project, as long as they fulfil the standard eligibility criteria as laid out in the MoU between the SPIU and BDF. As a result, farmers and their cooperatives tend to submit their business proposals to those banks which are known to them. This is in spite of the fact that the concrete terms and conditions, notably the arrangements for security and guarantees for cooperatives, differ notably between the different financing institutions. While BPR which has one approved loan application under PASP, operates standard collateral policies with land titles required from individual co-operators where cooperative jointly owned property is not available, the other bank with an approved PASP loan application (Urwego Opportunities Bank) can lend to cooperatives without individual collateral titles required. Overall, for banks and MFIs, and much less for SACCOs, the financing of the different types of postharvest infrastructure supported under PASP has not played a role so far or was operated as a small 8

15 niche business. Clearly, and with the right type of support and incentives, the growing market for processing and value addition requires a requisite growth in the capacities of financial institutions as well. 39. To this end, SPIU may consider the identification of a core pool of financial institutions with a strategic orientation and clear commitment to develop this market segment and operate more closely with this smaller pool of financial institutions. These could then benefit from capacity development initiatives, joint exchange and learning from each other s experience. From FY 2 onwards, the access to finance desk in the SPIU should identify this core pool of financial institutions based on a review of concrete terms and conditions these financial institutions offer to their cooperative and individual clients and then go forward with this smaller but more focused pool of FIs. One internationally facilitated training to bankers in climate smart post-harvest infrastructure financing is proposed as well for FY The terms and conditions of the grant complements to support loans under PASP require further fine-tuning. The guiding principles for this refinement include the following: Post-harvest investments with a climate smart focus and the grant complement in PASP not as a general purpose transfer to borrowers, but as a specific subsidy to make climate smart types of investments that would not be feasible without the grant complement; More differentiation of the targeted client groups. The current three client brackets (small, medium and large) are not sufficient. A matrix to be developed to this end should consider new versus already existing enterprises, the size of the investment with smaller investments receiving larger grant complements up to 40% but an absolute ceiling for the grant supplement of no more than 50,000 for all but those investments with a clearly proven climate smart rationale. Here the ceiling could be raised to USD 80,000. It remains to be seen whether a tightening of the business plan templates and a corresponding briefing to financial institutions and service providers shall suffice to introduce the climate smart focus that PASP requires for post-harvest infrastructure support. Involving BDF as a technical assistance service provider in this process remains an option to ensure quick mainstreaming into the Rwandan financial sector as well as a single, standard and uniform approach to business plan review and certification for the financing of banks. Agreed action Responsibility Agreed date Business plan format to be reviewed to narrow SPIU, BDF and ADC 15 June 2015 down eligible investments in line with PASP focus(the BP format should integrate the element of CRM, youth and women) ist of relevant training courses covering climate change and value chain financing to be identified for imparting in FY 2 and FY 3 to Financial Institutions IFAD / SPIU 30 June 2015 SPIU to manage process of generating a finetuned matrix for grant supplements to PASP facilitated loans SPIU to request SP to compile comparative review of financial institution terms and conditions for post-harvest investment lending as a basis to narrow down the pool of FI partner institutions SPIU 15 June 201 SPIU 30 June ASAP grant guidelines. Guidelines for ASAP grant application have been developed and validated in a workshop in February The mission reviewed this document with key PASP staff and have asked to be revised, integrating the following comments: (i) to avoid potential confusion with the ASAP grant, all references to ASAP in the grant application form must be removed as the grant is an integral mechanism of PASP, a possible suggestion of a sound title is Climate Resilience Agri-Business (CRAB) grant; (ii) there must be cross-referencing between the grant and the business plan prepared by ADC which is not the case at present; (iii) eligibility criteria must include a business 9

16 plan that addresses a specific climate issues, the HUBs must be a PASP HUBs and recipients should reflect targeting criteria identified in the PDR ( i.e. 40% of women and 20% of youth). Based on interviews with PASP staff and service providers, there is a clear need to develop adequate checklist to ensure climate resilience is integrated across all sectors of PASP. Agreed action Responsibility Agreed date Keep track of the HUBs and beneficiaries number to M&E officer Immediate ensure project targets (inclusion of youth and women) are being met. Develop a climate resilient checklist appropriate to Environment and Climate officer Ongoing the needs of service providers Develop a climate resilient checklist appropriate to the needs of service providers Environment and Climate officer Ongoing Proposed PASP Matching Grant Evaluation Matrix Class 0 (no climate resilience) Class 1 (moderate climate resilience) Class 2 (notable climate resilience) SMA OANS (loan size <= 40,000 USD) Start-up 30% (up to 12,000 USD) 35% (up to 14,000 USD) 40% (up to 16,000 USD) Existing 25% (up to 10,000 30% (up to 12,000 USD) 35% (up to 14,000 USD) USD) MEDIUM SIZED OANS (loan size <= 100,000 USD) Start-up 25% (up to 25,000 USD) 30% (up to 30,000 USD) 40% (up to 40,000 USD) Existing 20% (up to 20,000 USD) 25% (up to 25,000 USD) 30% (up to 30,000 USD) ARGER OANS (loan size <= 200,000 USD) Start-up 25% (up to 50,000USD) 30% (up to 60,000 USD) 40% (up to 80,000 USD) Existing 20% (up to 40,000 USD) 25% (up to 50,000 USD) 30% (up to 60,000 USD) N.B: future implementation support missions will assess challenges faced by the project to implement the proposed matrix and propose any change that might be required for improvement. Component 3: Project coordination and management 42. A Single Project Implementation Unit (SPIU) was put in place by MINAGRI to manage all IFADfunded projects including PASP. All required staff are in place categorized as follows: (a) SPIU coordinator, (b) Director of finance and administration, (c) knowledge management specialist, (d) Administrative Assistant (e) PASP operations manager, (f) post-harvest handling and storage officers (11 staff one attached to each district where PASP operates), (g) agro meteorologist, (h) climate and environment specialist, (i) M&E officer, (j) procurement officer, (k) accountant, and (l) access to finance specialist. 21 staff in total are paid salaries from the PASP funds. However there is a need of Civil Engineer Specialist to follow up the works of post-harvest infrastructures. 43. Monitoring and Evaluation. The SPIU already embarked on relevant data collection exercises such as creating a data base for all cooperatives operating on the PASP value chains, to thus lay a foundation for support to the target beneficiaries. The data is comprehensive and stored in different excel sheets, as well as word document report. The mission discussed with the M&E officer the possibility of sorting the data in a simple, accessible, one-stop database, and various options are being explored to ensure coherence and accessibility. The database should be reworked and completed as part of the wider project M&E system by end July PASP has a good opportunity to 10

17 obtain all relevant data by working closely with the district focal staff as well as with the service providers. For this to happen effectively, the SPIU will have to continue to provide relevant data collection tools, as well reporting templates. Such templates should guide in capturing of uniform data, as well as allow for the field-based staff to share their observations, experiences, and lessons learned, which in turn will inform future activities. 44. RIMS. The data collection exercise has taken into consideration the RIMS indicators as presented in the project log frame to enable the SPIU follow up on progress during implementation. The data on cooperatives and beneficiary households will be updated regularly as per the RIMS reporting requirements. There is need to explore options for the SPIU M&E officers to undertake customised RIMS training to beef up their capacity to report accurately and coherently on the RIMS and other indicators. 45. Reporting. The mission reviewed some of the progress reports and activity reports shared by the service providers such as RAB and RCA, and provided feedback on some aspects for improvement. The SPIU is commended for providing relevant reporting templates to the service providers, which is a good way to obtain reports covering all the key aspects that are of interest to the PASP project implementation. One common comment from the reports reviewed was that the trainers did not yet have training materials ready. To this effect, the SPIU should work more closely with the service providers to fast-track the production of training manuals on the various value chains and for the cooperatives. Furthermore, the SPIU and the service providers should together review the contents of the MoUs before renewal to ensure that they cater for the needs of the beneficiaries as per the comments arising on services and trainings offered, and taking into consideration lessons learned. In addition to the planned training manuals, the SPIU and service providers could consider including the developing of other training materials (in addition to the manuals), such as illustrative charts, info-graphics, and other relevant materials to foster learning, in the MoUs. 46. inkage between M&E and Knowledge Management and Communications. The SPIU has an already existing KM& strategy that is under implementation in other projects. The critical aspect for PASP at this point is the need to concretise the linkage with M&E as the source of facts, figures and lessons learned. For instance, the M&E and KM officer should work closely together to use baseline data to select cooperatives and households to serve as sample cases, which can be profiled and followed up throughout the project. PASP can then document clear, coherent, and data-backed case studies during the project life, and after to verify impact. 47. Documentation and communication. Communication serves a support role in project implementation. At the moment therefore, SPIU will need to continue to focus on developing communication materials that are relevant towards increasing beneficiaries understanding of the various services the project has to offer. For instance, write ups, info-graphics and radio spot messages on the criteria for accessing the financial services, the agronomical information for improved marketing, should be the focus of all Information, Education and Communication (IEC) materials at this point. 48. There is an opportunity to utilise the soon to be launched baseline studies to obtain some pointers on the appropriate communication channels for the cooperatives and individual households in the different regions, as well the key messages that they are interested in, and tailoring communications that address these. 49. IEC materials: MINAGRI and SPIU already have different communication channels and materials which are both outward looking and farmer focused. For PASP however, the focus at this moment is on sharing relevant information, and proactively engaging the target audiences so that they can fully benefit from the available services. As such, the approach should be on providing Frequently Asked Questions and Answers (FAQAs) on the project and Fact sheets with critical value chain, market access, and climate and environment conservation messages. The information can be illustrated in pictorial formats for ease of understanding by the farmers, as well as put into radio sound bites and messages. The KM and communications officer should work closely with the value chain specialists. 11

18 50. Internet-based communication channels. The SPIU has a webpage that is tagged to the MINAGRI website. This is a very good step towards sharing stories and results externally. However, because the page name is tagged to only one SPIU project PRICE, its searcheability is limited. When one googles SPIU or SPIU IFAD, it does not bring the expected SPIU web page up. This means that the page is known and viewed mostly by MINAGRI and SPIU and a few other people who know about PRICE and this is not an optimal use of the page. The Facebook page and twitter handles equally have to be named to reflect SPIU-IFAD Rw with a key word that links all these aspects. The M&E and KM officers in SPIU should also be able to post updates, photos, and relevant information using the official twitter handle and through the Facebook page. This will drive more traffic to the webpage, and thus meet the objective of sharing information widely. D. Fiduciary aspects 51. Financial management. The mission focused mainly on reviewing the structures that are available to ensure proper funds management. Since PASP is implemented under the same SPIU as other IFAD funded projects, the financial administrative procedures and internal control arrangements are the same, and have been seen to be highly satisfactory in previous missions, and still are. Emphasis was hence given to review of the general accounting system developed for PASP. The coding structure of the Chart of Accounts (CoA) for all government projects is pre-determined by the Ministry of Finance and Economic Planning. The SPIU has customized the natural accounts in the Ministry of Finance and Economic Planning CoA to ensure that it meets its own reporting requirements, and they (accounts) are fully categorized in different elements of revenues, expenses, assets and liabilities. The mission is satisfied that the CoA developed for PASP conforms to accounting principles and is bound present a fair picture of the financial situation of the project (in producing a statement of financial position and a statement of revenues and expenditure). 52. For purposes of trucking expense and revenue accounts by component and category/subcomponent, Tompro system allows for the development of an analytical chart whose journals and accounts post to a separate ledger (the analytical ledger). The set up (of the analytical chart) follows the layout of activities in component and category/subcomponent form, as provided for in the project cost tables. Account class levels too will be determined by the number of components and category/subcomponent. Though this has been done, the mission noted that there is need for improvement. For example, component one has got two high level groups (Investment cost and recurrent cost), each broken down into four categories/subcomponents. This is not laid out properly as the group for recurrent cost and the related category/subcomponent has been left out. Similarly, within the group for investment cost, the category/subcomponent for PASP-ASAP Implementation Partner Capacity Building has been left out. This will impair efficient and effective analytical financial reporting and monitoring. The essence of having the setup of a dual CoAs in an FMS is to efficiently facilitate Financial Monitoring and reporting. It is thus important that the analytical CoA is further developed to encompass all dimensions of project activities as stipulated in the cost tables. 53. Budgeting is a strong control tool as it provides standards for evaluating project performance. Since an informed team is an empowered team, it is imperative then that the project management is informed of the project budget status, in a more detailed manner other than a summary report on performance by component, on a day to day basis in order to facilitate effective budget execution monitoring by program heads. To ensure that this is done, the project needs to capture the AWPB into the Financial Management System. Reports on budget execution will then be generated automatically at any one time as may be required by management. 54. Disbursement. IFAD grant No. 445 and IFAD loan No.427 have both been disbursed at 18.26%. ASAP grant No. 428 is at 14.96%. Apart from a direct payment withdraw application for grants paid to BDF; the other disbursements are the initial allocation. This being the first year of implementation, and given that the project has been laying ground for take-off (considering the commitments so far entered into), we are hopeful that the disbursement percentage will improve. 12

19 55. SOE review. Since there has been no replenishment Withdraw Application prepared to date, the mission reviewed sampled expenditure items in PASP general ledger for the period up to May 2015, and was satisfied that all payment vouchers are fully supported. 56. AWPB 2014/2015. Total revised AWPB was FRW 2.77 billion out of which FRW 1.15 billion or 41.5% was spent as of 30th April Most of the activities in the AWPB were to be implemented by the service providers for different commodities. Apart from the cassava value chain, contracting processes have been completed for all other value chain actors and these are valued at FRW million. Total budget execution inclusive of commitments is thus estimated at 74.56%. 57. The format in which the AWPB/ is structured and the financing rules applied do not follow the formats laid out in the cost tables. Sighted examples are: the financing rule applied on Purchase of motorcycles for District Post-Harvest, Handling & Storage Officers is 82% IFAD oan/grant and 18% GoR, while the cost tables state 79% ASAP grant and 21% IFAD oan /Grant exclusive of taxes, and the third category/subcomponent in the AWPB is referred to as Technology transfer and incentives for operationalization, while in the cost tables it is Strengthening Agricultural Support Services (ASS) to HUBs. The AWPB is supposed to inform the analytical chart in the FMS (which has been configured in accordance with activities laid out in the cost tables). Deviations thereof will affect financial data capture and will result in production of reports that could be miss-informative. 58. Counterpart funds. Contribution by GoR to the current AWPB was USD 102,739, and if measured against expected total GoR contribution at appraisal, it represents 3.02%. Overall, GoR contribution is rated satisfactory given the activities that were to be financed in the AWPB. 59. Procurement at PASP has been performed by SPIU Procurement Unit at a highly satisfactory level, fulfilling the requirements of the project in an efficient, fair and transparent manner, as in the same way conducted for other IFAD-supported projects under SPIU implementation. 60. The Procurement Plan (PP) is not only structured properly in accordance with the guidelines, but also updated on almost daily basis, recording any procurement action taken for any of the procurement items into the PP without delay. This is a best approach to ensure that no procurement item is left unattended, and therefore all the procurement requirements will be fulfilled in a timely manner. 61. Contract management: It is noted that the contract monitoring table is updated by the financial staff, and not by the Contract Manager in charge of each contract. Since contract management requires more than payment monitoring, the mission recommends that the contract management function be transferred to the Contract Managers. They have contributed to the preparation of the technical specifications or terms of reference to the respective contract or have the expertise required to monitor the contracts. Contract Managers should be assigned to respective contracts and be clearly specified in the contract documents. They will fill in the contract management table which the mission prepared for KWAMP, and keep updating per each one of new and existing contracts. 62. Contract registry: The mission commends that contract registry has been kept in a satisfactory manner. However, in order for the Procurement Unit to administer each contract from contract administration viewpoint, the mission recommends to: (i) Create Contract Administration Table, showing all the payment status and contractual situation and (ii) Revise the Contract Registry Table to include such aspects therein. 63. Procurement files: The mission examined, on sample basis, more than 15 files that were identified from the Contract Registry. The mission was pleased to observe that each file is prepared in a systematic manner with a complete order, containing all the documents required for post review (or auditing) at a later stage. However, some areas for improvement in the contractual documents were identified. A few contractual provisions are observed to be missing (such as Effective date of Contract), or incorrectly formulated (such as Expiry date) in several contracts. Even though there might have no disputes with contractors as a result of lack (or incorrectness) of such provisions, the project could be at risk once any dispute emerges with a contractor. The mission therefore recommends to pay more attention to the contract formulation at the time of contract finalization. 13

20 64. To further improve the PP, the mission recommends to create a new column for the deadline for submission of the technical specifications (or TOR) by the user department and that the PP be shared with them on a common drive. With this initiative, the user department will be able to see when they need to submit specifications/tor so that their technical needs may be fulfilled in time. By sharing the PP, they will also be alerted (and procurement staff as well) when procurement is not being initiated due to the lack of technical specifications and TOR. 65. Compliance with loan covenants and audit. The project is generally being implemented in compliance with the loan covenants, and 2014/2015 being the first financial year of project implementation, the annual audit is not yet due. Agreed action Responsibility Agreed date Fiduciary Capture AWPB into FMS SPIU December 2015 Procurement Assign contract management function to Contract Managers, based on the template for managing contracts SPIU By end of Sep 2015 Revise Contract Registry for Contract Administration SPIU By end of June To create a new column in PP for the deadline for submission of the technical specifications E. Sustainability 66. PASP capitalizes on the significant production gains achieved in recent years in the agriculture and livestock sectors. Cooperatives play a crucial role in the agricultural and economic development in Rwanda but yet the existing structures are facing sustainability challenges and shortcomings related to unsustainable levels of debt, mismanagement and poor governance, lack of technical skills, inability to pay and attract qualified staff, etc. As some of them have been identified as potential HUBs, their sustainability aspects must be considered from the first year of project implementation and fully embedded in all stages of project planning. 67. PASP capitalizes on the significant production gains achieved in recent years in the agriculture and livestock sectors. Cooperatives play a crucial role in the agricultural and economic development in Rwanda but yet the existing structures are facing sustainability challenges and shortcomings related to unsustainable levels of debt, mismanagement and poor governance, lack of technical skills, inability to pay and attract qualified staff, etc. As some of them have been identified as potential HUBs, their sustainability aspects must be considered from the first year of project implementation and fully embedded in all stages of project planning. 68. Post-harvest activities have a dual role of reducing post-harvest losses and linking producers to markets. A failure to implement post-harvest activities properly will result in commodities failing to reach markets or markets failing to access the commodities. To address this, the SPIU and service providers must sensitize beneficiaries on how markets function and provide relevant market information to HUBs actors on a regular basis. It is recommended that PASP beneficiaries are trained on market linkage aspects. In parallel, the provision of market information should be done through a Market Information System (MIS). 69. Cooperatives members need to appreciate the fact that a warehouse is an investment that increases community incomes. To address this, business plans for warehouses should incorporate a commercial aspect by embedding a Warehouse Management Structure which is separate from the Cooperative s one. The success of PASP will also rely on the high level of appropriation and good usage of post-harvest technologies so as to ensure the reduction of post-harvest losses and increase value addition within the value chain for the focused commodities. To this effect, the service providers must deliver technical supports that respond to cooperatives/hubs needs and strengthen effectively their capacity. SPIU 2015 By end of June

21 70. All the actors of the value chain from harvesting to markets are complementary and must be coordinated to enhance business partnership. The project must facilitate a synergic approach between the different service providers and value chain actors. Moreover, the private sector must be engaged at the early stage of the project in order to capitalize on its experiences and thus inoculate commercial mindset to cooperatives, SMEs and potential HUBs. 71. As PASP is a soft support project, its success will depend on how the SPIU is applying a rural finance strategy that enhances institutional learning of the financial institutions, and creates concrete case examples of promising lending propositions to be taken up by the financial sector. 72. In addition, the climate resilience scope of the project must be mainstreamed in all project components as well as understood and assimilated by all project stakeholders, especially the service providers and the financial institutions. Therefore, the SPIU must give a strong focus on climate smart investments and promote technologies that have many positive impacts on beneficiaries ability to cope with climate change. Therefore, the mission recommends to the SPIU to systematically adopt a climate-proof approach (i.e. with relevant checklist) for all project activities and produced documents. F. Conclusion 73. MINAGRI and IFAD endorse the findings of this implementation support mission. The next follow-up mission will be carried out in December

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23 Appendix 1: Summary of project status and ratings Appendix 1: Summary of project status and ratings Basic Facts Country Rwanda Project ID 1497 Project Climate Resilient Post-harvest and Agribusiness Support Project (PASP) oan/dsf Grant No. ASAP grant Date of Update 19 June 2015 Financing terms Supervising Inst. No. of Supervisions ast Supervision June 2015 IFAD No. of Implementation Support/Followup missions ast Implementation Support/Followup mission 1 oan 427-RW Grant 445-RW 428-RW USD million Disb. rate % Approval December 2013 Total costs 83, Agreement 03 February 2014 Effectiveness lag IFAD Total 33, Effectiveness 28 Mar-2014 PAR value IFAD loan 13, MTR DSF grant 13, Current completion 31 Mar-2019 ast Amendment IFAD grant 6, Current closing 33 Sept-2019 ast Audit n//a Domestic Total 49, No. of extensions 0 Beneficiaries 11, Project Performance Ratings B.1 Fiduciary Aspects ast Current Government (ocal) Government (National) 3, Private Sector (ocal) 34, B.2 Project implementation progress ast Current 1. Quality of financial management 6 1. Quality of project management 5 2. Acceptable disbursement rate 3 2. Performance of M&E 4 3. Counterpart funds 5 3. Coherence between AWPB & implementation 4. Compliance with loan covenants 6 4. Gender focus 3 5. Compliance with procurement 5 5. Poverty focus 4 6. Quality and timeliness of audits 4 6. Effectiveness of targeting approach 7. Innovation and learning 4 8. Climate and environment focus

24 Appendix 1: Summary of project status and ratings B.3 Outputs and outcomes ast Current B.4 Sustainability ast Current 1. Capacity dvpt programme and business coaching 2. Post-harvest climate resilient agribusiness investment support 4 1. Institution building (organizations, etc.) 4 2. Empowerment 4 3. Quality of beneficiary participation 4. Responsiveness of service providers 5. Exit strategy (readiness and quality) 6. Potential for scaling up and replication N/A 4 B.5 Justification of ratings B.1.1 The financial management fully meets requirements and can be regarded as best practice. B.1.2 IFAD grant No. 445 and IFAD loan No.427 have both been disbursed at 18.26%. ASAP grant No. 428 is at 14.96%. B.1.3 Counterparty funds are at 90% of the current AWPB. B.1.4 The project complies with financing covenants. B.1.5 The Procurement Unit fulfils the requirements in an efficient and transparent manner. B.2.1 The SPIU model provides goods results in terms of project management. B.2.2 The M&E system is acceptable but PASP delayed to carry out a baseline survey. B.2.3 The AWPB 2014/2015 was FRW 2.77 billion out of which 41.5% was spent as of 30th April B.2.4 Gender focus needs improvements. B.2.5 The project is working towards reaching poor rural women and men. B.2.6 Overall targeting mechanisms are in place. B.2.7. The learning system is operational through learning routes. B.2.8 The implementation of ASAP provides space for climate resilient and environmental focus. B.3.1 HUB capacity development and business coaching delayed to start due to the long process to recruit SP. B.3. The process of facilitation to access financial services through business planning has started. B.4.1 The institutions supported by the project require intensive support. B.4.2 The target groups will be supported to strengthen their organizations when the activities of SP are fully operational. B.4.3. Beneficiaries showed great interest during the awareness campaign. B.4.4 Most of the SP signed their contracts during the supervision mission. They are professional and ready to support the target commodities. B.4.6 The project has potential for replication. However, this will be based on the implementation of the HUBs model which is still new in country (except for the Dairy VC). Overall Assessment and Risk Profile ast Current C.1 Physical/financial assets Not yet applicable C.2 Food security Not yet applicable C.3 Overall <b>implementation progress</b> (Sections B1 and B2) 4 Rationale for implementation progress rating: The main achievements during this first year include: (i) recruitment of key project staff and technical SP (ii) sensitization campaign on project objectives, goals and planned activities; and (iii) identification of 325 CIP-formed cooperatives that could form potential HUBs. Some of the SP (RAB, RCA) have already started the training programme for cooperatives. In addition, 29 business plans have been elaborated by farmers and cooperatives with the assistance of the SP. To date, 9 BP have been submitted to FI and 2 of them have been financed. Considering that the project is in its first year since effectiveness, key activities have focused on laying the ground for implementation. C.4 ikelihood of achieving the development objectives (section B3 and B4) 4 Rationale for development objectives rating: Execution of the first year s AWPB has been slow, about 41.5% as of 30th April As most activities in the AWPB were to be implemented with the support by service providers for different value chains, disbursements have been delayed by the long recruitment process. Apart from the cassava value chain, recruitment has been recently completed for all other value chains. The total budget execution inclusive of commitments is thus estimated at 74.56%. Even though this level of project implementation is below the proposed targets, achievement of development objectives is still highly probable. Risks: Short description of major risks for each section and their impact on -achievement of development 18

25 Appendix 1: Summary of project status and ratings C.5 objectives and sustainability. Fiduciary aspects (low disbursement) IFAD grant No. 445 and IFAD loan No.427 have both been disbursed at 18.26%. ASAP grant No. 428 is at 14.96%. Apart from a direct payment WA for grants paid to BDF, the other disbursements covered the initial allocation. Follow-up Project implementation progress Outputs and outcomes Sustainability Although some cooperatives are receiving support through PASP, none has been identified or formalized as a HUB or part of a growing HUB. The HUB approach is new for the CIP-commodities. The service providers and the SPIU should agree on a road map for their sustainable development. All the actors of the VC from harvesting to markets are not yet fully complementary and coordinated to enhance business partnership. Moreover, the private sector must be engaged at the early stage of the project in order to capitalize on its experiences and thus inoculate commercial mindset to potential HUBs. The sustainability of PASP will depend on how the SPIU is applying a market based approach in the two PASP innovation areas of financing for climate resilience and of financing specifically post-harvest infrastructure. In addition, the climate resilience scope of the project must be mainstreamed in all project components as well as understood and assimilated by all project stakeholders, especially the service providers and the financial institutions. Issue / Problem Recommended Action Timing Status imited experience in HUBs approach Business partnership The SPIU and SP will develop a road map for the development of HUBs based on the dairy experience under EADD phase I. If the concept is found to be too ambitious and not implementable in practical terms for value chains other than dairy, this should be diagnosed and then communicated to IFAD. Each SP in association with the Post-harvest officers will develop maps of their respective value chains identifying business actors and relationships with PASP target groups. Based on these maps, the project will design the strategic approach and identify the key investments for supporting effectively the particular VC. FY 2015/2016 Ongoing Business plan format Review the business plan format in order to narrow down eligible investments in line with PASP focus (the BP format should integrate the element of climate risk management, youth and women). Mainstreaming of climate resilience in project activities Address the lack of integration of climate resilience in all aspects of the project. Environment and climate specialist and the agro-meteorologist will review key documents, BPs and contracts for SP to ensure due recognition is given to climate issues. FY 2015/2016 Immediate Ongoing Ongoing Ongoing 19

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27 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Verifiable Indicators (*gender / vulnerable group disaggregated; R: RIMS-level 1 (output) or 2 (outcome) indicators Actual performance as at 6 th June 2015 Means of Verification Assumptions (A) and risks (R) OVERA GOA To alleviate poverty, increase rural income and contribute to the overall economic development of Rwanda R3: Increased ownership of household assets (household asset index)* (Targets defined in Baseline survey). R3: Prevalence of child malnutrition* amongst the 15,000 HHs reduced by 5 % points by end of project. Data not yet available ( waiting the figures from Baseline survey) Data not yet available (waiting the figures from Baseline survey) National statistics (EICV) Baseline and completion surveys PROJECT DEVEOPMENT OBJECTIVE Increased smallholder and rural worker incomes (including women, youth and vulnerable groups) from CIP crop and dairy PHHS-related businesses 155,000 direct beneficiaries of which 40% are women and 20 % youth. Average income (in constant 2012 prices) increased by 15 % for 50 % of the project s direct beneficiaries by end of project 3562 direct beneficiaries benefited project services of which 30% are women. Baseline and completion surveys Data not yet available Annual participatory studies Government agriculture and SME policies remain in place over the project life (A) Favourable economic environment /export prices (A) At least 5 % points of increased farm income derived from value chains supported by the project by MTR and 10 % points by end of project. Data not yet available Case studies on HUBs to assess changes Continued GoR commitment to promoting PASP value chains (R) At least 155,000 poor smallholder household members with increased climate resilience and increased food security direct beneficiaries benefited project services in term of advisory services and capacity building on different topics. 21

28 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Verifiable Indicators (*gender / vulnerable group disaggregated; R: RIMS-level 1 (output) or 2 (outcome) indicators Actual performance as at 6 th June 2015 Means of Verification Assumptions (A) and risks (R) At least 25,000 small-farm households that are engaged with participating HUBs gain access to new and relevant climate smart harvest and post-harvest technologies farmers benefited from project support for the construction of 49 maize drying temporary shelters and 3045 tarpaulins. 20% reduction in level of CIP crops post-harvest losses and milk spoilage over available baseline. Data not yet available ( waiting baseline survey on estimation of losses that is being to be carried out by FAO in collaboration with University of Rwanda) US$ value of new and existing postharvest facilities and infrastructure harvest facilities and infrastructure 242,521 US$ value of new post- made climate resilient. made climate resilient (49 maize drying shelters,3045 tarpaulins and support for 6 forage varieties that mature earlier and more tolerant to floods and droughts). Component 1: HUB capacity development programme Outcome: Participating HUBs have the skills and knowledge, as well as access to specialized service providers, to deliver larger volumes of improved produce to the market chain and provide climate resilient and low carbon value adding and market linkage services to an expanding number of clients 2 80% of participating HUBs in each selected value chain identify and address their business management and financial skill gaps and produce bankable business plans. R1: No. of people trained in postproduction, processing and 29 business plans elaborated by farmers/cooperatives under support of PASP field staff in which 9 business plans have been submitted to financial institutions and 2 of them related to the construction of maize warehouses and support to a dairy HUB have been financed 1283 farmers have been trained on post-harvest quality improvement and assurance by RAB. Baseline and completion surveys and case studies Client satisfaction surveys Cooperatives remain the focus for GoR support to development of SMEs and agricultural value addition (A) Continued good collaboration between RCA and the Apex 2 Under PASP, a climate resilient household is defined as a household that has access to timely and relevant climate information, additional technologies for crop and dairy production, and improved post-harvest storage for crop and dairy products. 22

29 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Verifiable Indicators (*gender / vulnerable group disaggregated; R: RIMS-level 1 (output) or 2 (outcome) indicators Actual performance as at 6 th June 2015 Means of Verification Assumptions (A) and risks (R) marketing. cooperative federations (A) 80% of participating HUBs identify and develop value adding services leading to improved access for supplying farmers to markets and stronger competitive positions. 80 % of participating HUBs acquire required capacities to implement climate risk management strategies and approaches to benefit their clients and members. Data not yet available (each service provider in line with PASP selected commodity will support the farmers to identify and develop value adding services in Hub established). Data not yet available (recruitment of service provider in mainstreaming climate risk management is process) PASP monitoring system Case studies on HUBs monitoring planned and actual outcomes of business plans PASP implementation partners (PHHTF, RAB) deliver required business services within their mandate to support PASP implementation and incorporate assessment and mitigation strategies of short and long term climate risks in their services (A) 100 % of HUB business plans incorporate climate change adaptation and food security measures including capacity building on climate resilient processing, handling and storage techniques. Fine-turning of 29 business plans to incorporate climate risks management actions are in process. Post training capacity assessment and targeted impact studies of HUB capability changes R2: 80 % of participating HUBs implement new marketing contracts with buyers (traders, WFP, linkages Existing marketing contracts with buyers are identified and opportunity for new markets shall be assessed by each service provider in line with selected commodity and facilitate District databases on activities and outcome 23

30 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Verifiable Indicators (*gender / vulnerable group disaggregated; R: RIMS-level 1 (output) or 2 (outcome) indicators Actual performance as at 6 th June 2015 Means of Verification Assumptions (A) and risks (R) with agro-processers, etc.) linkage with producers and buyers. Component 2: Post-harvest climate resilient agri-business investment support Outcome: HUB business investments in improved climate resilient and low carbon post-harvesting procedures, drying, processing and value addition, storage, logistics and distribution generate reductions in product losses and increase smallholder and rural labourer incomes 80 % of participating HUBs implement business plans that increase HUB profits. 20% of participating HUBs make significant (> Frw 90 million) new capital investment. 29 business plans elaborated by farmers/cooperatives under support of PASP field staff in which 9 business plans have been submitted to financial institutions and 2 of them related to the construction of maize warehouses and support to a dairy HUB have been financed. Data not yet available Client satisfaction surveys AFR reviews and studies imited capacity of HUBs to originate and develop sound and bankable business proposals (R) Business management capacity of new HUBs does not develop fast enough to cope with their expansion and manage their activities to support the value chain development (R) R1: 80% of participating HUBs are able to access development funds under commercial conditions at the end of the project. Data not yet available Project baseline and completion surveys and case studies Price volatility and transport cost disadvantages compared to competing regional production (R) 80% of participating farmers (disaggregated by sex) adopt 963 members of KABOKU cooperatives adopt best practices on maize drying (49 maize drying 24 oan assessments from BDF Adoption of postharvest and value addition

31 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Verifiable Indicators (*gender / vulnerable group disaggregated; R: RIMS-level 1 (output) or 2 (outcome) indicators Actual performance as at 6 th June 2015 Means of Verification Assumptions (A) and risks (R) best practices for post-harvest, crop drying/milk cooling and storage. temporary shelters are used in 2015 A). mechanisation is slower than planned (R) 80% of participating HUBs introduce relevant waterharvesting and management technology and/or show significantly reduced water usage. Data not yet available Monthly and annual BDF reports to SPIU Inadequate loan collateral provided by HUBs requiring loan guarantees are a major constraint to lending to HUBs (A) Domestic and regional export markets can absorb extra production 25

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33 Appendix 3: Summary of key actions to be taken within agreed timeframes Appendix 3: Summary of key actions to be taken within agreed timeframes Action Agreed Whom Date Train technical service providers and district officers on business SPIU, district officers, Immediate plan identification/formulation/implementation ADC Mapping of each value chain to develop PASP strategic approach Service providers, 31 July 2015 and identify key investments for individual value chains district officers Develop training module to train farmers on warehouse use Service provider for 31 July 2015 maize and beans & SPIU Identify, test and promote grain drying technologies targeting small SPIU/WAKAA/RAB 30 June 2015 groups of farmers Expedite action on procurement of hermetic bags SPIU 30 June 2015 Initiate procurement and testing of other storage technologies - SPIU, RAB 31 July 2015 household silos and drums, group storage solutions Address the lack of integration of climate resilience in all aspects of the project: it is recommended that environment and climate specialist with support of the agro-meteorologist consult and review key documents, BPs and contracts for service providers and partners to ensure due recognition is given to climate issues. SPIU Continuous Reconcile performance criteria of the project, i.e. RIMS, outcomes and impact, with the performance criteria existing under the Ministry of Agriculture Review the training curriculum of ADC and propose necessary amendments to ensure the climate resilience aspects of PASP are captured. Translate RBS requirements into clear building codes that will allow bills of quantity to be estimated and checklist provided to the HUBs to ensure contractors meet the minimum building standards agreed on the contract All business plans for new and existing Hub structures must integrate rainwater harvesting technologies. The capacities of the RWH structures will vary with the roof area of the structure and local rainfall and will be designed on a case by case basis SPIU & MINAGRI Environment and climate officer SPIU Engineer SPIU Engineer Ongoing Immediate Ongoing Ongoing Business plan format to be reviewed to narrow down eligible SPIU, BDF and ADC June 2015 investments in line with PASP focus(the BP format should integrate the element of CRM, youth and women) ist of relevant training courses covering climate change and value IFAD / SPIU June 2015 chain financing to be identified for imparting in FY 2 and FY 3 to Financial Institutions SPIU to manage process of generating a fine-tuned matrix for grant SPIU June 2015 supplements to PASP facilitated loans SPIU to request SP to compile comparative review of financial SPIU June 2015 institution terms and conditions for post-harvest investment lending as a basis to narrow down the pool of FI partner institutions Keep track of the HUBs and beneficiaries number to ensure project M&E officer Immediate targets (inclusion of youth and women) are being met. Develop a climate resilient checklist appropriate to the needs of Environment and Ongoing service providers Climate officer Encompass all dimensions of project activities as stipulated in the SPIU December 2015 cost tables Capture AWPB into FMS SPIU December 2015 Assign contract management function to Contract Managers, based SPIU Sept 2015 on the template for managing contracts Revise Contract Registry for Contract Administration SPIU June 2015 To create a new column in PP for the deadline for submission of the technical specifications SPIU June

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35 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator Unit AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Cumulative Actual % Total Outreach Households receiving project services Number 6,480 3, ,400 3, Groups receiving project services Number People receiving project services Number 32,400 14, ,518 14,248 9 Male 22,680 9, ,863 9,261 9 Female 9,720 4, ,655 4, Number of smallholder households supported in coping with the effects of climate change.(c) Number Number of smallholder household members supported in coping with the effects of climate change.(c) Number 6,000 4, ,736 Component 1: HUB capacity development programme and business coaching, I. Natural resources (land and water) People trained in infrastructure management Number 200 Male 140 Female 60 Groups managing infrastructure formed and or /strengthened Number 110 People in groups managing infrastructure Number 440 Male 140 Female 80 Groups managing infrastructure with Number

36 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator women in leadership positions Rainwater harvesting systems constructed or rehabilitated Households covered by new or improved climate information services (C) Other productive infrastructure constructed/ rehabilitated Number of people (individuals) adopting technologies that reduce or sequester greenhouse gas emissions (C) II. Agricultural technologies and production Staff of service providers trained People trained in crop production practices and technologies People trained in livestock production practices and technologies Unit AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Number Number Number Number Male Female Number Male Female Number Male Female Number Male Cumulative Actual % 30

37 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator People accessing facilitated advisory services Households receiving facilitated animals health services Crop/livestock production groups formed/ strengthened People in crop/livestock production groups formed/ strengthened Crop/ livestock production groups with women in leadership positions Number of households in vulnerable areas with increased water availability for agricultural production and processing (C) Number of production/processing facilities in vulnerable areas with increased water availability (C) III. Markets Unit AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Female Number Male Female Number Cumulative Actual % Number Number Male Female Number People trained in post-production, Number

38 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator processing and marketing Unit AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Cumulative Actual % Male Female Market facilities constructed and/or rehabilitated Marketing groups formed and/or strengthened People in marketing groups Number Number Number Male Female Marketing groups with women in leadership positions Processing facilities constructed and/or rehabilitated Storage facilities constructed and/or rehabilitated Value of infrastructure protected from extreme weather events (C) Number Number Number % 1 US$ `000 IV. Enterprise development and employment People trained in income generating activities Number Male 32

39 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator Unit Female AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Cumulative Actual % People receiving vocational training Number Male Female People trained in business and entrepreneurship Number Male Female Enterprises accessing facilitated nonfinancial services Enterprises accessing facilitated financial services Number Number V. Policy and community programming Government officials/trained Number Male Female People trained in community management topics Number Male Female Community workers and volunteers trained Number 33

40 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator Unit Male AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Cumulative Actual % Female Community groups formed/strengthened People in community groups formed/strengthened Number Male Female Community groups with women in leadership positions People accessing development funds Number Male Female Apex organisations formed/strengthened Number 5 Number of individuals (*) involved in climate risk management, natural resources management (NRM) or disaster risk reduction (DRR) activities (C) Number Male Female Number of groups involved in climate risk management, natural resources management (NRM) or disaster risk reduction (DRR) activities (C) Number 34

41 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator Number of national and international policy processes on climate issues to which the project-is contributing (C) Unit Number 6 AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Cumulative Actual % Component 2 :Post-harvest climate resilient agri-business investment support VI.Rural financial services Saving and credit groups formed and or strengthened Number of people in saving and credit groups formed/strengthened Number 138 Number Male Female Saving and credit groups with women in leadership position Financial institutions participating in the project Staff of financial institutions trained Number Number Number Male Female Voluntary savers Number NA NA Male NA NA Female NA NA Value of Voluntary saving USD 000 Active borrowers ( Individuals) Number NA NA 35

42 Appendix 4: Physical progress measured against AWP&B, including RIMS indicators Component/Sub Component Or Output Indicator Active borrowers (enterprises) Unit AWPB FY 2014/15 Actual at 6 th June 2015 % Appraisal targets Male NA NA Female NA NA Number Cumulative Actual % Value of gross loan portfolio (individual) USD 000 NA NA Value of gross loan portfolio (enterprises) People trained in financial services USD 000 Number Male Female Construction of maize drying shelters Number Purchase and distribution of tarpaulins (plastic sheets) to cooperatives. Number 10,000 3, ,045 Purchase and distribute motorcycles Number

43 Appendix 5: Financial: Actual financial performance by financier; by component and disbursements by category Appendix 5: Financial: Actual financial performance by financier; by component and disbursements by category Table 5A: Financial performance by financier Financier Appraisal (USD 000) Disbursements (USD 000) Per cent disbursed IFAD loan/grant 26, , % ASAP Grant 6, , % Government 3, % Beneficiary contribution 11, % Private sector contribution 34, % Total 83, , % Table 5B: Financial performance by financier by component (USD 000) IFAD oan/grant ASAP Grant Beneficiaries HUB Comm oans Gov't of Rwanda Total Component Amount Actual % Amount Actual % Amount Actual % Amount Actual % Amount Actual % Amount Actual % HUB Capacity Development Programme 3, , , , Post-Harvest resilience agribusiness investment 20,677 1, , , , , ,231 1,226 2 Project Management 2, , AUTHORISED AOCATION - 3,700-1, ,799 Total 26,937 5, ,924 1, , , , ,350 6,

44 Appendix 5: Financial: Actual financial performance by financier; by component and disbursements by category Table 5C: IFAD loan disbursements (SDR) oan 427/Grant 445 Category Allocation Disbursement Pending WA 02 Per cent Balance rants and subsidies 9,740, ,740, Goods, services and inputs 4,120, , , ,276, Operating costs 920,000-57, , Salaries and allowances 1,000,000-29, , Authorised allocation - 2,512, ,512, Unallocated 1,760,000-1,760, TOTA: 17,540,000 3,202, , ,096, ASAP Grant Category Allocation Disbursement Pending WA 02 Per cent Balance Grants and subsidies 2,450, ,450, Goods, services and inputs 1,490,000-69, ,420, Operating costs Salaries and allowances 120, , , Authorised allocation - 674, , Unallocated 450, , TOTA: 4,510, , , ,571,

45 Appendix 6: Compliance with legal covenants: Status of implementation Appendix 6: Compliance with legal covenants: Status of implementation Section Covenant Target/Action Due Date Compliance Status/Date Section 4.08 (i) Eligible expenditures The expenditure shall meet the reasonable cost of goods, works and services required for the project and covered by the relevant AWPB and procured in conformity with the Fund s Procurement Guidelines Activities budgeted for should be in line with attainment of project objectives, and planned for in the AWPB. Section 4.02 PASP to replenish Project Account quarterly in advance Done Section 7.05 Procurement of goods, works and services carried out in accordance with the procedures laid down in Schedule 3 Section 7.08 Insurance of vehicles, equipment and civil works financed from the loan proceeds to be consistent with sound commercial practice. Section 9.03, Audit report submitted to IFAD. To submit by 31 st Section 8.03 Section 7.01 Section 8.03 Schedule 4, para16 Progress reports to be submitted to IFAD on a half yearly basis. AWPB to be submitted to the Fund, for its review and comments A Mid-Term Review (MTR) to be carried out jointly by the Borrower and IFAD. Project to be exempted from all import duties, excise taxes and value added tax (VAT) on investment expenditures December days before the beginning of the relevant financial year (May 2015) Done Done Done N/A Complied Not complied. N/A Complied Remarks Not yet due AWPB was still in draft form at the end of April. The SPOIU was waiting for the ISM inputs All taxes charged to GoR 39

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47 Appendix 7: Knowledge management: earning and Innovation Appendix 7: Knowledge management: earning and Innovation earning 1. The SPIU has already organised some knowledge sharing events, and has embarked on activities to publicise the PASP interventions such as the project launch events. Going forward however, there is need to respond to the questions arising from beneficiaries and experiences of the components and subcomponents activities implemented so far. For instance, the need to further breakdown the criteria for cooperatives to access the financial services facility as well as the climate change initiatives need to be packaged in fact sheets and Frequently Asked Questions and Answers per component to ensure that there is a clear understanding, and to attract as many targeted cooperatives as possible to actively participate and benefit from the PASP initiatives. 2. earning/study visits. One of the knowledge sharing activities implemented under PASP has been learning/study visits in which key staff participated to learn from the experiences in Uganda and Kenya under the relevant value chains. The practice of earning Routes like these should not be a one off event, but should be built into the annual KM activities, to benefit the beneficiaries, key partners, as well as SPIU staff who will all need to learn from different experiences. This will present all participants of such learning events an opportunity to innovate, scale up good practices and learn from others what and how to do things differently towards improved effectiveness and efficiency. 3. For the learning events to be more meaningful and produce results there should be a deliberate effort by SPIU to ensure that participants actually learn, and bring back the lessons to their places of work or communities, and implement them. This means placing emphasis on lessons learnt, action plans on how and when the lessons will be implemented, as well as clear timelines and expected results. A monitoring framework should be put in place to ensure that the impact of such visits is recorded, as justification for future visits. For SPIU staff, another important aspect (beyond simply sharing a report), would be to hold face to face sessions with those that did not participate in the visits so they also learn first-hand what lessons were picked, and where necessary, be part of implementation of innovation plans. Details and guidelines on how to implement effective learning routes may be obtained from this link: 4. Beneficiary targeted communication materials (IEC). MINAGRI and SPIU already have different communication channels and materials which are both outward looking and farmer focused. For PASP however, the focus at this moment is on sharing relevant information, and proactively engaging the target audiences so that they can fully benefit from the available services. As such, the approach should be on providing Frequently Asked Questions and Answers (FAQAs) on the project and Fact sheets with critical value chain, market access, and climate and environment conservation messages. The information can be illustrated in pictorial formats for ease of understanding by the farmers, as well as put into radio sound bites and messages. The KM and communications officer should work closely with the value chain specialists. Such products should cover information on early warning systems (under the climate change and environment aspects), criteria for access to the available financial services, and such other component focused information. 5. Utilising the existing communication materials and channels: There already established communication channels and materials under MINAGRI, utilised by SPIU to share flash news, stories from the field and such other information. However, this being the period for PASP warrants a shift from the "business as usual" event-related flash news, and beneficiary stories (since it's still early in the day), to a more robust information sharing approach on the opportunities PASP interventions offer, the implementation modalities, the criteria for participation in PASP, the different stakeholders and service providers and what they have to offer to the relevant beneficiaries, key contacts information, and an attempt to respond to arising questions and issues. 6. Internet-based communication channels. The SPIU has a webpage that is tagged to the MINAGRI website. This is a very good step towards sharing stories and results externally. However, 41

48 Appendix 7: Knowledge management: earning and Innovation because the page name is tagged to only one SPIU project PRICE, its searcheability is limited. When one googles SPIU or SPIU IFAD, it does not bring the expected SPIU web page up. This means that the page is known and viewed mostly by MINAGRI and SPIU and a few other people who know about PRICE and this is not an optimal use of the page. The Facebook page and twitter handles equally have to be named to reflect SPIU-IFAD Rw with a key word that links all these aspects. The M&E and KM officers in SPIU should also be able to post updates, photos, and relevant information using the official twitter handle and through the Facebook page. This will drive more traffic to the webpage, and thus meet the objective of sharing information widely. 42

49 Technical annex I: Smallholder post-harvest infrastructures Technical annex I: Smallholder post-harvest infrastructures Introduction 1. The Climate Resilient Post-harvest and Agri-business Support Project (PASP) is a five year project implemented by the Ministry of Agriculture and Animal Resources of Rwanda co-financed by IFAD (oan 427- RW, Grant DSF 445- RW, ASAP Grant 428- RW). It became effective on 28 March 2014 and it is due for completion in March PASP comprises the following three components: (i) HUB capacity development programme and business coaching; (ii) Post-harvest climate resilient agribusiness investment support; and (iii) Project management and Coordination. The overall goal of the project is to alleviate poverty, increase rural income and contribute to the overall economic development of Rwanda. The project s primary focus is the facilitation of inclusive business activities that can thrive on increased agricultural production from CIP crops and dairy development. Investments in improved post-harvest procedures are expected to generate reductions in product losses that are just as important as improved crop yields in preserving food production and localized value addition in a changing and more uncertain climate. 2. PASP s primary target group comprises poor smallholder farmers either engaged in production and primary processing in the priority value chains (maize, beans, cassava, Irish potatoes and dairy), including poor farmers with some production potential and members of cooperatives who own small land plots and smallholders who supplement their income through agricultural wage work. In addition, PASP is strengthened by the financing of the Adaptation for Smallholder Agriculture Programme (ASAP) investment to facilitate a better understanding of how current and future agro-meteorological conditions influence harvest and post-harvest activities, so as to ensure that rural infrastructure and related investments supported by the project are resilient to these changing climate patterns. Component 1: HUB capacity development programme and business coaching 3. The primary objective of the component is to establish a total of about 200 HUBS for maize & beans, cassava, Irish potatoes and milk over the 5-year period of the project. Cooperatives, farmers organizations or SMEs associated with participating HUBs will be supported to meet their skill and knowledge gaps, as well as access to specialized service providers, to create viable and competitive businesses capable of delivering larger volumes of improved produce to the market chain and provide climate resilient and low carbon value adding to an expanding number of clients. Component 2: Post-harvest climate resilient agri-business investment support 4. The component will make business investments in improved climate resilient and low carbon post-harvesting procedures, drying, processing and value addition, storage, logistics and distribution. Based on viable business plans (BPs) generated with component 1 support, component 2 will facilitate business activities. ASAP funds will be allocated to support the incremental costs related to BPs -identified investments in low carbon energy supplies, and post-harvest equipment, infrastructure, climate resilient buildings and associated training to develop the capacity of the HUB to establish and operate such investments and improve their efficiency. Post-harvest Infrastructures and Techniques 1.0 Drying Technologies 5. Moisture content is one of the most critical intrinsic factor that determines the shelf-life of agricultural products. Removing moisture from food restrains various bacteria from growing and spoiling food. Further, removing moisture dramatically reduces the weight of the food for ease of transportation and handling. For cereals and legumes that attain physiological maturity at moisture contents above 35%, moisture levels must be reduced as rapidly as possible to 10% or 14% for safe storage as seed or food. Drying is the most widely used method for reducing the moisture in food and 43

50 Technical annex I: Smallholder post-harvest infrastructures can be achieved using two broad methods: (i) Application of heat e.g. Sun drying, Mechanized drying, Vacuum drying and Freeze drying and (ii) Binding the moisture in the food e.g. use of sugar and salt. 1.1 Application of Heat Sun Drying 6. Sun drying is the most common drying method used by smallholder farmers and usually takes two forms: (a) Simple Drying (b) Solar Drying. Simple drying involves exposing the food product to the sun; drying is due to the heat and air circulation. It has the advantage of being of almost no cost and ideal for products where little or no value is added. Among its disadvantages however are the fact that products being dried are totally exposed to contamination, it s totally dependent on the weather, drying rates are comparatively slower and it may not be possible to dry to sufficiently low moisture levels that could prevent microbial growth. 7. Solar drying on the other hand has the advantage of higher drying temperatures and controlled ventilation which results in shorter drying times and the ability to dry to lower final moisture content. They offer protection from contamination from dust and from rain showers and are simple to construct in local workshops. They are particularly necessary when value needs to be added by drying Storage Technologies 8. After drying, storage becomes the next most important activity within the post-harvest chain. A number of storage options are available, at the household level; there is the need for storage facilities for seed and food. Some of the technologies include traditional granaries, metal and plastic silos, hermetic bags etc. Group storage options include warehouses, Cover and Plinth (CAP) and other similar technologies. 44

51 Technical annex I: Smallholder post-harvest infrastructures Post-harvest Drying and Storage Technologies No. Technology/Techniques Description 1. Solar Dehydrator The solar dehydrator consists of a heating source, a fan; air vents for air circulation and food trays to lay food upon. The heating source (e.g. the sun), fans and vents work simultaneously to remove moisture from the food. The heat warms the food causing its moisture to be released from its interior. The fan then blows the warm, moist air out of the appliance via the air vents. This process continues for hours until the food is dried to substantially lower water content. 2. Collapsible Drying Case Based on air movement and solar energy, this specially designed case allows for efficient drying of grain and also for the grain to be easily covered in cases of sudden rainfall. The maximum depth of the grain should be up to the ankle bone (about 5 cm) to ensure that grain at the bottom of the pile also dries on time. 3a. Tent Dryer The tent dryer is suitable for drying a variety of agricultural commodities. It s very efficient and constructed from easily obtained materials. The roof is made with transparent plastic roofing sheets which makes room for solar energy to enter the shed. The commodities are dried on elevated platforms while the sides of the tent could be opened to encourage free air circulation and rapid drying rates. 45

52 Technical annex I: Smallholder post-harvest infrastructures 4. Maize Drying Crib (Wire mesh) The maize crib, constructed with wire mesh, is ideal for temporary holding and drying of maize cobs immediately after harvest. The crib could be covered to protect cobs from rain. 5. Concrete Drying Shed The drying shed could be used for drying paddy and other cereal crops. Drying is done on the pad while the storage shed serves as temporary storage for the produce. 6. Concrete Drying Floors Concrete floors are good for drying because concrete heats up quickly thereby speeding up the drying process. The technology is environmentally friendly and low-maintenance. The concrete floor finishing should be smooth and should be designed with water outlets. The maximum depth of the maize should be up to the ankle bone (about 5 cm) to ensure that grain at the bottom of the pile also dries on time. 46

53 Technical annex I: Smallholder post-harvest infrastructures 7. The Solar Tent Dryer Tent dryers can accommodate large volumes of produce. They are suitable for drying high value agricultural produce such as fruits and vegetables. Drying is rapid and the produce is protected from environmental contamination. 8. Cover and Plinth (CAP) CAP storage involves storage of food grains in the open with adequate precautions such as rat and damp proof plinths. Dunnage is provided and the covers are made of black polyethylene 250 microns thick, shaped to suit the stack. The covers are held down by nets and nylon lashing. Condensation is prevented by placing a layer of paddy husk-filled sacks on top of the stack under the polyethylene. 9. Bean Threshers 3 The thresher is versatile device that can thresh beans and other crops

54 Technical annex II: Warehouse management system Technical annex II: Warehouse management system 1. The development of the warehouse management system falls under Component 1 of the project. Component 1 focuses on HUB capacity development and business coaching. The relevant PASP warehouse development activity under this component is the establishment of 110 maize and beans Hubs over the five-year project period. Under this component, cooperatives and SMEs associated with participating HUBs will be supported to address knowledge gaps and access specialized services. This support should see the creation of viable and competitive businesses capable of delivering good quality larger volumes of grain to the market and provide climate resilient and low carbon value addition to an expanding number of clients. 2. To analyse the issues regarding warehouse development and management, we have used a system approach A warehouse development and management approach that ensures supply chain efficiency requires a holistic approach that allows into the consideration causes of warehouse losses that are located away from the warehouse or loss point. By examples, external causes could be linked to both household level activities such as poor drying and a regulatory or policy measures such as export ban that is causing bottlenecks up-stream resulting in grain staying longer in storage. 3. Therefore, to put things into perspective, the warehouse management supervision aspect was undertaken taking cognisant of the complete post-harvest supply chain and all the activities or factors that have a bearing on warehouse management. These factors includes cooperative structures and management, beneficiary selection and targeting, warehouse facilities and use, warehouse management structure, household level storage technology, service providers strategy, etc. The key factors or aspects have been put in the following table. The factors or aspects are arranged based on a warehouse development process and the brief description of the factors is provided followed by an assessments of the presence and form of the factor or aspect, the performance of the factor if it was present in delivering project outputs or driving project activities. The last column captures the recommendations made to improve factor performance to improve the warehouse management systems or activities. 48

55 Technical annex II: Warehouse management system Aspect/factor Details on the aspect/factor Was the aspect/factor present? PASP Strategic Approach Cooperative and SME Identification Process Cooperative and SME selection process. This is the PASP plan of action designed to implement the two components of; capacity development program and business coaching and post-harvest climate resilient agri-business investment support This process involves district project staff identifying cooperatives & SMEs they consider suitable to be project beneficiaries. The Mayor s office was also consulted. Selection is the stage when the cooperative or SME is given the goahead to develop a business proposal. Selection implies that the Coop or SME meets PASP selection criteria, and the business proposal of those selected is likely to be accepted by the bank. The Project Coordinator described to us their strategic approach. The strategy is set around cooperatives with service providers developing their plans and implementing them with input and support PASP project staff who would have identified target areas and beneficiaries. This aspect was the main project activity during the first year. Currently, there is no distinction between the identification and selection process an identified cooperative is deemed selected. This is evidenced by the fact that those identified are requested to develop business proposals irrespective of whether the bank is likely to reject the proposal due to inadequate information. Performance of the aspect/factor on the project The strategic approach presented has helped in project startup and giving initial direction to service providers. However, service providers contracted after project start-up will require a separate briefing on the strategy and these will need to provide their input and approach to other service providers. The identification of cooperatives was carried out well, and 325 cooperatives, and some SMEs with the potential to establish HUBs were identified. Because identified cooperatives and SMEs do not go through a formalised selection process to determine their suitability, it makes the selection process incomplete. The solution is to make the selection process distinct and preceded by the identification process. Cooperatives and SMEs identified at the first stage should be invited to submit an application indicating why they should be selected. This approach ensures the project selects applicants that are organised and unlikely to misuse funds. Submitting an application shows commitment to the goals of the project. Recommendations To improve implementation, it is recommended that the SPIU hold a strategic workshop where all service providers are invited, and the strategy is shared and discussed and detailed implementation plans for each service provider are developed. The service provider for a particular service will chair the working group for that service. A consultant can be hired to provide support in developing the strategic framework and detailed implementation plans for service providers. The identification process can be broadened by advertising on radio or local language newspapers. The will provide the element of transparency and inform those who could have been missed. The selection process should be a second stage process after the identification process. Moreover, the selection process should be based on a set criteria for cooperatives and SMEs. Identified Coops or SMEs must be invited to submit expressions of interest based on a standard format. The SPIU will then evaluate the EOI, and the ones that meet the criteria are then selected and supported to develop business proposals. 49

56 Technical annex II: Warehouse management system Aspect/factor Details on the aspect/factor Was the aspect/factor present? Training of Coops on post-harvest handling Household level grain handling practices and technology. Drying facilities/process This aspect covers the training of farmers on harvesting, primary processing, drying, household level storage, and on any value addition activity that should be done by farmers. This aspect looks at the type of technology, practices and processes at household level and the kind of PH support provided by the project. The drying of grains is a key process in Rwanda because of the prevalent wet weather during harvest time. The government through various programs has provided drying grounds and tarpaulins. The training component was in place, and the service provider for this was met. Some of identified cooperatives had undergone training in post-harvest handling by RAB and general management by the RCA. Farmers are aware of and use traditional and modern methods of grain handling like hanging grain to dry on walls and fences and the use of hermetic bags for household level storage. Efforts to procure hermetic bags to improve storage of maize and beans at the household level are underway. PASP has provided some households with tarpaulins; however these were not adequate as indicated by the farmers. The majority of cooperatives plan to install drying grounds at centralised locations so that farmers can aggregate their grain for drying and marketing purposes. Performance of the aspect/factor on the project Although training in PH is essential for any farmer, however, this should be linked to PASP beneficiaries. PH training should be directed at cooperatives and farmers whose proposals have been approved. In the current case where farmers were trained before funding approval, this could mean that the trained farmers might end up not being the project target farmers. The project has two approaches - Household level PH activities are focused on food security while at cooperative level, the focus is given tovalue added activities are focusing on storage and marketing. Although carrying out value addition at coop level allows for marketing large volumes, this has the negative effect of transferring from the household level to the coop level those benefits that should go directly to households. Since there are no drying grounds supported by PASP in place yet, their performance could not be assessed. However from experience centralised drying facilities encourages the delivery of wet grain to central locations resulting in large volumes of wet grain being pushed upstream. Should drying facilities fail to cope, this could result in large volumes being affected. The tarpaulins provided by the project to some farmers have been used as rooftops for temporary drying hangers, resulting in most of them being damaged Recommendations We recommend that farmers that should be trained should be those under cooperatives whose business proposal have been approved for financing - this avoids training farmers who have no link to project activities. To ensure that technical issues are incorporated in the training program, the input of the technical service provider should be sought when planning for training. The capacity of farmers to process and handle grain at household level should be strengthened not only for food security but also for marketing and centralised storage. Improving the capacity of HH to prepare crops for marketing and centralised storage has the net effect of reducing bottlenecks through improving supply chain efficiency. To discourage the movement of wet grain up the chain in large volumes, the project should focus on supporting drying technologies and practices for household level use. Centralized drying arrangements are not the best option in the long term because they result in the aggregation and shipment of wet grain. 50

57 Technical annex II: Warehouse management system Aspect/factor Details on the aspect/factor Was the aspect/factor present? Aggregation Systems Warehouse use Warehouses infrastructure Aggregation systems link farmers to warehouses or markets by building volumes, ensuring that the commodities present the right form in terms of grades and standards and packaging that meet storage or marketing requirements. Warehouse Use, is a component of the post-harvest supply chain whose activities facilitate the efficient use of a warehouse and the marketing of grains. This covers proper bagging, commodity presentation and the application of grades and standards in the marketing and storage of grain. Warehouse infrastructure is the warehouse building including the ancillary rooms for quality testing and office space. The project document mentions the need and installation of small HUBs and these can be aggregation centers. This aspect was not evident in the PH training provided by RAB and cooperatives leaders met were ignorant of this aspect. Any PASP supported warehouses was operational at the time of the mission. Performance of the aspect/factor on the project At the time of the mission, there were no small HUBs in place although there are plans to establish them. Farmers had not started using warehouses at the time of the mission, however without the farmers knowledge and training on this aspect, warehouses management will be very difficult to undertake. No PASP supported warehouses were yet operational at the time of the mission. Recommendations As part of the warehouse management system, it is recommended that each Coop or SMEs include the installation of aggregation centers in its catchment area. For SMEs that plan to build warehouses in urban areas, it should be mandatory that they install 2 or 3 aggregation points in the farming community they plan to source grain from. Without an aggregation point in the targeted farming community, there is no adequate guarantee that the supported warehouses will benefit smallholder farmers located in distant farming areas. The plan to instal aggregation centers should be included in the Business Proposals and M&E plans. Cooperatives and farmers must be trained in warehouse use covering bagging, grades and standards, commodity presentation and warehouse receipt systems. The training provider should include this in their training program. Planned PASP supported warehouses should have 90% of the space devoted to grain storage and should have separate rooms for quality analysis and office. Warehouse Management This refers the warehouse management system in place for receiving, storing and dispatching commodities from warehouses. It also includes quality testing system, weighing solutions, storage arrangement, quality maintenance, commodity accounting, management structure, the business model and the marketing Any PASP supported warehouse had started operations at the time of the mission. Although no warehouses were an operation, it was noted that traditionally cooperatives offer free warehouse services to members and also members do not expect to pay commercial fees for warehouse services provided. Secondly the current A strong commercial approach to warehouse management should be a key focus. This is achieved by separating warehousing activities from other coop activities; having a separate management structure for warehouse operations; all services provided by the warehouse should be paid for; 51

58 Technical annex II: Warehouse management system Aspect/factor Details on the aspect/factor Was the aspect/factor present? arrangement, Performance of the aspect/factor on the project management of warehouses is not based on a formal management structure, and staff are not trained in warehouse management. There is a lack of commercial approach to warehouse management. Even the SME interviewed focused on storage without realising the importance of throughput. Recommendations incorporating a warehouse handling plan in the business plan which shows volumes stored and movements during the planning period and then developing a cash flow based on the handling plan. Moreover, training of warehouse staff on all the facets of warehouse operation. Business development service provider Training service provider The Business Development service provider s role is to assist selected Coops and SMEs in developing project proposals and submitting them to the financial sector (saccos, commercial banks, etc ) Business plan development involves incorporating all the technical, storage, operational and financial issues. The business proposal charts the way forward of the business during the project period. The business plan should also show how the grantees will achieve their objectives in alignment with PASP s goals. The role of the training service provider is to meet all training needs of the project targeting cooperative members and HUB users and operators. The training service provider will identify training needs, develop training material and deliver the training. The business development service provider was on board at the time of the mission. The training service provider was on board at the time of the mission, and this is a positive thing. However, the training service provider had not completed the training needs assessments and has still to Reports from field staff and cooperatives suggested that banks faced delays in processing the business proposals due to lack of adequate information and funding collateral. Observations made is that some proposals focused on a specific investment but not on the global business project. This makes it difficult to link the new investment to changes in the whole business due to the new investment. At the time of the mission, 1283 farmers hand been trained in Post-harvest handling. Since there was no warehouse in operation, it was difficult to say whether the trained farmers will be linked to PASP supported A business proposal should focus on the whole business, not a particular investment.the proposal should also provide information on the management structure that must be separate from the cooperative management structure. The business plan should also have a handling plan detailing projected volumes received, dispatched and stored for the various crops to be handled. The financials should include storage fees charged and received per tonne and this should be separate from sales of the actual commodities. The proposal must also show the number of farmers to be linked to the investments. The business must highlight the importance of operating the warehouse as a commercial business. Thus the business proposal must capture both the commercial and developmental orientation of the project and how this will be achieved by the coop or SME. Training should target cooperatives whose business proposals have been accepted bythe financial sector so that their activities can be directly linked to the new investments. The training service provider should also consider including a training component 52

59 Technical annex II: Warehouse management system Aspect/factor Details on the aspect/factor Was the aspect/factor present? receive input from the warehouse technical service provider. Technical service provider Warehousing M&E The role of the technical service provider is to provide technical support to the project relating to a specific crop or value chain. For warehouse management, the technical service provider is expected to support technical activities on beans and maize. The warehouse M&E is for tracking changes in the development and use of the warehouse under the PASP project The technical service provider had just been contracted at the time of the mission. The warehouse M&E plan was not yet in place at the time of the mission. Performance of the aspect/factor on the project warehouses or not. A review of the issues covered during the PH training with RAB showed that aspects that facilitate linkages between farmers and warehouses had not been included in the initial PH training. Also, there is need to consider the technical input on warehousing and the training of warehouse staff. The need for technical warehouse support was evident during the mission, especial in support of proposal development and the development of training material that are related to warehouse operation and investment. This factor can only be evaluated when warehouses are in operation. Recommendations warehouse use; FAO can provide the technical support for this component. The technical service provider for maize and beans should provide inputs on training and warehouse development activities and encompass them into the business proposals for warehousing operation, rehabilitation, equipment and management. The Warehouse M&E plan should track the following; number of warehouses and aggregation points developed, storage capacity development and usage, volumes and types grains handled at each warehouse or aggregation center, throughput for each warehouse, the quality of commodities going through warehouses and aggregation centers, the number of farmers using warehouses and the number and types of services offered by warehouses. 53

60 Technical annex III: Dairy hub approach Technical annex III: Dairy hub approach Introduction 1. Initially, donors used a supply driven strategy to solve constraints in the market however it was found to make beneficiaries worse-off and was creating a dependency syndrome. Supply driven strategy is limited in impact, sustainability, outreach and scope. The Donor committee agreed to shift from a supply driven strategy to a market development approach dubbed Business development services ( BDS) which encompasses the HUB approach. 2. BDS refers to the wide range of services used by entrepreneurs to help them operate efficiently and grow their businesses. It embraces the fields of business, commerce and organizational theory. It also involves the creation of long-term value for an organization from customers; markets and relationships. 3. The Post-Harvest and Agribusiness Support Project s objectives aim to improve smallholder farmers and rural workers incomes (including women, men, youth and vulnerable groups) by improving production and market-access drivers of farmer through the HUBs. 4. Specifically, the project seeks to: Enhance production and productivity by: - Increasing the volume of milk produced - Improving milk quality and reducing loss through spoilage - Providing access to production inputs through business delivery services Improve Market-access by: - Developing local hubs of the BDS services and chilling plants that facilitate market access - inking producers to formal markets through processors - Increasing producers benefit from alternative markets 5. What works? To improve efficiencies along the entire dairy value chain it s important to have a combination of capital investments for the dairy HUBs, the appropriate technology for post-harvest handling; capacity building in technical and business areas, milk production and quality improvement. The anticipated impact of the interventions is wealth generation, jobs creation along the value chain and among the dairy value chain actors while the cooperatives businesses grow. The dairy value chain in a nutshell 6. Dairy Hub model is built on 4 Pillars: 1) Organizing farmers & strengthening farmer organizations. 2) inking farmers to improved affordable production technologies; AI, proper animal feeding, Animal health care. 3) inking farmers to markets; Invest in a farmer managed Chilling Plant, Bulk marketing, support farmer groups to negotiate and sign milk supply contract with buyers. 4) Building the capacity of service providers and stimulating Business Development Services in the Dairy Producer Organizations. 54

61 Technical annex III: Dairy hub approach Fig1: The schematic Dairy HUBs with other value chain actors under an M4P approach. 7. Smallholder dairy farmers buy shares in a milk chilling hub through dairy business associations. Through the HUB, they sell a dependable, quality supply of milk to dairy processors and receive income in return. They also gain access to banks and credit as well as private goods and services they need to sustain and grow their dairy businesses. 55

62 Technical annex III: Dairy hub approach HUBs development process map Partnership development with proposed Coop/MCC. Support formation of a strong governance structure at Coop/MCC Develop Strategic Business Plans for the Hubs and Annual Operational Plans & Budgets Start up/strengthen existing technical operations Financial Management support HUB business growth Annual performance measurement 8. Along the entire HUB the following needs to be emphasized: Production Phase 9. During the production phase, the farmers/producers need to maintain animal health through nutrition and veterinary management. On farm target livestock production and productivity indices need to be known through an envisioning process with the farmers. It should be noted that farmer access to quality feed, forage, and sufficient water supply can improve milk production and reduce seasonality variations for the emerging markets. 10. In order to improve milk production from 2 or 3 itres/cow/day to 15litres/cow/day, the 3 key strategic levers that are needed to impact the low production and productivity issues include: 1) Optimize breeding and reproductive practices 2) Provide a consistent supply of quality feed throughout the year 3) Proactively ensure a healthy animal to maximize its productive capacity 56

63 Technical annex III: Dairy hub approach Fig 2: Relationship between the Coop/MCC, Extension officers & Input suppliers Extension service providers Service and Inputs Farmer s Trainin g Coop/MCC- Agro-vets Business Other Input & Service Providers Pre bulking, bulking phase 11. During milk collection, the farmers need to emphasize high quality of milk produced on farm and at the pre bulking and bulking points. The MCCs need to have Standard Operating Procedures to emphasize sanitation, quality control, bulking procedures, transportation protocols, cooling, and management of milk spoilage. Processing and marketing phase 12. Farmer access to alternate market can be achieved through value addition to make milk products like cheese, yoghurt and butter. The quality of these products is dependent on quality of milk received Quality processing of milk allows the farmer Coop/MCC to consistently use their milk supply throughout the year and obtain higher prices in accordance with the locally available market. 13. Market access is improved through capacity building in business planning, market research and the identification of distribution channels. The return on investment is better if the farmers benefit collectively from a more reliable income stream. Key Success Factors for Dairy Hub 14. There are key success factors for ensuring that the benefits of a hub structure are achieved, most important being the scale of farmer participation Benefits of Hub Structure Key Factors for Success Improved marketing power for farmers Mobilising enough farmers to ensure sufficient Increase in selling price supply at collection centre Access to developed markets Identifying potential markets to ensure competitive pricing Stabilized demand Identifying and setting up an agreement with a Reduces waste (in wet season/evening milk) market (e.g. processor) that has the capacity to buy the collected milk (regardless of time of year) Access to a centralized market Ensuring access to the collection centre to farmers 57

64 Technical annex III: Dairy hub approach Service providers can access a large segment of the market Improved productivity Facilitates the credit provision to farmers which is a key enabler for providing services at all times of day and year Ensuring accurate record keeping at Chilling Plant or Coop to facilitate credit provision Mobilising enough farmers to join the Coop so that it can properly market the region to service providers Other success factors for the hub model Clearly separate the functions and roles of farmers (shareholders), the management committee or board and the business managers and staff at the hub. Public Private Partnerships facilitating the strong Management structure at the Coop Capacity building of Board of directors/business managers in management and of Service Providers to offer quality services at competitive prices Continued engagement of Business Development Service Providers by Producer Organizations to ensure continued provision of efficient delivery of services at a fee. Financing options/mechanisms For the Hub Model Check off for farmers using milk as collateral Micro Finance Institutions/Banks-oan facility for coolers, livestock and transport solutions & capacity building including micro-insurance Pharmaceuticals-Credit facility to PO owned Agro Vets and Extension workers ocal Government-Infrastructural investment (Roads, Coolers +Accessories, forage choppers) Service & Input suppliers-access & timely provision Milk quality services intensifying Producers based on premium pricing of milk 58

65 Technical annex IV: Resilience analysis checklist for PASP capacity building interventions Technical annex IV: Resilience analysis checklist for PASP capacity building interventions 1. Climate extremes, in the form of droughts and extended dry spells interspersed with heavy rainfall events, have impacts on agricultural productivity, post-harvest processes and rural infrastructure. Postharvest losses are singled out as a critical risk, as current losses are as much as 30% among major crops (cassava, Irish potato, beans and maize) and these losses are highly sensitive to the extremes of temperature and humidity associated with erratic rainfall. As for most countries in the world, reliable future climate projections are not yet available at the sub-national scale, but there is anecdotal evidence that the rainy season is becoming more unreliable, so current problems are expected to get worse in future. 2. The following is intended as additional guidance to the PASP Staff, Service Providers and Stakeholders on how to undertake a climate resilience or climate risk analysis of the proposed investments in a value chain (a generic Value Chain is presented in Figure 1). This checklist can be applied at all steps in a Value Chain and identify key climate challenges that need to be overcome, but it is intended to be applied in consultation with the beneficiaries. Table 1 provides an initial analyses of the climate constraints that will have to be considered in the PASP Value Chains from primary production through to harvest and post-harvest handling to the end user. All stages of the value chain have associated climate risks. Given that not all interventions will be possible in a single business plan/grant, prioritization of a top set of climate risks will be critical in its development. 3. In general, effective climate interventions in value chain projects will include the following three elements: 1) Diversification: Inclusion of a wider set of options to increase farmers livelihood, farming and environmental management portfolios as a risk management strategy. 2) Climate-proofing: Specific interventions to make key stages of the value chain more climate-resilient in ways that bring livelihood and resilience benefits to farmers. 3) Supply chain efficiencies: Measures such as waste reduction or inventory management that increase efficiency, deliver higher profitability (and hence higher adaptive capacity in a general sense) for farmers and small businesses in the value chain, and generate mitigation co-benefits. 59

66 Technical annex IV: Resilience analysis checklist for PASP capacity building interventions 60