Cambodia - Agricultural Productivity Improvement Project (Formerly listed as Agricultural Productivity & Rural Development)

Report No. PIC3053 Project Name Cambodia-Agriculture Productivity... Improvement Region East Asia and Pacific Sector Agriculture Project ID KHPA4033 Borrower Kingdom of Cambodia Implementing Agency Ministry of Agriculture, Forestry and Fisheries Estimated Project Cost US$35.1 million Date PID Revised September 24, 1996 Appraisal Completed June , 1996 Expected Date of Approval October 29, 1996 Country Background 1. With an estimated 1995 population of about 10 million and GNP per capita of $260, Cambodia is one of the poorest nations in the world. In contrast to some of its neighbors with dynamic and fast growing economies, the country is still recovering from years of war and isolation, when much of its physical and economic infrastructure was destroyed. Following a period (1979-1988) of aost exclusive assistance from the former communist bloc, the Paris Peace Accords of October 1991 opened up the country to wider rehabilitation assistance by bilateral and multilateral donors as well as by international non-government organizations (NGOs). The Paris Accords also paved the way for national elections held under the aegis of the United Nations Transitional Authority of Cambodia (UNTAC), cuinating in the formation of a coalition Royal Government at the end of October 1993. 2. The new Government has embarked, with the support of the international community, on a comprehensive medium-term program of macroeconomic stabilization that would help Cambodia successfully complete its reorientation towards a free market economy. Major policy interventions have been directed at bringing down the budget deficit and rate of inflation, at raising tax revenues and improving tax administration, and reforming the monetary sector. These policies have started to yield results, notably with the rate of inflation falling to an estimated 3.5 percent in 1995 as compared to triple-digit figures in early 1993. Sector Background 3. The development of agriculture, always a key sector due to the predominance of the rural population and its contribution to the national economy, will be crucial in helping the country meet the numerous challenges that it faces. Amongst these are the need to feed a population that, with its present growth rate of about 3t p.a., may  double in years, and the necessity to contain insupportable rates of rural-urban migration by productively absorbing in the rural economy a young population (about half are under 15 years of age). Another critical challenge is to progressively rebuild the Government's capacity to plan, formulate and execute agriculture and rural development programs, and so reduce its present heavy reliance on international technical assistance and the work of foreign NGOs. 4. The vast majority of Cambodian households continue to depend on agriculture and related subsectors of livestock, fisheries and forestry for their living. There are estimated to be about one million farming households of which a substantial minority, perhaps 35%, are headed by women. Agriculture constitutes half of Cambodia's GDP and employs about 75% of the labor force. Crops, grown both for food and for other products such as rubber, account for roughly 30% of GDP, livestock raising for another 15%, fishing for 4 to 5%, and forestry for 1 to 2%. Rice is far the most important crop, grown on over 90% of the cropped area and accounting for one-third of the total value of agricultural production; rice, vegetables, fish and some meat are the staples of the Cambodian diet. Rubber and timber are the most important export commodities, recently comprising 759 of total recorded exports; but small quantities of other agricultural products, including live cattle, rice, fruits and fish, are also traded with neighboring countries. 5. Agriculture research, planning and development, including that of the livestock, forestry and fishery subsectors, as well as management of water resources for all agricultural uses, is under the responsibility of the Ministry of Agriculture, Forestry & Fisheries (MAFF) which is organized on the basis of seven technical departments which control their own staff in the provinces, with a total of about 12,000 employees. Although many of these staff have useful training and/or work experience from earlier years, the Ministry does not presently have the budget or responsibility for implementing major projects, apart from irrigation rehabilitation works funded by the ADB under its Emergency Rehabilitation Project (ERP). All agricultural research is presently being done under externally funded projects, for rice notably by the International Rice Research Institute (IRRI) under a project funded by Australia. France plans to support the re-establishment of a research institute for rubber (IRCC). Responsibility for coordinating rural development activities lies with the Ministry of Rural Development (MRD), which now has about 1,200 employees and is involved in organizing rural water supply, rural roads, rural credit, village health and community development programs, often in collaboration with projects started by NGOs and international organizations. Important decisions by the Government affecting the relative roles and responsibilities of these and other agencies operating in the rural sector are increasingly being taken by a Council for Agriculture and Rural Development (CARD) on which all agencies concerned are represented under the chairmanship of the Second Prime Minister. The CARD is the Government's overall policy coordinating body for agriculture and rural development. Project Objectives 6. Recognizing the importance of the agriculture sector for Cambodia's development, the objective of the project would be to carry out a coordinated program through MAFF to bring about sustainable - 2 -  improvements in agricultural productivity and rural incomes. This would be achieved through a selective program of activities covering the main agricultural subsectors of rice and other crop production, livestock and fisheries, comprising essential knowledge acquisition, technology testing and adaptation, field development activities, essential rehabilitation investments, and a major effort in retraining and human resource management in MAFF. The sum total of these investments should lead by project completion to the building of substantial capacity in MAFF to plan, coordinate and implement successful development programs with the participation of the local populations concerned. Project Description 7. The project would comprise components addressing priority development needs of five of the Ministry's operations departments, three components at the Ministry level -- establishing a training and personnel management capability, strengthening the planning and statistics functions, and strengthening of selected provincial departments of agriculture -- and establishment of a project management unit (PMU) within the Ministry to manage the project. Organization of components by the responsible department has been adopted to facilitate preparation and management of the project; in practice there will be substantial linkage, both at headquarters and in the field, between the various components. Project components would be as follows: Agronomy, Seeds & Plant Protection 8. The component is aimed at strengthening the capacity of the Department of Agronomy (DOA) to develop appropriate technologies and formulate technical recommendations to farmers for improving crop production and productivity, with a view to achieving food security and sustainability and raising farmers' incomes. The component does not seek to develop DOA's capacity to undertake research per se, but rather to fill the critical gap between research and extension. It aims to provide DOA with the capacity to: (i) coordinate agricultural research effectively, to ensure that research programs on crop technology are formulated in accordance with the country's priorities; (ii) collect and analyze regional and local data on the main factors of production, with a view to identifying constraints and improving the base of technical knowledge that supports agricultural policy making; (iii) test technologies developed by research with a view to formulating suitable recommendations to farmers; (iv) lay the basis for modern seed industry in Cambodia capable of supplying farmers with higher yielding and better quality seed for rice and other food crops; (v) promote appropriate farming practices to ensure the sustainability of natural resources and protect the natural environment and the health of farming families from the increasing use of dangerous pesticides by educating them in integrated pest management (IPM) and other safer methods of pest control; and (vi) provide technical support to agricultural extension workers and staff of the provincial agriculture services; 9. The DOA component would consist of a (a) Capacity Building sub- component and five specific technical sub-components: (b) Soil Fertility Management and Conservation, (c) Farming Systems and Crop Diversification, (d) Seed Production, (e) Plant Protection and (f) -3 -  Integrated Pest Management (IPM). Each sub-component would include some technical assistance support and the necessary funding for training national staff, supplying equipment, construction or rehabilitation of selected infrastructure and incremental operating expenditures. Technical assistance for subcomponents (c) and (f) would be provided respectively by CIRAD (France) and the FAO Regional IPM Unit based in Manila. The cost of these subcomponents amounts to 29t of the total cost of the project. Animal Health & Production 10. All types of livestock in Cambodia suffer from very high morbidity and mortality rates, due to the inability of Government services or the private sector to deliver basic animal health services, for which there exists cost-effective technology and demand from farmers. This component of the project, to be implemented by the Department of Animal Health and Production (DAHP), would build on the experience of successful NGO livestock programs and also a small pilot scheme started under the ERP. There would be three subcomponents: (a) Disease Control and Management, which would improve the DAHP central support services for animal disease diagnosis and vaccine production; (b) a Basic Animal Health program in four provinces (Kompong Cham, Kratie, Prey Veng, Svay Rieng) where livestock raising is particularly important for the local economy; and (c) Promotion of Animal Production through an extension program for improved animal husbandry and nutrition. The cost of the component as a whole, which would be financed by IFAD, is estimated at $4.9 million, or 15t of the total project cost. Agricultural Hydraulics 11. The agricultural hydraulics component of the project is intended to strengthen the General Department of Irrigation, Hydrology & Meteorology (GDIHM) skills, knowledge, equipment and policy framework to function effectively as the MAFF department responsible for managing water for agricultural uses, and also as the only government agency with the mandate to plan the use of water resources across sectoral and local boundaries. The component would consist of four subcomponents: (a) GDIHM Capacity Building; (b) Hydrology Information System Development; (c) Small Scale Agricultural Hydraulics (irrigation and flood control); and (d) Medium Scale Agricultural Hydraulics. The four subcomponents are designed integrally, with two complementary objectives in mind: to help strengthen the technical, human and physical resources of the GDIHM; and to improve farmer incomes and food security in selected pilot provinces through provision of water for supplementary irrigation as well as fishing, livestock and domestic use. The institution building aspects, such as assistance for revising the laws relating to water rights and usage, would be coordinated closely with other initiatives in the sector, especially the technical working group on water resource issues being supported by the UNDP/DDSMS. Cost of this component would be 17t of the total project cost. Fisheries 12. The overall objective of this component, to be implemented by the Department of Fisheries (DOF), is to improve Cambodians' livelihood and -4 -  nutrition by sustaining the yield of freshwater fisheries through better management of the capture fishery and increasing the production of fingerlings for fish rearing. There would be three subcomponents: (a) fisheries conservation and management, comprising demarcation of fish sanctuaries in the Tonle Sap, habitat improvement, equipping the DOF fisheries inspection units for more effective regulation enforcement, and related information and training activities; (b) rehabilitation of a freshwater fisheries research station at Chriang Chamres on the Tonle Sap River in order to improve the production and supply of fingerlings of indigenous species for local fish raising enterprises; and (c) DOF capacity building, for which training and short term technical assistance would be supplied in policy, finance and administration, human resource development, fisheries law and statistics. This component would comprise 9t of the total project cost. Smallholder Rubber Research 13. The component, to be implemented by the Department of Rubber Production (DGPH), is designed to obtain the technical data needed to confirm the country's suitability for smallholder rubber development, through formulation and implementation of a smallholder rubber research program and training of national research scientists and technicians. The project would comprise technical assistance of a senior rubber research specialist for five years (to be provided by CIRAD, France), vehicles, office and laboratory equipment, and related operating expenses. The costs are estimated at 5t of the total project. MAFF Strengthening 14. These three components are situated organizationally at Ministry level and would comprise 19t of the cost of the project: (a) Human Resource Development & Management (HRDM): Technical assistance would be provided to establish and train a Human Resource Development (HRD) Unit reporting to the Ministry's Director General which would establish a MAFF personnel data base, train HRD managers in the MAFF and departmental personnel departments, carry out organizational and job analyses, carry out training needs assessments, and prepare training plans for each department and unit of the Ministry involved in the project. This work would provide the information and in-house skills needed to support an eventual reorganization of the Ministry as well as an expansion and more effective use of training. (b) Planning & Statistics: These two subcomponents, implemented by the Ministry's Department of Planning, Statistics & International Cooperation (DPSIC) would provide technical assistance (short and long term), staff training (local and overseas), vehicles, equipment and operating budgets needed to build the capacity of the planning and statistics offices of DPSIC to meet the Ministry's needs for basic agricultural statistics and project and program level policy and investment planning. (c) Support to Provincial Departments of Agriculture: The - 5 -  component would provide for rehabilitation of buildings, office equipment, training, workshops and incremental operating expenses for five MAFF provincial offices to support the project's field activities. Project Implementation 15. To help implement the project a Project Management Unit (PMU) would be created within MAFF, reporting to the Chairman of the Project Steering Committee. The PMU would be headed by a senior official, of the level of Under Secretary of State, and staffed by MAFF officials supported by long- and short-term technical assistance, including a Senior Project Management Advisor (the project CTA); a Procurement Specialist; a Finance and Administration Specialist; and short term consultants for establishing monitoring and evaluation systems and supervising buildings/civil works. The cost of the PMU would be 6% of the total project cost. Special Emphases of the Project 16. The project would focus on two, interlinked objectives: human resource development and institutional capacity building; and rural income growth and poverty reduction, through agricultural productivity improvements. In the process, the project would benefit women farmers and the environment. Project Benefits 17. Direct beneficiaries of the project include Cambodian agricultural staff who would benefit from intensive training and experience of the implementation of well-resourced, well-designed work programs which contribute to a coherent integrated sectoral program. However, the ultimate beneficiaries are rural communities reached by the project who depend on agriculture and fishing for their livelihoods. 18. Rural communities would benefit economically and financially through the adoption of appropriate, sustainable and financially profitable agronomic technology and low-cost measures for protecting animal health. Additional benefits would be obtained from improved water storage and drainage for increased production of rice and other crops, and from higher and sustained levels of production from freshwater fish capture and aquaculture, and (later on) from development of smallholder rubber. Project Sustainability 19. Measures to promote project long-term sustainability, notably through the planned transfer of knowledge and responsibilities from TA to Cambodian counterparts, and through systematic monitoring and evaluation of performance and results, are built into the project design. However, the full sustained benefit of the project will partly depend on whether human resource capacity developed in MAFF continues serving the needs of agricultural communities. This will partly depend on factors outside the scope of the project, such as the planned reform of the civil service and government pay scales, maintenance of political stability, and funding constraints on government budgets. Therefore, the - 6 -  sustainability and development impact of this and other MAFF development programs will depend upon the extent to which these wider objectives are met. Environmental sustainability of agriculture would be promoted through farmer training in integrated pest management, on-farm trials and demonstration of improved soil conservation methods, reduction in livestock disease and mortality, strengthened water resource planning and use in irrigation, and strengthened management and conservation of fishery resources. Project Financing 20. The estimated project cost of US$35.1 million equivalent would be financed by: (a) a local contribution of $3.35 million equivalent from the Government of Cambodia, financing about 10t of total project cost; (b) a proposed IDA (Interim Fund) Credit of SDR 18.8 million (equivalent to about US$27.0 million), on IDA terms, financing about 77T of total project cost; and (c) an IFAD Loan of SDR 3.3 million (equivalent to about US$ 4.75 million), financing the animal health and production component of the project and covering about 14t of total project cost. The proposed IDA Credit would be funded under the Interim Trust Fund (ITF) administered by IDA and subject to its special provisions regarding eligibility for procurement. These provisions would not, however, affect the IFAD Loan, financing the animal health and production component of the Project. Contact Point: H.E. Chan Tong Yves Under Secretary of State MAFF/PPU Boulevard Norodom Phnom Penh, Cambodia FAX: 855 15 911731 TEL: 855 15 913080 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by The Public Information Center week ending September 27, 1996. -7-