High Value Agriculture Project in Hill and Mountain Areas (HVAP)hvap.asdp.gov.np/downloadfile/HVAP Project Completion... · 2019. 7. 18. · Project Completion Report High Value Agriculture

Government of Nepal

Ministry of Agriculture and Livestock Development

High Value Agriculture Project in Hill and Mountain Areas (HVAP)

Project Completion Report (Main report with appendices)

Project Management Unit (PMU) Birendranagar, Surkhet, Nepal Phone No.: 977-83-523296, Fax No.: 977-83-525403 Email: [email protected] Website: www.hvap.gov.np December, 2018

Grant No.: DSF−8050−NP Loan No.: 796−NP

September, £017

Connecting People’s Capacities

Implementing Partners

Loan No.: 796−NP Grant No.: DSF−8050−NP

Government of NepalMinistry of Agriculture and Livestock Development

Project Completion Report(Main report with appendices)

HIGH VALUE AGRICULTURE PROJECT IN HILL AND MOUNTAIN AREAS (HVAP)

Project Management Unit Birendranagar, Surkhet, Nepal

Phone No.:977-83-523296, Fax No.:977-83-525403Email: [email protected]

www.hvap.gov.npDecember, 2018

Project Completion Report

High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page i

Contents

A. Introduction 25

B. Project description 28

B.1. Project context 28

B.2. Project objectives 29

B.3. Implementation modalities 31

B.4. Target groups 32

C. Assessment of project relevance 33

C.1. Relevance vis-à-vis the externalcontext 33

C.2. Internal logic 35

C.3. Adequacy of design changes 39

D. Assessment of project effectiveness 41

D.1. Physical targets and output delivery 41

D.2. Project outcomes and impacts 46

D.3. Targeting and outreach 57

D.4. Innovation, replication and scaling-up 59

E. Assessmentofprojectefficiency 62

E.1. Projectcostsandfinancing 62

E.2. Quality of project management 62

E.3. Qualityoffinancialmanagement 64

E.4. Partners’ performance 69

E.5. Quality of supervision and implementation support 70

F. Assessment of sustainability 71

G. Project internal rate of return (IRR) 72

H. Lessons learned and knowledge generated 77

I. Conclusions and recommendations 78

J. Annexes 83


Page ii High Value Agriculture Project in Hill and Mountain Areas (HVAP)

List of Tables

Table1: NumberofbeneficiaryhouseholdsbyValuechaintillFY2017/18 42

Table 2: Major groups formed across the value chain commodities and by districts 42

Table 3: HVAP Project targets sets on training and capacity developments and the

achievements 43

Table 4: Total number of Producers Organizations, Cooperatives, and social facilities

supported by the HVAP 44

Table 5: Total number of BD stakeholder’s consultation workshop, agribusiness contracts,

andrelatedactivitiescompleted/supportedbytheHVAP 45

Table 6: Number of Private Service Providers mobilized in the project districts 46

Table 7 : Average baseline and after intervention net income in 7value chains (NRs.) 47

Table 8: Change on average crop area of VC commodities per households between

baselineandof2074/75year 49

Table 9: The productivity of value chains in Baseline Vs after Intervention 50

Table 10: Volume (MT) of Production in Baseline Vs after Intervention 51

Table 11: Post-harvest loss percentage by value chain in Baseline Vs after Interventions 51

Table 12: Change on total VC market sale of from a typical household (Kg) in a year 53

Table 13: Well Being ranking of Dalit, Janjati, and other households in the project areas. 56

Table14: WomeninLeadershipPositionsinPOsinFY2017/18 57

Table15: TotalnumberofprojectdirectbeneficiariesbyethnicstructureandbyVCgroup,

asof2074/75 58

Table 16: Number of households participated in different Road corridors by HV commodities 58

Table17 TotalProjectCostsandExpendituretilltheendofFY2016/17 62

Table18: Financialperformancebyfinancierbycomponent(USD‘000) 62

Table19: YearwiseexpenditureoftheprogrammebudgetoftheHVAP 64

Table 20: Value Chain Commodity wise expenditure of the programme budget of the HVAP 65

Table 21: Key recommendations of Mission team by mission period of visit and yearduring

the project period 2011- 2018. 66

Table22: FinancialEfficiencymeasuresofhouseholdmodels 73

Table23: SummaryResultsofSubprojectmodels(incrementalfinancial) 74

Table 24: Project performance indicators 75

Table 25: Comparison of Project Performance Indicators 76

Table 26: Household Incomes at full development stage 76


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page iii

Appendices

Appendix 1: Terms of Reference (Tor) of the PCR as given to the consultant 83Appendix 2: List of persons met by the consultant (PCR) and the mission’s programme 87Appendix 3: PCR rating matrix 89Appendix 4: Project logical framework 111Appendix 5: Dates of supervision mission and follow-up missions 116Appendix6: Summaryofamendmentstothefinancingagreement 117Appendix 7: Physical Progress Table 118Appendix8: DistrictLevelStakeholderworkshopfindings 118Appendix 9. Some photos of the district level workshop 132Appendix10. Significantimpactoftheproject–inaCasestudy 133Appendix 11. Key document studied for the purpose of development of this PCR 136

Currency equivalents

CurrencyUnit =Nepali Rupees(NPR)US$1.0 =105 NPR(inJune-July2018)

Weights and measures

1kilogram = 1000g1.000kg = 2.204lb.1kilometre(km) = 0.62mile1metre = 1.09yards1squaremetre = 10.76squarefeet1acre = 0.405hectare(ha)1hectare(ha) = 2.47acres1ropaniofland = 508.74squaremetres


Page iv High Value Agriculture Project in Hill and Mountain Areas (HVAP)

Abbreviations and acronyms

AEC Agro- Enterprise Centre of FNCCI

ADBL Agricultural Development Bank Ltd, Nepal

ADS Agriculture Development Strategy

ASDP Agriculture Sector Development Programme

AWPB Annual Work Plan and Budget

B2B Business to Business

B2S Business to Service

BDSP Business Development Service Provider

BLC Business Literacy Class

CCI Chambers of Commerce and Industry

CF Community Forest

CFUG CommunityForestUserGroup

DADO DistrictAgricultureDevelopmentOffice

DCCI District Chambers of Commerce and Industry

DFO DistrictForestOffice

DLSO DistrictLivestockServiceOffice

DTCO DistrictTreasuryandControllerOffice

EoI Expression of Interest

FNCCI Federation of Nepalese Chambers of Commerce and Industry

GESI Gender and Social Inclusion

GIS Geographical Information System

GoN Government of Nepal

HHs Households

HV High Value

HVAP High Value Agriculture Project in Hill and Mountain Areas

HVC High Value Commodities

ICIMOD International Center for Integrated Mountainous Development

IFAD International Fund for Agriculture Development

KUBK KisankalagiUnnatBiubijanKaryakram

LNGO Local Non-Governmental Organization

LRP Local Resource Person

M&E Monitoring and Evaluation

MAPs Medicinal and Aromatic Plants

MDT Mount Digit Technology Pvt. Ltd.

MFI Micro Finance Institution

MIS Management Information System


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page v

MoALMC Ministry of Agriculture, Land Management and Cooperatives

MoAD Ministry of Agriculture Development

MoALD Ministry of Agriculture and Livestock Development

MoU MemorandumofUnderstanding

MSP Multi-Stakeholder Platform (Process)

MTR Mid-Term Review

NGO Non-Governmental Organization

NPR Nepalese Rupee

NTFPs Non-Timber Forest Products

OSV Off-Season Vegetable

PCCG Project Coordination and Consultative Group

PCR Project Completion Review Report

PIF Poverty Inclusion Fund

PMU ProjectManagementUnit

PO Producer Organisation

PSC Project Steering Committee

PSP Private Service Provider

RCE Road Corridor based Expert

RIMS Results and Impact Management System

SDF Sector Development Facility

SIF Spatial Inclusion Fund

SNV Netherlands Development Organisation

SPs Service Providers

SWOT Strength, Weakness, Opportunity and Threat

ToR Terms of Reference

ToT Training of Trainers

USD UnitedStatesDollar

US$ UnitedStatesDollar

VAT Value Added Tax

VC Value Chain

VCA Values Chain Analysis

VCF Value Chain Fund

W1 Window One

W2 Window Two


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page vii

Acknowledgments

This Project Completion Report (PCR) document has been prepared for the High Value Agriculture Project in Hill and Mountain Areas (HVAP). The HVAP is a joint project of the Government of Nepal (GoN) and the International Fund for Agriculture Development (IFAD). The HVAP was started in Feb 2011 and ended in Sept 2018 in the 7 hill and mountain districts of the Karnali province (Jumla, Kalikot, Dailekh, Surkhet, Salyan and Jajarkot) and province 7 (Achham) applying the inclusive value chain approach aiming to benefit13,500ruralhouseholdsandincreasetheirhouseholdincome.TheMinistryofAgricultureandLivestock Development (MoALD) was the executing agency and Netherlands Development Organization (SNV) and Agro-Enterprise Center (AEC) of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) were the implementing partners of this project.

HVAP would like to express its sincere thanks to Mr. Rajeswor Karki, Executive Chairperson, Mount Digit Technology (MDT) Pvt Ltd, Lalitpur, Kathmandu, who accepted the assignment to conduct the project completion review and prepare the PCR report. We would like to thank Dr. Madhusudan Bhattarai, Team Leader and Development Economist; and Dr. Nirmal Kumar Bishwakarma, value chain analyst and development expert of this assignment deputed by the MDT, for their painstaking efforts in preparation of this PCR.

We would like to thank to honourable secretary of the Ministry of Agriculture and Livestock Development (MoALD) and chair-person of the HVAP Project Steering Committee for his kind supports and guidance; assigning MoALD representatives for the PCR review mission; and thus for making the PCR review mission successful.

Likewise, we would like to express our appreciations to Ms. Louise McDonald, Country Director of IFAD forNepalandMr.BashuBabuAryal,CountryProgramCoordinatorofIFADNepalofficeinKathmandu,fortheirsupportsandconstructiveguidanceprovidedtothePCRmissionandreviewteamfieldedintheproject area. Sincere thanks go to the PCR review mission team of IFAD, Mr. Shrikant Shetty, the team leader and all the PCR review team members of the IFAD.

The PCR team organized consultation meetings with various stakeholders of the HVAP project, producers, traders, business service providers and VC actors across the project sites. We appreciate the contributions of smallholding farmers and members of Producers Organizations (POs), traders, and several other stakeholders who participated at the series of stakeholders’ consultation workshops, and voluntarily provided valuable information about the HVAP activities across the districts. We would like to thank all of the stakeholders for providing ground level comments.

We appreciate for the valuable comments, suggestions and feedback provided in the draft report, which has helped greatly to improve the quality of this report. In this end, special thanks go to HVAP PME-KM team, particularly Mr. Krishna Thapa, M&E Expert, for his persistent supports, valuable suggestions andinputsforcompletionofthisassignment.WeappreciateallofficialsoftheProjectManagementUnit(PMU),HVAP,forsharingkeyprojectdocuments,dataandtherelatedinformationabouttheproject,includingtheneededinformationonmanagementprocess,historicalfactsandfiguresofHVAP,andtheMIS data set. To this end, we appreciate Mr. Birkha Raj DC for providing the MIS based data, facts and


Page viii High Value Agriculture Project in Hill and Mountain Areas (HVAP)

figuresoftheprojecttothePCRteam.WeextendourheartygratitudetoallothergovernmentdeputedofficersandthetechnicalexpertsoftheHVAPatthePMUandtheprojectdistrict-basedstaffsfortheirhigh level of supports in facilitating the stakeholder consultation workshops across the districts. More importantly,sincerethanksalsogotoHVAPexperts/staff-Mr.RamPrasadPulami,Mr.SureshThapa,Mr. Hari Madan Adhikari, Mr. Keshav Karki, Ms. Renu Rai, Mr. Rudra Acharya, Mr. Kiran Rana, Ms. Sharada Sherpa, Ms. Chandika Lama, Mr. Giridhar Amatya, Mr. Damodar Neupane, Mr. Guru Adhikari, Mr.DeviramKandel;Ms.SunitaRegmi,andinternMs.YubarajeeAryal.WeextendourthankstoallotherofficialsoftheHVAPfortheirlogisticandadministrativesupportsandcooperationprovidedtothePCR team.

Rajendra Prasad BhariProject Manager,HVAP, Surkhet, Nepal, December, 2018


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page ix

Figure 1. Project area is illustrated in Green Color with the 3 targeted road corridor in Western Nepal


Page x High Value Agriculture Project in Hill and Mountain Areas (HVAP)

Project at a glance

Executing Agency: Ministry of Agriculture and Livestock Development (MoALD) Implementing Partners: Netherlands Development Organization (SNV) and Agro- Enterprise Center (AEC) of FNCCIDistrictbasedpartners: DADOs/DLSOs/DFOs/LNGOs/DCCIsProject Objective: Rural poor, especially women and marginal groups are integrated in high value agriculture value chains and markets and have improved income with ability to respond to market dynamics

Key Dates:IFAD Approval Signing Effectiveness Start of

ProjectMid-Term Review

Original Completion

Actual Completion

17 December 2009 5 July 2010 5 July 2010 6 Feb, 2011

January, 2014

30 September, 2017

30 September 2018

Mid-term Review Interim Evaluation Original Loan Closing

Actual Loan Closing

January 2014 - 31 March 2018

31 March 2019

Number of Beneficiaries:Total Direct Indirect Women Dalit/Janajati

Target 284000 84000 200000 60% 25%Achievement 354,058 105,437 248,621 63% 31%

Budget and Expenditure:

Sources of Fund Total Project’s Budget (Million) Expenditure till FY 2018/19 (million)USD NRs. USD NRs. Progress

%(USD)Progress %

(NRs.)Government of Nepal 1.72 171.87 1.43

145.23 83.14 84.50

IFAD 15.28 1526.86 13.66 1385.08 89.40 90.71SNV 0.7 69.95 0.89 88.72 127.14 126.83Beneficiaries 0.56 55.96 0.67 68.74 119.64 122.84Agribusinesses 0.61 63.3 1.22 125.21 200.00 197.80Total 18.87 1887.94 17.87 1,812.99 94.70 96.03Progress % 94.70 96.03


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page xi

Executive Summary

ThissectionsummarizeskeyfindingsandrecommendationsofthestudyonProjectCompletionReport(PCR) of the High Value Agriculture Project in Hill and Mountain Areas (HVAP) implemented by the Government of Nepal. The HVAP was implemented in seven mid-western hilly and mountainous districts of Nepal for about seven and half years from 6 Feb 2011 to 30 September 2018. HVAP is a joint project of the Government of Nepal (GoN) executed by the Ministry of Agriculture and Livestock Development (MoALD)with thefinancial support from the InternationalFund forAgriculturalDevelopment (IFAD).Federation of Nepalese Chambers of Commerce and Industry (FNCCI) through Agro-Enterprise Center (AEC) and Netherlands Development Organization (SNV) were the implementing partners of the HVAP. SNV and AEC worked as the implementing partners until July 2017 and July 2018 respectively.

The HVAP was implemented aiming to reduce the poverty and vulnerability of women and men in theprojectareasbyImprovingcommercialrelationsandpartnershipsbetweentheagricultural/NTFP/MAPs market operators and producers; increasing participation of poor marginal producers in high value commodity value chainswith improved access to agricultural/NTFPmarkets; benefitting poorsmallholder farmers and other rural producers from sustainable increase in volume and value of production asa resultof improvedproduction/collection, valueadditionandsalesofhighvaluenichemarketproducts; and enhancing enabling environment and strengthening local capacity to support market driven value chain.

The project has three major components as Component 1: Inclusive Value Chain Development; Component 2: Service Market Development; and Component 3: Project Management including M&E and knowledge management. The second component (Service Market Development) was added into the project workplan after the recommendation of the Mid Term Review (MTR) in 2014.

Keyoutputs,outcomesandimpactsoftheHVAPonthelivelihoodofthebeneficiaryproducersandupperlevelofvaluechainactorsalongthevaluechainintheprojectareashavebeenidentifiedbycriticallyreviewing the project documents and processes of operation of the HVAP in the project sites. Primary dataweregatheredfromthefiveprojectdistrictsfollowingthedirectobservationfromtheworkactivitiesof stakeholders, key informant interviews, one-to-one consultation with the major stakeholders of the project.Thefieldinformationwasalsosupplementedbythedataandstatisticsoftheproject’sManagementInformationSystem(MIS);anddataandfindingsfrompreviouslypublishedreportsoftheproject.Thedata were then compiled, analysed and presented in this form.

Thisfieldstudywasdoneintwophases.Inthefirstphase,thestudyteamvisitedtotheprojectfieldsites, and conducted consultations with key project team members, other key stakeholders, reviewed projectdocuments,andalsovisitedfewprojectfieldsiteslocatedatnearbydistrictsfromSurkhetdistrict,wherethePMUislocated.ThepreliminaryassessmentwasdoneduringJune/July,2018wherefieldsurvey and consultation were done in Surkhet, Salyan, Jajarkot, and Dailekh. In the second phase of the study, 4 Focus Group Discussions (FGDs) and 5 consultation workshops with key stakeholders of the project in Surkhet, Jajarkot and Dailekh districts were carried out in August, 2018.

The PCR has been prepared following the IFAD guidelines for the preparation of PCR (2015), and as pertheissuesandscopesclarifiedintheToRofthestudyprovidedbytheprojectmanagementtothe


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PCRstudyteam.Hence,facts,figuresanddatasetsacrossthestakeholdersandacrosstheprojectsiteswere compiled following the IFAD guidelines and overall evaluation framework using both quantitative and qualitative information, and processes of project operation. These included summarizing information on factorsbyRelevancy,Effectiveness,ProjectEfficiency,Sustainability,etc.Attheend,thestudyteam’sconclusions and implications, and major lesson learnt from the project implementations over the last seven and half years are summarized.

1. Relevancy

External context: This project has been designed and implemented in line with the Government of Nepal’s priority and objectives and IFAD’s strategies and objectives of improving livelihoods of poor farmers and overwhelming needs and problems of the rural communities (farmers and small-scale traders) globally. The project activities were designed in 2009 on the basis of well-recognized sectoral policies of agriculture sector of Government of Nepal such as Agriculture Policy 2004, and Agricultural Perspectives Plan of MoAD.

The HVAP has given high emphasis and priority for commercialization of high value produces produced out in the project targeted sites, and for development of value chain of targeted commodities produced in the region. The project also emphasized to increase business competitiveness of the value chain actors, linkages with national and international markets. The 20-years Agricultural Development Strategy (ADS) prepared by MoAD in 2015 has in fact also adopted several aspects of the lessons learning, and key featureandfindingsoftheHVAPprojectactivities.

Internal logic:TheValueChain(VC)analysisdonebytheprojecthas identifiedthegaps in theproduction (skills, technology, land fragmentation, credit, etc.), transportation (collection centre), processing (technology), market (guaranteed buyers, etc.) associated with each commodity selected by the project. These gaps have been major crux of the project interventions, which includes strengthening existing farmer groups, cooperatives, household business diary, and market linkages. Likewise, VC fund set up in the project were also very relevant to the needs of the farmers’ groups. The project internal document shows that 61% of groups are in satisfactory and excellent category in terms of their institutional capacities to manage the VC activities.

Flexibility:Theprojectplannedactivitieswereflexibleintermsofaccommodatingproblemsandneedsof thebeneficiaries targetedby theproject.The rolesofdifferentexternalmission teamswerealsoimportant for bringing several changes on the modus operandi of the project interventions of HVAP as perchangingdemandsoftheprojectbeneficiaries–theresourcepoorfarmersandtraders.Accordingto the recommendations of MTR 2014, the project has strengthened roles and functions of value chain teaminPMU,changed its investmentguidelines in theprojectareas,andempoweredPMUthroughincreasing its decisions on limit of allocating grants to the various proposals. The recommendation also widened the roles and opportunities of value chain commodities through the promotion of multiple value chains by the project. The addition of a new component of service market strengthening, as a separate component in 2014, has also played a very useful role to solve the barriers in functioning of VCs, and making the farmers located in remote places of Nepal, as entrepreneurs imparting business know-how andprofitorientedproducers,orserviceproviders.


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page xiii

2. Effectiveness

Physical target and service delivery: The HVAP has met all of the physical targets set in the project documentprepared in2009/10,andhasdelivered thecommittedoutputsandactivities.Theprojecthas met the component wise its physical targets. For many of the activities and outputs, the project has delivered more than the minimum targets (outputs) set in the project proposal approved in 2010. Most significantly,theprojecthasexceededthetargetsrelatedtoreachingbothdirectandindirectbeneficiaries(households);asithasexceededtargetofdirectbeneficiariesby16%,withprovidingoutreachsupportto15,965householdsagainst thetargetof13,500beneficiariesmentionedintheoriginallydesignedprojectdocumentin2010.Likewise,theHVAPhasbeenabletoreachover248,600indirectbeneficiariesagainst the outreach target of 80,000. Also, the project has exceeded its targeted outreach to reaching to women (63% vs. 60% target) and disadvantaged groups (31% vs 25% target) set in project document.

TheProject has formed, and/or, strengthened groups and cooperatives of farmers (producers) andtraders of the project targeted value chain commodities. The project MIS data show that there are total of 456 groups and cooperatives (91.2% of total 500 target to reach) were reached by the HVAP across the targeted value chain commodities. In addition, the project has achieved very good (100% and near to it) achievement in group mobilisation, group and cooperative mapping, inter-group and cooperative exposure visits, etc. The project provided training to 2,394 persons (95.8% of total 2,500 people targeted) in production, processing, and marketing of different value chain commodities.

Overall, the Value Chain Fund (VCF) has achieved an average of about 85.34 % of the total project targets for distribution of value chain fund as that of established in the project designed document in 2010. Among the fund types, value chain fund window two (set for farmers) and sector development fund for infrastructure have, by and large, led to more achievements than other components of the fund.

The Project has achieved more than its outputs’ target set earlier for supporting market linkages activities. That is, the project supported and facilitated total of 151 market linkage groups (Target was 150 groups) during its project period, and achieved 100% achievement in arranging market mechanisms between producers’groupsandtraders.Intotal,456valuechaingroups/cooperativesweredirectlylinkedwithagribusinesses, which has so far made arrangement for buy back of 5677 MT of goods and commodities of contracts, except goat value chain. Out of that, 441 (97%) producers’ organisations also sold their products to the traders locally during the same period. This network of local agribusiness and producers’ groups is expected to keep continue the producing and marketing activities in long-term and also benefitingbothsmallholdingproducersandthelocaltraders,withincreasedvolumeofbusinessandmore returns.

Project outcome and impacts: During the study team’s stakeholder consultations at the various stakeholders’ meetings, and based on the data sets from project MIS, the impacts of the project are very positive on improving agricultural productivity, access to market, households’ incomes and asset positions, human and social capital, and empowerment of producers. All of these factors have directly contributed in reduction of food insecurity and poverty levels in the project targeted sites. The project has produced very positive impacts on improving level of food security of the households, managing natural resources and the environment at the local communities. The project has also contributed positively


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forclimatechangeadaptationandimprovingresilienceleveloftheprojectbeneficiaryhouseholds,andat societal scale at the project targeted communities, to some extent.

Impact Assessment Report (2018) of the project, carried out by Result and Impact Assessment Division (RIAD) of IFAD, shows that 8% households in the project targeted sites upgraded from poverty line due to project intervention in the region. It was calculated with reference to productive assets-based poverty line.HVAPAnnualReport(2018)showsbeforetheinterventionoftheproject,26percentbeneficiaryhouseholdswerelivinginextremepoor;whichhasdecreasedtoonly5percentinFY2017/18.Itmeans21% households under extreme poor improved their well being after project’s intervention. In overall, 41% of the extreme poor and poor households have shifted to near poor and none-poor household category, which was contributed by the project interventions in the region. This evaluation study was done following the concept of Random Trial Control, and holding the other factors constant, i.e., by creating control group and holding the situation of business as usual, without the project scenario.

The overall average annual income of the project targeted household increased is estimated as NPR 46,055perdirectbeneficiaryhouseholdagainst thevalueofNPR30,000 target set in theprojectdocument (as per MIS system data). The total sales value of the project targeted households (project beneficiaryproducers)increasedtoNPR870millionfromthebaselinevalueofNPR225million.Threevalue chains comprising apple, off-season vegetable (OSV) and Timur have provided annual income of more than NPR 30,000 per household. Value chains comprising ginger, goat, turmeric and vegetable seed have yielded an annual increase in income of less than NPR 30,000.

Results and Impact Management System (RIMS) third level indicator (2018) shows that female household memberswhocanreadwasonly42.2percentagein2012/13(benchmark),whichhasreachedto79percentage in 2018, i.e., women literacy increased by 87 percentage during the project period. Similarly, malehouseholdmemberswhocanreadwasonly69percentagein2012/13(benchmark),butitreachedto 87 percentage in 2018, which is an increased on male literacy rate by over 26 percentage point during the project period. While comparing the situation before implementation of the project, level of malnourishment of children of below 5 years of age has been decreased substantially in the project implemented communities during the period of 7 years of the project. The RIMS study in 2018 has shown that the acute malnutrition (weight for height) was decreased by 6.3 percent over the project period than the case in before the project (in 2010). Similarly, the chronic malnutrition (height for age) and under weight (weight for age) were decreased by 6.6% and 11.2%, respectively, during the same period, which is due to the impact of the project interventions. The RIMS study (2018) also reported that the level of acute malnourished children decreased from 9.5% to 8.9 %, in overall sample selected households in the project areas. The acute malnourished children (girls) were decreased from 8.5% to 7.9%, where the acute malnourished children (boys) were increased from 10.4% to 13%. The acute malnutrition was higher among the boys compared to girls in both surveys (baseline and mid-term).

Overall analysis of the MIS data provided by the project indicates that the crop yield of ginger (one of thevaluechaincropssupportedbytheproject)increasedfrom459kg/ropaniinthebaselineyearsto585kg/ropani1in2017/18cropseason.Likewise,forOffSeasonVegetables(OSV)likecabbage,carrot,

1One Ropani measures as about 500 m2 and 20 Ropani of land makes about one ha of land.


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page xv

beans,cucumber,etc.,theaveragecropyieldincreasedfrom453kg/ropaniinbaselineperiodto530kg/Ropaniattheendoftheproject.

The production volume of agriculture and related activities increased to 15,119 MT at the end of project. The total volume of production of seven value chain commodities increased by 225% as compared to the baseline year, with highest percentage increase in off-season vegetable (393% increased) and lowest in Timur value chain (52% increased). The highest increased on volume of produce was in OSV value chain (8,152 MT) compared to the baseline volume. This was also due to the high-volume low value nature of crops. Lowest increased on volume of produce was in vegetable seed (18 MT) among the seven VC commodities, which is understandable due to high value and low volume nature of VC.

The project has produced also several kinds of direct and indirect positive impacts upon the farming communities. They include an increasing adaptive capacity of the poor farmers not only against economic shock but also employment shock, and against climate change vulnerability; though, the project log frame has set only one indicator about the issue related to climate change and climate vulnerability. Likewise, the farmers, producers and local traders also mentioned to the PCR study team that level ofconflictandanimosityhavebeenreducedinthelocalcommunities,wheretheVCdevelopmenthastaken places successfully from the project intervention, as people are now actively engaged in economic activities in the communities. To some extent, this has also reduced presser on distress outmigration of young labor forces to outside of the country, as some level of income earning and employment opportunities are created within the communities and surrounding the areas. The project documented case studies have also provided good example on its evidences.

Targeting and reach: All social groups have been participating in all value chain commodities. Project record shows that women occupy about 49% of the key positions of the supported groups and cooperatives. Thetotalnumbersofkeypostsinthose456groups/cooperativesare1,824.Outofwhichwomenheld980 positions, however, the targets set in the project document for this was 50% of the key posts of 500 groups and cooperatives. Thus, women have increased access to decision making body in the project supportedgroupsandcooperativesofHVAP.Likewise,womenled(chair)31percentofthegroups/cooperatives that have been supported by the HVAP.

Innovation and Replications: Project has generated many innovative activities, management practices, and farm production technologies. Multi-stakeholder platform (MSP) is one of the innovative processes and practices initiated by the HVAP in its project areas to promote market linkages between producers and traders to assure better market access to producers of HV crops located in remote places. The MSP technique was promoted by the project (HVAP), adapting it from the earlier innovation tried and adapted by SNV and other agencies working in outside of Nepal. The MSP is one of the successful innovative practices adapted by the project. This has also been quickly replicated in other projects and other regions of Nepal, as well.

Similarly, the mechanism of fee-based service market by private service providers is also an innovative way of providing high-skill services to resource poor farmers (producers) in remote hilly areas of western Nepal;whereregulargovernmentextensionandtechnicalservicesareusuallyinadequatetofulfilallofthe local demand. Similarly, the success of the project in setting up insurance mechanism for producers’ business activities, even for farmers as well, is in fact, an innovation of the project, and is also useful for


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other project activities in Nepal, as well. In similar fashion, business literacy classes (BLCs) to women farmers, and farmer diaries for keeping daily records of the farm production by farmers themselves are also other innovative mechanisms adapted by the HVAP in Nepal.

In addition to these process innovations, there are other some very important technological innovations adaptation practices done by the project. For example, solar lifted irrigation is one among them, which is getting popular in several other places along the Bheri river corridor, where the community settlement islocatedjustabovetheriver.Theeasyprocessfollowed/adaptedbytheprojecttoinvestigatethesoil fertility, manure needs, crop disease also have wider applicability to other parts of the countries. Likewise, some of the experiments from the piloting projects also suggested to popularize mixed farming system among the farmers in the region. Mixed farming system such as turmeric and maize, turmeric andmangopracticedbythefarmersseemsbeneficial.Thesetechnologiescanbeeasilyreplicatedinanother area, as well.

3. Project Efficiency

Budget and financing:Theprojecthavewellprogressedintermoffinancialdisbursementsandprovidinggrants to farmers and producers and small-scale traders. About 96 % of total budget (in NPR) has been spent by the end of the project (Sept, 2018).The progress of the project may differ slightly based on the USDexchangeratetoNepalicurrency.Whileanalysingthecomponent-wiseexpenditures,outof18.87millionof totalprojectbudget,12.3millionUSDwasallocatedfor inclusivevaluechaindevelopment(component one), out of which about 93% of the component budget has been spent.

Partnership: Partnerships with LNGOs, SNV, AEC, and DCCIs, as developed by the HVAP, have been effectively functioning, and providing a support with effective collaboration among the partners. In recent days, new sort of partnership between the project supported groups and Banks has been practiced. Severalother institutionsandorganizations, includingformalfinancinginstitutions,havealsocomeforward to support the farmers, with different modes of partnership. They include insurance companies, cooperatives,theagribusinesses/traders,andBusinessDevelopmentServiceProviders(BDSPs).

Project Management:TheprojecthasbeenoperatedthroughProjectManagementUnit(PMU)locatedin Birendranagar, Surkhet. All implementing partner agencies (MoALD, SNV and AEC) were housed together in a building; this practice is also one of the distinct features of the project management practices adoptedbytheprojectthanothersimilarprojectsoperatedinNepal.ExpertsfromvariousfieldswerefieldedatPMUoffice,whichprovided technicalservices,financialandcontractmanagement relatedsupportstoalloftheprojectbeneficiaries.PMUassignedtechnicalexpertsondifferentthematicareasof project (or as value chain experts), who worked for program planning, and also for monitoring and evaluation activities across the district level activities.

Thepaceofdisbursementoffinancialdisbursementoftheprojectwaslittleslowinearlierstageofprojectimplementation, at least until MTR. After restructuring of the project components by MTR, the effectiveness of the project was enhanced too. Process of evaluation of grant proposals (project concepts) of producers group by several agencies (persons), as adopted by the HVAP, was also involved with high transaction cost both for the project as well to the producers group seeking the grant funding from HVAP. Likewise, numbersofpayment-instalmentofprojectgrantsweremore,whichcanbefixedbasedonsizeoffunding


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page xvii

level, nature of funding, kinds of transaction costs involved in disbursement of the fund.

4. Project sustainability

Project has done several efforts to enhance its sustainability of the project value chain interventions done during the project period. This includes forging partnership with both local level agricultural sector government agencies as well as private sector agencies working in each of the local sites. The project has also ensured sustainability of its activities in terms of economic, social and environmental dimensions, as well. In terms of progress on sustainability of project activities, the HVAP has got good achievement in the development and kept continued operation of the market system that the project has createdsofar.TheHVAPAnnualreport(2018)showsthat82%agribusinessfirms(people)indicatedtheir expectation (or believe) of continuation of market arrangement created by the HVAP even after closing of the project in September 2018. The tripartite agreement involving DCCIs, agribusinesses and POs is working in the project sites towards improving key VC components in each of its command areas. This is very important for a continue working of market arrangements (market yards) created by the project even in the future. Several, farmers’ groups have usually also set up their own local level saving and credit groups (or cooperative in the villages), the functioningofthesegroupsorcooperativesarethencloselylinkedwithbankandotherfinancialinstitutions.The project has been supporting through group approach; particularly, through farmers’ groups, cooperatives of the farmers, etc., which, has also helped to enhance social sustainability of the project in the project areas. This project has no obviously observed negative environmental impacts. However, somemechanismsneedtobedevelopedtorecoverpartofgrantfromtheprojectdirectbeneficiariesthatwould at least cover for regular operations and maintenance costs of the particular interventions. This is particularly for the community level infrastructures constructed through the project grants. Such community level managed trust fund type of funding can also be used for regular operation and maintenance of the infrastructures, and for collective actions, all of which will enhance sustainability of the infrastructure invested from the external fund.

In the context of the service markets, private service providers were supported by the project for enhancing their technical and service delivery capabilities, their service standards, and overall management and the needed infrastructure and technical supports to them. Within the project period, more than 50 percent of theprojectbeneficiarieshavestartedtogettechnicalservicesforvaluechaindevelopmentfromthelocalservice providers supported by the HVAP and others. Most of the services and supports from the private service providers are based on fee-based services, which has provided positive incentives to both farmers and the Private Service Providers (PSPs) to ensure a better quality of the services to the clients (service seekers) and also for long-run business sustainability, even after completion of the HVAP activities in the region.

5. Lesson learned and knowledge generated

The HVAP has adopted system of learning, documentation, and sharing the information with others for lessons learning. These lessons learning of the project have also been documented in trimester and annual reports since its beginning. The project has published news bulletin regularly. Some of the learnings of the project have been published in well-read and nationally widely circulated daily news


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paper such as Kantipur. The project has documented some of the successful case studies includes CorporateSocialResponsibility (CSR),SustainableTimurProduction,DemonstrationofBasra/SpiralPump- Irrigation Technology for Off Season Vegetable Production, Collective Action through Developing Capacity of Producer Organizations.

Project has also developed/adapted many innovative activities, management practices, and farmtechnologies,etc.,and/or,innovativemanagementprocess.Onlysomeofthemarebrieflysummarizedhere. HVAP achievements and experiences on development of Off-Season vegetable production area; Public, Private, and Community Partnership (PPCP) in Timur value chain are some of successful model for conservation and livelihood promotion. Likewise, promotion of Zero Energy Cellar Store in Apple Value Chain; Transforming Gender Equality and Women Empowerment in Value Chain Development, etc. These well-documented knowledges that were generated from the project will be useful for other area and for a long time in the future.

Multi-stakeholder platform (MSP) is another innovative process and practice initiated by the HVAP project in its project areas for strengthening market linkage even in remote places. The MSP technique was promoted by the project, adapting it from the innovation tried by SNV and other agencies working outside of Nepal. The MSP has been quickly replicated also in other projects and other parts of Nepal too. MSP has provided good opportunities for strengthening market linkage even in remote places by facilitating contract between traders and producers. Details on MSP are described in the HVAP project documents. Considering the remoteness of the Karnali province, the MSP can be easily taken supported by the new project as well, and with an active involvement of local government and local DCCI.

The mechanism of fee-based extension services and market support by private service providers are innovative ways of providing services in remote hilly areas and among relatively poor producers in Nepal, where regular government extension and technical services are always inadequate to meet all of the local demand for these support services. In the same way, success of the HVAP on setting up insurance mechanism for the small-scale producers’ business activities, even in the agriculture sectors and in remote parts of Nepal, is in fact equally useful for other parts of Nepal as well. Likewise, Business Literacy Class (BLC) to women farmers and farmer diaries for keeping farm records are also other innovative mechanisms adapted by the HVAP in Nepal, which have potential to be adapted and scaled up by government extension services to wider parts of Nepal.

In addition to the innovation in process and management practices, some very important technological innovations have been also adapted by the project. For example, setting up solar lifted irrigation and drinking purpose is one among them, which is recently also getting popular in many places along the Bheri River corridor, where community settlement is located just above the river, but communities face acutewaterscarcity.Theeasyprocessfollowed/adaptedbytheprojecttoassesssoilfertility,manureneeds, crop disease also have wider applicability to other parts of the countries. Some of the experiments (piloting) from the projects and technologies can be easily replicated in other parts of the country, as well.


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page xix

6. Recommendations

i) VC development and the HVAP in regional/provincial context

a) Inthenewfederalstructure,DADOandDLSOlevelofgovernmentofficesarenotfunctioningat the district level and no existence of regional agricultural agencies, as well. In this context, proper monitoring and supervision of the project grantee farmers in the future through local government units (municipalities) structure would be a daunting task. Hence, for the upcoming project, the project man-agement may need to discuss these issues with provincial government authority (of Karnali Province) and to set up a framework for due monitoring and follow up supports to the project supported producers and traders for the next couple of years, until private service providers are well functioning in the remote communities.

b) Project has supported huge amounts (over Rs. 30 million of a grant to establish and set up market centre such as Bulbule Regional Agriculture Market in Birendranagar, Surkhet, which is already functioning. Likewise, Rs. 50 million grants have been committed for construction of a new cold storage facility in Birendranagar industrial area in Surkhet, which is under construction. These investments have huge positive impacts in strengthening value chain of high value commodities, and fast scale of multi-plier effects not only in the local communities and at a district but also across 4-5 districts in the region. The market system and business infrastructure to these tertiary level business needs to be supported and facilitated additional facilities even by the provincial government for their sooner completion and for their effective functioning, even after completion of the HVAP. These two infrastructures can act as a centre for price formation and setting up bench mark prices of agricultural produces in the region.

c) Project has established several collection centers of agricultural produces at district level, which needs to be supported by the local government or provincial government, after completion of the HVAP. Sincethesemarket infrastructureshavehugescalemultiplier levelbenefitstothe localandregionaleconomy, these market infrastructures will assist farmers for obtaining price information and selling the producesatdoorsteps,ultimatelystrengtheningvaluechainofthecommoditieseveninfar-flungareas.

d) HVAP and other such projects in remote areas should be more careful while providing large-scale grant to individual value chain actors, unless the business will produce huge scale of positive multiplier effects to society, and/or, itwill simultaneously support also developmentVCof producesinvolving large numbers of small- producers. In upcoming projects, as much as possible, such large-scale grants from the project to be transferred through groups or farmers’ cooperatives, and possibly amechanismtoensuresomekindsofrepayment(5-10%ofgrants)outofthebeneficiarygroupsforsetting up a community level trust fund to sustain the group actions in long term, even after termination of the project support with external fund. The economic sustainability and viability of the project of such large-scale funding need to be scrutinized by various thematic experts (and also private sector partners) to enhance effectiveness and sustainability of the project activities in the area.

e) A greater number of small-scale grants to be given to individual private service providers (PSPs) forinnovativeservicestoprojectbeneficiariesandruralcommunitymembers,whichwillalsoensureforbroader and deeper impacts. These include Private Service Provider (PSP) like: insemination service provider, veterinary service provider, crop protection service providers, farmers adviser, etc. This also


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includes custom hiring service providers of farm machinery, who provide rental services of specialized farm equipment (tractor, power tiller, threshers, harvesters, etc.).

f) Karnali provincial government has declared a policy in 2017, which says “within the coming 10 years, to establish the state as an organic state in producing agricultural commodities.” It is very challengingtasktoprovidealternatesolutionofchemical fertilisersandpesticides/insecticidestothefarmers who are using chemicals and other inputs. Therefore, it is very supportive if the follow up project support on key bottle necks on converting farming practices of ordinary farmers to organic production system. Some of the actions may include: mass scale production and marketing of compost manure production, establishment of organic manure production factory and its distribution network, promotion of organic pesticides preparation technology, improving cattle shed for livestock, and to support establishing an adaptive research center in the state dedicated to “organic farming research and technology adaptation.”

g) Potential exists for adding few more forest-based value chain for its support by the upcoming project in the coming days, such as Tejpat, chiraito, etc. In addition to export of raw material outside to theregion, local traders,and/or, localVCactorsshouldbesupportedalso forsettingupprimaryprocessing units of these herbal medicines, which will ensure guaranteed markets of these produces.

II) Service Market Development to support value chain

a) For effective partnership with government line agencies and local government, collaborative activities/jointprojectmayalsobringsynergytoeachothersector.Provisionsofprogrammefundingmechanism to these government line agencies and related institutions will increase ownership of the project activities among local and sectoral institutions, as well.

b) The HVAP has established its pocket areas in many places. These producers’ groups, collection centresormarketcentrescanalsoperformroleoflearningschool(suchasfarmers’fieldschools)tolarge-number of farmers in the project areas.

c) HVAP with the support from SNV and AEC of the FNCCI worked for development of the value chain services, and deeper penetration of marketing activities, in remote places of western hill and mountains.Inmanyplaces,asperthereportofHVAPandfieldobservations,institutionalcapacitiesofDCCIs are still weak despite of various supports were provided by the project. In this case, the new project should work in collaboration with DCCI, and also facilitate institutional development of DCCIs, throughengagingAECand/orothermarketandtradingsectorspecializedinstitutionsatthecenter.

d) The project should explore a way to set up a modest scale of producers’ groups managed trust fundinthegrantprojectscale(atPOlevel),throughsharingamodestpartofincrementalnetprofitofallindividual member. Then, this locally managed trust fund will further ensure a long-run sustainability of the grant funded project activities. This will provide positive incentives to large number of members (of POs and trader groups) for continuing the collective actions for development and management of local level market services and the market infrastructures.


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page xxi

III) Project management and coordination of activities

a) For effective partnership with government line agencies and local government, programme funding mechanism to these institutions at local government level (in limited scale) may provide incentives forbetterownershipoftheprojectactivitiesbytheLocalGovernmentUnits(Municipalities),andbettercoordination of various VC development activities at the local level.

b) ThecallforEoIforprojectgrantsshouldbedone3-4timesinayearwithfixedtimewindowforsubmission, and all of the received proposals should be cleared (yes or no decision) within a prescribed timeframe.ThiswouldenhanceefficiencyandeffectivenessofPMUandalsomoreconfidencebuildingof the project among the applicants (farmers and POs) due to timely release of the project grants to the producers.

c) Itwillbemoreeffectivethatsatelliteofficesbeestablishedinupcomingproject,withseniorofficialsto support for proper monitoring and, supervision of project work, and also processing of grant fund selected. In many cases, the single cost center of the HVAP also increased time for release of grant fund fromtheprojecttotheprojectbeneficiaries.

d) For better coordination and supervision, the upcoming project should start effectively using video conference and IT based conference call regularly (monthly basis) across the project sites located at far flunglocationsanditssatelliteoffices.ThiscanbedonewithmodestinvestmentonITinfrastructureateach site, which is compensated by saving from the travel cost and travel time of the personal. This will alsoenhanceefficiencyinprojectactivities,betterinformationsharingacrossthesites,andbetterM&EbythePMU.

e) For the upcoming project, the indicators of several key variables of project should be clearly definedandspecified.Forexample,forhouseholdincome–tobeclearlydefined,whetheritisanetincome (nominal or at constant prices), or return to management, or return to family labour and management,etc.Likewise,forfoodsecuritylevel(forproperspecificationforprojectmonitoringandquantificationinmeasurablenumber),andlabourcost(paidoutcostoflaborusesoralsototallabourusescost-includingfamilylaborcost).Inthesameways,fornumberofindirectbeneficiariesoftheproject,properspecificationanddefinitionforbeneficiariesofmarketservicesandmarketinfrastructuresshouldbeclearlyspelledout.Inaddition,thesetermsanddefinitions(andspecifications)alsoneedtobewelldefinedinthedatabaseguidelinesandMISdatacode,andalsotobewellunderstoodatasamelevel by all key staffs of the project.

f) The HVAP has generated huge scale of data sets on farm households and resource uses. The upcoming project should also thoroughly be analysed the MIS compiled data annually basis by hiring an data analyst for short time (2-3 months) in each year so that the MIS compiled data are analysed thoroughly and key summary tables are produced annual basis and regularly. This type of annual basis of summary tables will be useful for taking managerial decision in timely manner.

g) Large numbers of women are involved in goat rearing activities in HVAP so in other parts of thecountry.Thisisalsoalowriskactivitywithhighprofit.ThenationalmarketofgoatmeatofNepalisdeficitbyoverNRs.10billionannually,whichismetwithimportedmeatfromIndia.Hence,consideringthe


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huge level of unmet-demand for goat meat in Nepal, goat value chain (production and market) should be promoted with increased activities for the goat sub-sector, and also supporting on improving the breed of goat (public good) and R&D on goat in national and regional scale, as well.


High Value Agriculture Project in Hill and Mountain Areas (HVAP) Page 25

A. Introduction

1. This Project Completion Report (PCR) for High Value Agriculture Project in Hill and Mountain Areas (HVAP) is prepared following overall guidelines and template developed by International Fund for Agricultural Development (IFAD) for making PCR. The overall objective of this assignment was to prepare a Project Completion Report (PCR) with key elements of process evaluation framework of a developmentalprojectincludingrelevancy,effectiveness,efficiency,sustainability,projectoutcomeandimpact, and innovation and application adapted by the HVAP in the project targeted areas. This report also includes elements of up-scaling of innovations and value chain establishment set up adapted by the project, institutional sustainability of the value chain group and cooperatives formed by the HVAP project, and so on. The extent of participation of poor and disadvantaged farmers in development of value chain infrastructures, as well as usefulness and lessons learnt out of the outcomes and impacts of the interventions are documented. This PCR summarizes and documents these elements of the HVAP that are implemented until middle of July, and the information and data that were available in the project operated MIS systems of the HVAP by the end of September2. 2. The High Value Agriculture Project in Hill and Mountain Areas (HVAP) is a seven and half years’ joint project of the Government of Nepal (GoN) and the International Fund for Agricultural Development (IFAD), which started from 6 February 2011 and it lasted until 30 September 2018. The total cost of the projectwas18.872millionUSD,ofwhich15.283wascontributedfromIFADfundingandrestcontributionwasfromGovernmentofNepal,SNV,andtheprojectbeneficiaries.OutofthetotalIFADfunding,50%was provided as a grant, and 50% of funding as a loan funding. The project was originally planned for 6.5 years (i.e., till the end of September 2017), but it was extended up to end of September 2018, as a no- cost extension basis. 3. From the Government of Nepal side, the Ministry of Agriculture and Livestock Development (MoALD) implemented the HVAP in partnership with the Netherlands Development Organization (SNV) Nepal and the Agro-Enterprise Center (AEC) of the Federation of Nepalese Chambers of Commerce and Industries (FNCCI). Social mobilisation activities of the project (HVAP) were done by taking onboard district level operated NGO partners, i.e., one local NGO was selected and the assigned the social mobilization related tasks in each of the project-targeted districts. Thus, the project management unit located in Surkhet district coordinated activities of all of these partners and project collaborators. 4. The HVAP was signed between Govt of Nepal and IFAD on 5 July 2010. However, the project activitieswerestartedonlyafter6Feb2011.Inthefirstyear,largelyprojectpreparatoryactivitiesweredone, such as hiring of the project staffs and experts, deputation of staffs from government line ministries to the project districts, preparation of project implementation manual, and related manual and guidelines for implementing the project grants, etc.

2The data and number included in the report are consistent with project annual report (2017-18) and the external PCR report. In September 2018, the draft report of this PCR document (including feedback from stakeholder workshops) were shared with the IFAD external review mission and external PCR making team of IFAD, and the project management. This report is prepared in close consultation and coordination with the IFAD external PCR preparation and the evaluation team.


Page 26 High Value Agriculture Project in Hill and Mountain Areas (HVAP)

5. The MTR (Mid-Term Review) of the project was carried out in January 2014. The review recommended several changes in the project log frame. It then recommended to reorganize all of the project activities into three components. They are: a) “inclusive value chain development”; b) “service marketstrengthening”,andc)“Programmanagement”–whichincludesalsoactivitiesbelongingtomonitoring and evaluation, knowledge management, and overall coordination of all actors and stake-holders of the project. The other major changes done on the project structure by the MTR team (2014) were:restructuringofPMUstaffsaroundfourValueChain(VC)teams,provisionofPovertyInclusionFund (PIF) to address exclusion and related inequity in the distribution of the project grant and related other project supports in the targeted communities.

6. In total, eight missions were carried out by the IFAD part for monitoring of the work activities of HVAP, including MTR which provided substantial feedback and suggestions to accommodate on project activities (details about these missions and key recommendations are given in Annex-4). The recommendations from the external missions helped the project to align the project interventions more closely with the objectives and scope of the project interventions designed in 2010, and to tailored the activities as per the changing context of reforms and re-structuring of the major governing and administrative institutions in Nepal. 7. HVAP was signed between IFAD and Government of Nepal in July 2010. However, immediately after that major changes took places in structure and functions of the political systems and governance structures in the country, including changes into administrative structures of the government agencies. Since Sept 2015, the unitary system of governance and administration structure of Nepal has been transformed into federal structure. Accordingly, seven provinces have been set up, each province has a separate set up of governance and administrative body, headed by Chief Minister accountable to provincial legislative body. Each province has a mandate to administrate and govern various organizations and public agencies within its jurisdiction, as per the local context, with minimum directives from the central government. Each province is again divided into various local government (rural and urban municipalities),about100–150localgovernmentunits,dependinguponsizeofpopulationandlandarea. This project was in mid-western region in previous governance system, now large parts of the project areas are in Karnali province, and one district (Achham) is located in province number seven.

8. During the latter part of the project (2016-18), all three tiers of elections were held up in Nepal. The local election was conducted nearly a gap of 20 years from the period the local elected bodies were dismantled in the project areas (and in Nepal) 15-16 years ago. Similarly, elections for house of representative and provincial assembly were held in Nepal in 2017 and in early 2018 simultaneously in two phases. 9. In relation to agricultural and rural development, since 2015, Government of Nepal has implemented 20-years of Agricultural Development Strategy (ADS). The ADS accommodates objectives of Agriculture Policy 2004 and the learning of 20 years (1996-2015) program on Agriculture Perspective Plan (APP). Value chain development is in fact also a key component of the ADS of MoAD implemented since 2015, with more focuses on commercialisation of agriculture products. These major changes on overall governance and administrative structure, and changes on macro and sectoral policy settings on agricultural and rural development, in the previous eight years have naturally affected also the working modalities and implementation process of the HVAP activities. This includes changes on project interventions targets



and the time line for meeting the targets. 10. This Project Completion Report (PCR) has been prepared by Mount Digit Technology Pvt. Ltd.

11. The PCR study team from the Mount Digit Technology was led by Dr. Madhusudan Bhattarai, Team Leader and a senior development economist, and Dr. Nirmal Kumar Bishwakarma, served as a Value Chain Expert and an Evaluation Economist. This team was supported by two other research associates.ThePCRwritingworkwascarriedout in twophases. In thefirstphase,apreliminaryassessment was done by visiting to the selected project sites, compilation and analysis of the project documentsincludingsharingkeyfindingsoutofaweek-longfieldwork.Then,thesecondphaseofwritingof PCR was carried out from 16 July to middle of October 2018. In the second phase, consultants made two separate visits of over a week-days at the project sites in Karnali province. This was done for getting in-depth understanding of the project activities, and the VC reports. In addition, the PCR team also conducted one-to- one consultation meeting with key project staffs and project stakeholders. 12. The PCR team reviewed all key documents and guidelines of HVAP, including all of the mission reports and the evaluation reports of HVAP prepared at its various stages of the project. The PCR writing team extensively consulted with all major project implementing partners, central, provincial, district and communitylevelkeystakeholders.Widerdiscussionswereheldalsowithbeneficiaries(producersandtradersofVCcommodities)atthefieldsites.Theteamvisited12variousprojectsiteslocatedinSurkhet,Dailekh, Salyan and Jajarkot districts and it conducted 16 Focus Group Discussions (FGDs), and over 30 Key Informant Interviews (KIIs). In addition, it has done in-depth discussion with project staffs, VC producers,cooperatives,traders,governmentlineagencies,HVAPstaffs,officialsofFNCCI/DCCI,etc.Duringthefieldvisit inMay,theteamjoinedwiththeprojectmissionteamofHVAP.Inthethirdfieldvisit,theteamjoinedwithfinalPCRevaluationteamforconductingregionalstakeholderworkshopinSurkhet,andalsosharedtheinitialfindingsofthereportwiththeexternalPCRwritingteam.NamesofKeystakeholdersmetduringthefieldvisitsattheprojectsitesandotherstakeholdersmetinKathmanduare provided in anenx-2. 13. The study team visited the HVAP project sites in four different times then compiled in-depth informationonperformancesandprocessofoperationoftheproject.ThefirstvisitwasdonetoPMUin Surkhet district, and at the project sites from 18 May to 24 May, along with the IFAD external mission. Thesecondfieldsitevisitwasdonefrom9Juneto13June2018.Duringthat timevisits to fourdistricts were carried out, third visit was done from 11 August to 21 August 2018. At that time, detailed consultations were done with the community stakeholders in 4 districts and all the project key staffs were done. The fourth visit was done in the third week of the September 2018. During the visit to the project sites, consultations with key regional stakeholders were done. Large number of the province level of HVAP stakeholders attended the stakeholders’ workshop and interaction meetings in Birendranagar (Surkhet).Fromthesestakeholders’workshopsandseriesofFGDscarriedoutatthesefieldsitevisitsin September 2018, this study team compiled very valuable information in relation to the process, performances, and outcome of the project, and stakeholders’ perspectives and opinion about the project activities performed during the last 7-8 years.



B. Project description

B.1 Project context

13. Government of Nepal, with the support from IFAD, designed a project - High Value Agriculture Project in Hill and Mountain Area of Nepal (HVAP) in 2008 and 2009. This project was in line with IFAD’s country strategic opportunities and programmes in South Asia (2007-2012), and also in line with Government of Nepal’s strategic framework to reduce poverty in hill and mountain areas of the country, particularly in mid-western and far-western region of Nepal. The project activities were then planned largely targeting for Mid-Western Development Region (now Karnali province), which is also one of the leastdevelopedregionsofNepal.Furthermore,Karnaliprovincewasoneofthemostconflict-affectedregions of the country, with rampant poverty and social unrest in large part of the region.

14. The project design document was prepared in 2009; accordingly, environmental screening and scoping note of the project were done in 2010. The detailed situation analysis and baseline study of key seven value chain commodities targeted by the project were done in 2011.The design report provided detailed discussions on poverty and social exclusion issues as well as other major bottlenecks related to agribusiness and agro-marketing sector. The environmental screening and scoping note of the project discussed about situations of land degradation, forest, biodiversity, climate change, etc. Value Chain baseline report discussed about the bottlenecks in each stage of the value chain of key high value commodities produced in the region.

15. The High Value Agriculture Project in Hill and Mountain Areas (HVAP) was a market led initiative that sought to provide income and employment opportunities to the poor smallholder farmers and landless through the development and upgrading of pro-poor value chains. Following the Inclusive Business (IB) approach,theprojectfacilitatedmutuallybeneficialandprofitablearrangementsbetweenthesuppliers(producers) and buyers (traders) in High Value Commodity (HVC) value chains and enhanced inclusion and access of marginalized groups in the HVC prevailing in the region. 16. The overall approach of the project adhered to the following guiding principles: (a) Drivethevaluechainprocessfromthedemand/agribusinesssideandparticipating producers on the basis of a demonstrated and concrete market for the high value commodities. (b) Ensure that the producers become partners in the value chain with the agri-businesses by developing them into cost effective producers that they are able to deliver the qualities andquantitiesrequiredtomakethevaluechainprofitable,therebystrengtheningtheir position and improving their bargaining power. (c) Create an environment and build in robust processes and structures (groups) that enable women, poor and vulnerable households, and groups such as the Dalits, and Janajati (socially backward classes) to actively participate in the project. (d) Promote sustainability both in terms of institutions (value chain groups and cooperatives) andprocesses(valuechainsthatareprofitabletoboththeagribusinesses/tradersandthe producers). (e) Facilitate spatial as well as social inclusion and promote equity in project support among the participating districts



(f) Implement the project primarily through local NGOs and local service providers with government/MOAChavingoverallresponsibilityandoversightandSNVtakingthe technical lead in guiding project implementation. (g) Facilitatevaluechaingroupfinancingthroughacombinationofsources.Thisincludes agribusinessfinancing,self-generatedgroupsavings,loansfromlocalMFIs,aproject valuechainfundforinfrastructure/equipmentinvestment,andaprojectproductioninputs ` fund to establish group revolving funds

17. The project was implemented in six districts of Karnali province (then mid-western region) and onedistrictofprovincenumberseven(thenfar-westernregion)ofNepal.Morespecifically,sixdistrictsof Karnali province where the project was implemented includes Jumla, Kalikot, Surkhet, Dailekh, Salyan, Jajarkot, and one district from province no 7 includes Achham. This project was implemented along the three main road corridors of the region. They are: (i) Chhinchu-Jajarkot corridor; (ii) Surkhet-Dailekh corridor, and (iii) Surkhet-Jumla corridor.

B.2 Project objectives

18. The overall goal of the project was to reduce poverty and vulnerability of women and men in hill and mountain areas of the mid and Far Western Development Region of the country. The overall goal was to achieve through integrating rural poor, especially women and marginal groups in value chains andmarketsystemsofhighvalueagricultureandNon-TimberForestryProducts(NTFPs)/MedicinalandAromatic Plants (MAPs). Then, in turn, the project aimed to improve income, employment opportunities and ability of people to respond to market demand and opportunities based on marketing agreements withprivatelyledagribusinessfirms.

19. The HVAP had four expected outcomes. They were as below: (a) Improvedcommercialrelationsandpartnershipsbetweenagricultural/NTFP/MAP marketoperatorsandproducersthatresultinprofitable,efficient,market-orientated productionofhighvaluecommoditiesfor13,500beneficiaryhouseholds. (b) Increased participation and access of poor marginal producers in high value commodity valuechainsandagricultural/NTFPmarkets. (c) Benefitsforsmallpoorfarmersandotherruralproducersfromsustainableincreasesin volumeandvalueofproduction,asaresultofimprovedproduction/collection,value addition as well as sales of high value niche market products. (d) Enhancedenvironmentandstrengthenedlocalcapacitytosupportmarketdriven/value chain initiatives.

20. There were three major components of the project, as summarized below (a) Component One: Inclusive Value Chain Development. The objective of this component wastofacilitatemutuallybeneficialandprofitableproductionandmarketingarrange ments between producers of high value commodities and agri-businesses. The expected outputs from the component one of HVAP were: (i) Small scale producers organized in groups, with a high proportion of women and



vulnerable groups, are better able to respond to market demand and opportunities; (ii) Highportionofriskaversepersons/householdsandlandlessinprojectcommunities participate in the project; (iii) Incrementalvolumesofagriculturalcommodities,NTFPs/MAPsarebeingproducedin thequantitiesandqualitiesspecifiedincontractswithagribusinesses; (iv) Infrastructure,equipmentandcertificationfinancedbytheValueChainFundiscontributing totheprofitableproductionandmarketingoftheproject’shighvaluecommodities;and (v) Infrastructure projects that improve accessibility of remote communities completed and facilitate marketing of high value commodities. It has four sub-components:

(b) Component Two: Service Market Strengthening. The objective of this component was to support a sustainable increase in the purchase of business support services (including credit) by value chain actors in project areas. Business support services neededbylocalVCactorswouldmosteasilybeprivatizedand/ormovedtoafee-based service, would be strengthened with the highest priority. The expected outputs from Component 2 of the project were: (i) Contractual arrangements between producers’ groups and agribusinesses functioning effectively,sustainablyandbenefitingbothpartiesinatleast18valuechains; (ii) Strengthened institutional capacity for delivery and facilitation of market opportunities, information and support services; and (iii) Women, Dalits, Janajati and other poor and vulnerable groups well represented, actively involvedandbenefitingfromparticipationinprojectvaluechains.

(c) Component Three: Project Management including M&E and Knowledge Management (KM).Theobjectiveofthecomponentwastoprovideeffectivetechnical,financialand contract management of the project within the context of gender and poverty targeted value chain development. Monitoring and Evaluation System, Management Information System, Knowledge Management and Communication were the components inbuilt for effective project management. The expected outputs from the component three are listed below: (i) Project management, advisory and coordination systems operating effectively, and (ii) A functioning gender strategy that guides gender mainstreaming and facilitates project response to gender issues

21. The project design emphasized on addressing constraints in VC market of high value commodities produced in the region by providing incentives to the farm households for changing the subsistence level of production to market-oriented production of high value commodities. For this, the project focused on capacity development and institutionalisation of groups and cooperatives of HV producers, removing the barriers related to transportation and collection centre of the products, as well as, market linkages and market guarantee for the farmers. The project activities were targeted in reducing the trading steps and number of agents in marketing system. This was done also by facilitating aggregation of HVC produced in the region by developing capacity of key traders, and providing incentives to establish linkages with new national and international markets. In addition, the project did also several activities related to removing bottlenecks of marketing, with respect to strengthening linkages with supporting services for development



of HVC such as banks and insurance companies, involving the poor households and women in the production and marketing of high value crops.

B.3 Implementation modalities

22. The Ministry of Agriculture and Livestock Development (MoALD)3 was key implementing agency for the project. The Project Steering Committee was set up chaired by the Secretary of MoALD, located inKathmandu,whichwasalsothefinaldecision-makingbodyfortheprojectactivitiesandanychangesor deviation on project design. The Project Manager, based in the Surkhet district, was deputed from the MoALD for effective coordination on various activities across the agencies of agricultural marketing and rural development sectors. Likewise, the project had an agri-business enterprise development related working group, located in FNCCI, especially to support the agri-businesses and agricultural trading related subject areas.

23. In addition to IFAD and MoALD, the project had four majors implementing partners. They were: Netherlands Development Organisation (SNV), Agro-Enterprise Centre (AEC), Local Non-Government Organisations (LNGOs) as service providers, and Government district line agencies such as District AgricultureDevelopmentOffices(DADOs),DistrictForestOffices(DFOs)andDistrictLivestockServicesOffices(DLSOs).Theprojecthadclearlydefinedrolesandresponsibilitiesofeachoftheseimplementingpartner agencies, and mechanisms had been set up for coordinating functions of these institutions and related other development partners while working in the project targeted areas, along with an exit strategy once the project was completed.

24. The project’s implementing framework comprised three tiers of coordination bodies for advising andguidingthePMUforsmoothoperationoftheprojectactivitiesofHVAP.Theyare: (a) Project Steering Committee (PSC). It was the higher level governing body of the project, and was chaired by the Secretary of the MoALD. Main role of this committee (PSC) was to review project’s progress against targets, assess its effectiveness in achievingitspoverty/socialinclusionandgenderobjectives,reviewlessonslearned, assess management effectiveness, and also review and approve annual work plans and annual budgets. The PSC members included representation from government sector, theprivatesectors,andNGOs.LargenumbersofmembersofPSCwerehigherofficials and were located in Kathmandu. (b) HVAP Agribusiness Working Group. It was also based in Kathmandu. It was a forum dealing with the issues of project targeted agribusinesses. It also discussed topics that were particular concerned to them for developing the VC of the project targeted commodities. It raised issues and presents ideas and proposals to the project team. On the issues, it was foreseen that it would grow into a body to serve the high value agricultural/NTFP/MAPsectorasawholeandwouldcoordinatewithothervaluechain projects and programmes.

3The Ministry of Agricultural Development (MoAD) is the name of the ministry in 2010-12 when the HVAP project got started. During the last 5 years, the name of the line ministry of central government has been changed several times, even it has changed two times in the last one years. At present (in late 2018), it is called as Ministry of Agricultural and Livestock Development (MoALD).



(c) Project Consultative and Coordination Group (PCCG). It was an area-based group for coordination of VC related activities. This group acted as a forum to discuss issues and review opportunities and progress about the VC. It also facilitated the coordination of the project activities with various government bodies, agribusinesses agencies, and otherrelatedprojects/developmentintheprojectarea.

Inaddition,thesemainbodies,thereweresomeveryimportantforums/platformsattheprojectlevelforinclusionofcommunity/districtlevelstakeholders’suggestionsandconcernsinprojectimplementationprocess. Multi-Stakeholder Platform (MSP) was one important forum which was also an innovation of the project, as SNV provided the idea and which had been adapted well for development of inclusive value chain systems in the remotely located and less-developed regions of Nepal. MSP had very important roles in terms of facilitating various business dealing, B2B relationships, and other supporting value chain activities.

Likewise, District Agriculture Development Committee (DADC), was set up to coordinate the activities of various agencies at local level for agribusiness and rural development across the communities in a district. DADC had also important role in the selection of proposals, capacity development, review of programs, and monitoring of the project activities. In addition, the project had also provision to invite to various other government line agencies, while planning and review of the project. These line agencies also participated in the annual planning and review meeting of the concerned line agencies in relation to the HVAP, and meeting of newly formed District Coordination Committee (DCC).

B.4 Target groups

25. The HVAP was implemented for enhancing income, employment and livelihood of the people living in the hilly region of the then Mid-Western Development Region (Karnali province as newly created federal set up) in Nepal. Historically, this is also the poorest region of the country. According to the WFP (2018) the eight mountain districts of the Province six (Karnali Province) and province seven are some of the most food insecure areas of Nepal, with higher prevalence of poverty and stunting level than the case in any other districts, or than in comparison with the national average. According to Nepal Human Development Report 2014, Karnali Province Human Development Index (HDI) value is 0.445; the lowest compared to other parts of the country. Humla and Mugu, two districts in Karnali, had the highest Human Poverty Index (HPI) values for the years 2001 and 2011. The provincial level Multi-dimensional Poverty Index (MPI) estimated in 2017 has reported that one in every two people in Karnali Province lives in a poverty trap level as indicated by measuring various dimensions of the Multidimensional Poverty Index (MPI).

26. The overall target groups of the project are the members of the poor and food insecure house-holds in the project targeted areas in western Nepal, who are facing an acute lack of access to resources and lack of opportunities to secure basic level of income and employment. They are women and others often illiterate, or members belong to socially discriminated communities such as the untouchables (Dalits) and indigenous groups (Janajati). To enhance social inclusion in the project activities, the project focused its implementation strategies more towards disadvantaged households and individuals with one or more of the following characteristics: a) Annual income per person below the poverty line of NPR 6100 at 2001 constant prices, b) Landless or landholding of the household less than 0.5 ha of land holding,



c) Women, d) Dalits and Janajati and e) Other marginalized groups.

27. Intermsofthequantitativetargetsetting,theprojectaimedtobenefitabout55agribusinessesand 13,500 producer households directly from the project interventions in the targeted area, and then also aimed to support about 37,000 households indirectly, residing in the project areas. The project target groups, among the producers, consisted of the members of poor and vulnerable households wholacktheassets,accesstoresourcesanduseofopportunities.Amongitsbeneficiaries,theprojecttargets to include at least 60% women and 25% socially disadvantaged groups such as Dalits and indig-enous group (Janajati). 28. The project applied a targeting approach focusing on the poor and vulnerable households within the project targeted districts that make up the project area. The project has prepared Gender and Social Inclusion Strategy and Action Plan 2013, and Project Implementation Manual (PIM 2012) to make the project activities more inclusive and gender sensitive. The project has applied an approach of social inclusion,ensuringthatthetargetgroupmembershavetheopportunitytobefullyinvolvedinandbenefitfrom project activities, however, without excluding other members of the project communities who may act as leaders, early adopters and risk takers of HVC of the produces. 29. The project has also applied a combination of monitoring strategies to involve the poor and facilitatesocialinclusion,including:geographicaltargeting,social/communitytargeting,pro-activeinvolvement of risk adverse households, and spatial inclusion of poor remote communities. A participatory approach incorporating wealth ranking and consensus seeking was employed while planning for the project intervention at all of the project site to ensure the inclusion and active involvement of the poor and vulnerable population in these groups, with a special focus on women, Dalits, Janajati and other disadvantaged groups. C. Assessment of project relevance

C.1 Relevance vis-à-vis the external context

30. TheprojectwasdesignedconsideringthethemesofTenthFiveYearPlan(2002/03-2006/07)ofGovernmentofNepal,whichwasalsoNepal’sPovertyReductionStrategyPaperandThree-YearInterim Plan. These plans had focused on poverty reduction through the involvement of private sectors and NGOs in the development interventions. These strategies and policies had then pointed out that geographical and social exclusions were major bottleneck for poverty reduction in the country, and recommended for targeted programme activities for enhancing their effectiveness. The objectives and activities of HVAP are in line with the focuses of these periodic plans.

31. The project has been implemented in the most marginalized region of Nepal and its activities have been targeting to the poor and excluded groups through its Gender and Social Inclusion Strategy andtargetedActionPlan(2013).Privatesectorsandagro-businessfirmshavebeeninvolvedindifferentstage of value chain of high value products of the prioritized products. Local NGOs have been involved in social mobilization activities in each of the project site. These interventions are still relevant in current periodic plan, since fourteenth periodic plan (2017-2019) has focused on poverty reduction through social equality, regional balance as well as

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High Value Agriculture Project in Hill and Mountain Areas (HVAP)hvap.asdp.gov.np/downloadfile/HVAP Project Completion... · 2019. 7. 18. · Project Completion Report High Value Agriculture