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PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Project Name
Region
Sector
Project ID
Borrower(s)
Implementing Agency
Environment Category
Date PID Prepared
Date of Appraisal
Authorization
Date of Board Approval
Report No.: AB1859
Second Uttar Pradesh Diversified Agriculture Support Project
SOUTH ASIA
Agricultural marketing and trade (40%); Agricultural extension
and research (35%);General agriculture, fisheries and forestry
(25%)
P089484
GOVERNMENT OF INDIA
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
December 22, 2006
January 5, 2006
April 27, 2006
1. Country and Sector Background
The Tenth Five-Year Plan (2002/3 – 2006/7) establishes the country’s poverty and social development
agenda by setting targets for poverty reduction (down 5 % by 2007), employment generation and
human/social development, in addition to overall acceleration of GDP growth rate to 8% p.a. In contrast
to earlier Plans which had focused more on industrial development, agriculture has been made a priority
sector because of the dependence of the poor upon it and its potential to generate substantial employment
opportunities. The development strategy for agriculture moves away from the earlier approach of securing
increased production through subsidies in inputs such as fertiliser, water and power. Instead, it aims for a
more efficient, sustainable and equitable approach with four elements: (i) raising cropping intensity; (ii)
improved development and dissemination of technology; (iii) promoting agricultural diversification, postharvest technologies and marketing; and (iv) developing rural connectivity and other infrastructure that
support expansion of the rural economy.
Uttar Pradesh is a key arena in the country’s campaign against poverty. With 166 million people, it is
home to one-sixth of the nation’s population and almost one-fifth of the country’s poor. It is ranks below
the national average in a range of economic and social indicators. Agriculture is the dominant economic
sector, employing 72% of the population and contributing 42% of the state’s GDP. But the sector
exhibits weak and uneven growth, averaging less than 2% p.a. throughout the 1990s. The state’s
prosperity gap is also widening – per capita income was 3% lower than national average in 1950-51, but
had slipped to 38% lower by 1999-2000.
The most significant constraints to Plan implementation relate to resources, composition of public
expenditure, poor infrastructure, weak institutional and/or implement capacity, and restrictive regulatory
frameworks. Significant additional resource mobilization would be required to fund Plan outlays which,
in the case of UP, are forecast to double in size in the new Plan. Equally, improvements in public
expenditure management are needed to reduce the proportion of public expenditure on wages, pension,
interest, subsidy and on-going commitments, to allow an increase in capital spending, maintenance and
social support activities. Governance and regulatory environment will need to be reformed to improve
service delivery and facilitate productive private investments.
The agriculture sector in UP is experiencing problems of worsening land-man ratio, land degradation and
declining soil fertility in many areas, inefficient irrigation systems, stagnant yields, and lack of crop
diversification and subsistence-oriented crop and livestock production systems. Public extension activities
at the ground-level are negligible with little consequent acquisition of new technology or practices by the
majority of farmers. Advice on post-harvest processing and management activities is largely absent and
there are few backward/forward linkages with a primarily under-developed agribusiness sector.
Marketing infrastructure is essentially organized around cereal crops and pulses, and does not cater very
well to perishable and non-traditional products which, nevertheless, hold out substantial promise for both
income expansion and employment generation.
Although not a leading reformer, the state has made cumulative, if uneven, progress in a number of policy
and institutional reform areas like cost recovery and private participation in input/services supply,
especially in the context of the first Uttar Pradesh Diversified Agricultural Support Project and Sodic
Lands Reclamation Project. Looking forward, the state intends to upscale and extend key reforms that
have been piloted. The Agricultural Technology Management Agency (ATMA) model for rationalisation
and reorientation of public extension services, developed under DASP, will be applied to all districts.
Impetus for reform is also being provided by the central government which, under the Tenth Plan, links
provision of additional earmarked funds to governance and institutional reforms. The central government
has also launched a fully funded National Horticulture Mission to promote holistic growth through
research; production and productivity improvement; processing and post-harvest management; and
marketing.
2. Objectives
The objective of the project would be to increase agricultural productivity and product diversity in
UP; and enhance market opportunities and market access for the state’s farmers, fishers and livestock
producers.
In support of this objective, the project would foster increased private sector participation and investment
in all facets of the agricultural and allied sectors; and to promote more effective use of government funds
already allocated to these sectors, directly to line Departments and to private sector through government
sponsored investment grant schemes.
Key indicators of success would be (i) increased areas and yields of diversified field and tree crops,
livestock products and fish - complemented by an increase in the proportion marketed as fresh produce or
processed; (ii) more effective marketing of produce in project supported markets in terms lower
transaction costs and reduced wastage; and (iii) increased private sector participation and investment in
relevant areas of the sector.
3. Rationale for Bank Involvement
The Bank’s engagement in Uttar Pradesh supports the India Country Assistance Strategy (CAS) which
aligns itself with government attempts to bridge the widening gulf between the faster and slower growing
states in India. The strategy identifies UP as one of the four target states in which the Bank would
proactively try to build a productive development relationship. Further, enhancing rural livelihoods,
which will be the higher level outcome of the proposed project, constitutes one of the three areas in which
the CAS seeks to expand Bank lending.
The Bank is well-placed to assist the government to implement its development program, which focuses
on public sector reform, regulatory rationalization, private sector participation, demand-driven planning
and allocation, and community-based implementation - with an emphasis on the quality of public
investments. The Bank has a comparative advantage in combining analytical expertise, implementation
experience and resource support to facilitate such an inter-related, deep, and cross-cutting agenda for
change. This comparative advantage has been demonstrated during the recently completed Bank financed
Uttar Pradesh Diversified Agricultural Support Project (UPDASP), to which the proposed project would
be a follow-on operation, but with a broader sweep of activities. That initial project has provided useful
experience and models for the next phase work on promoting greater diversification and
commercialization of agriculture. Moreover, the policy reform dialogue promoted through the initial
project has focused on themes currently being emphasized in state and GOI plans. This has enhanced
both the credibility and capacity of the Bank to engage in agricultural/rural policy dialogue of both
sectoral and cross-cutting nature. Finally, the Bank is the only significant bilateral or multilateral
development partner working with GOUP to enhance rural livelihoods and develop the agricultural and
rural sector through promoting productivity, product diversification, and market access to facilitate
commercialization.
4. Description
The project covers all 70 districts in the state (32 phase I districts from the first project, and 38 new phase
II districts). Project activities would build on the successful initiatives of the initial project, but with the
addition of new interventions to address emerging marketing issues – for both fresh and processed
produce. Project activities are categorized into two components.
(i) Promoting Intensification and Diversification of Agricultural Production – by making extension
and adaptive research more relevant and accessible to farmers; encouraging the development and
introduction of more effective agricultural production systems; and reducing the risk associated with
change, especially for small operators.
o
Restructuring Extension and Adaptive Research Delivery. Introduction of a state-wide decentralized
pluralistic extension and adaptive research system, through adoption and development of the ATMA
management concept, which fosters farmer participation; public private partnerships; and
collaboration between line Depts. – and focuses appropriately on marketing as well as production
issues.
o
Upgrading Production Systems. Promotion of diversified, innovative agricultural, livestock and fish
production systems, supported by an investment grant scheme specifically targeted at marginal
landholders and the landless; along with livestock and fish up-grading programs, privatization of
artificial insemination (AI) services, and improved livestock disease surveillance systems.
o
Piloting Risk Mitigation. Pilot testing of risk mitigation mechanisms for small and marginal farmers,
involving concepts such as weather-based insurance and warehouse receipts, through MOUs with
private sector providers.
(ii) Expanding Market Opportunities and Increasing Access – by increasing market infrastructure
and making market management more responsive to farmers needs; promoting private sector
participation in agribusiness; and improving market access through more market information, a better
regulatory framework and improving supply chain management;
o
Modernizing Market Infrastructure and Management Systems. Market-yard development and
associated piloting of two market management models, involving: (i) partnership with the State
Agricultural Marketing Board (Mandi Board) to construct one specialized market each for fish
and fruits/vegetables, and upgrade/expand four more markets of each – to be operated as
regulated markets, but with enhanced governance and market stakeholder participation in market
design and operation, and outsourcing of selected market facilities to the private sector; and, (ii)
establishment of new concept district agri-markets, under the auspices of local ATMAs, but
managed by private sector entities, providing also a range of input supplies and general services
to farmers on the same site.
o
Promoting Agribusiness Investment. Establishment of a professionally managed Agribusiness
Development Facility (ABDF) to promote private sector involvement in agro-processing and
services provision, by increasing access to finance from commercial banks and GOI schemes;
increasing the availability of business development services to entrepreneurs; and fostering an
enabling business environment. To finance selected innovative agribusiness ventures, a small
Innovations Grant Fund would be established.
o
Facilitating Market Access. Through (i) an improved provision of market information on prices
and volumes traded in the major outlets, product standards, certification, and regulatory policies
and procedures; (ii) strengthened regulatory framework to improve the safety and quality
assurance of domestic and export products; and (iii) development of both coordinated and
uncoordinated supply chains by working with the private and cooperative sectors in market
identification and promotion; and facilitating linkages between producers, traders and processors
selected commodities, including milk and others to be identified during the project period.
5. Financing
Source:
BORROWER/RECIPIENT
INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
($m.)
50.0
78.0
Total
78.0
206.0
6. Implementation
Proposed institutional arrangements reflect what was established for the initial UPDASP, and proved to
be effective for that project. Overall responsibility for project execution would rest with the Agriculture
Production Commissioner (APC) Branch of GOUP. The APC is the senior government official normally
responsible for the operation of all the line Departments and agencies involved as implementing the
project.
Project oversight: Two committees exist at the state level to provide policy guidance and to oversee
project implementation. The Project Steering Committee is headed by the Chief Secretary of GOUP, with
other senior Departmental Secretaries and three non-officials representing farmers organization, NGOs
and the private sector as members. This committee provides policy guidance and general oversight of the
project in terms of achieving development impact. The Project Executive Committee, with the APC as the
chairperson and Secretaries of the participating line departments as members, has overall responsibility
for the management of the project. The EC approves annual work plans, and addresses all implementation
issues including resolution of any inter-departmental conflicts that might arise.
Project Coordination: This is the responsibility of the Project Coordination Unit (PCU) of the
Diversified Agricultural Support Project (DASP) Society, established in 1996 to facilitate project
preparation and implementation of the first project, supported by units in each district (DPCU). The role
of the PCU is not to implement the project, but to coordinate and facilitates implementation by the line
Departments and other implementing agencies. The Project Coordinator (PC) is a full-time officer at the
level of Secretary/ Special Secretary to the APC Branch of GOUP. Technical experts and managerial and
support staff are seconded to the PCU from line departments, universities/ institutes, or hired on contract
for the project period. As a registered Society, DASP is a GOUP agency, but has a semi-autonomous
status, with flexibility in administrative and financial procedures.
Project Implementation is the direct responsibility of the Departments of Agriculture, Horticulture,
Fisheries, Animal Husbandry, Dairy Development and Food Processing; along with other agencies such
as the Agricultural Produce Marketing Board (Mandi Board), Uttar Pradesh Livestock development
Board (UPLDB) and the Pradeshik Cooperative Development Federation (PCDF) – each operating in
their area of responsibility. Line Departments have established dedicated project implementation units
(PIUs) by deploying existing staff to focus attention on initiatives promoted by the project. To support
implementing agencies, the PCU and DPCU would have an essential role in coordinating activities at the
local level, especially with respect to the formation of community based groups, such as Farmer Interest
Groups (FIGs), Self Help Groups (SHGs) and Commodity Associations (CAs), with the help of NGOs
engaged under the project. To ensure good construction quality for any project funded civil works,
technical audits would be undertaken by independent consultants. Concurrent monitoring and evaluation
would be done by a reputed external agency.
At district level, Agriculture Technology and Management Agency (ATMA) would be the primary
vehicle for restructuring extension and adaptive research service delivery. Each district ATMA is
established as a registered society, with membership made up of a full range of stakeholders, including
district officers of line department; representative of zonal research station/ krishi vigyan Kendra;
commercial banks; producer committees involving farmers, fishers, livestock producers, women self help
groups, SC/ ST farmers; private sector input and service providers; and NGOs representatives. Each
ATMA has a Governing Board chaired by the District Magistrate, to provide overall policy guidelines for
district level intervention and maintain oversight and ensure coordination between line Departments; and
a Management Committee chaired by the Chief Development Officer, with responsibility for operation
and implementation of coordinated district extension and adaptive research initiatives.
Implementation of the project Marketing activities ( market development and management, and market
information systems) would involve marketing cells of different departments. PCU would place core
marketing teams to collate, analyze trend in marketing and provide technical backstopping to marketing
personnel in line Departments at the district level. The Mandi Board would be responsible for design and
construction of the specialized fruits/vegetable and fish markets planned under the project, along with
kisan sewa kendra in existing mandis. New post harvest handling and ancillary market facilities in new
and existing markets would be outsourced to private operators. Agri Marts to be established and operated
under the aegis of the local ATMA would be contracted to a private operator and managed in line with
agreed performance indicators. E-kiosks backed by mobile phones connectivity as spokes of agriculture
extension and marketing info-network would be established under an MOU between the PCU and
selected mobile phone providers.
The Agribusiness Development Facility (ABDF) would be administratively situated within the PCU, but
operated by a team of externally recruited professionals who would have sufficient autonomy to manage
and implement the program against agreed deliverables and milestones. A logical framework of inputs,
outputs, expected outcomes would be established and monitored and periodically. An Advisory Panel
would be established with representatives from the business community, commercial banks, farmer
associations and the government. The panel would not have executive powers, but would operate in an
advisory role only. In addition a committee would be established to screen applications to the Innovation
Fund, and ensure grants are made in line with agreed selection criteria.
7. Sustainability
Following a widely perceived successful initial DASP, government support for a second phase project
that would extend coverage to the whole state, and add a crucial marketing dimension missing from the
first project, has been very strong – evidenced by GOUP’s consistent request for the processing timetable
to be advanced as much as possible.
Project sustainability relates to institutional and operational reforms, post project budgetary implications
and infrastructure maintenance arrangements. A number of aspects of the project design would enhance
sustainability, such as: new institutional arrangements such as ATMAs and the paravet program have
been widely piloted in the earlier phase of DASP or other project in India – and are now endorsed by GOI
for scaling up throughout the country; wide stakeholder participation in project design and
implementation; establishing a ABDF modeled on facilities successfully operated by IFC in many
regions of the world; and partnering with, or outsourcing to, the private sector in livestock production and
agribusiness development activities, and in the development and operation of new market facilities. In
addition, implementation of most activities will be handled by line Depts and Government institutions
using almost exclusively, existing staff – which means post-project fiscal impact will be manageable.
Finally, sustainability will come about because the project encourages farmers to take a pro-active
approach to finding new market opportunities for themselves, and then tuning their production to
changing demands. Much of benefit is expected to come from improving existing marketing systems; but
the project will also facilitate farmers taking up new opportunities and engaging with the new marketing
systems that will emerge as a result of a liberalized marketing environment These marketing systems
offer the prospects of a future where an increasing proportion of agricultural production will have
embedded private sector support through provision of credit, inputs, technical advice and, above all,
access to expanding food processing and formal retail sectors.
8. Lessons Learned from Past Operations in the Country/Sector
o
o
o
o
Commercialization of agriculture and private sector involvement are necessary for raising rural
incomes: in project areas where markets and market access were well developed, technical
interventions had a magnified impact and higher outputs translated into higher incomes.
Conversely, lack of adequate market linkages and of capacity to produce for the market (e.g.
access to varieties, post harvest handling and quality control) have emerged as the biggest
challenges to sustaining productivity enhancement and income diversification in SHGs assisted
by the project. Therefore any follow-on project should promote greater market orientation of
production, improved product handling, and stronger market linkages.
Use of beneficiary groups as entry points for project activities improves participation and
beneficiary capacity to absorb project-supported changes. Also, interventions based on
beneficiary cost sharing generates more ownership, leading to improved design, complementary
private investments and more responsible O&M
Substantive reform of extension and research delivery systems is needed if farmers are to make
best use of new market infrastructure and opportunities, including convergence between line
Depts. and partnerships with the private sector;
Innovative initiatives are needed to promote effective farmer organization with marketing
linkages to commodity traders and agro-processors;
o
o
Fisheries is a good source of income, especially for marginal farmers and the landless, but good
extension and follow-up training is needed to nurture participants in the period after subsidized
inputs cease; and,
Adequate attention to animal nutrition and health, and to milk marketing is essential, without
which, upgrading of cattle will bring only limited benefits to livestock producers.
9. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project
Environmental Assessment (OP/BP/GP 4.01)
Natural Habitats (OP/BP 4.04)
Pest Management (OP 4.09)
Cultural Property (OPN 11.03, being revised as OP 4.11)
Involuntary Resettlement (OP/BP 4.12)
Indigenous Peoples (OD 4.20, being revised as OP 4.10)
Forests (OP/BP 4.36)
Safety of Dams (OP/BP 4.37)
Projects in Disputed Areas (OP/BP/GP 7.60)*
Projects on International Waterways (OP/BP/GP 7.50)
Yes
[X]
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[X]
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[]
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No
[]
[X]
[]
[X ]
[X ]
[X ]
[X ]
[X ]
[X ]
[X]
10. List of Factual Technical Documents
11. Contact point
Contact: Robert S. Epworth
Title: Sr Agriculturist
Tel: 5785+157
Fax:
Email: [email protected]
Location: New Delhi, India (IBRD)
Implementation Agency Contact:
Mrs. Archana Agrawal
Government of Uttar Pradesh
Lucknow
226010
Tel: 91 2238138/2720839/718
2720682
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
12. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http://www.worldbank.org/infoshop