Completion Report

Project Numbers: 31351-013 and 31351-014 Loan Numbers: 1949 and 2809 June 2016

Lao People’s Democratic Republic: Smallholder

Development Project

This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – kip (KN)

At Appraisal At Project Completion Loan 1949-LAO(SF) (31 October 2002) (18 September 2012)

KN1.00 = $0.0000922 $0.0001251 $1.00 = KN10,850 KN7,989

Loan 2809-LAO(SF) (28 September 2011) (26 October 2015)

KN1.00 = $0.000125 $0.000123 $1.00 = KN8,011 KN8,128

ABBREVIATIONS

ADB – Asian Development Bank AMIS – agriculture market information system APB – Agriculture Promotion Bank ATEC – Agriculture Technical Extension Center DAFO – district agriculture and forestry office DICO – district industry and commerce office DMF – design and monitoring framework DPO – district project office EIRR – economic internal rate of return FPMG – farmer production and marketing group GAP – gender action plan GMS – Greater Mekong Subregion ILO – International Labour Organization LCG – Lao Consulting Group MAF – Ministry of Agriculture and Forestry MOIC – Ministry of Industry and Commerce MTR – midterm review NAFES – National Agriculture and Forestry Extension Service NPSC – National Project Steering Committee ONPD – Office of the National Project Director PAFO – provincial agriculture and forestry office PCR – project completion report PICO – provincial industry and commerce office PPMS – project performance monitoring system PPO SOE

– –

provincial project office statement of expenditure

TA – technical assistance

WEIGHTS AND MEASURES

ha – hectare km – kilometer m2 – square meter t – ton

NOTE

(i) The fiscal year (FY) of the Government of the Lao People’s Democratic Republic ends on 30 September.

(ii) In this report, "$" refers to US dollars. Vice-President S. Groff, Operation 2

Director General J. Nugent, Southeast Asia Department (SERD) Director S. Nicoll, Lao People’s Democratic Republic Resident Mission, SERD Team leader P. Xayyavong, Project Officer, SERD Team members C. Bounnad, Associate Project Analyst, SERD

P. Louangraj, Senior Economics Officer, SERD S. Phanouvong, Senior Project Officer, SERD P. Phanvongsa, Project Analyst, SERD T. Saphakdy, Social and Development Officer (Gender), SERD S. Schipani, Senior Portfolio Management Specialist, SERD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1 B. Project Outputs 3 C. Project Costs 5 D. Disbursements 6 E. Project Schedule 6 F. Implementation Arrangements 7 G. Conditions and Covenants 7 H. Related Technical Assistance 8 I. Consultant Recruitment and Procurement 8 J. Performance of Consultants, Contractors, and Suppliers 9 K. Performance of the Borrower and the Executing Agency 9 L. Performance of the Asian Development Bank 9

III. EVALUATION OF PERFORMANCE 10

A. Relevance 10 B. Effectiveness in Achieving Outcome 10 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 11 E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13

A. Overall Assessment 13 B. Lessons 13 C. Recommendations 14

APPENDIXES

1. Project Design and Monitoring Framework 15 2. Original Project Loan 1949-LAO(SF): Overview of Implementation and Achievements 19

3. Additional Financing Loan 2809-LAO(SF): Overview of Implementation and Achievements 28

4. Project Performance Assessment: Summary of Major Issues 37

5. Project Implementation Arrangements 41

6. Compliance with Loan Covenants 45

7. Economic Analysis 56

8. Summary of Gender Equality Results and Achievements 63

9. Calculation of Overall Project Rating 80

10. Contribution to the ADB Results Framework 81

BASIC DATA Loan 1949-LAO(SF)

A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number

Lao People’s Democratic Republic 1949-LAO(SF) Smallholder Development Project Government of the Lao People’s Democratic Republic Ministry of Agriculture and Forestry SDR 9,092,000 ($12,000,000 equivalent) PCR:LAO 1560

B. Loan Data

1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (number of years) – Grace Period (number of years)

6 July 2002 19 July 2002 31 October 2002 1 November 2002 28 November 2002 7 February 2003 8 May 2003 18 June 2003 0 31 October 2009 18 September 2012 3 1% during 2003–2010, 1.5% in 2011 and thereafter 32 8

8. Disbursements

a. Dates Initial Disbursement

4 September 2003

Final Disbursement

11 July 2012

Time Interval

106.29 months

Effective Date

18 June 2003

Original Closing Date

31 October 2009

Time Interval

76.51 months

ii

b. Amount (SDR)

Category

Original Allocation Last Revised

Allocation

Amount Disbursed

Undisbursed Balance

a

01 Civil Works 3,933,000 4,337,200 4,285,733 51,467 02 Equipment 668,000 487,916 477,191 10,725 03 Vehicle 245,000 263,404 263,404 0 04 Materials 135,000 265,559 263,853 1,706 05 Training and Fellowship 1,338,000 627,674 625,886 1,788 06 Consulting Services 970,000 1,524,872 1,523,295 1,577 07 Incremental Operational Cost 392,000 843,673 842,720 953 08 O&M 259,000 327,576 326,341 1,235 09 Interest Charge 327,000 327,000 295,686 31,314 10 Unallocated 825,000 87,126 0 87,126 99 Imprest Account 0 0 (418) 418 Total (SDR) 9,092,000 9,902,000 8,903,691 188,309 Total ($ equivalent) 12,000,000 13,968,287 13,678,235 290,052 ( ) = negative, O&M = operation and maintenance, SDR = special drawing rights. a

cancelled on 18 September 2012.

9. Local Costs (financed by the Asian Development Bank) - Amount ($) 5.5 million - Percent of Local Costs 57% - Percent of Total Cost 40% C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost

6.50

8.19

Local Currency Cost 8.73 8.79 Total 15.23 16.98

2. Financing Plan ($ million})

Cost Appraisal Estimate Actual

Implementation Costs Borrower Financed 3.23 3.30 ADB Financed 12.00 13.38

Total 15.23 16.68

IDI Costs Borrower Financed 0 0 ADB Financed 0.42 0.30 Other External Financing 0 0

Total 15.65 16.98

ADB = Asian Development Bank, IDI = interest during implementation.

iii

3. Cost Breakdown by Project Component ($ million})

Component Appraisal Estimate Actual

A. Base Cost 1. Farmer Support Services 4.60 4.87 2. Agribusiness and Marketing Development 1.38 1.87 3. Rural Infrastructure 5.26 5.58 4. Project Management 2.24 4.36

Subtotal (A) 13.48 16.68 B. Contingencies

Physical Contingencies 0.61 0 Price Contingencies 0.73 0

Subtotal (B) 1.34 0 Total Project Costs 14.82 16.68

C. Interest During Implementation 0.42 0.30

Total 15.24 16.98

4. Project Schedule

Item Appraisal Estimate Actual

Date of Contract with Lao Consulting Group Q4 2003 7 December 2004 Completion of Engagement 31 December 2011 Date of Contract with the International Labour Organization

Q3 2003 9 March 2005

Completion of Engagement 16 June 2005 Date of Contract with Bomasis Consulting Q1 2004 20 November 2008 Completion of Engagement 7 February 2010 Date of Contract with Lao Consulting Group on Farmer Production and Marketing Group Survey

Q3 2007 21 July 2008

Completion of Engagement 29 January 2010 Date of Award Contract of DAFO’s Office Construction Q2 2005 9 December 2005 Completion of Works 28 August 2007 Date of Award Contract of Road from Soukhuma to Mounlapamok with:

Q1 2004

Homsombath Construction Company 6 November 2006 Completion of Work 28 May 2010 Phokham Construction Company 6 November 2006 Completion of Work 10 September 2010

Date of Award Contract of Road from Mounlapamok to Verngnang with:

Q1 2004

Homsombath Construction Company 6 November 2006 Completion of Work 25 September 2009 Champasack State Enterprise Irrigation 6 November 2006 Completion of Work 5 June 2009

Date of Award Contract of Road from Champhone to Xounbouly with Savannakhet Irrigation Construction State Enterprise

Q1 2004 8 November 2006

Completion of Work 17 July 2008 Date of Award Contract of Road from 13 South Road to Thapasoum with Khounxay Paththana Construction

Q1 2004 9 November 2006

Completion of Work 29 August 2008 Date of Award Contract of Construction of Houy Kadien, Houy Hin, Houy Ton and Houy Yang Bridges

Q1 2004 19 March 2008

Completion of Work 30 June 2009 Date of Award Contract of Construction of Houy Khamouan Bridge

Q1 2004 14 March 2008

iv

Completion of Work 17 February 2010 Date of Award Contract of Construction of Houy Kanloeuang, Hout Haed, Houy Tapai and Houy La Ox Bridges

Q1 2004 18 March 2008

Completion of Work 23 January 2010 Date of Award Contract of Saybouly Primary Market Construction

Q1 2005 12 December 2007

Completion of Work 9 August 2009 Date of Award Contract of Sayphouthong Primary Market Construction

Q1 2005 12 December 2007

Completion of Work 20 April 2009 Date of Award Contract of Pakxong Primary Market Construction

Q1 2005 15 January 2008

Completion of Work 20 February 2009 Date of Award Contract of Phonthong Primary Market Construction

Q1 2005 15 January 2008

Completion of Work 9 July 2009 Date of Award Contract of Thoulakom Primary Market Construction

Q1 2005 28 February 2008

Completion of Work 20 February 2009 Date of Award Contract of Nongbok Primary Market Construction

Q1 2005 8 February 2008

Completion of Work 10 March 2009 Equipment and Supplies Dates Q4 2003 First Procurement 10 February 2004 Last Procurement 28 July 2011 DAFO =District Agriculture and Forestry Office, Q = quarter.

5. Project Performance Report Ratings

Implementation Period

Ratingsa

Development Objectives

Implementation Progress

From 8 May 2003 to December 2003 Satisfactory Satisfactory From January 2004 to December 2004 Satisfactory Satisfactory From January 2005 to December 2005 Satisfactory Satisfactory From January 2006 to December 2006 Satisfactory Satisfactory From January 2007 to December 2007 Satisfactory Satisfactory From January 2008 to December 2008 Satisfactory Satisfactory From January 2009 to December 2009 Satisfactory Satisfactory From January 2010 to December 2010 Satisfactory Satisfactory From January 2011 to May 2011 Satisfactory Satisfactory From June 2011 to December 2011 On track On track From January 2010 to 18 September 2012 On track On track a

New project performance rating system was applied beginning June 2011.

v

D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members

a

Inception Mission 16 September 2004 2 18 a, b Loan Review Mission 1 5 December 2005 3 18 b, c, g Loan Review Mission 2 23 May 2006 2 16 d, g Loan Review Mission 3 13 November 2006 4 22 b, g

Midterm Review Mission 1 8 May 2007 2 10 b, e, g Midterm Review Mission 2 14 October 2007 4 36 f, e Loan Review Mission 4 26 November 2008 2 13 b, g, h Loan Review Mission 5 6 February 2009 4 24 g, h, i Loan Review Mission 6 12 August 2009 3 18 c, b, h Loan Review Mission 7 14 March 2010 2 12 c, h Loan Review Mission 8 9 January 2011 2 12 c, h a

a = senior financial specialist, b = project analyst, c = senior project officer, d = project officer, e = financial specialist, f = principal project management specialist, g = senior natural resources economist, h = economics officer, i = project administration unit head.

vi

BASIC DATA Loan 2809-LAO(SF)

A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan

7. Project Completion Report Number

Lao People’s Democratic Republic 2809-LAO(SF) Smallholder Development Project (Additional Financing) Government of the Lao People’s Democratic Republic Ministry of Agriculture and Forestry SDR 3,155,000 ($5,000,000 equivalent) PCR:LAO 1560

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (number of years) – Grace Period (number of years

9 May 2011 19 May 2011 21 July 2011 22 July 2011 22 November 2011 24 January 2012 23 April 2012 10 February 2012 None 30 June 2015 11 September 2015 None 1% per annum during grace period; and 1.5% per annum during amortization period 32 8

8. Disbursements a. Dates Initial Disbursement

16 March 2012

Final Disbursement

11 September 2015

Time Interval

41.9 months

Effective Date

10 February 2012

Original Closing Date

30 June 2015

Time Interval

40.64 months

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b. Amount (SDR)

Category Original Allocation

Last Revised Allocation

Amount Disbursed

Undisbursed Balance

a

1 Works 147,000 132,932 132,932 0 2 Equipment 359,000 577,328 576,675 653 3 Vehicles 109,000 96,540 96,540 0 4 Materials 427,000 424,944 424,012 932 5 Training 184,000 329,221 336,545 (7,324) 6 Consulting Services 468,000 532,519 519,485 13,034

7 Agency costs (Operational)

1,421,000 1,021,516 1,004,493 17,023

8 Interest charge 40,000 40,000 40,000 0 99 Imprest account 0 0 0 0 Total (SDR) 3,155,000 3,155,000 3,130,682 24,318 Total ($ equivalent) 5,000,000 4,783,333 4,749,406 33,927

( ) = negative, SDR = special drawing rights. a

cancelled on 26 October 2015. C. Project Data

1. Financing Plan ($)

Cost Appraisal Estimate Actual Implementation Costs

Borrower Financed 0.50 1.09 ADB Financed 4.96 4.71

Total 5.46 5.80

IDI Costs Borrower Financed 0 0 ADB Financed 0.04 0.04

Total 5.50 5.84

ADB = Asian Development Bank, IDI = interest during implementation

2. Cost Breakdown by Project Component ($million)

Component Appraisal Estimate Actual

A. Base Cost

1. Farmer Support Services 1.74 2.30 2. Agribusiness and Marketing 0.50 0.20 3. Rural Infrastructure 0 0 4. Integrated Extension Service 1.84 1.53 5. Project Management 0.60 1.14 6. Capacity Building 0.27 0.63

Subtotal (A) 4.95 5.80 B. Contingency 0.49 0 C. Financing Charges During Implementation 0.06 0.04

Total (A+B+C) 5.50 5.84

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3. Project Schedule

Item Appraisal Estimate Actual

Date of Contract with Implementation Consultants Q3, 2011 13 March 2012 Completion of Engagement 30 June 2015 Date of Contract with District Based Implementation Consultant in Kasi District

1 June 2012

Completion of Engagement 31 December 2014 Date of Contract with District Based Implementation Consultant in Mahaxay District

1 June 2012

Completion of Engagement 31 December 2014 Date of Contract with District Based Implementation Consultant in Phalanxay District

06 June 2012

Completion of Engagement 31 December 2014 Date of Contract with District Based Implementation Consultant in Khong District

06 June 2012

Completion of Engagement 31 December 2014 Date of Contract with District Based Implementation Consultant in Sanakham District

12 September 2012

Completion of Engagement 31 December 2014 Date of Contract with District Based Implementation Consultant in Xebangfay District

12 September 2012

Completion of Engagement 31 December 2014 International Monitoring and Evaluation Expert Q1, 2012 21 December 2012 Completion of Engagement 30 June 2015 National Environmental Safeguard Specialist 18 January 2013 International Pre- and Post-Harvest Technology Expert Q2, 2012 15 July 2013 Completion of Engagement 30 June 2015 TACDO Consulting Center 13 August 2013 Completion of Engagement 31 March 2014 International Economist 16 January 2015 Completion of Engagement 30 June 2015 Date of Award contract of small scale irrigation rehabilitation

Q3, 2011 17 September 2012

Completion of Contracts 26 April 2013 Office Renovations Q3, 2011 20 September 2012 Completion of Contracts 4 February 2013 Equipment and Supplies Q3, 2011 27 April 2012 Completion of Contracts 24 September 2014

Q = quarter, TACDO = Training and Consulting for Development.

4. Project Performance Report Ratings

Implementation Period Ratings

From 11 February 2012 to December 2012 On track From 1 January 2013 to 31 December 2013 On track From 1 January 2014 to 31 December 2014 On track From 1 January 2015 to 30 June 2015 On track

ix

D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-

Days

Specialization of Members

a

Inception 28 February 2012 2 12 a, b, c Loan Review Mission 1 3 November 2012 3 18 a, c, d Loan Review Mission 2 22 June 2013 3 18 c, d, e Loan Review Mission 3 3 December 2013 2 8 c, d Loan Review Mission 4 23 June 2014 4 8 c, d Loan Review Mission 5 17 November 2014 2 12 c, d, f, g Project Completion Review 9 November 2015 2 10 a, c, d, f a

a = senior economics officer, b = principal country economist, c =associate project analyst, d =project officer, e = senior project officer, f = social development officer, g = lead social development specialist.

I. PROJECT DESCRIPTION

1. The Smallholder Development Project aimed to establish sustainable commercial smallholder agriculture and associated agribusiness in 16 districts in four target provinces, with the goal of achieving increased rural incomes and employment. This was based on outputs of (i) an effective agricultural extension and training mechanism; (ii) improved physical infrastructure for input and produce marketing; and (iii) an effective primary marketing network.1 The project was approved by the Asian Development Bank (ADB) in November 2002, became effective in June 2003, and closed in September 2012 after three extensions of the loan closing date. Technical assistance (TA) accompanied the project to facilitate agribusiness training.2 The estimated project cost of $15.2 million was to be financed by an ADB loan of $12 million equivalent from Special Funds Resources and $3.2 million equivalent from the Government of the Lao People’s Democratic Republic (Lao PDR). ADB approved a major change in project scope in January 2005 to cover a revised roads program. 2. In February 2011, the government requested additional financing for the project to replicate activities that were performing well, which was approved by ADB in November 2011.3 The aim was to continue supporting farmer production and marketing groups (FPMGs) in their production, marketing and business activities. The additional financing outputs included (i) strengthening FPMGs; (ii) replicating post-harvest technology and practices; (iii) strengthening extension services of the Agriculture Technical Extension Centers (ATECs); (iv) improving FPMGs’ knowledge of agribusiness practices; and (v) strengthening capacity for project implementation. Additional financing expanded coverage to eight new districts in the four target provinces. The additional financing became effective in February 2012, was completed on 30 June 2015, and was closed on 26 October 2015. The estimated cost for the additional financing was $5 million from ADB’s Special Funds Resources and $0.05 million from the government. The project framework at appraisal and achievements at completion, for the original and overall projects, are in Appendix 1.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

3. The project was relevant to government policy. At the time the project was formulated the government’s sector vision emphasized (i) increasing rural incomes by developing market-oriented agriculture, and improving public institutions and policies to better serve this aim; (ii) improving the business and investment environment; (iii) achieving a better balance of investments in the sector; and (iv) improving the sustainability of rural infrastructure investments. The strategy aimed to improve the technical knowledge and agribusiness awareness of farmers and increase capacity to boost output and create marketable surpluses to meet growing domestic and regional demand. The focus was on local and external raw commodity and agribusiness processing markets. The intentions of the original project and additional financing fit well with these objectives.

1 ADB. 2002. Report and Recommendation of the President on a Proposed Loan and Technical Assistance Grant to the Lao People’s Democratic Republic for the Smallholder Development Project. Manila. (Loan 1949-LAO). The project covered six districts in Savannakhet province, six in Champasak province, two in Khammuane province, and two in Vientiane province.

2 ADB. 2009. Technical Assistance Completion Report: Agribusiness Support and Training in Lao PDR. Manila. (TA 4005-LAO).

3 ADB. 2011. Report and Recommendation of the President on a Proposed Loan for Additional Financing to Lao

People’s Democratic Republic: Smallholder Development Project. Manila.

2

4. The original project design was consistent with ADB’s corporate goals as expressed in the 1999 Poverty Reduction Strategy, which emphasized pro-poor, sustainable economic growth.4 ADB’s Country Strategy and Program for Lao PDR identified rural development and market linkages as one of the operational priorities.5 The project scope was justified by country and sector analysis that recognized (i) the potential for addressing poverty by raising agriculture productivity on a sustainable basis; (ii) rapidly expanding land and market linkages with neighboring countries; and (iii) the agribusiness environment was impaired by numerous policy, regulatory and information constraints. ADB’s understanding of these issues was informed by previous operations.6 The project scope also fit well with ongoing and proposed investments in rural finance and banking sector reforms.7 There was a strong geographic rationale for the project location. The government’s sector strategy recognized a clear dichotomy between the investment needs of the sloping uplands and the Mekong valley. The project covered the Vientiane Plain and the Mekong Corridor almost entirely. These areas had (i) relatively dense populations, (ii) some functioning irrigation areas, (iii) small but growing marketable surpluses of non-rice crops and livestock, and (iv) significant informal trade with Thailand.8 The approach was to reduce poverty by enhancing, regularizing and increasing the sustainability of these trends. 5. By the seventh National Socioeconomic Development Plan (NSEDP)9 the main objective was to ensure transition from subsistence to commercial smallholder production. The emphasis of the eighth NSEDP10 included a targeted approach based on local comparative advantage, but maintained wider objectives of (i) clean, modern technology; (ii) links to processing and services; and (iii) value addition. ADB’s agriculture and natural resources sector assessment in 2011 also recognized continuing opportunities afforded by (i) strategic land linkages within the Greater Mekong Subregion (GMS); (ii) increasing green growth and new agriculture developments;11 and (iii) expanding favorable trade conditions with Lao PDR’s ascension to the Association of Southeast Asian Nations Free Trade Area. Accordingly, ADB’s strategy was to promote value chain strengthening through better rural access and improved post-harvest practices.12 At project completion, the government continued to focus on concentrating modern farming in large plain areas along the Mekong River and in the smaller upland plains, and developing domestic markets to facilitate intra-provincial trade in agricultural products. Smallholders were expected to play an increasing role in processing, branding and marketing agriculture products through farmers’ organizations and in partnership with the private sector. The project logic clearly supported such ambitions.

6. Project design was based on project preparatory technical assistance (PPTA), including in-depth problem and objectives analyses and sector policy reviews. Supply-side aspects of

4 ADB.1999. Fighting Poverty in the Asia and Pacific Region-The Poverty Reduction Strategy of the Asian

Development Bank. Manila. 5 ADB. 2002. Lao PDR: Country Strategy and Program (2003-2005). Manila.

6 ADB. 1989. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Lao People’s Democratic Republic for the Agriculture Program. Manila; ADB. 1992. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Lao People’s Democratic Republic for the Second Agriculture Program. Manila.

7 ADB. 2000. Proposed Technical Assistance Cluster to the Lao People’s Democratic Republic. Manila. (TA 3413).

8 These included maize, soybean, peanuts, cotton, sesame, vegetables, non-timber forest products and pigs.

9 Ministry of Planning and Investment. 2011. The Seventh Five-Year National Socioeconomic Development Plan

(2011-2015). Vientiane. 10

Ministry of Planning and Investment. 2016. The Eighth Five-Year National Socioeconomic Development Plan (2016-2020). Vientiane.

11 New agriculture refers to conditions that derive from increasing globalization, and within which there are vastly increased international flows of information, goods, financial capital, technology, ideas and people.

12 ADB. 2011. Country Partnership Strategy for Lao People’s Democratic Republic 2012-2016. Manila.

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smallholder commercialization were targeted through farmer support services and the demand side through agribusiness and marketing components.13 The project scope was ambitious, necessitating complex implementation arrangements. Significant design deficiencies became evident during implementation: aspects of the demand-side support (credit lines, market information services and investment promotion) proved largely redundant, while the need to reformulate the roads program and adjust the labor-based approach employed in road construction also suggests the need for more robust analysis and better donor coordination at the design stage. Construction of primary markets was originally agreed by ADB and the government at the PPTA draft final report stage. Additional resources were then provided to further investigate the need for primary markets. Six market sites were eventually selected and preliminary designs prepared. 7. Project design deficiencies complicate project evaluation. For example, the original project framework set goals of economic growth and increased employment and income. The expected achievement at the purpose level was establishment of a sustainable smallholder agriculture base. However, the project framework improperly set performance indicators by specifying agricultural production changes at the goal level and income changes at the purpose level. The revised design and monitoring framework (DMF) for the additional financing was problematic in its conceptions of impact (defined in terms of agriculture productivity) and outcome (defined in terms of smallholder sustainability). The results chain should instead have linked agriculture productivity to changes in incomes, employment and poverty incidence. The reformulated DMF retained the use of a household income indicator at the outcome level and an impact-level production indicator. It also contained an unrealistic target regarding the number of households whose incomes would be raised. B. Project Outputs14

1. Effective Agricultural Extension and Training Mechanism 8. This component aimed to (i) strengthen the government extension system; (ii) acquire and provide updated technology packages for a variety of agriculture and livestock activities, including for those with export potential; (iii) establish contract farming arrangements as a basis for training; and (iv) facilitate rural credit to farmers. At original project completion, 162 FPMGs were registered, with a membership of 9,075 households in 323 villages. Post-harvest technology was provided to FPMGs in 10 districts. A total of 4,089 smallholder farmers obtained seasonal credits from the Agriculture Promotion Bank (APB); the total amount was KN214.35 billion. Eight agribusinesses accessed KN33.44 billion in bank loans linked to project-supported activities. A total of 185 training sessions for 6,169 farmers (20% women) and 108 study visits for 825 farmers and 285 staff were undertaken. Further, 280 agricultural demonstrations and 101 staff training courses for 1,193 staff were delivered. The additional financing provided further support to strengthen agricultural extension services and training. 9. Strengthened farmer production and marketing groups. The project achieved all performance indicators under this output. At completion of the additional financing, a total of 221 FPMGs were established and registered, compared to the target of 190. Within these groups, 2,222 members (17% women) received training in production, processing and packaging, while 284 members (14% women) received agribusiness and marketing training. 27% of committee

13

ADB. 2000. Technical Assistance to the Lao People’s Democratic Republic for Preparing the Smallholder Development Project. Manila. (TA 3603).

14 A fuller description of project outputs is in Appendix 2 (for original project) and Appendix 3 (for additional financing).

4

members of FPMGs were women, against a target of 20%. Group savings have been established by 60 FPMGs, with total capital of about KN1 billion ($131,480). Among these, 54 groups engaged in savings mobilization and re-lending schemes (the target was 56). About 4,500 project staff, FPMG members and entrepreneurs received technical and management training. Three FPMGs received organic certification, with five groups on the way to achieving this at project completion. Another three became cooperatives, and 31 produced quality R3 type improved rice seed and supplied it to farmer households within the 24 target districts and neighboring districts. Some 3,000 tons of R3 type improved rice seed was produced and 40% of this was sold. 10. Replicated post-harvest technology and practices. The project provided 119 production groups with 3 chili driers, 10 rice seed dryers, 8 rice seed threshers, 8 rice seed graders, 8 transplanting machines, 21 moisture testers, 14 mowing machines, 66 seed spay machines, seed color sorters, 3 coffee roasters and 5 corn grinders. All groups received adequate training to operate the machinery (20.3% of training participants were women against a target of 20%). More than 80% of FPMGs applied recommended post-harvest technology and group savings are used for operations and maintenance (O&M) of the equipment. 11. Strengthened extension services of the Agriculture Technical Extension Centers. The project strengthened the capacity of Xebangfay Agriculture Research and Development Center in Khammuane province, Thasano Rice Seed Research and Seed Multiplication Center in Savannakhet province and the Lao-China Agriculture Cooperation Center in Champasack province to provide better quality extension services to farmers. Laboratory equipment, training room construction, development of training curriculums, and construction of organic vegetable planting demonstration sites were all provided. At completion, these centers provide extension services on rice seed and commercial rice production, fish farming, livestock raising and organic vegetable production to 361 villages against the target of 400. The extension coverage is slightly lower than expected due to village consolidation. 12. Improved farmer production and marketing group knowledge of agribusiness practices. This output involved (i) facilitating farmer–private sector information sharing; (ii) promoting cooperation among farmers, village extension workers, FPMGs, and trade groups to identify market needs and quality standards; (iii) adopting best practices for the trade and promotion of agricultural products and services; (iv) strengthening the value chain linkage between smallholders and private sector; and (v) training for business development. A total of 24 forums and agribusiness conferences (the target was 8) and 19 trade fairs and exhibitions were organized. Improved knowledge of agribusiness practices on the part of FPMGs resulted in 65 contract farming arrangements being agreed to (the target was 20), establishment of seven farm retail outlets and two rice mill marketing platforms.

2. Improved Physical Infrastructure for Inputs and Produce Marketing 13. This was originally to rehabilitate 89.5 kilometers (km) of strategic high-priority rural access roads and construct 70.8 km of new roads. The location and length of roads were later changed to complement the support of other development partners.15 At completion, as per revised scope, 78 km of feeder roads were rehabilitated and 54 km of rural access roads with 9 bridges were constructed.

15

ADB approved a major change in project scope on 25 January 2005.

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3. Effective Primary Market Network in Project Provinces

14. This output aimed to develop an effective primary market network through (i) agribusiness investments; (ii) provincial trade fairs and investment promotion workshops; (iii) establishing a Lao agribusiness forum; (iv) upgrading of Ministry of Agriculture and Forestry’s (MAF) market information system; and (v) assistance to the Trade Promotion Center, Ministry of Industry and Commerce (MOIC). It was to promote policy dialogue between the business community and the government at business forums; and construct strategically located primary markets.16 At completion, most output performance targets were not met. The project constructed six markets, but the agricultural market information system (AMIS) was defunct and the joint MAF and MOIC website databases were only partially operational. Three businesses received commercial bank loans with project support, 14 business plans had been prepared, and a number of contract farming agreements between FPMGs and commercial companies were in place. Two model contract and marketing arrangements were in place, demonstrating potential benefits of linking smallholders to processors and wider value chains.17

4. Strengthened Human Resource Capacity for Project Implementation 15. Support was provided for implementation and technical training (marketing, livestock and fisheries) and the additional financing further strengthened human resource capacity for project implementation through capacity building activities for the staff of Office of the National Project Director (ONPD), provincial project office (PPO) and district project office (DPO). Training focused on project management, financial management, procurement and agricultural production technologies. A total of 662 ONPD, PPO and DPO staff (including 156 women) attended training and study visits. C. Project Costs

Table 1: Project Cost Summary, Estimated and Actual ($ million)

Original Project Additional Financing Overall Project

Component / Output Budget

Actual Budget

Actual Budget Actual %

Farmer Support Services 4.60 4.87 1.74 2.30 6.34 7.17 31 Agribusiness and Marketing 1.38 1.87 0.50 0.20 1.88 2.07 9

Rural Infrastructure 5.26 5.58 0.00 0.00 5.26 5.58 25

Integrated Extension Service 0.00 0.00 1.84 1.53 1.84 1.53 7 Project Management and Capacity Building

2.24 4.36 0.87 1.77 3.11 6.13 27

Contingency 1.33 0.00 0.49 0.00 1.82 0.00 0

Interest During Implementation 0.42 0.30 0.06 0.04 0.48 0.34 1

Total Costs 15.23 16.98 5.50 5.84 20.73 22.82 100

Government contribution 3.23 3.30 0.50 1.09 3.73 4.39 19

ADB (including IDI) 12.00 13.68 5.00 4.75 17.00 18.43 81

ADB = Asian Development Bank, IDI = interest during implementation. Source: Asian Development Bank estimates.

16

Markets were to serve as collection, grading, storage, and exchange points for primary produce as well as points for distributing agricultural inputs (i.e., fertilizers, seeds, chemicals, tools and small farm machinery).

17 The first example was the rice mill marketing platform in Khammuane and Savannaket province, whereby rice millers established contract farming with paddy rice and rice seed FPMGs. The other sustainable model was the Bongphao organic vegetable FPMGs in Vientiane province that focused on a niche market and implemented good agricultural practices.

6

16. The total project cost was $22.82 million, about $2 million more than planned. The government’s contribution was just over 19% of the total and ADB’s contribution was about 81%.18 Original project management costs and capacity building costs exceeded appraisal estimates due to (i) higher than expected staff numbers and training needed; and (ii) three project extensions, totaling 26 months, which required additional project administration and consulting services funding. The dollar value of the SDR-denominated loan proceeds increased during implementation and exchange rate gains reached $1.9 million by late 2010. These were mainly allocated to cover additional farmer support services and project management and capacity building activities. About 40% of the additional financing directly supported the FPMGs, including extra costs incurred for rice milling equipment, more training for project staff, and additional consulting services. D. Disbursements

17. The original project established an imprest account at the Bank of Lao PDR with an initial advance of $0.2 million. Project sub-accounts were established for the executing agency and each of the four participating provinces. Statement of expenditure (SOE) procedure was initially used to replenish the imprest account. Disbursements in the first two years of project implementation were slow because of (i) delays in consultant recruitment; (ii) delays in the award of rural roads contracts; (iii) slow implementation of the agribusiness and marketing component; and (iv) slow imprest account replenishment because project staff lacked familiarity with SOE financial management requirements.19 Slow implementation progress and delayed disbursements were overcome after a change in project management staff and an increase in the imprest account ceiling to $0.5 million in 2007. Cumulative disbursements accelerated to 66% of the net loan proceeds in December 2008 and reached 100% ($13.68 million) by early 2012.

18. For the additional financing, an imprest account and five sub-accounts were opened with an initial advance of $0.5 million. Disbursements were made in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). After gaining experience during the original project, the executing agency effectively managed SOE dispensation. By the end of 2014 the imprest account turnover ratio reached 2.96 and loan proceeds totaling $4.75 million were disbursed without problems. E. Project Schedule

19. An 18-month gap between loan effectiveness and start of physical implementation arose from delays in mobilizing the project implementation consultants and a major change in project scope to accommodate changes in the rural road component.20 This was followed by slow progress under the farmer support services and agribusiness and marketing components.21 Problems encountered during original project implementation were mainly due to (i) limited coordination between the District Agriculture and Forestry Office (DAFO) and the District Industry and Commerce Office (DICO) in the field; (ii) absence of terms of reference for key 18

Beneficiary contributions were not formally incorporated into the project’s financing plan. An estimated amount of $140,000 was spent to construct FPMG meeting rooms, farmer group learning centers and post-harvest equipment shelters.

19 Use of SOE was suspended by ADB in 2009 due to financial mismanagement. Financial management improved during the additional financing period and ADB reinstated the use of SOE procedure for replenishment of the imprest account on 14 September 2012.

20 There was also a delay in road construction, as local labor shortages involved negotiations to use more machinery than had originally been intended under the labor-based, machine assisted model.

21 Mainly due to the focus on contract farming at the expense of other performance objectives.

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positions in the project organization structure; (iii) delays in the availability of counterpart funds for government staff activities; and (iv) the initial weak capacity of project staff to develop and implement annual work plans. As a result, in 2007 the executing agency and ADB agreed to extend the loan closing date for one year to 31 October 2010.22 While the pace of implementation improved greatly after the national project director was replaced in early 2009, another 10-month extension was required to allow sufficient time for the project to meet its performance targets.23 A third extension of the loan closing date for three months to 31 December 2011 was agreed to allow completion of all envisaged provincial activities.24 Overall, the cumulative extension period was 26 months. Additional financing was implemented as scheduled. Physical completion took place in December 2014 and the project account closed as scheduled in September 2015. F. Implementation Arrangements

20. MAF was the executing agency. It established the ONPD under the National Agriculture and Forestry Extension Service25 with responsibility for overall project management and reporting. The ONPD was staffed by full- and part-time government staff and supported by consultants. Project implementation anticipated both cooperation between central-level ministries (i.e., MAF, MOIC, and the Ministry of Communication, Transport, Post, and Construction, with various ministerial departments serving as implementing agencies) and devolution of administrative and reporting responsibilities to PPOs. The project organization was complex and involved a large number of government staff members.26 Implementation arrangements are fully described in Appendix 5. 21. The additional financing extended the project to eight new districts and included the Ministry of Planning and Investment (MPI) and the National Commission for the Advancement of Women (NCAW) in the National Project Steering Committee (NPSC) and Provincial Steering Committee. Two ATECs were to act as formal technical advisory units to the FPMGs, providing them with training and technical services, agriculture product demonstrations and seed quality control and soil tests. Advance contracting and retroactive financing had been agreed during project processing but was not used because only minor expenses were incurred before declaration of loan effectiveness. G. Conditions and Covenants

22. Status of compliance with loan covenants under the original project and additional financing are in Appendix 6. Under the original project, compliance with covenants was generally satisfactory. No covenants were modified, suspended, or waived. However, there were counterpart funding delays and audited project financial statements were submitted late because of weak internal reporting mechanisms. The project performance management system (PPMS) was not adequately established. This meant that (i) no baseline data was collected; (ii) the numbers of households and FPMGs could not be verified; and (iii) implementation progress could not be accurately monitored against targets. The project’s 2007 midterm review (MTR) was undertaken without a comprehensive midterm report. Monitoring of policy constraints to agribusiness development was not undertaken. Information needed for the executing agency’s project completion report (PCR) was incomplete and it was submitted to ADB late. Only about

22

The first loan extension was approved by ADB on 28 March 2008. 23

The second loan extension was approved by ADB on 17 March 2010. 24

The third extension was approved by ADB on 29 August 2011. 25

This became the Department of Agricultural Extension and Cooperatives in August 2012. 26

In 2007 there were 153 full-time and 77 part-time staff involved, for example.

8

half the intended NPSC meetings were held and the project only partially achieved its target for farmers’ extension coverage. 23. Compliance with additional financing covenants was satisfactory. Only one covenant—subsidized agribusiness credit via MOIC—was not complied with; the scheme was reviewed and suspended by the government in 2013. H. Related Technical Assistance

24. Technical assistance for agribusiness support and training (footnote 1) was provided alongside the original project. Its objectives were to: (i) identify viable and strategic agribusinesses and potential investors and assist them in establishing their businesses; (ii) train potential investors regarding market analysis, business plan preparation, feasibility studies, and loan applications from commercial banks; and (iv) raise awareness of business opportunities by conducting study tours for potential local investors and entrepreneurs to businesses in the region. A training consultant was provided for 10 person-months inputs and 30 investors were trained. In 2006 17 business plans were prepared for agribusinesses but only three resulted in loans being obtained.27 The TA scope was revised during the MTR mission to allow for recruitment of an international market information system specialist to help design and establish the AMIS.28 Soon after its establishment in 2009 the AMIS was discontinued because of a lack of funding and shortage of staff to maintain it in the Department of Production and Trade Promotion, MOIC.29 The TA Completion Report rated the TA implementation successful, notwithstanding the small number of financed business plans and AMIS issues (footnote 2). I. Consultant Recruitment and Procurement

25. Consultants were recruited for the original project from two sources, following ADB’s prevailing Guidelines on the Use of Consultants. Lao Consulting Group (LCG) was recruited using quality-and cost-based selection method and initially contracted to supply 44 person-months international consultant inputs and 148 person-months of national consultant inputs. After a reassessment of actual needs, the LCG contract was revised to provide for 11 person-months of international consultant inputs (an agribusiness development specialist and monitoring and evaluation specialist) and 196 months person-months of national consultant inputs. Because of their expertise in labor-based machine-assisted construction technology, the International Labour Organization (ILO) was employed through direct contracting procedure.30 For additional financing, there were short inputs provided by international specialists for post-harvest technology, monitoring and evaluation and government PCR preparation, as well as 373 person-months of national consultants through LCG. 26. Under the original project, vehicles were procured using national competitive bidding, while various other goods were procured using shopping procedures. Fifteen contract packages were awarded using national competitive bidding for: (i) construction of rural roads (six contracts), (ii) construction of primary markets (six contracts), and (iii) construction of nine bridges (three contracts). Procurement followed ADB’s Procurement Guidelines and

27

This was due to the need for collateral, and beyond the control of the project. 28

A description of the AMIS and its complementary websites are in Appendix 2. 29

The TA completion date was extended once from 31 December 2005 to 30 April 2009. 30

Engagement of ILO was agreed with the government during project processing. ADB provided no objection on 28 March 2005 on the draft Letter of Agreement between the government and the ILO, which was signed on 5 May 2005.

9

government procedures acceptable to ADB. Omission of envisaged procurement packages in the project’s early annual work plans and budgets caused some delays but the situation was satisfactorily addressed after the change in project management (para. 19). There were no significant issues with annual procurement planning or procurement procedures applied during the additional financing period. J. Performance of Consultants, Contractors, and Suppliers

27. The performance of the ILO under the original project was satisfactory, as construction of the rural infrastructure works were supervised properly, and staff from provincial and district Public Works and Transport Offices were trained in the application of labor-based technology, which was suitably adopted by local contractors. However, the performance of LCG consultants was very poor during the first two years of implementation. The team leader’s lack of work planning, monitoring and reporting had a major negative impact on implementation progress. LCG’s performance improved after a change of personnel in late 2006, revisions to the LCG contract after the MTR mission, and under the revised project management situation. Performance of consultants under additional financing was satisfactory, with the exception of the gender specialist, whose contract was terminated. This caused delays in the implementation of the gender action plan (GAP). Overall, the performance of consultants is rated less than satisfactory. The performance of the rural infrastructure contractors under the original project is rated satisfactory. Under additional financing, small-scale irrigation scheme rehabilitation was done to the appropriate standard. While there were no major issues reported with suppliers, some post-harvest equipment required replacement due to low quality. K. Performance of the Borrower and the Executing Agency

28. The performance of the Borrower and executing agency is rated satisfactory. While there were start-up issues because project staff, especially those in the provinces, lacked a clear understanding of project objectives and management procedures, this is partially attributed to delayed recruitment of the project implementation support consultants. Key issues were (i) the deficient PPMS, with almost no reliable data about project implementation progress available until 2007 (3 years after the start of physical activities) and (ii) initial delays with release of counterpart funds due to inadequate annual work planning and budgeting.31 A turning point in executing agency performance came with the appointment of an experienced national project director in January 2009. Executing agency performance improved significantly following a review of government staff roles and responsibilities within the ONPD, PPOs and DPOs. The introduction of regular management meetings and staff training on project management further improved performance. Project management, planning, monitoring, financial and reporting arrangements were satisfactory throughout the 3-year additional financing period. L. Performance of the Asian Development Bank

29. ADB performance was less than satisfactory. Although review missions were frequent (ADB fielded 16 loan review missions from 2004 to 2015) underlying management issues were left unresolved in the early years of project implementation. This likely resulted from frequent changes in ADB project officers and the fairly innovative nature of the project (described as a

31

A request for counterpart funds needs to be integrated into the overall MAF annual budget plan, which is developed one year in advance based on the government planning cycle.

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“pilot”), with demand-side interventions being tested in a changing institutional environment.32 The 2007 MTR mission attempted to re-orient project interventions by updating the DMF and developing regulatory guidelines for farmer groups, but these initiatives were not embodied in formal changes in project scope. The ambitious outcome targets were also not amended during processing of the additional financing. More positively, delegation of project administration to the Lao PDR Resident Mission in 2009 improved ADB’s technical oversight and responsiveness.

III. EVALUATION OF PERFORMANCE

A. Relevance

30. The project is rated relevant. At the time of the original project and additional financing design, it fit well with government and ADB priorities. At both stages there were plausible problem diagnostics and a robust economic rationale for public intervention. There was evidence of lessons applied from ADB and other development partners’ experiences, and an attempt to create synergies with other ADB interventions in different sectors (e.g., finance). The project’s supply and demand dichotomy was innovative. Expectations that the agribusiness and marketing component would prove the most difficult to implement were well founded. The availability and use of known and understood production technology, particularly improved rice seed, underpinned the original design logic. The use of TA to support preparation of business plans and credit applications was sensible. 31. Several of the original project’s demand-side interventions, such as agribusiness market information and access to agribusiness credit via the APB became less relevant over time. For example, mobile and digital information technology became commonplace and it emerged that loans from APB would always require collateral. Relevance was maintained by increasing focus on the FPMGs late in the original project and during additional financing periods. The attempts to upgrade production and processing technology, improve business and management skills, and establish business linkages between millers, marketers and contractors became increasingly appropriate given the evolving sector conditions. B. Effectiveness in Achieving Outcome

32. The project is rated less than effective. This assessment is based on the failure of the original and additional financing projects to meet targets for the number of households (54,000 in the original project, a further 10,400 under the additional financing) to increase income by 30%. However, this performance target is problematic. It was realized quite early in the project that the extension system would not have an impact at this scale, as the estimate was based on a highly aggregated, unrealistic model of a certain proportion of farmers in any project district adopting new rice technology. An opportunity to revise the target during the MTR was lost (a proposal to revise the DMF was made by the ADB review mission but not formalized) and another was overlooked during additional financing processing.33 At completion, the number of direct beneficiaries is estimated as 4,842 FPMG households, some 11,000 improved rice seed planting households, a few rice millers, and about 10,000 vehicle operators and transport users, for a total of about 26,000 households.

32

Four different ADB staff members were responsible for the project from effectiveness in 2003 to 2009. In total, 8 ADB project officers were assigned to the project over 14 years.

33 The additional financing DMF left the original household performance target unchanged, although the Economic Analysis and Impacts Assessment appendixes in the Report and Recommendation of the President on Additional financing (footnote 3) both estimated that the original project impacted about half as many beneficiaries (i.e., 29,000 households) as intended.

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33. Effectiveness—as it relates to agricultural production and other performance targets specified for the original project purpose and the additional financing outcome—is assessed as follows: (i) in the original project, the average rice yield increment targets were achieved (at 1.38 ton/ha in the wet season and 0.4 ton/ha in the dry season), and non-rice cropping and business skills also increased (although no targets were set); (ii) transport costs changes and livestock mortality declines were not measured; (iii) under the additional financing, rice yield performance targets were over achieved, reaching 3.2 ton/ha in the wet season, and 4.9 ton/ha in the dry season. Information services and credit access outputs were not achieved. C. Efficiency in Achieving Outcome and Outputs

34. The project is rated efficient. The estimated economic internal rate of return is 14.5% for the project as a whole, 12.4% for the original project, and 21.5% for the additional financing alone. Quantified benefits come from: (i) improved crop and livestock activities by FPMG households, (ii) distribution and planting of improved rice seeds, (iii) improved milling performance, and (iv) vehicle operating costs and time savings on the project roads. No quantified benefits are attributed to the six markets constructed or to veterinary services provided by the original project. Non-quantified benefits include technical, managerial and marketing skills upgrades for FPMG members, government staff and private sector businesses; environmental improvements such as better soil quality from compositing; and positive health impacts from increased organic food consumption and reduced use of chemical inputs. 35. The project is less efficient than the appraisal estimate because the number of direct beneficiaries is lower than intended and there were delays in benefit delivery. Offsetting this, crop productivity gains were greater than expected, output prices rose by a factor of almost 5 between 2001 and 2011, and livestock demand from within Lao PDR and neighboring countries was high. The additional financing also created a stream of significant quantified benefits in the form of improved milled rice output quality. Overall, on the basis of the model developed for economic internal rate of return estimation at completion, the incremental additional financing investment (about 25% of total project costs) substantially improved the performance of what would otherwise have been a marginally efficient project. 36. There is no evidence that project outputs were supplied at anything other than least cost. Primary market construction costs averaged about $132,000 each, the cost of the Soukhuma–Mounlapamouk district feeder road was about $37,000 per km in 2015 (the norm was about $80,000 per km) and nine bridges (20-ton design standard) cost about $200,000 each. Equipment and land development for each FPMG cost a few thousand dollars, excluding training and study tours. Estimating the project unit cost per direct beneficiary suggests a figure of about $730 per household under the additional financing, which is comparable to other development partner projects in the country. D. Preliminary Assessment of Sustainability

37. The project is rated likely sustainable. Project roads are good quality and being used, with operation and maintenance costs included in district and provincial budgets. Given the expanding links to international routes (i.e., to Cambodia and Thailand) they are not likely to be neglected in the future. The same is true of the markets. Although not being used as primary stores but mostly as retail markets, they generate sufficient income to cover basic operations and maintenance costs. The ATEC in Champasak province will require some government support, but innovative cost-sharing models for farmer participation at the center may ensure some degree of cost recovery. The improved sorting and grading practices at the Khammuane

12

rice mills have strong price incentives to be sustained. A project output that has not proven sustainable is the AMIS.

38. The outlook for many of the FPMGs is positive. Financial returns at the household level are positive for crop, vegetable and livestock activities. Most farmer groups have operated for several years and have gained sufficient management, accounting and technical capacity and skills to sustain themselves. It is likely that FPMGs will further expand, given (i) the existence of group revolving funds in 60 groups, (ii) the registration by a few as cooperatives, (iii) the existence of a MAF decree covering all FPMGs,34 (iv) the preparation by some of business plans and credit applications, (v) plans to expand cultivation sites and (vi) recent increases in contract farming. Moreover, (i) domestic and regional demand for primary products remains very strong; (ii) the agribusiness credit situation is stable; and (iii) improved rice yields are unlikely to fall, even if further increments are harder to achieve. However, the numbers of households participating in FPMGs from 2011 to 2015 fell significantly, even as the number of FPMGs rose. There were localized issues with marketing of certain crops including rice in the 2012–2013 season, some rice seed producers had difficulties meeting R3 quality standards, and some households that registered to participate in FPMGs found they could not meet the labor or investment cost commitments. Original project support was maintained in some villages but not in others. Further monitoring is needed to gain a full understanding of project sustainability. E. Impact

39. The impact of the overall project is assessed as moderate. Increased incomes have been achieved among FPMG members, and non-FPMG households that used improved rice seeds, millers, road users (both vehicle operators and households gaining increased consumer surplus), and market users. However, the combination of these effects falls somewhat short of what was envisaged in aggregate at the outset. 40. FPMGs were impacted positively in terms of group solidarity and an increased ability to capture benefits along commodity value chains. The exchange of knowledge (with some FPMGs acting as learning centers) and of retail products among FPMGs across different districts, as well as the undertaking of relatively large-scale contract farming arrangements (65 contracts, worth $12 million by the end of 2014) all strengthened geographic and intra-sectoral linkages. The efforts of extension staff and other professional training had a positive impact on public institutions, especially the MAF’s Department of Agricultural Extension and Cooperatives, PAFOs and DAFOs. The 4,500 farmer training days directly impacted the primary producer population. 41. Environmental impacts. The original project and additional financing were classified as environmental category B. An initial environmental examination, summary initial environmental examination, and environmental management plans were prepared and implemented in accordance with ADB and government requirements. The environment safeguard specialist screened project activities and helped the executing agency monitor environmental impacts. There were no adverse environmental impacts due to the project and nuisances were avoided following environmental management plans. Project supported activities (e.g., compost production and organic-based cultivation) have conferred positive environmental, climate and

34

Agreement of Minister on the Establishment of Agriculture Production Groups No. 2984/MAF dated 24 September 2014. This does not confer legal status on FPMGs but is a statement of government support for producing and marketing in groups.

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health impacts. Under the additional financing, annual environmental monitoring reports posted on ADB’s website in compliance with loan covenants. 42. Resettlement impacts. The original project involved construction of feeder roads, rehabilitation of rural roads and construction of primary markets. A resettlement plan was finalized and approved by ADB prior to the commencement of works construction. The project acquired 222,391 square meters (m2) of agricultural lands from 143 affected persons35 and 12,119 m2 of residential lands occupied by 33 affected persons.36 Land compensation, cash payments and relocation were satisfactory and overseen by the provincial and district compensation and resettlement committees.37 All affected persons were satisfied with the compensation arrangements. No complaints were received. The rehabilitation and development of rural roads followed existing alignments and construction of the market was on vacant land owned by the government. The additional financing was classified category C for involuntary resettlement, with no resettlement impacts. 43. Gender impacts. The original project and additional financing emphasized gender equity in their designs. The original project’s strategy for improving the status of women was implemented as planned. Under the additional financing, the project was re-categorized effective gender mainstreaming. The GAP was well integrated into project activities and loan covenants. At project completion, 15 out of 16 (94%) of gender targets in the GAP were achieved. Notably, the GAP helped empower women by engendering strategic changes that improved women’s agency and voice, which increased incomes. Overall, GAP implementation is assessed successful. Details of gender equity results and achievements are in Appendix 8

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

44. The overall project is rated successful. This rating is based on the assessment of relevance, effectiveness, efficiency, and sustainability.38 The project attempted to provide an innovative solution to problems surrounding the creation of a commercial smallholder agriculture subsector in the early 2000s. By including demand-side interventions with ongoing production support activities. It planned to create more formal and local market outlets for primary produce and to integrate these by improving physical linkages. Project interventions were and remain relevant to the government and ADB priorities. The project was financially and economically viable. Project activities are likely sustainable. However, the project is considered less then effective in achieving its outcome due to partial achievement of ambitious performance targets. Calculation of the overall project rating is in Appendix 9. B. Lessons

45. Better coordination with other development partners and government agencies during the original project design stage could have helped avoid the need to re-formulate the rural roads component and strengthened the government’s commitment to make counterpart funds available on a timely basis. Robust DMF preparation is essential for setting clear project objectives, targets and performance indicators within a logical results chain. Other key lessons

35

About 8% of the 2,759,555 m2 farm lands of 143 affected persons.

36 Represents 4% of the 296,255 m

2 lands occupied by 33 affected persons.

37 These comprised representatives from government agencies, heads of villages, and locally based organizations, and was chaired by the provincial and district governors.

38 ADB. 2013. Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila.

14

include (i) the project performance management system should be understood by the project management and implementing teams and the system should be well defined and developed early in the project cycle; (ii) frequent changes in the ADB project officer interrupts the continuity of implementation supervision; (iii) more robust financial management assessment at appraisal may have helped avoid financial management problems experienced during implementation; and (iv) supplementary investment in the form of additional financing can greatly improve overall project efficiency, once an appropriate intervention focus has been identified and employed, even following delayed implementation of the original investment. ADB could have responded better to the project’s early implementation problems and should have been clearer in formulating the objectives logic and performance targets. 46. Concentrating effort on FPMGs through a learning-by-doing process turned what was a pilot project at the outset into a demonstration at completion. FPMGs were shown to be successful as units for production and marketing, extension delivery, provision of skills and technology and as contracted primary suppliers. However, the project’s approach was costly in terms of scale because FPMGs required intensive support. Although all groups still exist at completion it is not clear how they may expand or be replicated. Despite successful use of new technology such as improved rice seeds, many FPMGs now face problems in overcoming credit and trade policy constraints. Ultimately, their future will depend on how effectively they can deepen linkages with the private sector. C. Recommendations

1. Project Related 47. The executing agency should continue to monitor FPMG experience to assess: (i) how many groups survive into the medium term and why, (ii) how many households within the groups continue to undertake improved crop and livestock activities, and (iii) what the development path is for those that do survive. These survivor groups will likely experience increasing constraints due to limited access to affordable credit, institutional development (e.g., the absence of a cooperative law and their lack of status as legal entities), and technical trade issues (e.g., regarding export bans and sanitary and phytosanitary certifications). Better understanding these constraints could provide opportunities for future ADB policy engagement. The government should commit sufficient funding for sustainable operations of the ATECs. 48. The appropriate timing for preparation of a project performance evaluation report would be December 2017, to allow an assessment of FPMG sustainability two rice growing seasons after project closure.

2. General 49. First, greater care should be taken in DMF preparation at the design stage and opportunities to correct mistakes in the DMF during implementation should be taken. Second, when ADB review missions identify implementation difficulties, remedial measures should be recommended in sufficient detail to enable these to be adopted. Proposed changes to project objectives, targets, and the scope of activities that are discussed with and agreed to by the Borrower and executing agency—especially during the MTR—should be formalized in updated project documents. Third, future project designs should include adequate support to enable project readiness (e.g., through use of start-up consultants) and for training project staff in procurement, financial management, and reporting.

Appendix 1 15

PROJECT DESIGN AND MONITORING FRAMEWORK

Project Framework, Loan 1949-LAO(SF) (2002)

Design Summary Performance Indicators Achievements

Goal: Economic growth, employment creation and income growth

Commercial crop production increases by 30,000 t/year by 2010 Percentage of households in rice deficit in project area declines from 22% to 11% by 2010 Number of households in poverty (below upper poverty line) in project provinces declines from 20% to 15% in Vientiane, from 37% to 29% in Savannakhet, from 36% to 28% in Champasak and from 42% to 32% in Khammuane

Achieved. Wet and dry season production increased over 400,000 tons during 2003–2011 (provincial figures) Achieved. For all provinces except Champasak (based on rice per capita availability estimates) Achieved. Proportion in poverty is less than 3% in all provinces

Purpose:

Establishment of sustainable smallholder- commercial agriculture and associated agribusiness in the Provinces of Vientiane, Savannakhet, Khammuane and Champasak

54,000 households have improved incomes by end of project. Average beneficiary smallholder household income increases by 30% (from $410 in Vientiane, $280 in Khammuane, $293 in Savannakhet, $442 in Champasak) Wet season rice yields increased by 0.5 t/ha on average for some 20% of households in project districts Dry season average rice yields increased by 0.4 t/ha for some 10% of farmers in project districts Increased non-rice dry season cropping towards higher value and less water- demanding crops (e.g., corn, soybean, peanut, cabbage and garlic) Reduced transport costs per ton-kilometer for agricultural and non-agricultural traffic Livestock mortality declines by 15%; fisheries production increases by 50,000 tons Greater skill levels among Lao farmers and processors, better marketing and primary producer-secondary processor links

Partly achieved. About 26,000 households increased income. Increases were greater than 30% in all provinces. Achieved. Average increase of 1.38 t/ha in project districts Achieved. Average increase of 0.4 t/ha in project districts. Achieved. Farmer production and marketing groups produce maize (2,677 t), cabbage (13,973 t), sweet corn (4,646 t) and vegetables (466 t)

No data available No data on livestock; fisheries production increases not achieved Achieved. Use of post-harvest technology (e.g., 17 grain dryers, 10 rice threshers, 12 graders for rice seed) and on-farm production technology (e.g., greenhouses and composting); some small-scale contract farming (rice, corn and glutinous rice for export to Viet Nam), and ”rice mill platform” established in Khammuane to link paddy producers, seed multipliers and millers. Also Bongphao model organic vegetable production and marketing group established

16 Appendix 1

Design Summary Performance Indicators Achievements

Outputs:

1. Effective agricultural extension and training mechanism 2. Improved physical infrastructure for input and produce marketing 3. Effective primary market network in project provinces

Extension and training reaches 54 villages in each of the 16 project districts; establishment of P-ETUs, C-ETUs and 16 DAFOs; study tours for DAFO farmer groups to MOAC district offices in Thailand and MARD District offices in Viet Nam 89.5 km of rural access roads upgraded to all-weather standard; 70.8 km of new feeder road construction 54 officials trained in market economics; 30 private sector business people trained; 5 agribusiness conferences; 5 cross-border trade fairs; national Lao agribusiness forum established; international product grades and standards established; MIS of MAF and MOC web page upgraded and aligned to share information; government policy and legal reforms to improve market and investment environment Increase of primary market space 9,000 m

2 in about 6 new markets

Linkage with credit fund under FSPL APB makes 30 loans to creditworthy agribusinesses

Partly achieved. 530 villages reached by extension within all project districts. 185 farmer training sessions (6,169 persons); 74 study visits for 825 farmers and 34 study visits for 285 staff (including MOAC); 101 staff training courses (1,193 persons); over 560 crop demonstrations Achieved. 78 km of feeder roads were rehabilitated and 54 km of rural access roads with 9 bridges were constructed (coverage changed and agreed with the government) Not achieved. Some private sector business owners participated in output 1 study tours. Agriculture Market Information System designed but not operational. No policy and legal reforms. Achieved. 6 markets constructed Not achieved Partly achieved. Only 3 APB loans were made, but 14 more business plans prepared.

APB = Agricultural Promotion Bank, C-ETU = central extension training unit, DAFO = District agriculture and forestry office, FSPL = First Sector Program Loan, km = kilometer, m

2 = square meter, MAF = Ministry of Agriculture and

Forestry, MARD = Ministry of Agriculture and Rural Development (Viet Nam), MIS = management information system, MOAC =Ministry of Agriculture and Cooperatives (Thailand), MOC = Ministry of Commerce, PAFS = provincial agriculture and forestry service, P-ETU = provincial extension training unit, RRP= report and recommendation of the President to the Board of Directors, t = ton. Source: ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Technical Assistance Grant to the Lao People’s Democratic Republic for the Smallholder Development Project. Manila; the project completion review mission.

Appendix 1 17

Design and Monitoring Framework, Overall Project (2011)

Design Summary

(Overall Project)

Performance Targets and Indicators with Baselines

(overall Project)

Achievements

Impact

Improved agricultural productivity in four provinces

Commercial crop production increases to 50,000 t by 2014 from 30,000 t in 2010

Percentage of beneficiary households unable to produce or buy rice requirements declines from 5% in 2010 to 0% by 2014

Partly Achieved. 22,345 t of incremental rice and rice seed produced Achieved. 100% of beneficiaries surveyed could produce or buy enough rice.

Outcome

Improved sustainability of smallholder commercial agriculture in the provinces of Champasak, Khammuane, Savannakhet and Vientiane

64,400 households have improved incomes by 2014

Wet season rice yields increase from 2.5 to 3.0 t/ha in old and new project districts by 2014

Dry season rice yields increase from 2.8 to 3.2 t/ha in old and new project districts by 2014

Partly achieved. At completion, the estimated number of direct beneficiaries is about 26,000: FPMG members (4,900), users of R3 seeds and millers (11,000), and transport operators (2,000) and road users (8,000) Achieved. Average wet season rice yield was 3.2 t/ha Achieved. Average dry season rice yield 4.9 t/ha

Outputs

Effective agricultural extension and training mechanism

(Original Project, Output 1)

Extension services and training reach 124 villages in 24 project districts

Achieved. 227 villages reached in 24 districts (16 original project districts, 8 additional financing districts)

Strengthened FPMGs in 24 Districts by 2014 (Additional Financing, Output 1)

190 FPMGs established and registered

56 FPMGs have established revolving funds At least 20% of committee members of FPMG are women

Achieved. 221 FPMGs established Achieved. 60 FPMGs have revolving funds Achieved. 27% of FPMG committee members are women

Improved physical infrastructure for inputs and produce marketing (Original Project, Output 2)

Agriculture and marketing information system installed 89.5 km of rural access roads upgraded and 70.8 km of new feeder roads constructed

Achieved. AMIS installed by original project but not operational at completion Achieved. 78 km of feeder roads rehabilitated and 54 km of rural access roads constructed under the original project

Replicated post-harvest technology and practices in the new project areas (Additional Financing Output 2)

Post-harvest equipment supplied to participating FPMGs Post-harvest technologies increase farm-gate prices by an average of 30% by 2014

Achieved. Equipment supplied and installed (3 chili driers, 10 rice seed dryers, 8 rice seed threshers, 8 rice seed graders, 8 transplanting machines, 21 moisture testers, 14 mowing machines, 66 seed spay machines, seed color sorters, 3 coffee roasters and 5 corn grinders) Partly achieved. Some farm-gate prices increase, but not by 30%, and not necessarily attributable to post-harvest technology. No regular surveys were

18 Appendix 1

Design Summary

(Overall Project)

Performance Targets and Indicators with Baselines

(overall Project)

Achievements

At least 20% of participants in training and study tours are women

undertaken to determine the effect of post-

harvest technology on farm gate prices. Achieved. 20.3% are women

Effective primary market network in project provinces

(Original Project, Output 3)

Established markets functioning well AMIS functioning well

Achieved. But in use mainly as retail, not primary, markets Not achieved. AMIS not functioning post-original project

Strengthened extension services of ATEC (Additional Financing Output 3)

Extension services provided in about 400 villages by 2014 One integrated extension service model operating by 2013

One training facility upgraded (Lao-China) At least 80% of the ATEC staff has skills in work planning and management

Not achieved. 361 villages covered by extension services (partly due to village consolidation in Khammuane) Achieved. Linked production and marketing training provided at ATEC in Champasak

Achieved. Construction of the training room, supply of furniture, construction of the organic vegetable planting demonstration sites, grading house and kitchen room Achieved. 85%–90% have such capacity (Xebangfay and Champasak, respectively, based on ONPD assessment)

Improved knowledge of FPMGs on agri-business practices (Additional Financing, Output 4)

20 contracts between farmer groups and agribusiness signed by 2013

8 trade-fairs/agri-business forums attended by project beneficiaries At least 25% of business fora and agri-business conference attendees are women

Achieved. 65 contracts in place as of the end of 2014 Achieved. 19 trade fairs and 24 business fora held Achieved. 25% of attendees were women

Strengthened human resource capacity for project implementation (Additional Financing, Output 5)

Project implementation schedule achieved Routine reporting completed in a timely manner

Partly achieved. After a slow start the project was implemented as scheduled and closed in June 2015 Achieved. For additional financing.

AMIS = agriculture market information system, ATEC= agriculture technical extension center, FPMG = farmer production and marketing group, ha = hectare, km = kilometer, ONPD = office of national project director, t = ton. Source: ADB. 2011. Report and Recommendation of the President to the Board of Directors: Proposed Loan for Additional Financing to the Lao People’s Democratic Republic for Smallholder Development Project. Manila; the project completion review mission.

Appendix 2 19

ORIGINAL PROJECT LOAN 1949-LAO(SF): OVERVIEW OF IMPLEMENTATION AND ACHIEVEMENTS

A. Introduction 1. This appendix reviews implementation of the original project’s four components—(i) farmer production support; (ii) agribusiness and marketing; (iii) rural infrastructure; and (iv) project management, highlighting major issues that arose during implementation and outlining their implications for achievement of component and project objectives. B. Farmer Support Services 2. The logic of this component was to intervene on the supply side of smallholder agriculture—to provide the wherewithal for the emergence of a commercial smallholder agriculture production base in the four provinces. The component aimed to (i) strengthen the government extension system; (ii) acquire and provide updated technology packages across a variety of agriculture and livestock activities, including those with export potential; (iii) establish contract farming arrangements as a basis for training; and (iv) facilitate rural credit to farmers. The component aimed to deliver the output of an effective agriculture extension and training mechanism by introducing new technologies to intensify and commercialize the production of wet season rice, dry season non-rice cash crops, livestock and fisheries. Beneficiaries would include subsistence, semi-commercial and commercial producers. Improved support services would tailor technology and management packages to these groups accordingly to increase relevance and adoption rates. Extension staff capacity of the provincial agriculture forestry office (PAFO) and district agriculture forestry offices (DAFOs) was to be strengthened through training and technology upgrades. The PAFOs and DAFOs would disseminate improved crop and livestock technology and extension packages from the National Agriculture and Forestry Research Institute, International Rice Research Institute, and elsewhere. The Ministry of Agriculture and Forestry (MAF) was to: (i) establish formal contacts with extension offices in neighboring countries to acquire freely offered extension packages; and (ii) promote private sector extension services and input supply by helping facilitate contract farming arrangements with private agribusinesses. Extension reach would be expanded through training for water users’ associations and the creation and training of farmer production and marketing groups (FPMGs) in agriculture and livestock production technologies and marketing operations, and in conducting participatory trials and demonstrations. There would also be training for village extension workers to cover agricultural and livestock production and marketing. Additionally, the project would provide (i) community vaccination of animals to reduce the mortality of cattle, buffalo, pigs, and chickens; (ii) dry season feeding demonstrations to increase the weight of cattle and buffaloes; and (iii) fishpond trials and demonstrations. The Agriculture Promotion Bank (APB) would provide financial services to support technology adoption and increased marketing and commercialization. 3. Despite start-up delays progress under this component by the end of 2005 appeared impressive. Over 300 demonstration crop sites had been established (rice, soybean, corn, peanuts and castor bean) although this included just six fishponds and 13 cattle feed sites. Training of trainers and of district staff under the newly-adopted Lao Extension Approach had also begun.1 A small number of farmer study tours had been undertaken, and PAFOs and DAFOs had conducted eight training programs on rice, other crops, and animal feeds, as well as contract framing arrangements for some 550 farmers. Farmer groups for crop and livestock activities were forming,

1 The approach consists of two sub-systems: the government and village extension systems. The government extension

service consists of three strata: national agriculture extension service, the provincial agricultural and forestry extension centre and the district agricultural and forestry extension office. The village extension system is jointly managed by villagers and village authorities. Activities are facilitated by village extension workers who are appointed and compensated by the community, while receiving technical support through the government service.

20 Appendix 2

but the number involved was not clear. ADB review missions found constituent numbers of households and farmer groups were inconsistent.2 4. According to ADB review missions, extension staff orientations and activities differed considerably across the provinces (Savannakhet appeared the most organized), monitoring and evaluation (M&E) procedures for the component’s activities were not developed, and the Office of the National Project Director (ONPD) was tracking progress in each of the provinces manually. It also appeared the consultants were allocating too much time to promoting a small number of larger-scale contract farming possibilities, rather than on establishing more robust public extension services (including the crop and livestock demonstrations) and consolidating farmer groups on a project-wide basis. 5. By mid-2006, 458 demonstrations were recorded comprising over three-quarters crops and nearly a quarter livestock. There had been 133 farmer training events and some 176 separate training courses for National Agriculture and Forestry Extension Service (NAFES) provincial, district, and village extension workers. However, despite the apparent number of demonstrations no information was kept by the project other than the site location and the crop or activity involved. Thus there are no data regarding: (i) the outcome or effectiveness of the trials, (ii) the types of farmers being targeted by particular trials (e.g., subsistence or semi-commercial), and (iii) adoption by farmers. Project demonstrations appeared to have been established on the basis of verbal guidance only. There were no printed materials for farmers to refer to and an exclusive focus on those crops for which Thailand had recently granted import tax exemptions. Although the consultants cited examples of credit flows to agribusiness and farmer groups by the project, no details were recorded or could be provided to ADB missions. By the end of 2006, the recorded number of training courses had reached 424 with over 6,300 participants, although the situation regarding the planning, organization, and reporting of the demonstrations remained fundamentally unchanged. 6. The project’s midterm review (MTR) in 2007 had major implications for the farmer support services component, including reducing the target number of villages to be covered by extension and training activities from the original target of 864 villages (54 in each of 16 districts) to 581 villages.3 Beneficiary households were now anticipated to be some 25% of this population or 39,778 households from a total of 144,799 households in project districts, and a project population of very slightly over a million people. In addition: (i) the project had not yet collected any data on baseline production conditions (e.g., areas and yields); (ii) the MTR mission could only confirm that 119 FPMGs had actually been established; and (iii) examples of project-supported contract farming arrangements and assistance in gaining access to credit seemed to be largely anecdotal, and not fully documented. 7. Possibly the most serious issue that emerged was a lack of clarity regarding what a FPMG actually constituted, in terms of: (i) its official registration (this was initially not required by local authorities, nor by the project itself); (ii) constitution (including any formality of establishment or governance); (iii) composition (how many families or individuals); and (iv) interests and objectives (crops, livestock and fisheries) or longer-term perspective (e.g., operating for more than one season of production, desire for production credit). The absence of a consistent FPMG definition explained why the earlier recorded of numbers of FPMGs turned out to be unrealistically high, in that it had included large numbers of ad hoc groups which may have only included a couple of families. In the absence of any formal or working definition of what an FPMG comprised, and in order to address the need for any such groups to have an adequate legal basis if they were to

2 ADB. 2005. Aide Memoire. Review Mission 5-12 December, 2005.

3 ADB. 2002. Report and Recommendation of the President on the Proposed Loan and Technical Assistance Grant to

the Lao People’s Democratic Republic for the Smallholder Development Project. Manila. (Loan 1949-LAO).

Appendix 2 21

engage in credit and other contractual arrangements, the midterm review developed proposals for how a Lao Smallholders Association could be established.4 8. A survey of the FPMGs identified by provincial and district extension staff conducted in early-2008 found: (i) there were 183 FPMGs in existence (about 11 per district), (ii) only about a third of these were actually registered with local government, (iii) group membership ranged from 2 to 143 families, (iv) crop specialization tended to have a geographic basis (e.g., cabbage in Paxong and peanuts in Bachiang district, Champasak province), and (v) only about half of the groups could actually produce any crop production figures.5 By early 2009, the project was planning to work with 157 of these FPMGs, following further consolidation of some groups. This number of FPMGs was adopted as a realistic project platform and broader issues concerning their efficiency, extent of social inclusiveness, and legal status became the focus of project implementation concerns. 9. The project also planned to support seven Agriculture Technology Extension Centers (ATECs) to act as district hubs to provide extension services to these FPMGs and also to DAFO staff.6 By the end of 2009, two ATECs (i.e., Phouheuasava ATEC in Savannakhet and Nam Mang ATEC in Vientiane) had been supplied with agricultural production and processing equipment and some agriculture inputs to arrange training and demonstrations for farmers. 10. Regarding extension activities, in 2009 some 150 farmer training sessions were organized for 5,415 farmers, 36 study visits were undertaken for 649 farmers, 9 study visits for 66 staff were conducted, 280 agricultural demonstrations were undertaken and 76 staff training courses for 1,002 staff were conducted. By the end of 2009, the number of FPMGs had been further consolidated to 117; the project supplied some of these with post-harvest processing equipment, in particular for rice seed and fodder maize quality improvement. Following the project’s 2009 national steering committee meeting it was decided to focus on priority commodities: sweet corns and feed corns, pig and cattle raising, soybean and vegetables. Some progress on contract farming arrangements continued 7 although the areas involved were quite small and the precise project contribution unclear. Some concerns were emerging with existing contract farming arrangements—notably in the case of the Mit-Lao company—where it appeared that farmers growing sugar cane did not fully understand the terms of contracts they had signed. By the end of 2009, 289 smallholders had been assisted in gaining access to credit from the APB. 11. Regarding extension activities, in 2010 there were 165 farmer training sessions for 5,665 farmers, 62 farmer study visits for 706 farmers and 15 staff study visits for 119 staff, 280 agricultural demonstrations and 80 staff training courses for 1054 staff.8 By early 2011, these figures had risen to 185 farmer training sessions (for 6,169 farmers, 20% female), 74 study visits for 825 farmers and 34 study visits for 285 staff. A further 280 agricultural demonstrations and 101 staff training courses were delivered for 1,193 staff.9 12. FPMGs continued to evolve during the life of the original project, while the government continued to work on finalizing the legal framework and implementing regulations for their operations. Despite some continuing uncertainty in this regard, during 2011 the project provided

4 MTR 2nd Phase Aide Memoire, 28 October 2007, Annex 4. This also included plans for accessing credit.

5 Review Mission Aide Memoire, 4 December 2008.

6 The ATECs had been reformed and restructured, and placed under the direct authority of the PAFO.

7 For example, sweet corns and feed corns in Vientiane province; rice seed and pigs in Khammuane province; sugar

cane and feed corns in Savannakhet province; and, bananas, cabbage, peanuts, Chinese cabbage and soybeans in Champasak province.

8 Review Mission Aide Memoire, 9 April 2010.

9 Ministry of Agriculture and Forestry. 2013. Project Completion Report: Smallholder Development Project ADB Loan

1949-LAO (SF). Vientiane. 439 study tours involving 1,580 farmers (53% women) were undertaken.

22 Appendix 2

the first batch of post-harvest technology for 10 districts. This included 17 sets of grain dryers, 10 rice threshers and 12 graders for rice seed. Upon agreement on the provision of post-harvest equipment by the project, the FPMGs constructed buildings where equipment was placed. The project provided improved rice seed varieties—42.5 tons of R2 type rice seeds for seed production farmers and 93.5 tons of R3 type rice seeds for commercial rice production farmers. In addition, 4,089 smallholder farmers in 16 districts accessed seasonal credits from APB totaling KN214.35 billion, while 8 agribusinesses gained access to KN33.44 billion in bank loans linked to project-supported activities. At project completion, a total of 162 FPMGs had been established and registered, with an estimated combined membership of 9,075 households. Table A2.1: Summary of Farmer Production and Marketing Groups by Activity, and Villages

and Households Involved (2011) Activity No. of FPMGs Number of

Village No. of Households

Rice seed 29 36 1,455 Commercial rice 51 127 4,313 General vegetable 6 11 214 Organic vegetable 8 8 101 Feed corn 10 10 251 Sweet corn 7 8 221 Soybean 1 3 31 Peanut 4 7 159 Cabbage 2 11 382 Banana 1 2 36 Coffee 1 1 17 Sugar 2 1 40 Cattle 35 78 1,507 Swine 5 20 348 Fish

162 323 9,075 FPMG = Farmer Production and Marketing Group. Source: Ministry of Agriculture and Forestry. 2013. Project Completion Report: Smallholder Development Project ADB Loan 1949-LAO (SF).Vientiane.

C. Agribusiness and Marketing 13. This component was intended to intervene on the demand side of smallholder agriculture by strengthening market linkages and adding value. It intended to provide an effective primary market network through: (i) agribusiness investment promotion via conferences organized by the Lao National Chamber of Commerce and Industries; (ii) provincial trade fairs and investment promotion workshops; (iii) the establishment of a Lao agribusiness forum; (iv) upgrading MAF’s market information system in coordination with the Ministry of Industry and Commerce (MOIC); and (v) assistance to MOIC’s Lao Trade Promotion Center to promote Lao products through electronic media.10 Information technology would be used to collect and disseminate market information through DAFOs. Knowledge of international agricultural product grades and standards would be expanded. Training in market economics would be carried out by the government’s National Organization for Studies on Policy and Administration.11 The project was to promote

10

National and provincial conferences and workshops would also be used to build awareness and understanding regarding the implementation of policies and related regulatory functions needed to develop competitive agribusiness, and allow interaction between public officials and the private sector on ways to improve performance.

11 Including: (i) two one-week national market economics workshops (including participants from MAF, MOC and Ministry of Industry and Handicrafts); (ii) four one-week provincial market economics training workshops (participants from Office of the Provincial Governors, PAFO, provincial departments of commerce, provincial departments of industry and

Appendix 2 23

policy dialogue between the business community and the government by developing central and local-level business forums.12 This component would also construct strategically located primary markets to promote the growth and strengthening of wholesale marketing operations by middlemen.13 14. Similar to the farmer support services component, implementation of the agribusiness and marketing component began very slowly. This can be explained in part by developments in (i) the Greater Mekong Subregion (GMS) and Association of Southeast Asian Nations, which had begun to promote business and investment opportunities in the Lao People’s Democratic Republic (Lao PDR); and (ii) Thailand’s Economic Cooperation Strategy Plan of Action, which allowed the tariff-free import of a number of products from neighboring countries. These developments lessened the need for national-level conferences and trade fairs. In addition, staff at the MOIC responsible for implementation of many of these activities had a very high turnover. Moreover, during 2005–2006 implementation consultants: (i) failed to produce any targeted workplans; (ii) did not develop a systemized approach to component implementation, monitoring and reporting; and (iii) were focusing on a few mainly Thai businesses with possible interests in investing in Lao PDR agriculture, to the detriment of more broad-based development possibilities and the collection of baseline data regarding actual possibilities for commercialization throughout the project area. 15. By the time of the MTR in 2007, the only activities under this component that were reasonably on track involved the planning primary markets.14 By late 2007, bidding documents for the markets had been approved and construction was set to begin with completion and operation expected by mid-2008. 16. Although little was happening in terms of national trade fairs and conferences at this time, the information database of business and smallholder groups was almost ready to be used and the websites for MOIC and NAFES were likewise almost ready for operation following further testing and translation into the Lao language. Seventeen business plans and loan applications had also been developed under the associated technical assistance (TA), but only three succeeded in obtaining loans. 17. By the end of 2008 construction of the markets was nearly completed, and the MAF agricultural market information system (AMIS) was close to being implemented by the MOIC’s Department of Production and Trade Promotion, with the expectation that it would become fully operational in 2009, and would be operated jointly with the NAFES thereafter. The AMIS focused on gathering data on agribusinesses needs (e.g., commodities, prices, and quantities) and making these available to small traders and farmers via mobile phone SMS requests. Use of the system was to be supported at the village cluster level through agribusiness directories, posters, and market booths. However, by 2009, the future of AMIS was uncertain following completion of grant-funded TA support. The MOIC website database continued to operate, but was not fully functional. 18. By early 2009, NAFES supported by Swiss Development Cooperation had established a sub-working group on agribusiness and the government had established a Commodity Production

handicrafts, and provincial chambers of commerce); (iii) four one-week provincial training workshops in market surveying techniques for staff of provincial DOCs; and (iv) one 10-day training in price forecasting for the Planning Division of MOC and the MAF Division of Statistic.

12 This was to complement training provided by the project to government officials in market economics and supportive policy environments, and also that provided under the Banking Sector Reform Program Loan and ADB financed TA 3413-LAO: Technical Assistance Cluster to the Lao PDR for Rural Finance Development.

13 Market locations were to serve as collection, grading, storage, and exchange points for primary produce as well as points for distributing agricultural inputs (fertilizers, seeds, chemicals, and tools; and small farm machinery including pumps, pedestrian power tillers, harvesters, and threshers). Sites would be identified during implementation.

14 The agreed market sites were in six districts in Thoulakhom (Vientiane province), Nongbok (Khammuane province), Xaybouly and Xayphounthong (Savannaket province), and Pakxong and Phonthong (Champasak province).

24 Appendix 2

Promotion Fund under the Department of Production and Trade Promotion. The objective was to mobilize and promote commodity production by state and private enterprises.15 These actions rendered the original project objectives of establishing discussion and information forums and promoting access to credit largely redundant. This required a reorientation of some project activities. For example, the project helped smallholders access funds from the Commodity Production Promotion Fund rather than the APB. 19. Construction of all six primary markets was completed in 2009, at a cost of about $130,000 each. In 2010, five were being used, with market management committees established. Nampheng market in Thoulakhom District of Vientiane Province had successfully involved private sector traders in its operation from the outset. However, once market operations began, problems emerged regarding access, drainage and lack of buildings for adequate market management. 20. More significantly, use of the structures evolved not as sites for primary produce collection, storage, and grading and sale in bulk to traders, but as typical wet/retail markets. In short, the objective of using these markets as wholesale points where farmers could bring produce and receive better prices for bulk marketing; and for further transshipment to local markets and neighboring countries was only partly achieved. The intention to use the facilities as sites for trade fairs and extension was hardly addressed. At some sites, capacity was underutilized. At Phonthong in Champasak province only a few traders used the site compared with its competitor, an adjacent, larger facility that was privately run. 21. Over the years, these sites have become well utilized, have attracted adjacent economic activity and development, and appear to be viable. Local authorities have typically turned them over to concessionaires who appear to receive a positive return. However, they are generally not serving the purpose they were designed to meet—as places for first stop collection, storage and bulking.16 Local traders mainly continue to purchase at the farm gate; farmers themselves have generally not wanted to become transporters. 22. By completion of the original project, achievements under the agribusiness and marketing component could be summarized as follows: (i) the six primary markets had been constructed and were operational, albeit with some problems; (ii) the AMIS and MAF and MOIC website databases were not fully operational primarily because of a lack of qualified staff; (iii) 3 businesses had received commercial bank loans with project or associated TA support, and 14 other business plans had been prepared (some might receive future funding from other sources); and (v) a number of contract farming agreements between FPMGs and commercial companies were in place, including agreements for sweet corn canning, 500 tons of rice from one FPMG to Beer Lao Company, and two contracts for 1,000 and 2,000 tons of glutinous rice for export to Viet Nam. 23. More important than these specific achievements were two model contract and marketing arrangements that demonstrated the potential benefits of successfully linking smallholders to processors and the wider value chain. The first is a rice mill marketing platform in Khammuane and Savannakhet province that established contract farming with paddy rice and rice seed FPMGs. The millers provide seeds (which come from rice seed-producing FPMGs), fertilizers, and some credit in cash to commercial paddy rice FPMGs, and agree to a pre‐determined price for paddy rice.17 The second is Bongphao organic vegetable FPMG in Vientiane province focused on a niche market and based on good agricultural practices. 15

Based on the fund regulations, an interest rate of 5%–7% per annum applied to beneficiaries in agriculture, forestry and handicraft sector and 8%–9% in the industrial sector. This was half the interest rate charged by commercial banks at the time.

16 The exceptions are Phontong and Nampheng markets, which also serve some role as wholesale markets.

17 This was supported further under output 4 under the additional financing, as detailed in Appendix 3.

Appendix 2 25

D. Rural Infrastructure 24. This component aimed to integrate the supply and demand sides of commercial smallholder production by physically facilitating the flow of agricultural technology, other inputs, and agricultural products to and from smallholder products and markets. Improved roads would lower transport costs and facilitate flows of inputs and primary produce among production centers, and primary and strategic GMS markets. The identified roads linked existing west–east and north–south marketing corridors to the People’s Republic of China, Thailand, and Viet Nam. The project planned to rehabilitate 89.5 kilometers (km) and construct 70.8 km of strategic roads. These were: (i) the Pakse–Champasak–Soukhouma–Mounlapamouk road (Road No. 14-A) linking the poor, but potentially productive, lower Mekong plain of Champasak province to the highly commercial east–west corridor of Pakxong–Pakse and the Thai border; (ii) the Champhone–Xonbuli road in Savannakhet province linking the potentially productive Xonbuli district to the commercially active east–west corridor in Savannakhet, and connecting to the Thai border; and (iii) Songkhone–Thapasoun road linking the commercial center of Songkhone district in Savannakhet province to a key Mekong River border trading market with Thailand. 25. Plans were changed in Champasak province because two of the original three sections (totaling 60.9 km) were to be financed by the Japan International Cooperation Agency. At completion, the project had (i) constructed 54 km of rural access roads in Champhone, Xonbuli and Songkhone district, Savannakhet province; (ii) rehabilitated a 78 km of feeder road connecting Soukhouma and Mounlapamouk district in Champasak province; and (iii) constructed nine bridges in Champasak province. The cost of the Soukhouma to Mounlapamouk road was $2.9 million, or about $37,000 per km, while the nine bridges collectively cost $1.8 million. These costs compared favorably with other construction undertaken at the time of completion. 26. All of the planned rural road infrastructure was designed and supervised by the International Labour Organization. The main tasks were to assist the Department of Public Works and Transport of Champasak province in: survey and design; quantity calculations; cost estimates; preparing bidding documents for road, bridge and market construction works; carrying out the bidding process; organizing training courses for government staff and private contractors; and providing on-the-job training during work implementation. The use of labor-based technology generated work for 200 workers.18 Floods in 2007 caused damage to bridges and it was decided to raise the level of some road sections to prevent further losses. 27. In addition to an estimated 2,008 vehicle operators who directly befit from road use in the form of reduced vehicle operating costs (VOCs), a further 8,000 households in the road area of influence also benefit in the form of time savings. The impact of the road appears to have been extremely positive in terms of opening up an area for commercial rice cultivation that had previously relied on relatively expensive river transport or seasonal, difficult road access. Rice millers set up operations near the northern end of the road when it opened, and in 2014 the largest rice mill in the area was established outside Soukhouma district town. By completion of the original project, the roads were included in the provinces’ road development programs, including pavement of access roads with double bituminous surface treatment.

18

International Labour Organization. 2009. Final Report on Technical Assistance to the Smallholder Development Project: Rural Road Component, ADB Loan 1949 Lao (SF). Bangkok.

26 Appendix 2

E. Project Management 28. Project management was under the authority of a national project director, who was to be appointed and adequately supported by the executing agency and consultants.19 29. Project management performance was poor from the outset. Delays in loan effectiveness and consultant recruitment did not help, but by early 2006 weaknesses in planning, management, monitoring and reporting of activities by the Office of National Project Director (ONPD) were apparent, as were deficiencies in the work of consultants. Two issues were identified by earlier review missions, but were not adequately addressed. The team leader’s time continued to be misallocated, with too much focus on detailed administrative and translation work, and larger-scale contract farming possibilities, which were arguably seen as a shortcut to achieving project objectives, instead of more broad-based contract farming arrangements. Further; international M&E consultant inputs were inadequate. After almost half of consultant inputs had been used, the project still lacked an M&E system. 30. At the MTR in 2007, the implementation and management situation remained fundamentally the same, notwithstanding increased awareness of (i) inadequate coverage of project staff’s incremental costs for monitoring and supervision of activities; and (ii) difficulties in managing the funds flow beyond the central level. A consequence of poor management was that the extension, farmer support, agribusiness and marketing activities were largely implemented with no interconnections. It was by then apparent that the project would not complete its objectives in the original timeframe and a one-year extension of the implementation period was agreed by ADB and the government. 31. A project planning workshop held in late 2008 failed to develop realistic workplans for the remaining project period. In January 2009 MAF issued a decision to appoint a new national project director and deputy. At the same time: (i) provincial appointments were reviewed; (ii) the organization of ONPD was improved by reallocating staff, refining job descriptions, and recruiting new staff as needed; and (iii) the consulting services agreement with the Lao Consulting Group was changed to better reflect needs until the end of the project period, in particular by strengthening M&E. By 2010, the OPND appeared to have much more interaction with its provincial and district offices and coordination across project components by respective government agencies had greatly improved. F. Summary 32. The following observations are drawn from the foregoing outline of the project components’ implementation during the original project period:

(i) project management (ONPD and consultants) inadequately addressed the project needs in terms of implementing components 1 and 2 in the first few years of operations. There were deficiencies in planning, monitoring and reporting of these component activities that remained unaddressed, despite various recommendations made by several ADB review missions;

(ii) prior to 2009, project consultants appear to have had a definite agenda that sought to involve specific agribusinesses in possible contract farming arrangements, to the detriment of wider smallholder participation. Some arrangements that were made as a result of this particular orientation were not especially advantageous to the smallholders involved;

19

Project implementation arrangements are described in Appendix 5. Consultants were supplied via a contract with Lao Consulting Group and via the International Labour Organization for the rural roads component.

Appendix 2 27

(iii) the failure to properly define farmer production and management groups, and the lack of recording and reporting of the purpose and outcomes of the demonstration trials in the early project period indicate a failure to implement the project as originally intended, and to link the supply and demand sides of the project. An absence of the most basic data about the numbers of villages in districts to be targeted by extension activities, number of households in the FPMGs, crop yields and mixtures of these households compromised the project’s ability to design a realistic workplan to support the smallholder agriculture production base, and compromised its ability to reasonably measure the impacts resulting from project interventions;

(iv) some aspects of the project design were either overtaken by events (e.g., investment promotions and incentives being available through non-project channels, such as Thailand’s Economic Cooperation Strategy Plan of Action) or made redundant (e.g., when agriculture credit was available more cheaply than through APB), while others were perhaps poorly designed at appraisal (e.g., business plans that may have been well produced but were unlikely to be of value if APB insisted on collateral being pledged in order to make loans available). In each of these areas, the original project could arguably have reoriented itself to respond to new conditions more quickly than it did;

(v) ADB review missions were timely and frequent, but project’ management issues remained unsolved. This resulted from both frequent change of ADB project officers as well as the fairly innovative nature of a “pilot” agriculture development project that contained demand-side interventions, and was tested in a fairly fluid institutional environment;

(vi) the ADB MTR missions conducted in two phases in 2007 attempted to re-orient the project, given its obvious implementation problems. The 2nd Phase of MTR mission drafted an updated DMF to reflect both the needs of the project and changes in ADB project preparation practice (i.e., the move from the earlier project framework to the more robust DMF format adopted in 2006).20 The MTR also re-estimated the likely economic internal rate of return21 and drafted potential regulatory guidelines for the formation and operations of the FPMGs, including the development of revolving credit funds;

(vii) funds flow problems impeded project implementation for a long period, incremental staff costs issues for follow-up activities constrained some field activities, and the costs of staff to keep the AMIS going post-project compromised the sustainability of the information-based outputs;

(viii) changes in personnel and reorganization of ONPD resulted in project management becoming much more robust after early 2009;

(ix) delegation of the project to the Lao PDR Resident Mission improved project oversight; and

(x) of all project activities, only the rural infrastructure component was implemented largely without problems although it was not implemented as designed.

20

ADB. 2006 Project Performance Management System: Guidelines for Preparing a Design and Monitoring Framework. Manila.

21 Details are in Appendix 7

28 Appendix 3

ADDITIONAL FINANCING LOAN 2809-LAO(SF): OVERVIEW OF IMPLEMENTATION AND ACHIEVEMENTS

A. Introduction 1. This appendix reviews implementation of the additional financing outputs: (i) strengthened farmer production and marketing groups (FPMGs); (ii) replicated post-harvest technology and practices; (iii) strengthened extension services of the Agriculture Technical Extension Center (ATEC); (iv) improved FPMGs’ knowledge of agribusiness practices; and (vi) strengthened human resource capacity for project implementation. B. Output 1: Strengthened Farmer Production and Marketing Groups 2. This output involved: (i) capacity building of FPMGs in extension services, management of groups, new agricultural production techniques, post-harvest practices and marketing; (ii) promoting commodity markets to improve environmental and social performance of agriculture and value-added products; (iii) support for 96 FPMGs established under the original project in 16 districts, and establishment of 28 FPMGs in new target districts; (v) setting up revolving funds for FPMGs in new districts; (vi) international and national training on rice planting technologies and livestock rearing; and (vii) support to organic farming groups in applying certified practices. 3. Implementation began well, with 33 FPMGs established in the new target districts during 2012. These included FPMGs doing rice seed production (8 groups, which produced over 50,000 kilograms (kg) of R3 seed for 58 rice producing groups); commercial rice growing (11 groups); organic vegetables (8 groups, including some downstream from the Nam Theun 2 hydropower scheme); and red chilies (6 groups). Among the FPMGs already established under the original project, supervision and monitoring by the Provincial Project Offices (PPO) and District Project Offices (DPO) suggested many were maintaining their revolving funds, but some were facing difficulties with accessing markets and it seemed they might not prove sustainable. 4. During 2012 pre-and post-harvest equipment was being delivered to groups on an ongoing basis, including greenhouses for organic vegetables. These technology upgrading activities were supported by training programs in: (i) management of FPMGs, (ii) production techniques, (iii) post-harvest technology (i.e., drying and storage), (iv) group revolving funds, and (v) marketing. Six study visits were organized for new FPMGs to the FPMGs that had been established under the original project. 5. By mid-2013, a total of some 217 FPMGs had been established (119 under the original project, and 98 in the new districts under the additional financing), exceeding the target of 190 groups. More than 1,700 FPMG members had received training on crop production, grading, processing and packaging, although some aspects of agribusiness and marketing and post-harvest technology training were slightly behind schedule. The programs for irrigation scheme construction, rice seed dryer shelters, threshers, graders, moisture testers, and organic vegetable greenhouses had all been all completed. Some 37 of the FPMGs were reported to have functioning group revolving funds and further training and support was planned for the rest of 2013. Overall, just under 20% of 217 groups could be defined as sustainable on the basis of their ability to maintain market links, manage and maintain their revolving funds, and be able to train other FPMGs. 6. The project began to classify the FPMGs into four categories according to their respective institutional, financial and technical capacities, and to tailor support for the remainder of the

Appendix 3 29

additional financing period accordingly.1 A particular focus of the strengthened FPMGs output was on helping “learning” FPMGs transition to “strengthened” or “model” status. Model FPMGs were expected to have the potential to develop into formal cooperatives, which was consistent with government policy and encouraged by the project, with a target of one FPMG or cooperative per province. By the end of 2013, more FPMGs had been established, increasing the project total to 221 (119 from the original project and 102 from the new districts under the additional financing). Training had been provided to 2,222 members (17% women) in production, processing, and packaging, and to 284 members (14% women) in agribusiness and marketing. Revolving fund capacity had grown to 42 of the FPMGs with nearly $70,000 in capital subscribed. 7. By the end of 2014, capacity building activities in the form of training and input provision had been largely completed. Table A3.1 summarizes the total number of trainees by the type of training received and by gender of participant.

Table A3.1 Project and Farmer Trainees, by Type of Training Received

International Training Program Project Staff Farmers

Total Female Total Female Total Female 1 Post-harvest technology 37 5 9 1 28 4 2 Organic vegetables production 3 3 3 Crop production 20 3 20 3 4 Large ruminant 4 4 5 Value chain 46 12 18 4 28 8 6 Agribusiness and marketing 37 5 37 5 7 Other co-ops 142 32 122 31 20 1 National Training Program 1 Project management and procurement 111 29 111 29 2 Rice seed production techniques 1,254 224 8 5 1,249 2,194 3 Commercial rice seed production 33 33 4 Soil improvement and pest management 451 120 70 26 381 94 5 Post-harvest technology 241 39 75 13 166 26 6 Organic vegetables plantation 194 82 194 82 7 Animal raising (poultry) 32 5 5 3 27 2 8 Large ruminants and AI 3 3 9 Pig raising and AI 104 65 8 2 96 63 10 Crop production grading and packaging 39 17 2 2 37 15 11 Village extension workers 131 131 16 12 Agribusiness development and marketing 180 57 74 10 106 47 13 Group management 284 39 99 24 185 15 14 Agriculture produce processing 21 18 7 5 14 13 15 FPMG revolving fund establishment and

management 428 190 6 4 422 188

16 Environment safeguard management 16 4 16 4 17 Association management for rice miller groups 30 11 5 25 11 18 Coffee production techniques and plantation

management 36 14 6 30 14

19 Training of trainer on organic vegetable production

34 10 34 10

20 Other 237 25 237 25 Total 4,148 1,024 742 181 3,409 843 AI = artificial insemination, FPMG = Farmer Production and Marketing Group. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO (SF). Vientiane.

1 Namely: model, strengthened, learning, initiating; details are in the Review Mission Aide Memoire for June 2013.

30 Appendix 3

8. The final summary of capacity building of project staff, FPMG members, other farmers, and entrepreneurs under this output is summarized in Table A3.2. Almost 4,500 persons were trained, of whom 24.5% were women.2 Table A3.2: Strengthened Farmer Production and Marketing Groups –Training Summary

Project Staff FPMGs Entrepreneur Total Item Female Male Total Female Male Total Female Male Total Total Female

Training 181 561 742 840 2,566 3,406 3 0 3 4168 1,024

National 137 392 529 827 2,503 3,330 3 0 3 3859 967

International

44 169 213 13 63 76 0 0 0 289 57

Study Tour 40 137 178 32 117 158 3 2 5 341 75 National 17 62 80 31 110 150 0 0 0 230 48 International

23 75 98 1 7 8 3 2 5 111 27

Total 221 698 920 872 2,683 3,564 6 2 8 4,489 1,099 FPMG = Farmer Production and Marketing Group. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO (SF).Vientiane

9. At project completion, nearly half the FPMGs were classed as model or strengthened. Some of the model groups were being developed to be farmer learning hubs for farmers to share good practices and for the experienced farmers to provide onsite coaching and technical support to their peers (Table A3.3).

Table A3.3: Farmer Production and Marketing Groups Learning Hubs No. Province District Village FPMGs 1 Champasak Sanasomboun Kili Rice seed production

Champasak Champasak Donsomhomg Rice seed production Champasak Phonthong Oupaleth Rice seed production Champasak Mounlapamok Pakmork Rice seed production Champasak Bachieng Kengchia Maize production Champasak Nongsung Pakxong Cabbage production Champasak Pakxong Lat 40 Coffee cooperative Champasak Kong Venkhao Rice seed production Champasak Pakse PPO

2 Savannakhet Xounbury Kongpathornvanh Rice seed production Savannakhet Xaybury Somsaath Rice seed production Savannakhet Atsphanthong Houameung Organic vegetable production Savannakhet Kaisonphomivhane Pakkha Organic vegetable production

3 Khammaoune Nongbok Navanthong Rice seed production

Khammaoune Xebangfai Teung Rice seed production Khammaoune Mahaxay Namarkba Rice seed production Khammaoune Thakhek PPO

4 Vientiane Thoulakom KemNeua Cattle production Vientiane Kasi Phonsida Rice seed production Vientiane Sanakham Naphieng Rice seed production

PPO = Provincial Project Office. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO (SF).Vientiane.

2 Figures relate to the numbers of persons attending a particular training event or program. Because individual FPMG

members can attend more than one event, the number of farmers is greater than the number of households in FPMGs.

Appendix 3 31

10. Two out of 12 organic vegetable plantation groups received organic certification from the Ministry of Forestry and Agriculture, Department of Agriculture, and another six groups were then under evaluation to be certified as organic vegetable plantation groups.3 To meet the additional financing targets for sustainability it was agreed that support would focus on group management and revolving fund establishment for the 80 learning FPMGs that had the potential to upgrade. 11. At the conclusion of the additional financing period there were 221 registered FPMGs, with 20% were defined as model, 48% strengthened and 32% learning or initiating. A summary of FPMGs and their various activities is in Table A3.4.

Table A3.4: Summary of Farmer Production and Marketing Groups, Households and Activities

FPMG = Farmer Production and Marketing Group. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO (SF).Vientiane.

12. It is notable that the number of households participating in the increased number of FPMGs fell following the conclusion of the original project, from 9,075 households to just over half that number. This can be ascribed to the following factors: (i) many members may have initially expressed interest in participating in crop or livestock activities but were unable to meet the labor or investment cost demands; (ii) some households in the rice seed producing groups could not meet the necessary quality standards; (iii) in the 2012–2013 season the commercial rice market suffered a decline and some households could not find market outlets; (iv) in Khammuane province, some households switched from vegetable crop to tobacco plantation because of attractive prices, but could not be supported by the project as a result; (v) likewise, some former cabbage producers switched to coffee; and (vi) in Pakxong district, some cattle households reduced their involvement under pressure to reduce the numbers of animals, which were threatening coffee plants. There was also some initial double counting of households by the project if they were involved in more than one group. Thus, a combination of over enthusiasm, changing market and production conditions, and difficulties in meeting technical standards for certified seed production resulted in a reduction and consolidation of groups during the additional financing period. Some of these factors are relatively recent developments, making the effect on long-term sustainability unclear. 13. Revolving funds were established by 60 FPMGs compared to the performance target of 56, most of which were model or strengthened groups, with roughly KN1 billion in capital. Many appeared sustainable—some 89% were reportedly mobilizing savings for relending. Most (90%) of

3 Groups that received organic vegetable certification were in Boungpao village in Thoulakom district, Vientiane province

and Pakka village in Kayson district, Savannkhet province. The organic certification process took almost 12 months. Groups under evaluation were Nongphai village, Sanasomboune district, Nongsoung village in Pakxong district, Champasak Province; Houameuang village, Atsaphangthong district and in Phontan village, Phalansay districts, Savannakhet province; and Namonmay village, Kasi district, Naphieng village, Sanakham district, Vientiane province.

FPMG Activity Number of FPMGs

Number of Households

Commercial rice production 111 2,774 Rice seed multiplication 31 574 Cattle 20 251 Swine 7 109 Chicken 2 22 Coffee (roasting) 2 82 Feed corn 7 264 Organic vegetables 12 125 Other vegetables and all other activities 29 707 Total 221 4,908

32 Appendix 3

FPMGs had books of accounts, almost as many had bank passbooks, and nearly 75% had formal agreements regarding the use of funds and maintenance of post-harvest equipment. 14. Three FPMGs became cooperatives: one traded agriculture products (15 households) in Bachieng district, Champasak province; one composed of 9 households traded agricultural products in Pakxong district, Champasak province; and a coffee production cooperative formed in Pakxong district, Champasak province. R3 rice seed production FPMGs (31 households) were established in the 24 districts. In terms of gender objectives, 27% of FPMG committee members were women (compared to the target of 20%); of the 3,564 extension trainees in 227 villages 24% were women. 15. By end of 2014, some 3,000 tons of R3 rice seed was being produced (wet- and dry-season rice combined). From this supply of improved seed, about 40% was sold throughout the provinces; if some 75% of it was planted and averaged an incremental 1 ton per hectare (ha), this would represent just over 11,200 tons of paddy rice annually. Before the end of 2014, the Ministry of Agriculture and Forestry (MAF) issued a decree regarding the establishment of agriculture production groups; while this did not give the FPMGs legal status, it meant that potential agribusinesses knew they existed, had some kind of official acceptance and encouragement, and could be dealt with by potential contractors.

4

16. The extension training activities appear to have been successful by virtue of the twin approaches of: (i) farmers field school and demonstrations; and (ii) nurturing a number of farmer leaders through the Lao Extension Approach to act as trainers or demonstrators for their peers and neighbors. 75% of farmers surveyed at the end of the additional financing period reported to have adopted new technology that they had seen demonstrated, either directly by project staff or by other farmers. C. Output 2: Replicated Post-Harvest Technology and Practices 17. This output comprised: (i) promoting value addition through post-harvest technology and associated improved practices, (ii) supplying FPMGs with post-harvest equipment and training regarding its operation and maintenance, and (iii) organizing exchange visits and study tours to stimulate new agricultural initiatives and post-harvest practices. 18. By the end of 2013 the procurement and delivery of the post-harvest equipment (3 chili driers, 10 rice seed dryers, 8 rice seed threshers, 8 rice seed graders, 8 transplanting machines, 21 moisture testers, 14 mowing machines, 66 seed spay machines, seed color sorters, 3 coffee roasters and 5 corn grinders) was complete. Equipment was provided to 8 rice seed production groups and 111 commercial rice production groups. The construction of rice seed dryer shelters together with FPMGs’ cash and in-kind or labor and materials contribution, totaling about $140,000 was also complete. FPMGs’ group revolving funds were used for machinery maintenance. 19. Training on the use of the machinery was provided on delivery, and the international post-harvest specialist provided further support during 2013, by training ATEC staff and FPMG members. Training covered large-area based practices, as well as pre-harvest techniques including land preparation, seed preparation, fertilizer application, pest management and various processes of post-harvest techniques such as harvesting methods, drying and storage. Participation of women in post-harvest training was significant, 66 out of 324 trainees (just over 20%) were women, and nearly 90% later claimed to be following some recommended practices.

4 No. 2984/MAF dated 25 September 2014.

Appendix 3 33

20. During 2014 it was observed that the project-supplied technology was being well accepted by the FPMGs; some 85% were apparently using the pre- and post-harvest technology successfully and a figure of 81% successful use was later estimated by the end-line survey in 2015. However, some problems arose with rice transplanters in very wet areas and a few threshers, which experienced mechanical issues. Some seed dryers had proved redundant, because seeds were available with a lower moisture content than expected. It took some FPMGs longer than expected to formulate regulations for financing maintenance of their equipment and to establish proper formal contracts between rice milling groups and traders. 21. Two large paddy areas were piloted in Khammuane and Vientiane provinces using the upgraded technology. Results were mixed, in that no production was achieved in Khammuane due to a water shortage, while the Vientiane trial showed the potential of large field-based cultivation and of leveling wet land. 22. Project staff reported that the typical price of rice seed sold by FPMGs rose from KN2,500–KN3,000/kg in 2012 to KN4,500–KN5,000/kg in 2014 as a result of improved quality. For corn seed the prices rose to KN2,000–KN2,200/kg from KN1,300–1,700/kg over the same period. The groups seemed more confident of future outcomes, with 30% of sales revenues typically allocated to current and future operation and maintenance. D. Output 3: Strengthened Extension Services of the Agriculture Technical Extension

Centers 23. This output included: (i) strengthening of public–private partnerships for agricultural research and development by involving the rice research centers, ATECs, FPMGs and rice miller groups to improve productivity and quality; (ii) strengthening ATEC’s staff capacity; (iii) establishing ATEC rice seed storage facilities; (iv) procuring post-harvest equipment, rice transplanting machinery, and laboratory equipment for quality tests; (v) upgrading training facilities in the Lao–China Agriculture Research Center in Champasak province; and (vi) mobilizing post-graduate students to facilitate FPMG improved rice planting and harvesting processes. 24. By the end of 2013, laboratory equipment was delivered to the Thasano Rice Seed Research and Seed Multiplication Center in Savannakhet province which was providing training to seven villages in rice seed production technology, and undertaking quality assurance tests of the rice seed produced by the FPMGs. 25. Construction of the training room in the Lao–China Agriculture Research Center in Champasak province was complete by end of 2013, with equipment and furniture delivered, and organic vegetable planting demonstration sites, a grading house, and kitchen room constructed. The project supported the construction of the training room and provision of training equipment, while the Agriculture University of Guangxi helped the government by financing construction of a $40,000 dormitory for the training facility. This would allow training of 20–30 trainees from the vegetable FPMGs throughout the 24 districts. Training for 23 farmers on a 1-month course on organic vegetable plantation began in early 2014 with project’s support on transport costs, per diem and training fees. The center began to explore sustainable finance mechanisms for the post- additional financing period, including a variety of cost and revenue sharing arrangements with farmers. Organic vegetable training combined production technologies aiming for improved quality and higher yields with developing the capability of the farmers to become entrepreneurs through farm planning, budgeting and market research. Vegetables produced in large volumes from the center attracted many local traders, who sold much of the production to nearby markets and to Thailand.

34 Appendix 3

26. The Xebangfay Agriculture Research and Development Center in Khammuane prepared a detailed training plan for rice seed production, commercial rice production and fish farming in 2013 but installation of the project-supplied rice seed storeroom equipment was postponed due to the delay in construction of the storeroom financed under the Word Bank Khammuane Development Project.5 Although the storeroom was completed by mid-2014, it was not operational and lacked finance for ongoing operation at the end of 2014. More positively, Xebangfay was planning to sell R2 rice seed to support its future operations, and to explore other donor opportunities. 27. Overall, by November 2014 these three centers were able to provide training in rice seed and commercial rice production, fish farming, livestock-raising and organic vegetable production to some 361 villages, benefitting 4,407 households. The performance target of 400 villages covered by the ATECs was difficult to reach due to village consolidation in Khammuane province that reduced the number of villages by about 22%. 28. Regarding the upgrade of ATEC staff skills, it was estimated at additional financing completion that 85%–90% of staff at Xebangfay and Champasak ATECs had acquired the necessary skills and capacity for work planning, budgeting and management. E. Output 4: Improved Farmer Production and Marketing Groups’ Knowledge of

Agribusiness Practices 29. This output involved: (i) facilitating inter-sectoral information-sharing on agribusiness practices (trade forums and consultation meetings); (ii) promoting cooperation among farmers, village extension workers, FPMGs, and trade groups to identify market needs and quality standards; (iii) adopting best practices for the trade and promotion of agricultural products and services; (iv) strengthening the agribusiness value chain link between smallholders and the private sector; and (v) training for entrepreneurship and business development. 30. This output also began well, with consultations and meetings between FPMGs and traders and processers resulting in signing of rice seed and commercial rice production contracts in Khammuane, and vegetable and coffee bean supply contracts for Ubon Thani in Thailand. However, in the eight new additional financing districts, there was a lack of coordination reported between the provincial and district project offices and the provincial and district industry and commerce offices, necessitating follow-up action by the Office of the National Project Director (OPND) and the Ministry of Industry and Commerce’s Department of Production and Trade Promotion. By the end of 2013, some 34 contract farming arrangements had been signed between FPMGs and the private sector. 31. The rice mill platform model—in which rice millers procure improved R3 rice seeds from rice seed production groups and then supply these to commercial rice production groups and other farmers together with fertilizer and orientation on rice production techniques, who then re-supply the mill with their output—was well established in Khammuane province, and close to being considered a government standard model. As a result, the project attempted to accelerate replication throughout the eight new districts. By project completion, and as a result of the mills having been supplied with rice graders (3 graders, at just under $50,000 each), rice millers in Khammuane were able to better grade some 50,000 tons of paddy per year bought from their contract farmers and on a spot basis, resulting in a 25%–30% price premium over unsorted or graded product. This was a significant source of project economic impact. 32. Contracting progress picked up further during 2014, and by mid-year (i) there were 41 contract farming arrangements in place, with a value in excess of $12 million recorded (the

5 World Bank. 2008. Khammuane Development Project (Project Appraisal Document). Washington D.C.

Appendix 3 35

vegetables for Ubon Thani were by far the largest of these contracts); (ii) 31 rice miller, trader and processor groups had been officially established in the four provinces; and (iii) a program was developed to prioritize support to FPMGs during the remainder of the additional financing period. By the end of 2014, 65 contract farming arrangements were in place, and seven farm retail shops had been set up. A summary of contracts by province, households, trader numbers, and value is in Table A3.5.

Table A3.5: Summary of Contract Farming Arrangements

Province No.

FPMGs Participating Households

Processing groups / traders

No. of contracts

Product quantity

per contract

(kg)

Value of contract (KN)

Khammuane 5 80 19 21 96,794 428,435,500

Savannakhet 5 261 5 7 160,500 444,650,000 Champasak 31 673 22 34 60,886,000 100,967,350,000 Vientiane 1 19 1 3 75,000 240,000,000 Total 42 1,023 47 65 61,218,294 102,080,435,500

($12,760,054) FPMG = Farmer Production and Marketing Group = kg = kilogram. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO (SF).Vientiane.

33. The agribusiness training and study tours for FPMGs were complete in 2014 (133 farmers, traders had participated, with 35% were women) and a total of 13 business matching meetings concluded. Twenty-four forums and agribusiness conferences had been organized or attended, as well as 19 trade fairs or exhibitions attended. Some 664 farmers, traders, and processers had attended these, 25% of whom were women (Table A3.6). A number of these female participants were those who were involved in village enterprises (e.g. noodle processing, or rice milling) and one outcome was the assistance given to women in accessing markets through the establishment of seven farmers’ agri-retail stalls in the four project provinces.

Table A3.6: Trade Fair and Agribusiness Forum Attendance (by Province and Gender)

No. Location No.

TF/Ex (time)

No. Beneficiaries

No. AFF(time)

No. Beneficiaries

Total

Total Female Total Female Total Female 1 Vientiane 2 130 60 130 60 2 Khammuanee 3 350 100 6 182 71 532 171 3 Savannkhet 3 100 30 8 225 56 325 86 4 Champasak 3 1100 380 10 257 39 1,357 419 5 ONPD 8 2800 970 2,800 970 Total 19 4,480 1,540 24 664 166 5,144 1,706

AFF = agribusiness fair and forum, Ex = exhibition, ONPD = Office of National Project Director, TF = trade fair. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO (SF).Vientiane.

F. Output 5: Strengthened human resource capacity for project implementation 34. Capacity building activities were completed by mid-2014 for ONPD, provincial project office and district project office staff. This covered training and coaching on: (i) project management, (ii) financial management, (iii) procurement, and (iv) agricultural production technologies. 662 (156 women) staff attending the training and study visits. The procurement of rice seeds and

36 Appendix 3

construction materials for renovation of small-scale irrigation systems was handled by the provincial project office without problems. With support of the consultants, all of the planned project activities were implemented as scheduled. G. Summary 35. The following observations are based on the preceding implementation history during the additional financing period:

(i) the implementation of all outputs under the additional financing was driven from the outset by a workplan of clearly-specified activities aimed at achieving well-defined and realistic targets;

(ii) the additional financing as a whole was able to build on the experience and achievements of the original project. Many operations and capacities were well known, and external conditions were increasingly favorable to project objectives. In addition, there was a relatively high standard of operational performance across all outputs that was in stark contrast to the early years of the original project. The result was to consolidate and extend gains made toward the end of the original project period;

(iii) there was considerably more consistency in management on the part of both the executing agency and ADB, with no senior-level changes in the ONPD nor within the supervision arrangements at ADB’s Lao People’s Democratic Republic Resident Mission, whose supervision helped sustain close working relationships with the project throughout the additional financing period;

(iv) management responses to emerging conditions was nuanced and responded to identified challenges;

(v) the number of households participating in the increased number of FPMGs declined over the additional financing period, but this is probably in response to a settling and consolidation process that occurred in part because of changing market conditions, and does not threaten sustainability.

Appendix 4 37

PROJECT PERFORMANCE ASSESSMENT: SUMMARY OF MAJOR ISSUES

A. Introduction 1. The Smallholder Development Project documentation exhibits a number of features that complicate its performance assessment at completion. These include: (i) the ambiguous way in which higher-level objectives for the project were defined, (ii) the indicators that were defined for the respective higher-level performance objectives, (iii) the specification of performance targets for higher-level achievements, (iv) revisions made to the design and monitoring framework (DMF) and (v) project monitoring and reporting. B. Objectives Hierarchy Logic 2. The original project defined its purpose as the establishment of sustainable smallholder commercial agriculture and associated agribusiness in the provinces of Champasak, Khammuane, Savannakhet, and Vientiane.1 This is what the original project could have reasonably expected to achieve if it were implemented as designed. Its goal was defined as economic growth, employment creation, and income growth, which was appropriate and consistent with most agriculture development projects of this type, being wider in scope and influenced by factors (e.g., prices, weather, policy changes) beyond the control of the project itself. 3. In an attempt to update and clarify the project objectives hierarchy, the additional financing overall design summary of 2011 revised the purpose (DMF outcome),2 to improved sustainability of smallholder commercial agriculture in the provinces of Champasak, Khammuane, Savannakhet, and Vientiane, while the goal (DMF impact ) became improved agricultural productivity in four provinces. In effect, this revision broke the project’s original results chain: that achieving improvements in agriculture production and productivity would result in consequential changes to economic growth, incomes, poverty, and employment. Instead, the new logic made improved agricultural productivity dependent on sustainability. To the extent that agriculture productivity may depend at least in part on the sustainability of commercial smallholder agriculture production conditions this may not be unreasonable, although an argument can be made for the reverse: that agriculture sustainability depends upon agriculture productivity. 4. However, this revised formulation misses the larger cause and effect relationship the DMF tries to capture: that the underlying reason for improving agriculture productivity is to raise economic growth, income, and employment, and that these objectives provide the real motivation for public intervention. C. Choice of Indicators For Higher-level Project Objectives 5. A related feature that complicated the performance assessment results from the choice of performance indicators in both the original project framework and the additional financing DMF. In the original project framework: (i) the goal-level performance indicators include one concerning aggregate commercial crop production—an increase of 30,000 tons of commercial crop production per year—which would more typically have been included with changes in productivity or production measured at the purpose level, measuring what the project itself could reasonably have

1 Asian Development Bank (ADB). 2002. Report and Recommendation of the President on a Proposed Loan and

Technical Assistance Grant to the Lao People’s Democratic Republic for the Smallholder Development Project. Manila. (Loan 1949-LAO).

2 ADB. 2011. Report and Recommendation of the President on a Proposed Loan for Additional Financing. Lao People’s

Democratic Republic: Smallholder Development Project. Manila. ADB adopted the use of the design and monitoring framework in 2006; ADB. 2007. Guidelines for Preparing a Design and Monitoring Framework. Manila.

38 Appendix 4

been expected to achieve; and (ii) the purpose-level indicators include one on income—54,000 households have improved incomes— which would more typically be associated with the goal of changes to growth, income, poverty, and employment, rather than the sustainability of smallholder agriculture. These production and income indicators were then mixed with poverty indicators at the goal–impact level, and rice deficit and production indicators at the purpose–outcome levels. The result is to essentially conflate the two levels of the project’s objectives achievements, as they are both measured by a similar set of mixed (production and income) indicators, instead of being presented as logically and causally related, but separated according to whether they were within the project’s control or not. D. Performance Target Specification 6. Another issue with project performance assessment involves the actual targets for impacted households that were established at the higher objective levels. 7. Projects, including agriculture extension activities, typically impact some households (i) directly—e.g., through participation in trials, attendance at training events, by becoming village extension workers, or by receiving new technology; and (ii) some indirectly—e.g., farmers who change practices because they have seen these working for their neighbors or fellow farmer production and marketing group (FPMG) members. Project designs typically embed an expectation of how many farmers will be affected in various ways, according to both the characteristics of the host population and the resources of the extension system itself. The accuracy of the initial projections of extension system performance will depend on the resources applied at design, and implementation problems that may arise.3 8. The project’s performance targets varied as follows over the project life:

i. based on the project preparatory technical assistance design, the original project set the relatively broad expectation that about 20% of farmers with wet season rice and 10% of dry season rice farmers would be positively impacted by the original project, and that the project would work in 54 villages in each of 16 districts (for a total of 864 villages), thus affecting about 40,000 farmers (footnote 1). The purpose-level performance target included incomes improved in 54,000 households (33,000 households through wet season rice cultivation, and 16,000 through dry season cultivation, plus some non-rice cropping, road transport and market beneficiaries);

ii. based on slow implementation progress, the midterm review (MTR) in 2007 reduced the expected number of villages covered from 864 to 531, with the number of impacted farmers some 25% of this population, or 39,778 households (out of a total of 144,799 households in project districts). Although they were proposed to the government and the ADB by the MTR mission, these targets were not formally adopted in a revised DMF;

iii. during additional financing preparation in 2011, the number of households in the 162 FPMGs was estimated to be 9,075. However, it was also suggested that direct beneficiaries experiencing income increases totaled 29,000 households (and not 54,000 as indicated in the original project documents).4 Although the presentation is not

3 Projects with varying types of interventions (e.g., agriculture extension, rural roads, primary markets, or policy

changes) will produce different types of impacts (e.g., rice yield improvements, vehicle operating costs savings, improved product quality) on different groups of beneficiaries. Some of the beneficiary groups may overlap (a farmer may get better rice yields and also see his/her local transport costs go down) and relatively precise monitoring of different project components and groups of beneficiaries is required to avoid double counting of individuals. Even within the same project activity, a household may be a member of more than one FPMG, for example.

4 Impact Assessment and Economic Analysis appendixes in the additional finance project documents (footnote 2 in this

appendix).

Appendix 4 39

entirely clear, this number represents the FPMG households plus an estimate of households impacted by original project veterinary activities. It does not include vehicle operators or transporters as beneficiaries from the roads investment. On this basis, the DMF contained in the additional financing economic analysis uses 29,000 households as the outcome-level target for the original project; and

iv. the DMF in the additional financing main text retains the figure of 54,000 households as the original project target. The increase in project geographical coverage and the scope of its revised outputs under the additional financing was expected to result in reaching 10,400 additional households. Despite the fact that the preparation work for the additional financing itself identified just 29,000 beneficiaries (FPMG members and vaccine recipients), the 10,400 additional financing beneficiaries were simply added to the original project total of 54,000 households. Thus the additional financing main text lists 64,400 households to be impacted by the overall project at the outcome level, while the additional financing economic analysis lists just 39,400.

9. The importance of these targets for assessment of project performance—and their variability and lack of specificity—can be put into context by considering the reporting undertaken by the executing agency at the end of each loan period. The executing agency’s original project completion report (PCR) prepared in 2013 estimates direct agriculture beneficiaries as the 9,075 FPMG members, with some 4,655 indirect road user beneficiaries. The government’s project completion report of the additional financing prepared in 2015 estimates FPMG membership of 6,900 households, with more expected to join, for a total of around 7,500-8,000 direct beneficiaries. 5 10. The following observations emerge from the changes in the higher-level performance targets and apparent achievements over the life of the project:

i. the original estimate of province-wide extension coverage was ambitious considering the resources and levels of expertise available, and when the original project began to focus more closely on establishment and development of the FPMGs, this inevitably reduced the total number of households likely to be impacted;

ii. when it was realized that targeted household coverage would not be achieved, some attempt (i.e., at the MTR in 2007) to revise the DMF performance targets was initiated, but without formal follow through;

iii. a lack of clarity about how many households would be impacted by different investment flows and project activities is apparent in the original project Report and Recommendations of the President to the Board of Director (RRP). The document contains references to about 40,000 households, and 33,000 wet season and 16,000 dry season rice farmers but establishes a project framework target of 54,000 households (possibly including other crops and vehicle operators). This situation was compounded at additional financing preparation, which failed to differentiate the expected benefit streams and quantify these in the formal project documentation, and defined two different performance targets at the same level (i.e., both 64,400 and 39,400 households for the overall project outcome target);

iv. the figure of 64,400, which remains in the additional financing RRP main text, establishes a performance target that was known to be unrealistic at the time of additional financing preparation, and almost certainly predicated a post-project assessment of less than effective; and

v. The two executing agency PCRs assessed purpose and outcome performance entirely in terms of the FPMG household numbers, which is where project effort was

5 Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO (SF).Vientiane.

40 Appendix 4

concentrated, and made various attempts to describe and estimate other types of impacted households. However, the documentation makes no consistent estimates of beneficiary impacts.

E. Design and Monitoring Framework – Revisions and Variants 11. In addition to the issues with the definition of objectives, selection of indicators and specification of performance targets outlined above, revisions to the project framework and DMF during the MTR in 2007 left the project subsequently unclear about what to report against. 12. The 2007 MTR mission developed a DMF to replace the original project framework, in an attempt to make the framework more comprehensive, improve consistency, and reflect minor changes in scope. The reformulated DMF revised the impact statement to livelihood of smallholders is improved by enhancing employment creation, income and economic growth in Vientiane, Savannakhet, Kammuane and Champasak province. It also and slightly re-phrased the outcome statement. Apart from containing a means–end relationship in the impact statement (i.e., ‘livelihoods improved by employment….’), this was not problematic, and the revised indicators removed the mixture of income and production-level indicators that characterized the original project framework. Most importantly, the former purpose-level income indicator was appropriately assigned to the goal–impact level. 13. Despite recognition by the MTR that project extension coverage would now only reach 581 villages with a target of 25% of that population expected benefit from the project, the number of households whose income was to be affected remained unchanged from the original 54,000, instead of being changed to the newly identified 39,788. Corresponding outcome and output indicators were also inaccurate. 14. Following preparation of the revised DMF and its description in the MTR mission Aide Memoire,6 the executing agency began to use it for reporting. The executing agency’s PCR for the original project acknowledges that the reformulated DMF was not formally adopted by ADB and government, but states the project regarded it as more appropriate than the original project framework. The executing agency’s PCR for the additional financing reports against a variant of the MTR DMF, which blends the original and updated versions, making direct comparison with original project framework performance targets difficult. In terms of serving as a definitive tool useful for project performance monitoring, the DMF is redundant. F. Project Monitoring and Reporting 15. The project performance monitoring system was weak from the outset: (i) no baseline and/or agriculture performance benchmark data was collected prior to or during the start of project activities; (ii) the number of villages, households, FPMGs, demonstrations reached by the project were not properly recorded for several years, and field implementation could not be verified; (iii) project staff had a generally poor understanding of project objectives; and, (iv) technical monitoring and evaluation support capacity was limited. As awareness grew that original household-level impact coverage might be lower than expected, and as the project orientation changed towards a focus on the FPMGs and away from a more generalized village-level model, the DMF was not adjusted through a change in project scope. Likewise, when a multiplicity of targets emerged following the MTR, and the outcome target was inappropriately applied at the additional financing stage, the project did not realize the implications in terms of reporting and performance assessment.

6 Aide Memoire of Midterm Review Mission. 15-25 October 2007.

Appendix 5 41

PROJECT IMPLEMENTATION ARRANGEMENTS

A. Original Project (Loan 1949): Summary of Implementation Arrangements1

1. The executing agency was to be the Ministry of Agriculture and Fisheries (MAF), which would appoint a national project director (NPD) acceptable to the Asian Development Bank (ADB). The Office of the NPD (ONPD) would be assigned adequate office support staff and would have overall administrative and management authority over all project components and would be responsible for procurement, project performance monitoring and evaluation, reporting, arranging audits, and financial management. A National Project Steering Committee (NPSC) was to be established consisting of representatives from: (i) MAF; (ii) Ministry of Industry and Commerce; the Ministry of Communication, Transport, Post, and Construction (MCTPC); (iii) the Committee for Planning and Co-operations; and (iv) the provincial vice governors. The NPSC was to be chaired by the vice minister, MAF. The NPD would be the member secretary of the NPSC. The NPSC would meet twice per year to review the physical and financial progress of the project, provide overall guidance and direction for project implementation and help to resolve any outstanding issues, including policy addressing constraints. 2. Field implementation would be the responsibility of the respective provincial governments in the project areas. Provincial project offices (PPOs) would be set up and have day-to-day responsibility for coordination of project activities in the provinces. The governor’s office was to designate a provincial project coordinator preferably from the Provincial Agriculture and Forestry Office (PAFO) to head the PPO. A provincial steering committee (PSC) would be established in each province, chaired by the vice governor and including representatives of the PAFO. Department of Communication, Transport, Post, and Construction; Department of Commerce (DOC); and the Department of Industry and Handicraft. The Department of Communication, Transport, Post, and Construction would implement road construction and rehabilitation, and primary market construction; PAFO would implement the extension component; and DOC and the Department of Industry and Handicraft would implement the agribusiness promotion component in collaboration with PAFO. The district agriculture and forestry offices (DAFOs) would implement the extension component at the district level. DAFO staff were to be trained and guided by the Central Extension Training Unit at the National Agriculture and Forestry Extension Service (NAFES)2 and by the Provincial Extension Training Units within PAFO. All would assign full-time staff necessary to implement the project. 3. MAF was to: (i) work through the PAFOs and DAFOs in extension and training of farmers; (ii) implement a 3-year capacity building program for PAFO and DAFO staff; (iii) implement the production and marketing capacity strengthening of DAFOs, water users associations, and farmer production and marketing groups (FPMGs); (iv) identify sites for primary markets; (v) work with Ministry of Communication, Transport, Post and Construction (MCTPC) to carry out resettlement plans for roads and markets; (vi) work with the Science, Technology and Environment Agency (STEA) to carry out environmental impact assessment of roads and markets; and, (vii) conduct workshops and study tours within the Lao People’s Democratic Republic and to neighboring countries to study a range of public and private sector extension mechanisms. 1 ADB. 2002. Report and Recommendation of the President on a Proposed Loan and Technical Assistance Grant to

the Lao People’s Democratic Republic for the Smallholder Development Project. Manila. (Loan 1949-LAO) and the associated project administration manual (http://www.adb.org/sites/default/files/linked-documents/31351-014-lao-pam.pdf).

2 This became the Department of Agricultural Extension and Cooperatives in August 2012.

42 Appendix 5

4. An organization chart of the original project as prepared by the midterm review in 2007, but absent from the project administration manual (PAM) is in Figure 1.

Figure 1: Project Organization Structure (Loan 1949-LAO (SF))

Source: Midterm review mission October 2007.

National Steering Committee

National Project Director

International Consultants for Overall Management: (Agribusiness Economist/Team Leader)

Extension & Training Team

Market Infrastructure Team

Market Information System Team

Access to Rural Finance Team

Smallholder & Agribusiness Coordinator Coordinator

Other Supports for Viable

Investments in Equipment &

Materials

Management of Information System/Information and Communication Technology Specialist for C1 & C2

Steering Committees/Line agencies at Provincial and

District Levels: - Ministry of Agriculture and Forestry - Ministry of Industry and Commerce

Staff & Consultants for C3 Staff of Ministry of Agriculture and Forestry and Department of Trade and Commerce

Government Staff of Ministry of Agriculture and Forestry, Ministry of

Industry and Commerce, etc, national, provinces & district

Extension Workers at Sub-Districts

Clustered Villages/Sub Villages

Smallholder Households

Appendix 5 43

B. Additional financing (Loan 2809-LAO (SF)): Summary of Implementation Arrangements3

5. The additional financing largely retained the original organization arrangements. A few key points include:

i. The NPSC was now to include the Ministry of Planning And Investment (MPI) and National Commission for Advancement of Women (NCAW);

ii. The NPD was to be in the ONPD established within NAFES under the original project. Roles and responsibilities were defined in the PAM for the ONPD, which consisted of two units: administration and finance; and planning, technical, monitoring and evaluation;

iii. MAF was to have a representative from the Sub-Commission for Advancement for Women (S-CAW) to supervise implementation of the gender action plan;

iv. The PSCs established under the original project were chaired by the provincial vice governor, with representatives from PAFO, Provincial Industry and Commerce Office, Provincial Planning and Investment Office, and district vice governors, who also chaired the District Project Steering Committees (DPSCs). Representatives from S-CAW were to be members of the PPSCs for the additional financing;

v. PPOs had been set up, headed by PAFO; a representative from S-CAW was be appointed to the PPO to help monitor gender action plan (GAP) implementation. The roles and functions of PPOs were also clarified in the additional financing PAM.

vi. The DPSCs established under the ongoing project consisted of representatives from DAFO, District Industry and Commerce office (DICO), and Department Of Planning and Investment (DPIO). The chief of the district project offices (DPOs) was a member secretary of PPSC;

vii. Eight new DPSCs were to be established in the new districts, and to include representatives from S-CAW;

viii. The DPSCs were to provide overall guidance and direction for project implementation, and help to resolve any outstanding issues including policy constraints in the district;

ix. Field project implementation in districts was to be the responsibility of the respective district governments. DPOs were to be set up to be responsible for day-to-day coordination of project activities in the districts. The District Governor’s Office was to designate a District Project Coordinator (DPC) preferably from DAFO to head the DPO. A representative from S-CAW would be appointed to DPO to help with GAP monitoring;

x. Two Agriculture Technical Extension Centers (ATECs)4 along with DPO were to act as a technical advisory unit to farmer groups by providing training and technical services to farmers, conducting agriculture product demonstrations, and undertaking seed quality control and soil tests. In this respect, the project aimed to build capacity of ATEC in Khammuane and Champasak provinces by providing post-harvest equipment and materials and improving its facilities to enable ATEC to adequately fulfill its functions.

3 ADB. 2011. Report and Recommendation of the President on a Proposed Loan for Additional Financing. Lao People’s Democratic Republic: Smallholder Development Project. Manila.

4 ATEC was an organization reporting to the Provincial Agriculture and Forestry Extension Service under PAFO. ATEC received financial and technical support from PAFOs and NAFES, as well as technical support from agriculture research centers that were operating in the same provinces.

44 Appendix 5

Project Organization Structure (Loan 2809-LAO (SF))

ATEC=Agriculture Technical Extension Center, DAFO= District Agriculture and Forestry Office, DICO= District Industry and Commerce Office, DPIO= District Planning and Investment Office, MAF= Ministry of Agriculture and Forestry, MoF= Ministry of Finance, MPI= Ministry of Planning and Investment, M&E= Monitoring and Evaluation, ONPD= Office of National Project Director, PAFO= Provincial Agriculture and Forestry Office, PICO= Provincial Industry and Commerce Office, PPIO= Provincial Planning and Investment Office, SC= Steering Committee, S-CAW= Sub-Commission for Advancement of Women. Source: ADB. 2011. Report and Recommendation of the President to the Board of Directors: Proposed Loan for Additional Financing to the Lao People’s Democratic Republic for Smallholder Development Project. Manila.

Ministry of Agriculture and Forestry (Executing Agency)

Department of Agriculture Extension and Cooperatives (Implementing Agency)

National Steering Committee: MAF, MOF, MOIC, MPI, N-CAW Chairmen of 4 Provincial SC

Provincial SC: Deputy Prov. Governor, PAFO, PICO, PPIO, Chairmen of District SC, S-CAW

Office of National Project Director (ONPD)

NPD, DNPD (1), DNPD (2)/S-CAW

Provincial Project Office (PPO)

Vientiane, Khammuane, Savanakhet, Champasak province

Chief, Deputy Chief(1), Dep. Chief(2)/S-CAW

Planning,

M&E, Technical

Unit

Planning, M&E Unit

Admin& Finance Unit

Planning, M&E Unit

Admin &Finance Unit

District Project Office (DPO) 16 On-going Districts and 13 New Districts

Chief, Dep.Chief/S-CAW

ATEC

District SC: Deputy District Governor, DAFO, DICO, DPIO, S-CAW

Admin &Finance

Unit

Appendix 6 45

COMPLIANCE WITH LOAN COVENANTS

Original Project Loan 1949-LAO(SF)

Reference in Loan

Agreement Covenants Status of Compliance

Article IV, Section 4.01 (a)

The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and agribusiness practices.

Complied with

Article IV, Section 4.01 (b)

In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to the Loan Agreement.

Complied with

Article IV, Section 4.02

The borrower shall make available, promptly as needed, the funds, the facilities, services, land, and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project and for the operation and maintenance of Project facilities.

Complied with late Delays releasing counterpart funds for government staff to conduct project activities at village level. This was resolved after ADB approved in September 2007 the government request to amend allocation of loan proceeds for civil works, and incremental operational costs for District Agriculture and Forestry Office and Office of National Project Director

Article IV, Section 4.03 (a)

In the carrying out of the Project, the Borrower shall cause competent and qualified consultants and contractors, acceptable to the Borrower and the Bank, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and the Bank.

Complied with

Article IV, Section 4.03 (b)

The Borrower shall cause the Project to be carried out in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to the Borrower and the Bank. The Borrower shall furnish, or cause to be furnished, to the Bank, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as the Bank shall reasonably request.

Complied with

Article IV, Section 4.04

The Borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

Complied with

46 Appendix 6

Reference in Loan

Agreement Covenants Status of Compliance

Article IV, Section 4.05 (a)

The Borrower shall make arrangements satisfactory to the Bank for insurance of the Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice.

Complied with

Article IV, Section 4.05 (b)

Without limiting the generality of the foregoing, the Borrower undertakes to insure, or cause to be insured, the goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods.

Complied with

Article IV, Section 4.06 (a)

The Borrower shall maintain, or cause to be maintained, records and accounts adequate to identify the goods and services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the operations and financial condition of the agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof.

Complied with

Article IV, Section 4.06 (b)

The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to the Bank; (iii) Furnish to the Bank, as soon as available but in any event not later than nine (9) months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in English language; and (iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request.

Complied with late Submissions of four out of eight annual audited project financial statements were delayed due to late submission of project financial statements to auditors, arising from weak financial management. All annual audited project financial statements received unqualified auditors’ opinion

Article IV, Section 4.06 (c)

The Borrower shall enable the Bank, upon the Bank’s request, to discuss the Borrower’s financial statements for the Project and its financial affairs related to the Project from time to time with the Borrower’s auditors, and shall authorize and require any representative of such auditors to participate in any such discussions requested by the Bank, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree.

Complied with

Article IV, Section 4.07 (a)

The Borrower shall furnish, or cause to be furnished, to the Bank all such reports and information as the Bank shall reasonably request concerning (i) the Loan, and the expenditure for the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the

Complied with late.

Appendix 6 47

Reference in Loan

Agreement Covenants Status of Compliance

administration, operations and financial condition of the agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balance-of-payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan.

Article IV, Section 4.07 (b)

Without limiting the generality of the foregoing, the Borrower shall furnish, or cause to be furnished, to the Bank quarterly reports on the carrying out of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as the Bank shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter.

Partly complied with Submissions of quarterly progress reports were delayed

Article IV, Section 4.07 (c)

Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, in such form and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the Borrower of its obligations under the Loan Agreement and the accomplishment of the purposes of the Loan.

Complied with late The project was closed in November 2011, while the executing agency’s project completion report was submitted to ADB in October 2013

Article IV, Section 4.08

The Borrower shall enable the Bank’s representative to inspect the Project, the goods financed out of the proceeds of the Loan, and any relevant records and documents.

Complied with

Article IV, Section 4.09

The Borrower shall ensure that the Project facilities are operated, maintained and repaired in accordance with sound administrative, financial, engineering, environmental, and maintenance and operational practices.

Complied with

Article IV, Section 4.10 (a)

It is the mutual intention of the Borrower and the Bank that no other external debt owed a creditor other than the Bank shall have any priority over the Loan by way of a lien on the assets of the Borrower. To that end, the Borrower undertakes (i) that, except as the Bank may otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest charge and any other charge on, the Loan; and (ii) that the Borrower, in creating or permitting the creation of any such lien, will make express provision to that effect.

Complied with

Article IV, Section 4.10 (b)

The provisions of paragraph (a) of this Section shall not apply to (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such properly; or (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date.

Complied with

Article IV, Section 4.10

The term “assets of the Borrower’ as used in paragraph (a) of this Section includes assets of any political subdivision or any agency of the Borrower and assets of any agency of any such

Complied with

48 Appendix 6

Reference in Loan

Agreement Covenants Status of Compliance

(c) political subdivision, including the Bank of the Lao People’s Democratic Republic and any other institution performing the functions of a central bank for the Borrower.

Schedule 3, para. 8 (a)

The Borrower shall establish immediately after the effective date, an imprest accounts at the Bank of Lao PDR and subsidiary imprest accounts acceptable to the Bank. The imprest accounts shall be established, managed, replenished and liquidated in accordance with Bank’s “Loan Disbursement Handbook” dated January 2001, as amended from time to time and detailed arrangements agreed between the Borrower and the Bank. The initial amount to be deposited into the imprest accounts shall not exceed the equivalent of the six months estimated expenditure for activities to be financed from that account or 10% of the total Loan proceeds, whichever is lower.

Complied with

Schedule 3, para. 8 (b)

The statement of expenditures (SOE) procedure may be used for reimbursement of eligible expenditures and to liquidate advances provided into the imprest accounts, in accordance with the Bank’s ‘Loan Disbursement Handbook’ dated January 2001, as amended from time to time, and detailed arrangements agreed upon between the Borrower and the Bank. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed the equivalent of $50,000.

Complied with

Schedule 4, para. 7

All civil works contracts may be awarded on the basis of local competitive bidding among prequalified contractors in accordance with the standard procurement procedures of the Borrower and acceptable to the Bank. Prequalification, selection and engagement of contractors shall be subject to the approval of the Bank. As soon as the bids received have been evaluated, the proposal for award of contract shall be submitted to the Bank for approval. The Bank shall be furnished with three copies of (i) an account of the public opening of bids; (ii) a summary and evaluation of the bids (iii) the proposal for award and (iv) a draft contract or draft letter of acceptance. Promptly after each contract is awarded, the Bank shall be furnished with three copies of the contract is executed.

Complied with

Schedule 4, para. 9

Where land acquisition is required for a component of the Project, no civil works contract for that component shall be awarded until after the Borrower has completed satisfactorily and in accordance with the approved Resettlement Plan compensation payment and relocation to new sites, and has ensured that rehabilitation assistance is in place.

Complied with

Schedule 5, para. 4

Except for the consultant services related to (i) labour based machine‐ assisted construction technology and (ii) economic training, the consultants shall be selected and engaged as a firm by MAF using the quality – and‐cost‐based selection (QBCS) method.

Complied with

Schedule 5, para. 4 (e)

After the conclusion of negotiations but before the signing of the consultant’s contract, the bank shall be furnished with the contract as negotiated for approval. Promptly, after the contract is signed, the Bank shall be furnished with three copies of the signed contract. If any substantial amendment of the contract is proposed after the execution, the proposal changes shall be submitted to the Bank for Approval.

Complied with

Appendix 6 49

Reference in Loan

Agreement Covenants Status of Compliance

Schedule 6, para. 1

MAF shall be the Project Executing Agency. MAF shall assign NPD adequate office support staff. NPD shall have overall administrative and management authority over all project components, and shall be responsible for procurement, PPMS, reporting, arranging audits, and financial management. NPD shall ensure that all policy constraints to agriculture and agribusiness development are identified at the beginning of Project implementation period and closely monitored during the Project implementation period. Notwithstanding Section 4.07 of the Loan Agreement, NPD shall report immediately to ADB any significant events that may affect the project implementation.

Partially complied with

i) Policy constraints and implementation issues associated with agribusiness were not properly monitored

ii) Project Performance Monitoring System was incomplete

Schedule 6, para. 2

MAF shall (i) work through PAFOs and DAFOs in extension and training of farmers, (ii) implement a three-year capacity building program for PAFOs and DAFOs staff, (iii) implement production and marketing capacity of DAFOs and WUAs, and Farmer Producer and Marketing Groups, (iv) identify sites for primary markets, (vi) work with MCTPC to carry out resettlement plans of roads and markets, (iv) work with the Science, Technology and Environmental Agency to carry out environmental impact assessment of roads and markets, and (vii) conduct workshops and study tours within Lao PDR and to neighboring countries to study a range of public and private sector extension mechanisms.

Partially complied with Targets for the number of farmers and extension personnel to be trained were not met

Schedule 6, para 3

A National Project Steering Committee (NPSC) shall be established consisting of representatives from MAF, MOIC, MCTPC, the Committee for Planning and Cooperation, and the provincial Vice Governors, and shall be chaired by the Vice Minister of MAF. NPD shall be the member secretary of NPSC. NPSC shall provide overall guidance and directions for project implementation, and help MAF resolve any outstanding issues including policy constraints. NPSC shall meet at least twice a year to review the physical and financial progress of the Project.

Partially complied with NPSC was established but meetings were not regularly held. A little more than 50% of the total required number of NPSC meetings (i.e. twice per year) were held.

Schedule 6, para. 4

Within one month of the effective date, a Project Procurement Committee (PPC) headed by the Director General, MAF, and comprising one representative each from ICT, MCTPC, MOIC, Ministry of Finance, and the Committee for Planning and Cooperation, shall also be established. The responsibility of PPC shall include (i) evaluation of bids and tenders for procurement of goods and services, (ii) establishment of standards and specifications for equipment and materials, and (iii) provision of oversight and guidance to NPD in order to ensure timely procurement and dispersal of equipment and materials.

Complied with

Schedule 6, para. 5

Respective provincial governments in the Project areas shall be responsible for the field implementation of the Project. PPOs shall be responsible for day-to-day coordination of Project activities in the provinces. The Governor’s Office shall designate a Provincial Project Coordinator (preferably from PAFOs) acceptable to Bank to head the PPO. A provincial Steering Committee in each Province, chaired by the Vice Governor and including the representatives of PAFOs, DCTPC, DOC, and DIH, shall oversee the implementation of the project in the province

Complied with

50 Appendix 6

Reference in Loan

Agreement Covenants Status of Compliance

and help resolve policy issues.

Schedule 6, para. 6

For Part A of the Project, PAFO shall implement the extension component at the provincial level, and DAFOs shall implement the extension component at the district level. For Part B of the Project, the Department of Commerce (DOC) and Department of Industry and Handicraft (DIH) shall implement the agribusiness promotion component in collaboration with PAFO. For Part C, of the project, Department of Communication, Transport, Post, and Construction (DCTPC) shall implement road construction and rehabilitation, and primary market construction.

Complied with

Schedule 6, para. 7

PAFO, DCTPC, DOC, and DIH shall assign full-time staff necessary to implement the Project. DAFO staff shall be trained and guided by the Central Extension Training Unit at the National Agriculture and Forestry Extension Service and by Provincial Extension Training Units within PAFOs.

Complied with

Schedule 6, para. 8

NPD, with assistance from the PPMS consultants, shall develop a comprehensive PPMS to ensure that Project facilities are managed efficiently and the project benefits are measured and monitored for each Project component. PPMS shall measure Project impacts including participation in Project activities, changes in production and marketing, changes in employment opportunities, and development of agribusiness. It shall include a participatory mechanism to ensure beneficiaries’ involvement in monitoring. NPD, assisted by the PPMS Specialists and PPOs shall be responsible for carrying out the PPMS activities, including establishment of benchmark through initial baseline physical and socioeconomic surveys, data collection, and analysis. NPD shall submit annual PPMS reports to the Bank throughout the Project implementation period.

Partially complied with PPMS was not clearly understood by project staff. This adversely affected the timely collection and analysis of project benefits information.

i) PPMS manual was not prepared and benchmark data were not established properly.

Schedule 6, para. 9

Within six months of the effective date, NPD shall submit a detailed implementation plan for monitoring performance and preparing benchmark information for Bank’s review and concurrence.

Not complied with Work planning was weak for the first 2 years of project implementation (pre-2009) due to poor performance of project consultants and inadequate understanding of project staff.

Schedule 6, para. 10

During the third year of the Project implementation period, the Borrower and the Bank shall undertake a comprehensive midterm review. The midterm review shall evaluate the actual physical and financial progress of the Project, implementation procedures, procurement performance, effectiveness of NPD and provincial governments, and consultant’s performance. Before the midterm review, NPD shall prepare a comprehensive report identifying issues and submit it to the Bank for its consideration during the last quarter of the third year of the Project implementation.

Partially complied with Midterm review was conducted in 2 phases without the benefit of a comprehensive midterm report by ONPD

Appendix 6 51

Reference in Loan

Agreement Covenants Status of Compliance

Schedule 6, para. 11

The Borrower shall take all necessary measures to implement to the satisfaction of the Bank, the Resettlement Plans (RPs) developed for the Project roads and markets. The Borrower shall be responsible for the acquisition of the land required for the Project and, if required, relocation and resettlement of Project affected people. The Borrower shall ensure that such land acquisition compensation, relocation and resettlement are carried out in accordance with the Resettlement Framework and the Sample Resettlement Plan agreed upon between the Borrower and the Bank, the Borrower’s procedures and the Bank’s requirements as defined in the Bank’s Policy on Involuntary Resettlement. In case of discrepancies between the Borrower’s procedures and the Bank’s requirements, the Bank’s requirements shall apply. The Borrower shall promptly inform the Bank of any such discrepancies. The Borrower shall provide the Bank with monthly status reports on land acquisition and resettlement process.

Complied with

Schedule 6, para. 13

The borrower shall ensure that child labour will not be allowed in the construction of activities and camps.

Complied with

Schedule 6, para. 14

The Borrower shall ensure that ILO –pioneered local resource-based rural road construction, rehabilitation, and maintenance system will be used in the Project wherever possible. The Borrower shall ensure that workers hired for the Project for construction, rehabilitation or maintenance work will be paid a fair market wage in accordance with the labour law.

Complied with

Schedule 6, para. 15

The Borrower shall ensure that no price ceilings on agricultural commodities or livestock will be imposed in the Project areas. The Borrower shall ensure that no restrictions shall be imposed on the movement or sale of agricultural commodities, livestock, or related processed products in the Project areas except those that are reasonable for the purposes of disease control and sanitation.

Complied with

Schedule 6, para. 16

The Borrower shall ensure that (i) all relevant guidelines of the Borrower and the Bank on environment management shall be followed during the Project Implementation Period, (ii) no new roads to be financed by the Loan will be constructed without a prior approval of the Bank, and (iii) in any case new roads are constructed, an initial environment examination and environmental monitoring program will be carried out.

Complied with

Schedule 6, para. 17

All the project road alignments shall be surveyed and if necessary, cleared of unexplored ordinance according to accepted international practice, prior to survey and design of rural roads and bridges.

Complied with

ADB=Asian Development Bank, DAFO=District Agriculture and Forestry Office, DCTPC=Department of Construction, Transport, Post and Communications, DIH=Department of Industry and Handicraft, DOC=Department of Commerce, ICT=Information Communication Center, ILO=International Labour Organization, MOIC=Ministry of Industry and Commerce, MAF=Ministry of Agriculture and Forestry, MCTPC= Ministry of Construction, Transport, Post and Communications, NPD=National Project Director, PAFO=Provincial Agriculture and Forestry Office, PPC=Provincial Project Coordinator, PPMS= project performance monitoring system, PPO=Provincial Project Office, NPSC=National Project Steering Committee, RP=resettlement plan, WUA=water user association. Source: Ministry of Agriculture and Forestry. 2013. Project Completion Report: Smallholder Development Project ADB Loan 1949-LAO (SF).Vientiane, the project completion review mission.

52 Appendix 6

Additional Financing Loan 2809-LAO(SF)

Reference in Loan Agreement

Covenants Status of Compliance

Article IV, Section 4.02 (a)

The Borrower shall, and shall cause: (i) ONPD, PPOs, and District Project Offices, to maintain separate accounts for the Project; (ii) ONPD to have such accounts and related financial statements consolidated and audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for Implest Accounts and statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request

Complied with

Article IV, Section 4.02 (b)

The Borrower shall enable ADB, upon ADB’s request, to discuss the Borrower’s financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by ONPD pursuant to subsection(a) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of ONPD unless ONPD shall otherwise agree.

Complied with

Article IV, Section 4.03

The Borrower shall enable ADB’s representatives to inspect the Project, the Goods and Works, and any relevant records and documents.

Complied with

Schedule 5, para. 1

The Borrower and MAF shall ensure that the Project is implemented in accordance with the detailed arrangements set forth in the PAM. Any subsequent change to the PAM shall become effective only after approval of such change by the Borrower and ADB. In the event of any discrepancy between the PAM and this Loan Agreement, the provisions of this Loan Agreement shall prevail.

Complied with

Schedule 5, para. 2

The Borrower shall ensure that (a) counterpart financing necessary for the Project is provided in time to enable completion of the Project activities; and (b) additional counterpart funding is provided in case if any shortfall of funds or cost overruns occurred during the Project implementation due to the fluctuation currency SDR and the Dollar and commodity price increase.

Complied with

Schedule 5, para. 3

The Borrower, through MAF and MOIC, shall ensure that free access for the Project beneficiaries (farmers, traders, ATECs, Research Center, and processors) is provided to participate in trade fairs and business forums to be organized by the Borrower to display their products, models, and activities.

Complied with

Schedule 5, para. 4

The Borrower, through MOIC, shall ensure to continue providing the Project farmers, traders and processors access to loans with 7% interest subsidy in accordance with its ministerial decision no. 103/MOIC dated 8 June 2011 for maximizing the Project benefit.

Not complied with The policy was discontinued in 2013

Schedule 5, The Borrower shall, and shall cause ONPD and PPOs to, ensure that a sound financial management system of the Project is maintained in accordance with Guideline for the Financial Governance and

Complied with

Appendix 6 53

Reference in Loan Agreement

Covenants Status of Compliance

para. 5 Management of Investment Project Financed by ADB, 2001, including the management of the Loan funds and operation of the Imprest Accounts.

Schedule 5, para. 6

The Borrower, through MAF, shall ensure that the Project management is closely coordinated with other development projects in the Project Provinces to maximise opportunities, inputs and strategies.

Complied with

Schedule 5, para. 7

The Borrower, through MAF, shall ensure that: (a) PPMS established under the Ongoing Project is updated; (b) the Project performance indicators are monitored, including data disaggregated by gender, wherever possible; and (c) reports summarizing the key findings of monitoring are submitted to ADB.

Complied with PPMS updated and modified in January 2012

Schedule 5, para. 8

The Borrower, through MAF, shall ensure that (a) relevant technical standards are followed while establishing any processing facilities or installing equipment; (b) the Project facilities are maintained adequately during and after the Project is completed; and (c) maintenance supervision, quality control and contract management are conducted in accordance with the Borrower’s national standards.

Complied with

Schedule 5, para. 9

The Borrower shall, and shall cause MAF, ONPD and PPOs to, (i) comply with ADB’s Anticorruption Policy (1998, as amended to date) and acknowledge that ADB reserves the right to investigate directly, or through its agents, any alleged corrupt, fraudulent. Collusive or coercive practice relating to the Project; and (ii) cooperate with any such investigation and extend all necessary assistance for satisfactory completion of such investigation.

Complied with

Schedule 5, para. 10

The Borrower shall, and shall cause MAF, ONPD and PPOs to, ensure that the anticorruption provisions acceptable to ADB are included in all bidding documents and contracts, including provisions specifying the right of ADB to audit and examine the records and accounts of the executing and implementing agencies and all contractors, suppliers, consultants, and other service providers as they relate to the Project.

Complied with

Schedule 5, para. 11

The Borrower shall, and shall cause MAF, ONPD and PPOs to, ensure that no Project activities entails any involuntary resettlement impacts, any permanent or temporary adverse socioeconomic impacts arising from any land acquisition, conversion, donation, or restrictions of access.

Complied with

Schedule 5, para. 12

The Borrower shall, and shall cause MAF to, ensure that the preparation, design, construction, implementation, and operation of the Project and all Project facilities comply with (a) all applicable laws and regulations of the Borrower relating to environment, health and safety; (b) the Environmental Safeguards; and (c) all measures and requirements set forth in the IEE, the EMP, and any corrective or preventative actions set forth in a Safeguards Monitoring Report.

Complied with

Schedule 5, para. 13

The Borrower shall, and shall cause MAF to, ensure that all bidding documents and contracts for Works contain provisions that require contractors to: comply with the measures relevant to the contractor set forth in the IEE and the EMP (to the extent they concern impacts on affected people during construction), and any corrective or preventative actions set forth in a Safeguards Monitoring Report.

(a) make available a budget for all such environmental measures; and (b) provide MAF with a written notice of any unanticipated environmental risks or impacts that arise

Complied with

54 Appendix 6

Reference in Loan Agreement

Covenants Status of Compliance

during construction, implementation or operation of the Project that were not considered in the IEE and the EMP.

Schedule 5, para. 14

The Borrower shall, and shall cause MAF to, do the following: (a) submit annual Safeguards Monitoring Reports to ADB; (b) if any unanticipated environmental risks and impacts arise during construction, implementation or operation of the Project that were not considered in the IEE and the EMP, promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed corrective action plan; and (c) report any actual or potential breach of compliance with the measures and requirements set forth in the EMP promptly after becoming aware of the breach

Complied with

Schedule 5, para. 15

The Borrower shall, shall cause MAF to, ensure that no proceeds of the Loan are used to finance any activity included in the list of prohibited investment activities provided in Appendix 5 of the SPS.

Complied with

Schedule 5, para. 16

The Borrower, though MAF, shall ensure that within 90 days of the Effective Date, a complaint and problem management mechanism acceptable to ADB is developed, and a task force is functioning effectively to: (a) review and document eligible complaints of the Project stakeholders; (b) proactively address grievances; (c) provide the complainants with notice of the chosen mechanism/action; and (d) prepare periodic reports to summarize the number of complaints received and resolved, and final outcomes of the grievances and chosen actions and make these reports available to ADB upon request. Eligible complaints includes those related to the Project, any of the service providers, any person responsible for carrying out the Project, complaints on misuse of funds and other irregularities, and grievances due to any safeguards or gender issues.

Complied with

Schedule 5, para. 17

The Borrower, through MAF, shall ensure that (a) the GAP is implemented and monitored in a timely manner and reported to ADB annually in coordinate with principles of ADB's Policy on Gender and Development (1998) and adequate resources are allocated for this purpose; (b) adequate support and guidance is provided to the Project Provinces, Districts and ONPD in implementation of the GAP; (c) targets under the GAP are achieved including, but not limited to (i) all FPMG women committee members are trained on group management by 2012; (ii) at least 30% of government officials consulted are women; (ii) at least 40% of farmers consulted to prepare for group establishment are women; (iv) at least 20% of post-harvest technique training's recipients are women; and (v) at least 25% of women participation at agribusiness conferences and forums and other Project implementation related capacity building trainings; (d) progress in achieving the GAP targets are reflected in the Project progress reports and the Project completion report through collection and compilation of gender-disaggregated data, wherever relevant; (e) bidding documents include provisions as specified in the GAP; and (f) the Project contractors, where possible: (i) employ women in construction, rehabilitation and maintenance works; (ii) provide equal pay to men and women for work of same type in accordance with national laws and international treaty obligations; and (iii) provide safe working conditions for both male and female workers.

Complied with

Schedule 5, para. 18

The Borrower, through appropriate authorities, shall ensure that adequate funding is allocated for maintenance in good condition of the roads completed under the Ongoing Project.

Complied with

Appendix 6 55

Reference in Loan Agreement

Covenants Status of Compliance

Schedule 5, para. 19

The Borrower, through appropriate authorities, shall ensure that allocation of budget is made and the existing access roads and irrigation systems in the Project villages are improved in order to maximize the Project benefit.

Complied with

Schedule 3, para. 6

The borrower shall cause immediately after the Effective Date, at the Banks acceptable to ADB, (i) the First Generation imprest Account established and managed by MOF at the Bank of Lao PDR; and (ii) second generation imprest accounts established and managed by ONPD and each PPO at the Banks acceptable to ADB. The imprest accounts shall be established, managed, replenished and liquidated in accordance with the Loan Disbursement Handbook, and detailed arrangements agreed upon between the Borrower and ADB. The imprest accounts shall only be used for the purposes of the Project. The currency of all imprest accounts shall be the Dollar. The aggregate amount to the deposited into the imprest accounts shall not exceed the lower of (i) the estimated expenditure to be financed from the imprest accounts for the 6 months of the Project implementations; or (ii) the equivalent of $500,000.

Complied with

Schedule 3, para. 7

Withdrawals from the Loan Account may be made for reimbursement of eligible expenditures incurred under the Project for Works, Goods, and Consulting Services before the Effective Date, but not earlier than 12 months before the date of this Loan Agreement in connection with procurement of Works, Goods, and Consulting Services, subject to a maximum amount of $500,000

Complied with

Schedule 4, para. 7

The Borrower shall not award any Works contract which involves environmental impacts until: (a) the Ministry of Natural Resources and Environment of the Borrower has granted the final approval of the IEE; and (b) the Borrower has incorporated the relevant provisions from the EMP into the Works contract.

Complied with

Schedule 4, para. 8

The Borrower shall recruit the individual consultants for providing services as described in Paragraph 3 of Schedule 1 to this Loan Agreement.

Complied with

Schedule 4, para. 10

The Borrower shall ensure that all ADB-financed contracts with consultants contain appropriate representations, warranties and, if appropriate, indemnities from the consultants to ensure that the Consulting Services provided do not violate or infringe any industrial property or intellectual property right or claim of any third party.

Complied with

Schedule 4, para. 11

First contracts procured under the national competitive bidding procedures, shopping procedures, contracts procured under direct contracting procedures and contracts for Consulting Services shall be subject to prior review by ADB, unless otherwise agreed between the Borrower and ADB and set forth in the Procurement Plan

Complied with

ADB= Asian Development Bank, ATECs= Agriculture Technical Extension Centers, EMP= Environmental Management Plan, FPMG= farmer production and marketing group, GAP= gender action plan, IEE= Initial Environmental Examination, MAF= Ministry of Agriculture and Forestry, MOIC= Ministry of Industry and Commerce, ONPD= Office of National Project Director, PAM= Project Administration Manual, PPMS= Project Performance Management System, PPOs= Provincial project offices, SDR= Special Drawing Rights. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report: Smallholder Development Project ADB Loan 2809-LAO(SF), Vientiane; the project completion review mission.

56 Appendix 7

ECONOMIC ANALYSIS A. Introduction 1. This appendix summarizes some of the main features of the project economic analyses from design to completion, and re-assesses the economic performance of the original project, the additional financing, and the overall project. B. Economic Analysis at Project Appraisal (2002) 2. The project preparatory technical assistance (PPTA) economic analysis presented its economic pricing and methodological assumptions very clearly, used a domestic numeraire, and contained distribution and poverty impact and sensitivity and quantified risk analyses.1 Its quantified benefit streams included crop increments and vehicle operating costs (VOC) savings; non-quantified benefits included skills (business and technical) and social cohesion impacts. The extension impact model was not focused on groups of farmers, but rather assumed a generalized behavioral production and technology impact on 20% of all farmers in each of the districts in which the project would work. The base case economic internal rate of return (EIRR) was 20.0%. Considerable sensitivity testing was included. C. Economic Analysis at Midterm Review (2007) 3. Recognizing: (i) the delayed implementation of the project; (ii) changes to scope of component activities (especially extension coverage) and their costs; and (iii) changes in the productivity environment since the design was completed (especially observed increases in average rice yields in project provinces), the midterm review mission re-estimated the project’s economic performance. Its quantified benefits included income streams from stall and parking rentals at project-supported markets, as well as cropping benefits and VOC savings on the roads as actually constructed. It contained distribution and poverty analysis and some sensitivity testing, but not quantified risk analysis. The base case EIRR was estimated at 17.0%. D. Economic Analysis at Additional Financing Preparation(2011) 4. The economic analysis of the additional financing reviewed the performance of the original project and estimated EIRRs for that project alone, for the additional financing alone, and for the overall project.2 Using a world numeraire and containing no risk or distribution analyses, the model applied: (i) actual project costs and output price information (current rice projections were particularly high at that date); (ii) updated estimates of rice and livestock yield impacts to that point; (iii) revised estimates of extension coverage; (iv) estimates of the production impacts of improved rice seed production and distribution; and (v) VOC savings on the constructed roads, based on traffic surveys. Because the primary markets had not been located where originally intended (and were mainly being used as retail and/or wet markets by that point), the economic impact of this investment was excluded from the benefit stream. On this basis, the base case EIRR for the original project was now estimated at 16.3%, that for the additional financing 22.4%, and for project overall 16.9%. 1 ADB. 2000. Technical Assistance to the Lao People’s Democratic Republic for Preparing the Smallholder

Development Project. Manila followed the methodology contained in ADB.1997. Guidelines for the Economic Analysis of Projects. Manila

2 ADB. 2011. Report and Recommendation of the President on a Proposed Loan for Additional Financing. Lao People’s

Democratic Republic: Smallholder Development Project. Manila

Appendix 7 57

E. Executing Agency Project Completion Reports Economic Analyses (2013, 2015) 5. The original executing agency project completion report (PCR) (assessing completion in 2011 but produced in 2013)3 included only quantified economic benefits from incremental cropping outputs VOCs were not included due to the absence of a traffic count, while market benefits, improved rice seed distribution benefits, and livestock production benefits were also excluded. The PCR included (i) detailed crop budgets based on higher-than-expected yield increments; and (ii) estimates of the areas of rice and vegetable crop impacted, which were much smaller than originally expected because of the project focus on the farmer production and marketing group (FPMGs), with a total of 9,075 household members (this compares to 54,000 households estimated at appraisal, and just under 40,000 at midterm review). On this basis, the EIRR for the original project was estimated at 13.2%. 6. The executing agency additional financing PCR4 used largely the same model and assumptions as did the economic re-evaluation in the PCR for the original project, but using a different number of FPMG households. The additional financing expanded to eight new districts and FPMG numbers increased, although actual household membership declined to “about 6,900” and the PCR appears to use “about 8,000” in calculations. Using revised yield estimates based on the March 2015 end-line survey, the EIRR was re-estimated at 15.3% for the original project, 25.4% for the additional financing, and 18.4% overall. F. Project Completion: Summary Economic Analysis (2015) 7. The various economic analyses (i) use different project costs estimates (i.e., expected vs. actual); (ii) varying benefits stream compositions (e.g. including or not including VOCs, livestock, improved rice seed distribution, and markets); (iii) changing impact scale estimates (e.g., numbers of households involved, extent of rice yield increments achieved) which typically change and are applied as project-specific data become available over time; and (iv) contain differences in the scope of the economic analysis (e.g., whether they include quantitative risk analysis or poverty impact ratio calculations). Some also use differing assumptions about the application of economic pricing parameters, especially the standard conversion factor (SCF) or shadow exchange rate (SERF) and shadow wage rate factor (SWRF). These various analyses are thus not strictly comparable; however, they do represent the best estimates regarding project performance based on available information and generally plausible understandings of project scope and scale at different times. 8. The following assumptions have been used to re-estimate project economic performance at the completion of the additional financing. First, all project costs have been converted into 2015 prices based on the actual project funds disbursement profile and government expenditures, by being adjusted as follows: (i) costs of tradables for 2002–2015 are assumed to constitute 60% of total project costs; (ii) the annual current values of tradables are then adjusted by manufactured unit value,5 and converted to Lao economic prices using a domestic price numeraire by applying a shadow exchange rate factor of 1.05; (iii) costs of non-tradables comprise 40% of project costs; their value is adjusted from current annual Lao prices to a 2015 constant price level using Lao domestic inflation factors.6

3 Ministry of Agriculture and Forestry 2013. Project Completion Report. Smallholder Development Project ADB Loan

1949-LAO (SF).Vientiane. 4 Ministry of Agriculture and Forestry 2015. Project Completion Report. Smallholder Development Project ADB Loan

2780-LAO (SF). Vientiane. 5 World Bank. Manufactures Unit Value Index. http://data.worldbank.org/data-catalog/MUV-index. Accessed 15/09/2015

6 World Bank. Data – Indicators. http://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG/countries/1W-

LA?display=graph. Accessed on 15 September 2015.

58 Appendix 7

9. Second, quantified economic benefits come from four sources:

(i) Crop and livestock activity increments from the farmer production and marketing groups. Net annual incremental economic returns (with project minus without project) to various farming activities at the household level have been estimated based on data gathered through field interviews with FPMG members in late 2015, which were compared to crop budget data compiled by the project (returns are summarized in Table A7.1). (This includes application of a shadow wage rate factor of 0.90). Based on the project’s categorization of proportions of FPMGs by their relative strength and expertise (i.e., model, strengthened, learning, and initiating) it is expected that across all households only 40% of this income level will actually be achieved on average.7 In the absence of FPMG survey agronomic data, these parameters are necessarily approximate. Yield increments for non-rice crops obtained by FPMG members as reported and estimated in project documentation generally accord with original project and additional financing estimates—e.g., soybean around 2 tons (t) per hectare (ha), maize at 3 t/hectare—while average wet and dry season rice yields exceed targets in both the original and additional financing periods; the targets and achievements are summarized in the project framework and design and monitoring framework (Appendix 1).

Table A7.1: Summary of Farmer Production and Marketing Groups,

Participating Households and Estimated Annual Economic Returns (2015)

FPMG Activity Number of FPMGs

Number of Households

Average net household incremental

economic income ($/year)

Commercial rice production 111 2,774 1,023 Rice seed multiplication 31 574 1,056 Cattle 20 251 1,366 Swine 7 109 2,213 Chicken 2 22 800 Coffee (roasting) 2 82 1,600 Feed corn 7 264 951 Organic vegetables 12 125 1,946 Other vegetables and all other activities

29 707 1,209

Total 221 4,908 $1,119 FPMG = Farmer Production and Marketing Group. Notes: Figures of activities and households from project database. Average household annual net income across all FPMGs is calculated on a weighted basis. Source: Project database and project completion review mission.

(ii) Improved rice seed production. The incremental improved rice seed production is

based on volumes of seed produced and distributed throughout the provinces by the seed multiplication groups. In 2015, the seed multiplication groups produced just over 3,000 tons of R3 seed. Of this, it is estimated that 40% was sold. Of the amount sold it can be reasonably assumed that 75% eventually gets planted (some may be eaten or spoiled and replaces traditional varieties). At an average rate of application of 80 kilograms/ha, this represents a total area planted of 11,280 ha, and with an average increment of paddy of 1 t/ha over more traditional seed, an equivalent of the same number of tons of incremental paddy produced. The

7 The EIRR estimate assumes FPMG benefits started in 2010 and took 3 years to get to their 2015 level, and that there

is 2% growth in returns per annum post-2016

Appendix 7 59

economic value of this rice is based on the current (export parity)8 Lao border benchmark of Bangkok 5% broken f.o.b. of $420/t (November, 2015), adjusted by freight and insurance via Khon Kaen and Thanaleang to $390.60/t after application of SERF and by another $20/t to allow for carriage and freight costs from farm gate to the border. The economic value per ton of paddy output is adjusted to an on-farm value of production or crop gross margin (i.e., economic value of rice output less costs of production, including imputed family labor) using farm budgets’ production coefficients for rice production compiled by the PPTA design work, updated by the project and converted from paddy to rice at a milling rate of 63%.

(iii) Rice milling improvements. The rice mill platform in Khammuane province uses project-supplied sorters and graders (at a cost of just under $50,000 each) to produce better-quality milled rice from the output produced by local FPMG commercial rice producers. The business model involves supplying FPMG rice growers and other producers with seed and inputs to maintain and expand paddy volumes. With annual throughput of about 50,000 t of paddy, better sorting and grading results in a price and quality improvement of about 25% on about 10% of its volume (i.e., 5,000 t annually). Incremental milling costs are associated with the machinery use, labor and differential bagging, accounting for 10% of the incremental economic value of producing better quality milled rice output.

(iv) Vehicle operating costs savings. In the absence of updated traffic count information, VOC estimates made in 2011 are used, with an adjustment of 5% to reflect their calculation at a world price numeraire.9 The estimates assume 2% traffic growth per annum, include time savings, and estimate a consumer surplus of 50% of benefits for generated traffic. Table A7.2 summarizes traffic types expected, incremental traffic, and VOC savings per kilometer, as used at additional financing. At project completion, annual VOCs are worth just over $0.5 million in 2015 prices.

Table A7.2: Summary of Traffic and Vehicle Operating Costs Estimation

Traffic Types Traffic Increment with Rehabilitation

(vehicles per day)

Vehicle Operating Costs Savings (2011, KN/km)

Motorcycle 1273 83

Hand tractor 506 181 Motor car 39 11 Mini bus 186 61 Small truck 509 182 Pick up 125 37 Total 2638 555 km = kilometer, VOC = vehicle operating costs Source: Asian Development Bank estimates.

(v) Primary markets. No benefits are attributed to the primary markets, which are now

functioning as wet/retail markets, nor to the wider veterinary services provided by the original project.

(vi) Non-quantified benefits. Benefits that were not quantified include technical, managerial and marketing skills upgrades, including of FPMG members, government staff, and the private sector; environmental improvements (e.g., of soil

8 The Lao People’s Democratic Republic is now a consistent rice exporter, mainly of glutinous rice, and imports of high-

quality and specialty varieties does occur. P. Eliste and N. Santos. 2012. Lao People's Democratic Republic Rice Policy Study. Washington D C: World Bank.

9 A SCF of 0.9 was applied to domestic resource costs, which are about 40% of total component costs. Economic value

is now expressed at a domestic numeraire and adjusted to 2015 prices from a constant 2011 price level, based on a weighted average manufactures unit value and Lao domestic inflation factor of 1.18.

60 Appendix 7

quality through compositing); and health impacts through organic food consumption and reduced use of chemical inputs).

10. On the basis of the model just described, the estimated EIRR for the project as a whole is 14.5%, for the original project 12.4%, and for the additional financing 21.5%.10 A summary project resource statement is in Table A7.3. 11. Without the additional financing, the original project would have generated no rice milling benefits, and FPMG benefits would likely have been proportionate to the number of groups respectively established during the original project period (161) and additional financing period (221). For the additional financing alone, the EIRR estimate assumes FPMG and rice seed benefits in proportion to additional financing/total groups established (or 60/221), a build up over 3 years, no VOC benefits, and a delay by 2 years of the milling benefits under the assumption it would have taken the project longer to get started with this activity. 12. Economic returns are quite sensitive to changes in cropping benefits; a 15% reduction in FPMG crop production changes causes the base case EIRR to fall below 12%. Without improved rice seed benefits the estimated EIRR falls to about 6%; without rice milling benefits, the estimated EIRR falls below 10%; and without VOCs savings it falls to 12.6%. 13. In terms of household financial impacts, based on available crop and livestock budget data and field discussions: (i) commercial rice and rice seed production (as undertaken by the majority of FPMG households) may typically result in net incremental income gains of above $1,000 per year, with somewhat lower income gains from feed corn production; (ii) livestock activities can generate considerably more for participating families, but are also more variable, with pig production potentially more attractive than cattle-raising (reported net annual income increments for pig production were up to $5,000, and for cattle $2,500–$3,300); and (iii) income gains from organic and non-organic vegetables are somewhere between field crops and livestock, with the former more attractive where they can be sold (annual net incremental incomes of organic producers were reported to be almost $2,000 and $1,330 for non-organic producers). 14. Regarding the project’s financial sustainability, there are few options for cost recovery from farmers or millers in the short term, although general taxation possibilities may exist in the longer term. The operation and maintenance (O&M) costs of project roads are already included in government budget plans for 2015 onwards. The project-supported market sites now functioning as primary markets collect some user fees from traders; these have largely covered incurred O&M costs to date, but future periodic maintenance costs will have to come from local government budgets. There is evidence that at least some sites (e.g., Lao-China Agriculture Cooperation Center in Champasak province) are already planning to expand with a mixture of government and commercial funding, so the overall picture regarding sustainability is quite positive. The longer-term operation of the ATEC may be riskier. ATEC has introduced various innovative schemes for cost recovery through farmer training fees, sales of crops produced, and farmer in-kind contributions but it is unclear to what extent these will be able to cover longer-term O&M costs, including periodic maintenance. Increased government allocations are likely to be needed to ensure sustainability.

10

Many of the benefit estimation assumptions are subject to considerable uncertainty, in particular the number of households now (and in the future) participating in FPMGs, which form the basis for estimates of project resource efficiency and likely sustainability of project effects.

Appendix 7 61

G. Summary 15. This estimate of the project’s resource efficiency suggests that the additional financing investment made a significant difference to overall project performance. The additional financing added economic benefits in the form of rice milling, and expanded the scale of the FPMG crop and livestock production and improved rice seeds distribution. Without the additional financing, the project would have been a less than efficient use of resources.

62 Appendix 7

Table A7.3: Summary Project Resource Statement Project Year PY1 PY2 PY3 PY4 PY5 PY6 PY7 PY8 PY9 PY10 PY11 PY12 PY13 PY14 PY15 PY16 PY17 PY18 PY19 PY20 PY20 PY20 PY20 PY20 PY20 PY20 PY20 PY20

Calendar Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Project costs ($ million, current) 0.7 1.2 1.9 1.7 1.8 2.5 4.2 3 1.5 2 2

Of which:

0.42 0.72 1.14 1.02 1.08 1.5 2.52 1.8 0.9 1.2 1.2

Domestic costs (e.g., staff, travel, supplies) - 40% 0.28 0.48 0.76 0.68 0.72 1 1.68 1.2 0.6 0.8 0.8

Project costs ($ million constant, 2015)

Tradeable costs (adjust by MUV) 0.44 0.75 1.17 0.67 0.99 1.44 2.40 1.76 0.91 1.21 1.21

Tradeable costs (adjust by SERF @ 1.05) 0.46 0.79 1.23 0.70 1.04 1.51 2.52 1.85 0.95 1.27 1.27

Domestic costs (adjust by Lao inflation) 0.66 1.06 1.48 1.20 1.17 1.47 2.29 1.50 0.77 0.94 0.90

Total costs 1.12 1.85 2.71 1.90 2.21 2.98 4.81 3.36 1.73 2.21 2.17

Economic benefits ($ million 2015 constant)

FPMGs (weighted average, all activities) 1.08 1.63 2.17 2.17 2.17 2.17 2.17 2.21 2.26 2.26 2.30 2.35 2.39 2.44 2.49 2.54 2.59 2.64 2.70 2.75

Rice seed (non-FPMG households) 0.81 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62 1.62

Milling (quality improvement) 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65

VOCs (Sukhuma-Mulapamok-Veun Gnang Road) 0 0 0.3 0.34 0.34 0.51 0.52 0.53 0.54 0.55 0.56 0.56 0.57 0.57 0.58 0.59 0.60 0.61 0.61 0.62 0.62 0.63 0.63

Total economic benefits ($ million 2015 constant) 0.00 0.00 0.00 0.00 0.00 0.30 1.42 2.78 4.30 4.96 4.97 4.98 4.99 5.04 5.09 5.10 5.14 5.20 5.26 5.31 5.37 5.42 5.48 5.53 5.60 5.65

Net benefits ($ million 2015 constant) (1.12) (1.85) (2.71) (1.90) (2.21) (2.68) (3.39) (0.58) 2.57 2.75 2.80 4.98 4.99 5.04 5.09 5.10 5.14 5.20 5.26 5.31 5.37 5.42 5.48 5.53 5.60 5.65

EIRR 14.5%

ENPV @12% 2.77

Tradeable costs (e.g., materials,

construction,vehicles, TA) - 60%

( ) = negative, EIRR = economic internal rate of return, ENPV = economic net present value, FPMG = farmer production and marketing group, MUV = manufactures unit value, PY = project year, SERF = shadow exchange rate factor, TA = technical assistance, VOC = vehicle operating cost Source: Asian Development Bank estimates

Appendix 8 63

SUMMARY OF GENDER EQUALITY RESULTS AND ACHIEVEMENTS

I. Project Description 1. The Smallholder Development Project aimed to establish sustainable commercial smallholder agriculture and associated agribusiness in four provinces, with the goal of achieving increases in rural incomes and employment.1 This was to be achieved through three outputs: (i) an effective agricultural extension and training mechanism, (ii) an effective primary market network, and (iii) improved physical infrastructure for input and produce marketing. The original project comprised three technical components: farmer support services, agribusiness and marketing, and rural infrastructure, and project management. The additional financing comprised five outputs: strengthened farmer production and marketing groups; replicated post-harvest technology and practices; strengthened extension services of the Agriculture Technical Extension Center (ATEC); and improved knowledge of agribusiness practices on the part farmer production and marketing groups (FPMGs).

II. Gender Analysis and Project Design Features

A. Gender Issues and Gender Action Plan Features 2. Rural Lao women are primarily responsible for maintaining family food security. This role is often underestimated, and prevailing cultural values tend to disadvantage women in terms of their participation in politics and decision-making processes, as shown by their underrepresentation in village committees and limited opportunities to participate in extension and health care work, and instruction or learning activities. Moreover, by virtue of their geographic location, they are isolated from resources and services. Poor access to infrastructure, especially road and market facilities, is a key constraint faced by women. In remote areas, access to markets and financial services is very limited, and middlemen mostly control market prices, leaving little bargaining power for individual farmers or producers. Traditional norms limiting women’s mobility can further restrict their access to markets. Poor public infrastructure also adds to the costs running small enterprises. 3. Agriculture contributes 40% to the Lao People’s Democratic Republic (Lao PDR) gross domestic product and employs 70% of its predominantly agrarian population. Although women account for 54% of the agricultural workforce, few women participate in farmer training and study tours. Gender gaps in the agriculture sector exist in agriculture extension services, in cultivation, commercialization, and other productivity enhancement interventions. Market information and financial services access are limited, there is low productivity among women farmers due to their neglect in agricultural extension. Low literacy levels and poor skills in farm production are constraints to engagement in supplemental income-generating activities, notably in agribusiness and other micro and small-scale enterprises. These led to negative attitudes towards women, including traditional beliefs that women should be housewives, and only their husbands can make decisions. There is limited access to working capital and marketing opportunities resulting in low investments, both in farm and off-farm ventures. There is limited participation in FPMG endeavors with respect to food production and achievement of food security objectives. The current situation stems from existing social biases regarding the capacity of women to lead in planning and decision-making.

1 ADB. 2002. Report and Recommendation of the President on a Proposed Loan and Technical Assistance Grant to

the Lao People’s Democratic Republic for the Smallholder Development Project. Manila. (Loan 1949-LAO).

64 Appendix 8

4. The project’s gender action plan (GAP) addressed these issues in accordance with the corresponding budget and activities of the additional financing. The key gender targets included:

(i) at least 40% of participants of consultation meetings with farmers for group establishment are women;

(ii) at least 20% of committee members of FPMGs are women; (iii) at least 20% of participants attending training and seminars are women; (iv) at least 30% of participants are women in consultation meetings related to

strengthening the services of ATECs; (v) at least 30% of participants attend training to prepare contractual, legal and

financial access to bank credits; (vi) at least 25% of business forum and/or agribusiness conference attendees are

women; (vii) at least 25% of entrepreneurship trainees are women; (viii) at least 30% of members of trade or processor groups are women; (ix) 30% of participants in training to enhance capacity of Provincial Agriculture and

Forestry Offices (PAFO), District Agriculture and Forestry Offices (DAFO), ATECs, and farmer’s groups on agribusiness practices are women;

(x) collect sex-disaggregated data and integrate it into the overall project database; and

(xi) involve the Sub-Commission for the Advancement of Women (S-CAW) staff in project activities at the national, provincial, and district levels

B. Overall Assessment of Gender-Related Results/Achievements

5. The project GAP consisted of 16 performance gender indicators, 15 (94%) of which were achieved or exceeded. GAP implementation is rated successful. 6. Key achievements included that women accounted for: (i) 172 (67%) of the 258 members of trade and/or processor groups (target 30%); (ii) 418 (31%) of the 1,327 farmers who attended training on preparing contractual, legal, and financial for accessing to bank-credits (target 30%); (iii) 66 (20%) of the 324 participants trained in post-harvest techniques and new technology (target 20%); (iv) 166 (25%) of the 677 participants who attended agribusiness conferences (target 25%); (v) 47 (35%) of the 133 rice millers, processors and traders who attended training on agribusiness initiatives and marketing (target 25%); (vi) 94 (30%) of the 318 participants who attended agribusiness practices and trainings (target 30%), which pertained to the enhancement of capacity of PAFOs, DAFOs, ATECs and farmer groups on agribusiness practices. In addition, once the project performance management system was functioning, the project collected sex-disaggregated data and integrated it into the overall data base. The only target remaining unachieved was the participation by 30% female staff in the consultation meetings between PAFOs, DAFOs, ATECs and research institutes. The actual number was 54 (20%) women out of 271 participants; the reason for this was the limited number of women who worked in this technical area. 7. GAP monitoring results were regularly updated and attached to project quarterly progress reports. The project allocated funds for a gender consultant, but could not find a suitably qualified person to lead GAP implementation. The project management team and Ministry of Agriculture and Forestry (MAF) Division for the Advancement of Women (DAW) staff therefore worked closely with the Asian Development Bank to implement the GAP. GAP implementation progress was included in loan covenants and incorporated into project activities to ensure that the activities were responsive to the needs of women.

Appendix 8 65

C. Gender Equality Results 1. Participation, Access to Project Resources and Practical Benefits 8. At the end of the project, 1,863 (40%) of the 4,649 participants in consultation meetings were women, and through these consultations 360 (26%) female committee members were represented in various FPMG committees, for a total of 1,374, exceeding the GAP target of 20%. All women committee members (360) participated in FPMG management training, and 851 (24%) out of the total of 3,603 participants attending various training and study visits were females (target 20%). Women mostly headed the FPMG finance committees, a distinct role that arguably demonstrated their capacity as better managers of financial and monetary matters than their male counterparts.2 9. Forty-three women out of 48 members (90%) managed four agro-processing groups, and the membership of 20 rice miller and trader groups established by project completion included more than 60% women. The overwhelming participation of women in these groups underscored the rapid income generation. For example, in addition to cultivated rice for both wet and dry seasons Ms. Sisay who lives in Nakham village, Sanasomboun District, Champasak Province planted about 1,600 square meters of red chili during the dry season, which brought a relatively large income for her family of about KN17,150,000 ($2,144) per season compared to her previous income from selling paddy rice for about KN12 million ($1,500). The project provided technical training on red chili planting, which was significant in helping women improve their agribusiness capacity. FPMG management training supported by the project also helped promote women’s leadership, with women obtaining knowledge of group management through passage of rules and regulations, and financial management of FPMGs. 10. A story about a female participant’s change in behavior and outlook after attending training is in Box A8.1. The participation of women in FPMGs was accelerated by intensive training on entrepreneurship and attendance at agribusiness forums offered by the project (where more than 30% of total participants were women), which motivated women as members of trade and processors’ groups.

Box A8.1. Project Impact on a Female Participant Who Attended Training on Livestock and Farmer Production and Marketing Group Formation

Ms.Lathachak, a resident of Nongbok district in Khammuanee Province, participated in a training course on agribusiness focused on small income generating projects. She lives with her husband, who has less than one hectare of land cultivated with paddy rice during wet season and leafy vegetables and cereals during the dry months. The earnings from cultivation were not enough to support the schooling of her kids. Ms. Lathachak was intrigued by the opportunity for income generation taught by the project, and volunteered to attend the training on swine production. She and four other women formed a swine production and marketing group. She started with a single sow. Knowledge about rearing swine, growing and fattening piglets, vaccinations and other assistance were provided by the District Agriculture and Forestry Office. From the proceeds of the piglets from the first sow, she was able to purchase two additional ready-to-breed sows. She has experienced two breeding cycles since the training, and although she did not disclose her earnings, she proudly remarked that she had additional income to support her children’s schooling. Deriving income from swine rearing boosted her morale and gave her confidence she can contribute a modest income to help support her family in a decent and dignified manner.

2 Prudence on financial matters appeared to be the overriding factor considered by women because of the

susceptibility among male Lao members to use group funds on vices (e.g. drinking liquor) rather than on the welfare of the group.

66 Appendix 8

Box A8.2. Project Impact on Female Beneficiaries

Mrs. Sisay lives in Nakham village, Sanasomboun District, Champasak. She joined the project as a member of a commercial rice production group in 2012. Before the project, she was able to cultivate rice during the wet season only, and encountered water shortages for planting other crops during the dry season. In 2012, the project provided support to procure construction materials to renovate small-scale irrigation systems in the village, allowing farmers to cultivate rice during the dry season. With support from the project, about 330 meters of irrigation concrete canal systems were renovated, covering about 30 hectares for dry season cultivation. Following irrigation system renovation, she can cultivate rice in both the wet and dry seasons. In addition, she also plants about 1,600 square meters of red chili during the dry season, which brought a relatively large income of about KN17,150,000 ($2,144) in one season (compared to her previous major income from selling paddy rice for about KN12 million ($1,500). Now, 24 households are planting chili in the village (about 5.25 hectares in the dry season) with total production of 80,391 kilograms, earning about $70,000 per cropping season.

2. Strategic Changes in Gender Relations 11. The project set a quota for participation by women in decision making, which is one of the strategies for promoting women’s empowerment. FPMG formulation created an opportunity for both men and women to gain knowledge and skills on production, marketing and negotiation power. The high proportion of female committee members (26%, against a target of 20%) in the organized FPMGs illustrates a strategic change in gender relations, and is a testament to the change in the internal governance structure of FPMGs, which now involves women in decision-making. About 1,640 female members of the established FPMGs are now performing administrative and technical tasks. While previously women were rarely recognized, about 90% of farmer-leader respondents now allow female committee members to become involved in planning, monitoring and implementing farm activities.3 With regard to monitoring, women are given responsibility for the collection and safeguarding of cash, instead of this task being allocated exclusively to men. Men have begun to recognize and respect women’s capacity as effective partners in all fields in the agricultural sector. 12. Women were involved through FPMG formation, training, and agricultural extension outreach services through their own and/or collective production farms. This served the twin purpose of demonstrating improved production techniques around villages and providing additional income. Through participation in FPMGs they expect to become active participants in commercial smallholder agriculture. Apart from these activities, female project staff at three levels (Office of the National Project Director, PAFO and DAFO) helped execute GAP-related activities. 13. Through training, women increased their confidence to work harmoniously with their husbands in making decisions to introduce innovative production methods. This was evident among the small income-generating activities run by women (e.g. organic vegetable gardens, agro-based processing). Men and women worked together inside their collective farms (e.g. Thoulakhom organic vegetable group) to generate additional incomes. Women likewise encouraged their counterparts in the villages—either by word-of-mouth or through the demonstration farm—to join consultation meetings and training sessions offered by the project.

3 Ministry of Agriculture and Forestry. 2015. Project End-line Report L2809. Vientiane. The report disclosed that 70%

of female committee members were involved in monitoring, 19% in implementing farm activities, and 10% in planning.

Appendix 8 67

14. Box A8.3 provides an example of a woman who benefitted from the project approach in Thoulakhom district, which helped increase her family’s income.

Box A8.3. Project Impact on Female Beneficiaries

Mrs. Manivanh lives in Bungphao village, Thoulakhom District, Vientiane Province with her husband and two children. She became a member of an organic vegetable group in 2010. Before this, she cultivated rice, sweet corn and ran a small local noodle shop in her village. Her earnings were from selling noodles, and averaged KN100,000 per day (about $12). After joining the farmer marketing and production group she received training and study visits on organic vegetable production techniques, compost making techniques, and agribusiness establishment, both in country and abroad. She learned how to plant organic vegetables, prepare organic compost and control insects by applying non-chemical insecticides. Initially the project provided materials for organic house construction (e.g., plastic sheet and sprinkler systems), while the group contributed local materials such as wood and bamboo for roof construction. As a group committee member, she is in charge of the marketing unit. She is now engaged in planting only organic vegetables as the major activity to support her family, and has 16 organic vegetable greenhouses among the group for planting leafy vegetables. She can now earn about KN1.2 million–KN2.0 million ($1500-$2500 per house per crop, or about $28,750 per year. With her income, she bought a small and a large truck to transport her organic vegetables to two organic markets (Thatluang organic market and Chao Fa Ngoum Park organic market in Vientiane capital) and the fresh market in her district in Vientiane Province. In addition, she can support her children’s education and purchase household goods and other home consumable items. She is proud of being an organic vegetable cultivator which has been a life-changing experience.

3. Contribution of Gender Equality Result to Overall Project Outcomes and

Effectiveness 15. The GAP was integral to the project and greatly contributed to the attainment of the overall objective. The project’s gender equality results were due to gender sensitive design, and GAP implementation and monitoring. The GAP was well incorporated in project activities that addressed gender gaps in participation in decision making processes, and access to agricultural extension, markets and financial services. 16. The active participation of women in the training and study tours has established a new set of income generating opportunities for women, either through establishment of their own micro enterprises or managing the enterprises or projects as a group. Women are now able to initiate a shift from agricultural production on a subsistence basis to agricultural production as a market-orientated household economic activity. This increased the ability of women to access income channels and reduced their time poverty. At project completion, the average annual incremental income of FPMG-participating households was about $1,119. The knowledge and skills acquired by women in the course of the project developed and nurtured their self-confidence, boosting their ability to participate effectively as development partners in the village, and facilitated commercialization of smallholder agriculture.

III. Lessons and Recommendations 17. The following factors were considered significant in achieving GAP targets:

(i) the ADB project officer and social development officer (gender) provided clear guidance and technical support on GAP implementation;

68 Appendix 8

(ii) realistic GAP targets were set and they were easy to understand and monitor by project staff;

(iii) the national project director consistently championed the gender targets, reminding the project management team of these during the meetings; and

(iv) the project management team at central, provincial and district levels were aware of project gender requirements. Monitoring and evaluation officers at each level actively collected information for reporting GAP implementation progress.

18. The project encountered the following difficulties during implementation:

(i) A lack of affordable agriculture bank credit. Interest rates offered by agriculture banks are 12%–15%, which are considered too high by the beneficiary group members. In the absence of access to affordable loans, the bank credit training provided by the project (e.g., preparation of application forms, financial literacy) would not be effective. A lack of affordable credit remains a major bottleneck to development of micro and small agribusinesses by both men and women;

(ii) The untimely deployment, and eventual withdrawal, of a local gender specialist affected planning and coordination-related activities during early GAP implementation; and

(iii) The limited capacity of MAF’s S-CAW members regarding GAP implementation,4 which was unfamiliar to them because S-CAW members were not included in the project management team, and had no training on GAP implementation. Despite these limitations, the project invited them to assist with GAP implementation because of the lack of a qualified gender consultant.

19. The following observations are made with regard to sustainability:

(i) Obvious positive gender benefits achieved to date (where female as well as male farmers demonstrated gained confidence, improved knowledge, reduced manual work through various technologies, and increased income) are likely to be sustainable;

(ii) Training S-CAW members to conduct detailed needs assessment of female farmers and adjust GAP designs, and involving them in monitoring GAP implementation yielded positive results. It is likely that this approach will contribute to sustained capacity on the ground in the project and other projects; and

(iii) The strengthened FPMGs provided a model to commercialize smallholder agriculture with maximum participation by women, with attendant benefits. As an example, the contract farming concluded between the rice millers and the commercial rice and rice seed FPMGs has proven to work effectively in increasing rice productivity. In addition, women’s supplemental income generating activities have significantly increased household incomes. Sustainability among these households is likely given the current levels of production. The principle of ownership has been instilled among the FPMGs, especially through the establishment of revolving funds. Prudent handling of

4 MAF’s S-CAW members are members of DAW under MAF’s Cabinet Office and were not involved in the project

management team. However, they were tasked with supporting women’s advancement in MAF. There is a network for women’s advancement at the central, provincial and district levels.

Appendix 8 69

these funds, largely given to women, coupled with further savings mobilization among FPMG members will be a key factor in sustaining financial independence.

20. The following recommendations will enhance impacts on women in future projects:

(i) The project management team’s commitment and support to GAP implementation has been instrumental but is not sufficient. GAP requirements and gender targets should be clearly communicated at all levels of project implementation, and as early during implementation as possible;

(ii) In the absence of a national gender consultant, it is important to consider alternative GAP implementation support;

(iii) In order to ensure effective and harmonious coordination—which is critical to achieving results—special supervision is needed when multiple agencies (S-CAW, PAFO, DAFO, and Lao Women’s Union) are accountable and report to different authorities;

(iv) Village-level community facilitators should assist trainers to ensure women can better absorb information especially those with low literacy levels;

(v) The monitoring and evaluation system should integrate sex-disaggregated data beginning at the project design stage to ensure the accuracy of gathering and reporting. Field-level staff should be appointed as GAP implementation coordinators; and

(vi) The lack of affordable credit remains a major constraint to both female- and male-led micro and small agribusiness development. Future ADB policy intervention may be appropriate to help overcome this.

70 Appendix 8

ACHIEVEMENTS OF GENDER ACTION PLAN IMPLEMENTATION

L2809: Smallholder Development Project (Additional Financing)

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

Output 1: Strengthened farmer production and marketing groups in 24 districts

1. Inform community men and women of the opportunities of extension services and training provided by the project

Achieved February to April 2012: ONPD conducted consultation meetings among men and women about responsibilities in agricultural extension in 80 villages in eight new districts in four provinces: Khammuane, Savannakhet, Champasak and Vientiane. 800 out of 2,800 (29%) participants were women. The project team informed the community that the criteria for involvement of women in FPMG management included: (a) being confident, (b) able to mobilize community villagers, and (c) good understanding and literacy. March 2014: another round of consultation meetings were conducted by ONPD, PPOs and DPOs involving 109 FPMG members. The objectives were to re-appoint females in FPMG committees, and inform participants of the gender targets for establishment of FPMGs.

Key issues discussed include: updated rules and regulations for women’s participation in FPMG committees, addressed to PPOs, S-CAW and FPMG members; coordination mechanisms at central, provincial and district levels to improve GAP implementation, addressed to PPOs, DPOs and S-CAW. As a result, the project has reached 26% against the performance target of at least 20% women’s participation in FPMG committees (360 out of 1,374 FPMG committee members are women).

2. Assess constraints of women to participate in extension services, training and study visits and develop mechanisms to address them (e.g., location of services, type of extension/training, duration, time, care requirement)

Achieved Before August 2013 the project implemented the GAP in the absence of a gender consultant, with GAP implementation led by the project manager and M&E consultant. The project management team at the provincial and district levels were not informed about project gender requirements. To address this, the project team in consultation with ADB invited MAF’s DAW members to conduct an assessment of constraints to participation by women in extension services, training and study visits, followed by development of mechanisms to address them. The assessment found that: (i) the project management team at provincial and district levels did not fully understand the project GAP; (ii) collaboration between the project and DAW, PAFO, and DAFO

Appendix 8 71

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

was not systematic; (iii) female farmers were not aware of project activities and opportunities due to limited information provided to the community; (iv) gender indicators were not set up for training and study tours supported by the project; and (v) there was insufficient effort to invite women into household-based meetings due to a lack of understanding on the importance of women’s participation. Therefore, women were not aware of the importance of their participation. These constraints were addressed by conducting a consultation workshop on 24 September 2013 among project team and DAW members to clarify the issues identified by the assessment, and agree on specific solutions to mitigate the constraints. Following the Lao PDR Resident Mission gender specialist’s presentations on project gender targets, the project management team and DAW members agreed that (i) the M&E consultant were to double check project information systems to ensure that all gender targets are integrated into project’s M&E system; (ii) DAW members will conduct a gender awareness raising meeting and outline project gender requirements for project beneficiaries; and (iii) the project management team will closely supervise and monitor GAP implementation.

3. Ensure that at least 40% of participants of consultation meetings with farmers to prepare for group establishment are women

Achieved 1,863 (40%) women out of 4,649 participants attended farmer’s consultation meetings to prepare for group establishment.

(i) 800 of the 2,800 participants (29%) who attended discussions in February–April 2012 were women;

(ii) in August 2013, project staff from ONPD, PPO and DPO and TPPD carried out the consultation meetings to revisit the trade groups and rice millers in four project districts in Vientiane Province. Of the 130 participants attending, 24 (18%) were women;

(iii) of the 109 participants attending the consultation meeting to re-appoint female FPMG committee members in Vientiane, Khammuane, Savannakhet and Champasak provinces on March 17–25, 2014, 63 (57%) were women;

(iv) in August 2014, the project team organized consultation meetings in 55 villages covering 24 districts in 4 provinces involving 334 farmers, 147 (44%) of whom were female farmers. The discussions focused on (a) rechecking the number of revolving funds established in the targeted groups; (b) reviewing the groups’ regulations on revolving fund management, and existing basic group accounting systems; and (c) updating and developing logbook accounts for FPMGs;

(v) during 21–28 September 2014, the new director general of DAEC, the national project director and Lao journalists visited FPMGs in Savannakhet and Khamouane provinces. Of the 141 farmers visited, 69 (49%) were female farmers who participated in the discussions held for the mission, the objectives of which were to (a) follow up on project implementation progress and provide inspiration for farmer production groups in the targeted areas to help them understand the importance of agricultural extension and cooperatives, and (b) promote best practices

72 Appendix 8

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

achieved by the project through the Lao media channel; (vi) on 3–8 August, 2014 the MAF National Project Steering Committee, 10 representatives from

MAF and DAEC, and the project team conducted a working visit to 80 farmers, 35 of whom were women from the Bangphao organic vegetable production group, Bankern cattle production group of Thoulakhom district, and rice seed production group and organic vegetable group of Kasi district in Vientiane Province. The visit followed up on implementation progress and resolved implementation issues and difficulties;

(vii) 119 females (36% of the total of 332 farmers) attended consultation meetings with four ADB review missions conducted in November 2012, July 2013, December 2013, and July 2014. The missions reviewed implementation progress and achievements against the expected outputs and outcome; and held discussions on major activities to be implemented for the remaining period;

(viii)452 females (88% of 512 farmers) attended consultation meetings on veterinary services in 24 districts across 4 provinces during June 2013 to October 2014 conducted by staff from PPOs, DPOs and ONPD. Farmers gained basic knowledge of vaccination, disease treatment for cattle, swine and poultry;

(ix) during June–October 2014, the project carried out a number of consultation meetings with farmer groups to set up farmer knowledge centers and FPMG agri-retail shops in 24 districts; 85% (93 out of 110) of farmers participating in the meetings were women. The knowledge centers are for knowledge sharing on each type of product (e.g., organic vegetables and rice milling). For example, in Vientiane Province, the project had a knowledge sharing center on organic vegetables, which provided technical advice on organic vegetable plantation, marketing information, and group management procedures. This center is very helpful for farmers, and especially women, who want to learn: they can pick up fact sheets or brochures, discuss issues with experienced farmers who are available at the center (which is located in their farm), and see practical activities;

(x) during 2–3 October 2014, the DPO of Sanakham District, Vientiane Province organized a meeting with farmer groups to discuss the contract farming arrangement for rice seed, and the commercial rice farmer group; 64% (48 out of 75) of participants were female. The meeting discussed the rights of two parties (farmers and traders), and details farmers need to understand before signing contracts; and

(xi) on 28 October 2014, the DPO of Sanakham District, Vientiane Province carried out a meeting with a banana processing group to review and discuss the operation of an agri-retrial shop and the group revolving fund; 81% of participants (13 out of 16) were women farmers who do banana processing. The project provided a machine for processing banana via the revolving fund all group members work together on processing banana by using that machine.

Appendix 8 73

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

4. Promote women’s representation in FPMG committees to achieve at least 20% women membership

Achieved 360 out of 1,374 (26%) of FPMG committee members were women; 221 FPMGs were officially established and endorsed, with 11,881 members, including 1,649 female members (14%). The project updated the criteria in order to encourage greater participation by females in FMPGs committees as follows: Election of women in FPMG committees: The participation of women is pro-rated, based on total representation/members per committee as (i) at least one female for a three-member committee; (ii) at least two females for a five-member committee; and, (iii) at least three females for a seven-member committee. Criteria for participation by women as FPMG members: Willing, and voluntary

Aged 15–60 years

Good heath

Basic skills in agricultural activities e.g. livestock raising, vegetable farming Able to mobilize community and/or villagers Good understanding and literacy level

Criteria for female participation in finance-accounting: Had experience in community trading activities

Literate

Knowledge of basic calculation

Criteria for female participation in marketing: Experience in community trading activities

Experience with communication and contact with traders

Experience in trade negotiations

Knowledge of market demand for each cropping season

Literate

5. Train FPMGs on group management by 2012, attended by all women committee. Promote women’s participation to achieve at

Achieved All 360 women committee members (100%) participated in group management training.

74 Appendix 8

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

least 20% of participants of the technical trainings and study visits are women.

24% of participants (851 out of 3,603) attending technical training and study visits were females. The training and study visits included: group management, group revolving funds, rice seed and commercial rice production technologies, organic vegetable production, crop production grading, packaging and processing, agribusiness and marketing, livestock and poultry production, soil improvement techniques and pre- and post-harvest technologies.

Output 2: Replicated post-harvest technology and practices

1. Ensure women participate in consultation on post-harvest equipment and feed corn production technology and actively express their needs.

Achieved The project carried out several consultation meetings with two banana processing groups (one group in Vientiane and one in Champasak province), one noodle processing group in Champasak Province, one pork processing group in Khammuanee Province, and sweet and feed corn production groups in Vientiane Province; 58% of participants (89 out of 154) attending the meetings were women. Key issues discussed:

Identification of problems involving agriculture production and processing activities encountered by farmer groups; and identification of technologies or equipment for farmer’s groups to improve their post-harvest activities and find alternatives to address post-harvest issues. Women farmers noted that: Women bear dispropotionate workloads for post-production process of corn, such as harvesting, corn hulling and drying, which are done manually and are highly time consuming. Processing activities such as noodle slicing, banana slicing, and banana drying are also mostly manual tasks.

vi. Farmers proposed that having appropriate tools would improve product quality and financial returns, while replacing manual labor and reducing the workload of women. Solution: The project procured and supplied the following equipment: banana slicing machines, banana oven, fruit mixing machines, chili grinding machines, meat mixing machines, skin slicing machines, noodle slicing machines, corn hulling machines, corn dryer and corn grinding machine. To date, a total of 811 farmers (46% or 377 women) benefited from the equipment provided. This includes 93 farmers from the banana processing group, 96 farmers from the noodle processing group, 260 farmers from the pork processing group, and 622 farmers from sweet and feed corn production groups.

2. Conduct study tour, training and workshop for farmers on post-harvest technique and new initiatives. At least 20% of participants are women,

Achieved A total of 324 participants were trained on post-harvest techniques and new technology, 66 of whom (20%) were women.

Appendix 8 75

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

(i) During 26-27 November 2013, the project carried out a study visit for farmers and project staff to Vientiane Province to learn pre- and post-harvest activities, such as a demonstration of using seed spraying machines for new rice production techniques, and visited the National Agriculture Research Centre; 50 participants joined the study visit, 5 of whom were women (10%). (ii) During 26-27 December 26–27 2013, the project carried out training on pre- and post-harvest techniques for farmers and project staff in Thoulakhom District in Vientiane Province, which aims to provide knowledge on implementation of large paddy field practices and to improve farming practices in the project areas; 18 participants (including 1 woman) attended the training. (iii) During 20-21 February 2014, the project carried out a study tour for rice seed farmers to explore new techniques for post-harvest technologies in Thailand. Two of the 31 participants were women. (iv) During 7-11 February 2014, training on pre- and post-harvest was conducted in Vientiane and Khammuane provinces for farmers and project staff by the international pre- and post-harvest technology consultant; 33 of the 166 training participants (20%) were women. (v) During 15–16 May 2014, training on post-harvest equipment and post-harvest techniques to assure the quality of rice seed and reduce post-harvest losses was conducted in Thoulakham district, Vientiane province for rice seed farmers and commercial rice farmers groups by a local company that supplied a 40-ton capacity rice dryer; 25 of the 59 training participants (42%) were women.

Output 3: Strengthened extension services of the Agriculture Technical Extension Center

1. Conduct consultation meetings between PAFO, DAFO, ATECs, and research institutes. At least 30% of participants are women.

Partly achieved A total of 54 women out of 271 participants (20%) attended the consultation meeting between PAFO, DAFO, ATECs, and research institutes. (i) A meeting was held on 17 September 2013 at Xebangfay center in Khammuane province to discuss and agree on the role and responsibility of the center and to develop the integrated extension service model. A total of 57 participants including 4 women (7%) from project staff, MAF, NAFRI, PICO, PAFO, DAFO, farmers and entrepreneurs in Khammuane attended the meeting. During the meeting it was agreed to name the center Xebangfay Agriculture Research and Development Center, while the integrated rice production chain model was selected as the extension service model for Khammuane province. (ii) Staff from ONPD, PPO, DPO and ATEC attended training on project management and discussed the roles and responsibilities of the center in order to develop an integrated extension service model and consultation meetings on an annual operational plan for FY2014. Of 161 participants, 25 (16%) were women.

76 Appendix 8

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

(iii) During 5–6 September 2014, staff from the MAF Department of Agriculture, PPO, DPO, ATEC and farmers of Khammuanee Province met in Mahaxay District to disseminate regulations and good management practices on organic production techniques, including agro-processing procedures for staff, entrepreneurs and farmers; 25 of the 53 participants (47%) were women. Issues and Challenges: Underachievement of this indicator is due to the fact that the consultation meetings were held prior to the project team informing PAFO and DAFOs on project gender requirements.

Output 4: Improved farmer production and marketing groups’ knowledge of agribusiness practices

1. Organize consultation meeting for male and female members of farmer groups and trade/processor groups.

Achieved Project staff from ONPD, PPO and DPO and TPPD carried out the consultation meetings to rearrange the trade groups and rice millers in 4 project districts in Vientiane Province; 130 participants attended, including 24 (18%) women. Project benefits, as identified by women: Good opportunity for women to actively participate in marketing and finance because of their inherent talent in selling and managing expenses and profit from small businesses, such as retailing and restaurants.

Increased opportunity for women to communicate with potential buyers and customers.

Opportunity for effective learning through doing (e.g., rice miller group members in Khammuane province have learned that quality rice seeds are essential for farmers to produce high-quality rice).

Project benefits, as identified by men: Men have more time for other activities such as collecting rice from farmers and managing rice milling when women take the lead on marketing.

Women and men can share experiences on their activities such as information on market demands, new production technologies, and seed varieties.

2. Establish trade/processor groups, with at least 30% women members

Achieved 169 out of 258 (65%) members of trade and processor groups were women. Four agro-processing groups, involving 48 members including 43 women (90%) were established as of June 2013.

Appendix 8 77

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

20 rice miller and trader groups, involving 210 members including 129 women (61%) were established as of December 2013.

3. Train farmers to prepare contractual, legal, and financial for accessing to bank-credits; with at least 30% women participants

Achieved: In October 2014, the DAFO of Sanakham district, Vientiane province organized a meeting with farmer groups to explain preparation of contractual and legal arrangements (e.g., contract farming arrangements for rice seed and commercial rice farmer groups). 48 (64%) of the 75 participants were women. This meeting explained the rights and obligations of the two parties (farmers and traders), noting farmers need to understand contract details before signing.

4. Organize business forums / agribusiness conference with at least 25% women

Achieved 677 participants attended the agribusiness conferences, including 166 women (25%).

PPO and PICO of Savannakhet carried out agribusiness forums on rice production on 16 October 2012; 10 (20%) of the 51 participants were women.

The DPO of Xebangfai District, Khammuanee Province held a meeting with rice miller groups to discuss assisting rice farmer group access markets through contract farming arrangements; 6 of the 23 participants (26%) were women.

Three male staff from DICO and PICO attended an Exhibition for Visit Lao Year 2012 in Savannakhet on 27–31 of October 2012. Samples of rice and other produce were brought to the trade fair for display.

Four agribusiness conferences were held out by PICO in Khammuanee Province during 2012–2013 attended by 143 participants, including 57 (40%) women.

37 project staff (6 women, or 16%), farmers and traders attended a rice forum in Khong district on February 13, 2014. Among the topics discussed were how to assist noodle processing group access the markets or traders through contract farming arrangements.

91 project staff, farmers and traders attended a provincial rice forum in Champasak Province on 17–18 February 2014 that aimed to link producers to traders through production chain approaches and contract farming arrangements; 9 of the 91 participants (10%) were women.

The project carried out seven rice matching meetings in Champasak Province in May 2014, which aimed to bring farmers and traders or processors together to discuss and reach contract farming arrangements. The meeting was attended by 99 participants, including 14 women (14%).

78 Appendix 8

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

The project conducted six rice matching meetings in Savannakhet Province from April to May 2014 that brought together 124 participants (27 women, or 22%)

Business matching meetings between rice miller groups and private traders were carried out in Khammuane, Savannakhet and Champasak during 17–24 August 2014 that aimed to exchange experiences on rice trading and contract farming arrangements. Women accounted for 37 of 96 the participants (37%).

5. Organize entrepreneurship training with at least 25% women

Achieved A total of 133 rice millers, processors and traders (47, or 35%, were women ) attended training on agribusiness initiatives and marketing approaches in January 2014 in Vientiane, Khammuane, Savannakhet and Champasak provinces led by a project team that comprised staff from ONPD and TPPD.

Output 5: Strengthened human resource capacity for Project implementation

1. Enhance capacity of PAFOs, DAFOs, ATECs, farmer groups on agribusiness practices; 30% of training participants are women

Achieved 30% of participants (94 out of 318) attending agribusiness practices and trainings were women.

During 2–6 September, 2013, 99 project staff from ONPD, PPO, DPO, PICO, and DICO attended training on FPMG management in Khammuane and Savannakhet provinces; 24 of the 99 participants (24%) were women.

Project staff were trained on basic business principles of cooperative management in Khammuane province during 19–23 August 2013; 10 out of 47 (21%) were women.

39 project staff and farmers, including 13 women (33%), attended training on FPMG revolving fund establishment and management during 4–6 September 2013 at the ONPD in Vientiane.

133 rice millers, processors and traders (including 47 women, or 35%) attended training on agribusiness initiatives and marketing approaches in January 2014 in Vientiane, Khammuane, Savannakhet and Champasak province led by a project team made up of staff from ONPD and TPPD.

2. Collect sex-disaggregated data and integrate it into overall project’s data base.

Achieved All reports produced by the project include sex-disaggregated data. The project integrated a sex-disaggregated data system into the overall project database.

Appendix 8 79

Gender Action Plan (GAP Activities, Indicators and Targets,

Timeframe and Responsibility)

Progress

3. Involve S-CAW staff at the national, provincial, and district levels of project activities

Achieved

The project collaborated with S-CAW members at the national, provincial, and district levels. This included (i) DAW staff conducted an assessment on constraints to the participation of women in extension services, training and study visits in August 2013; (ii) the project organized a consultation workshop in September 2013 among project team and DAW members to clarify the issues identified by the assessment and agreed on specific solutions to mitigate the constraints; and (iii) DAW staff conducted meetings on gender awareness raising and project gender requirements for project beneficiaries.

ADB= Asian Development Bank, ATEC= Agriculture Technical Extension Center, DAEC= Department of Agricultural Extension and Cooperatives, DAFO= District Agriculture and Forestry Office, DAW= Division for the Advancement of Women, DICO=District Industry and Commerce Office, DPO= District Project Office, FPMG= farmer production and marketing group, FY= Fiscal Year, GAP= Gender Action Plan, LRM= Lao PDR Resident Mission, M&E= monitoring and evaluation, MAF= Ministry of Agriculture and Forestry, NAFRI= National Agriculture and Forestry Research Institute, ONPD= Office of national Project director, PAFO=Provincial Agriculture and Forestry Office, PICO= Provincial Industry and Commerce Office, PPO= Provincial Project Office, S-CAW= Sub-Commission for the Advancement of Women, TPPD = Department of Trade Promotion and Production Development. Source: Ministry of Agriculture and Forestry. 2015. Project Completion Report. Smallholder Development Project ADB Loan 2809-LAO(SF), Vientiane; the project completion review mission.

80 Appendix 9

CALCULATION OF OVERALL PROJECT RATING

Criteria Weight Rating Score89 Relevance 25% Relevant 2.0 Effectiveness 25% Less Than Effective 1.0 Efficiency 25% Efficient 2.0 Sustainability 25% Likely Sustainable 2.0 Weighted Average Successful 1.75 Source: Asian Development Bank estimates.

89

ADB. 2013. Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila.

Appendix 10 81

CONTRIBUTION TO THE ADB RESULTS FRAMEWORK

No. Level 2 Results Framework Indicators

(Key Outputs and Beneficiaries) Targets Achievements

1. Finance Microfinance accounts opened and end borrowers reached (number)

56

Group revolving fund established in 60 farmer production and marketing groups.

2. Transport National highway, provincial, district, and rural roads built or upgraded (km)

132

78 km feeder roads were rehabilitated, and 54 km rural access roads were constructed.

Source: Ministry of Agriculture and Forestry. 2013. Project Completion Report: Smallholder Development Project ADB Loan 1949-LAO (SF).Vientiane, and project completion review mission.