Final Manual

PRACTICAL MANUAL FOR PREPARING

AGRICULTURAL PROJECTS

Ministry of Agriculture, Forestry and FisheriesFood and Agriculture Organization of the United Nations

Main Author: MEY KalyanAssisted by SREY Vuthy and VALENTI Livio

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I. Acknowledgement

The Food and Agriculture Organization of the United Nations (FAO) has assisted Cambodia with a Technical Cooperation Project (TCP), called “Strengthening of Agricultural Project Formulation and Design” (TCP/CMB/3102 (D)), with the main objectives:

Long-term objective: to promote growth and reduce poverty by increasing investment and stimulating economic activities in rural areas; and

Immediate objective: to strengthen the capacity of MAFF in project formulation and planning, so that sound investment proposals will be formulated.

Under excellent collaboration between the FAO and Ministry of Agriculture, Forestry and Fisheries (MAFF), 3 training sessions (2 weeks each) on practical skills in project formulation, including theory and field visits, have been implemented between December 2007 and October 2008. More than 80 participants, representing staff from line ministries, central departments of MAFF, and the Department of Agriculture (DOA) at provincial and municipal level, have attended the three courses. As the result, in addition to knowledge acquired on project preparation, participants have prepared more than 30 project proposals initiated from their own areas. Some of these proposals are being refined in order to seek financial assistance from development partners. The project has taken many innovative approaches, and has been very much appreciated by the Royal Government of Cambodia.

This Manual has been prepared as part of the assistance by FAO. It has been launched during a seminal held at MAFF in December 2009. It is expected that this Manual will be used by participants as well as non-participants to prepare numerous, even small, agriculture projects in order to promote rural economic growth, thus reduce poverty.

Finally, I would like to extend my sincere appreciation to MAFF and its staff for the excellent collaboration and support to make the implementation of this project smooth and successful. This project would not have been so smooth and successful without their professional commitment and collaboration. Special thanks go to Mr. Kariyan MEI (former FAO/HQ staff, team leader), Mr. John Weatherhogg, and Mr. Someth Suos for designing and implementing this project.

Ajay MarkandayFAO Representative in Cambodia

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II. Introduction

The present Manual has been designed to be simple and practical for practitioners to prepare small agricultural development projects. Particularly, it is intended for use by middle level staff at both central and provincial levels. It is also important to note that this Manual is based on the general concepts of project formulation. Each donor, however, has its own guideline for the project format. Therefore, when applying to a particular donor for requesting fund, it is crucial to produce a project document that answers to the specific requirement of that particular donor. However, it is very likely that most concepts presented in this Manual would answer most of the requirements by donors.

The Manual has 5 Parts. Part I: Project Report has been designed to guide what a project report would cover, and how it can be prepared. This is the most important part. Part II presents the basic concepts and tools necessary of the project formulation. Part III provides key guides for project analysis, and Part IV presents real examples of project report. Finally, Part V includes three Appendixes, including various reading materials and reference.

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TABLE OF CONTENTS

I. Acknowledgement........................................................................................................................3

II. Introduction...................................................................................................................................4

Part I: Project report.............................................................................................................................7

Part II: Basic concepts and tools........................................................................................................21

Part III: Key guides for project analysis.............................................................................................27

Part IV: Some real examples..............................................................................................................33

Part V: Various appendixes................................................................................................................73

APPENDIX 1: ADDITIONAL READING ON THE PROJECT COSTS AND ANALYSIS......................................75

APPENDIX 2: FAO TCP GUIDELINES......................................................................................................................89

APPENDIX 3: PRA TOOLS.......................................................................................................................................139

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PART I: PROJECT REPORT

Outline of a project report

In general, a standard project proposal includes the following items:

Each item will be explained in the chapters below together with examples in the boxes. The report that includes items 1-7 is called “main report”.

Background

The background chapter should be short and to the point. It should provide only relevant information needed to establish the project rationale and scope. There is no need to include long information that is no relevant for the author to explain why the project is important and necessary. Typical topics to discuss here are:

Key features of the economic situation; Main characteristics of the agricultural sector such as land use, farm size, farming system,

main crops, and recent trends; Major constraints to overall development; Income distribution and poverty; and Development policies and social objectives.

Box 1: Project Outline

1. Background2. Project area, development constraints and potentials3. Project rationale 4. Description of activities and components5. Project costs6. Organisation and management7. Beneficiaries, benefits, and justification8. M&E, issues, and follow-up9. Various annexes

Box 1: Project Outline

1. Background2. Project area, development constraints and potentials3. Project rationale 4. Description of activities and components5. Project costs6. Organisation and management7. Beneficiaries, benefits, and justification8. M&E, issues, and follow-up9. Various annexes

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It is always convenient and useful to include small statistical tables to support arguments, instead of explaining by so many words. Make sure that the readers find it easy to follow the information and arguments presented. For example, when explaining the recent trends of crops production, showing 5 years time series production statistics is more convincing than explaining by words. The trend could be shown by giving the percentage changes that can be done easily by using the Excel programme. Also do try to round up the numbers in order to simplify reading.

Project area, development constraints and potentials

This chapter should give the reader a specific picture of the project area, particularly the socio-economic situation, the main constraints, and the opportunities for improvement. It should start by giving the description of resources in the area, and then draw out the implications of the current situation for the design of the project. It should be more analytical rather than only descriptive. Similarly, presenting small tables analysing the information in the project area is important. This chapter normally covers:

Natural resources, location, climate, soils, water resources; Farming systems, land use, technologies; People, income distribution, poverty, farmers’ organization; Institutions, inputs supply, marketing, infrastructure; and Ongoing main projects in the areas.

It is useful to include simple maps showing the project area here, or attach it to an annex. When the maps are big and complex, it is better to show in an annex.

Box 2: Example of Part of Background Description

Since the early 1990s, after decades of wars, Cambodia has achieved peace, stability, and recently good economic growth. People’s life has improved substantially, and although still high by regional standard, the poverty incidence has been reduced. Nevertheless, the socio-economic issues resulted from the widening gaps between rich and poor, and between urban and rural remain one of the main concerns of the government. To mitigate these gaps, as spelt out in the Government Rectangular Strategy, it has adopted the Agricultural Diversification Policy as means to increase income in rural areas, and hence reduce poverty. Development of sericulture is seen as an important part of this policy. While this macro policy has been correctly adopted, the Government institutional capacity is still inadequate to translate the policy into practical action plans, which would have tangible impacts on people’s livelihood.

Box 2: Example of Part of Background Description

Since the early 1990s, after decades of wars, Cambodia has achieved peace, stability, and recently good economic growth. People’s life has improved substantially, and although still high by regional standard, the poverty incidence has been reduced. Nevertheless, the socio-economic issues resulted from the widening gaps between rich and poor, and between urban and rural remain one of the main concerns of the government. To mitigate these gaps, as spelt out in the Government Rectangular Strategy, it has adopted the Agricultural Diversification Policy as means to increase income in rural areas, and hence reduce poverty. Development of sericulture is seen as an important part of this policy. While this macro policy has been correctly adopted, the Government institutional capacity is still inadequate to translate the policy into practical action plans, which would have tangible impacts on people’s livelihood.

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Project rationale

This chapter leads the reader to the point at which he or she can understand the overall need, justification and feasibility of the project proposals that are to be made. This is the most important part of the report. This should be sharp and concise. Based on the information already given in the previous chapters, its purpose is to complete the explanation of why this project is needed, define its overall objectives, and indicate what kind and scale of project would be best suited to resolve the specific problems of the area. However, it is not in this chapter that the actual project proposals will be discussed and presented.

At the same time, this is the most difficult chapter to write. Here, the author must have a clear understanding of the project area and project concept he or she wants to present. In order to build up the argument, it is useful to make reference to:

The country goals for the rural and agricultural sector; The food need or market opportunities; Its comparative advantage of producing agricultural crops; and The rational use of natural resources.

From these considerations, the general objectives of the project should be derived and presented. After discussing the general needs and objectives, it is important to move to explaining the strategy and justification of specific actions. For this, it is convenient to explain the opportunities which exist in the project area. The argument on the opportunities could include the following topics:

Box 3: Example of the Description of Constraints

Silkworm disease: this problem has been identified (more than 50 percent silkworm mortality) in all silkworm rearing areas. This disease problem occurs essentially due to: a) the lack of a technical institution that can properly control and supply disease-free silkworm eggs and b) improper technical handling of silkworm rearing activities at farm level;Low productivity of cocoon production: the productivity is extremely low due to the combined effects of the disease problem, the low quality of the silkworm varieties, and rudimentary production technique. The current yield of cocoon production in Cambodia is less than 0.2 tonnes/ha of mulberry as compared to its potential of about one tonne/ha;

Low quality of yarn due to lack of proper reeling system: most reeling is done manually. While manual reeling process has some value in terms of producing “traditional” products, this process produces low quality yarn; and

Lack/shortage of technical capability: in research, production, and management of silk production. For these reasons, Cambodia would need massive training for both Government technicians and raw silk yarn producers, at all levels

Box 3: Example of the Description of Constraints

Silkworm disease: this problem has been identified (more than 50 percent silkworm mortality) in all silkworm rearing areas. This disease problem occurs essentially due to: a) the lack of a technical institution that can properly control and supply disease-free silkworm eggs and b) improper technical handling of silkworm rearing activities at farm level;Low productivity of cocoon production: the productivity is extremely low due to the combined effects of the disease problem, the low quality of the silkworm varieties, and rudimentary production technique. The current yield of cocoon production in Cambodia is less than 0.2 tonnes/ha of mulberry as compared to its potential of about one tonne/ha;

Low quality of yarn due to lack of proper reeling system: most reeling is done manually. While manual reeling process has some value in terms of producing “traditional” products, this process produces low quality yarn; and

Lack/shortage of technical capability: in research, production, and management of silk production. For these reasons, Cambodia would need massive training for both Government technicians and raw silk yarn producers, at all levels

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The existence of good markets; The technical possibility to increase the productivity; The possibility to make sustainable use of natural resources; and The existence of farming communities to develop such opportunities.

Finally it is logical to discuss major constraints which prevent the successful and sustained

exploitation of such opportunities. Therefore, the proposed project intervention is the key to remove such constraints, and thus open up the potential in the area for development. By such a sequence, the concept of a possible project is build up. In this connection, it is important to review the concept, experience, and lessons from other projects that tried to tackle similar issues. It is crucial to make sure that the newly proposed project is not going to repeat mistakes made by other projects.

Once the rationale and conceptual case for a project has been defined, attention needs to be made on how the project will be designed. This design normally takes the following process: define the objectives, review available options, and narrow down options by applying certain criteria. The project design normally treats the following items:

Selection of the locations for the project; Selection of the target population, and any special targeting measures; What is the appropriate scale for the project; Define the range of components to be included in the project; Choice of technical strategy and technology; Selection of organizational arrangements; and Define the appropriate time frame for the project, and its phasing.

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Description of activities and components

Up to this point, the main elements of the project have been discussed and presented: background, constraints and opportunities, project rationale, project concept and objectives, and the project design. In this chapter, the writer should define and describe in detail what’s kind of concrete activities that the project is going to propose, their phasing, their costs, and how they would be financed and procured. In describing a project, it is convenient to distinguish between project objectives and their related components.

The main purpose of this chapter is to explain the concrete actions and interventions that will be proposed by the project. Do remember that, these actions normally require fund. For example, building research station, providing equipment, materials, training, conducting extension on new technology to farmers etc… all of these actions would require fund. It is not in this Chapter that the writer would

Box 4: Example of Project Rationale

Many studies undertaken by various donors indicated that Cambodia has good potential for the production of silk. However, this potential (including the availability of labour force, land, and suitable climate) has not been fully exploited. In addition to the national potential, the international trend is also favourable for the Cambodia silk subsector, in the long run. This is primarily due to the rising production costs, particularly labour and land, in the main producing countries like China.

Most of donors’ assistance to the silk subsector so far has been focused on processing, weaving, and marketing. Progress has been made in these areas. There is also a good solid and increasing demand for silk products from both national and international markets. However, this increasing demand is being met by imported silk yarn from China and Viet Nam. It is estimated that the current national demand for silk yarn is about 400 tonnes/year, while the local production is less than five tonnes/year. The local production is being concentrated particularly in Siemreap and Banteay Meanchey provinces. With the imported price of USD 25 000/tonnne, the import bill is about USD 10 million paid to foreign producers every year.

Furthermore, the local raw silk production is in decline, and facing major challenges. This is particularly evident even in the so-called “Mecca of Khmer silk” in Phnom Srok in Banteay Meanchey province. Raw silk production is the main economic activity of the farmers in that area. However, due to decline in raw silk production, it was reported that many farmers are losing faith in raw silk production activities, and want to migrate to Thailand. If this situation continues, Phnom Srok will soon become “One Village, No Product”.

Although there is expanding demand for silk products, the current system of silk production – processing – marketing does not sufficiently benefit the poor in rural areas. This is primarily due to the fact that the silk value chain is not well connected to allow the participation of the rural producers. They are excluded from the process, as rural and urban weavers depend almost exclusively on imported silk from China and Viet Nam. The assumption that the demand generated by the market development alone would automatically pull supply-production from the rural areas is simply not working in the Cambodian silk context.

Box 4: Example of Project Rationale





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explain about the output of the project, which will be discussed in the later part of the report. This part is basically for the discussion of inputs, i.e. activities of the project.

Also it is useful to provide both the General Description and the Detailed Description of the project.

General description: This section, which should be no longer than one page, presents the reader with a brief overview of the project. It can be often quoted more or less unchanged in the Summary and Conclusion at the beginning of the report. The usual content includes:

A short description of the project long term and short term objectives; A brief summary of each main component; A reference to total costs and phasing; and An indication of organizational arrangements.

Detailed description: The aim of this section is to describe the project in more detail so that the reader acquires a fuller understanding of each of its components and the inter-relationship between them. The nature and scope of project actions must be described in sufficient detail. But lengthy descriptions, specifications, design and cost estimates are tedious and should be placed in supporting annexes.

The core of this section is usually a separate summary, for each component, of the main activities, its physical quantity, and the broad estimated costs. The project activities are clustered into various components for ease understanding and implementation. For an irrigation project for example, activities could be clustered into 3 groups or components: one for irrigation engineering and construction, one for agricultural support, and the last one for social support such as forming farmers into associations. Do remember that each component includes various activities. And each activity involves costs and requires financing support by the project.

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Project costs

It is extremely important to establish sound cost estimates, as they provide the basis for determining the project financial and economic viability, and its funding. Generally, the project costs are estimated by component, and clustered into Investment cost and Recurrent cost. The investment cost is the cost necessary to create assets, does occur only during a limited period of the project, and are not required regularly. Training is normally classified as investment cost. The recurrent cost is the cost required to support the operation and maintenance of the project. And this cost will be required regularly, even after the project ends. For example, buying a motorcycle is an investment cost, and running and maintenance of the motorcycle is recurrent cost. The same applies to building roads. Generally, donors are willing to help building roads as it is within a limited time, however they don’t want to be involved in the maintenance because it will take long time. Clearly, without securing project funding i.e. without convincing donors or the Ministry of Economy and Finance, project cannot be implemented.

The total project costs would include the capital costs of civil works to be constructed, machinery and equipment to be purchased, incremental salary costs of additional staff to be employed, and incremental operating costs over the implementation period of all kinds including vehicle and office operating costs, rental charges etc.

Box 5: Example of Project Objectives and Components

Objectives:

The long term objective or goal of the project is to reduce the rural poverty and to create employment through the development of sericulture which is socially and economically very attractive.

The immediate objectives of the project are: a) to strengthen basic technical, institutional, and physical capacity (including silkworm egg production, improve breeding, silkworm rearing, cocoon reeling) necessary for further development of the silk subsector; and b) to enhance silk production through the formulation of a Silk Development Programme for future expansion phases.

Components/activities:

Establishment of a Silkworm Egg Production Centre (SEPC) with a capacity of 5 000 cases of disease-free silkworm per year (20 000 silkworm eggs/cage);Establishment of a small cocoon reeling facility to demonstrate the efficiency of modern reeling technique, and to test the product;Setting up eight “Demonstration Farms” in important existing and potential areas, to show and promote new techniques in silkworm rearing, including mulberry sapling plots (Kg Speu, Takeo, Kampot, Kg Cham, Kratie, Pursat, Siemreap, and Banteay Meanchey); this will be expanded to other provinces when additional budget is available;Capacity building of Government staff and producers through technical training to improve productivity and quality of cocoons and silk yarn; andFormulation of a Silk Development Programme, for future expansion phases.

Box 5: Example of Project Objectives and Components

Objectives:

The long term objective or goal of the project is to reduce the rural poverty and to create employment through the development of sericulture which is socially and economically very attractive.

The immediate objectives of the project are: a) to strengthen basic technical, institutional, and physical capacity (including silkworm egg production, improve breeding, silkworm rearing, cocoon reeling) necessary for further development of the silk subsector; and b) to enhance silk production through the formulation of a Silk Development Programme for future expansion phases.

Components/activities:

Establishment of a Silkworm Egg Production Centre (SEPC) with a capacity of 5 000 cases of disease-free silkworm per year (20 000 silkworm eggs/cage);Establishment of a small cocoon reeling facility to demonstrate the efficiency of modern reeling technique, and to test the product;Setting up eight “Demonstration Farms” in important existing and potential areas, to show and promote new techniques in silkworm rearing, including mulberry sapling plots (Kg Speu, Takeo, Kampot, Kg Cham, Kratie, Pursat, Siemreap, and Banteay Meanchey); this will be expanded to other provinces when additional budget is available;Capacity building of Government staff and producers through technical training to improve productivity and quality of cocoons and silk yarn; andFormulation of a Silk Development Programme, for future expansion phases.

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In general, a project would be implemented over a few years period, say 5 years. For example, let us assume an irrigation project aimed at developing a total area of 5,000 ha. This 5,000 ha cannot be developed at once, and it has to be developed gradually over a 3-5 years period. The area development will start small in year 1 and year 2, and then gradually getting bigger over time. This is called phasing, which is very important in design a project. And the project costs would follow the phasing of the project.

Physical contingencies are included in the project costs to allow for uncertainties and to compensate for possible inaccuracies in the estimates of work quantities. The rate of physical contingencies to apply varies according the degree of confidence placed in the estimates. This rate is normally at around 10-15% of the total project costs. Be careful here: in general one tends to increase this rate; if this rate is high, this means that one’s estimate is not good. So, making good estimate is the first priority. Price contingencies may also be estimated to demonstrate the probable escalating effects of inflation on project costs and hence the magnitude of financing required.

The FAO and the World Bank have jointly developed a computer programme called COSTAB to handle all these aspects particularly for big investment projects. For small projects, Excel programme is considered sufficient. However, do show transparency in the calculation, i.e. show all assumptions used, and avoid showing only the result. The standard cost table should show units, quantities, prices, and by project years as shown in the table below. This kind of table would facilitate the implementation and monitoring of the project.

Box 6: Investment Cost and Recurrent Cost

Investment costCivil work (building, roads, canals etc)Equipment, materials Vehicle, motorcycleTA, training, study, visitAll inputs (seeds, fertilizers, office supplies etc)Recurrent costIncremental salary (only the increase with the project)Operating costs (gasoline, maintenance of vehicle and building)

Box 6: Investment Cost and Recurrent Cost

Investment costCivil work (building, roads, canals etc)Equipment, materials Vehicle, motorcycleTA, training, study, visitAll inputs (seeds, fertilizers, office supplies etc)Recurrent costIncremental salary (only the increase with the project)Operating costs (gasoline, maintenance of vehicle and building)

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Organization and management

This chapter explains how and by whom the project would be executed and implemented. Once the technical and economic parameters have been defined, the establishment of efficient arrangements for management is likely to be the key to project success. The discussion here should concentrate only on the particular institution arrangement which would be adopted for project implementation.

To assure better sustainability, there is tendency to use existing organizations and departments to be supported and reinforced by the project, to take the lead in project management. Also important are human resources in the organizations who take initiatives, make decisions, draw up plans, approve expenditure, hire staff and decide routine supports or interventions. The chapter should also refer to the jobs and the required qualifications of the key individuals who will make the system work.

The entities which will be responsible for the various aspects of project execution and operation should be identified. How they would carry out their responsibilities should be explained. The aim should be to show that they are the most appropriate bodies to assume the particular assignment, and that they have the powers, structure, staffing, equipment, finance and motivation to undertake there respective functions effectively.

A distinction should be made between policy, advisory or coordinating bodies, and those with executive power. Bodies in the former categories may decide or make recommendation on overall policy, distribute assignments between different participating entities, approve plans, budgets, account or reports, authorize major expenditures or contracts, or hire and fire top level staff. Executive bodies, on the other hand, supply the former entities with the basic information on which to exercise these responsibilities. They then implement their decisions and report back the results.

Box 7: Example of Cost EstimatesBox 7: Example of Cost Estimates

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Beneficiaries, benefits, and justification1

The project outputs, benefits, beneficiaries, and why the project is justified (or does the project make sense when we compare costs and benefits) will be discussed in this Chapter. Before the project benefits can be estimated, it is essential to explain the technical changes which the project is expected to introduce. Then do make it clear that they are compatible with the physical and socio-economic characteristics of the project area. Only if it is shown that the proposed technical changes match the circumstances, the aspiration of the beneficiaries and the perceived risks that it can be assumed that the beneficiaries are ready to adopt the new technical changes. The chapter should quantify the returns to typical individual adopter of technical changes, by showing the crop models analysis (one hectare), and then aggregate to the project level. That is in the total, how many tons of paddy, maize, soya beans ,etc. are expected to be produced by the project. The total number of project beneficiaries will be estimated, preferably providing numbers of men and women.

1 For more explanation concepts and analysis, please see Part II and Part III.

Box 8: Example of Project Organization and Management

As discussed in the previous section, the institutional set-up could present as a risk, thus require special attention. In the silk value chain, there are mainly three parts: production, processing, and marketing. An umbrella organisation to coordinate all the three parts is considered necessary. The “One Village One Product” (OVOP) National Committee, under the Office of the Council of Ministers (the originator of the request for the FAO assistance) is appropriate to play the coordinating, knowledge sharing, and monitoring roles. In other words, it is responsible to coordinate and oversee the development of the whole silk subsector. OVOP would therefore coordinate and oversee the overall implementation of the project, and share silk information and implementation progress with other Ministries and Agencies dealing with the overall silk subsector.

The international practices suggest the following: up to raw silk production is under Ministry of Agriculture; reeling and weaving under the Ministry of Industry; and marketing and trade under the Ministry of Commerce. Through many discussions with the Government, it was agreed that the Ministry of Agriculture, Forestry and Fisheries (MAFF) will be the Implementing Ministry of this proposed project, because it has basic facilities and technical expertise that could be mobilised and trained, at the least cost. And MAFF, through its General Directorate of Agronomy (GDA), will be in charge of implementing the project.

Box 8: Example of Project Organization and Management


The international practices suggest the following: up to raw silk production is under Ministry of Agriculture; reeling and weaving under the Ministry of Industry; and marketing and trade under the Ministry of Commerce. Through many discussions with the Government, it was agreed that the Ministry of Agriculture, Forestry and Fisheries (MAFF) will be the Implementing Ministry of this proposed project, because it has basic facilities and technical expertise that could be mobilised and trained, at the least cost. And MAFF, through its General Directorate of Agronomy (GDA), will be in charge of implementing the project.

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It should demonstrate that the changes would be technically and financially sustainable. The financial attractiveness to farmers of any proposed activity normally depends very much on the relationship between the prices of inputs and of outputs which they intend to produce. And the behavior of prices, especially for farm outputs, may respond to changes in the supply and demand situation of the products. If the output is internationally traded such as rice, its price links to the international market prices. And if the output would be only consumed by local markets, it prices would be determined by the supply-demand of the local markets.

Proposed changes need to be explained briefly but clearly, highlighting those features which distinguish them from current practices. Particularly, impact on crops yields will be estimated, and a small table will be prepared to show yields with and without project. While yields are expected to increase, the production costs also will increase. All impacts on yields and benefits to farmers will be captured in the crop models analysis. Unless it is clear that farmers will make money from adopting the proposed project, it is difficult to convince donors and policy makers to approve the project. Therefore showing a clear financial attractiveness to the farmers is crucial.

The financial attractiveness to farmers generally depends very much on the relationship between the prices of inputs and the prices of outputs as discussed above. The writer should discuss the prices trend,

Box 9: Format of a Crop Model (1 ha)Box 9: Format of a Crop Model (1 ha)

Box 10: Example of Yields With and Without ProjectBox 10: Example of Yields With and Without Project

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and assess the market to demonstrate that additional products by the project would find the market access. Normally the farm gate prices at the time of analysis are used, and assumed to be constant during the analysis period. The farm gate prices are the prices at the farms, not at the markets. It is convenient to attach a small table showing the inputs and outputs farm-gate prices used in the analysis.

Finally, this chapter should provide sufficient information to the decision-makers regarding the advantages, disadvantages, and risks of embarking on the proposed project, from a national point of view. Normally, the economic rate of return (ERR)2 is used to demonstrate the economic viability of the project. However, this alone is not enough. In addition, this chapter should show that the project is justifiable in the context of national resources availability, and are consistent with the government economic and fiscal policies. Thus, for example, it is not enough simply to demonstrate that an irrigation project would generate a satisfactory economic rate of return if there are, within the same country, opportunities for producing the same level of output at a lower cost from rain-fed farming.

For projects aimed at reducing poverty, the chapter should provide the reader with estimates of the without and with project changes in income distribution situation together with other indicators (such as nutrition) of the project’s expected impact on rural poverty. The costs per beneficiary and the expected earnings of beneficiary vis-à-vis wages in other sectors would also be relevant indicators.

The expected environmental impacts – both negative and positive – should be discussed. The main purpose is to focus on the expected effects of the project on the environment. Also, it should include the measures adopted in the design of the project to mitigate any adverse impact on the environment.

2 See Part III.

Box 11: Example of Farm-Gate Prices of Inputs and OutputsBox 11: Example of Farm-Gate Prices of Inputs and Outputs

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M&E, issues, and follow-up

The monitoring and evaluation (M&E) system is an integral part of the project document. After a project has been designed, a M&E system must be in place to monitor the progress of project implementation and to evaluate the project impact, to ascertain if the project has been implemented as planned, and that it has achieved its objectives as intended. Normally, the M refers to the monitoring of the physical implementation of the project, whereas the E, refers to the evaluation of the impact of the project. The basic element for this M&E system would include the institution responsible for M&E, the methodology for M&E, the indicators, and the reporting system.

In preparing a project, there are always issues that require solution and decision by decision makers. These issues could include policies as well as technical choices. It is important that the writer raises and presents these issues openly for broader consultation and discussion in order to achieve final consensus. The policy issues may include for example: (i) the level of cost recovery in public sector irrigation schemes; (ii) the ownership of tree planted under the social forestry program; (iii) the respective roles of the public and private sector in the provision of agricultural services; and (iv) the roles of NGOs.

Finally, the project report must indicate what are needed to be done next, before the project implementation can take place. This may include further technical studies, for example the land evaluation study to confirm the area under possible irrigation, to clearly define the project scope.

Various annexes

Up to now, i.e. items 1-7 are included in the “main report”. The main report is the most important part of the project document. So, all important arguments and information should be presented in this main report. And this main report should be well written, concise, well organized, and should not be too long. Therefore, whatever detailed and specific information on technical aspects, detailed analysis, technical drawings and maps etc. which require many pages of explanation should be organized and presented in Annexes. Generally, there is no limitation on the number of Annexes. Therefore, do remember to organize Annexes by types of information. For example, technical analysis, project analysis, maps, drawings, statistical data etc. each would be better presented in one separate Annex.

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PART II: BASIC CONCEPTS AND TOOLS

Basis for a project

Many situations can provide the basis for consideration of a project. Some of these relate to needs, such as the need to address rural poverty or environmental degradation, the need to respond to farmers’ ambitions (for example introducing or expanding the area under new crops), the need for making better use of resources (such as reclaiming land or making use of available water), the need for exploiting a market opportunity (which may include assistance to production of a crop where the area has some comparative advantage), and for removing constraints (such as lack of water, inputs, credit and advice).

Choice of components

Clearly this depends on the type of project to be attempted. In general project and component design should aim to address the main constraints to development. In most cases a project would consist of several inter-related and mutually supporting components. For example an irrigation rehabilitation project would most likely also include an agricultural development component, and farmers’ association support component. That way the productive use of the improved water supply is more assured.

Data and data collection

Good project preparation requires collecting data already available and getting information from all the stakeholders. Collection of data should be started right at the beginning of contemplating a project. Available data comes in several forms which would include statistics on population, physical resources and infrastructure and perhaps also information on incomes, and agricultural statistics giving areas under each type of crop, yields, livestock statistics and perhaps something on farmers’ assets, such as machinery and equipment. There may also be information on agricultural trade with quantities of commodities and prices.

In addition to these sources of data there may also be relevant information from studies relating to the project area or nearby similar areas, or there may have been an earlier project which would also provide a lot of useful information. All of this information taken together would give at least some idea of the agricultural situation and the rural economy before talking to farmers and other stakeholders.

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Defining project scope

The project’s overall scope should be decided not only on the basis of need or technical possibilities, but also from the viewpoint of what is going to be within the competence of the local farming communities, the capacity of supporting institution, the absorptive capacity of markets for both inputs and outputs, and in particular the institutional capability of the implementing agencies, such as the government line departments.

Factors influencing project success

First is that simple projects are generally more successful than complicated ones. The second is that in most instances the main constraint and most likely point for failure is the institutional competence and capacity of the implementing agency. This indicates the need in project design in trying to minimize stresses on the implementing agency. This includes all sorts of methods, such as devolution and making use of private sector where possible or Non Government Organizations (NGOs), giving the implementing agency more of a supervisory role, rather than one of being executive. Remember that project design is a relatively easy task, compared to project implementation. Don’t be tempted into making design too beautiful and complicated. Keep it simple, otherwise “the best may be the enemy of the good”.

Famers’ interest

Most guides to project preparation have a larger section on assessment of the views of beneficiaries and all those individuals, groups and institutions with some sort of connection to, or interest in the project. Great energy and effort has been put into developing procedures for ensuring that project objectives are soundly based and realistic. This has led to the development of all sorts of processes and the use, or development, of many so-called “tools”. The aim of all of these is to ensure that all possible opportunities and constraints concerning development have been identified and that every individual, group or agency with an interest – the so-called “stakeholders” in the project have been able to express their views.

Funding

Project funding (or money) would need to be secured before implementation. For large project, normally project financing normally consists of two parts: that provided by the financing institution (FI) and/or donor, and that provided from Government budget. Particularly for large projects an FI and a donor may both be involved or sometimes even more than one FI. If all the finance is used jointly this is called joint co-financing, but if the funds are separately channeled to particular components or parts of the project it is referred to as parallel co-financing.

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How to assess farmers’ interest

The approach to talking to stakeholders and listening to their views can be flexible. Typically discussions can be with individuals, as groups, or as a stakeholder workshop (frequently all three). The advantages and disadvantages of each are fairly obvious. Much has also been written on how to set about discussions – the advantages or otherwise of drawing up lists of questions so as to have structured interviews. The important thing is to make it easy for the stakeholders to provide their information, to spend as much time as possible listening and recording their information and opinions. Also be careful not to overstretch their attention span. If you go on for too long asking questions you will get some very odd answers!

Which methods you use is really up to you to decide, depending on the individual project area and cultural situation. For example all financial institutions today are very keen to see the maximum involvement of women in projects, but in many cultures it is not normal for women to attend meetings. Even in cultures where they can, they may often be too tied to the house and family to be able to attend a meeting. Where women have already formed groups the situation is easier, particularly if there is a woman staff officer to facilitate the discussion and record the information given.

Identifying project proposal

One starting point in project formulation would be “Assessment of farmer interest”. At the same time, good knowledge of the agricultural situation, the rural economy and existing living standards of the rural population are essential for any project identification. Without such knowledge it is impossible to identify the overall project scope, or to decide whether such an activity or group of activities is realistic. Generally, various macro studies on overall agricultural economy such as the agricultural sector study or the livestock sub-sector study are required before good projects can be identified. In the overall studies, the pro and con, and the advantages and disadvantages of the sector or sub-sector are identified and analyzed.

Justification of a project

Projects are justified by the benefits they provide. These can be directly quantifiable benefits (such as tons of paddy, or increases in income), or qualitative benefits (such as improvement in groundwater resources, or forest cover, or institutional strengthening). This last is particularly difficult to estimate. After the project benefits have been identified, the next step is to compare the benefits and costs to be spent by the project. The relationship between project benefits and costs has to be reasonable in order to assess that investment in a project is justified. If the project benefits are too small compared with the project costs, the project is considered unjustified. The project analysis provides the basis information to the decision makers to make right judgment whether a proposed project should go ahead or not.

Objectives

The main objective of projects is improvement in incomes and living standards of the rural population. In order for beneficiaries to participate in project activities they must be able to see that it is

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in their interest to do so. If this motivation is lacking the chances of the project being successful are likely to be slim. This aspect needs to be very clear at the outset. Projects may have some physical objectives, such as improving irrigation water availability or better conservation of forest areas, but neither of these can be the principal project objective. In the first case the improved irrigation water is only valuable if some use is made of it in increasing agricultural production and hence incomes. In the second case the greater forest conservation will be achieved as a result of measures to improve incomes and living standards, not as the prime objective of the project.

Origins of the project

In fact the projects could come from various sources: the dream of the leaders, Minister and senior Government staff, development partners, and local initiatives. Some of the biggest projects are reported to be the result of dreams, like Chairman Mao Tse Tung and the Three Gorges project. Not infrequently they are the idea of a head-of-state or senior politician or civil servant. Looking at the project design materials of the development partners one gets the impression that projects are generally started as a result of their country development strategy work.

As we have already discussed under project objectives a major determinant of project success is the degree of motivation and participation by the beneficiaries. For this reason it makes sense that project ideas should reflect the reality in the field, and be fitted into the overall provincial and national plans. Obviously there is the need for a lot of interchange of information, to and fro between national and provincial government planners on the one hand, and lower level field staff and farmers on the other.

Project and program

A program is defined as “a planned series of events”. Projects are therefore much more time-bound than program. A number of projects may indeed, make up a program. This is not without significance, since most tasks in the agriculture sector take time to develop and is may be difficult to complete all the activities to make a project successful within the time-frame of around five years, normally allowed by the financing institution.

Project cycle

In explaining a project, it is recognized that in general there is a kind of cycle or life. The figure below is taken from a European Union (EU) document, and obviously it shows a project cycle from development partners view points. However, it could be started from an overall study of the sector (in the figure, this is called Programming). Following this the project then moves through the successively stages of Identification (initial design of the project concept), Appraisal (further detailed studies), Financing, Implementation and Evaluation (assess if the project achieves the objectives). At each of these various stages various documents need to be prepared and decisions taken.

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Tools used in the project preparation3

SWOT analysis, problem trees, objective trees, and logframe: Some of the tools mentioned are aimed at sorting and ranking the information obtained. Often this involves sorting the data by way of a matrix table so that any pattern in the information or particular features become more recognizable. In this way Stakeholder Analysis lists all the groups of individuals and agencies having an interest in the project, records their interest in the development subject (project), their attitude (positive or negative), the resources they have to support or weaken the project, and their particular mandate or responsibilities. Similarly project ideas or stakeholders can be subjected to Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis. In groups or workshops stakeholders can take part in creating a Problem Tree, followed by an Objectives Tree.

3 For more details, please refer Appendix 3 in Part V.

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PART III: KEY GUIDES FOR PROJECT ANALYSIS4

Agricultural benefits

For agriculture projects increased production can come from: (a) increasing the cultivated area by clearing forest or rehabilitating wasteland; (b) increasing cropped area, by increasing the intensity of cropping on the area already cultivated; (c) increasing unit area yields; and (d) a mixture of more than one of the above.

Typically projects involve a change in the farmers’ cropping patterns and practices – introducing new crops, expanding the area of more profitable crops, or improving the technology of growing the existing crops. In order to quantify the effects of such changes one needs to draw up little crop budgets in order to see the costs and benefits of each crop in “without the project” and “with the project” situation.

Incremental benefits

When considering the project benefits for the analysis, it is important to measure only the incremental benefits. The incremental benefits are defined as the difference between the benefit with the project and the benefit without the project. It means that even there is no project, there are already some kind of benefits. For example in the case of the traditional farming system without using good seeds and fertilizers, there is already some kind of production, although small. When the project introduces new farming techniques, the production will be much bigger.

Project benefits

Investment in any project can be made only if there are sufficient benefits expected to be generated from the project. For example, the benefit from the investment in using good seeds and fertilizers is the increase in agricultural production. The benefit from the investment in building road and bridge is the improvement in transport, thus reducing the costs of operation and maintenance of vehicle, reducing time for transport, and opening up to new productive areas. The investment in hospital would reduce illnesses, thus reducing expenditure on health, and making people stronger and more productive.

4 For more details, please refer appendixes in Part V.

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With project and without project

We say “without” and “with” rather than “pre-project” and “with project” since over time we can expect that there might be some increase (or decrease) in performance even without the project, but in reality in most situations the “pre-“ and “without project” situations are more or less identical.

Crop budgets

Always remember that the “with project” crop budgets are supposed to show what might happen at full project development in the average farmer situation. It is not expected to show the best performance. Some farmers will not adopt improved practices, for all sorts of reasons. Also for many reasons some farmers may not benefit from project improved services. Therefore assumptions in the crop models on yield increases should be kept conservative.

In order to makes things as simple as possible these comparisons are generally made at the gross margin level – gross margins being defined as total value of crop production, less variable costs such as seed, fertilizer, cultivation costs and hired labour. In fact in practice we often include some elements of fixed costs, such as for example water charges.

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You will need to have these little crop budgets for every crop produced, and will probably need separate crop budgets for the same crop produced in different seasons – that is if there are significant differences in methods of production and yields.

Farm gate prices

The farm-gate prices are the prices at the farm. This concept has been defined to make sure that they are different from the market prices. When farmers use fertilizer for example, their costs are not only the costs of fertilizer at the market, they need to add all the costs to transport the fertilizer from the market to their farms. On the contrary, for the agricultural produces, the farmers will not receive the prices at the market. They have to deduct all the costs to bring their produces to the market. Otherwise, they will sell their products to traders who come to their farms at their farms. The whole idea of using farm gate prices is to clearly assess the impact on farmers.

Cropping patterns

This is one of the concepts used in addition to crop budget concept to assess the benefits of the project. The crop model or crop budget (one hectare) is used to estimate the impact of the project on one crop only, say for paddy or maize. However, in the real farming system, the farmers would produce a mixture of crops, for example paddy, maize, soya beans, and vegetable at the same time. The cropping pattern assumes all these crops, and estimates the changes in “Without Project” and “With Project”, as shown in the table below.

Crop Model, Upland Rice (one hectare)

Unit Price Without Project 1/ With Project 2/Riel/Unit Quantity Value (000Riel) Quantity Value (000Riel)

I. Gross Income Paddy kg 1,900 1.4 2,660 2.6 4,940 By-product lump-sum - - Total 000Riel 2,660 4,940

II. Costs Seeds kg 5 150.0 750 120.0 600 Urea kg 4.4 60.0 264 150.0 660 Super phosphate kg 1.2 100.0 120 250.0 300 Insect; weeding l-s 50 150 Manure kg 0.01 - - 1,500.0 15 Pesticide lump-sum - 300 KCL kg 4.3 60.0 258 120.0 516 Land preparation ls - - Irrigation ls - - Miscelleneous ls - - S.total, exclude labour 000Riel 1,442 2,541 Labour pers-day 25 175.0 4,375 120.0 3,000 Total, include labour 000Riel 5,817 5,541

III. Gross Margin, exclude labour 000Riel 1,218 2,399 Gross Margind, include labour 000Riel (3,157) (601)

IV. Return to labour 000Riel/pd 175.0 7 120.0 20

Sources: PCU and mission estimates.1/ low input.2/ improved.

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Rainy Season Dry Season Rainy Season Dry Season --------------------------------------Unit Ha ------------------------------

Crops Paddy 0.6 0.8 Maize 0.2 0.3 Soya beans 0.2 0.3 Vegetable 0.1 0.2 Total 0.6 0.5 0.8 0.8G. Total (%) 110% 160%

Without Project With Project

Cropping Pattern per One Hectare Farm

Full development

Because of the project intervention, normally it is assumed that the yield of crops proposed in the project would increase. For example by having better water management, using good seeds and fertilizer, and practicing good farming method, the rice yield would increase from 2 tons to 3 tons per hectare. In the analysis, one cannot assume the yield to reach 3 tons right from year 1 of the project. The construction of the irrigation scheme will take time, and similarly, it would take a few years to convince farmers to use modern technology. As the result, the crop yield would increase only gradually to reach the maximum 3 tons over 4 years, for example. In this case, the full development is 3 tons per hectare to be realized in year 4.

Financial analysis

The financial analysis, using financial prices, is a method to assess the impact of a proposed project on financial position of private entities, such as farmers, associations, private companies, and autonomous state enterprises – but in general not for government departments. For example, with the project how much an average farmer will gain (or lose)? This kind of calculation can be done using the crop model method as explained in the previous sections. Or what kind of financial impacts on a private enterprise which intends to invest in producing animal feeds promoted by the project. For public entities, a simple financial analysis could be carried out to assess for example, the project impact on the revenues and expenditures of the government.

In many cases, all the investments are made (or paid) by government and the farmers’ main

contribution is only their own labour. In this situation a financial rate of return (FRR) cannot be calculated to assess the impact on farmers. Clearly, they will gain form the project. Where farmers are investing, such investing in aquaculture or raising chicken, the FRR can be calculated. However in all cases, one of the best methods to assess the impact on farmers is the calculation of return per family labour day.

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Economic analysis

The purpose of economic analysis is to estimate the attractiveness of the proposed investment from the national perspective, i.e. the gain or lose to the national economy as the whole. In this case, economic prices are used, and reflecting the economic concepts. Items such as taxes, duties and subsidies are all “transfer payments”, thus these items have to be excluded from the calculations. Also all project inputs and outputs have to be valued at their opportunity cost.

For labour, its economic value will be estimated by asking how much they would earn in the situation where there is no project, i.e. its opportunities costs. If there is considerable unemployment or under-employment, it can be considered that labour value would be below the market rate. Similarly in periods of labour scarcity, its value would be equal to the market rate. Often, in situations where there is no significant unemployment, the market wage rate (or financial rate) can be considered as to reasonably reflect economic value.

In all these calculations, incremental costs and benefits are considered. As far as family labour is concerned, it is obviously employed in both “without” and “with” project situations. If there is any significant increase in family labour employment the incremental amount should be costed in the calculations, using the same value as for hire labour

Internal rate of return (IRR)

For investment project, it is always expected that it will generate benefits. For example, the Government builds roads, because it expects that the road will generate benefits to the national economy. While the project cost (or investment) would incur in the short term during the project implementation (say Project Years 1-3), the project benefits tend to be generated over a longer period of time (say Project Years 3-20). Because the costs and benefits would occur at different years, and the values of dollar at Year 2 and Year 15 for example are different, it is difficult to have a reasonable comparison between the project costs and the project benefits. To resolve this time-value problem, the concept of the Internal Rate of Return (IRR) has been introduced. In this case, for easy understanding of the IRR concept, the project could be considered as a bank. If investment is made in this particular project (bank), how much return (interest) could the project (bank) pay to the investors. If this rate is too low, the investors (Government, donors, private sectors) are not interested in investing in the project. For simplicity, the Economic Internal Rate of Return is called ERR, and the Financial Internal Rate of Return is called FRR.

Calculation of the IRR

The last step in the analysis is to set the net agricultural benefits stream (flow) against the capital (investment) costs and the project operating costs. Before drawing up such a three line table, the analysis period will be decided. The period chosen depend on the expected life of the main investments. It is frequently taken as 20-30 years. For equipment such as vehicles that have a shorter life, the analysis has to assume re-equipping, say after every 5 years.

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The final and fourth line will be the balance or net benefit (flow) to be discounted. The calculation will provide both the economic rate of return (ERR) and also give the Net Present Value (NPV) of the project – assuming a certain discount rate – normally taken as 10%. This calculation could be carried out easily, once all data are well defined, using the Excel programme.

After calculating the ERR on the basis of all the right assumptions and estimations, it is normal to also make a sensitivity analysis to test the resilience of the assumptions used. This shows how sensitive the ERR and NPV are to changes in the basic assumptions. For example, what the ERR would be if the assumed crop yields are less. The sensitivity tests most normally applied are capital costs increased by 20%, project operating costs increased by 20%, net benefits stream decreased by 20%, benefits stream lagged against costs by one year, and various combinations of the above.

For a project to be considered “satisfactory” it should have an ERR of 12% or more. An ERR of 10-12% is considered borderline, but acceptable if the project has other, non-quantifiable benefits. Below 10% the project is considered unsatisfactory. A sample table for the ERR calculation is shown in the table below.

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PART IV: SOME REAL EXAMPLES

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Cambodia: Sericulture Project – FAO TCP Format

Country: Cambodia

Project title: Support to sericulture rehabilitation

Project symbol: TCP/CMB/3205 (D)

Starting date: January 2009

Completion date: January 2011

Government Coordinating Agency: Office of the council of Ministers; One VillageOne Product National Committee (OVOP)

Government Implementing Agency: Ministry of Agriculture, Forestry and Fisheries (MAFF)

FAO contribution: USD 470 000

Signed: ........................................ Signed: ................................................

H.E. Dr. SOK An Jacques DioufDeputy Prime Minister, Director-GeneralMinister in charge of the Office of the (on behalf of the Food and Agriculture Council of Ministers and Organization of the United Nations – FAO)Vice Chairman of OVOP National Committee(on behalf of the Government)

Date of signature: ....................... Date of signature: .................................

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Executive Summary

Silk is very important for Cambodian rural economy, and poverty reduction, because it: (i) generates higher value-added than general crops like rice; (ii) is a very labour intensive activities, thus creates rural employment particularly to women; and (iii) generates regular cash income to the rural households. In the silk production chains, there are three main activities: a) production of silk yarn; b) weaving and final products making; and c) marketing. Recently, Cambodia has been very active in points b) and c). However, the local production system of silk yarn is falling apart, although demand for silk yarn exists and increasing due mainly to strong economic growth and booming tourism. Now, Cambodia needs about 400 tonnes/year of silk yarn, but the local supply is less than five tonnes, and decreasing every year. Deficit is being satisfied by import from China and Viet Nam.

The mission has identified major constraints to development of sericulture in Cambodia as follows:

silkworm disease: this problem has been identified (more than 50 percent silkworm mortality) in all silkworm rearing areas. This disease problem occurs essentially due to: a) lack of a technical institution that can properly control and supply disease-free silkworm eggs; and b) improper technical handling of silkworm rearing activities at farm level;

low productivity of cocoon production: the productivity is extremely low due to the combined effects of the disease problem, the low quality of the silkworm varieties, and rudimentary production technique. The current yield of cocoon production in Cambodia is less than 0.2 tonnes/ha of mulberry as compared with its potential of about one tonne/ha;

low quality of yarn due to lack of proper reeling system: most reeling is done manually. While manual reeling process has some value in terms of producing “traditional” products, this process produces low quality yarn;

the lack/shortage of technical capability: in research, production, and management of silk production. For these reasons, Cambodia would need massive training for both government technicians and raw silk yarn producers, at all levels.

The immediate objectives or outcomes of the proposed project are: a) to establish a basic technical, institutional, and physical capacity (including silkworm egg production, improve breeding, silkworm rearing, cocoon reeling) necessary for further development of the silk subsector; and b) formulate a Silk Development Programme for future expansion phases.

The expected outputs are:

Output 1: establishment of a Silkworm Egg Production Centre with a capacity of 5 000 cases of disease-free silkworm per year (20 000 silkworm eggs/cage);

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Output 2: establishment of a small cocoon reeling facility to demonstrate the efficiency of modern reeling technique, and to test the product; Output 3:setting up seven “Demonstration Farms” in important existing and potential areas, to show and promote new techniques in silkworm rearing, including mulberry sapling plots; Output 4:capacity building of Government staff and producers through technical training to improve productivity and quality of cocoons and silk yarn; Output 5:formulation of a Silk Development Programme, for future expansion phases.

Currently, even just to substitute the silk yarn import of 400 tonnes alone, Cambodia would need about 5 000 ha of mulberry plantation, giving rural employment of about 25 000 people. In the long run, it is expected that the national demand for silk yarn will continue to increase due to both booming economy and tourism, and it is also likely the production in neighbouring countries would decline. Therefore, there is a good justification to produce more, beyond the policy to just substitute the import.

Continuous and coordinated efforts are required in order to revitalise a big subsector such as sericulture and to place it on a right track for a long term development. Assistance to this subsector or would require longer time (more than covered by TCP [Technical cooperation Programme]), and would be best designed to have many phases. It is clear that the Food and Agriculture Organization of the United Nations (FAO), cannot take all challenges; however, it is fundamental and vital that it helps to tackle critical technical gaps, such as disease control, breeding improvement, extension, and capacity building, the main domains where FAO has good expertise. Without technical assistance to remove such basic critical bottle-necks, further development of this subsector cannot be expected. Therefore, FAO assistance in the form of a TCP is vital, and should be seen as an opening first phase for a long term development of the whole subsector.

This project will cover the services of one Retired Expert in silkworm egg production and silkworm rearing for five months in three missions, one Retired Expert in cocoon processing for three months in two missions, one Retired Expert in mulberry propagation and cultivation for two months in two missions, two national experts for a total of 14 months and FAO technical support services from the Agricultural and Food Engineering Technologies Service, (AGST). In addition, the project will provide official travel, materials and equipment, training as well as general and direct operating costs.

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Glossary of Acronyms

AGST Agricultural and Food Engineering Technologies Service

DAALI Department of Agronomy and Agricultural Land Improvement

DSA Daily Subsistence Allowance

FAO Food and Agriculture Organization of the United Nations

FAO Rep FAO Country Representative

IKTT Institute of Khmer Traditional Textile

LTUO Lead Technical Unit Officer

MAFF Ministry of Agriculture, Forestry and Fisheries

NC National Consultant

NPC National Project Coordinator

OVOP One Village One Product

SEPC Silkworm Egg Production Centre

TCDC Technical Cooperation between Developing Countries

TCOT Technical Cooperation Programme Service

TCP Technical Cooperation Programme

TCPF Technical Cooperation Programme Facility

TSS Technical Support Service

WAE When-Actually-Employed

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1. BACKGROUND

1.1 General Context

Since the early 1990s, after decades of wars, Cambodia has achieved peace, stability, and recently good economic growth. People’s life has improved substantially, and although still high by regional standard, the poverty incidence has been reduced. Nevertheless, the socio-economic issues resulting from the widening gaps between rich and poor, and between urban and rural remain one of the main concerns of the government. To mitigate these gaps, as spelt out in the Government Rectangular Strategy, it has adopted the Agricultural Diversification Policy as means to increase income in rural areas, and hence reduce poverty. Development of sericulture is seen as an important part of this policy. While this macro policy has been correctly adopted, the Government institutional capacity is still inadequate to translate the policy into practical action plans, which would have tangible impacts on people’s livelihood.

Learning from experience in many East Asian countries including China, Japan, Korea, Thailand and Viet Nam, the Government has recognized the importance of mulberry cultivation, silkworm rearing and raw silk production, as a strategy to increase the rural income and activate the economic dynamism of the rural areas. The FAO assistance is expected to assess the potentials and constraints of this subsector, and to propose action plans that could be taken by the Government for further development. Once the proposed action plans are in place, the Government will make efforts to mobilize the private sector, and bilateral as well as multilateral development partners to assist this undertaking.

Brief of the Silk Subsector

It is reported that mulberry planting and silk weaving activities have been introduced into Cambodia in 13th century. After World War II, sericulture in Cambodia was fairly developed with mulberry plantation of about 6 000/ha. In 1960s, 20 tonnes/year silk yarn was produced while the national demand was about 80 tonnes/year.

During the Khmer Rouge Regime (1975-1979), silk yarn production and weaving activities were largely abandoned. After the Khmer Rouge regime, people with previous knowledge of sericulture restarted the silk activities, but only with minimum means of production. Since 1980 weaving activities in Cambodia were restarted mainly with the silk yarn imported from Viet Nam.

At present, production of silk yarn and weaving are the main activities of this subsector. Nevertheless, major production of silk yarn remains only in Phnom Srok, Banteay Meanchey province (about 100/ha mulberry plantation, and decreasing), which is considered to be the traditional sericulture centre. New mulberry plantations have been initiated in Kampot and Siemreap provinces with private initiatives. The annual local silk yarn production is estimated of less than five tons. Weaving activities become more and more active in rural areas, due to increasing demand of silk fabric from local as well as international markets. Tourism is booming. Silk weaving activities are active in the following provinces: Takeo (Samrong, Bati and Prey Kapas), Kampong Cham (Prek Chankran), Prey Veng (Sithor Kandal), Banteay Meanchey (Phnom Srok), and in Siem Reap. In 2001, it was estimated that there were about 10 000 family-weavers in Cambodia.

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Increasing demand for silk yarn has been satisfied by import from neighbouring countries. It is estimated that currently about 400 tonnes of silk yarns have been imported mainly from Viet Nam and China every year. Middlemen in the central market in Phnom Penh import silk yarn, and sell to provincial distributors who in turn sell to weavers. Weavers can purchase silk yarn by cash or credit.

1.2 Sectoral Context





2. RATIONALE

2.1 Problems/issues to be addressed

The mission has identified major constraints as follows:

silkworm disease:

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this problem has been identified (more than 50 percent silkworm mortality) in all silkworm rearing areas. This disease problem occurs essentially due to: a) the lack of a technical institution that can properly control and supply disease-free silkworm eggs and b) improper technical handling of silkworm rearing activities at farm level; low productivity of cocoon production: the productivity is extremely low due to the combined effects of the disease problem, the low quality of the silkworm varieties, and rudimentary production technique. The current yield of cocoon production in Cambodia is less than 0.2 tonnes/ha of mulberry as compared to its potential of about one tonne/ha; the low quality of yarn due to lack of proper reeling system: most reeling is done manually. While manual reeling process has some value in terms of producing “traditional” products, this process produces low quality yarn; the lack/shortage of technical capability:in research, production, and management of silk production. For these reasons, Cambodia would need massive training for both Government technicians and raw silk yarn producers, at all levels.

2.2 Stakeholders and Target Beneficiaries

The immediate beneficiaries would be the concerned institutions which will receive direct support from the proposed project in terms of equipment and materials, and the technical staff who will receive technical training in disease control process, improved breeding, and silk worm rearing and cocoon reeling technology. However, these are only the intermediate beneficiaries. The real beneficiaries would be thousands of silkworm rearing farmers in the rural areas, who will be able to reduce the mortality rate, and increase productivity, thus eventually increase their income. Although the effects on the intermediate beneficiaries would be rather rapid, it would take somewhat longer time for the silkworm farmers to realise the benefits. As discussed in the foregoing sections, if the current 400 toness silk yarn import will be substituted by the local production, it will need about 5 000/ha mulberry plantation, thus creating rural employment of about 25 000 people. In addition to the direct benefits, there will be spill-over benefits on weavers and other players in the silk value-chains. The whole subsector would be placed on a solid footing, with minimum risk of potential shortage of imported silk yarn in the future. However, it would be difficult to know exactly “when” and “how much” these benefits would be realised, because all will depend on the response of interested farmers, the availability of affordable credit to farmers, and support from other donors in the expansion phases.

2.3 Project Justification

From experience and trends in the region, the silk subsector has been and still is very crucial for the agricultural economy of Japan, Korean, and now China, Thailand and Viet Nam. It is not important for Japan and Korea now, because the labour cost is too high. It is believed that China (producer of 70 percent of total silk) will gradually give up part of its silk subsector as well because of rising labour cost. Although Cambodia is endowed with good potential for silk production (including the availability of labour, land, and suitable climate), this potential has not been fully exploited.

Silk is very important for Cambodia’s rural economy, and poverty reduction, because it: (i) generates higher value- added than general crops like rice; (ii) is a very labour intensive activities, thus creates rural employment particularly to women; and (iii) generates regular cash income to the rural

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households. Incremental labour requirements are generally light in nature, and can be supplied from home base in addition to other routine household works. This does not require people to migrate and live in towns as in the case of working in the garment industry. It is estimated that about 90 percent of required labour will be suitable for women. Therefore, sericulture can be considered as women-friendly activity. In the silk production chains, there are three main activities: a) production of silk yarn; b) weaving and final products making; and c) marketing. Recently, Cambodia has been very active in points b) and c). However, the local production system of silk yarn is falling apart, although demand for silk yarn exists and increasing due mainly to strong economic growth and booming tourism. Now, Cambodia needs about 400 tonnes/year of silk yarn, but the local supply is less than five tonnes, and decreasing every year. Deficit is being satisfied by import from Viet Nam and China.

Currently, even just to substitute the silk yarn import of 400 tonnes alone, Cambodia would need about 5 000/ha of mulberry plantation, giving rural employment of about 25 000 people. In the long run, it is expected that the national demand for silk yarn will continue to increase due to both booming economy and tourism, and it is also likely that the production in neighbouring countries would decline. Therefore, there is a good justification to produce more, beyond the policy to just substitute the import.

As for a reference, experience in 1970-1980 South Korea, with only half the size of Cambodia, shows the following: planted 91 000/ha mulberry, produced 42 000 tonnes cocoon or 5 600 tonnes raw silk, directly employed about 480 000 people in cocoon production, and produced value added of USD 170 million/year from raw silk alone. This translates into generating an income of USD 1 900/ha. Yet, these benefits do not include the economic impact from the upstream activities such as reeling, weaving, production of final products, marketing, transport etc.

Furthermore, continued dependence on imported silk yarn is risky even for Cambodian weavers, because of the possible shortage of yarn supply in the international market in the future. It is reported that the main producing countries like China and Viet Nam are setting up more silk factories, thus keep raw materials for their own use.

As discussed above, the major constraints for the segment of mulberry plantation/silkworm rearing to develop are: (i) silkworm disease; (ii) low productivity of cocoon production; (ii) low quality of yarn due to lack of proper reeling system; and (iv) lack/shortage of technical capability. These constraints are indeed the main critical gaps for any further development of the sericulture subsector. Without removing these constraints, even the existing local silk yarn production of about five tonnes/year is likely to disappear in the coming few years. Furthermore, this is precisely the domain where FAO has technical experience and expertise to assist.

It is difficult to analyse with high degree of accuracy the frequently-asked-question of whether Cambodia has comparative advantage in silk production, because there is no reliable data due to the fact that Cambodia has never embarked sufficiently on the silk subsector5. Comparing the current productivity with exporting countries is just not right, because silkworm in Cambodia is plagued with disease, thus naturally the productivity is low. Besides, the comparative advantage concept is a dynamic one. Conceptually, it could be argued that the main inputs for silk production are: labour, land, and technology. The main missing element now is technology, and it is rather safe to advance the reasoning that the costs of labour and land in Cambodia are less or not far different from those in Viet Nam and

5 Based on theoretical assumptions, indicative financial calculations are shown in Annex 7 of Part IV.

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China at present and in the future. Therefore, by providing sufficient technical support, it is rather safe to assume that Cambodia would acquire comparative advantage in the medium and long runs.

The assumption that the demand generated by the market development alone would automatically and sufficiently pull supply-production from the rural areas is simply not working in the Cambodian silk context. This is because the silk production is technically more complex than production of simple agricultural crops like rice. How can farmers handle disease problems, or breeding issues? This is a shining case that the Government’s lead is vital. In Japan and Korea, good quality worms are produced, guaranteed, and supplied by the government agency. It is illegal for farmers to breed silk worms in those countries. In Cambodia, traditional breeding is being done by farmers, without proper control. As the result, silk worm disease is widespread, and the genetic quality of silk worm is poor. In addition, the technical capacity to handle silkworm breeding, control, and rearing at both government and farm levels is extremely weak.

Therefore, the proposed TCP should be regarded as the first or initial phase of a longer programme to launch and develop the sericulture subsector in Cambodia. However, without the FAO support to tackle the fundamental and technical issues, the subsector would simply not take off. Therefore, the FAO assistance should be regarded as instrumental to fill the critical gaps, or catalytic role, which would eventually allow other donors to participate. At present, there are a number of projects assisted by external donors (such as the European Union [EU], the United Nations Developing Programme [UNDP], the International Trade Centre [ITC], etc.) assisting the silk subsector, however, most interventions are in the processing and marketing segments, but not the fundamental segment, i.e., mulberry plantation/silkworm rearing/cocoon production. In terms of the division of labour among international donors, this is precisely the domain of the FAO. Without intervention in this segment, poverty cannot be reduced, and rural economy cannot be improved, purely because import of silk yarn would continue to rise to satisfy increasing demand. There is also a danger of silk yarn shortage on the international market, thus marginalising even the expanding weaving activities as well.

2.4 Past and Related Work

Since early 1980s, three projects have been funded to support the weavers and silk yarn producers namely Silk Rehabilitation in Northwestern Cambodia (PRESNOC), the Project for Strengthening of Silk Sector (PASS) and the Microfinance Institution (PRASAC). PRESNOC and PASS are the projects funded by the French Development Agency (AFD) and working directly with silk yarn producers and weavers in Phnom Srok (Banteay Meanchey province) and Siem Reap province. With these projects, an institution on silk has been established: CNS (Centre National de la Soie) based in Siem Reap. PRASAC mainly worked on the multiplication of weavers and introduction of improved loom to the weaving areas in Takeo, Kampong Cham, and Prey Veng provinces.

Moreover, there are individuals, NGOs and social enterprises also interested in promoting Khmer silk. They have worked with groups of people as trainees and weavers. Those enterprises are mostly self-financed. Increasing demand of silk yarn can be also a result of new weavers trained by those NGOs and private enterprise. Artisan d’Angkor and IKTT (Institute of Khmer Traditional Textile) are the two well known private sectors in Siem Reap Province. Artisan d’Angkor is a private company while IKTT is an NGO promoting Khmer silk. It is often found that in the areas near the tourist sites, there are weaving workshops run by NGOs giving training to young people on weaving and selling the fabric to tourists.

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Studies related to silk subsector Plan de relance de la soie au Cambodge, Eurchrysalide, BDPA-SCETAGRI, 1996; Etude de la filière soie au Cambodge, Satec Development International, 2001; Etude de faisabilité, IRAM, 2001; Options for establishment a full production and marketing chain for silk production in southern

Cambodia, PRASAC Phase II, 2001; A proposal for establishing a Cambodian Silk Board, PASS, 2004; Etude de la filière soie au Cambodge, BDPA-PASS, 2005; Project for strengthening of silk sector PASS, 2005; Sector-wide strategy for the Cambodian Silk Sector, UNDP, 2005.

Most knowledge on sericulture in Cambodia is on weaving and marketing while the knowledge on silk yarn production is still very limited.

2.5 FAO’s Comparative Advantage

In response to the request by the Royal Government of Cambodia dated 21 September, 2007, the FAO (Asia and the Pacific Service [TCIP]/Agricultural and Food Engineering Technology Services [AGST]) dispatched a technical support mission6 (TCP/CMB/3103-Facility) to Cambodia, in order to assist the Government in assessing the potentials and constraints of the sericulture subsector and in formulating the project concept and estimating the project cost.

Continuous and coordinated efforts are required in order to revitalise a big subsector such as sericulture and to place it on a right track for a long term development. Assistance to this subsector would require longer time (more than covered by TCP), and would be best designed to have many phases. It is clear that FAO cannot take all challenges, however, it is fundamental and vital that it helps to tackle critical technical gaps, such as disease control, breeding improvement, extension, and capacity building, the main domains where FAO has good expertise. Without technical assistance to remove such basic critical bottle-necks, further development of this subsector cannot be expected. Therefore, FAO assistance in the form of a TCP is vital, and should be seen as an opening first phase for a long term development of the whole subsector.

However, while implementing the proposed TCP project, it is vital to assess the potentials and constraints of the whole subsector and formulate programme for further development during subsequent phases. Financial assistance will become more crucial for subsequent phases after major technical aspects have been well established with the assistance of the FAO TCP. Therefore, formulation of a Silk Development Programme, contacting and exchanging findings with bilateral as well multilateral institutions are considered equally crucial during the implementation of the TCP project, in order to link the proposed TCP project to subsequent phases.

6 Comprising Mr. Kariyan MEI, Mission Leader (TCIP/FAO), Mr Keewook Sohn, Silk Expert (AGST/FAO), and Mr Suon Seng, Agronomist, National Consultant.

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3. PROJECT FRAMEWORK

3.1 Impact

The impact or development goal of the project is to reduce the rural poverty and to create employment through the development of sericulture which is socially and economically very attractive.

3.2 Outcome and Outputs

The immediate objectives or outcomes of the proposed project are: a) to strengthen basic technical, institutional, and physical capacity (including silkworm egg production, improve breeding, silkworm rearing, cocoon reeling) necessary for further development of the silk subsector; and b) to enhance silk production through the formulation of a Silk Development Programme for future expansion phases.

The expected outputs are:

Output 1: establishment of a Silkworm Egg Production Centre with a capacity of 5 000 cases of disease-free silkworm per year (20 000 silkworm eggs/cage); Output 2: establishment of a small cocoon reeling facility to demonstrate the efficiency of modern reeling technique, and to test the product; Output 3:setting up seven Demonstration Farms in important existing and potential areas, to show and promote new technique in silkworm rearing, including mulberry sapling plots; Output 4: capacity building of Government staff and producers through technical training to improve productivity and quality of cocoons and silk yarn; Output 5: Formulation of a Silk Development Programme, for future expansion phases.

3.3 Sustainability

At the moment, although there is increasing demand for silk, the current silk subsector in Cambodia is underdeveloped and not sustainable because the silkworm disease is widespread and undermining the profitability of silk yarn production. The proposed project aims at placing this subsector on a sustainable developmental path.

Once the silk technology is well established, it is expected that this project could be instrumental to other rural development projects funded by either external donors or the Government. For example, the World Bank has just approved about USD 11 million for the Land Allocation for Socio-Economic Development Project (LASED), in which more than 5 000/ha of land will be distributed to poor families. The FAO mission coordinated with the LASED team to see if silk could have any role in

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LASED project. In addition to the fact that LASED team welcomed warmly any agricultural activities which would generate income to poor families, the mission has found that LASED lands are technically suitable for silk development. During implementation, further coordination with LASED as well as with other rural development projects will be explored.

3.4 Risks and Assumptions

The major risks of the project are: a) failure to establish a strong and clear institution set-up from the beginning to implement the project; b) low technical absorption capacity of staff and farmers; and c) reluctance and unwillingness of farmers to take up the new silk technology.

Risk Impact Probability Mitigation

a) Failure to establish a clear institutional set–up

Delay in implementationPoor performance

Low Utmost efforts to be made by FAO to guide, discuss and agree with the Government

b) Low technical absorption capacity

Poor performance Low Special attention on training both government staff and farmers, particularly women

c) Farmers’ reluctance to take up new technology

Limited impact on poverty

Low Special attention on hands-on training and guidance using demonstration farms

4. IMPLEMENTATION AND MANAGEMENT ARRANGEMENTS

4.1 Institutional Framework and Coordination


So far, many silk related projects assisted by foreign donors have focused primarily on the processing and marketing parts, not much on the production part. As the proposed project would primarily focus on assisting the production part (i.e. mulberry planting, silkworm egg production, silkworm rearing, cocoon

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production, and extension to farmers), a technical ministry/agency which deals with the issues of agriculture research, technology, and extension is considered to be the most appropriate in the long run. The international practices suggest the following: up to raw silk production is under Ministry of Agriculture; reeling and weaving under the Ministry of Industry; and marketing and trade under the Ministry of Commerce. Through many discussions with the Government, it was agreed that the Ministry of Agriculture, Forestry and Fisheries (MAFF) will be the Implementing Ministry of this proposed project, because it has basic facilities and technical expertise that could be mobilised and trained, at the least cost. And MAFF, through its Department of Agronomy and Agricultural Land Improvement (DAALI), will be in charge of implementing the project.

Through this project, FAO would provide assistance in terms of equipment, materials, and technical training to MAFF, which will appoint a National Project Coordinator (NPC) to be in charge of implementing the project. The NPC will be assisted by national consultants. In return, MAFF will be responsible to provide office space, laboratory facility, staff, operating costs as agreed with the project. Generally, in the framework of the FAO TCP project, civil work, office space, staffing, and operating costs are the responsible of the Government. FAO generally supports technical experts, equipment, and training of the government staff and farmers.

The project proposes to establish one “Silkworm Egg Production Centre” (SEPC), which will be the core facility of the project (see Annex 6.1 in Part IV). This facility would include a laboratory, office, and training space. The proposed small cocoon reeling facility will also established in the same area. A total area of about one hectare is required for this centre, and electricity supply is vital. In the mission’s opinion, this core facility would be best served by establishing it in the outskirt of the capital Phnom Penh. Together with MAFF, the FAO technical experts have identified the Prey Pdav Agriculture Research Station, in Kg Speu province and about 40 Km from Phnom Penh, as suitable for SEPC. This facility will be used in combination with the National Agriculture Laboratory in Phnom Penh. Production of silkworm egg, silkworm varieties improvement and control, and all training to the Government staff will take place in this centre.

In addition to this core facility, the project also proposes establishing seven Demonstration Farms and new silk areas in seven provinces (see Annex 6.2 in Part IV). Each Demonstration Farm, covering about 2-4/ha, would include: training space, silkworm hatching, silkworm rearing area, and mulberry plantation. These Demonstration Farms will also distribute silkworm and silkworm egg received from SEPC to farmers. Part of the plantation area would be used for experimentation of various mulberry species by the SEPC. Interested farmers will be trained primarily in these demonstration farms. Particular attention will be paid to train women because about 90 percent of required labour will be provided by women. Together with MAFF, the FAO technical experts have identified seven provinces as for the first step in promoting sericulture in Cambodia. The selected seven provinces are: Kg Speu (the same as SEPC), Takeo (TonleBati), Kampot, Kg Cham (Chamkar Leu), Kratie, Pursat, Siemreap, and Banteay Meanchey. These Demonstration Farms could be expanded to other provinces, if there are sufficient request and funding from other donors. In Kratie, the FAO mission has explored the possibility to cooperate with the World Bank funded project, Land Allocation for Socio-Economic Development (LASED), where 4 000/ha have been distributed to farmers. LASED management welcome this cooperation, and the project area is considered suitable for mulberry and silkworm rearing. In addition, there are many other projects which have good potentials to benefit from this proposed project. More cooperation with other projects will be promoted during implementation of the project.

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One issue which requires special attention is the transaction of silkworm and silkworm egg. SEPC would produce about 5 000 cases silkworm egg per year, which would require about 200/ha of mulberry plantation. These would be distributed partly to the demonstration farms, and remaining to farmers. As for a public institution, silkworm eggs will be distributed free of charge to the Demonstration Farms. However, there is the issue of payment as a mechanism for silkworm egg distributed to farmers. For sustainability purpose, it is proposed that farmers would pay subsidized prices, say 50 percent of the cost for the first two years, as an incentive for them to re-start the silk activities. From the third year, they will pay full price in order to assure the financial sustainability of the SEPC in the future. This issue will be further discussed with the Government counterpart during inception.

4.2 Strategy/Methodology

This technical assistance project should be seen as the first phase of a long effort to develop the silk subsector. In particular, it will focus to remove major technical constraints which hamper the subsector from development. This is an area where the Government/public sector plays a major role. While other international donors assist other parts of the silk value chain, FAO is assisting primarily the technical aspects, the main area of the FAO expertise. Producing disease-free silkworm eggs, providing good quality silkworm, strengthening the technical capacity of staff, training and disseminating new technology to farmers etc, are all the works of the public sector. Without such a basic framework, no development could take place. Only after these technical gaps have been resolved, that the development process will take place and evolve over time. International donors as well as the private sector would play various roles in promoting sericulture during the expansion phase, after the technology has been introduced and tested.

To allow farmers to expand the silk activities, one of the major constraints would be the availability of affordable rural credit, one of the main constraints for rural development in Cambodia.

Demonstration Farms would be established at existing silk areas to demonstrate and train farmers on new technology of mulberry planting, silkworm rearing, and cocoon production. Particular attention will be paid to the needs of women, as they are the major contributor to required labour. However, it is considered beneficial also to explore new frontiers in non traditional areas of high potential, in order to expand the process. It was preliminary assessed by the silk expert that the existing silk areas are not necessary the best place for silk production in Cambodia.

4.3 Government Inputs

4.3.1. Prior Obligations and Prerequisites

a clear Government commitment and policy regarding the development of this silk subsector is imperative. The Government has confirmed its commitment to develop sericulture. One of the issues that need clarification in the future is the relative importance of traditional golden silk vis-à-vis hybrid silk;

clarify the responsibility of the Government institutions in relation to various parts of the silk value chains: production, processing, and marketing. During various discussions with the Government, it has been clearly agreed that: a) OVOP will be the Coordinating Agency; and b) MAFF will be the Implementing Agency;

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define the institution responsible for the “Silkworm Eggs Production Centre”, and required associated land, building, staff, and operating costs. As the Implementing Agency, MAFF will be in charge of this Centre, and MAFF management has assured the mission that it will take necessary measures to honour its obligation.

define the institution responsible for the Demonstration Farms, and required associated land, building, staff, and recurrent costs. Similarly, these Demo Farms will be under the supervision of MAFF. In provinces where MAFF does not have research station, stations under the management of the Provincial Agriculture Office will be sought for. In this care, ownership by Provincial Governments would be encouraged, and MAFF would provide technical support.

4.3.2 Financial and/or Contributions in Kind

MAFF will participate in the project implementation, using its institution and staff as follows:

it will assign a National Project Coordinator (NPC) to manage the implementation of various components of the project. The NPC will be assisted by national consultants supported by the project. MAFF will also assign technical staff to work with the international experts, provide secretarial support, office space and logistical support for the international experts in performing their duties;

MAFF will provide land, building, laboratory facility, staff, operating costs, basic utilities, and other facilities required for implementing the project;

throughout the project period, MAFF will provide others basic materials necessary for project implementation, not supported by the project;

it will sustain SEPC and demonstration farms after the FAO support to the project completes.

4.4 FAO Contribution

4.4.1 Personnel Services

International experts under the Partnership Programmes (supervised by the AGST): One Retired Expert in silkworm egg production and silkworm rearing for five months in three

missions (ToR in Annex 2.1); One Retired Expert in cocoon processing for three months in two missions (ToR in Annex 2.2); One Retired Expert in mulberry propagation and cultivation for two months in two missions

(ToR in Annex 2.3).

FAO Technical Support Services (TSS) (ToR in Annex 2.6 ): FAO-TCIP will provide TSS for 45 days in three missions; FAO-AGST will provide TSS for 24 days including at least one mission .

National Experts: One National expert in sericulture management for 12 months on a WAE basis (ToR in Annex

2.4); One National expert to support preparation of the silk development programme for two months

(ToR in Annex 2.5).

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Administrative Support : Casual labour to assist in organizing technical training courses and implementing Demonstration

Farms.

4.4.2 Other Travel

Duty travel of the FAO Representative his/her assistant to the project sites and duty travel of counterparts.

4.4.3 Contracts, Letters of Agreements or Contractual Service Agreements

Preparation and publication of sericulture an illustrated training manual in local language, using the manuscript prepared by AGST in 2007.

4.4.4 Materials, Supplies and Equipment

Expendable materials and supplies: materials and supplies required for silkworm egg production and silkworm rearing, cocoon reeling facility, demonstration plots, and technical training courses (see Annex 4.2 in Part IV).Non-Expendable Equipment: the equipment required for silkworm egg production centre, cocoon reeling facility and demonstration plots will be provided by the project. The preliminary specifications of non-expendable items, with provisional itemized cost estimates are provided in Annex 4.1.

4.4.5 Training

Study Tours:a study tour of two staff for two weeks will be organized to take lessons from sericulture advanced countries, such as China, Japan, Korea and Thailand. The cost includes travel and DSA at UN rates, not including a fee to the receiving institute/centre, which will be born by the inviting countries. The study tour will be arranged by FAO technical officers and PEC/PIC of the Government.

travel: USD 1 500 x two persons = USD 3 000 DSA: USD 150 x two persons x 14 days = USD 4 200

In-Country Training and Workshop:setting up and preparation of training and workshops: USD 5 000Internal travel and accommodation for participants: USD 150 x 80 = USD 12 000

4.4.6 General Operating Expenses (GOE)

To cover miscellaneous expenses required in the field for the operation of the project, such as telephone communications, photocopy paper, etc. (not more than five percent of the total budget minus the DOC).

4.4.7 Direct Operating Costs (DOC)

Direct operating costs (7 percent of the project expenditure) to cover FAO’s administrative and operational costs related to the implementation of the project.

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5. OVERSIGHT, MONITORING, MANAGEMENT INFORMATION, AND REPORTING

5.1 Monitoring and Knowledge Sharing

A monitoring system to measure project performance will be established during the inception phase of the project. The system will record and provide up-to-date information on the implementation of activities, the use of inputs and the fulfilment of performance indicators. NPC will be responsible for monitoring the project implementation in close collaboration of the Project Team Leader (Expert for silkworm breeding and rearing) and the national consultant. Mission and activity reports produced by international and national consultants, as well as the mid-term review workshop will serve as monitoring tool during the project implementation.

The experiences and knowledge obtained during project implementation will be shared timely with other ministries/agencies particularly through OVOP, the governmental officers, extension workers, and farmers through workshops and training courses. The findings and lessons learned in the project will be utilized for formulation of the follow-up projects to be presented to International Donors.

5.2 Communication and Visibility

Several activities, such as project Launching and Mid-Term review workshops, within the project implementation are designed specifically to increase the visibility and sustainability of the project results. Progress and lessons learnt will be shared and communicated with concerned institutions and stakeholders, particularly through OVOP, whose main tasks are to oversee and share information. In addition, communication and regular contacts with potential donors who may be interested in the expansion phases is crucial. Various reports produced by experts will be equally vital for better communication and visibility.

5.3 Reporting Schedule

All consultants (Retirees and national), the FAO officer on mission and study-tour trainees will produce mission reports (training manuals or technical reports to be appended, if produced) at the end of each mission according to FAO formats.The NPC will provide a progress report to OVOP and FAOR/Cambodia every six months, covering the progress, constraints, problems, solutions found and changing circumstances in relation to the project activities.

The Project’s Team-Leader Consultant, will draft the terminal statement according to FAO/TCP procedures, in consultation with the National Project Coordinator, the terminal statement will be finalized by the FAO Lead Technical Unit Officer (TCIP).

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Annex 1

PROJECT BUDGET

Country: CambodiaProject title: Rehabilitation of sericultureProject symbol: TCP/CMB/3204 (D)

Comp. Component Description Sub Comps. Main Comp.

5013 Consultants 95,500 5542 Consultants - International - 5543 Consultants - National 28,000 5544 Consultants - TCDC/TCCT - 5545 Consultants - Retired Experts 67,500 5546 Consultants - South South Cooperation - 5547 Consultants - UN Volunteers - 5549 Consultants - Young Professionals -

5014 Contracts 5,000

5650 Contracts Budget 5,000

5020 Overtime 15,000 5652 Casual Labour - Temporary Assistance 15,000

5021 Travel 80,756 5661 Duty travel others (only FAO staff) 2,000 5684 Consultants - International - 5685 Consultants - National - 5686 Consultants - TCDC/TCCT - 5687 Consultants - Retired Experts 48,900 5688 Consultants - South South Cooperation - 5689 Consultants - UN Volunteers - 5694 Travel - Training 7,200 5691 Consultants - Young Professionals - 5692 Travel TSS 18,656 5698 Travel - Non staff (e.g. counterparts) 4,000

5023 Training 17,000 5920 Training Budget 17,000

5024 Expendable Equipment 46,200 6000 Expendable Equipment 46,200

5025 Non Expendable Equipment 121,000 6100 Non Expendable Equipment Budget 121,000

5027 Technical Support Services 37,190 6111 Report Costs 2,000 6120 Honorarium TSS 35,190

5028 General Operating Expenses 21,606 6300 General Operating Expenses Budget 21,606

5029 Support Cost 30,748 6118 Direct Operating Costs 30,748

Grand Total 470,000

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Annex 2.1

TERMS OF REFERENCE

International Consultant for Silkworm Egg Production and Silkworm Rearing(Project Team Leader)

Under the overall supervision of the Food and Agriculture Organization of the United Nations (FAO) Representative in Cambodia (Budget Holder), the technical supervision of the Agricultural and Food Engineering Technology Service (AGST), in close coordination with Asia and the Pacific Service (TCIP), and in cooperation with other consultants and the Government counterparts, the International Expert for Silkworm Egg Production and Silkworm Rearing will undertake the following duties:

First Mission (one month-year one); together with the Government counterpart, review and select sites suitable for the Silkworm Egg

Production Centre (SEPC) and the demonstration farms; arrange the procurement of silkworm eggs and mulberry saplings for the project

implementation; prepare a detailed work plan and finalize items and their specifications in the lists of equipment,

supplies and materials; assist the National Project Coordinator (NPC) and the Implementing Ministry in establishing a

SEPC and seven demonstration farms in planning, buildings and in supplying equipment and materials;

prepare a concise “Technical guide to Cocoon Production” for training staff and farmers; organize the inception workshop for government staff and lead the training courses for extension

workers and cocoon producers; assess general status of sericulture in Cambodia, and together with the Lead Technical Unit

Officer, initiate the formulation of a Silk Development Programme; prepare the mission report in an MS-Word file.

Second Mission (two months – year one) review and assess the progress of the project activities and recommend possible revision of the

work plan including improvement potential in technical and managerial capacity of the country; supervise the demonstration farms in cocoon production activities and SEPC in preservation and

production of eggs; organize and execute the training courses of year one in cocoon production; survey and analyse the present status of domestic demand and supply of silk products for

possible internal market development; assist Government authorities concerned in soliciting participation of the donors in national

promotion of sericulture development; assist the PEC/PIC in organizing and executing the National Sericulture Workshop; together with the Lead Technical Unit Officer, formulate the Silk Development Programme; prepare the mission report in an MS-Word file and submit it to the Budget holder.

Third Mission (two months – year two): assess the project achievements and recommend the future work plan to improve cocoon and

silk production capacity of the country;

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continue to supervise the demonstration farms in cocoon production activities and SEPC in preservation and production of eggs;

organize and execute the training courses of year two in cocoon production; survey external markets and promote possible sales of dry-cocoons, silk yarns and fabrics

including finished silk products to the international markets; based on the experience gained and follow-up strategies conceived, prepare a draft project

proposal for follow-up activities in expanding cocoon and silk production; together with the Lead Technical Unit Officer, formulate the Silk Development Programme; prepare the mission report in an MS-Word file.

The Consultant will provide a written report in English within two weeks of conclusion of each mission. The report should give a clear summary of recommendations and conclusions and points for follow-up before the next visits.

Duty Station: Phnom Penh

Duration: Five months in three missions

Qualifications: A university degree from a well recognised, reputable university or institute of technology, related to sericulture or entomology. A proven track record as evidenced by international assignments, reports and/or refereed papers published in internationally recognised journals and bulletins.

At least ten years of practical commercial experience and a good working knowledge of silkworm egg production and high qualification in silkworm rearing for cocoon production.Fluency in English is mandatory.

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Annex 2.2

TERMS OF REFERENCE

International Consultant for Cocoon and Raw Silk Processing

Under the overall supervision of the Food and Agriculture Organization of the United Nations (FAO) Representative in Cambodia (Budget Holder), the technical supervision of the Agricultural and Food Engineering Technology Service (AGST), in close coordination with Asia and the Pacific Service (TCIP), and in cooperation with other consultants and the Government counterparts, the International Expert for Cocoon and Raw Silk Processing will undertake the following duties:

First Mission (1.5 months – year one): (Prior to arrival at the duty station, communicate with the Project Team Leader, concerning

procurement and installation of the machines for raw silk production). review and assess the status of cocoon processing from harvested cocoons to raw silk; assist the National Project Coordinator (NPC) in recruitment of factory personnel, technicians

and factory workers; supervise planning and establishment of the Cocoon Reeling Facility, especially for installation

of cocoon drying and reeling machines; prepare a concise “Post harvest of cocoons and raw silk processing” for training purposes to be

used during the second mission; train the staff and workers in the Cocoon Reeling Facility to introduce new skills and methods to

improve productivity and quality of raw silk.; together with the Lead Technical Unit Officer and other experts, participate in the formulation

of the Silk Development Programme; prepare the mission report in an MS-Word file.

Second Mission (1.5 months – year two): review and evaluate the technological level of cocoon processing, and introduce necessary skills

and methods to improve productivity and quality of raw silk; organize a silk processing training course to train the staff and workers in cocoon reeling facility

so as to produce quality raw silk through operation of the silk facility; recommend for further increase of production and improvement of quality and productivity of

raw silk; assist in survey and analysis of domestic demand and supply of raw silk for promotion of silk

weaving in the country, and in sales of raw silk produced to domestic weaving sector; participate in searching for external markets and establishing contacts for possible sales of raw

silk, and in sending out the samples for quality assessment, when requested by the possible buyers in the international markets;

compare the quality of raw silk produced by bi-voltine and poly-voltine cocoons to recommend further direction of producing quality silk yarn;

together with the Lead Technical Unit Officer and other experts, participate in the formulation of the Silk Development Programme;

prepare the mission report in an MS-Word file.

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The International Expert for Cocoon and Raw Silk Processing will provide a written report in English within two weeks of conclusion of each mission. The report should give a clear summary of recommendations and conclusions and points for follow-up before the next visits.


Duration: Three months in two missions

Qualifications: A university graduate degree from a well recognized, reputable university or institute of technology, related to sericulture or entomology. A proven track record as evidenced by international assignments, reports and/or refereed papers published in internationally recognised journals and bulletins.

At least ten years of practical and commercial experience and a good working knowledge of post harvest of cocoons and raw silk processing is required.Fluency in English is mandatory.

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Annex 2.3

TERMS OF REFERENCE

International Consultant for Mulberry Cultivation

Under the overall supervision of the Food and Agriculture Organization of the United Nations (FAO) Representative in Cambodia (Budget Holder), the technical supervision of the Agricultural and Food Engineering Technology Service (AGST), in close coordination with and Asia and the Pacific Service (TCIP), and in cooperation with other consultants and the Government counterparts, the International Expert for Cocoon and Raw Silk Processing will undertake the following duties:

First Mission (one month – year one): prior to arrival at the duty station, communicate with the Project Technical Leader (PTL), to

provide mulberry varieties and to establish propagation systems of mulberry trees; assess the climatic conditions of mulberry cultivation in the country and assist the National

Project Coordinator (NPC) in establishment of mulberry variety demonstration farms; prepare a concise “propagation and plantation of mulberry trees in the tropics” for training

purposes to be used during the second mission; train the staff and workers in the mulberry fields to introduce new skills and methods to improve

productivity and quality of mulberry leaves; together with the Lead Technical Unit Officer and other experts, participate in the formulation

of the Silk Development Programme; prepare the mission report in an MS-Word file.

Second Mission (one month – year two): evaluate the technological level of mulberry cultivation and introduce necessary skills and

methods to improve the productivity and quality of mulberry leaves; organize a training course for mulberry propagation and cultivation, including harvest methods

of mulberry branches and leaves; recommend improved techniques for silkworm feed production and improvement of quality and

productivity of mulberry leaves; search for obtaining mulberry varieties from sericulture developed countries to Cambodia and

provide the related technicians with the methods how to select mulberry varieties suitable to the tropical conditions;

compare the leaves productivity and propagation methods between the mulberry varieties introduced from the temperate countries and the native or tropical strains;


prepare the mission report in an MS-Word file.

The International Expert for Mulberry Cultivation will provide a written report in English within two weeks of conclusion of each mission. The report should give a clear summary of recommendations and conclusions and points for follow-up before the next visits.


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Duration: Two months in two missions

Qualifications: A university graduate degree from a well recognised, reputable university or institute of technology. A proven track record as evidenced by international assignments, reports and/or refereed papers published in internationally recognised journals and bulletins.

At least ten years of practical and commercial experience and a good working knowledge of mulberry cultivation.Fluency in the English language is mandatory.

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Annex 2.4

TERMS OF REFERENCE

National Consultant for Sericulture Management

Under the overall supervision of the Food and Agriculture Organization of the United Nations (FAO) Representative in Cambodia (Budget Holder), the technical supervision of the Agricultural and Food Engineering Technology Service (AGST), in close coordination with the Asia and the Pacific Service (TCIP) and in cooperation with other consultants and the Government counterparts, the National Consultant for Sericulture Management will undertake the following duties:

assist the National Project Coordinator (NPC) in overall implementation of the project activities and in communication as necessary with International Experts, FAO and Government Officers concerned in relation to the project activities;

assist the NPC in preparing briefing reports or field activity reports, as required by officers concerned from FAO/TCIP.

translate technical information and data and training materials into local language, as necessary, and assist in the training activities;

review the mission reports of the International experts and assist the NPC in the technical and managerial recommendations to the Demonstration -Farms and the cocoon reeling facility;

supervise and/or assist cocoon farmers, extension workers and laboratory technicians in continuing project activities throughout the project period, especially while the international experts are away;


prepare a consultant report, describing chronologically his work done, in an MS-Word file.

The National Consultant for General sericulture Management will provide a written report in English within two weeks of conclusion of each mission. The report should give a clear summary of recommendations and conclusions and points for follow-up.


Duration: Eight months in When-Actually-Employed (WAE) basis, covering the entire project duration

Qualifications: A university graduate degree from a university or institute of technology, related to agriculture or biology/entomology. A proven track record as evidenced by international assignments, reports and/or refereed papers.

At least ten years of practical and commercial experience and a good working knowledge of agriculture production. Fluency in English is mandatory.

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Annex 2.5

TERMS OF REFERENCE

National Consultant for Sericulture Sector Development

Under the overall supervision of the Food and Agriculture Organization of the United Nations (FAO) Representative in Cambodia (Budget Holder), the technical supervision of the Asia and the Pacific Service (TCIP), in close consultation with the Agricultural and Food Engineering Technology Service (AGST), and in cooperation with other consultants and the Government counterparts, the National Consultant for Sericulture Development will undertake the following duties:

collect and collate information regarding the silk value chain (mulberry planting; mulberry growing; harvesting mulberry leaves; hatching silkworm eggs; feeding silkworms; producing cocoons; cocoon processing; yarn reeling; silk weaving);

analyse the value chain information with the objectives of identification and quantification of factors which affect the efficiency and competitiveness of the chain, and preparation of recommendations for the public and private sectors. The value chain should be mapped including all its technical factors, economic indicators, inputs, stakeholders, markets, enabling environment and its strengths, weaknesses, opportunities and threats;

based on the value chain analysis, determine through feasibility and market studies the requirements for intervention to make the individual activities (farming, processing, trading) in the sericulture subsector, as well as the subsector as a whole, economically profitable and viable;

participate in the formulation of the Silk Development Programme.

Duty Station: Phnom Penh.

Duration: Two months.

Qualifications: The National Consultant will have a degree in agricultural economy with more than ten years of practical experience in the agricultural or agro-industrial sector; experience in sericulture would be an advantage.In addition, required are good written and spoken skills in English and good social skills in relation to farmers and other actors in the sericulture subsector.

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Annex 2.6

TERMS OF REFERENCE

Lead Technical Officer (LTO):Agricultural and Food Engineering Technology Service (AGST) - FAO headquarters

Assignment: In close collaboration with the Food and Agriculture Organization of the United Nations (FAO) Representative; the Asia and the Pacific Service (TCIP), the international and national consultants, the Government counterparts and National Project Coordinator (NPC), the Lead Technical Officer (LTO) is responsible for a smooth implementation of the project and for the preparation of future programmes, specifically, he/she will: a) lead and coordinating the whole project implementation process; b) lead the formulation of the Silk Development Programme for the future expansion phases; and c) coordinate with Government counterparts and NPC.

ToR of the Mission (one week):

participate in the project launching; inception workshop; provide overall guidance, and direction for implementing the project to the Government

counterparts, to the National Project Coordinator (NPC), and consultants; together with other experts and government counterparts, facilitate the overall project

implementation plan; held meetings with the government counterparts to iron out any remaining issues, if any, to

assure a smooth implementation; together with other consultants, initiate the plan to formulate the Silk Development Programme

for future expansion phases; prepare a back-to-office report.

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Annex 2.7

TERMS OF REFERENCE

Technical Support Service, Economist, Asia and the Pacific Service (TCIP),FAO headquarters

Assignment: Three missions of two weeks each.In close collaboration with the Food and Agriculture Organization of the United Nations (FAO) Representative and the Agricultural and Food Engineering Technology Service (AGST), the international and national consultants, the Government counterparts and National Project Coordinator (NPC), the Asia and the Pacific Service (TCIP) Economist assists in a smooth implementation of the project and the preparation of future programme, specifically, he/she will: a) coordinate the project implementation process; b) assist the formulation of the Silk Development Programme for the future expansion phases; c) coordinate with Government counterparts and (NPC); and d) coordinate with potential donors. The three missions will be coincided with the mission of the Project Team Leader (international consultant).

First Mission (two weeks): participate in the project launching; inception workshop; provide overall guidance, and direction for implementing the project to the Government

counterparts, NPC, and consultants; together with other experts and Government counterparts, facilitate the overall project

implementation plan; held meetings with the Government counterparts to iron out any remaining issues, if any, to

assure a smooth implementation; together with other consultants, initiate the plan to formulate the Silk Development Programme


Second Mission (2 weeks): assess the progress of the project implementation, and propose adjustment and improvement, if

necessary; held meetings with the Government counterparts, and NPC to determine new direction in order

to reflect new emerging needs; held meetings with potential donors to brief them the status of the project implementation, and

sound out if they are interested in assisting further undertaking; together with other consultants, continue the formulation of the Silk Development Programme


Third Mission (2 weeks): conduct the final assessment of the project implementation; held meetings with the Government counterparts, and NPC to evaluate the performance of the

project implementation, and identify the new emerging needs;

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held meetings with potential donors to report the project performance, and identify if they are interested in assisting the Silk Development Programme;

together with other consultants, finalise the formulation of the Silk Development Programme for future expansion phases;

prepare a back-to-office report and the Terminal Statement.

Duty Station: Rome

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WORK PLAN Annex 3

OUTPUTS/ACTIVITIES YEAR 1 YEAR 2

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

Output 1 Silkworm egg production centre established

Activity 1.1 Site selection and plot planning X X

Activity 1.2 Construction of laboratory (Gov. Cambodia) X X X X X

Activity 1.3 Purchase and installation of equipment X X X X X

Activity 1.4 Mulberry plantation X X X X

Activity 1.5 Prepare management plan and train staff X X X X X

Activity 1.6 Production of silkworm eggs X X X X X X X X X X

Output 2 Cocoon reeling facility established

Activity 2.1 Identify suitable sites and arrange plan X X X

Activity 2.2 Purchase and installation of equipment X X X X X

Activity 2.3 Train staff and operate cocoon reeling X X X X X X X X X X X

Output 3 Set-up seven demonstration farms

Activity 3.1 Identify suitable sites and arrange plan X X X X X X

Activity 3.2 Propagate mulberry saplings X X X X X X

Activity 3.3 Plant mulberry trees X X X X

Activity 3.4 Silkworm rearing and training farmers (3 times) X X X X X X

Output 4 Capacity building of Government staff and producers Activity 4.1 Plan schedule and prepare training guide in local language

X X X X X

Activity 4.2 Carry out training courses (4 times) X X X X X X X X

Output 5 Formulate Sericulture Development ProgrammeActivity 5.1 Study the feasibility of the sericulture value chain

X X

Activity 5.2 Discuss with Government through workshops (3 times)

X X X X X X

Activity 5.3 Finalize draft document X X

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Annex 4.1

EQUIPMENT, SUPPLIES AND MATERIALS (IN USD)

Itemized List of Equipment

Equipment Quantity Unit valueTotal (USD)

Drier with fan for cocoons and silkworm moth 1 25 000 25 000

Generator for electricity 1 15 000 15 000

Incubator for silkworm eggs (10-40) 1 8 000 8 000

Temperature & humidity controller 2 2 500 5 000

Refrigerator for egg preservation 3 3 000 9 000

Microscope for moth inspection and egg observation 4 2 500 10 000

Centrifuge (3 000 rpm) for moth inspection 1 5 000 5 000

Balance (200 g, 2 kg and 100 kg) 10 500 5 000

Thermometer and hygrometer 30 100 3 000

Mulberry cutting machine 1 2 000 2 000

Cocoon floss remover 8 1 000 8 000

Cocoon cooking apparatus 1 5 000 5 000

Cocoon reeling machine (cocoon testing) 1 15 000 15 000

Computer with internet connection 3 2 000 6 000

Total 121 000

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Annex 4.2

EQUIPMENT, SUPPLIES AND MATERIALS (IN USD)

Itemized List of Materials and Supplies

Materials and supplies QuantityUnit value

Value (USD)

Silkworm eggs 70 cases 20 1 400

Mulberry saplings 50 kg 80 4 000

Silkworm rearing tools (wooden trays, etc.) 8 farms 700 5 600

Materials for silkworm egg production 20 400 8, 00

Materials for mulberry cultivation 8 farms 1,500 12 000

Chemicals (Formaldehyde, lime, calcium chloride, hydrochloride, alcohol, etc.)

8 farms 600 4, 00

Cocooning frames 8 farms 300 2 400

Laboratory wears 30 100 3, 00

Fuels and the others - - 5 000

Total 46 200

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Annex 5

PROPOSED ORGANIZATION ARRANGEMENT AND FUNCTION

MAFF(DAALI)

Southwestern. Egg Production Centre (near Phnom Penh)

Maintenance of genetic resources Silkworm egg production Training of staff/extension workers Oversee the seven Demonstration Farms

Seven demonstration farms(Provinces)

Propagation of mulberry saplings Incubation of silkworm eggs Young silkworm rearing for distribution Silkworm rearing for cocoon productionTraining of sericulture farmers

Sericulture Farmers(Province/District)

Cultivation of mulberry trees Silkworm rearing for cocoon production

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Annex 6.1

TYPICAL PLAN OF SILKWORM EGG PRODUCTION CENTRE (SEPC)

(Total one ha of land needed in a suburb of Phnom Penh)

Office

Meeting room

Cold storage 1

Cold storage 2

Incubation room

Silkworm egg

preparation

Cocoon reeling

facility

Moth

inspection

laboratory

Silkworm rearing house (training)

Lecture room 6 m

12 m

20 m

Cocoon

storage

Mulberry field

18 m

6 m

Mulberry field

Mulberry field

Mulberry field

Mulberry variety collection

15 m

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Annex 6.2

TYPICAL PLAN OF A DEMONSTRATION FARM (DF)

(about four ha each – in seven provinces)

Young silkworm rearing house (1st

-3rd instar)

Lecture room 10 m

Mulberry field Mulberry field

Mulberry saplings propagation

Mulberry field

Mulberry variety collection

Grown silkworm rearing house (training)

12 mMulberry storage

25 m

Incubation room

25 m

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Annex 7

INDICATIVE FINANCIAL CALCULATIONS

The table below shows the gross margin per hectare (before cash expenditure and family labour) of major crops in Cambodia. Sericulture produces the highest gross margin, although labour requirement is also high at about 400 person/day (person/day for rice 90, soybeans 115, and corn 125). In the environment where there is labour surplus, sericulture is considered suitable as it provides employment continuously. In addition, labours are light in nature, thus suitable for women, and could be performed from their home bases.

Gross Margin of Selected Crops

Crop Productivity (kg/ha) Unit price (USD) Gross Margin (USD)

Rice 2 500 0.22 550

Corn 3 600 0.20 720

Soybean 1 400 0.45 630

Sericulture/cocoon 750 3.00 2 250

Assumptions:

For sericulture/cocoon production, as there is no credible existing data, the following theoretical but rather realistic assumptions have been made based on the agro-climatic conditions of Cambodia:

farmers could rear five cycles per year; six boxes of cocoon can be produced per cycle; cocoon weight of 25 kg per box; fresh cocoon price of USD 3/kg

Therefore the gross margin: 5 x 6 x 25 x 3= USD 2 250

Once mulberry trees are grown, the real sericulture production cost is almost negligible, except labour, mostly supplied by family labour. It is estimated about 400 person/day would be required to produce the above gross margin, of which about 90 percent will be women labour. Based on the above assumption, the return by labour/day is estimated at USD 5 6, far higher than the prevailing market labour rate (mostly for men) at about USD 2 5/ day. Another positive aspect of sericulture is that it produces income continuously, roughly every two months.

There are concerns about competition from rubber plantation, as it is getting more profitable due to price increase in recent years. Although rubber plays an important role in the Cambodian agricultural economy, as a policy, the Government would need to diversity its agricultural economy, i.e. to include sericulture. Rubber still produces lower gross margin compared with sericulture. Besides, while rubber plantation would require sizable land to be viable (mostly undertaken by entrepreneurs), sericulture could be performed by smallholders with various sizes of land, thus benefit more to smallholders. This is a good tool to reduce poverty and unemployment in rural areas.

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PART V: VARIOUS APPENDIXES

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Appendix 1: Additional reading on the project costs and analysis

APPENDIX 1: ADDITIONAL READING ON THE PROJECT COSTS AND ANALYSIS

A. Project Costs

In almost all project analyses, costs are easier to identify (and value) than benefits. In every instance of examining costs, we will be asking ourselves if the item reduces the net benefit of a farm or the net income of a firm (objectives in financial analysis), or the national income (objective in economic analysis).

Items for Inclusion in the Project Costs

- Include all components and inputs necessary for the project's success, regardless of source of financing - i.e. include the value not just of public sector inputs but also of farmers' own contributions to the investments, whether in cash, materials, equipment or in the form of labour.

- While projects were once regarded as vehicles for financing capital investments only, most financing agencies have broadened the definition of eligible items to include such items as:

- Incremental operating costs - i.e. recurrent costs over and above the "normal" running costs of the concerned agencies - incurred during the disbursement period specifically for the implementation, management and monitoring of the project.

- Technical cooperation, either foreign or national, aimed at increasing the capacity of concerned institutions to implement the project. Note that such technical assistance should usually be treated as a category of investment expenditure (related to specific project components, such as "project management") rather than as a project component in its own right.

- Training, both overseas and local, aimed at improving staff capabilities: most frequently training is related to meeting the staffing requirements for implementing the project, but usually training aimed at more general institutional strengthening also qualifies for project financing.

- Project preparation costs, if these have been financed by reimbursable loans from the financing agency, for instance under the World Bank's Project Preparation Facility.

- Engineering costs and architects' fees that would be incurred during the disbursement period.

- Interest during construction: some financing agencies are prepared to consider as a project cost interest payable during the disbursement period of the loan. Amounts, however, can only be calculated once a financing plan has been finalized.

- Start-up costs: one-time costs such as legal fees, payments for feasibility studies, licensing or registration fees.

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- Studies and trials: particularly those concerned with project evaluation and aimed at providing a stronger technical basis for later projects.

- Working capital: to cover the projected incremental working capital required to bringa project-funded enterprise to the point at which it reaches steady-state operation.

Items Conventionally Excluded from Project Costs

- Sunk costs: costs which have been incurred prior to the commencement of a project (e.g. in constructing a dam prior to a project which would complete the irrigation water distribution network) are conventionally excluded from project cost estimates, but the amounts already invested should be noted if these are known.

- Taxes and duties: duties and other taxes on imported goods are usually excluded from project cost estimates, especially if the government has agreed to waive these. Should they be included, rates and amounts should be indicated so that appropriate adjustments can be made in the economic evaluation.

- Land: the value of land (e.g.. farm land) required for the project is normally excluded from project costs except in cases where important amounts have to be purchased by government for project implementation purposes (e.g. for construction of main canals in an irrigation system or for sitting of a wholesale market).

Level of Detail

While only a summary description is required of each component in the main text of the report, this must normally be derived from more detailed specifications and estimates given in annexes or working papers, or in separate studies, to which reference should be made.

A summary of the extent of detail and degree of accuracy appropriate at each step in the formulation of projects with engineering components, which is broadly relevant also for other types of projects. The level of design required for appraisal of civil works and machinery is a matter of engineering judgment, and treatment will depend on the nature of the investments, which may be considered in three broad groups.

- Important major works, such as dams, specialised processing plants, main roads. Detailed site investigations are normally required, and at least preliminary designs and specifications should be complete. All multilateral financing agencies have strict procedures to be followed in engineering studies and designs for major dams and for the resettlement of people displaced by reservoirs or other major works.

- Relatively homogenous repetitive works, such as tertiary and quaternary irrigation channels and drains. For these it is necessary to complete surveys and prepare detailed designs and quantity estimates for representative sample areas and, in all cases, for the area to be covered in the first year of the project. Total quantities and costs for the whole component can be derived by extrapolation.

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- Minor works, such as small bridges, farm access roads, etc. Estimates can be derived from standard type designs.

Most financing institutions accept that preliminary design standards form a satisfactory basis for project preparation. The World Bank, however, requires that "by the time of appraisal/negotiation, engineering work (field investigation and detailed design) should be well advanced so that bidding documents are available about the time of Board approval to facilitate tendering, to shorten the project cycle and provide accurate project costs". However, in the absence of specific instructions from the financing agency, preparation should not proceed beyond the point of ensuring completion of the work and studies necessary to provide an adequate basis for appraisal.

Where the degree of accuracy of the preliminary estimates is difficult to determine because of lack of adequate engineering or survey data, or where the extent of possible error is greater than that considered tolerable - and particularly in respect of those projects with borderline economic rates of return - it normally would be necessary to commission detailed engineering studies. This is most often the case in roads and port development projects, but it should also apply, for example, to the main canals or storage structures of an irrigation project.

B. Project Benefits

The benefits of agricultural projects can arise either from an increased value of production or from reduced costs. The specific forms in which tangible benefits appear, however, are not always obvious, and valuing them may be quite difficult.

Increased production

Increased physical production is the most common benefit of agricultural projects. An irrigation project permits better water control so that farmers can obtain higher yields. Young trees are planted on cleared jungle land to increase the area devoted to growing oil palm. A credit project makes resources available for farmers to increase both their operating expenditures for current production-for fertilizers, seeds, or pesticides-and their investment-for a tubewell or a power thresher. The benefit is the increased production from the farm.

In a large proportion of agricultural projects the increased production will be marketed through commercial channels. In that case identifying the benefit and finding a market price will probably not prove too difficult, although there may be a problem in determining the correct value to use in the economic analysis.

In many agricultural projects, however, the benefits may well include increased production consumed by the farm family itself. The home-consumed production from the projects increased the farm families' net benefit and the national income just as much as if it had been sold in the market. Indeed, we could think of the hypothetical case of a farmer selling his output and then buying it back. Since home-consumed production contributes to project objectives in the same way as marketed production, it is clearly part of the project benefits in both financial and economic analysis. Omitting

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home-consumed production will tend to make projects that produce commercial crops seem relatively high-yielding, and it could lead to a poor choice among alternative projects. Failure to include home-consumed production will also mean underestimating the return to agricultural investments relative to investments in other sectors of the economy.

When home-consumed crops will figure prominently in a project, the importance of careful financial

analysis is increased. In this case, it is necessary to estimate not only the incremental net benefit-including the value of home-consumed production and money from off-farm sales-but also the cash available to the farmer. From the analysis of cash income and costs, one can determine if farmers will have the cash in hand to purchase modern inputs or to pay their credit obligations. It is possible to have a project in which home-consumed output increases enough for the return to the economy as a whole to be quite attractive, but in which so little of the increased production is sold that farmers will not have the cash to repay their loans.

Quality improvement

In some instances, the benefit from an agricultural project may take the form of an improvement in the quality of the product. For example, the Livestock Development Project, which was to extend loans to producers of beef cattle, assumed that ranchers would be able not only to increase their cattle production but also to improve the quality of their animals so that the average live price of steers per kilogram would rise from US$12.2 to 14.4/kilo in constant value terms over the twelve-year development period. Loans to small dairy farmers in the Smallholder Dairy Improvement Project are intended to enable farmers not only to increase output but also to improve the quality of their product. Instead of selling their milk to make ghee (cooking oil from clarified butter), farmers will be able to sell it for a higher price in the fluid milk market. As in these examples, both increased production and quality improvement are most often expected in agricultural projects, although both may not always be expected. One word of warning: both the rate and the extent of the benefit from quality improvement can easily be overestimated.

Change in time of sale

In some agricultural projects, benefits will arise from improved marketing facilities that allow the product to be sold at a time when prices are more favorable. A grain storage project may make it possible to hold grain from the harvest period, when the price is at its seasonal low, until later in the year when the price has risen. The benefit of the storage investment arises out of this change in "temporal value."

Change in location of sale

Other projects may include investment in trucks and other transport equipment to carry products from the local area where prices are low to distant markets where prices are higher. For example, the Fruit and Vegetable Export Project included provision for trucks and ferries to transport fresh produce to outlets in the whole market. The benefits of such projects arise from the change in "locational value."

In most cases the increased value arising from marketing projects will be split between farmers and marketing firms as the forces of supply and demand increase the price at which the farmer can sell in the harvest season and reduce the monopolistic power of the marketing firm or agency. Many projects are

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structured to ensure that farmers receive a larger part of the benefit by making it possible for them to build storage.

Facilities on their farms or to band together into cooperatives, but an agricultural project could also involve a private marketing firm or a government agency, in which case much of the benefit could accrue to someone other than farmers.

Changes in product form (grading and processing)

Projects involving agricultural processing industries expect benefits to arise from a change in the form of the agricultural product. Farmers sell paddy rice to millers who, in turn, sell polished rice. The benefit to the millers arises from the change in form. Canners preserve fruit, changing its form and making it possible at a lower cost to change its time or location of sale. Even a simple processing facility such as a grading shed gives rise to a benefit through changing the form of the product from run-of-the-orchard to sorted fruit. In the Apple Marketing Project for exmple, the value of the apples farmers produce is increased by sorting; the best fruit is sold for fresh consumption while fruit of poorer quality is used to make a soft drink concentrate. In the process, the total value of the apples is increased.

Cost reduction through mechanization

The classic example of a benefit arising from cost reduction in agricultural projects is that gained by investment in agricultural machinery to reduce labor costs. Examples are tubewells substituting for hand-drawn or animal-drawn water, pedal threshers replacing hand threshing, or tractors replacing draft animals. Total production may not increase, but a benefit arises because the costs have been trimmed (provided, of course, that the gain is not offset by displaced labor that cannot be productively employed elsewhere).

Reduced transport costs

Cost reduction is a common source of benefit wherever transport is a factor. Better feeder roads or highways may reduce the cost of moving produce from the farm to the consumer. The benefit realized may be distributed among farmers, truckers, and consumers.

Losses avoided

The benefit may arise not from increased production but from a loss avoided. This kind of benefit stream is not always obvious, but it is one that the with-and-without test ( see below) tends to point out clearly. For example, lethal yellowing is attacking a Tall variety of coconut. The government has undertaken a large investment to enable farmers to plant Dwarf coconuts, which are resistant to the disease. Total production will change very little as a result of the investment, yet both the farmers and the economy will realize a real benefit because the new investment prevents loss of income. The benefit from the Drainage Project will arise not from increasing production in the already highly productive agricultural land, but from avoiding losses due to the waterlogging caused by year-round irrigation.

Sometimes a project increases output through avoiding loss-a kind of double classification, but one that in practice causes no problem. Proposals to eradicate foot-and-mouth disease envision projects by which the poor physical condition or outright death of animals will be avoided. At the same time, of course, beef production would be increased.

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Other kinds of tangible benefits

Although we have touched on the most common kinds of benefits from agricultural projects, those concerned with agricultural development will find other kinds of tangible, direct benefits most often in sectors other than agriculture. Transport projects are often very important for agricultural development. Benefits may arise not only from cost reduction, as noted earlier, but also from time savings, accident reduction, or development activities in areas newly accessible to markets. If new housing for farmers has been included among the costs of a project, as is often the case in land settlement and irrigation projects, then among the benefits will be an allowance for the rental value of the housing.

C. "With" and "Without" Project Comparisons

Project analysis tries to identify and value the costs and benefits that will arise with the proposed project and to compare them with the situation as it would be without the project. The difference is the incremental net benefit arising from the project investment. This approach is not the same as comparing the situation "before" and "after" the project. The before-and-after comparison fails to account for changes in production that would occur without the project and thus leads to an erroneous statement of the benefit attributable to the project investment.

A change in output without the project can take place in two kinds of situations. The most common is when production in the area is already growing, if only slowly, and will probably continue to grow during the life of the project. The objective of the project is to increase growth by intensifying production. The Livestock Development Project was appraised, for example, production in the national sheep flock was projected to grow at about 1 percent a year without the project. The project was to increase and stabilize sheep production and the incomes of seminomadic flock owners and sheep fatteners by stabilizing the availability of feed and improving veterinary services. With the project, national flock production was projected to grow at the rate of 3 percent a year. In this case, if the project analyst had simply compared the output before and after the project, he would have erroneously attributed the total increase in sheep production to the project investment. Actually, what can be attributed to the project investment is only the 2 percent incremental increase in production in excess of the 1 percent that would have occurred anyway.

A change in output can also occur without the project if production would actually fall in the absence of new investment. For example, the coast was subject to erosion from wave action. Under the Sea Defense Project, the government has built seawalls to prevent the erosion. The benefit from this project, then, is not increased production but avoiding the loss of agricultural output and sites for housing. A simple before-and-after comparison would fail to identify this benefit .

In some cases, an investment to avoid a loss might also lead to an increase in production, so that the total benefit would arise partly from the loss avoided and partly from increased production. For example, agricultual land is subject to progressive salinization as a result of heavy irrigation and the waterlogging that is in part attributable to seepage from irrigation canals. Capillary action brings the water to the surface where evaporation occurs, leaving the salt on the soil. If nothing is done to halt the process, crop production will fall. A project is proposed to line some of the canals, thus to reduce the

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seepage and permit better drainage between irrigations. The proposed project is expected to arrest salinization, to save for profitable use the irrigation water otherwise lost to seepage, and to help farmers increase their use of modern inputs. The combination of measures would not only avoid a loss but also lead to an increase in production. Again, a simple before-and-after comparison would fail to identify the benefit realized by avoiding the loss.

Of course, if no change in output is expected in the project area without the project, then the distinction between the before-and-after comparison and the with-and-without comparison is less crucial. In some projects the prospects for increasing production without new investment are minimal. For example, a pump irrigation scheme was built that permitted farmers to produce a second rice crop during the dry season. Without the project, most of the area was used for grazing, and with the help of residual moisture or small pumps some was used to produce tobacco and other cash crops. Production was not likely to increase because of the limited amount of water available. With the project now in operation, rice is grown in the dry season. Of course, the value of the second rice crop could not be taken as the total benefit from the project. From this value must be deducted the value forgone from the grazing and the production of cash crops. Only the incremental value could be attributed to the new investment in pumps and canals.

D. Financial Prices

It is conventional practice to use prevailing, normal input and output prices in the financial evaluation of crop budgets, farm models or agribusiness enterprises. Farm-gate prices for farm-level analysis are usually derived from interviews with farmers or from wholesale and retail market price reports, adjusted for transport costs and traders' margins. The analyst, however, should explain the nature of any key factors affecting price formation, assess the extent to which the assumed prices are likely to be sustainable and, if there are doubts on this, test the sensitivity of the models to price changes. The accountant's principle of prudence should, in general, be adopted in making financial price assumptions for both inputs and outputs. Thus, appropriate adjustments should be made if prices prevailing at the time of project preparation were out of keeping with trends, were unduly low or high because of seasonal gluts and shortages, or were likely to be influenced by the project itself - eg. through increasing demand for labour or through increasing the supply of a commodity to such an extent that it might influence prices on domestic or even international markets. Compensatory price adjustments might also need to be made, for instance, to the prices of inputs, if there were signs of impending changes in incentive policies. This would be especially necessary if such adjustments in incentives are recommended in the report itself.

Conventionally, financial price projections are not adjusted for forecast changes in the international prices for traded commodities. There is, however, no logical basis for such differential treatment of economic and financial price adjustments and, at least where significant downward changes in international prices for outputs are foreseen or where there is a strong likelihood of input price rises (e.g. as a result of demand generated by the project or through government commitments to reductions in subsidy), these should be reflected in the assumptions made in the financial analysis.

It is usual to make projections of prices - both financial and economic - in constant money terms, eliminating the effects of inflation which are implicitly assumed to affect input and output prices

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equally. Consequently it is important that all prices and costs refer to the same point in time, which must be clearly stated.

Financial price assumptions for the main inputs and outputs should be summarised in a text table, where they may be usefully compared with economic prices (see below).

E. Economic Prices

For those inputs or commodities which could have a significant bearing on the viability of the project, an explanation must be given of the assumptions underlying the forecasts of economic prices used in project evaluation. In this, a distinction must be made between traded and non-traded goods, and a decision must be taken as to whether to compensate for distortions in the pricing of foreign exchange through the use of a shadow exchange rate or through the application of conversion factors to the price of non-traded goods. If the analyses are carried out correctly, the final result should be the same. However, the use of conversion factors is to be preferred since it allows for differentiated treatment of different categories of traded goods.

In the case of internationally traded commodities such as fertilizer, grains, oilseeds or lumber, prices are usually derived from forecasts prepared periodically by the World Bank. The accuracy of these forecasts and the related assumptions on inflation have often been questioned on the basis of retrospective assessments of earlier forecasts, but no better series has been developed and their use has the advantage of ensuring a measure of consistency in pricing between projects and countries. Nevertheless they should be interpreted with caution. Before use, the forecast prices should be converted to constant prices for the date of project preparation. It is then usually necessary to convert these figures to farm-gate prices by working backwards from the international forecast price, making adjustments for the economic cost of shipping, handling, internal transport and distribution and making allowances also, if necessary, for quality differences. Direct and indirect transfers (such as taxes or subsidies) are eliminated in the calculation and an important decision which has to be taken is whether a given commodity should be valued in import parity terms (in the case of products for which there is an unsatisfied national demand) or export parity terms, since this will have a major influence on the value given to that commodity in the analyses.

For non-traded goods, such as farm labour, locally-made raw materials (eg bricks) or many fruits and vegetables, the aim is to set prices which reflect their opportunity costs. The market price equals the opportunity cost in a truly competitive market; but in practice, distortions (for example official minimum wages, value-added tax etc.) exist in most cases, which require that adjustments be made to the financial price. It should be borne in mind that for non-traded goods, derivation of economic prices requires two steps: first, assessing the opportunity cost of the goods, which may be higher or lower than the nominal price (but may be equal to it where competitive markets exist); secondly, applying to the opportunity cost the appropriate conversion factor. Guidance on appropriate conversion factors can usually be obtained from economics staff of national planning agencies or of the financing agencies.

Unskilled labour is the most important non-traded commodity in most projects. It used to be customary to assume opportunity costs well below wage levels. However, experience has shown that the real opportunity cost is generally much closer to the actual wage levels. Caution and close scrutiny are

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therefore indicated before assigning low (or even zero) opportunity costs for labour. Seasonality is a key factor here. In seasons of peak activity, when the total rural labour force may be occupied, the opportunity cost is likely to be close to the prevailing daily wage rate, whereas in the slack season it may fall considerably below the amount actually paid to farm workers. All incremental unskilled labour employed at a particular time, whether paid in cash or kind or contributed free of charge by the farm family, should be valued at the same opportunity cost.

F. Financial Analysis

The approach to financial analysis may vary depending on the type of project proposed. At the entity level, the analysis also assesses the financial structure, efficiency, and viability of the project entity on the basis of audited historical and pro forma financial statements, using financial ratio analyses and measurements against relevant industry comparators or averages.

This section should show, largely through reference to the farm models, or through household models if non-farm income is significant, what would be the expected impact of adopting the recommended technologies on the income and welfare of typical individual producers, or in some cases, communities. Models should be developed for each major beneficiary type, an attempt being made to ensure that each model represents a typical situation in terms of farm size, farming system or tenure status. An example below gives a summary description of farm models, which would then be followed by a summary of analytical results. Models or, if these entities are already defined, projections of financial results, should also be prepared for any trading or processing units to be funded by the project. Earlier sections should have indicated the nature of the constraints and needs faced by each type of producer, the opportunities for increased production, and the technical strategy by which it is intended to open these opportunities to them. The results summarised at this point should focus on the same strategy and opportunities but express the expected results in financial terms, using the estimated prices which will be justified in the following chapter.

The essential elements of production models are forecasts of land use and input needs, with and without the intervention of the project, and of productivity or yields. From these a forecast of physical output is derived, on which a value can be placed by attributing prices to each commodity. In portraying inputs, the models should distinguish between those of a capital nature (for example, land improvement, planting and early maintenance of tree crops, or purchase of breeding stock or machinery), and recurrent elements such as seeds, fuel, feed or fertilizers. In complex farming systems it is useful to build the models on the basis of a series of crop or livestock budgets, illustrating expected inputs and outputs for each commodity to be produced and demonstrating their inherent viability. These budgets and the complete models should include forecasts of the quantities, prices and costs of all purchased inputs used, and the quantities of any inputs (such as family labour or draught power) provided at no financial cost.

Summary Description of Farm Models Example

Two farm models have been used to examine the attractiveness of project participation to rainfed farmers in the project area.

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Model A: represents a female farmer with 0.7 ha of land who produces sorghum, millet and interplanted cowpeas, largely for subsistence, who has no access to official credit, few cash savings, and is unable to risk major innovations. It is assumed that she would take up, although initially on only 25% of her planted area, the shorter-term sorghum and improved cowpeas which are already gaining acceptance in the project area. In addition to improving the supply of these seeds, the project would promote low-cost seed dressing to improve crop establishment, and timely sowing and weeding to optimize use of available rainfall.

Model B: represents a male-headed household with 2.5 male equivalents of available labour, which cultivates 2.5 ha using manual techniques. In addition to this area of traditional cereals and legumes, of which there is a small marketable surplus in most years, this farmer has six sheep which feed on natural vegetation and crop residues and represent a form of savings to be drawn on in unfavourable years. Here the changes envisaged for Model A would be supplemented by the purchase of low doses of fertilizer on credit. Parallel emphasis on livestock health (vaccination/endo-parasite control), management (selective castration) and nutrition (improved conservation of natural fodder and crop residues) would increase flock size, thus offsetting increased risks and returning more organic matter to the soil. Extension would emphasize combining the FYM with careful timing and placement of the inorganic fertilizer, to maximize efficiency in use of this purchased input.

Farm models also provide the basis for estimating the likely long and short term credit needs of project participants, and for forecasting their debt service obligations. Particular care needs to be taken by the analyst in estimating working capital requirements and the means by which these can be financed.

The cost and return implications derived from the financial analysis of the crop or enterprise budgets can usefully be summarised in a short text table which may also compare financial return per unit of land, labour, cash expenditure, cubic metre of water etc., without and with the project. Only after it is clear that all activities amongst the building blocks of the models are financially viable is it justified to proceed to an analysis of a financial model of the complete farm or enterprise over time. A further summary table or tables should be given for the key results from the analysis of the annexed financial models.

Financial models should assume constant financial unit costs and prices over the period of analysis, unless there is any special reason to depart from such assumptions - for instance, if the expected output from the project would be big enough to depress product prices. If, as is the case in inflationary situations, there is a major discrepancy between nominal and real interest rates, it is appropriate to adopt the real rate in calculating debt service obligations, while at the same time also holding prices constant.

The basic models which are analysed in annexes and summarised in the main text should aim to represent average situations. In practice however, physical and financial results are likely to vary significantly between farmers and from one year to another due to factors such as weather differences or pest attacks. There may also be a general shortfall in assumed average productivities due, for instance, to unforeseen difficulties by the beneficiaries in mastering a new technology or by their taking a step-by-step approach and adopting only a part of any proposed package. In addition, relationships between costs and prices may change as a result of market trends or be deliberately manipulated by government policy intervention. For such reasons, a series of variants on the basic financial models may need to be

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run to demonstrate the extent of their sensitivity to risks or changes. The purpose of these variants is to show whether or not the project's technical strategy is robust enough to sustain project beneficiaries through misfortunes such as a series of consecutive years of unfavourable weather or a drought falling in the first year of their project participation. The variants may also be used to assess the implications for project participants of alternative pricing policies or market scenarios, or of partial adoption of technology.

The results of any financial model must be interpreted with considerable care, however. The mere calculation of an attractive financial rate of return on investment should not be taken to imply that the proposed technical changes will necessarily capture the interest of all farmers. For a small-scale farmer the most attractive opportunity may be to earn more per day of family labour, or perhaps to generate more of the family's needs for subsistence food with less cash outlay, labour or risk so that resources can be freed for more profitable (perhaps off-farm) use. For small farmers, concerns over the risks implied by innovation are particularly likely to affect the response to project opportunities. For the specialist vegetable grower who is restricted to a small, perhaps irrigated, area, yield per hectare (or return per cubic meter of scarce water) may be the most important criterion to examine. On the other hand for large-scale commercial farming or processing, net production cost per ton, a balanced cash flow or the financial return on equity capital may be the critical parameters. The analysis should always be made in those terms which are thought (or, ideally have been shown through diagnostic studies) to be those most relevant to the people whom the project is intended to benefit.

For some projects the individual household or firm is not the appropriate unit for analysis. For instance, many components of projects for improved land management, natural resource conservation or social forestry are intended to bring benefits to the community as a whole. In the justification of these projects it is desirable to simulate the impact of the proposed changes both on typical individuals and on the overall community (or communities) dependent on the resources. Such modelling may in many cases be better carried out in physical rather than

G. Economic Analysis

For projects amenable to cost-benefit analysis, the analysis is based on summary measures of performance (economic rate of return or net present value), calculated on the incremental benefits and costs of the project to society as a whole (using the “with-project and without-project” criterion). The main benefits and costs, including the key underlying assumptions made (e.g., market output for key outputs and inputs, phasing of development, shadow prices) and sensitivity analysis should be presented. For projects not amenable to a cost-benefit analysis, the presentation states the basis for deciding on the merits of the project. For example, it may compare the project's cost-effectiveness ratios with those of alternative designs that achieve the same desired results. The analysis should identify those key variables that render the cost-effectiveness ratio higher than that of a rejected alternative, or higher than some critical point. All key assumptions should be presented

A project's economic benefits consist of the net incremental value of production (expressed in economic prices) attributable to the investments being financed by the project. To establish the extent of incremental costs and benefits, it is necessary to compare what would happen without the project with what would occur with the project. In some cases it is possible to assume that, without

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the project, the present (i.e. pre-project) situation would persist. In other cases, however, there may be historical evidence to suggest that, even in the absence of any intervention; production would continue either to rise (as a result perhaps of spontaneous settlement in a new agricultural area) or to fall (perhaps because of progressive increases in soil salinity in the absence of drainage).

There are several measures which can be used to demonstrate the economic feasibility of the project, some of which take account of the distributional impact of benefits: each has its own advantages and disadvantages. However, attention here is confined to the Economic Rate of Return and the Net Present Value concepts.

The Economic Rate of Return (ERR) may be defined as "the rate of discount at which the total present value of costs incurred during the life of the project is equal to the total present value of benefits accruing during the same period". Typically, in investment projects, costs are bunched at the beginning of the project, while benefits only begin to accrue after a lapse of time. Obviously benefits earned and costs incurred in the near future have higher values than similar benefits or costs arising several years hence. The application of a discount factor enables these costs and benefits to be compared on a present value basis, taking into account differences in the timing of expenditure and income. High initial investment costs and comparatively smaller but immediate benefits may give more satisfactory rates of return than the same investment costs followed by a longer development period and larger benefits.

To calculate the economic rate of return - whether on a whole project or on certain of its components - it is necessary to construct a table (which should be given in an annex) showing the forecast streams of incremental costs and benefits, and the resulting incremental net balances, as they accrue each year during the life of the project. The life of the project is usually taken as the period corresponding with the useful life of the major investment components, and typically ranges from around 15 to 30 years. Using Excel, the rate of return is calculated. The adequacy or otherwise of this rate may then be judged against criteria such as the opportunity cost of capital in the particular country where the project is to be implemented. As a very rough rule of thumb, the project analyst might recognize that the project is in the "danger zone" if the rate arrived at is less than about 10 to 12%, the minimum ERR conventionally acceptable to many financing institutions, but one which is probably still considerably above the long-term opportunity cost of capital.

The cost streams used in the construction of the foregoing table should include the capital costs of the project (including physical - but not price - contingencies) plus the operating, maintenance and replacement costs of project works expressed in economic prices; they should also include the operating costs incurred by the farmers or other project beneficiaries, as well as in providing services and running the project's management system. Operating costs for participating farmers or other beneficiaries may be derived from the representative models or crop budgets or herd models aggregated according to the number of units to give the overall project estimates. Annual maintenance costs are usually estimated on the basis of an appropriate percentage of the capital costs of the works concerned (e.g. drains 4%, roads 3%). If the life of certain project-financed investments is less than the assumed life of the project (which is nearly always the case), provision should be made for the cost of their replacement when this is needed. Residual values of project-funded assets should be taken into account as benefits, usually at the end of the project life. In some cases (e.g. when equipment used in construction is transferred to another project) a residual value may be applied earlier in the project life and attributed to project income. The

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economic benefits stream will normally include the value of the incremental output of the project. These values should reflect any price improvements attributable, for instance, to improved quality.

One of the main problems with using the ERR as a measure of economic viability is that it is only a relative measure, which gives no indication of the magnitude of the benefits.

Thus a large project with a relatively low rate of return may generate more benefits in absolute terms than a small project with a very high return. In cases where this could be a problem - particularly where comparisons between different options are needed - the use of the Net Present Value (NPV) is appropriate. This is derived by discounting the net benefit stream by a factor equal to the estimated opportunity cost of capital.

For some types of projects such conventional approaches to economic analysis may be largely meaningless, either because of the difficulties of estimating the magnitude of the benefits (for example to investments in research or extension services) or because of valuation problems (e.g. protection of biodiversity). In such cases it may be sufficient to demonstrate that the proposals represent the least cost (i.e. most cost-effective) approach to attaining a set of agreed objectives.

H. Fiscal Implications

For all projects, analysis of financial soundness includes examining the fiscal sustainability of the proposed project (including incentives for maintaining and operating the project adequately). This includes an evaluation of the impact of the project on government finances, taking into account (a) the incremental taxes and subsidies that would result from the project; (b) the increase in recurrent costs resulting from the project and the prospects for financing this increase; (c) the government’s current fiscal situation; (d) the overall level of recurrent costs required to operate the sector adequately and the volume of financing provided by the Government in the recent past; and (e) the availability and certainty of counterpart funds for the project.

Estimates should be presented of the net public cost of the project. This is the place to explain assumptions on cost recovery rates and mechanisms and to examine the extent to which they would cover the capital and operating costs of the assets and services being financed by the project. If there are significant government revenues from taxes on agricultural output, trading, processing or export, these should also be quantified and taken into account. To the extent that, conversely, there would be a continuing net call on government funds, for example for the provision of agricultural support services or subsidies on inputs, the amount should be quantified and an assessment made as to whether the government would be in a position to sustain its obligations once external funding ceases. Given the number of projects which have run into funding problems at the conclusion of the disbursement period, these analyses are important in arriving at a financially sustainable project design.

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Appendix 2: FAO TCP guidelines

APPENDIX 2: FAO TCP GUIDELINES

TCP PROJECT CYCLE

This part of the Guidelines describes the regulations and standard procedures that should be applied at the various steps that constitute the TCP project cycle7.

I. Country Priority Setting Process and TCP project Identification

National priority setting

1. The TCP seeks to respond to the problems identified by the national stakeholders and requested by national governments. However, given the limited availability of TCP resources, not all requests can be supported, and the FAO Rep concerned will assist the government in a priority setting process that will ensure that TCP assistance is provided in those sectors or technical fields that present the best and most strategic areas for FAO’s intervention. TCP assistance should, to the extent possible, be fully consistent with the national development frameworks, including the United Nations Development Assistance Framework (UNDAF) and, where it exists, the National Medium-Term Priority Framework (NMTPF8). The priority setting process is supported by the FAO Policy Assistance Division and the Multi-disciplinary Teams in the Subregional Offices, where they exist.

Identification of TCP ideas and formulation of project outlines

2. The priority setting process normally results in specific ideas for TCP projects. Stakeholders concerned are encouraged to prepare project outlines for those project ideas, which have been retained as having the highest priority. The project outline (ANNEX 1 of these guidelines) should provide the necessary elements for exploratory discussions with all stakeholders and may also be shared, by the government and with the assistance of the FAO Rep if appropriate, with donors to explore their interest in contributing to reaching the project objectives and/or to ensuring follow-up. The project outline is screened by the FAO Rep and shared with the concerned technical units in FAO and TCOT as early as possible, for advance review to assess their technical merits and feasibility, and the likelihood of eligibility against the TCP criteria. The outline can be substituted by a fully formulated project document based on the format in ANNEX 2.

Co-financing

3. While eligible TCP projects can be approved in support of, or complementary to, programmes and projects funded by the government or by donors, TCP resources cannot be used to make a

7 Refer also to Field Programme Circular FPC 2003/04 “Project Cycle” which describes the steps and responsibilities in FAO projects.8 The NMTPF is a planning and management tool. It outlines how FAO can best assist the country in meeting its priorities, including MDG targets. The NMTPF is an FAO input in the UN Common Country Programming Process such as (UNDAF) and is being gradually introduced.

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purely financial contribution to a larger programme or to pre-commit resources to “basket-funding” arrangements9.

Non-duplication

4. TCP resources cannot be used to repeat previous TCP projects in the same country, or as a substitute for government follow-up to previous TCP projects or to compensate for ineffective follow-up.

II. Submission of Official Requests

5. Requests for TCP assistance must be addressed to the Director-General of FAO. The ADG/TC may receive requests on behalf of the Director-General. In those countries where FAO has an accredited representative, the requests are normally channelled through him/her.10

6. At any given time, a government may submit requests for assistance to FAO. The FAO Rep screens all requests to assess whether they relate to priorities identified in the context of the priority setting process and whether they take account of the preliminary feedback, if any, obtained from the FAO technical units. The FAO Rep is required to ensure that there are not more than two to three official requests for TCP assistance pending approval from a given country at any given time. Depending on the number of official requests received from the government concerned, and considering the limitations of FAO to accommodate all requests, the FAO Rep may need to consult with the government to prioritize the requests received. The results of these consultations should be shared with the FAO units concerned (in particular with the relevant technical divisions and TCOT) in order to maintain an up-to-date overview of the TCP pipeline.

7. The official request may be in the form of a letter or fax and can be scanned and transmitted by electronic mail. The communication submitting the request should confirm that it has been endorsed by the government authorities responsible for the coordination or planning of external technical cooperation or any other entity defined by the government as the official channel of communication with FAO11, as well as by the technical ministry concerned with the subject matter.

8. In cases where a request originates from an entity other than a national government, ministry or agency (e.g. from non-governmental organizations, national foundations, cooperatives, unions or other non-profit organizations), it should be officially submitted by the government authorities responsible for the coordination of external technical cooperation. Endorsement by the technical ministry concerned with the subject matter should also be assured.

9 Examples of “basket funding”: Sector-Earmarked Support (SWAP [Sector Wide Approach]), Jointly-funded government projects, jointly funded donor projects.10 In countries where there is no FAO accredited Representative, this function is covered by the UNDP Resident Representative and, if there is no UNDP Resident Representative, it is covered by the FAO Regional or Subregional Office, or FAO headquarters, as appropriate. 11 Government institutions representing the official channel of communication are listed on FAO Intranet at: http://intranet.fao.org/offsiteframe.jsp?uu=http://afintra01.fao.org/internal/ois/bulletin/Corrdir/Corrdir.htm

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9. Requests for regional and interregional assistance may be submitted through two modalities:

a. requests submitted by intergovernmental organizations recognized by FAO on behalf of all or some of their members. Such requests do not require further validation from individual governments;

b. requests submitted by several governments. These can be considered when there are no established regional bodies or when governments seek to work together directly rather than through a regional organization. Requests of this type must be accompanied by expressions of interest from all the governments involved, except in the case of regional emergency projects, for which requests from only three governments may trigger wider regional action, in particular in the neighbouring countries, if affected by the same emergency crisis.

Requests should be accompanied by a draft project proposal (see ANNEX 2) or, at least, by a project outline (see ANNEX 1) containing the necessary information to appraise the request against the TCP criteria.

III. Project Formulation and Approval

10. The FAO Rep, or the Subregional Representative or Regional Representative in case of requests related to the subregion or region, screens the request and compiles supporting documentation that will facilitate independent appraisal. In case a request does not provide enough information for appraisal, the FAO Rep will provide guidance to the requesting entity in formulating a project outline, as described above, or a more complete project document, if information is available.

11. The responsibility for submitting a draft project document following the TCP format rests with the requesting national technical agency or government service. FAO will, through its technical services, assist in the finalization of the document.

12. Technical divisions are reimbursed for the work carried out by FAO technical staff to formulate project documents12. In cases of special need, additional resources for the formulation can be made available at the request of the government through the TCP Facility (see ANNEX 4).

Appraisal

13. All requests are subjected to a thorough review and appraisal at different levels of the Organization, involving the FAO Rep, TCOT, the LTD and other technical entities. The review and appraisal process is managed and coordinated by TCOT; in the case of the TCPF this process is managed by the FAO Rep, under the guidance of TCOT.

14. The appraisal process aims at ensuring that:

12 At standard rates upon project approval (see FPC 2005/01, Reimbursement of FAO Technical Support Services in TCP Projects).

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the support requested falls within FAO’s mandate, strategic goals and priorities and is consistent, where it exists, with the NMTPF (responsibility of the FAO Rep);

the proposal is not a repetition of or follow-up to previous TCP assistance and that it does not duplicate other activities, especially supported by external assistance (responsibility of TCOT and the FAO Rep);

the request meets the TCP criteria (responsibility of TCOT);

the proposed support is operationally feasible; the objectives stated are achievable with the planned resources and the timeframe indicated in the project document 13;

the proposal is technically sound and realistic in its layout; its objectives and resources are logically articulated and FAO’s technical units have adequate capacity to backstop project implementation (responsibility of LTD through its officers in the Regional and Subregional Offices or at headquarters, as appropriate, and other technical units associated with the project).

15. The FAO Rep appraises requests that are submitted within the framework of the TCPF to ensure their eligibility for TCP funding. The result of the appraisal as well as his/her report on the use of the TCPF, are posted by the FAO Rep in the FPMIS.

16. For all requests not covered by the TCPF, the FAO Rep submits an In-Country Appraisal14

(ICA) in which he/she provides a personal and independent assessment of the importance and context of the request, emphasizing specifically its relation to government, UN and donor policies and priorities, and the likelihood of follow-up activities. The project documentation elaborated at country level, including the ICA, should be transmitted to TCOT for review, appraisal and further processing.

17. If, following the appraisal of the request for its compliance with TCP criteria or its technical and operational feasibility or for reasons related to the financial possibilities of TCP, the requested assistance cannot be approved, the government is informed immediately by the ADG/TC, or by the Chief, TCOT, directly or through the FAO Rep.

Finalization, review and clearances

18. All non-emergency projects are reviewed by the Programme and Project Review Committee (PPRC) to ensure their compliance with the general orientation and policies of the Organization15.

13 See FPC 2001/06, “Procedure for the operational clearance of project proposals”.14 See also in FPMIS, FPC 1998/04 “In-country Appraisal of Requests for New Technical Assistance Project Proposals” from which the ICA form can be extracted.15 For Terms of Reference of the PPRC and format of the Project Review Sheet, please see the PPRC Web site at http://internal.fao.org/ois/BULLETIN/ProjReview/PPRC.htm.

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19. If the project document that results from the above process differs significantly from the original request, it may be sent to the requesting government or the national implementing agency for examination and formal endorsement. If the project document is in direct response to the problem defined in the request, the project is submitted for approval.

Approval

20. Authority for project approval rests with the Director-General, who may delegate it to a senior official of the Organization who is normally the ADG/TC. He/she informs the government of project approval through the official channels of communication, designates the budget holder responsible for operating the project and declares it operational through the established procedures.

21. The project document is signed by the FAO Rep and by a representative of the recipient government or intergovernmental organization.

IV. Project Implementation and Completion

Start-up

22. Project implementation arrangements and guidance are described in FAO’s Field Programme Manual and relevant Field Programme Circulars16 available from FPMIS.

23. The project is implemented jointly by FAO and the national partner institution designated by the government (or the intergovernmental organization), which are responsible for providing their respective contributions as per signed project document. The general provisions contained in ANNEX 3 apply to all TCP projects.

24. On FAO’s side, the unit operating the project - in most cases, the FAO Rep - is designated by the ADG/TC as its budget holder. The budget holder operates the project in accordance with the following principles:

The project should be implemented in compliance with TCP criteria and regulations and in accordance with FAO rules, regulations and procedures. In particular, the budget holder is responsible for ensuring cost-effectiveness and full transparency in the utilization of project funds according to FAO’s standard accounting practices.

A Project Task Force is to be established, within two weeks after project approval, that is composed of members of the technical services concerned by the project and the TCOT officer concernedError: Reference source not found.

The overall responsibility for project operations rests with the budget holder who is accountable for the use of project resources in accordance with the project document and for ensuring timeliness of action as established in the project’s work plan which, if not

16 FPC 2002/02, “Project Task Force Consultations” and FPC 2003/04, “Project Cycle”

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already included in the project document, should be prepared at project start. The work plan should be flexible and revisable at any time, and will constitute a guide for all stakeholders to provide their contribution at the right time, and an instrument for monitoring project implementation and achievements.

Government’s and national stakeholders’ contribution

25. The respective contributions of the national stakeholders involved in the project and, in particular, the contribution of the national partner institution will be delivered as specified in the project document and according to the administrative arrangements put in place by the government.

26. Each project should be supervised by the National Project Coordinator (NPC) nominated as soon as the project starts (preferably before) and fully paid by the government. The NPC will facilitate the participation of national stakeholders, obtaining their timely contributions and inputs in the project, and will ensure that project outcomes reach the ultimate beneficiaries. National project personnel recruited by FAO are fully accountable to the Organization and cannot be on the government’s payroll at the time of their assignment with FAO, nor can they be recruited from the national partner institution.

27. Depending on the complexity and type of the project, the establishment of a Project Steering Committee is encouraged with the participation of the senior government officials concerned and representatives of other main stakeholders, for the purpose of guiding and monitoring the project's implementation. The FAO Rep in the recipient country should be a member of the Project Steering Committee.

FAO contribution

28. The contribution of FAO to the project is defined in the project document. See in ANNEX 2 of these guidelines a list of the different types of inputs that can be provided through TCP.

29. The expertise provided by FAO will help build local capacities to ensure that the critical gaps and problems to which TCP is directed would be addressed effectively.

30. FAO's commitment is limited to the provision of the quantities of expertise, materials, supplies, equipment and other inputs required to reach the project objectives, and specified in the project document, up to the budgetary allocation. The share of equipment and supplies should not exceed 50 percent of the total budget (except for emergency projects).

31. More generally, the commitment of FAO is limited to the provision of technical services and the procurement of inputs directly related to the project, and not to the delivery of a specific budget amount. The purpose of a TCP project cannot be to provide budgetary support to normal (or scheduled) activities of national or regional institutions. If project objectives are achieved with fewer inputs, or with inputs at lower cost, the unspent funds are returned to the TCP General Account. Unless justified through a revision (see below), the procurement and delivery of all project inputs should conform to the project document.

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Monitoring

32. During implementation, progress towards the planned outputs and outcomes is monitored by the budget holder, and by the FAO Project Task Force. Monitoring will facilitate timely and cost-effective implementation, including identification of issues and problems for timely corrective action by the project management at all levels, including by the Project Steering Committee.

Revisions

33. TCP projects should be revised in the course of their execution if changes are required to reach established objectives and expected outputs or to adapt the project to unforeseen circumstances arising during implementation. Adjustments to the approved project and to its budget are regulated by FPC 2006/01 “Procedures for the Revision of TCP Projects” accessible through the FPMIS and attached as ANNEX 5.

Reporting

34. Reporting requirements under TCP projects are covered by the FAO Field Programme Reporting Manual (FPC 2003/02). Specific reporting requirements should be clarified in the project document and individual responsibilities should be specified in the experts’ terms of reference annexed to the project document.

35. Each project is concluded with a terminal statement or concluding letter that is prepared under the responsibility of the LTD in consultation with the FAO Rep in his/her capacity as budget holder and is submitted by the LTD to TCOM for final processing. The terminal statement, which should be submitted to the government within three months of completion of project activities, informs the government at the highest level of the project's major achievements and recommendations.

Project closure

36. Once the project activities have been completed, the budget holder takes appropriate steps to close the project following established procedures governing project closure. In so doing, any unspent funds will be returned to the TCP General Account and reallocated to new projects.

V. Follow-Up

37. Upon completion of field work on a TCP project and before the departure from the country of FAO experts or consultants (if applicable), the FAO Rep arranges for consultations with the government and the project’s stakeholders to review the project’s achievements compared to the expected results (e.g. capacities were developed, knowledge and skills were shared), to identify pending issues and ensure that arrangements for appropriate follow-up action are in place, as foreseen in the project document.

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38. The terminal statement or concluding letter mentioned above should provide a summary of the findings from the above review and highlight the follow-up actions needed by the project stakeholders to ensure sustainability. In particular, it will mention any donor commitment for follow-up that would have been secured during project preparation or implementation.

VI. Evaluation, Inspection and Audit

39. The appropriate units of FAO can at any time, and even after project completion, evaluate, inspect and audit projects funded under the TCP.

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Appendix 2 : FAO TCP guidelines ANNEX 1

PROJECT OUTLINE

The project outline should have between 2 and 4 pages.

Country

Project Idea Title

Envisaged duration – deadline for action

Budget (US$, tentative)

Originator of project idea, (in government service and/or LTD)

Name of technical officer, e-mail address, contact telephone, division or service

Background and justification problem to be addressed, within context; critical gap to be filled by the project and justification for FAO involvement; stakeholders and foreseen beneficiaries; other elements that demonstrate eligibility for TCP support.

Project design expected outcome of the assistance; inputs, activities, and tentative budget to be provided by FAO; government’s contribution (optional), national partner institution.

Sustainability and key follow-up measures sustainability prospects in light of the above outcome; key assumptions; means of ensuring follow-up; possible donor commitment for follow-up.

Annexes: technical annex, references, relevant BTORs by FAO staff, and any other type of information relevant to the case (if readily available)

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Appendix 2: FAO TCP guidelines ANNEX 2

STANDARD PROJECT DOCUMENT FORMAT

Introduction

The TCP project format proposed below is based on the annotated guidelines: Standard Project Document Format, Guidelines for Project Formulators but focuses on the requirements for TCP projects only. While the presentation of a constructed Logframe (presented in Appendix) is facultative in TCP project documents, its logic and terminology should be used, for clarity purpose.

A TCP project document has several purposes and audiences. The purposes include: accountability framework for the recipient institutions and FAO planning and monitoring tool for FAO and recipient legal framework implementation framework and work plan for project implementers funding framework for all partners (beneficiary and FAO)

The degree of detail required depends on the project’s complexity. The decision on what level of detail is appropriate depends on the judgement of the project formulator, in consultation with the FAO units concerned.

FAO's Governing Bodies have decided upon a series of criteria that govern the use of TCP resources (see chapter III). Every request for TCP assistance is therefore appraised against these criteria in order to determine its eligibility. Project documents must build up a convincing case for the project to be financed from TCP resources and provide all the information required to conduct the appraisal against TCP criteria.

In addition, in order to strengthen the quality of FAO’s field programme and to ensure that all projects contribute towards achievement of the World Food Summit objectives and the Millennium Development Goals, a number of complementary criteria have been adopted by FAO. Formulators of TCP project documents must carefully consider the criteria when designing a project. The criteria with which all FAO projects should comply are:

1. Synergy: ensure adequate interaction between the Organization’s normative and field based activities so that these are mutually supportive.

2. Comparative advantage: identify the Organization’s comparative advantage and draw maximum benefit from such advantage for the project.

3. Sustainability: have a positive sustainable impact on, or lead to, conditions favouring food security and poverty reduction and contribute to environmental conservation and sustainable rural development.

4. Capacity building: build and/or reinforce national capabilities to ensure continuity of action, promote sustained self-reliance and strengthen public institutions.

5. Gender equality/equity: promote gender equality and equity through the systematic compliance with FAO’s stated commitment to and policy on mainstreaming a gender perspective into its normative work and field activities.

6. Partnerships – alliances: promote broader partnership, alliance, and participation as well as complementarity with relevant multilateral and/or bilateral assistance.

7. National and/or beneficiary institution ownership: promote government responsibility and ownership of project results.

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Index of the project document format

Cover PageExecutive Summary Table of Contents (optional)Acronyms (optional)

1. BACKGROUND 1.1 General Context (optional)1.2 Sectoral Context 1.2.1 Development priorities and MDGs 1.2.2 Relations with NMTPF and UNDAF1.3 Sectoral Policy and Legislation (optional)

2. RATIONALE 2.1 Problems/Issues to be Addressed2.2 Stakeholders and Target Beneficiaries2.3 Project Justification2.4 Past and Related Work (optional)2.5 FAO’s Comparative Advantage (optional)

3. PROJECT FRAMEWORK 3.1 Impact 3.2 Outcome and Outputs3.3 Sustainability 3.4 Risks and Assumptions

4. IMPLEMENTATION AND MANAGEMENT ARRANGEMENTS 4.1 Institutional Framework and Coordination 4.2 Strategy/Methodology4.3 Government Inputs 4.4 FAO Contribution

5. OVERSIGHT, MONITORING, MANAGEMENT INFORMATION, AND REPORTING5.2 Monitoring and Knowledge Sharing5.3 Communication and Visibility (optional)5.4 Reporting Schedule

ANNEXES

Annex 1 BudgetAnnex 2 Logical Framework (optional)Annex 3 Work Plan Annex 4 Terms of Reference for International and National Personnel

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Cover Page

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

TECHNICAL COOPERATION PROGRAMME

Country:

Project title:

Project symbol:

Starting date:

Completion date:

Government Ministry responsiblefor project execution:

Budget covering FAO contribution: US$ ....................

Signed: .............................................. Signed: ...........................................

Jacques DioufDirector-General

(on behalf of the government) (on behalf of FAO)

Date of signature: ..................................... Date of signature:.............................

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Executive Summary

The purpose of the executive summary is to provide essential information about the project to high-level decision makers in both the donor and the beneficiary country/ies as well as for FAO management. It should be prepared in a straightforward narrative style, presenting: i) the context, rationale; ii) the expected output(s) and outcome, and; iii) a synthesis of FAO’s contribution. Whenever possible, partnership arrangements and the contribution of the project to a specific national programme should be highlighted. The executive summary should be clear, concise and limited to one page in length. Examples can be provided by TCOT, the Regional/Subregional Offices or the FAO Representative.

Table of Contents

As the length of the document without annexes should not exceed ten pages, a table of content is not mandatory.

Acronyms (optional)

In case ample use of acronyms is foreseen, a complete list of all acronyms used within the text can be provided. Note: the first time a term is introduced in the text it must be spelled out in full followed by the bracketed acronym (example: Millennium Development Goal (MDG)).

SECTION 1. BACKGROUND

This is the opening section of the project document and serves as the introduction and platform upon which to present the general and sectoral context within which problems exist that the project will be addressing. It is important that the background information provided lead to the issue of the project. This section should not exceed 250 words, or half a page.

Three sub-headings are recommended to define the context within which the project will operate: General Context, Sectoral Context, and Sectoral Policy and Legislation. Of these, only the Sectoral Context section is mandatory, while the other two should only be provided if relevant/essential. Keep it clear and concise, drawing on the most recently available data, relevant project outputs, and lessons learned. The underlying theme which should start in this section and be carried throughout the project document is that of national ownership.

1.1 General Context (optional)

This is the general introduction and should provide a brief overview of the issues as well as the physical, social, and economic context within which the project will operate. The section is optional and only to be provided if of specific relevance to the focus of the project.

1.2 Sectoral Context

Under the sectoral sub-heading, define government responsibility within the sector, development planning, National Medium Term Priority Framework (NMTPF), United Nations Development Assistance Framework (UNDAF), MDGs, Poverty Reduction Strategy (PRS), national and regional food security programmes. This section will show how TCP criteria 2 and 3, Aims and Purpose and Country or Regional Priorities, are met by the project.

The sectoral context can be presented in two sub-sections:

1.2.1 Development priorities, World Food Summit objectives and MDGsUnder this heading identify national developmental and sectoral priorities as well as their relationship to the WFS objectives and the MDGs, as relevant for the project. Indicate overall donor involvement in sector and priorities. Discuss relevance/linkages to any regional programmes.

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1.2.2 NMTPF and UNDAF Describe the relationship between the issues that the project will be addressing and the medium-term priorities for Government–FAO collaboration agreed in the NMTPF (if any) and the more general UN assistance priorities foreseen in UNDAF. . Describe the major focus of the UN system in the country and mention relevant programmes/projects financed by donors and donor coordination mechanisms.

1.3 Sectoral Policy and Legislation (optional)

Explain the government’s policy and long term planning. List the relevant pieces of legislation in place and describe whether they are considered satisfactory in the context of the government’s proposed policies and plans. Outline what legislation is pending or proposed and what legislation will be needed to implement the government’s policies. Describe whether FAO policy and legal assistance is deemed desirable or necessary in this context. The section is optional and only to be provided if of specific relevance to the focus of the project.

SECTION 2. RATIONALE

Section 2 provides the platform to present the problems to be addressed, the target beneficiaries, the locally identified priorities, project justification, and the development context within which the project will operate. Rationale is often based on a needs (or damage) assessment undertaken by FAO jointly with the government and/or other UN agencies/donors. In this section, consider carefully the PPRC criteria and highlight FAO’s comparative advantage as well as any synergy with regional or subregional programmes. This section should not exceed three pages.

2.1 Problems/Issues to be Addressed

Clearly define the problem/s that the proposed project will address including scope, history and causes of the problem/s. Explain how the problem/s relates to overall sector development with reference to government development priorities. Indicate here how TCP criterion 4, Critical Gap or Problem, is met by the project.

2.2 Stakeholders and Target Beneficiaries

Identify the stakeholders (agencies, organizations, groups or individuals) which have a direct or indirect interest in the project. Identify the target beneficiaries (groups or individuals) for whom the project is being undertaken. Project planning, development and implementation should be done in a participatory and gender-sensitive manner with the stakeholders and target beneficiaries, including, whenever possible, local representatives of potential donors. Also note TCP criteria 9 and 10, Gender Sensitivity and Partnerships and Participation and relevant PPRC criteria: gender equality/equity.

2.3 Project Justification

Explain why the government requires external support through a project to address the problems/issues. Explain why it is needed here and why it is needed now; and what the consequences would be without the project. Explain clearly what is the root cause of the problem to be addressed. Briefly present the strategic/capacity building approach that the project will use to address the defined problem and how it will enable the stakeholders to achieve their objectives. Note TCP criteria 8 and 9, Capacity-Building and Gender Sensitivity, and relevant PPRC criteria: capacity building and gender equality/equity.

2.4 Past and Related Work (optional)

Provide concise information on the focus of other UN and/or government/donor projects or activities that are active (or have been) within the sector and/or related to the project being implemented, which are not part of those to be included in section 1.2.2 NMPTF and UNDAF. Also note all past or current related FAO activities. If the proposed project is expected to interact with other projects, define the mechanisms for

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coordination and information sharing to ensure complementarity and build sustainable partnerships for lasting impact. Note relevant TCP criteria 10 and PPRC criteria: partnerships – alliances.

2.5 FAO’s Comparative Advantage (optional)

If of particular relevance, clearly define the rationale for FAO’s involvement as partner of the government (i.e. comparative advantage) for implementation of this project. Consider: body of experience, lessons learned, best practices and knowledge networks as well as prior cooperation with potential donors. Note relevant PPRC criterion: comparative advantage.

SECTION 3. PROJECT FRAMEWORK

In this section, the project framework is presented, i.e. the proposed overall impact (goal), the outcome and the planned outputs. The framework is basically a results chain whereas activities lead to outputs which lead to an outcome which leads to impact. For the sake of clarity within the project document, specific activities should be presented only in the annex (logical framework and/or work plan). The development of the logical framework is not mandatory for TCP projects, but can be provided as an Annex following the format provided in Appendix. Formulators must clearly understand the difference between an activity and an output, an output and an outcome, an outcome and an impact (see definitions in pages xiv to xvii of this annex). For TCP projects this section should not exceed 2 pages.

3.1 Impact

Clearly present the Impact (Development Goal) to which the project will contribute. Generally this will relate to national or international development objectives and/or the Millennium Development Goals.

3.2 Outcome and Outputs

Present the specific outcome that the project will work to achieve. Outcome is what had previously been termed “immediate objective/s”, however the current approach is to have only one outcome defined in one succinct statement. Outcome is the result of outputs which are the result of activities. In this section only present the planned outcome and outputs:

Outcome ___________ Output 1. ___________ Output 2. ___________ Output 3. ___________

Outcome and outputs should be formulated in very clear terms that are qualitatively and quantitatively verifiable so that relevant indicators can be easily derived for monitoring and evaluation purposes.

Typical examples of TCP outputs include: policy and/or strategy document drafted or endorsed by relevant institution; laws, regulations drafted and/or voted or enacted upon; investment plan or plan for mobilizing resources prepared and/or endorsed/funded; specific programme to follow up on TCP project prepared and funded or implemented; institution strengthened (specify in what way); established database, knowledge network, communication system; etc. Particular attention will be given to describing those activities and outputs that will ensure sustainability of project outcome and maximize the likelihood of catalytic effects and follow-up, such as: i) mobilization of financial resources as a result of the project (specify amounts expected in US$ and sources, including from national budget), and; ii) outputs of training activities17: number and type of persons trained (farmers, rural dwellers, government staff, NGO/CSO staff, etc.), title, content and duration of training sessions.

17 The training activities considered here cover organized and sustained communication activities (meetings, seminars, study tours, fellowships and other educational events), designed to improve skills, with clear aims and objectives that are made explicit in advance and are supported by selected learning materials. Opportunities for assessment of progress are built into the training process.

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3.3 Sustainability

Present here the expected end of project situation. Explain what resources, infrastructure, capacity, processes etc. are in place to ensure continuity. Explain how and why the outcome of this project will be sustainable and how impact will be achieved after the project. Define what partnerships are to be established during project implementation that can contribute to the sustainability of project activities and outputs. In particular, define linkages with other nationally or donor-funded programmes, partnerships with Civil Society Organizations (CSOs) and NGOs. Explain what is being put into place to ensure a smooth transition (exit strategy) when project resources are finished. Define how lessons learned by the project or knowledge generated can be shared with a broader audience. Formulators of projects must consider how information generated is disseminated and should plan for this in activities/outputs.

Given the scope and limitations of TCP assistance this section is key to the eligibility of all requests. The section needs to show how TCP criteria 5, 7 and 8, Sustainable Impacts, Government Commitment and Capacity-Building, are met by the project. Also note relevant PPRC criteria: sustainability and capacity building.

3.4 Risks and Assumptions

Risk assessment and management are essential in project planning. The important point is not necessarily to avoid risks but to plan for them and to mitigate their impact on the project. In this section identify the risks which could jeopardize the realization of the project outcome and describe how the project will mitigate these perceived risks:

outline the key risks assessing their impact and probability (preferably in matrix form – see Figure 1);

describe how the risks will be monitored;

explain whether there is a credible programme external to the project that addresses these risks (e.g. to improve public sector standards and systems);

outline steps proposed within the project to address these risks and indicate if these steps have been agreed with project partners; and

address risks that may be due to delays in project approval and/or commencement of activities resulting in changed circumstances and/or requirements through mandatory project revision.

Figure 1: Risk MatrixRisk Impact Probability Mitigation

1.

2.

Assumptions are basically the conditions needed to achieve results after the risks have been managed and are included within the optional logical framework (presented in Appendix).

SECTION 4. IMPLEMENTATION AND MANAGEMENT ARRANGEMENTS

The previous sections have defined “why” the project is needed and “what” the project is going to do. This section defines “how” the project will do it. This section should not exceed three pages.

4.1 Institutional Framework and Coordination

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Present here which government ministry is responsible for what within the sector and how the project will be located within or relate to the concerned ministry. Define which specific organizational unit or section will be responsible for the project and how the project will be managed therein. Discuss what other ministries and/or organizations should be involved, in what capacity (steering committee, etc.) and how they contribute or benefit from the project.

In case the project is part of a larger programme involving other projects, this section should clarify the relationship with them, consultative mechanisms, and identify the national coordinating mechanism in place or to be established.

If applicable, explain how the project can strengthen cross-sectoral collaboration. TCP criteria 10 Partnership and Participation and PPRC criterion: partnerships – alliances.

4.2 Strategy/Methodology

Every project needs a clear strategy and a well planned methodology to successfully achieve its outcome in a timely and efficient manner. In this sub-section, discuss the strategy behind this project and explain how it will contribute to the larger development programme (national/ regional). Explain clearly how the project will be implemented in the field. Define what methodology will be used to ensure stakeholder participation and ownership. Discuss any other methodologies that will be used to ensure that the defined activities are successfully realized. If necessary, define who will do what, when, where, and why. This can be presented briefly here and in more detail in a work plan to be placed in annex of the project document. The level of detail provided is to be decided by the project formulator and discussed within the project task force.

Sufficient detail should be provided in this sub-section to illustrate how the project will be successfully implemented. However, the strategy and methodology should not be rigid but sufficiently flexible so that both may adapt and change if necessary as experiences are gained and lessons learned from the field. Projects often “learn by doing” and this approach must be accommodated within the project document. Explain how those responsible for project implementation can learn and adjust during implementation. Note TCP criteria 7, 8, 9, and 10 and relevant PPRC criteria capacity-building, gender equality/equity, and national ownership.

4.3 Government Inputs This section is completed in close consultation with the recipient government.

1) Prior obligations and prerequisites (optional)

These are the actions required by the recipient government prior to project implementation. Generally, actions which are necessary not only to ensure smooth project implementation, but also for starting up the project, should be considered as prior obligations to be fulfilled before signature of the project document. Prerequisites are those conditions which must be in place prior to commencement of activities in order to ensure smooth project implementation. Obligations and prerequisites should be listed here and explain how they will be addressed.

2) Financial and/or contributions in kind

Subsequently, present the contributions in kind (facilities, resources and services) and financial resources that the government will provide to ensure timely and effective implementation of the project. This includes office space, equipment, staffing, coordination, leadership (National Project Coordinator, Steering Committee, etc.), customs clearance for equipment, clearance of international personnel, etc..

In projects where beneficiaries are expected to provide a contribution in order to benefit from the project’s outputs, the modalities should be explained.

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The underlying fact is that all projects should belong to programmes which are part of the national development strategy of a specific country. The concept of national responsibility and ownership must be clearly expressed within the project document and put into practice in the course of subsequent implementation. Note TCP criterion 7, Government Commitment and PPRC criterion, national ownership.

4.4 FAO Contribution

Within the budget (to be placed in annex 1 of the project document), define what inputs are to be provided, when and how. The Oracle budget lines (BL) under which the inputs should be budgeted are shown in brackets in the following description. When co-financing arrangements are envisaged with other donors, this section should explain the inputs that will be provided through other funding and relevant management arrangements. In such cases and to the extent feasible, projects should be designed as modules both for inputs and outputs permitting clear identification of what has been funded by the different funding sources, and clear accountability for results.

1. Personnel services

This section lists the different types of personnel input that will be provided by the project and, for each individual, his/her area of expertise, total duration/timing of assignment and number of missions. Detailed terms of reference must be provided in annex, indicating the qualification required, tasks to be performed, expected outputs, reporting responsibilities, duration/timing of assignment, number of missions and duty station(s).

International experts will preferably be recruited under FAO’s Partnership Programmes (TCDC/TCCT experts and retired experts), whenever suitable expertise at the required level is available under these programmes.

- International experts under the Partnership Programmes (i.e. TCDC/TCCT or retired experts). The level of their remuneration is based on the standard terms and conditions of the Partnership Programme, as agreed between FAO and the member countries that are signatories of the TCDC/TCCT agreements. Independent international experts can also be recruited as TCDC/TCCT, if accepting the related contract conditions (BL 5544, honorarium and BL 5686, international and in-country travel and daily subsistence allowance, DSA). The same DSA rates apply as for international experts at UN honorarium rates.

- Other international experts. The level of their remuneration is established on the basis of UN prevailing rates for the type of expertise required. The standard costs include honorarium (account line BL 5542), estimated international and in-country travel costs and the DSA (BL 5684) applicable to the country and in-country specific areas. The recruitment of international experts at UN honorarium rates requires the approval of FAO senior management based on a justification provided by the Director of the Lead Technical Division, clarifying efforts made in seeking for alternative candidates under Partnership Programmes.

- FAO Technical Support Services (TSS) are services provided by FAO technical officers based at FAO Regional Offices, Subregional Offices or headquarters. Formulation of project documents can be reimbursed under this component. The costs for TSS include honorarium (BL 6120) calculated at the standard rate for FAO services established by the Organization, and estimated international and in-country travel costs and the DSA (BL 5692) applicable to the country. In cases where FAO cannot provide the technical staff to undertake the TSS work, FAO staff can be replaced, at the initiative of the FAO technical division concerned, by an external expert. In such cases, the honorarium of the expert is paid by the FAO technical division, which is reimbursed by claiming the TSS (BL 6120), while the travel and DSA costs are charged to the project under TSS travel (BL 5692). In addition, standard amounts are to be budgeted for processing the terminal statement or concluding letter (BL 6111).

- National experts. They are selected by FAO, and cannot be on the government payroll at the time of their assignment with FAO, nor be recruited from the national implementing agency. The level of their

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remuneration (BL 5543) is based on prevailing local conditions and in line with rates applied by the UN system as well as government rates. FAO retains the responsibility for the technical guidance and supervision of these experts and reviews their performance.

- South-South Cooperation professionals. The level of their remuneration is based on the terms and conditions of the South-South Cooperation agreement signed between FAO and the member countries (BL 5546, honorarium and BL 5688, international and in-country travel and DSA).

- United Nations Volunteers (UNVs). The level of their remuneration (consisting of an all-inclusive monthly living allowance) is established according to prevailing local conditions and can be obtained from UNDP country office (BL 5547). International travel is generally budgeted in BL 5689.

- Administrative support (non-professional national project personnel such as secretarial support, interpreters, drivers, casual labour, etc.) will be provided only on an exceptional basis and only in support of the project's activities (BL 5652).

2. Other travel. The budget line duty travel (BL 5661) may cover travel of the FAO Rep and Assistant FAO Rep to project sites. In exceptional cases, if required for project implementation, national staff from the implementing agency or from a key partner institution may be entitled to reimbursement of their travel expenses related to the project within the limits of government reimbursement rates (BL 5698).

3. Contracts, letters of agreements or contractual service agreements (BL 5650) for specialized technical services. Mixes of services and inputs can be covered under contracts or letters of agreements with specialized institutions. The itemized services or inputs to be provided, the expected results and conditions that such contractual arrangements entail must be clearly specified in an annex to the project document. Contract can not be established with the project’s national implementing/beneficiary institution to offset for what should be part of counterpart contribution.

4. Materials, supplies and equipment: FAO's commitment is limited to the supply of the quantities specified in the project document, up to the budgetary allocation. This section will provide a list of expendable and non-expendable equipment with a reasonable level of specification. This component should not exceed 50 percent of the budget.

- Expendable materials and supplies (BL 6000). If total costs exceeds US$10 000, specifications, maximum physical quantities and related maximum amounts allocated in US dollars for the individual expendable items must be stated in annex.

- Non-expendable equipment (BL 6100). If total costs exceed US$10 000, the preliminary specifications of non-expendable items, with provisional itemized cost estimates, should be provided in an annex to the project document. The procurement of vehicles requires prior clearance by TCOT.

5. Training: If representing an important project component, an annex should give the details of the training sessions, such as: title, technical content, training approach, targeted participants (by gender and occupation), host institution and place, project staff responsible for delivering training, envisaged number of trainees and duration, as well as detailed cost estimates.

A distinction should be made between external training (study tour), in-country training (workshops and seminars) and regional workshops. The cost, rationale and purpose of each workshop and study tour should be well justified and detailed.

- Study tours for nationals should be kept to the absolute minimum (maximum two trainees per beneficiary country and maximum two countries visited per trainee). In exceptional circumstances, the trainees can be accompanied by an interpreter. The cost of the study tour includes travel and DSA (at UN rates) (BL 5694) and may also include a fee to the receiving institute/centre (BL5920). If board and

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accommodation is included in the fee, the DSA is reduced to 20 percent. Academic training is excluded. Only under exceptional circumstances a fellowship for a maximum of 3 months could be included.

- The budget for in-country workshops (BL 5920) for national participants should cover only the cost required for setting up the workshops and for the preparation and reproduction of the training materials, as the government is expected to cover the cost of the participation of its nationals. However, in exceptional circumstances, expenses for internal travel and accommodation for participants needing to travel to attend the training course may be included. The per diem should be calculated at UN or government rates, whichever is lower.

- Regional workshops. The project covers (BL 5694) costs related to international travel and DSA of participants in regional workshops. Ad hoc project arrangements are encouraged with a view to reduce overall costs for trainees’ participation in regional workshops, in particular through the provision of board and lodging by the host institution and/or the definition of an ah-hoc daily allowance.

6. General operating expenses (GOE) (BL 6300) to cover miscellaneous expenses required in the field for the operation of the project, such as telephone communications, photocopy paper, etc. (not more than five percent of the total budget minus the DOC).

7. Direct operating costs (DOC) (BL 6118) to cover FAO’s administrative and operational costs related to the implementation of the project (currently seven percent of the project expenditures)

SECTION 5. OVERSIGHT, MONITORING, MANAGEMENT INFORMATION AND REPORTING

This section provides the oversight for the project to ensure that it is being implemented properly and is on course to realizing defined outputs and outcome in a timely manner. This section is also where the formulator details what internal monitoring arrangements will be put into place to assist project management with ensuring efficient and effective project implementation. Also herein, communication and visibility needs should be planned and budgeted. Finally reporting of results must be defined.Note: This section should not exceed two pages.

5.1 Monitoring and Knowledge Sharing

Define how monitoring (and/or participatory monitoring) will be realized during project implementation, i.e. identify who is responsible, how it is planned, timed and budgeted for. Explain how impact assessment, findings and lessons learned will be realized and utilized in future planning/development activities.

Explain how the project will be monitored within the country and how the information will be used. Identify who will do monitoring (participatory monitoring and evaluation by target beneficiaries, or project staff, or a steering committee, or the FAO Rep, etc.), when it will be done and how and with whom the results will be shared. Explain how experience generated by the project will be made available through FAO’s corporate Knowledge Forum and collections of explicit knowledge (e.g. Corporate Document Repository), and through the use of existing or tailor-made “knowledge networks”. 5.2 Communication and Visibility

For most projects, communication of results is essential to meet donor/government requirements as well as to strengthen sustainability of actions and results. As experience is gained and “lessons learned”, this information must be shared with partner organizations and with others to strengthen overall programme development. Communication aspects should be considered for all projects and be planned/budgeted for where appropriate.

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Communication is closely related to the issue of visibility as the advertising aspect of what is being done, who is paying for it, who is doing it. This must be considered in project design/budgeting (noted to be quite important in emergency relief/ rehabilitation projects).

5.3 Reporting Schedule

Each international or national consultant, including FAO personnel providing technical support services has to prepare a mission report containing the main results, conclusions and recommendations of his/her missions.

The final project reporting requirement is a terminal statement, presenting the main results and conclusions of the project in addition to FAO’s recommendations to the government. It is the responsibility of the FAO technical unit charged with technically supporting the project to ensure that this terminal statement is issued in a timely manner and is of a suitable quality.

The preparation of the terminal statement may be assigned to the lead technical consultant, and has to be specified in his/her TOR. In some cases, a short and concise concluding letter indicating that the project has delivered the inputs and achieved its purposes will be sufficient as a record of project accomplishments. Terminal statements or concluding letters are transmitted by the FAOR to the highest technical authority in the government, normally the Minister for Agriculture.

ANNEXES (to the project document)

The standard annexes to the TCP project document are:

Annex 1 Budget (see standard format in appendix)

Annex 2 Logical Framework (optional – see appendix)

Annex 3 Work Plan (see sample in appendix)

Annex 4 Terms of Reference for International and National Personnel (see sample in appendix)

Additional annexes may be required to provide technical specifications for materials and equipment, details on training or contracts, etc. Project formulators should use their best judgement and when in doubt – add the annex.

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PROJECT BUDGET (FAO Contribution in US$)

Country: .......................Project title: ........................Project symbol: TCP /....... / ......

Budget line Component Description

Sub Comps.

Main Comp.

5013 Consultants

-

5542 Consultants – International

-

5543 Consultants – National

-

5544 Consultants - TCDC/TCCT

-

5545 Consultants - Retired Experts

-

5546Consultants - South South Cooperation

-

5547 Consultants - UN Volunteers

5014 Contracts

-

5650 Contracts Budget

-

5020 Locally Contracted Labour

-

5652Casual Labour - Temporary Assistance

-

5021 Travel

-

5661 Duty travel others (FAO staff only)

-

5684 Consultants – International

-

5685 Consultants – National

-

5686 Consultants - TCDC/TCCT

-

5687 Consultants - Retired Experts

-

5688Consultants - South South Cooperation

-

5689 Consultants - UN Volunteers

-

5691 Consultants - Young Professionals

-

5692 Travel TSS

-

5694 Travel – Training

- 5698 Travel non staff (counterparts)

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5023 Training

-

5920 Training Budget

-

5024 Expendable Equipment

-

6000 Expendable Equipment

-

5025 Non Expendable Equipment

-

6100 Non Expendable Equipment Budget

- 5027 Technical Support Services - 6111 Report Costs

6120 Honorarium TSS

-

5028 General Operating Expenses

-

6300 General Operating Expenses Budget

- 5029 Support Cost - 6118 Direct Operating Costs -

Grand Total -

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The logical framework

The “logical framework” refers to a planning/management tool which has been used in various forms for project planning over the past several decades. The logical framework (or log frame) is simply a table or matrix which is used to facilitate project planning by clearly presenting a hierarchy of project elements with associated indicators, means of verification and important assumptions. The initial stages of log frame preparation are identification of stakeholders, problem analysis and formulation of options to address the problems:

Phases of the logframe approach

When options are defined and agreed to, the log frame matrix is developed with the following hierarchy:

Design Summary Indicators / Targets Data Sources Assumptions

Impact

Outcome

Outputs

Activities

Impact is now the accepted term for what previously was termed the Overall Development Objective or Goal. This is uppermost level of the log frame matrix and should refer to government development priorities and/or MDGs. The next level (2) is outcome. Outcome represents what had previously been called the immediate development objective/s however in the new harmonized approach, only one outcome is presented for a project. The next level (3) is outputs which are realized through activities at the 4th and final level. At times there is confusion between what an activity is and what an output is. An activity involves action and should be stated clearly as something to be done, such as: will train ten school teachers in....., versus an output which is something accomplished, such as: ten school teachers trained in ...

Completion of the Matrix:As seen above the log frame matrix is comprised of 4 columns: 1) design summary, 2) indicators, 3) data sources, and 4) assumptions. When completing the log frame refer to Figure 1 and Figure 2. Column one

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(design summary) and column four (assumptions) are completed together as in Figure 1. Assumptions represent the conditions necessary at each level for achievement of the objectives/results.

Assumptions relate to objectives at the SAME level

Design Summary Assumptions

Impact

Then we should contribute to this

Impact

And these conditions pertain

Outcome If we achieve this outcome.

Then we should achieve this

outcome.


Outputs If we deliver these outputs.

Then we will deliver these

outputs.


Activities If we carry out these activities

Then we will carry out these activities.

START HERE If these pre-

conditions pertain

Once the elements under Design Summary and the assumptions are defined, the 2nd and 3rd columns are completed as per Figure 2. For each level, and for every activity/output, indicators should be provided in Column 2 to serve as benchmarks upon which to measure achievement. For each indicator, provide the means of verification or data source in Column 3 with which to measure the indicator.

A completed log frame not only clearly presents a project but it provides the project implementers a tool for guiding implementation and subsequently provides project evaluators a tool for evaluation.

In the file below, there is an example of a complete logframe.

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Figure 1

START HERE (NOT WITH THE ACTIVITIES!) The Logical Framework Prior Steps Use appropriate and proportionate processes before starting on the logframe itself e.g. stakeholder, problem, objectives and options analyses. Design

SummaryIndicators/

TargetsData

sourcesAssumptions

Step 7 Re-check the design logic e.g. if the conditions are in place and we do the activities, will we deliver the Outputs? And so on up Columns 1 and 4. Move on to Step 8 overleaf.

Step 1 Define the Impact/GoalTo what national or sector level priorities are we contributing? What long-term benefits on the lives of the poor will happen partly as a result of the project? Several interventions may share a common Goal.

Impact Outcome to Impact

conditions

Step 6dWith the outcome achieved, what conditions are needed to contribute to the impact/goal?

Do a robust risk analysis.

At each level, identify risks by asking what can stop success. For each risk, evaluate its seriousness and probability; and identify mitigatory measures. Manage the risks by adding mitigatory measures planned within the project to Column 1 (mainly as activities, possibly as an output). The conditions that remain are the Assumptions in Column 4.Avoid mixing Assumptions and Risks.

Step 2 Define the OutcomeWhat immediate change do we want to achieve? Why is the intervention needed? How will others change their behaviour as a result of the use, uptake or implementation of the outputs? How will development conditions improve on completion of the Outputs? Limit the outcome to one succinct statement.

Outcome Output to Outcome conditions

Step 6cWith the outputs delivered, what conditions are needed to achieve the outcome?

Step 3 Define the OutputsWhat will be the measurable end results of the planned activities? What products or services will the project be directly responsible for, given the necessary resources?

Outputs Activity to Output

conditions

Step 6bWith the activities completed, what conditions are needed to deliver the outputs?

Step 4 Define the ActivitiesWhat needs to be actually done to achieve the outputs? This is a summary (not detailed workplan) showing what needs to be done to accomplish each output.

Activities Pre-conditionsStep 6aWhat conditions need to be in place for the activities to be done successfully?

Step 5 Check the vertical logic back up Column 1Apply the If/then test to check cause and effect. If the listed Activities are carried out, then will the stated Output result? Is what is planned necessary and sufficient? Are we planning to do too much or too little? And so on up Column 1.

Step 6 Define the assumptions at each levelDo a robust risk analysis to determine the Assumptions in the project design.

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Step 8 Define the Performance Indicators and Data Sources/EvidenceComplete both columns together

DesignSummary

Indicators/ Targets

Indicators are means; Targets are ends. Start by defining Indicators; only set Targets when there is enough baseline data and stakeholder ownership. Set Indicators and Targets in terms of Quality, Quantity and Time.

Evidence is usually in the form of documents, outputs from data collection. Some reliable sources may already be available. Include data collection planned and resourced in the project as Activities in Column 1.

Data sources Assumptions

Impact Step 8a Impact indicators/targetsWhat will indicate the impact changes that are happening/will happen to which the project has contributed? Include changes that will happen during the lifetime of the project, even if only early signs.

Step 8a Impact data sourcesWhat evidence will be used to report on impact changes? Who will collect it and

when?

Outcome Step 8b Outcome indicators/targetsAt the end of the project, what will indicate whether the outcome has been achieved? This is the key box when the project is evaluated on completion.

Step 8b Outcome data sourcesWhat evidence will be used to report on

outcome changes? Who will collect it and when?

Outputs Step 8c Output indicators/targetsWhat will indicate whether the outputs have been delivered? What will show whether completed outputs are beginning to achieve the outcome? These indicators/targets define the terms of reference for the project.

Step 8c Output data sourcesWhat evidence will be used to report on output delivery? Who will collect it and

when?

Activities Step 8d Activity indicators/targetsWhat will indicate whether the activities have been successful? What milestones could show whether successful Activities are delivering the outputs? A summary of the project inputs and budget will also be one (but not the only) entry here?

Step 8d Activity data sourcesWhat evidence will be used to report on the completion of activities? Who will collect it

and when? A summary of the project accounts will be one (but not the only) entry

here.

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Do not include too much detail in the log frame. A detailed work plan and budget will follow as separate, attached documents

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Example TERMS OF REFERENCE

International Coffee Processing/Quality Marketing Specialist

Duty Station: CREC, Pakxong and Vientiane

Duration: two person/months in four missions

Under the overall supervision of the Budget Holder and the technical supervision of the FAO/RAP Industrial Crops Agronomist and the FAO/RAP Senior Agroprocessing Post Harvest Specialist and in close cooperation with other consultants and counterparts the International Coffee Processing/Quality Marketing Specialist will undertake the following duties:

First Mission (15 days – year 1, month 3):

Help the team review the plan of activities and the work programme.

Begin collecting data for reviewing strategies and policies for developing the enabling environment for the emerging Specialty Coffee Industry.

Assist the other consultants and RAP staff with clarifying the roles of the Coffee Research Extension Centre and the relationships between NAFES and NAFRI at provincial and district levels.

Review with other consultants the equipment needs of the project and provide recommendations specifications and prices for procurement.

Second Mission (… days, year x, month x)

The International Coffee Processing/Quality Marketing Specialist will provide a written report in English within two weeks of conclusion of each mission. The report should give a clear summary of recommendations and conclusions and points for follow-up before the next visits.

Qualifications:

A degree from a well recognised, reputable university or institute of technology.

A proven track record as evidenced by international assignments, reports and/or refereed papers published in internationally recognised journals and bulletins.

At least seven years practical commercial experience and a good working knowledge of production, processing, quality management and international marketing of coffee.

Fluency in the English language is mandatory.

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Example WORK PLANVILLAGE WOODLOT DEVELOPMENT

OUTPUTS / ACTIVITIES YEAR 1 YEAR 2

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

Output 1 Tree nursery established

Activity 1.1 Select a good site X

Activity 1.2 Collect materials X X X X

Activity 1.3 Prepare the soil X X X X

Activity 1.4 Plant the nursery beds X X X X

Activity 1.5 Prepare management plan and train staff X X X

Activity 1.6 Water, weed and care for the tree seedlings X X X X X X X X X X X X X X X X X X X X

Output 2 10,000 trees planted in each of 3 villages

Activity 2.1 Identify suitable sites in the villages X X

Activity 2.2 Prepare the sites for tree planting X X X X

Activity 2.3 Plant the trees with the local communities X X X X X X

Output 3 Local plantation management committees established

Activity 3.1 Identify stakeholders and facilitate committee organization X X X X X

Activity 3.2 Draft by-laws X X X

Activity 3.3 Obtain official recognition from district authorities X X X

Activity 3.4 Facilitate plantation protection and management X X X X X X X X X X X X

To complete the work plan: list the outputs of the projects (as per above) with associated activities to achieve each output. Set up the right hand columns as per the duration of the project (12 months, 36 months, whatever). Carefully plan the timing of each activity based on inputs and expected outputs.

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TCP General Provisions

Source: FPC 2005/02

1. The achievement of the objectives set by the project shall be the joint responsibility of the government and FAO.

2. As part of its contribution to the project, the government shall agree to make available the requisite number of qualified national personnel and the buildings, training facilities, equipment, transport and other local services necessary for the implementation of the project.

3. The government shall assign authority for the project within the country to a government agency, which shall constitute the focal point for cooperation with FAO in the execution of the project, and which shall exercise the government's responsibility in this regard.

4. Project equipment, materials and supplies provided out of Technical Cooperation Programme funds shall normally become the property of the government immediately upon their arrival in the country, unless otherwise specified in the agreement. The government shall ensure that such equipment, materials and supplies are at all times available for use of the project and that adequate provision is made for their safe custody, maintenance and insurance. Vehicles remain the property of FAO, unless otherwise specified in the agreement.

5. Subject to any security provisions in force, the government shall furnish to FAO and to its personnel on the project, if any, such relevant reports, tapes, records and other data as may be required for the execution of the project.

6. The selection of FAO project personnel, of other persons performing services on behalf of FAO in connection with the project, and of trainees, shall be undertaken by FAO, after consultation with the government. In the interest of rapid project implementation, the government shall undertake to expedite to the maximum degree possible its procedures for the clearance of FAO personnel and other persons performing services on behalf of FAO and to dispense with, wherever possible, clearance for short-term FAO personnel.

7. The government shall apply to FAO, its property, funds and assets, and to its staff, the provisions of the Convention on the Privileges and Immunities of the Specialized Agencies. Except as otherwise agreed by the government and FAO in the Project Document, the government shall grant the same privileges and immunities contained in the Convention to all other persons performing services on behalf of FAO in connection with the execution of the project.

8. With a view to the rapid and efficient execution of the project, the government shall grant to FAO, its staff, and to all other persons performing services on behalf of FAO, the necessary facilities including:

i) the prompt issuance, free of charge, of any visas or permits required;

ii) any permits necessary for the importation and, where appropriate, the subsequent exportation, of equipment, materials and supplies required for use in connection with the project and exemption from the payment of all customs duties or other levies or charges relating to such importation or exportation;

iii) exemption from the payment of any sales or other tax on local purchases of equipment, materials and supplies for use in connection with the project;

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iv) payment of transport costs within the country, including handling, storage, insurance and all other related costs, with respect to equipment, materials or supplies for use in connection with the project;

v) the most favourable legal rate of exchange;

vi) assistance to FAO staff, to the extent possible, in obtaining suitable accommodation;

vii) any permits necessary for the importation of property belonging to and intended for the personal use of FAO staff or of other persons performing services on behalf of FAO, and for the subsequent exportation of such property;

viii) prompt customs clearance of the equipment, materials, supplies and property referred to in subparagraphs (ii) and (vii) above.

9. The Government shall appoint a National Project Coordinator (NPC), as envisaged in the Project Document, to carry out the functions and activities specified in the agreement. In some cases, it may be necessary for FAO to request, in writing, the NPC to incur specific commitments or obligations or to make specific payments on behalf of FAO. In such cases, the project may advance to the NPC project monies, up to the amounts allowed by and in accordance with current FAO rules and regulations. In this event the Government agrees to indemnify FAO and to make good to it, any losses that may arise from any irregularity in the maintenance of the advanced FAO’s monies on the part of the NPC.

10. The government shall deal with any claim which may be brought by third parties against FAO or its staff, or against any person performing services on behalf of FAO, and shall hold them harmless in respect of any claim or liability arising in connection with the project, unless the government and FAO should agree that the claim or liability arises from gross negligence or wilful misconduct on the part of the individuals mentioned above.

11. The persons performing services on behalf of FAO, referred to in paragraphs 6, 7, 8 and 10, shall include any organization, firm or other entity, which FAO may designate to take part in the execution of the project.

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TCP FACILITY 18

1. Establishment of the TCPF

The Council, at its 129th Session (November 2005), welcomed the decision to delegate full authority to the FAO Reps for approval of commitments under the TCP Facility up to US$200 000 per member country and per biennium, in order to enable FAO to respond to government requests for urgent local programme support activities and to strengthen field programme development processes.

2. Country eligibility

All countries that are eligible for TCP assistance on a grant basis are also eligible for the TCPF19.

3. Operational responsibility for the TCPF

The FAO Rep has full operational and budget holder responsibility for the TCPF. In cases of countries with an accredited, but non-resident FAO Rep, the operational and budget holder responsibility for the TCPF rests with the accredited FAO Rep. In countries with no accredited FAO Rep, the designation of operational and budget holder responsibility for the TCPF follows the established policy for other FAO projects. The budget holder henceforth is referred to as “the FAO Rep”.

4. Scope of the assistance provided under the TCPF

Basic principles:

in line with the principles that govern the use of funds provided under the TCP, the Facility is intended to assist FAO Member Nations through the provision of technical cooperation services;

as for any TCP project, the use of funds provided under the TCPF must be in line with the TCP criteria. It is the responsibility of the FAO Rep to ensure compliance with these criteria;

funds provided under the TCPF are meant to respond to requests originating from one or more line ministries.

The aims of the technical assistance provided under the TCPF are to:

rapidly solve a specific technical problem for which the expertise may not be immediately available within government services;

formulate project proposals or documents in the areas of FAO’s Mandate, required for submission to potential funding sources, including to the TCP20;

prepare background documents required by the government; carry out small sector- and subsector-related studies or assessments as required by the government,

including to facilitate field programme development and participation in related UN processes.

The TCPF is not meant to fund bridging activities between projects.

5. Inputs that can be provided under the TCPF

18 These Guidelines for the TCP Facility have been issued through the Field Programme Circular FPC 2006/02, 5 May 2006. This FPC is available for FAO internal users from the Field Programme Management Information System (FPMIS https://extranet.fao.org/fpmis/)19 FAO Council report CL129/REP/2, paragraph 9: “...access henceforth by high-income developing countries and developed countries to technical assistance through the TCP modality only on a full cost-recovery basis was also supported...”.20 Replacing the use of Advance Allocation.

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The TCPF can be used to provide the following inputs or services:

national consultants (honorarium, DSA and in-country travel); international consultants (honorarium, DSA, international and in-country travel). In accordance with

ODG instructions, the recruitment of international consultants at UN rates requires prior ODG clearance21;

partnership (TCDC/TCCT and retired experts) consultants (honorarium, DSA, international and in-country travel);

Technical Support Services from decentralized offices or headquarters (staff cost, DSA, international and in-country travel);

Letters of Agreement (LOAs) with institutions, universities, civil society or non-governmental organizations, related only to the provision of technical services;

general operating expenses (including communications, printing, renting of vehicles related to project implementation, limited expenses related to final workshops/wrap-up meetings) for a maximum five percent of overall budget;

direct operating costs at the established rate (currently seven percent).

The TCPF cannot be used to cover the establishment of posts, travel allowances for government staff, training activities outside the country, study tours, or the procurement of expendable or non-expendable equipment and supplies. The TCPF cannot be used to defray administrative costs or other operating costs of the FAO representation which are not directly related to the implementation of the TCPF (General Operating Expenses). Under no circumstances can the TCPF be used to defray administrative costs or other operating costs of government agencies.

6. Operation of the TCPF

The Facility will be operated according to the following basic principles:

full authority, responsibility and accountability of the FAO Rep; full transparency; technical soundness; response to requests from governments; compliance with the TCP criteria.

6.1 Approval of the TCPF

The FAO Rep can trigger the opening of a TCPF by submitting to the Chief, TCOT, either an official generic letter from the government (as per model letter in Attachment 1), or an official specific request from the concerned ministry for TCP support. The communication submitting the request should confirm that it has been endorsed by the government authorities responsible for the coordination of external technical cooperation or any other entity defined by the government as the official channel of communication with FAO. In case of a specific request for support, the request should reach TCOT accompanied by a TCPF budget sheet (Attachment 2) indicating the amount requested per budget line.

In response to the request, the Chief, TCOT, under delegated authority from the Assistant Director-General of the TC Department (ADG/TC), will request AFF to open a TCPF project and allocate the amount to the budget lines as per the information provided by the FAO Rep. TCOT will inform the FAO Rep of the project symbol. The TCPF will appear as any other TCP project in the FPMIS and the financial systems. The FAO Rep will inform the government of the approval of the project and will ensure that the documentation and data related to the project is uploaded in FPMIS22.

21 The use of international consultants who are not recruited under the Partnership Programme should be justified by the technical division in an e-mail addressed to the FAO Rep, who should obtain the clearance of ODG.

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In order to avoid any underutilization of the overall TCP appropriation, a TCPF project will be approved for the sole amount requested by the FAO Rep. The budget can be replenished until the end of the biennium, as needed and upon request of the FAO Rep, up to US$200 000 and on condition of availability of TCP resources. The NTE date of any TCPF will be the last day of the biennium (maximum duration 24 months) 23.

6.2 Implementation of the TCPF

Once the TCPF has been approved in accordance with 6.1, the TCPF can be used to respond to several different specific requests from various line ministries. The FAO Rep screens each specific incoming government request for assistance as endorsed by a senior representative of the technical ministry concerned24, reviews it as to whether it falls within FAO’s Mandate, assesses whether it meets the TCP criteria, checks with TCOT whether the necessary funds are available to increase the TCPF budget and consults with FAO’s technical units concerned on the technical soundness of the proposal and on their capacity to technically backstop the activity. As a guiding principle, technical clearance should normally be sought from the decentralized office nearest to the location where the project inputs are required which would normally be the subregional office or the regional office25.

If, based on these consultations, the FAO Rep concludes that the requested assistance can be provided within the framework of the TCPF, he/she informs the ministry concerned that the request will be supported by FAO. For each specific request, the FAO Rep arranges for the preparation of a standard form containing the main objective of the assistance, the outputs, inputs foreseen and the rationale for using TCP resources (see Attachment 3, Part I) and uploads the form in FPMIS. To increase the budget of the TCPF, the FAO Rep sends a revised budget sheet (see Attachment 2), to TCOT and the budget is increased within the overall ceiling of US$200 000 per country per biennium and on condition of availability of TCP resources. The FAO Rep is responsible for ensuring that the funds allocated under the approved TCPF project are committed before the end of the biennium.

The FAO Rep assumes full responsibility for the operation of the TCPF and will be accountable for the correct application of the TCP criteria and for the use of the resources and the related inputs. The implementation is undertaken in close collaboration with the senior counterparts in the government and FAO's technical officers assigned to support the TCPF’s activities.

Recruitment of project personnel and approval of LOAs follow established procedures. Terms of Reference and CVs of consultants and contractors under LOAs require mandatory clearance by the FAO technical officer assigned to the TCPF activity concerned.

The FAO Rep operates the project through all stages, including closure.

Each government request addressed in the context of the TCPF should result in one or several outputs, one of which should be a document (such as a technical report, a project proposal for extrabudgetary funding, a planning framework, a draft legislation, etc.). This document should be in a format approved by the FAO Rep and/or the FAO technical officers concerned prior to the commencement of the activities. When finalized and technically cleared, this document should be transmitted by the FAO Rep to the relevant government authorities, the FAO technical officers concerned, the relevant regional and subregional offices,

22 Depending on the quality of the internet connection, the FAO Rep will directly update the FPMIS with documents and data or will request the support of the decentralized office (SRO/RO) concerned.23 A TCPF for the subsequent biennium can be opened as soon as a government request in this regard is received. 24 Once the TCPF is established as per 6.1, specific requests for assistance under the project need not be signed at the highest ministerial level.25 Initial requests for technical support or clearance of documents should be addressed to the subregional coordinator or representative, as appropriate, who will assess whether the required expertise is available in his/her office at the time required and, if so, will designate the technical officer responsible for providing the required support, while keeping the relevant technical division at headquarters informed. If the required expertise cannot be made available from the team at the decentralized office, the decentralized office immediately informs the FAO Rep and the technical division at headquarters, who will then agree with the FAO Rep whether technical support can be provided from headquarters or another location, including FAO experts in other projects.

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TCOT, and should be uploaded in FPMIS. At the same time, the FAO Rep is requested to complete Part II of Attachment 3 and upload the form in FPMIS.

Within eight weeks of the end of the biennium, the FAO Rep is responsible for the preparation of a concluding letter or short report on the use made of the TCPF and the outputs produced. After obtaining technical clearance, the FAO Rep should address this letter/report to the government with copy to ADG/TC, TCOT, the FAO regional/subregional offices and technical division(s) concerned, and OCD, and it should be uploaded in FPMIS.

Following submission of the concluding letter/report, the FAO Rep fills in the operational closure form and the financial closure form for submission to TCOM and AFFC, respectively. The participating FAO technical offices will receive the reimbursement for the specific technical support services provided, if any, as per established procedures.

*****

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Attachment 1

TECHNICAL COOPERATION PROGRAMME FACILITY

Model letter for formal government request

Dear Mr/Ms ... ,

I refer to the decision of the Director-General of FAO to establish a facility under the Technical Cooperation Programme (TCP) to accelerate response to specific requests for assistance from FAO Member Governments.

Following our conversation of ........ with ....... (or our exchange of correspondence/your discussions with the Director of Agriculture or of ......), I confirm that the Ministry of ......... wishes to avail itself of this TCP facility.

OR

The Minister for ................hereby wishes to benefit from this TCP facility made available by the FAO Director-General.

Yours sincerely,

The Ministeror Permanent Secretary

(or person of similar rank)on his/her behalf

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Attachment 2


Budget

to be filled by the FAO Rep in consultation with the technical division(s) and transmitted to TCOT for replenishment of TCPF project resources.

126


Attachment 3


Suggested format for description of assistance to be rendered in the context of a TCPF

PART I, to be completed by the FAO Rep and uploaded in FPMIS before activities begin:

TCP Facility project code (if project already established): ……......………......…..…..

Title of the assistance: ……………………………………………………………......…..…..

Objectives:

…………………………………………………………………………………........…........……………………………………………………………………………………………................….

Expected outputs:

………………………………………………………………………………………......…...........………………………………………………………………………………………….................

Main inputs foreseen:

……………………………………………………………………………………......……...........………………………………………………………………………………………......…...........

Rationale for funding under the TCP (main TCP criteria met):

...........................................................................................................................................

...........................................................................................................................................

Approximate budget: US$....................

Expected duration: ………….................

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PART II, to be completed by the FAO Rep at the end of the activity and uploaded in FPMIS:

Output(s) obtained (including date of transmission to the Government if relevant)

...........................................................................................................................................

...........................................................................................................................................

Main inputs used (if different from plan):......................................................................................................................................................................................................................................................................................

Realized or expected longer-term impact of the assistance......................................................................................................................................................................................................................................................................................

Problems or difficulties encountered during implementation

...........................................................................................................................................

...........................................................................................................................................

Any other observations

...........................................................................................................................................

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PROCEDURES FOR THE REVISION OF TCP PROJECTS26

TCP projects should be revised in the course of their execution if changes are required to achieve established objectives and expected outputs or to adapt the project to unforeseen circumstances arising during implementation.

Basic principles:

(a) The procedures are intended to facilitate the work of the budget holder by minimizing bureaucracy and maximizing flexibility in adjusting the project to the realities as they unfold during its implementation, while at the same time ensuring integrity, effectiveness and transparency in the utilization of TCP funds and compliance with TCP criteria and FAO policies.

(b) The budget holder and FAO technical officers share the responsibility for ensuring cost-effectiveness in project implementation.

(c) The commitment of FAO is limited to the provision of technical inputs and not to the delivery of a specific budget amount. If project objectives are achieved with fewer inputs, the unspent funds are returned to the TCP General Account.

(d) The budget holder is responsible for ensuring full transparency in the utilization of project funds, e.g. by encouraging clear and unequivocal descriptions of expenditures that allow for easy monitoring of project transactions in the Data Warehouse and by keeping records of all decisions taken during project implementation.

(e) The budget holder is responsible and accountable for ensuring the use of project resources in accordance with FAO rules and regulations and financial procedures.

(f) Project resources can be used solely for the provision of technical assistance services and the procurement of inputs directly related to the project.

(g) TCOT should be alerted to the need for a revision that goes beyond the flexibility margins/authority of the budget holder as soon as the required changes are known and quantified and, in any case, before the proposed changes are implemented.

The following types of revision can be identified:

Project revision

Changes in project design may include an adjustment to objectives, outputs or activities, etc., as well as a significant qualitative or quantitative modification of project inputs.

Budget revision

1. Modification of the total budgetary allocation may be required to cover a quantitative or qualitative adjustment of inputs or to accommodate cost variations.

2. Reallocation between child accounts may be needed to adjust inputs or to reflect actual costs even if the overall budgetary allocation remains unchanged.

Rephasing/extension of project activities

26 These Procedures have been issued through the Field Programme Circular FPC 2006/01, 6 April 2006. This FPC is available for FAO internal users from the Field Programme Management Information System (FPMIS https://extranet.fao.org/fpmis/)

129


Rephasing of the project by modifying the scheduled start and end dates may become necessary, if the initiation and/or completion of field activities are delayed.

130


FLEXIBILITY MARGINS AND AUTHORITY TO EFFECT REVISIONS OF TCP PROJECTS

A B C D

No prior approval by TCOT is required

Approval by TCOT is required through

e-mail

Approval by TCOT is required through a

formal project/budget revision

Approval by the Director, TCO

is required through a formal project/budget

revision

Project revision Revision of objectives, new outputs, new

activities, new type of inputs, with no budget

implications or falling in the margins defined

below

Revision of objectives, new outputs, new

activities, new type of inputs, with budget

implications falling in the margins defined

below

Revision of objectives, new outputs, new

activities, new type of inputs, with budget

implications falling in the margins defined

below

Modification of total budget allocation (within ceiling of US$500 000 per project) 27

up to 15% of total budget

maximum US$20 000

for adjustments to approved inputs

up to 15% of total budget maximum US$20 000

for new inputs

up to 50% of total budget

maximum US$100 000

for adjustments above 50% or US$100 000

Reallocation between child accounts (with exceptions as per table below)

up to 20% per account line

maximum US$15 000

for adjustments to approved inputs and for switching between

TCDC, retired and national consultants

and/or contracts, keeping same terms of

reference

up to 20% per account line

maximum US$15 000

for new inputs

for adjustments up to US$50 000 per account

line

for adjustments above US$50 000 per account

line

Rephasing/extension Up to 6 months within 24 months project

duration

More than 6 months and extensions beyond 24

months

The following account lines must be sustained at pre-established levels:

Account-line Description Comment

6111 Report Costs Standard fee to process the project’s Terminal Statement in TCOM

6116 Evaluation 28 Standard fee to cover expenses for theme-oriented evaluations

6118 Direct Operating Costs Charged monthly by AFFC based on actual expenditure for the month at 7% to cover the cost of administrative and operational support services

27 For projects approved before 1 January 2006, the ceiling is US$400 000.28 For projects approved before 1 January 2006 only.

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FORMAT OF THE REQUEST FOR REVISION

Cases falling under Column A - no prior approval by TCOT is required:

The budget holder, in consultation with/upon request from concerned FAO technical officers and counterparts, can proceed with the adjustments. Any budgetary changes should be reflected in the next formal request for budget revision. The need for rephasing/extending a project should be communicated to TCOT, which will update the Field Programme Management Information System (FPMIS).

Cases falling under Column B - approval by TCOT is required through an e-mail:

The budget holder, in consultation with/upon request from concerned FAO technical officers and counterparts, sends an e-mail providing a justification for the revision to TCOT. Upon approval, the e-mail will be uploaded to FPMIS by TCOT. Any budgetary changes should be reflected in the next formal request for a revision. In cases of rephasing/extension, TCOT will update the appropriate fields in FPMIS.

Cases falling under Columns C and D - approval by TCOT or Director, TCO is required through a formal project/budget revision:

The budget holder, in consultation with/upon request from concerned FAO technical officers and/or counterparts, fills in the TCP Budget Revision form (see Annex A below, available in Excel format from FPMIS under Procedures/Field Programme Circulars or from the Field Programme Manual). The form should be submitted by e-mail to the Chief, TCOT. For revision of objectives and other major adjustments, evidence of government approval may be requested by TCOT. Upon approval, the budget holder is informed by e-mail and the revision is sent by TCOT to AFFC to effect adjustments in ORACLE. A copy of the approved revision is posted in FPMIS.

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ANNEX A

(Available and to be used in Excel format)

FAO Technical Cooperation Programme

Project / Budget Revision No.: ... Project Symbol: TCP/....../.....Oracle Code:

.......

Project Title:

Project Schedule Planned Revision 1 Revision 2 Revision 3 Revision 4

Total months: …

From: …

To: …

Rationale for the Revision Request: (Supporting documentation may be attached)

Kindly provide concise and transparent justification and description of required adjustments

Operating Unit: ………. Endorsing Service: TCOT Authorizing Division: TCO

no physical signature required

Name of Budget Holder Date: ..........................

Chief, TCOTDate: ……….............……

Director, TCODate : ……………

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(Available and to be used in Excel format)

ORACLE Activity Code

0

Accts Input Description Sub/Child Main/Parent Commitments Available Sub/Child Main/Parent

Account Account and Actuals Budget Increases Decreases Account Account

5013 Consultants - - - - 5542 Consultants - International - - 5543 Consultants - National - - 5544 Consultants - TCDC/TCCT - - 5545 Consultants - Retired Experts - - 5546 Consultants - South South Cooperation - - 5547 Consultants - UN Volunteers - - 5549 Consultants - Young Professionals - -

other child/sub accounts total - 5014 Contracts - - - 5650 Contracts Budget - 5020 Overtime - - - - 5652 Casual Labour - Temporary Assistance - -

other child/sub accounts total - 5021 Travel - - - - 5661 Duty travel (FAO staff only) - - 5684 Consultants - International - - 5685 Consultants - National - - 5686 Consultants - TCDC/TCCT - - 5687 Consultants - Retired Experts - - 5688 Consultants - South South Cooperation - - 5689 Consultants - UN Volunteers - - 5694 Travel Study Tour - - 5692 Travel TSS - - 5698 Travel non-staff (counterparts) - -

other child/sub accounts total - 5023 Training - - - 5920 Training Budget - 5024 Expendable Equipment - - - 6000 Expendable Equipment Budget - 5025 Non Expendable Equipment - - - 6100 Non Expendable Equipment Budget - 5027 Technical Support Services - - - - 6111 Report Costs - - 6116 Evaluation - - 6120 TSS (Honorarium) - -

other child/sub accounts total - 5028 General Operating Expenses - - - 6300 General Operating Expenses Budget - 5029 Support Cost - - 6118 Direct Operating Costs - -

other child/sub accounts total - Grand Total - - - - - - - -

Revised Budget(as per Last Approved Revision) project period Required Modification

TCP Symbol

0

Budget Changes

Financial

Project Budget

Requested

Status

as recorded for the whole

*****

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Reimbursement of FAO Technical Support Services in Technical Cooperation Programme (TCP) Projects29

1. Basic principles

In order to ensure high quality standards and coherence with the Organization’s goals and policies, it is crucial that technical assistance be planned and supervised by technical specialists of the Organization, both through desk-work and through direct supervision and technical backstopping visits to the field or direct participation in project implementation as field experts in their own right.

Such services would normally be provided by FAO staff, but could also be entrusted to consultants when capacities to support the field programme are overstretched or the specific expertise is not available in FAO. Staff and consultants hired by technical units for Technical Support Services (TSS) would ensure the technical synergy of all project inputs throughout the project cycle, supervise and coordinate activities related to the technical management of projects and participate in project task force consultations on behalf of a technical unit30. In the case of Technical Support Services provided by consultants, the concerned technical unit would remain responsible for the technical quality of the support provided.

The following phases of the project cycle are of relevance for the reimbursement of technical support services:

Pre-project support Project implementation Post-project implementation

1.1 Pre-project support

This phase covers all activities prior to project approval and includes the review and technical appraisal of requests for assistance from member countries, and the formulation and submission of project documents and accompanying documentation to TCOT.

Given that the Organization’s functional statements require that technical divisions provide “specialized support, on request from the Technical Cooperation Department (TC), in the formulation or implementation of projects”, full reimbursement of costs for such services would be neither reasonable nor feasible. It is also recognized that the time input and actual work effort for this task can vary greatly by project.

Within these limitations and in order to simplify reimbursement procedures, a standard five-day input per project of the technical unit providing the lead technical officer31 will be budgeted to cover these services. In the case of multidisciplinary projects, each participating technical unit responsible for specific project inputs/outputs will receive the equivalent of a one-day input for their contribution to the formulation phase of the project. It is understood that reimbursement for these services can only be granted if and when projects are actually approved.

This concept does not preclude the possibility of using advance allocations to finance project formulation or project formulation missions in the case of complex requests, according to established procedures.

1.2 Project implementation

29 These Procedures have been issued through the Field Programme Circular FPC 2005/01 – Revision 1, 14 March 2007. This FPC is available for FAO internal users from the Field Programme Management Information System (FPMIS https://extranet.fao.org/fpmis/)30 Technical units can be a service or branch in FAO headquarters, regional offices or subregional offices and are identified on the basis of the location of the officer providing the services.31 The lead technical officer can be based in a service or branch in FAO headquarters, a regional office or subregional office.

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During the project implementation phase, technical support services for specific tasks are mainly provided through field visits to projects with specific terms of reference (TOR) and clearly defined outputs. In exceptional cases, reimbursement for research, analysis and compilation of technical documents at the desk can also be foreseen. The budget for such services would be calculated based on the estimated actual days on mission and/or of desk-work.

In addition, technical support services are provided for standard tasks for which a time-recording system is not available. The tasks that are considered as reimbursable and the corresponding standard time inputs expressed in days or fraction of days are established as follows:

Days Tasks that are eligible for reimbursement

0.2for the recruitment of each international, retired or national consultant (roster search, review of candidatures and selection)

0.4for the recruitment of each TCDC/TCCT consultant (roster search, review of candidatures and selection)

0.2 for each contract, LoA, etc. 0.1 for review and approval of specifications of technical equipment0.1 for review and approval of specifications of supplies0.4 for review and approval of study tours0.6 for review and approval of each in-country training activity

2for each mission of international consultants (briefing of consultants and review, editing and clearance of his/her mission and technical reports)

1for each assignment of national consultants (briefing of consultants and review, editing and clearance of his/her mission and technical reports)

2.4for each mission of TCDC/TCCT consultants (briefing of consultants and review, editing and clearance of his/her mission and technical reports)

The allocated standard time input reflects the average time spent on projects for the various tasks; there may be projects where the actual time spent on an individual task is higher or lower. The average time assigned to each task may be reviewed at the beginning of each biennium, in consultation between TCD and the technical departments.

1.3 Post-project implementation

The standard cost for the finalization and dispatch of the terminal statement by TCOM is established by Management, in consultation with TCOT, and currently stands at US$1 850.

All TCP projects are subject to evaluation. For reasons of economy of scale, evaluation of single TCP projects would not be economical. They will be evaluated on a cluster basis, according to common themes, by the Evaluation Service (PBEE). Each project will allocate US$1 000 for this task.

2. Budgeting for technical support services

It is the responsibility of TCOT to ensure that technical units receive their fair share of reimbursement. A technical support services budget is established for each project in close consultation with the units concerned (see Annex 1 below).

Unless major project revisions are needed, the budget for standard tasks would not be revised during project implementation. However, the budget established for field missions can be revised to take into account unexpected developments during project implementation.

A flat standard rate based on calendar days (a 30-day month), representing average actual costs of the most likely input mix, will be used to calculate the budgeted reimbursement. The standard rate, which for 2006/2007 has been set at US$421, will be reviewed and updated by PBEP in consultation with TCOT, every

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two years, at the time when standard rates for the Regular Programme and consultants’ honoraria are reviewed.

3. Reimbursement procedures

Projects are debited for Technical Support Services through a reimbursement claim. The claim is prepared by the technical unit that provided the services using a claim form accessible from the FPMIS project page (https://extranet.fao.org/fpmis/index.jsp).

On submitting the claim for reimbursement, FPMIS generates an e-mail through which the technical unit can transmit the completed claim directly to the SSC (Shared Services Centre, previously known as MSS) or MSU32, notifying (by copy of the e-mail) the budget holder, who would monitor the submission within her/his overall responsibility for the use of project funds. If no objection is received from the budget holder within five working days, the SSC or MSU prepares the journal for the transfer of funds from the project to the account specified by the unit that provided the service.

The frequency and timing of the invoicing is left to the technical units33 to decide. However, it is mandatory to claim the reimbursement and use the funds within the same biennium in which the services are rendered.

In line with the financial rules of the Organization, mission-related work can only be claimed after the services have been rendered. For standard tasks, given the principle that only partial reimbursement can be provided and in view of the fact that these are mostly delivered before or during project inception, it is foreseen that a technical unit could combine the claim for the full amount with the first claim for mission-related work. Should no mission be envisaged for the technical unit, the claim can be reimbursed as soon as the input under the technical unit’s responsibility has been delivered.

When consultants are used to provide Technical Support Services (TSS), they have to be recruited by the concerned technical unit using own resources. Reimbursement claims can be timed as per above. However, travel costs can be directly charged to the project (account 5692 Travel-Technical Support Services).

The travel budget rests under the responsibility of the budget holder and established procedures remain applicable.

Evaluation costs are charged to ongoing projects as they accrue. A journal is prepared by the Evaluation Service (PBEE) and sent directly to AFFC for approval without budget holder involvement. Should a project not have been charged before its operational closure, the funds should be returned to TCP through the closing revision.

4. Monitoring

The budget holder monitors the provision of technical support services in accordance with the project document/technical support services budget and alerts the project task force should any issues arise.

The reimbursement claim includes the collection of some statistical information in the FPMIS form to assist in the standard rates’ update and reporting.

5. Special cases

32 If the unit providing the service is located in FAO headquarters or in a subregional office, the claim would be sent to the SSC. For units in regional offices, the claim would be sent to the MSU of the regional office.33 Consideration could be given to timing claims with the PBRs, to ensure that actual level of reimbursements is included in the eBMM at the time of reporting to PBE so as to also facilitate the TSS reimbursements’ forecasting.

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In the case of emergency assistance projects where project formulation is not led by a technical unit, each participating unit would receive one-day reimbursement for clearance of project inputs.

Associate Professional Officers (APOs) can participate in project formulation and/or implementation, but divisions cannot claim reimbursement for other than travel related expenses.

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Annex 1

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Technical Support Service Budget (TSSB)

Project Code & Symbol:

Lead Technical Unit:Title:

I. STANDARD TASKS LTO Unit Participating Units

Type of Tasks Days Totals

Recruitment of Each International Consultant 0.2Number of Consultants 0Days 0 0 0 0 0Recruitment of Each National Consultant 0.2Number of Consultants 0Days 0 0 0 0 0Recruitment of Each TCDC/TCCT Consultant 0.4Number of Consultants 0Days 0 0 0 0 0Contracts, LoA 0.2Number of Contracts 0Days 0 0 0 0 0Non-Standard Equipment Review & Approval 0.1If Applicable = 1 0Days 0 0 0 0 0Non-Standard Supplies Review & Approval 0.1If Applicable = 1 0Days 0 0 0 0 0Study Tours Review & Approval 0.4 Number of Study Tours 0Days 0 0 0 0 0In-Country Training Review & Approval 0.6Number of Training 0Days 0 0 0 0 0Mission of Each International Consultant 2Number of Missions 0Days 0 0 0 0 0Mission of Each National Consultant 1Number of Missions 0Days 0 0 0 0 0Mission of Each TCDC/TCCT Consultant 2.4Number of Missions 0Days 0 0 0 0 0

Total days 0 0 0 0 0

Reimbursable days for project formulation 0 0 0 0 0

II. SPECIFIC TASKSRate Totals 0 0 0 0

Research, Analysis & Technical Documents CompilationNumber of days 0

Participation in and Leadership of Field MissionsNumber of days 0DSA 0 0 0 0 0Other travel costs 0

Totals 0 0 0 0

TOTAL NUMBER OF REIMBURSABLE DAYS 0 0 0 0 0

TOTAL REIMBURSABLE IN US$ 0 0 0 0 0

Reimbursement rate applied to each day (in US$) 421

III. TOTAL BUDGET FIGURES

6120 Honorarium - Technical Support Services US$ 0

5692 Travel - Technical Support Services US$ 0

6111 Report Cost US$ 1,850

6116 Thematic Evaluation US $ 1,000

Signature Date

PROJECT ANALYST, TCOT

CHIEF, TCOT

Appendix 3: Tools for Participatory Rural Appraisal

APPENDIX 3: PRA TOOLS

1. Problem Analysis

1.1. Problem Analysis/Problem Tree

Problem analysis identifies the negative aspects of an existing situation and establishes the “cause and effects” relationships between the identified problems. It involves three main steps:

1. Definition of the framework and subject of analysis;2. Identification of the major problems faced by target groups and beneficiaries (What is/are the

problem/s? Whose problems?); and3. Visualization of the problems in form of a diagram, called a “problem tree” or “hierarchy of

problems” to help analyze and clarify cause-effect relationships.

The analysis is presented in diagrammatic form (see Figure 21) showing effects of a problem on top and its causes underneath. The analysis is aimed at identifying the real bottlenecks which stakeholders attach high priority to, and which they wish to overcome. A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives.

How to Establish a Problem Tree

Creating a problem tree should ideally be undertaken as a participatory group event. It requires the use of individual pieces of paper or cards on which to write individual problem statements, which can then be sorted into cause and effect relationships on a visual display.

Step-1:

Step-2:

Step-3:

Step-4:

Step-5:

Step-6:

Step-7:

The aim of the first step is to openly brainstorm problems which stakeholders consider to be a priority. This first step can either be completely open (no pre-conceived notions as to what stake holder’s priority concerns/problem might be), or more directed, through specifying a “known” high order problem or objective (e.g. improved river water quality) based on preliminary analysis of existing information and initial stakeholder consultations.

From the problems identified through the brainstorming exercise, select an individual starter problem.

Look for related problems to the starter problem.

Begin to establish a hierarchy of cause and effects: Problems, which are directly causing the starter, are put below. Problems, which are direct effects of the starter problem, are put above.

All other problems are then sorted in the same way-the guiding question being “What causes that?” If there are two or more causes combining to produce an effect, place them at the same level in the diagram.

Connect the problems with cause-effect arrows-clearly showing key links.

Review the diagram and verify its validity and completeness. Ask yourself/the group- “are there important problems that have not been mentioned yet?” If so, specify the problems and include them at an appropriate place in the diagram.

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Step-8: Copy the diagram onto a sheet of paper to keep as a record, and distribute (as appropriate) for further comment/information.

Important points to note about using the problem tree tool are:

The quality of output will be determined by who is involved in the analysis and the skills of the facilitator. Involving stakeholder representatives with appropriate knowledge and skills is critical;

A workshop environment involving groups of up to 25 people is an appropriate forum for developing problem tree, analyzing the results and then proposing next steps;

It may be appropriate to undertake a number of separate problem tree analysis exercises with different stakeholders groups, to help determine different perspectives and how priorities vary;

The process is as important as the product. The exercise should be treated as a learning exercise for all those involved , and an opportunity for different views and interests to be expressed; and

The product of the exercise (the problem tree) should provide a robust but simplified version of reality. If it is too complicated, it is likely to be less useful in providing direction to subsequent steps in the analysis. A problem tree cannot (and should not) contain or explain the complexities of every identifiable cause-effect relationship.

Once complete, the problem tree represents a summary picture of the existing negative situation.

In many respects the problem analysis is the most critical stage of the project planning, as it then guides all subsequent analysis and decision-making on priorities.

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Figure-1: Example of a Problem Tree

Problem analysis - River pollution

1.2 Analysis of Objectives:

Analysis of objectives is a methodological approach employed to:

Describe the situation in the future once identified problems have been remedied; Verify the hierarchy of objectives; and Illustrate the means-ends relationships in a diagram.

The “negative situations” of the problem tree are converted into solutions, expressed as “positive achievements”. For example, “river water quality is deteriorating” is converted into “quality of river water is improved”. These positive achievements are in fact objectives, and are presented in a diagram of objectives showing means/ends hierarchy (see Figure 22). This diagram aims to provide a clear overview of the desired future situation.

The main steps in the process are summarized below:

Step-1:

Step-2:

Step-3:

Reformulate all negatives situations of the problems analysis into positive situations that are: desirable realistically achievable

Check the means-ends relationships to ensure validity and completeness of the hierarchy (cause-effect relationships are turned into means-ends linkages)

If necessary: revise statements add new objectives if these seem to be relevant and necessary to achieve the

objectives at the next higher level delete objectives which do not seem suitable or necessary

Once again, the analysis of objectives should be undertaken through appropriate consultation with key stakeholder groups. Information previously gained from undertaking stakeholder analysis (including institutional capacity assessment) should also be taken into account. This should help in terms of:

Considering priorities; Assessing how realistic the achievement of some objectives might be; and Identifying additional means that might be required to achieve desired ends.

Once complete, the objective tree provides a summary picture of the desired future situation, including the indicative means by which ends can be achieved.

As with the problem tree, the objective tree should provide a simplified but robust summary of reality. It is simply a tool to aid analysis and presentation of ideas.

Its main strength is that it keeps the analysis of potential project objectives firmly based on addressing a range of clearly identified priority problems.

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River water quality is deteriorating

High levels of solid waste dumped into the river

Most households and factory discharged wastewater directly into

the river

Wastewater treated in plants does not meet environmental

standard

River ecosystem under serious threat, including the declining of

fish stock

High incidence of water borne diseases and illness, particularly

among poor families

Catch and income of fishing families in decline

Polluters are not controlled

Population is not aware of the danger of

waste dumping

Existing legal regulations are inadequate to prevent direct discharge of wastewater

40% of households and 20% of business

not connected to sewerage network

Environment Protection

Agency ineffective and closely aligned with industries

interests

No public information/ed

ucation programs available

Pollution has been a low

political priority

Inadequate levels of capital investment and poor business planning within local

Government


Figure-2: Example of an Objective Tree

Problem analysis - River pollution

2. SWOT Analysis:

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model.

Strengths: attributes of the person or company that are helpful to achieving the objective Weaknesses: attributes of the person or company that are harmful to achieving the objective. Opportunities: external conditions that are helpful to achieving the objective. Threats: external conditions which could do damage to the objective.

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.

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River water quality is improved

The quantity of solid waste dumped into the river is

reduced

No. of households and factory discharging wastewater directly into

the river is reduced

Wastewater treated in plants meets environmental

standard

Threat to river ecosystem is reduced and fish stock are increased

Incidence of water borne diseases and illness is reduced, particularly among poor families

Catch and income of fishing families is stabilized or

increased

Polluters are effectively controlled

Population more aware of the danger of

waste dumping

New legal regulations are

established which are effective in

preventing direct discharge of wastewater

Increased of % of households and

business are connected to

sewerage network Environment

Protection Agency is

effective and more

responsive to a broad range of stakeholder

interests

Public information/ed

ucation programs

established

Pollution management is given a higher

political priority

Improved business planning within local

Government is established, including

cost recovery mechanism

Increased capital

investment


First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.

The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development.

3. The logical framework

3.1. When to use Logframe

Identifying activities Preparing project design Appraising project design Implementing projects Monitoring and evaluating project

3.2. Definitions

Goal: Long term impact, benefits for target groups expected to gain from the program/project (what results we want to see: e.g. higher incomes, improved nutrition, better health, etc.)

Purpose/Outcome: Direct impact, Change in behaviour/use of potential which directly result from the utilization of deliverable outputs (what we want to achieve: e.g. increased production, better food quality, cleaner water etc.)

Outputs: Goods and services produced (what do we provide: e.g. irrigation system, animal immunized, trees planted, policy guidelines produced, staff trained etc.)

Activities: Means and actions carried out by the project in order to achieve and obtain the outputs/results (what do we do: e.g. tube wells construction, tree plantation etc.)

Inputs: Materials and people needed

Assumption (risk): External conditions that will affect success

Indicators: Information to determine progress

Means of verification: Expected source of information

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3.3. The logic of the framework

Summary of Hierarchy of Objectives

Indicators Verification Assumptions

GOAL The higher order impact benefits for target groups expected to gain from the program/project

Measures to verify accomplishment of Goal

Sources of data needed to verify status Goal level indicators.

Important external factors needed in order to attain the Goal

PURPOSE/OUTCOMEThe immediate outcome, Change in behaviour of target groups which directly result from the utilization of deliverable outputs

Measures to verify accomplishment of Purpose

Sources of data needed to verify status Purpose level indicators.

Important external factors necessary for sustaining objectives in the long-run

OUTPUTSThe goods and services produced

Measures to verify accomplishment of Outputs

Sources of data needed to verify status Output level indicators.

Important external factors needed in order to attain the Purpose

ACTIVITIESThe means and actions carried out by the project in order to achieve and obtain the outputs/results

Measures to verify accomplishment of the activities

Sources of data needed to verify status Activity level indicators.

Important external factors that must prevail in order to accomplish the Outputs

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GOAL

PURPOSE / OUTCOME

OUTPUTS

ACTIVITIESIf

If

If

Then

Then

Then

Deliver

Achieve

Contribute


3.4 Example of a logical framework

Project Title:

“Building Technical Capacity of Village Agricultural Extension Workers”

Target Groups:

Poor farmers/producers, members of agricultural development communities in Banteay Meanchey, Battambang, Kampong Cham, Prey Veng, Takeo and Siem Reap Province of Cambodia

Ministry/Province:

Ministry of Agriculture, Forestry and Fisheries (MAFF) and Provincial Department of Agricultures

Thematic Focus:

Agricultural Productivity Improvement (Agricultural Extension Services)

Starting Date:

January 2011

Duration:

3 years

Objectives & Activities Indicators Means of Verification Important Assumptions

Project Goal:

To increase income of the poor farmers and members of agricultural development communities in target areas by proving knowledge and know-how on agricultural production through village agricultural extension workers (VAEWs)

- At the end of the project implementation, the income of the target groups (poor farmers and members of agricultural development communities) increased by at least 15%.

(i) Reports from M&E staff, at the mid-term and final review

(ii) National and provincial statistics

(iii) Report from the Base line survey done by PDA

Project Outcome:

The target groups (poor farmers and members of agricultural development communities) improve their technical capacities and are able to increase agricultural production

- At the end of the project implementation, the crop production increased by at least 15% in the target areas

- Provincial statistics

- Report from the Base line survey done by PDA

- Reports from M&E staff, at the mid-term and final review

Assumptions for the Project Goal:

(i) Better natural and climate condition during the project implementation

(ii) Stability in prices

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Output 1:

The Village Agricultural Extension Workers (VAEWs) are established and strengthened their technical capacities to assist and provide technical advices to the farmers for increasing agricultural production

- At the end of the project implementation, at least 2,000 VAEWs in 6 target provinces officially nominated and their technical skills improved

- At least 70% farmers who received the technical advices provided by the VAEWs are able to apply the knowledge and technical skills learned to increase their agricultural production

- Report from PDA

- M&E report and direct interview at the fields

- Report from Commune Councils in target areas

Assumptions for the Outcome:

- Willingness of VAHEV to participate in agricultural extension services

- Special consideration on the selection of target farmers who advices and interventions will be provided

- Farmers’ willingness to learn new skill and agricultural technology

Major Activities for Output 1:

Activity-1: Select and officially form 2,000 VAEWs in six target provinces

Activity-2: Prepare training materials for 50 training courses to VAEWs

Activity-3: Provide 50 training courses to VAEWs

Activity-4: Conduct 30 farmer field schools

Activity-5: Conduct 12 technical exchange programmes for VAEWs

Assumptions for Output 1:

- Good technical absorption capacity by the farmers and district staff of PDA and DOA staff

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Output 2:

The technical capacity of the PDA (OAE) and district staff in the target provinces improved for providing better technical advices and technology transferring to VAEWs at the grass root level

At the end of the project implementation, at least 300 technical staff working in PDA (OAE) and district staff in target provinces build up their technical capacities through TOT


- Report from PDA and DOA


Commitment from technical departments of MAFF to assist the PDA (OAE) and DOA in terms of technical skills

Willingness of PDA staff to improve their skills and transfer them to VAHVs


Activity-1: Prepare training materials and document for TOT training to PDA (OAE) and district technical staff

Activity-2: Conduct 20 TOT Training courses for PDA (OAE) and district technical staff

Activity-3: Conduct 20 field practices for PDA (OAE) and district technical staff


- High absorption technical capacity of DOA staff

Output 3:

The technical extension document developed and published for VAEWs to use at the village level

At the end of the project implementation, at least 2,000 sets of technical documents published and distributed to VAEWs at the villages

- Report from DAE


- Report from Commune Councils and village heads in target areas


Strong coordination from technical line departments of MAFF is made for assisting DAE to develop the technical documents

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Activity-1: Prepare technical documents for VAEWs to use at the village level

Activity-2: Conduct 2 stakeholders consultation workshops to validate the technical document Activity-3: Finalize and publish 2,000 sets of technical documents for VAEWs


- High absorption technical capacity of VAEWs to use the documents provided

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