PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB6740 RELAUNCHING AGRICULTURE: STRENGTHENING Project Name AGRICULTURE PUBLIC SERVICES II Region LCR Country Republic of Haiti Sector ARD Lending Instrument Grant Project ID P126744 Borrower(s) Ministry of Finance Implementing Agency Ministry of Agriculture, Natural Resources and Rural Development (MARNDR) Environmental Screening { }A {X}B { }C { }FI Category Date PID Prepared Apr. 14, 2011 Estimated Date of Appraisal August 8, 2011 Completion Estimated Date of Board October 4, 2011 Approval Decision {Insert the following} Project authorized to proceed to negotiations upon agreement on any pending conditions and/or assessments. {the text is automatically generated after PID is filed}. I. Country Context 1. With a GDP per capita estimated at US$648, Haiti is the poorest country in the Americas and the Caribbean. The state of the Haitian economy in the last two decades has been particularly affected both by a number of sequential political crises and a series of devastating natural disasters. Poverty is of great concern in the country - fifty-four (54) percent of the country’s population lives on less than US$1 a day and seventy-eight (78) percent on less than US$2 a day. Approximately 4.5 million Haitians are destitute, with the majority living in rural areas. Income inequality is high among the highest in Latin America and the Caribbean (Gini coefficient of 0.59). Multidimensional poverty is far-reaching, as evidenced by poor social indicators such as literacy, life expectancy, infant and maternal mortality. Haiti ranks 148 out of 177 countries in the 2011 United Nations Human Development Index. In rural areas, 88 percent of individuals live below the poverty level and basic services are practically nonexistent. 2. The devastating January 12, 2010 earthquake represented a major setback to the economy and aggravated an already precarious social situation. Economic growth is estimated at negative 5 percent for 2010 while during the five years preceding the earthquake Haiti had experienced a stable and encouraging macroeconomic environment albeit risky. With minimal impact from the global crisis and a post-hurricane rebound, real growth between FY2004/05 and FY2007/09 averaged 2.5 percent annually, compared to negative 0.7 percent registered on average per year in the preceding 5 years. Economic growth reached 2.9 percent in FY09, driven by strong agricultural and manufacturing output. 3. The earthquake affected economic activity disproportionately because it occurred near the Port-au-Prince area where 65 percent of the country’s economic activity is concentrated. Its impact was especially harmful for the private sector, which, according to the Post Disaster Needs Assessment (PDNA), suffered damage and losses estimated at US$5.7 billion, (about 70 percent of the total losses to the country). The most affected private sector was housing, which suffered damages in an amount of US$2.3 billion, followed by commerce (US$639 million), private education (US$437 million), industry (US$342 million), food (US$330 million) and transport (US$316 million). Damages and losses to agriculture were approximately US$146 million. 4. During 2010, Hurricane Tomas and the cholera outbreak, alongside food and oil price inflation, have complicated the challenges faced by the agriculture sector. Haiti is the most vulnerable country to an increase in food and oil prices in the Latin American and Caribbean Region given the poverty level, the lack of social safety nets, and the dependency on food imports. The current resurgence in food price “volatility” and food-induced inflation can contribute to further deterioration of people’s nutritional status (30% of children suffer from chronic malnutrition and 50% of women are anemic. Food accounts for a large share of the family budget for poor and urban wage earners, and higher food prices leads people to switch to cheaper calories (i.e., fat and simple sugars). 5. Increasing production is a key objective of the Government’s reconstruction efforts. Agriculture plays a major role for both food security and for the economic recovery and the social stability of Haiti. Following the earthquake, many families in rural areas affected by poverty and food insecurity have received destitute family members. Agriculture is also a major source of growth for the country’s economy. Before the earthquake, agriculture GDP was growing at 5.9% per year (2009) and contributing a third of the country’s GDP. After the earthquake, agriculture and construction where the only two sectors showing positive growth (data from 2010). II. Sectoral and Institutional Context 6. The government has pursued sound macroeconomic policies over the last decade, substantially reducing its budgetary deficit while pursuing monetary and exchange rate policies to contain inflation with some degree of success. However, chronic underinvestment in the rural economy (e.g., infrastructure, public services and programs and ineffective natural resource management have steadily depleted the rural productive base. The budgetary allocation to the Ministry of Agriculture, Natural Resources and Rural Development (MARNDR), already low, was 8% of total government resources during 2001 and has dropped to 3% of total government spending in 2008. Trade liberalization in the 1990s included no transitional or pro-active export measures, suddenly making Haiti one of the most open markets in all of Latin America, yet leaving the rural economy without the means to adjust or to facilitate labor market shifts. Underinvestment in rural public goods has been compounded by weaknesses in MARNDR’s capacity to collect and analyze sector data or work with stakeholders in establishing priorities for investments based on clear technical criteria. 7. Agriculture plays a dominant role in the economy, contributes 25 percent of GDP, and accounts for around 50 percent of overall employment (66 percent of employment in rural areas and 75 percent of employment in low income households). Agriculture is a potential source of growth also for the poorest in Haiti. Typical farmers in Haiti (average farm size is 0.5 Ha) do not use improved planting materials, just seeds saved from the previous crop, planted in degraded soil without pest controls or inputs other than hand tools. Those farmers who participate in programs in Haiti that do provide access to improved germplasm (selected seeds, cuttings or budwood) in conjunction with soil conservation measures demonstrate dramatic productivity and income increases. Most who farm have no access to new technologies and little or no protection against pests or diseases. For example, the pig production sub- sector collapsed during the 1980s due to the spread of Classical Swine Fever (creating economic losses of approximately US$8 million); and in 2008, mango exports (the top agriculture export crop) to the US were stopped for 6 months due to the detection of fruit fly, producing losses of at least US$4 million. 8. Analysis of what works in Haiti to fill the agriculture public goods and services gap has generated a high degree of consensus between the Ministry of Agriculture, Natural Resources, and Rural Development (MARNDR) and its Development Partners. Since the earthquake, the MARNDR and Development Partners have prepared and agreed on a National Agriculture Investment Plan (NAIP) covering the period 2011- 2016. The NAIP not only derives its objectives and strategy from the existing National Agriculture Policy, the Post-Disaster Needs Assessment (PDNA), and the overall Government and International response to the post-earthquake reconstruction effort. The NAIP has three components focusing on rural infrastructure, production and productivity of sub-sectors, and agriculture public services and institutional support. The NAIP focuses on priority regions which were selected according to: (i) post-earthquake migration patterns into rural areas; (ii) the location and competitiveness of agriculture supply chains; and (iii) priority watersheds. III. Project Development Objectives 9. The project will contribute to the objectives of the National Agriculture Investment Plan (2011-2016), which are to: (i) increase the productivity and the competitiveness of the agriculture sector; (ii) augment by 25 percent the contribution of agricultural production to the national food availability; (iii) reduce by 50 percent the number of persons who suffer from food insecurity in Haiti by 2015; (iv) improve the health conditions and nutrition of the Haitian people, with focus on vulnerable groups such as anemia reduction interventions for female agricultural workers; (v) increase the agriculture income of at least 500,000 households; (vi) augment the entry of foreign currency into the country; and (vii) decrease the vulnerability of the general population to natural hazard risks. 10. To facilitate these broad national goals, the development objective for this operation is to increase access of small farmers to agriculture1 extension services and training on animal and plant health in priority regions2 and to strengthen the MARNDR’s capacity to further define and implement the National Agriculture Extension Strategy (PDVA), as well as to provide financial assistance in case of an agriculture sector emergency. IV. Project Description 11. The proposed project includes four components: (1) Strengthening the role of MARNDR in providing agricultural support services; (2) Relaunching local agricultural services; (3) Emergency response; and (4) Project management. The project components are complementary (thematically and geographically) to the activities proposed by the IADB under the GAFSP funding for Haiti. They also complement ongoing activities under the IADB-financed Rural Supply Chain (DEFI) project and under the Bank-financed RESEPAG I project (currently under Bank supervision), as well as ongoing activities under the NAIP that are financed by other donors. The geographic areas of the project are the priority areas identified in the NAIP, but will have an initial focus in the South, South-Eastern, North, and North-Eastern Departments. The project components are interlinked in that the activities for strengthening MARNDR’s capacity to provide agriculture extension and support services at the national level (Component 1), are a necessary condition for maximizing the impact on the ground and providing access to and developing the market for agriculture extension services for small farmers (Component 2). Component 1: Strengthening the role of the MARNDR in agricultural support services provision (US$ 10 million) 12. This component will strengthen the role of the MARNDR as the leader of Haiti’s agricultural innovation system. Activities under three subcomponents will reinforce and build capacity within the MARNDR to lead, guide and bring coherence to agricultural sector development and investments in animal and plant health control and protection, to facilitate flows of information and technology among people and organizations, and to promote the interaction and participation among sector actors. 13. Sub-component 1.a: Planning and coordination of agricultural extension and training services provision (US$3 million). The sub component will enhance MARNDR’s capacity to define and implement the National Agricultural Extension Strategy (PDVA) through, inter alia, institutional and organizational reforms within MARNDR at the national, departmental and local level through: (i) the establishment of learning based monitoring and evaluation mechanisms; (ii) the creation of the National Agricultural Services Coordination Committee 1 Agriculture includes crop and livestock production. 2 See priority areas as specified in Haiti’s National Agriculture Investment Plan (NAIP). and the strengthening of the Tables de Concertation Agricoles Departamentales3; (iii) the strengthening of the agriculture sector’s human resources through: (a) an evaluation and revision of university and vocational school training curricula for Agricultural Service Providers; and (b) the provision of financial and technical assistance support to Technical Training Facilities and other training centers fulfilling similar functions in the Priority Regions; and (iv) the facilitation of international and regional exchange of experiences and information on agricultural service provision. This will be done by financing: (i) consultancies and training to undertake an evaluation and revision of the various curricula – in line with Haiti’s new PDVA- that are used to train agricultural service providers; and (ii) consultancies, equipment, vehicles, goods, and minor works to strengthen the capacity of the technical training facilities located in the Priority Regions, as well as in other appropriate public and private training centres. Capacity building activities under this sub-component will be included as part of the Project’s Annual Operating Plan (POA) to be approved annually by the Bank. 14. Sub-component 1.b: Agricultural sector information systems (US$2 million). This subcomponent will finance consultancies, training, vehicles, goods, equipment and works to increase the availability of quality price, agro-climate data and tools4 that could be used to better manage agro-climatic risks and to enhance agricultural production systems. The subcomponent will establish agricultural sector information systems to: (i) increase the availability of quality agro-climate data and tools; (ii) improve: (a) advance planning for agriculture input use; (b) managing crop yield risks; and (c) the early identification of and response to animal and plant health threats; and (iii) strengthen the collection and dissemination of agricultural market prices to include farm gate prices. In order for the activities of this sub-component to be implemented, existing animal and plant health, weather, price and agriculture statistics data will need to be collated and backed-up in the MARNDR’s cloud computing information system. 15. Sub-component 1.c: SPS capacity (US$5 million). This subcomponent will finance the provision of training, vehicles, goods, equipment and infrastructure investments to improve bio-security, diagnostic and quarantine services at central, departmental and local levels. The recently completed assessment of Haiti’s veterinary services by the World Organization of Animal Health (OIE) and a subsequent GAP analysis5, planned to be finalized by the end of 2011, will provide the country with the appropriate strategic framework for future development and investments to be financed under this subcomponent. Component 2: Market support for relaunching agricultural services (US$ 36 million) 16. This component will relaunch local provision of, and access to agricultural support and extension services. It will finance: (i) works, goods, vehicles, equipment and consultancies to strengthen local agriculture extension and innovation capacity; and (ii) meetings, training, studies, workshops and exchange visits. These activities will accompany the farmer-level agriculture technologies and inputs promoted by the MARNDR (and financed by the parallel 3 The Table de Concertation is a Department-level Agriculture Sector Table chaired by the MARNDR. Members of the Table de Concertation include NGOs, Farmer Organizations, public and private sector organizations present at the Department level. 4 An example of such tools can be found in: www.agrolcimate.org 5 The GAP analysis will be undertaken by using the OIE PVS pathway. GAFSP operation supervised by the IADB)6 by increasing the capacity of public, private and civil society (NGO) local service providers to deliver and serve the needs of their clients. In addition, this component will support a competitive agriculture innovation and extension market support facility (“Market Support Facility or “MSF”) to be managed by the MARNDR in coordination with the Table de Concertation Agricole Departamentale. The MSF will co-finance, at the Department level, on a matching-grant basis, the carrying out of Subprojects to: (i) promote the adoption of priority technologies and improved agricultural inputs; (ii) undertake applied research in agriculture supply chains not covered by public research programs; (iii) strengthen producer-based organizations and provide for an increased level of technology transfer; and (iv) provide technical assistance for post-harvest and agribusiness technology improvements for Eligible Farmers in the MARNDR’s National Farmer Registry following criteria, terms and conditions defined in the Operational Manual. The MSF will allocate funds to new opportunities that arise during implementation as well as special allocations to provide effective and efficient food response in the case of emergencies (natural disasters). Component 3: Agriculture Risk and Emergency Response (US$ 1 million) 17. Following an adverse natural disaster, animal or plant health emergency, or food crisis affecting the agriculture sector of Haiti during the execution period of the project, the Government of Haiti (GoH) may request the Bank to re-allocate project funds to support response and reconstruction. This component will allow the GoH to request the Bank to re- categorize and reallocate financing from other project components or the use funds to cover early recovery and rehabilitation costs related to the agriculture sector. Additional funds could also be made available through this window for the same purpose. 18. Disbursements will be made against a positive list of critical goods, and/or a farmer subsidy scheme agreed with the Bank, and/or the procurement of goods, works, and consultant services required to support the needs of the GoH. All expenditures under this component, should it be triggered, will be in accordance with BP/OP 8.00 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made. If not disbursed 12 months before the closing date, the amount of US$1 million can be made available to finance activities under the other project components. Component 4: Project Management and Administration (US$ 3 million). 19. Project execution will be under the RESEPAG I team, which is under the responsibility of the Direction General (DG) of MARNDR. This component will finance incremental costs associated with project implementation, supporting MARNDR in its day-to-day management of the Project, through the provision of technical advisory services, the acquisition of equipment and vehicles and the financing of operating and other related costs. All efforts will be made by the DG to coordinate project implementation across MARNDR’s units, in particular the Departmental Agriculture Directorates (DDAs) involved, the Programming and Studies Unit (UEP), Directorate of Animal and Plant Health (DPAV), and the Directorate of Research and Training (DRF). The program coordinator in the DG team will be the primary 6 The IADB-GAFSP operation will specifically finance smart subsidies (vouchers, conditional cash payments) to promote specific agriculture technologies and improved inputs in the same geographic areas as RESEPAG II. Bank counterpart for the purposes of project supervision and will interface with the fiduciary functions of the Directorate of Administration and Finance (DAAF). All reporting will be done jointly for RESEPAG I and II. V. Financing Source: ($m.) Borrower/Recipient 0 IBRD 0 IDA 40 Others : (GAFSP Trust Fund) 10 Total 50 VI. Implementation 20. The Project will be implemented by the Ministry of Agriculture, Natural Resources, and Rural Development (MARNDR), in particular, the team executing the RESEPAG I project. The MARNDR has already been assessed on technical and fiduciary issues in 2009 during the preparation of the RESEPAG I project. The RESEPAG I team, although with some delays due to the January 2010 earthquake and the 2010-2011 electoral process, has been executing the project as planned. A fiduciary and institutional assessment was undertaken during project preparation of RESEPAG II in order to assess the experiences so far with RESEPAG I and as a result additional resources (human and material) and institutional arrangements needed for MARNDR to execute RESEPAG II have been identified. Specifically, such additional support, human resources and capacity strengthening under RESEPAG II, will be focused on the mainstreaming of gender and environmental issues, and dedicated to the management of environmental safeguards, fiduciary and M&E aspects of project implementation. 21. Although the existing institutional structure of MARNDR reflects the legacy of past approaches to public sector involvement in the agriculture sector, the MARNDR has proven its ability to lead the sector by quickly preparing and approving a NAIP with wide support from Development Partners and by securing funding from the GAFSP only months after the January 2010 earthquake. Nevertheless, RESEPAG I and II are expected to continue the current efforts in strengthening MARNDR’s institutional capacity by using MARNDR’s current institutional structure, and focusing on core functions, such as fiduciary capacity, budgetary processes, agricultural support services, and policy and donor coordination. Furthermore, the MSF under Component 2 will rely on the existing Agriculture Sectoral Tables at the Departmental level (Tables de Concertation) to allocate and supervise grant funds to sub-projects. The Tables de Concertations, given its representation from civil society, farmer groups, public and private sectors will be the main mechanism for technical and social monitoring of project activities at the local level. VII. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Piloting the Use of Borrower Systems to Address X Environmental and Social Issues in Bank-Supported Projects (OP/BP 4.00) Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Involuntary Resettlement (OP/BP 4.12) X Indigenous Peoples (OP/BP 4.10) X Forests (OP/BP 4.36) X Safety of Dams (OP/BP 4.37) X Projects in Disputed Areas (OP/BP 7.60)* not eligible for piloting under OP 4.00 Projects on International Waterways (OP/BP 7.50) not eligible for piloting under OP 4.00 VIII. Contact point at World Bank and Borrower World Bank Contact: Diego Arias Carballo Title: Task Team Leader Tel: +1 202 458 9809 Fax: Email: darias@worldbank.org Location: Washington, D.C. Borrower/Client/Recipient Contact: Ronald Baudin Title: Minister of Finance Palais des Ministeres Port-au-Prince Haiti * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas Fax: 509-222-4222 Implementing Agencies Contact: Hermann Augustin Title: Coordinator, RESEPAG, MARNDR Tel: +509-3446-8914 Email: hermann_augustin@yahoo.fr IX. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop