INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Public Disclosure Copy Report No.: ISDSC2739 Date ISDS Prepared/Updated: 03-Dec-2013 Date ISDS Approved/Disclosed: 03-Dec-2013 I. BASIC INFORMATION A. Basic Project Data Country: Tajikistan Project ID: P132652 Project Name: TAJIKISTAN AGRICULTURE COMMERCIALIZATION PROJECT (P132652) Task Team Sandra Broka Leader: Estimated 14-Feb-2014 Estimated 30-May-2014 Appraisal Date: Board Date: Managing Unit: ECSAR Lending Investment Project Financing Instrument: Sector(s): Agricultural extension and research (50%), Crops (30%), Irrigation and drainage (10%), Animal production (10%) Theme(s): Other rural development (75%), Rural services and infrastructure (25%) Financing (In USD Million) Total Project Cost: 22.00 Total Bank Financing: 22.00 Public Disclosure Copy Financing Gap: 0.00 Financing Source Amount BORROWER/RECIPIENT 0.00 IDA Grant 22.00 Total 22.00 Environmental B - Partial Assessment Category: Is this a No Repeater project? B. Project Objectives The project development objective is to increase the commercialization of farms and agribusinesses in selected areas of Tajikistan. This will be achieved by improving the performance of selected value chains and providing financial and capacity building services to the project beneficiaries. The direct beneficiaries of the project would include (i) commercially-oriented producer associationsand farmers, agro-processors, agri-business enterprises and agro-input dealers engaged in the value chains supported by the project; (ii) participating financial institutions; and (iii) public and academic institutions. Public Disclosure Copy C. Project Description Component I: TA Support to Commercialization (US$ 4.35 million, all IDA) 1. This component will support the following activities: a. Training to value chain participants. For farmers, the project will support three main types of training : (i) extension services and technological advice, on as needed basis, to farmers on specific subjects of agricultural production and processing; (ii) training activities to all value chain participants, on the benefits of participation in a value chain, and duties and responsibilities of the various participants; and (iii) to very small farmers, to increase their commercialization potential, on the benefits, duties and responsibilities of establishment and participation in productive partnerships. This training is expected to strengthen the partnerships by building economies of scale to market their products and to purchase farm inputs on more favorable terms, through group buying and selling. The training will also cover strategies for increasing marketed surplus, the identification and evaluation of sales opportunities, business management, transport, storage, grading and quality control. The training will be gender-sensitive. For agro-processors and agri-business enterprises the potential (demand-based) training activities will include: strategies for improving links with producers and producer organizations; strengthening aggregation activities; business management, marketing and quality control; improvements to product quality along the value chain; sources and use of market information; market studies and test marketing, roundtables, attendance at trade fairs and mentoring services to help participants understand market requirements. Agro-input dealers will receive training on business practices, where and how to source farm inputs, how to facilitate and benefit from discounted (group) sales to producer associations, and awareness and application of quality and safety regulations. Public Disclosure Copy All training activities will be implemented by local and/or international consulting and training companies to be hired under the project, which have demonstrated experience in the relevant training domain. Cooperation will also be sought with other projects involved in building the capacity for extension, including projects seeking to build a viable private sector extension service. b. Provision of support to agro-processors, agri-business enterprises, agro-input dealers and commercially oriented farmers and producer associations to develop business plans and investment proposals for productive linkages, and guidance on how to finance the necessary investment. c. Capacity building in the country’s consulting sector, through transfer of global knowledge and good practices, on how to support agribusiness sector development and value chain/productive linkage development activities, to ensure that such capacity remains in the country after the project closes. The project will work with (an) committed consulting company (-ies), improving their capacity to work with interested value chain participants and build optimized value chains and productive linkages. Component II: Access to Finance for Commercial Farms and Agribusinesses ($US20.0 million, including US$13.9 million IDA) 2. Potential investments include: improved on-farm technology, storage, processing, new products, marketing, quality enhancement and food safety. Activities under this component will be consistent with OP10.00 Investment Project Financing Public Disclosure Copy a. Credit Line for medium-term loans and leases (US$15 million, including US$10 million IDA). To address the current market failure to provide medium-term credit for investment, a credit line will be provided to government to support medium-term lending and leasing for investment activities by agro-processors and other agri-businesses involved both in the selected value chains, but also to other credit-worthy agri-businesses. This credit line will be for loans or leases of up to 7 years, with the exposure per beneficiary of up to US$400,000, for investment in modern technological plant and equipment. Ministry of Finance will channel the funds through qualified commercial banks and non-bank financial institutions (Participating Financial Institutions – PFIs) selected jointly by the Government, World Bank and IFC. These PFIs will carry out full appraisal of loans, set interest rates and repayment terms to final beneficiaries based on prevailing market conditions and the type of investment financed, and bear the full risk of loan repayment. Participating PFIs will be required to contribute at least 25% of the total lending or leasing requirement from their own resources. Detailed operational guidelines for the credit line, setting forth the types of investments financed, as well as financial and operational requirements to borrowers and PFIs will be developed before the implementation will start. Borrowers will be expected to contribute around 20% of the total project cost from their own resources. To ensure that the benefits of this credit line are widely distributed, the maximum support for any single value chain, all borrowers included, will be $US1 million. b. Matching Grant Support for Investment Proposals (US$4.6 million, including US$3.5 million IDA). Matching grants will be provided in the following two types of support: (i) to complement the commercial credit line described above, not exceeding 30% of the total financing received through the PFIs. These matching grants will be appraised by the PFIs, as part of the total financing package towards partial coverage of the sub-project costs (a portion of this, in the amount of 20% of the project costs will be covered by the borrower). To ensure repayment discipline, the Public Disclosure Copy matching grant will be the last 30% of the financing, i.e., the borrowers will have to repay the first 70% of the financing received on time and in full, in order to benefit from the matching grant. (ii) to provide the start-up capital of the productive partnerships created under Component 1, which target the smaller and poorer farmers, the partnerships will be eligible to receive a matching grant for investment purposes (procurement of small-scale equipment, building of storages, etc.) in the amount not exceeding US$20,000 per partnership. The partnerships will have to meet a set of criteria, including, but not limited to: (i) the extent to which the grant proposal will, improve market access and add value; (ii) the expected impact on market demand for farmer produce; (iii) potential replicability by other small rural businesses; (iv) the technical financial and environmental viability of the proposed grant project; and (v) likely sustainability. The program will be subject to a rigorous, transparent selection process. Beneficiaries will be monitored to ensure that implementation takes place as agreed, and once in operation, each investment will be evaluated to assess its costs and benefits. Applicants will be required to contribute at least 30 percent of the total cost of the investment (in addition to any matching grant and/or loan support), and will be required to engage in activities to develop and strengthen linkages along the value chain. The matching grants to productive partnerships will be implemented by the Project Implementation Group (PIG), on the basis of the agreed criteria and in close collaboration with the World Bank team. Detailed operational guidelines for the matching grant program will be developed during the further preparation work. c. Capacity building for PFIs (US$400,000, all IDA). Given the novelty of the medium-term investment lending and value chain financing concepts, the Project will implement a capacity building program for the financial institutions involved in the Project. The PFIs will receive training in two subjects: (i) Appraisal of agricultural investment loans and leases, (ii) Financial Products for Public Disclosure Copy financing of value chains. Management and minimizations of the risks associated with these new products will be part of the training program; and (iii) Conducting subprojects EA. The PFI training activities will be done in a close collaboration with IFC. Component III: Institutional Capacity Building and Project Management (US$3.75 million, all IDA) 3. This component will strengthen the capacity of public institutions responsible for relevant services and policies; and the capacity of the Ministry of Agriculture to manage this and other donor projects. a. Market Information for farmers and agribusinesses (US$700,000, all IDA). FAO is currently developing, in collaboration with the National Statistics Agency (Goscomstat), a market information database containing price data collected weeklyin all major markets. At project end in mid-2014, they will have built the data set and created a publicly accessible interne t site for potential users. The project will extend this work by initiating collection of three other price indices which are vital for the agribusiness sector yet not being collected in the country: farm-gate prices, wholesale market prices and wholesalers’ prices. The project will also make this information more accessible to farmers and agri-business enterprises. Guidance on how best to use this information will also be incorporated into the training programs to be implemented under component I. above. The project will also finance a wholesale market feasibility study, which will, among other things, look at cross- border markets. b. Upgrading of the technological skills in the agro-processing sector (US$800,000, all IDA). The project will work with the Technological University of Tajikistan to improve its capacity to ensure better prepared food technology graduates which enter the country’s food processing sector. The project will provide technical assistance on the curriculum, teaching equipment upgrades, as Public Disclosure Copy well as strengthen the linkages between the university and the private processing sector. c. Support to the policy and regulatory reform for input use and marketing (US$250,000, all IDA). This sub-component will strengthen the public sector capacity for regulation and quality control of farm input use and marketing. The current regulatory environment for fertilizer and agricultural chemicals will be reviewed and draft amendments will be prepared to align with international best practice, public sector staff will be trained to apply and monitor these regulations, quality control and safety standards will be strengthened, and administrative procedures will be developed to license and monitor private sector importers, distributors and retailers of these inputs. The impact of current tax policy on farm input use, farm input markets and farm output will also be reviewed and recommendations will be developed for tax policy reform. d. Project Management (US$2 million, all IDA). Given the project’s emphasis on increasing agricultural commercialization and productivity, the Ministry of Agriculture will serve as the project’s implementing agency. A Project Implementation Group (PIG) within the Ministry of Agriculture, comprising existing ministry staff and consultants will be responsible for project management and coordination. This arrangement will strengthen the Ministry’s capacity to move away from implementing projects through stand-alone PMUs, to a more integrated implementation structure. Training and supervision during the course of project design and implementation will further strengthen this capacity. The component will also finance Monitoring and Evaluation activities, including the baseline study, mid-term and final impact surveys. D. Project location and salient physical characteristics relevant to the safeguard Public Disclosure Copy analysis (if known) The project locations will be chosen during further preparation work, based on the value chains to be supported and the location and activities of aggregators and producers in the value chains. The location and activities of agri-business projects by the Bank and other donors will also influence project location, in order to avoid duplication and develop synergies with other projects. The project will be located in rural areascwhere agricultural potential is high and agriculture is critical for rural livelihoods. E. Borrowers Institutional Capacity for Safeguard Policies The Ministry of Agriculture (MOA) will be in charge of the project implementation. The project implementation unit (PIU) will contain staff of the MOA, as well as consultants hired from outside. While some members of the formerly existing Project Implementation Units, including environmental specialists, may be employed by the new PIU, its capacity cannot be assessed at this stage and will be done during the project design stage. F. Environmental and Social Safeguards Specialists on the Team Arcadii Capcelea (ECSEN) Lola Ibragimova (ECSSO) II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ Yes This policy is triggered as the project will BP 4.01 support a series of activities which will generate some environmental and social impacts. While Public Disclosure Copy the project will provide many environmental and social benefits such as increased food security and farmers income, proposed activities under component 2 that would provide access to finance for commercial farms and agribusinesses as well as matching grants supporting different types of subprojects (improved on-farm technology, storage, processing, new products, marketing, quality enhancement and food safety), may also cause some negative impacts related to: (a) increased pollution of ground and surface waters due to processing of agricultural products; (b) solid wastes during processing of agricultural products; (c) noise and air pollution; (d) health and safety hazards at the agro-processing factories; etc. To address these adverse impacts the Borrower will prepare an Environmental Management Framework (EMF) which will specify the EA requirements for subprojects and matching grants to be supported under the second component. This document will cover the following: (a) rules and procedures for Public Disclosure Copy environmental screening; (b) guidance for preparing subprojects EIA and/or simple EMPs as well as of EMP Checklist; (c) possible mitigation measures for different types of subprojects and matching grants; and (d) requirements for monitoring and supervision of implementing of EIA/EMPs requirements. The proposed training and extension to be provided under the component I and III of the project will include various aspects of ensuring environmental sustainability of different types of agricultural investments. In this regard the EMF would provide advices on what environmental issues should be integrated in the curricular for proposed agricultural training and extension activities. While the training and information dissemination activities will be focused mostly on post harvesting investments, they would also cover also key environmental safeguards issues during agricultural production such as mineral fertilizers and pesticides management through Integrated Pest Management approach, soil and water resources conservation. Under the capacity building activities to be provided for participating Public Disclosure Copy financial institutions a special training will be devoted to rules and procedures of subprojects EA. Per WB requirements the EMF will be disclosed and consulted in the country before appraisal. Natural Habitats OP/BP 4.04 No This policy will be not triggered as the project would support investments only in the settlements or on existing agricultural lands. The EMF will provide guidance and criteria for subprojects screening on this OP and all those which might trigger the policy will be excluded from the project financing. Forests OP/BP 4.36 No This policy will be not triggered as all project activities will be implemented in the existing settlements and there will be no support for wood harvesting subprojects. Pest Management OP 4.09 Yes This OP 4.09 is triggered as the project may finance purchasing of pesticides and and/or proposed project activities that could lead to their increased usage. No separate Pest Management Plan is needed, but the Environmental Management Framework will Public Disclosure Copy include a section describing both measures which will be used to ensure compliance with national laws and WB requirements relating to pesticide purchase and use, and also measures to promote Integrated Pest Management (IPM) approaches and safe pesticide handling and disposal practices to reduce human and environmental exposure. Additionally the EMF will include a list of eligible pesticides in the country and guidance on their use. Any proposed financing for purchase of pesticides will require NoB from WB. Physical Cultural Resources OP/ No N/A BP 4.11 Indigenous Peoples OP/BP 4.10 No N/A Involuntary Resettlement OP/BP Yes Involuntary Resettlement Policy OP4.12 is 4.12 triggered. Project activities will not require resettlement. The typical range of activities is focused on technology transfer, improved pasture management practices, market orientation trainings and which do not require expansion of agricultural land plots already leased or owned by the farmers. However, sub- grant and sub-loan financing is allowed for Public Disclosure Copy small construction works, such as small agro products storage facilities. Although these would only are anticipated to be constructed on land owned or purchased by the loan or grant beneficiaries or on public land allocated by the local authorities, there is a risk that there could be informal land users who could be displaced. An RPF for the project will be prepared which will focus mainly on the mitigation of this risk. Safety of Dams OP/BP 4.37 No N/A Projects on International No N/A Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP No 7.60 III. SAFEGUARD PREPARATION PLAN A. Tentative target date for preparing the PAD Stage ISDS: 16-May-2014 1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons. B. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS: The EMF document will be prepared and disclosed, and the public consultation held before Public Disclosure Copy Appraisal. Its disclosure will be done via Internet and by submitting the draft documents to key stakeholders for review and comments. After that (in about 10-14 days) the EMF document will be consulted at a special workshop with participation of all stakeholders and representatives from broad public and NGOs. All relevant consultation documents including invitations, announcement, list of attendees, minutes and summaries of comments received will be attached to the EMPs and ESMF for Infoshop disclosure. IV. APPROVALS Task Team Leader: Name: Sandra Broka Approved By: Regional Safeguards Name: Agnes I. Kiss (RSA) Date: 03-Dec-2013 Coordinator: Sector Manager: Name: Dina Umali-Deininger (SM) Date: 03-Dec-2013 Public Disclosure Copy