The proposed project supports the implementation of the government's Agriculture Development Strategy to 2025 (ADS) by boosting the competitiveness of rice value chains in Khammouane, Saravan, and Savannakhet provinces, and vegetable value chains in Vientiane Capital, Champasak, and Sekong provinces. The project will improve the climate resilience of agricultural infrastructure, and enhance crop productivity, diversification, and commercialization. It will help improve the capacity for storage, processing, quality, and safety testing, and promote the use of biofertilizers and organic farming. It will strengthen the capacity of farmers and agribusinesses for climate-smart agriculture (CSA), and create an enabling environment for climate-friendly agribusinesses to promote sustainability along the value chain.
Description The proposed project supports the implementation of the government's Agriculture Development Strategy to 2025 (ADS) by boosting the competitiveness of rice value chains in Khammouane, Saravan, and Savannakhet provinces, and vegetable value chains in Vientiane Capital, Champasak, and Sekong provinces. The project will improve the climate resilience of agricultural infrastructure, and enhance crop productivity, diversification, and commercialization. It will help improve the capacity for storage, processing, quality, and safety testing, and promote the use of biofertilizers and organic farming. It will strengthen the capacity of farmers and agribusinesses for climate-smart agriculture (CSA), and create an enabling environment for climate-friendly agribusinesses to promote sustainability along the value chain.
The Human Development Index report ranks the Lao PDR as 138th out of 188 countries. Macroeconomic and political stability enabled it to achieve moderate economic growth at 6.5% per annum during 1986 2016. However, the country also grappled with a persistent current account deficit, falling foreign currency reserves, and growing public debt. Although the contribution of agriculture to the national gross domestic product is declining (from 32.7% in 2010 to 19.8% in 2016), the economy still remains agrarian: about 65% of the working population is employed in the sector. Low sector growth led to low levels of rural household incomes. The poverty rate of those engaged in agriculture is nearly three times higher than for those working in other sectors.
The government aims to increase the agricultural growth rate to 3.4% per annum by 2020. The policy framework for the agriculture sector is set out in (i) the ADS to 2025 (footnote 1); (ii) the 8th Five-Year National Socio-Economic Development Plan (2016 2020); (iii) the Development Strategy of the Crop Sector 2025 and Vision 2030; and (iv) the National Strategy on Climate Change of Lao PDR.7 The ADS aims to (i) ensure food security; (ii) produce competitive commodities with a comparative advantage; (iii) develop a clean, safe and sustainable agriculture; and (iv) shift gradually to the modernization into a resilient and productive agricultural economy.
Description of Outcome Productive and resource-efficient agribusiness value chains developed in project areas.
Enabling environment for climate-friendly agribusiness enhanced.
Environmental Aspects The three representative subprojects were found to have minimal environmental impacts and were classified as category C. However, category B is retained for the overall project as future subprojects, such as upgrade of access roads and tertiary canals, may have environmental impacts. An environmental assessment and review framework has been prepared to guide the screening and classification of each subproject during implementation and disclosed it on the ADB website in March 2018. Subprojects classified as category A will not be financed. The environmental assessment and review framework includes an environmental code of conduct for contractors, which will be adopted for all category C subprojects to ensure adoption of good environmental site management practices. A project grievance redress mechanism will facilitate the resolution of any safeguard-related complaints.
Involuntary Resettlement Involuntary resettlement is classified as Category B. Subproject screening will identify and reject any category A subprojects that involve significant involuntary resettlement, economic displacement, or land acquisition. Due diligence conducted for the three representative subprojects shows that none will result in any physical or economic displacement. Two subprojects will not require land acquisition while the vegetable packhouse subproject will need minimal land acquisition through voluntary donation. A land acquisition and resettlement framework has been prepared to guide the screening and selection of subprojects as well as the resettlement planning process, and uploaded to the ADB website in March 2018. A rigorous due diligence procedure to verify bona fide voluntary donation is included in the resettlement framework to further screen and select subprojects during implementation and guide the preparation of any resettlement plans, if required.
Indigenous Peoples Indigenous peoples is categorized as Category B. Due diligence on the three representative subprojects showed that many ethnic groups are living in the project provinces. However, no indigenous peoples were found in the three representative subproject areas, and no indigenous peoples plan (IPP) was prepared. An ethnic group development framework, which was disclosed on the ADB website in March 2018, has been prepared to guide the preparation of IPPs as needed during project implementation, which will ensure inclusion and the full consultation and participation of ethnic group households and communities.
During Project Design During project design, consultations were conducted MAF; provincial, district, and village officials to determine project priorities, objectives, and confirm priorities and needs. Focus group discussions were also held with private crop collectors, mill operators, and other agribusiness actors and families living in the subproject target areas.
During Project Implementation The project is expected to become effective by 1 November 2018. Broad and meaningful consultations will continue through project implementation to build on the initial consultations held with various stakeholder groups during project preparation.
Consulting Services All consultants will be recruited following the ADB's Guide on the Use of Consultants (2013, as amended from time to time). MA will recruit project implementation consultants (PIC), financial management entity (FME), external monitoring agency, individual start-up management consultants, and individual finance and administration assistants. Advance contracting will be done for the (i) start-up management consultants, (ii) PIC, and (iii) the FME.
Procurement All procurement will be done following the ADB Procurement Guidelines (2015, as amended from time to time). MAF will rehabilitate access roads and tertiary canals, upgrade (and procure equipment) crop research centers and laboratories, and procure vehicles and office equipment for NPMO and PPMUs. Advance actions will be done for procurement of vehicles and office equipment/furniture.
ADB and the Government of the Lao PDR signed an agreement yesterday for a $40.5 million grant for a project that will help farmers and agribusinesses develop sustainable and climate-smart agriculture value chains in the country.
ADB'a Board of Directors has approved a $40.5 million grant to help farmers and agribusinesses develop sustainable and climate-smart agriculture value chains in the Lao People’s Democratic Republic.