world bank document equivalents (exchange rate effective, january 31, 2012) currency unit = west...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 58889-WS

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR5.2 MILLION(US$8 MILLION EQUIVALENT)

AND A

PROPOSED GRANT

FROM THE

FOOD PRICE CRISIS RESPONSE MULTIDONOR TRUST FUNDIN THE AMOUNT OF US$5 MILLION

TO THE

INDEPENDENT STATE OF SAMOA

FOR AN

AGRICULTURE COMPETITIVENESS ENHANCEMENT PROJECT

February 28, 2012

Pacific Islands Sustainable UnitSustainable Development DepartmentEast Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed without WorldBank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective, January 31, 2012)

Currency Unit = West Samoan Tala2.24 WST = US$11.55 US$ = SDR 1

FISCAL YEARJanuary 1 - December 31

ABBREVIATIONS AND ACRONYMS

ACEO Assistant Chief Executive OfficerACU Aid Coordination UnitAPHD Animal Production and Health DivisionAPHO Animal Production and Health OfficerCAS Country Assistance StrategyCBS Central Bank of SamoaCD Crops DivisionCDD Community Driven DevelopmentCEO Chief Executive OfficerCOEP Code of Environmental PracticeCPP Community Participation in ProcurementCQS Consultants Qualification Based SelectionDBS Development Bank of SamoaEIA Environmental Impact AssessmentEMP Environmental Management PlanESMF Environmental and Social Management FrameworkESMO Environmental and Social Management OfficerFMM Financial Management ManualFPCR Food Price Crisis ResponseF&V Fruit and VegetableGDP Gross Domestic ProductGNI Gross National IncomeGOFAR Government Finance and Reporting SystemsGOS Government of SamoaHTFA High Temperature Forced AirIBRD International Bank for Reconstruction and DevelopmentICB International Competitive BiddingIDA International Development AssociationIFR Interim Financial ReportIPM Integrated Pest ManagementIRR Internal Rate of Return

ISP Implementation Support PlanMAF Ministry of Agriculture and FisheriesM&E Monitoring and EvaluationMGSC Matching Grants Screening CommitteeMGP Matching Grants ProgramMIS Management Information SystemMM Mitigation MeasuresMNREM Ministry of Natural Resources, Environment, and MeteorologyMOF Ministry of FinanceMWCSD Ministry of Women, Community and Social DevelopmentNCB National Competitive BiddingNGO Non Government OrganizationPC Project CoordinatorPCG Project Coordination GroupPIM Project Implementation ManualPMP Pest Management PlanPP Procurement PlanPSC Project Steering CommitteePUMA Planning and Urban Management AgencyQBS Quality Based SelectionQCBS Quality and Cost Based SelectionSACEP Samoa Agriculture Competitiveness Enhancement ProjectSAO Samoa Audit OfficeSBEC Small Business Enterprise CentreTA Technical AssistanceUNDP United Nations Development ProgrammeUSD US DollarsWB World BankWIBDI Women in Business Development Incorporated

Regional Vice President: Pamela CoxCountry Director: Ferid Belhaj

Sector Director: John RoomeSector Manager: Charles Feinstein

Task Team Leader: Mona Sur

COUNTRY

Samoa Agriculture Competitiveness Enhancement Project

TABLE OF CONTENTS

Page

I. STRATEGIC CONTEXT ...................................................................... 1

A. Country Context.................. ................ 1

B. Sectoral and Institutional Context................... .......... 1

C. Higher Level Objectives to which the Project Contributes.................. 3

II. PRO JE CT DEVELOPMENT OB JECT IVES .............................................. 4

A. PDO.......................... ........... 4

B. Project Beneficiaries.................. ............ 4

C. PDO Level Results Indicators................. .......... 4

II I. PROJECT DESC RIP TION.................................................................... 5

A. Project Components.................. ............. 5

B. Project Financing............................6

C. Lessons Learned and Reflected in the Project Design............. ...... 6

IV . IMPLEMENTATION .......................................................................... 7

A. Institutional and Implementation Arrangements.................7

B. Results Monitoring and Evaluation.................. ......... 8

C. Sustainabilty........................... ........... 9

V. KEY RISKS AND MITIGATION MEASURES.........................................10

A. Risk Ratings Summary Table ..................... .......... 10

B. Overal Risk Rating Explanation......................10

V I. AP PRAISAL SUMMAR Y....................................................................10

A. Economic and Financial Analyses............. ............. 10

B. Technical...................... ........ 11

C. Financial Management................... ........ 12

D. Procurement..................... ............ 13

E. Social (including Safeguards)............... .......... 13

F. Environment (including Safeguards)............. .......... 14

Annex 1: Results Framework and Monitoring.....................................................16

An nex 2: Deta iled Project Descr ip tio n.............................................................19

An nex 3: Implementation Arrangements ........................................................... 2 6

Annex 4: Operational Risk Assessment Framework (ORAF)..................................41

An nex 5: Implementation SupportPlan.............................................................4 4

PAD DATA SHEET

Samoa

Samoa Agriculture Competitiveness Enhancement Project (P115351)

PROJECT APPRAISAL DOCUMENT

EAST ASIA AND PACIFIC

EASNS

Basic InformationDate: 28-Feb-2012 Sectors: General agriculture, fishing and forestry sector (60%), Agricultural

extension and research (20%), Agro-industry, marketing, and trade(20%)

Country Director: Ferid Belhaj Themes: Rural services and infrastructure (50%), Rural policies and institutions

Sector Manager/Director: Charles M. Feinstein/John A. (25%), Micro, Small and Medium Enterprise support (25%)Roome

Project ID: Pl1l5351 EA Category: B - Partial Assessment

Lending Instrument: Specific Investment Loan

Team Leader(s): Mona Sur

Joint IFC: No

Borrower: Ministry of Finance

Responsible Agency: Ministry of Agriculture and Fisheries

Contact: Mr. Fonoiava Sealiitu Sesega Title: Chief Executive Officer

Telephone No.: 68522561 Email: [email protected]

Project Implementation Period: Start Date: 02-Jul-20 12 End Date: 28-Mar-20 17

Expected Effectiveness Date: 02-Jul-20 12

Expected Closing Date: 28-Mar-2017

Project Financing Data(US$M)[] Loan [X ] Grant [ ] Other

[ X] Credit [ ] Guarantee

For Loans/Credits/OthersTotal Project Cost (US$M): 16.16

Total Bank Financing (US$M): 8.00

Financing Source Amount(US$M)BORROWER/RECIPIENT 0.26

International Development Association (IDA) 8.00

Global Food Crisis Response Program 5.00

LOCAL BENEFICIARIES 2.90

Total 16.16

Expected Disbursements (in USD Million)Fiscal Year 2013 2014 2015 2016 2017

Annual 1.54 1.52 1.44 2.18 1.32

Cumulative 1.54 3.06 4.50 6.68 8.00

Project Development Objective(s)The objective of the project is to support fruit and vegetable growers and livestock producers to improve their productivity and take greater advantage ofmarket opportunities.

Components

Component Name Cost (USD Millions)Livestock Production and Marketing 4.73

Fruit and Vegetable Production and Marketing 3.02

Institutional Strengthening 6.09

CompliancePolicyDoes the project depart from the CAS in content or in other significant respects? Yes [ ] No [X ]

Does the project require any waivers of Bank policies? Yes [ ] No [X ]

Have these been approved by Bank management? Yes [] No[ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [X ]

Does the project meet the Regional criteria for readiness for implementation? Yes [ X] No[]

Safeguard Policies Triggered by the Project Yes NoEnvironmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X

Legal Covenants

Name Recurrent Due Date FrequencyEstablish a Project Steering Committee. 01-Oct-2012

Description of CovenantEstablish and maintain a Project Steering Committee to provide overall policy guidance and strategic direction during implementation.

Name Recurrent Due Date Frequency

Establish a Matching Grant Steering Committee. 01-Oct-2012

Description of Covenant

Establish and maintain a Matching Grant Steering Committee to carry out the Matching Grant Program.


Implement an information management system. 01-Jan-20 13


Implement an information management system satisfactory to the Association.


Make Matching Grants for Farm Enterprise Investments XQuarterlyunder the MGP.


Make Matching Grants for Farm Enterprise Investments under the Matching Grant Program to Beneficiaries and in accordance with eligibility criteria and

procedures acceptable to the Association.


Implement Project in accordance with the Project XMonthlyImplementation Manual


The Recipient shall carry out the Project in accordance with the Project Implementation Manual.


Implement Project in accordance with the ESMF and COEP XMonthlySlaughterhouse Development


The Recipient shall carry out the Project in accordance with the Safeguards Documents (meaning ESMF and the COEP Slaughterhouse Development).


Carry out a mid-term review 30-Sep-20 14


Carry out jointly with the Association, a mid-term review of the implementation of operations under the Project.


Establish a Project Coordination Group 01-Oct-2012


Establish, and maintain throughout Project implementation, the Project Coordination Group within MAF to administer and coordinate the implementation ofthe Project


Carry out a cattle census/baseline survey 01-Jan-20 13


Carry out a cattle census/baseline survey as a basis to measure the extent to which the Project objective and associated outcomes have been achieved by theend of the Project Implementation Period


Cost recovery for breeding farms XMonthly


The Recipient, through MAF, shall ensure that all sales of livestock from its breeding farms shall be made on a cost recovery basis


MOU for the matching grant program 01-Oct-2012

Description of CovenantThe Recipient, through its ministry of finance and MAF, shall enter into an agreement (the Memorandum of Understanding) with the Development Bank ofSamoa and SBEC for the matching grant program


Draft legislation adopted by Cabinet on hygienic slaughter & 01-Jan-2014meat safety.


Recipient has received evidence of adoption by Cabinet of draft legislation on hygienic slaughter & meat safety & letter confirming all beef sold in retailoutlets shall be hygienic ally slaughtered.


Satisfactory operation of Field Slaughter Service & 01-Jan-2015establishment of Mgt entity.


Recipient has operated Field Slaughter Service in manner deemed satisfactory by Association for no less than 12 months & has established an appropriateindependent management entity for Abattoir.

Team Composition

Bank Staff

Name Title Specialization Unit

Solange A. Alliali Senior Counsel Legal LEGES

Miriam Witana Procurement Specialist Procurement EAPPR

Isabella Micali Drossos Senior Counsel Legal LEGES

Marianne Grosclaude Senior Agriculture Economist Agricultural Economies LCSAR

Mona Sur Senior Agriculture Economist Team Lead EASNS

Josefo Tuyor Senior Operations Officer Environmental Safeguards EASPS

Angela Nyawira Khaminwa Social Development Specialist Social Safeguards AFTCS

Victoria Florian S. Lazaro Operations Officer Social Safeguards EASPS

Gitanjali Pounambalam Country Program Assistant Program Assistant EACNF

Stephen Paul Hartung Financial Management Specialist Financial Management Specialist EAPFM

Maeva Natacha Betham Vaai Liaison Officer Liaison Officer EACNF

Antonia Wong E T Temporary Operations Assistant EACNF

Non Bank Staff

Name Title Office Phone City

Jean-Claude Balcet Consultant, Agricultural WashingtonEconomist

John Lowsby Consultant, Infrastructure Eveni

Engineer

Robert Epworth Consultant, Agriculture Specialist Buderim

Peter McCrea Consultant, Institutional Christchurch

Specialist

Patrick Hanemaun Consultant, Fruit & Vegetable McAllen

Specialist

Donald McNee Consultant, Extension Specialist Brisbane

Brian Brandenburg Consultant, Livestock Specialist Alhambra

Locations

Country First Administrative Location Planned Actual CommentsDivision

Samoa Vaisigano Vaisigano X

Samoa Va'a-o-Fonoti Va'a-o-Fonoti X

Samoa Tuamasaga Tuamasaga X

Samoa Satupa'itea Satupa'itea X

Samoa Palauli Palauli X

Samoa Gagaifomauga Gagaifomauga X

Samoa Fa'asaleleaga Fa'asaleleaga X

Samoa Atua Atua X

Samoa A'ana A'ana X

I. STRATEGIC CONTEXT

A. Country Context

1. Samoa has achieved a major economic transformation over the last fifteen years, withreal Gross Domestic Product (GDP) per capita increases of three percent per annum on average,faster than elsewhere in the Pacific Islands, and with GDP per capita estimated at USD 3,087 in20101. The country also has one of the highest human development indexes in the Pacific.Economic growth has been driven by services, especially commerce and tourism, andremittances from a large diaspora of some 160,000 Samoans living aboard, mainly in NewZealand2. Despite this strong growth, the income gap between the urban population of about40,000 living in Apia and the rural population of approximately 140,000 has been increasing,partly due to the poor performance of the agriculture sector.

2. The level of extreme poverty in Samoa, as measured by the food poverty line, is low withonly 3 percent of households falling below the food poverty line.3 However the incidence ofbasic needs poverty is much higher; 20.1 percent of all households and 26.9 percent of thepopulation fall below the basic needs poverty line. Despite having a large subsistence agriculturesector, households remain very vulnerable to increases in food and fuel prices, particularly whenfaced with the loss of cash income due to a reduction in remittances or loss of employment.Households in the lowest expenditure quintile spend about 55 percent of their total expenditureson food. These households are hardest hit when the cost of the food basket increases, such as itdid in 2008 when food costs increased by 25 percent between the first and fourth quarters of theyear.

B. Sectoral and Institutional Context

3. From 1995 to 2009 agricultural value added has declined at an average rate of 2 percentper annum in real terms, resulting in the sector's contribution to GDP dropping from 19 percentin 1995 to 12 percent in 2009. Nevertheless, agriculture continues to play an important role in theeconomy, employing around two-thirds of the national labor force. About 18,000 ruralhouseholds live in the 360 villages of the two main islands, Upolu and Savai'i, which aregoverned as semi-autonomous entities under councils of chiefs. Rural households comprisingextended family units are the major producers, practicing small-scale and labor intensive mixedfarming on customary owned land. Less than 15 percent of land is freehold or governmentowned, a proportion of the latter being leased to farmers for agricultural production. The largemajority of agricultural holdings are less than four hectares, with few above twenty hectares.Coconuts, cocoa, taro and other root crops, along with fruits and vegetables are the main crops.These are combined with small-scale livestock production. Around 80,000 hectares or about 30percent of the country are potentially available for agriculture, with most of the remainder being

1World Bank. World Development Indicators.2 In 2006 the total population of Samoa was 180,741. About 140,000 ethnic Samoans are resident in New Zealandand about 20,000 are resident in Australia and there are significant Samoan communities in Hawai'i and the WestCoast of the United States.

Government of Samoa, Samoa Bureau of Statistics and UNDP Pacific Centre. 2010. A Report on the Estimation ofBasic Needs Poverty Lines and the Incidence and Characteristics of Hardship and Poverty.

1

forest or scrub. But only 10,000 hectares of this is used for low intensity mixed cropping, withthe majority planted to plantations or pastures.

4. The agriculture sector is constrained by a mix of policy and institutional factors, whichhave combined to impede the productive potential of rural households and agribusinesses. First,while successive Samoa Development Strategies (2003-2007 and 2008-2012) promoteagriculture through market-oriented strategies, both public and private investment over the pastdecade has been low. Second, only one quarter of rural households are engaged in formalmarkets4 , the majority of households being subsistence farmers. Third, existing farming systemsare labor intensive, and rural labor is becoming more scarce and expensive due to high wages inurban areas and opportunities offered by migration. At the same time, the rocky nature of soils inSamoa presents a challenge to larger scale farming and mechanization. Fourth, access toagricultural credit is difficult, lending products are inappropriate for agriculture and interest ratesare high, constraining on-farm investment and production systems needing significant workingcapital. Finally, Samoa has still to develop effective farm support services, including market-driven research and extension to promote improved technologies, and farmer access to improvedbreeding stock and planting material is limited.

5. Agriculture in Samoa is also very vulnerable to the adverse effects of climate change.Climate change is manifesting itself in more frequent and extreme rainfall events, longer dryerspells and drought events, rising sea levels, extreme winds and high air and water temperatures.The effects of climate change and variability will make agricultural production morechallenging. A higher incidence of pests and disease is expected. Since Samoa has limitedirrigation infrastructure, irregular or inconsistent rainfall is extremely problematic.

6. Notwithstanding these challenges, significant opportunities exist to develop Samoa'sfresh fruit and vegetable and livestock sub-sectors. A large share of the existing demand forfruits and vegetables is currently being met by imports and there is scope for encouragingdomestic production to reduce this import dependence.5 In addition, current per capitaconsumption of fruits and vegetables appears very low by regional and global standards,indicating a need for increased awareness of the dietary benefits of fruit and vegetableconsumption and prospects for future demand growth. The presence of well-organized retail andfoodservice channels represent a considerable advantage to an organized fresh produce supplychain, provided that domestic producers are able to meet buyer standards for product continuity,quality and price. There are some products which could also be developed into sustainable exportcommodities, including organic products for which there is recognized export potential.

7. However, irregular domestic supply patterns have encouraged the organized retailgrocery, hotel and restaurant buyers in Samoa to rely on imported product for their basic fruitand vegetable requirements. The small average size of fresh fruit and vegetable production unitsand the lack of coordination between growers severely limit the ability of individual farmers tosatisfy the demands of organized buyer groups. With little or no access to these high-value, bigvolume sales outlets, local growers are forced to sell through farmers markets or roadside stands,where prices are generally lower, and where minor supply surpluses often lead to major price

4MiniStry of Agriculture and Fisheries.More than 51percent of the domestic supply of vegetables is imported.

2

discounts. Better organization at production level, when coupled with improved plantingmaterial, and on-farm investments and infrastructure to permit year-round production, couldprovide local farmers with the ability to supply organized retail and foodservice customers withthe quality and quantity of fresh fruits and vegetables these customers require.

8. Livestock production in Samoa is also largely subsistence oriented. With the exception ofa small number of larger scale cattle operations, livestock production is dominated by smallhousehold production units, involving in total about 40,000 cattle; 150,000 pigs; 310,000poultry; and 250 sheep.6 Almost all rural households raise backyard poultry and pigs. Cattleherds have been crossed extensively with imported exotic breeds for more than thirty years, butvirtually all pigs and poultry breeds are indigenous, with a few exotic crosses. Sheep are new toSamoa, and all sheep in the country originated from those imported from Fiji in 2004.Productivity of most livestock is low because of a lack of attention to nutrition, breedingmanagement and animal health. In the absence of any abattoir facilities in the country, themajority of animals are slaughtered in unhygienic conditions, and carcasses transported in non-refrigerated vehicles. Apart from the obvious public health considerations, this process results ina substandard carcass which makes it difficult for domestic meat to compete with imports. Sixtyfive percent of meat consumed in Samoa is imported into the country.

9. The government is now actively considering a higher level of investment in theagriculture sector. The Ministry of Agriculture and Fisheries (MAF) has recently prepared anAgriculture Sector Plan (2011 - 2015) which provides a road map to guide public and privateinvestments in the sector. The primary objectives of the Agriculture Sector Plan are: tostrengthen policy, legal and regulatory frameworks for sustainable agriculture development; toimprove national self reliance in food production and nutritional security; to enhance privatesector capacity in improving agricultural productivity, value adding and marketing; and to ensuresustainable adaptation and management of agricultural resources. Through its support forstrengthening the performance of the livestock and fruit and vegetable sub-sectors, the proposedproject supports the implementation of Samoa's Agriculture Sector Plan. The proposed projectcomplements the assistance provided by other development partners including the EuropeanUnion's All Africa Caribbean Pacific Agricultural Commodities Programme, the Sino SamoaAgriculture Technical Cooperation Project, and assistance from the United Nations DevelopmentProgramme for integrating climate change risks in the agriculture sector.

C. Higher Level Objectives to which the Project Contributes

10. The higher level objectives of the project are that, in targeted livestock andfruit/vegetable sub-sectors, local produce captures a growing proportion of the domestic foodmarket, and rural household incomes are increased. In doing so, the project would help narrowthe gap between rural and urban incomes, and boost Samoa's foreign exchange reserves throughfood import substitution and increased exports. The project contributes to Samoa's objective of"increased food and income security by 2015" and specifically to the agriculture sector policyobjectives to "improve self-reliance in food production and nutritional security" and "to enhanceprivate sector capacity in improving productivity, value adding and marketing".

6 Government of Samoa, Samoa Bureau of Statistics and Ministry of Agriculture and Fisheries. 2011. Agriculture

Census Tabulation Report 2009.

3

11. The proposed project is consistent with the 2012 - 2016 Country Partnership Strategy forSamoa and supports Priority 1 of the Strategy on Enhancing Competitiveness and EncouragingExports. Similarly, with its focus on raising productivity in the fruit and vegetable and livestocksub-sectors, strengthening value chains and linking farmers to markets, the proposed Project isalso consistent with the Global Food Crisis Response Program Framework Document(Component 3, Enhancing Domestic Food Production and Marketing Response) and the WorldBank Group Agriculture Action Plan FY2010-FY2012.

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

12. The development objective of the project is to support fruit and vegetable growers andlivestock producers to improve their productivity and take greater advantage of marketopportunities.

B. Project Beneficiaries

13. The project would be implemented over a period of five years, on both Upolu and Savai'iislands. Household participation in the project would be demand-driven. The project woulddirectly benefit about 1,500 households wanting to adopt a more commercial approach to fruitand vegetable and livestock production and marketing. An additional 500 households who wantto produce more fruits and vegetables and livestock products but at the same time prefer toremain operating at a subsistence level will also benefit from project activities.

C. PDO Level Results Indicators

(i) an increase in the productivity of commercially-oriented farmers in the fruit andvegetable sub-sector.

(ii) an increase in the productivity of subsistence-oriented households in the fruit andvegetable sub-sector.

(iii) an increase in the value of sales of commercially-oriented farmers in the livestocksub-sector.

(iv) an increase in the value of sales of commercially-oriented farmers in the fruit andvegetable sub-sector.

(v) an increase in the share of locally produced fruits and vegetables sold by domesticretail and foodservice channels.

(vi) an increase in the share of locally produced meat sold by domestic retail andfoodservice channels.

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III. PROJECT DESCRIPTION

A. Project Components

14. The project would promote the adoption of improved technologies and agriculturalpractices; and finance investments both on-farm and in strategic market infrastructure. Projectactivities would be grouped into three components: (a) Livestock Production and Marketing; (b)Fruit and Vegetable Production and Marketing; and (c) Institutional Strengthening.

15. Component 1: Livestock Production and Marketing. The objective of this componentwould be to encourage interested livestock producers to upgrade livestock, improve husbandrypractices and stock management, make productivity enhancing on-farm investments, andimprove the quality of meat sold in the local market. The component would comprise a numberof activities, including:

(a) improving farmer access to superior breeding stock for cattle, pigs, sheep andpoultry;

(b) financing eligible farm enterprise investments to improve stock handling andlivestock housing and provide start-up working capital, through a combination ofdemand-driven matching grants and commercial loans;

(c) providing technical advice on breed selection and breeding management, nutrition,animal health and improved husbandry practices;

(d) improving livestock nutrition by fostering locally grown feedstuffs and upgradingpastures for cattle and sheep; and

(e) improving meat quality and hygiene initially through initiation of a new fieldslaughter service on Upolu and Savai'i, and later by construction of an abattoir onUpolu, all with associated cold chains.

16. Component 2: Fruit and Vegetable Production and Marketing. The objective of thiscomponent would be to enable interested fruit and vegetable growers to have access to new,higher yielding varieties, adopt improved technology and production techniques, makeproductivity enhancing on-farm investments, and organize themselves to strengthen theirpresence in the market and meet the demands of local retailers and foodservice operators foryear-round supplies of fresh fruits and vegetables. The component would be comprised of anumber of interrelated activities, including:

(a) enhancing farmer access to planting material of a broad range of improved fruit andvegetable varieties, shown in local trials to be suitable for Samoan conditions;

(b) financing eligible farm enterprise investments to facilitate land preparation, addressproblems with seasonal rainfall excesses and shortfalls, increase mechanization andprovide start-up working capital through a combination of demand-driven matchinggrants and commercial loans;

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(c) providing technical advice on variety selection, crop nutrition, improved husbandrypractices, post harvest handling and organization of producer groups; and

(d) promoting the growth of organic products and fruit and vegetable exports throughassistance in market development and arrangements for certification.

17. Component 3: Institutional Strengthening. The objective of this component would be toimprove the effectiveness of agricultural institutions (government and non-government)providing extension and adaptive research services to Samoan farmers; and the ability ofthese same institutions working individually or in collaboration with each other toimplement and monitor the project effectively. This would be done by:

(a) enhancing institutional, technical and management capacity to improve extensioneffectiveness and address identified skill-gaps in staff and the operational proceduresof implementing agencies;

(b) providing incremental staff to manage the project effectively;

(c) improving work facilities and providing adequate vehicles, equipment and operatingexpenditure to maximize operational effectiveness; and

(d) designing and implementing a monitoring and evaluation system which is integratedinto the existing Management Information System (MIS) of MAF.

B. Project Financing

Lending Instrument

18. The project would be financed by an IDA Specific Investment Credit equivalent to US$8million and co-financed by a US$5 million grant from the Food Price Crisis Response CoreMultidonor Trust Fund managed by the World Bank.

C. Lessons Learned and Reflected in the Project Design

19. In conjunction with a number of others donors, the Bank has in the past financed twoprojects in the agricultural sector in Samoa, Agricultural Development I and II, both of whichclosed in 1988. Lessons can be learned from these projects, from other donor funded projects inSamoa, and from similar Bank-funded projects. These lessons have been taken into account inProject design and implementation arrangements, and include: (a) project interventions should bebroad-based and well integrated into the MAF sector strategy if project benefits are to besustained; (b) improved technologies need to be introduced gradually to enable recipients toadjust to new technologies and practices; (c) farmers need to be mobilized in a demand-drivenmanner by involving their producer organizations; (d) smallholders investing on-farm or insmall-scale processing enterprises should contribute to start-up investment and operating costs toensure commitment and ownership; (e) efforts must be made to ensure marketing chains fromproducer to consumer are in place that link farmers with buyers to facilitate marketing andimprove access to technical information and finance; (f) any support for agricultural

6

development needs to give careful consideration to natural resources management and thepotential impact on the environment; (g) improving the performance of supply chains in Samoarequires coordinated action from the public and the private sector; (h) sufficient attention has tobe given to socioeconomic considerations, in particular farmers' priorities and productionchoices, to avoid a limited supply response occurring; and (i) implementation capacity of MAF isa constraint and strengthening of MAF, non-governmental and service providers in the sector,and producer organizations is needed to build joint capacity to drive agricultural development.

Project Cost and Financing

Project Components Project cost IR orDA % FinancingFinancing

1. Livestock Production and 4.73 3.60 76Marketing2. Fruit and Vegetable Production 3.02 1.80 60and Marketing3.Institutional Strengthening 6.09 5.70 94

Total Baseline Costs 13.84 11.10 80Physical contingencies 1.04 0.90Price contingencies 1.29 1.00

Total Project Costs 16.16 13.00 80Interest During Implementation

Front-End FeesTotal Financing Required 16.16

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

20. Several agencies are expected to be involved in the implementation, including theMinistry of Finance (MOF), Ministry of Agriculture and Fisheries (MAF), Ministry of NaturalResources, Environment and Meteorology (MNREM), Ministry of Women, Community andSocial Development (MWCSD) and the Development Bank of Samoa (DBS). It is alsoenvisaged that the private sector and relevant NGOs would be involved in the implementation ofsome project activities, including, inter alia, the Small Business Enterprise Centre (SBEC) forinvestor training, supporting and strengthening producer organizations and assisting farmers toaccess credit and matching grants; and Women in Business Development Inc. (WIBDI) fororganic and niche market products.

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21. Project management support would be provided to oversee implementation andcoordinate the activities of implementing agencies. This would be done at a number of levels.

22. Project Steering Committee (PSC): Comprised of representatives of MOF (chair);MAF; MNREM; MWCSD; DBS; SBEC; and representatives of the private sector and NGOs.The function of the PSC would be to guide the overall direction of the project, review annualwork programs, resolve implementation bottlenecks outside the control of MAF, assess thepotential of the project to achieve the expected development impact at the national level, andadjust project activities, if necessary, in pursuit of the project development objective.

23. MAF Executive Management Team: Comprised of the Chief Executive Officer (CEO)and all Divisional Assistant CEOs (ACEO) and the Project Coordinator. The function of theteam would be to review annual work programs, budgets and Monitoring and Evaluation (M&E)results, and resolve implementation bottlenecks within MAF's control.

24. Project Coordination Group (PCG): Comprised of Project Coordinator (PC); PrincipalMatching Grants Officer, Principal Procurement Officer; Senior Procurement Officer, PrincipalMonitoring and Evaluation Officer; Principal Social and Environmental Officer and a SeniorFinancial Management Officer. Collectively, this group would be responsible for projectimplementation coordination (including preparation of annual work programs and periodicproject performance reviews), administration (procurement and financial management),safeguards compliance and monitoring and evaluation of project inputs, outputs and outcomes.Responsible administratively to the CEO, the Coordinator would be appointed at the level ofACEO and act as Secretary to PSC.

25. To foster organizational and project sustainability, project activities would bemainstreamed and implemented as integral parts of MAF 's program to improve the productivityand competitiveness of the livestock and fruit and vegetable sub-sectors. Accordingly, while theProject Coordinator would have ultimate responsibility for ensuring the project is implementedas planned and produces the development impact expected of it, day-to-day implementation ofproject fruit/vegetable activities and livestock activities would be the principle responsibility ofACEOs of the Crops Division and Animal Production and Health Division (APHD) respectively.The PCG would coordinate closely with the ACEO Corporate Services on procurement andfinancial management; and the ACEO Policy and Planning on M&E activities.

B. Results Monitoring and Evaluation

26. The Project M&E system would track the Project Results Framework indicators to assessoverall project performance. It would also track environmental and social indicators to assessthe effectiveness of environmental and social mitigation measures. The PCG will have overallresponsibility for M&E and related reporting requirements, and provide periodic monitoring dataon project activities to all interested parties. MAF's Policy and Planning Division is responsiblefor monitoring the Agriculture Sector Plan performance indicators and has an existingManagement Information System (MIS). The existing MIS would be adapted to enable projectspecific M&E data to be integrated into the existing system. A framework for project M&E

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would be established at project inception with the assistance of appropriate technical assistance.A full-time M&E officer will be recruited and will be a member of the PCG.

27. Data collection would be conducted at the following stages: (i) project inception, as partof a cattle census/baseline survey, to assign initial values to project indicators and facilitateplanning of the hygienic field slaughter services; (ii) annual surveys of supermarkets, hotels andrestaurants to assess the volumes of locally sourced livestock products and fruits and vegetablesbeing sold; (ii) mid-course of Project implementation, to update measurement of resultsindicators for the Mid-term Review, through a first repeater survey; and (iii) at projectcompletion, to assess the final project results and impacts, through a second repeater survey. Thedata collected would be gender-disaggregated and include relevant environmental and socialdata. Project data would be summarized on a semester basis, and included in the semi-annualprogress reports.

28. Separate baseline data would be collected for each participant in the Matching GrantsProgram (MGP) and annual beneficiary surveys would be undertaken to gauge farmerperceptions of the effectiveness of the applied research and extension activities promoted by theproject. Approximately US$ 500,000 has been allocated for M&E activities.

C. Sustainability

29. Government commitment to the project concept is reflected in recent SamoanDevelopment Strategies that emphasize the importance of inter a/ia enhancing food security;promoting commercial investment and diversification of crop production, including high-valueperishable products for both the domestic market and exports; supporting commercial investmentin livestock production; and strengthening MAF's capacity in planning, budget management andmonitoring & evaluation. The proposed project would focus on all these aspects.

30. Project sustainability will hinge on a number of factors, including upgrading the skillbase of MAF field services and inculcating an extension methodology in MAF that enduresbeyond the project; establishing strong business relationships between producers and buyers; andfostering an effective system of financing future agricultural production and investment. Projectdesign and implementation arrangements incorporate a number of features to address these issuesand enhance project sustainability, including institutional strengthening of MAF, linkinglivestock and fruit/vegetable growers with buyers in business arrangements that transcendimplementation of the project; use of matching grants to develop stronger links between farmersand financial institutions that can endure beyond the project period; and strengthening producerorganizations and involving them in project implementation.

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V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary Table

Rating

Stakeholder Risk Moderate

Implementing Agency Risk

Capacity High

- Governance Moderate

Project Risk

- Design High

- Social and Environmental Moderate

- Program and Donor Low

- Delivery Monitoring and Sustainability High

Overall Implementation Risk High

B. Overall Risk Rating Explanation

31. The overall implementation risk is rated as High. The high risk rating stems from theweak implementation capacity of MAF and the lack of experience with implementing an IDA-fuinded project. There is a shortage of skilled technical and managerial staff in the sector and theexisting staffs in MAF do not have all the necessary skills required to implement the full range ofproject activities. The establishment of a full-time PCG strengthened by selective internationaltechnical assistance is intended to partially mitigate this risk. Project activities will beimplemented in a phased manner to ensure that the requisite skills and arrangements are in placeprior to proceeding with more technically and managerially complex activities such as thedesign, construction and operation of the abattoir in Upolu. Further mitigation will be throughthe substantial capacity development and training programs. Significant investments will bemade in upgrading the institutional capacity of MAF and broadening the skill-base of MAF staff.Potential risks are summarized in the Operational Risk Assessment Frameworks in Annex 4.

VI. APPRAISAL SUMMARY

A. Economic and Financial Analyses

32. Particular attention was given to understanding the impact of the proposed matchinggrants on the financial viability of on-farm improvements. For this analysis, the prices paid tofarmers were based on import parity hence the enterprise models also reflect the underlyingcompetitiveness of each production system. The results of the enterprise analyses indicate thatwhile the proposed livestock and fruit/vegetable investments often require new managementskills and increased spending on inputs, most investments are expected to lead to large gains inrural incomes that more than justify these additional costs. This is particularly true for vegetable

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enterprises where the analysis shows that farmers can expect to earn a net income greater thanGross National Income (GNI) per capita from one acre of vegetable production. Most livestockenterprises lead to significant gains in farmer income over the baseline situation. Importantly,because most livestock enterprises are far less expensive to operate than fruit or vegetableenterprises, investments in this area may be particularly appealing to rural households with ashortage of cash and/or labor to spend on agriculture production.

33. Separate from the on-farm investments, the project would also support public investmentin hygienic slaughter facilities, including an abattoir on Upolu and two field slaughter serviceson Upolu and Savai'i. Because of the small-scale and non-intensive nature of cattle productionsystems in Samoa, as well as the presence of a large market for fa'alavelave (customarygathering) cattle, considerable attention was given to assessing the viability of two options forhygienic slaughter including the development of two mobile field slaughter units that wouldoperate in rural areas on both islands with a refrigerated chill truck to bring the carcasses tomarket and the construction of a fixed abattoir to be based on Upolu.

34. Unlike most on-farm investments for which the results of the financial analysis arerobust, results for the proposed slaughter facilities are mixed. For the hygienic slaughterfacilities, the estimated financial IRR for a fixed abattoir is only positive when there is (i) regularuse of the hygienic facilities by at least 60 percent of producers; and (ii) a 20 percentimprovement in the national calving rate within the life of the project. When both of theseconditions are met, the IRR for a fixed abattoir is around 100. With slow adoption and nosignificant improvement in calving rates, the IRR for the abattoir becomes negative. The resultsfor a mobile slaughter unit with refrigerated chill truck are more encouraging. Under the samebase assumptions, the estimated IRR for the mobile unit is 9 percent. With poor adoption and noimprovement in the calving rate, the IRR falls to 2 percent and 6 percent, respectively. Potentialhealth benefits due to hygienic slaughter facilities could not be incorporated into the models dueto lack of adequate data. No subsidy would be required during the Project implementationperiod for the mobile slaughter service since the cumulated operating margin is positive,however a subsidy would be required to cover the operating costs of the fixed abattoir.

35. The financial and economic IRR for the entire project was estimated at 13.5%o and 15.3%orespectively. The estimated IRRs are robust to decreases in crop yields and/or prices received byfarmers, and increases in investment costs. In computing the financial and economic rates ofreturn, only the revenues of producers directly participating in the project's matching grantprogram have been taken into account. It is clear that other farmers will also benefit indirectlyfrom improvements in extension and advisory services and the increased availability of improvedplanting material and breeding stock. Activities under the project, including the promotion ofhygienic slaughter and campaigns to promote increased fruit and vegetable consumption willalso result in additional benefits in terms of improved nutrition and food safety which have notbeen quantified.

B. Technical

36. The project as designed would introduce a number of technical innovations, some ofwhich are new to Samoan farmers and others with which they are already familiar. Apart fromupgrading farmers' husbandry skills, the main livestock innovations are the introduction of

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exotic breeds and the establishment of hygienic slaughter practices. The concept of livestockbreed improvement is well established in Samoa, although it has waned in recent years due tolack of Government financial support. The project would therefore be revitalizing what wasdone previously in this area, and was popular with livestock producers. A two-pronged approachhas been taken to improving the livestock slaughter system, starting with the upgrading of fieldslaughter techniques on both Upolu and the island of Savai'i and establishment of an abattoir toservice livestock producers on Upolu, where the one large town of Samoa (Apia) is located.Even after the abattoir is constructed, the improved field slaughter services would continue tooperate on Savai'i where livestock concentrations are less and the logistics of transporting liveanimals is more problematic. Both systems will have challenges, including implementingeffective meat inspection arrangements for the field slaughter system and organizing an effectivestock collection system to ensure a consistent throughput for the abattoir. Technical assistancewould be provided once implementation begins to ease both these potential problems.

37. Innovations in the fruit and vegetable area include introduction of new crops (potatoesand onions) and improved varieties of existing fruit and vegetables already grown in Samoa; on-farm investments; and the possibility of expansion of the existing High Temperature Forced Air(HTFA) facility. Appropriate technical assistance would be provided to MAF to ensure onlyvarieties likely to suit Samoan conditions are chosen and new planting material would only bereleased to farmers after they have been screened on MAF research stations and then field testedin the farm environment. The types of investments that would be supported under the projectincluding the concept of rock clearing, basic irrigation and mechanization are familiar to Samoanfarmers and are expected to be adopted relatively easily if the financial incentives are adequate.Polytunnels to protect crops from excessive rainfall are a relatively new concept for mostSamoan farmers and hence a more prudent approach will be taken in promoting this investment -

encouraging less risk adverse farmers to try small areas of tunnels and to expand only when theyare more familiar with the concept and confident that the investments are justified financially.Within the past year several farmers have made investments in polytunnels for vegetableproduction due the successful demonstrations supported under the Sino Samoa AgricultureTechnical Cooperation Project.

C. Financial Management

38. The financial management assessment identified the following as the main FM risks forthis project: (a) limited FM capacity within the implementing agency, which could lead to poorkeeping of accounting records, (b) poor adherence to the internal controls already in place withinthe Samoan Government, and (c) transcription errors within the project accounting records as theactual payments are made by the MOF initially out of the government bank account. Thefollowing mitigation measures are to be put into place to address these risks: (a) theestablishment of a Project Coordination Group (PCG) which will include a full-time FinancialManagement Officer and a part-time Finance Advisor to be employed initially to aid in thesetting up of the project accounts; (b) development of the Project Implementation Manual whichincludes a Financial Management section; and (c) monthly reconciliation of project accounts tothe government records. In addition Quarterly Interim Financial Reports will be required in aformat agreed with the Bank, and annual project audits will be conducted by the Samoa AuditOffice (SAO).

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39. The project will use four Disbursement Methods: Advance, Reimbursement, DirectPayment and Special Commitment. In order to facilitate the means of payment for the majorityof day-to-day expenses, a Designated Account will be opened to enable the Bank to advancefunds from the IDA Credit and the FPCR (Food Price Crisis Response) Grant to the Project. Thedocumentation required for the replenishment of the advance and reimbursement will be byStatement of Expenditure. To the extent practicable, the proceeds of the FPCR Grant would bedisbursed on account of expenditures for the project before disbursements of the proceeds of theIDA Credit.

D. Procurement

40. The procurement capacity and risk assessment has concluded that MAF has limited in-house capacity to manage the procurement activities. To address these limitations, a ProcurementAdvisor with international experience and two Procurement Officers (one to oversee the MGPprocurement) will be hired for project-dedicated procurement support. The Corporate ServicesDivision of MAF will provide procurement oversight.

41. Procurement of parent breeding stock will follow the most competitive methods feasiblebut including direct contracting procedures, as previously practiced by the MAF, with adequateoversight arrangements, as agreed with the Bank. The procedures are detailed in the ProjectImplementation Manual (PIM).

42. Procurement under the project will be carried out in accordance with the World Bank's"Guidelines: Procurement under IBRD Loans and IDA Credits," dated January 2011(Procurement Guidelines); "Guidelines: Selection and Employment of Consultants by WorldBank Borrowers," dated January 2011 (Consultant Guidelines); and the provisions stipulated inthe Financing Agreement.

E. Social (including Safeguards)

43. Overall the project is likely to have a positive impact on Samoan society by improvingrural livelihoods and employment opportunities through increased farm production and access tomarkets and enhanced demand for labor on farms and from service industries. Duringpreparation, the proposed project has attracted strong support from both farm and livestockproducer associations and individual livestock and fruit and vegetable producers on both Upoluand Savai'i.

44. Public consultation for the project-affected people was conducted, including consultationmeetings with local residents, communities, farmer organizations, village council representativesand non-government organizations, including women's groups.

45. There will be no land acquisition, involuntary resettlement or destruction of physicalassets under the project. The final location of the abattoir is on Government-owned land that hasno settlers on it. As a rule, any project activities involving land acquisition and involuntaryresettlement will be excluded and this will be specified in both the ESMF and in the Code ofEnvironmental Practice (COEP), which in turn are mentioned in a legal covenant.

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F. Environment (including Safeguards)

46. An Environmental and Social Management Framework (ESMF) was prepared by theMinistry of Agriculture and Fisheries (MAF). The ESMF analyses the positive and negativeimpacts of the different types of sub-projects that will be financed by the project. It also sets outthe principles, procedures and guidelines for screening environmental and social impacts ofindividual subprojects that will be identified and implemented during project implementation,mitigation measures, implementation arrangements, a monitoring plan and arrangements fortraining and capacity building.

47. A separate COEP was also prepared for the construction and operation of the abattoir.The COEP also serves as the sub-project environmental management plan (EMP). The results ofthe ESMF analysis on the potential environment and social impacts of the project indicated thatthe negative impacts are minor, manageable, localized and temporary primarily because the sub-projects are small in scale and limited in scope and investments are made at the household level.The negative impacts can be addressed by following the proposed mitigating measures duringthe planning, design and implementation phases of the sub-projects. The ESMF has fullyconsidered the potential project impacts on the natural and social environments, specifically ofthe abattoir construction and potential increase, though not expected, in agrochemical use underthe fruit and vegetable component. To address the issue of potential increase in agrochemicaluse, a pest management plan (PMP) has been prepared and included in the ESMF. The PMPfocuses on an integrated pest management approach, which the project will support.

48. Among the sub-projects, the construction of the proposed abattoir and waste generatedduring its operation would have some environmental impacts if the wastes are not managedproperly. Effective waste management facilities such as wastewater treatment would beconstructed as part of the abattoir. The COEP/EMP spells out the measures that need to befollowed for the design, construction and operation of the abattoir. Mitigation measures specifiedin the COEP/EMP would focus on control of impact levels to minimize problems from odors andanimal waste.

49. The potential transmission of pathogens, antibiotics and their resistant strains fromlivestock to humans under the project may pose a health risk. To minimize this risk, the ESMFrequires that livestock farmers properly manage manure, including composting before use oncropland, or before being disposed. This is especially true if animals, especially pigs, areconfined to sheds. It is expected that health risks and the potential of disease transmissionincidence can be greatly reduced through implementation of these measures.

50. The ESMF has been disclosed locally in the local language and has been posted onMAF's webpage (www.maf.gov.ws) and made available in public places where stakeholderswould have easy access. The English version of the ESMF was also disclosed in the Bank'sInfoShop.

51. The current institutional capacity of MAF staff to implement most of the measuresoutlined in the ESMF is considered to be weak, particularly due to lack of staff with abackground in natural resource management, soil science, and social sciences. A full-timeenvironmental and social management officer (ESMO) will be recruited in the Project

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Coordination Group and will be responsible for overseeing the social and environmentalscreening, preparation of EMPs, and monitoring implementation of these plans. There is alsoprovision for part-time TA to the PCG on social and environmental management. The TA andESMO will support capacity building of the MAF to use the ESMF and for the development andimplementation of the Integrated Pest Management Plans.

52. The main agency responsible for environmental protection in Samoa is the Planning andUrban Management Agency (PUMA), which is the regulatory agency within the Ministry ofNatural Resources, Environment, and Meteorology (MNREM). The MNREM is a well-organized agency with good experience in environmental impact assessment and environmentalmanagement plans, and is familiar with Bank environmental safeguards. The ESMO would betrained and accredited by PUMA so that they can review and approve/decline the proposed sub-projects based on environmental and social screening and send the completed reports to PUMAon a biannual basis for review.

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Annex 1: Results Framework and Monitoring

Country: Samoa

Project Name: Samoa Agriculture Competitiveness Enhancement Project

Results Framework

Project Development Objectives

PDO Statement

The development objective of the project is to support fruit and vegetable growers and livestock producers to improve their productivity and take greateradvantage of market opportunities.

Project Development Objective Indicators

Cumulative Target Values Data Source! Responsibility for

Indicator Name Core Unit of Measure Baseline YRI YR2 YR3 YR4 End Target Frequency Methodology Data Collection

Percentage increase in AnnualM&average fruit and L &vegetable yields of Percentage 0.00 0.00 0.00 40.00 60.00 100.00 Annual surveys of MAF - PCG &CD

groers participating in p tcipants

Percentage increase in Annual M&Eaverage fruit and suvysovegetable yields of Percentage 0.00 0.00 0.00 20.00 30.00 50.00 Annual suvy f MAE - PCG &CDtarge:ted subsistence patcipants

Import statisticsPercentage of locally Uand an annualproduced beef sold by Percentage 40.00 40.00 42.00 46.00 50.00 5500 Aul survey of MAF-PCGdomestic retail and g 5 nasupermarkets,food service channels hotels and

restaurants.

Percentage of locally F]Import statistics

produced fruits and Liand an annual

vegetables sold by Percentage 5.00 10.00 15.00 20.00 25.00 30.00 Annual survey of MAF-PCGdomestic retail and sprmarkets,food service channels htl n

restaurants.

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Percentage increase in Annual M&Ethe value of sales offruit and vegetable Percentage 0.00 0.00 0.00 25.00 30.00 40.00 Annual surveys of MAF-PCG & CD

growers participating in pricipants

Percentage increase in Annual M&Ethe value of sales of Llivestock producers Percentage 0.00 0.00 0.00 25.00 30.00 40.00 Annual surveys of MAF - PCG & APHD

participating in the patcipants

Intermediate Results Indicators

Cumulative Target Values Data Source! Responsibility for

Indicator Name Core Unit of Measure Baseline YRI YR2 YR3 YR4 End Target Frequency Methodology Data Collection

Cumulative number ofbusiness plans prepared Lby livestock Number 0.00 50.00 270.00 460.00 740.00 1100.00 Six-monthly MAF - PCG MAE - PCGproducers/entrepreneurs recordsand approved for grantfinancing

Proportion of APHDstaff completingDtraining programs toupgrade their extensionPecnae 00250 800 90090010.0 AnaAHDrods ME-PDeffectiveness and/ortechnical capacity

Proportion of CropsDivision staffEicompleting trainingprograms to upgrade Percentage 10.00 35.00 80.00 90.00 90.00 100.00 AnnualCrpDison ME-rpsivintheir extensionReodeffectiveness and/ortechnical capacity

LII Annual M&EIncrease in response toimproved husbandry - Percentage 0.00 0.00 0.00 0.00 0.00 60.00 Annual surveys of MAE - PCG & APHD

calvng ateprojectcalvin rateparticipants

Increase in ElAnnual M&Ereproduction rates in Wresponse to improved Number 5.00 5.00 5.00 6.00 7.00 7.00 Annual surveys of MAE - PCG & APHDhusbandry - average participantslitter size for pigs

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Number of livestockprocessed through Eihygienic field slaughter Number 0.00 0.00 1000.00 1000.00 1200.00 1400.00 Six-monthly APHD records MAF - APHDservices and theabattoir

Cumulative number ofbusiness plans prepared Lby fruit and vegetable Number 0.00 50.00 160.00 240.00 320.00 500.00 Six-monthly MAF - PCG MAE - PCGproducers/entrepreneurs recordsand approved for grantfinancing

Number of farmersusing improved fruitand vegetable varietiesand adopting improved Nme .06.0 100 8.0 300 0.0 Sxmnhy MFCos M EPG Chusbandry practices(IPM, prudent fertilizeruser)

Increase in theproportion of surveyed LIAnnual M&Elivestock and fruit and Percentage 0.00 5.00 10.00 15.00 25.00 50.00 Aul surveys of MAF - PCGvegetable producers projectreceiving satisfactory participantsextension services

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Annex 2: Detailed Project Description

SAMOA: Agriculture Competitiveness Enhancement Project

1. Project Development Objective. The development objective of the project is to supportfruit and vegetable growers and livestock producers to improve their productivity and takegreater advantage of market opportunities. This would be achieved through facilitation ofindustry dialogue and coordination; assisting farmers to organize themselves into marketinggroups and establish direct links with buyers; enhancing farmer access to new and/or improvedplanting material and superior breeding stock; encouraging adoption of improved agriculturalhusbandry practices and technology; improving meat quality and safety through new hygienicslaughter services; and targeted investments to improve farm and livestock productivity.

2. The project would be implemented over a period of fie years, on both Upolu and Savai'iislands. The SACEP Matching Grants Program (MGP) would support demand-led investments inimproved on-farm production and marketing of livestock and fruit and vegetable products toimprove the productivity, quality and efficiency in these value chains and to enable participatingfarmers to access identified markets. The MGP would be targeted to those households wanting toadopt a more commercial approach to fruit and vegetable and livestock production andmarketing. Households who want to produce more fruits and vegetables and livestock productsbut at the same time prefer to remain operating at a subsistence level would also benefit fromproject activities. It is anticipated that the project would directly benefit about 1,500commercially-oriented farmers through the MGP and at least another 500 subsistence-orientedfarming households.

3. Key project outcome indicators would be:

(a) an increase in the productivity of commercially-oriented farmers in the fruit andvegetable sub-sector

(b) an increase in the productivity of subsistence-oriented households in the fruit andvegetable sub-sector

(c) an increase in the value of sales of commercially-oriented farmers in thelivestock sub-sector

(d) an increase in the value of sales of commercially-oriented farmers in the fruit andvegetable sub-sector

(e) an increase in the share of locally produced fruits and vegetables sold bydomestic retail and foodservice channels

(f) an increase in the share of locally produced meat sold by domestic retail andfoodservice channels

4. Detailed Component Description. The project would include three components: (a)Livestock Production and Marketing; (b) Fruit and Vegetable Production and Marketing; and (c)Institutional Strengthening.

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5. Component 1: Livestock Production and Marketing. The objective of this componentwould be to encourage interested livestock producers to upgrade livestock, improve husbandrypractices and stock management, make productivity enhancing on-farm investments, andimprove the quality of meat sold in the local market. The component would comprise a numberof activities, including:

(a) improving farmer access to superior breeding stock for cattle, pigs, sheep andpoultry;

(b) financing eligible farm enterprise investments to improve stock handling andlivestock housing and provide start-up working capital, through a combination ofdemand-driven matching grants and commercial loans;

(c) providing technical advice on breed selection and breeding management,nutrition, animal health and improved husbandry practices;

(d) improving livestock nutrition by fostering locally grown feedstuffs and upgradingpastures for cattle and sheep; and

(e) improving meat quality and hygiene initially through initiation of a new fieldslaughter service on Upolu and Savai'i, and later by construction of an abattoir onUpolu, all with associated cold chains.

6. Nucleus Breeding Stock. Breeding stock would be imported by MAF in the first andsecond years of the project to replenish and expand first-generation livestock numbers on theGovernment nucleus breeding farms, involving procurement of about 40 cattle, 100 sheep, 20pigs and 100 poultry. Minor refurbishing of buildings and upgrading of stockyards and fenceson existing cattle breeding farms would be carried out; and a new pig unit with a capacity of 60breeders and offspring built to replace the existing non-functional unit. The breeder poultry flockwould be expanded, and a small hatchery building with an egg incubator would be constructedadjacent to the existing poultry house to produce day-old chicks. Under the project, farmmanagers would be trained to manage government breeding farms and their livestock in a moreprofessional manner - supported by strategic short-term technical assistance to assist in nucleusfarm development and management, introduce breeding programs, improve feeding programs forbreeding stock, assist in the selection of imported breeding stock and oversee the introduction oflivestock performance testing. To improve livestock performance and promote more rapiddistribution of offspring from the imported livestock to commercial producers, the developmentof a limited number of privately-owned multiplier farms for cattle, pigs and sheep would beactively encouraged and supported under the project. The multiplier farms would use offspringfrom the nucleus farms as foundation stock from which to raise replacement stock for sale tocommercial producers. In time, government nucleus farms would sell only to these multiplierfarms. Replacement poultry would continue to be supplied from the new government hatchery,which would raise day-old chicks to 4 weeks of age before distribution to household producers.Sales of livestock from MAF's breeding farms would be made on a cost recovery basis in orderto ensure the sustainability of these farms.

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7. Farm Enterprise Investments. The project would encourage farm enterpriseinvestments by offering a financial incentive in the form of a matching grant (see Annex 3 forimplementation arrangements of the MGP). Investments would be financed through acombination of a commercial loan (30 percent), project provided matching grant (50 percent),and equity (20 percent). Interested farmers could avail of the matching grants to upgradelivestock and improve on-farm livestock production facilities such as housing and stock yards,fencing, water supply and pasture management. Beneficiary eligibility criteria, levels ofmatching grants, and the matching grant operating procedures are detailed in a Matching GrantsManual which is part of the Project Implementation Manual. Although the MGP is entirelydemand driven, it is estimated that up to 1,100 livestock producers might participate in the MGP.Representative investment models have been prepared for cattle (water facilities, pastureimprovement, holding yards and shared access to an upgraded bull); sheep (ram and four ewes,shed and fencing, and start-up creep feed for ewe flushing and lambs); pigs (crossbred boar andboar-pen, and start-up improved feed); poultry (two improved roosters, nesting boxes andfencing); and, bees (20 hives with queen bees). In addition, second level pig and poultryinvestments are anticipated for a select number of small-scale farmers who make a success oftheir initial investments and want to upgrade to a more intensive production system: pigs(crossbred boar and five sows, full shedding and improved feed for all stock); poultry (30broilers in three production cycles per year, shed and fencing, and start-up improved feed).

8. Technical Advice. New production technologies to be introduced would encompassimproved husbandry practices, improved feeds and feeding practices, pasture management,improved breeding and general management, confined livestock raising, and improved marketingpractices. Specific officers focusing in either animal production and health or livestockmarketing would be identified from within APHD and trained to work with other APHD staff,livestock associations and groups of participating livestock owners. TA in breeding farmmanagement and abattoir design and operations would be recruited for strategic short-termperiods over the first two to three years of the Project to build the capacity of APHD staff.Training would also be imparted on topics such as group dynamics, basic enterprise economicsand marketing. Both matching grant program beneficiaries as well as targeted subsistencefarmers would benefit from the training and technical advice on livestock production andmarketing provided under the Project.

9. Animal Feed and Forage Production. To address the absence of feed grain productionin Samoa, production of cassava for use as an animal feed energy source would be piloted.Farmers interested in investing in cassava production would be encouraged to organizethemselves into Cassava Producer Groups to access financing through the MGP. Based onfarmer demand, these groups could also be assisted through the MGP to establish small scale,group-owned cassava chipping and drying facilities. Dried cassava chips could be sold to thelocal feed mill for processing into cassava meal and blending into compound feed. The Projectwould also support pasture improvement trials, involving legume over-sowing, weed control,brush cutting, rotational grazing, joint sheep and cattle grazing trials, and the planting of legumehedges. Pasture improvement activities would be targeted to cattle producers; these producerscould also invest in pasture improvements through the MGP. Forage yields and incrementallivestock productivity from the various interventions would be evaluated to determine the mostprofitable interventions.

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10. Livestock Slaughter and Marketing. The project would support a two-phased approachto establish a hygienic slaughtering system for meat for the retail trade. During the first two yearphase the regulatory frameworks and logistical infrastructure essential in supporting hygienicslaughter would be developed. The project would support a review of the draft Samoa Slaughterand Meat Supply Act for promulgation to provide the regulatory framework for livestockslaughter and meat inspection. In the first phase, once the regulatory framework is in place, afield slaughter service would be launched on Upolu and Savai'i Islands, comprising a truckoperating on each with refrigerated cold box for the rapid carcass chilling, manned by adriver/slaughterman and accompanied by a meat inspector. A small cold storage unit would alsobe set up in Savai'i to facilitate carcass movement to Apia. The field slaughter service wouldprovide fee-based on-farm slaughter upon request by livestock owners, using an off-the-groundslaughter stand; on-farm meat inspection; and enable same-day delivery of the chilled carcass towholesalers/retailers. Carcasses would be stamped to allow traceability, and carcass hygienewould be monitored by bacteriological sampling by the veterinary laboratory. Mechanismswould be put in place through the Samoa Slaughter and Meat Supply Act to compensate farmerswhen their animals are condenmed for sanitary reasons. A multi-media Samoa safe meatcampaign would be launched to disseminate public awareness messages to the general public,meat retailers and the hotel and restaurant trade on the availability of hygienically slaughteredand handled locally produced meat.

11. During the second phase, scheduled from the second half of Project Year 3, subject to thesatisfactory operation of the field slaughter service for a period of at least 12 months, and theestablishment of an appropriate independent abattoir management entity, an abattoir would bebuilt on Upolu. The abattoir would be constructed in modular form to allow for futureexpansion, incorporating an overhead rail for a cattle slaughter line with an initial annualcapacity of about 500 head, and is expected to grow to a potential throughput of about 4,500head, beyond the Project period with increasing slaughter demand over time. Ancillary facilitiesinclude carcass chill rooms, stockyards, the abattoir access road, and a waste managementsystem incorporating liquid and solid waste handling, constructed in accordance with goodenvironmental management practices. An independent operating entity would be set up tomanage the abattoir on a commercial basis. Experienced TA support is envisioned during thesetwo phases to assist in mobilizing the field slaughter service, training of slaughtermen and meatinspectors, and to design and supervise abattoir construction. Short-term TA would also beprovided to assist MAF in finalizing the draft Samoa Slaughter and Meat Supply Act.

12. Component 2: Fruit and Vegetable Production and Marketing. The objective of thiscomponent would be to enable interested fruit and vegetable growers to have access to new,higher yielding varieties, adopt improved technology and production techniques, makeproductivity enhancing on-farm investments, and organize themselves to strengthen theirpresence in the market and meet the demands of local retailers and foodservice operators foryear-round supplies of fresh fruits and vegetables. The component would be comprised of anumber of interrelated activities, including:

(a) enhancing farmer access to planting material of a broad range of improved fruitand vegetable varieties, shown in local trials to be suitable for Samoan conditions;

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(b) financing eligible farm enterprise investments to facilitate land preparation,address problems with seasonal rainfall excesses and shortfalls, increasemechanization and provide start-up working capital through a combination ofdemand-driven matching grants and commercial loans;

(c) providing technical advice on variety selection, crop nutrition, improvedhusbandry practices, post harvest handling and organization of producer groups; and

(d) promoting the growth of organic products and fruit and vegetable exports throughassistance in market development and arrangements for certification.

13. Planting Material: The project would support the identification and introduction byMAF of fruit and vegetable varieties grown successfully in climates similar to Samoa. Thesewould be subjected to nursery screening trials at Nu'u Station, and varieties showing promisewould then be trialed on selected farmers' fields. Only varieties successful in the field trialswould be released to farmers for commercial planting. Based on current market signals, initialfocus would be on the identification of the principal imported vegetable and fruit crops includingtomatoes, capsicums, carrots and sweet oranges. In addition to these, a range of other vegetableswould also be included in the identification and trialing processes, including, potatoes and bulbonions, which are not currently grown in Samoa, but are an important component of vegetableimports. Adequate focus would be given to identifying improved varieties for fruits andvegetables currently grown by subsistence farmers.

14. Farm Enterprise Investments: The project would provide support for a range of farmenterprise investments needed to enhance the competitiveness of the fruit and vegetable sub-sector, financed through a combination of a commercial loan (30 percent), project-providedmatching grant (50 percent), and equity (20 percent) (see Annex 3 for implementationarrangements of the MGP). Although demand driven, it is anticipated that up to 500 householdsmight participate in activities focusing on fruits and vegetables through the MGP. Lava rocks area dominant feature of soil profiles throughout Samoa. Investments would include field rockremoval to allow production of sub-surface vegetable crops such as potatoes and onions andcarrots, and allow mechanization of farm operations. Commercial level production of freshvegetables is also hindered by intense rainfall eroding soil and damaging crops during the peakrainy season (November to February); and limited moisture during the dry summer months ofJuly and August. Demand is expected for polytunnels to protect vegetable crops growing duringthe rainy season when produce prices peak, and the Project will also provide support for waterharvesting systems and drip irrigation to improve production during the drier months.

15. Technical Advice: New production technologies, farm operations and post harvesthandling techniques would be introduced under the project to support the introduction of newvarieties and crops and the move towards year round vegetable production, involving the use ofpractices such as polytunnels and water harvesting/drip irrigation. Specific officers within theCrops Division would be identified to focus on these aspects and facilitate training of othertechnical staff and conduct demonstrations. Similar attention would be given to allied aspectssuch as soil management, to ensure the more intensive production systems being introduced donot compromise the long-term vitality of the soils; for IPM to address potential pest problemsassociated with the more intensive cultivation practices promoted by the project; and agricultural

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engineering to help with farm mechanization issues. The project would finance appropriate TAin the first two years of implementation to build the capacity of Crops Division staff to assistfarmers in all these areas. The project would also fund efforts to improve the diets of Samoansby encouraging increased consumption of fresh fruits and vegetables, in consultation with theMinistry of Health, and the Ministry of Women Community and Social Development(MWCSD). Both MGP beneficiaries as well as targeted subsistence farmers would benefit fromthe training and technical advice provided under the Project.

16. Market development for organic products and fruit and vegetable exports:Although the primary focus of the project would be on domestic consumption, a secondary focuswould be on exploring export market potential. Support would be provided to assist marketinggroups identify potential markets for products in which Samoa appears to have somecomparative advantage, particularly markets which lie close to Samoa; confirm that farmergroups are able to supply desired volumes and quality; and determine post-harvest handlingpractices which would maximize shelf life at minimum incremental cost, emphasizing productdelivery by ocean rather than by air. Resolving any certification issues for organic productswould also be supported by the project. A small High Temperature Forced Air (HTFA) facility atNu'u has been in operation since 2003. The project would fund studies undertaken by interestedproducer groups to assess the export market for fruits and vegetables and the associated need formore HTFA capacity. If these studies show that there is good potential for the exports and thatlack of HTFA capacity constitutes a constraint to exploiting this potential, consideration wouldbe given to this investment later in the project, utilizing unallocated funds, provided satisfactoryagreement could be reached on the form of ownership and management to operate the expandedfacility on a full cost recovery basis. This issue should be addressed in the above studies.

17. Component 3: Institutional Strengthening. The objective of this component would beto improve the effectiveness of agricultural institutions (Government and non-government)providing extension and adaptive research services to Samoan farmers; and the ability of thesesame institutions working individually or in collaboration with each other to implement andmonitor the project effectively. This would be done by:

(a) enhancing institutional, technical and management capacity to improve extensioneffectiveness and address identified skill-gaps in staff and the operational proceduresof implementing agencies;

(b) providing incremental staff to manage the project effectively;

(c) improving work facilities and providing adequate vehicles, equipment andoperating expenditure to maximize operational effectiveness; and

(d) designing and implementing a monitoring and evaluation system which isintegrated into the existing Management Information System (MIS) of MAF.

18. Extension methodology and MAF's skill base. Through a series of training workshops,management and field staff of both Crops Division and APHD would be introduced to more pro-active extension methods, tailored to Samoan circumstances. Field staff would be provided withthe skills to develop and deliver relevant and effective extension programs to different groups of

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farmers, including inter a/ia, development of monthly and annual work programs with outputsand impacts than can be monitored; ability to assist commercially oriented farmers to formmarketing groups and link to buyers in a sustainable fashion; and, Participatory Rapid Appraisalskills to assess the extension needs of subsistence farmers and develop and implementappropriate strategies to cater to these farmers. Among subsistence farmers, activities would betargeted to more vulnerable households and women and youth. Participatory Rapid Appraisalsand follow-up activities targeting subsistence farmers would be jointly undertaken andimplemented by MAF and MWCSD. Skill upgrading would start with skill-gap analysisexercises, leading on to a more formalized system of in-service staff training, focusing ondeepening knowledge of livestock and crop husbandry practices and broadening the skill base toinclude aspects such as IPM, agricultural engineering, and farm economics. As part of thisexercise, crop and livestock production manuals would be updated and new farmer extensionliterature generated.

19. To support these activities, the project would finance selected short-term TA, coveringextension management, crop variety selection and development; livestock breeding advisors(cattle/sheep and pigs/poultry), producer marketing group formation and facilitating marketlinkages; integrated pest management; agricultural engineering/irrigation development; soilmanagement; and public awareness programs promoting fresh fruit and vegetable consumption.

20. Project Coordination and Management. MAF would have overall responsibility forproject management, coordination and performance of the project components. Seven full-timestaff will be recruited to the Project Coordination Group including the following: ProjectCoordinator (PC) who will also facilitate sector coordination; Principal Matching Grants Officer;Principal Procurement Officer; Senior Procurement Officer; Principal Monitoring andEvaluation Officer; Principal Environmental and Social Management Officer and a SeniorFinancial Management Officer. Up to three additional staff will also be recruited to facilitateSBEC-managed activities related to the MGP. Selected short-term TA will be recruited to trainPCG staff on IDA procedures and policies including procurement, financial management,environmental and social safeguards and M&E.

21. Support Facilities and Activities. To facilitate the operation of a modernized extensionsystem and to support SACEP implementation, procurement of appropriate transport, equipment,demonstration materials and selected building refurbishments would be financed, along withstaff training and selective study tours and incremental operating costs. Provision would also bemade for upgrading the Veterinary Laboratory and construction of a new Crops Post-EntryQuarantine Unit.

22. Monitoring and Evaluation. MAF would be responsible for overall monitoring andevaluation of all project activities. An M&E system integrated into the existing ManagementInformation System (MIS) of MAF would be developed for the project (see further details inAnnex 3).

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Annex 3: Implementation Arrangements


Implementation Oversight

1. Several agencies are expected to be involved in the implementation, including Ministryof Finance (MOF), Ministry of Agriculture and Fisheries (MAF), Ministry of Natural Resources,Environment and Meteorology (MNREM), Ministry of Women, Community and SocialDevelopment (MWCSD) and the Development Bank of Samoa (DBS). It is also envisaged thatthe private sector and relevant NGOs would be involved in the implementation of some projectactivities, including, inter alia, the Small Business Enterprise Centre (SBEC) for investortraining, supporting and strengthening producer organizations and assisting farmers to accesscredit and matching grants; and Women in Business Development Inc. (WIBDI) for organic andniche market products.

2. Project management support would be provided to oversee implementation andcoordinate the activities of implementing agencies. This would be done at a number of levels.

3. Project Steering Committee (PSC): Comprised of representatives of MOF (chair);MAF; MNREM; MWCSD; DBS; SBEC; and representatives of the private sector and NGOs.The function of the PSC would be to guide the overall direction of the project, review annualwork programs, resolve implementation bottlenecks outside the control of MAF, assess thepotential of the project to achieve the expected development impact at the national level, andadjust project activities, if necessary, in pursuit of the project development objective.

4. MAF Executive Management Team: Comprised of the Chief Executive Offcer (CEO)and all Divisional Assistant CEOs (ACEO) and the Project Coordinator. The function of theteam would be to review annual work programs, budgets and M&E results, and resolveimplementation bottlenecks within MAF's control.

Implementation Management

5. Project Coordination Group (PCG): The PCG would comprise of the ProjectCoordinator (PC); Principal Matching Grants Offcer, Principal Procurement Offcer; SeniorProcurement Officer, Principal Monitoring and Evaluation Officer; Principal Environmental andSocial Management Officer and a Senior Financial Management Offcer. Collectively, thisgroup would be responsible project implementation coordination (including preparation ofannual work programs and periodic project performance reviews), administration (procurementand financial management), safeguards compliance and monitoring and evaluation. Responsibleadministratively to the CEO, the Coordinator would be appointed at the level of ACEO and actas Secretary to PSC.

6. To foster organizational and project sustainability, project activities would bemainstreamed and implemented as integral parts of MAF 's program to improve the productivityand competitiveness of the livestock and fruit and vegetable sub-sectors. Accordingly, while theProject Coordinator would have ultimate responsibility for ensuring the project is implemented

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as planned and produces the development impact expected of it, day-to-day implementation ofproject fruit/vegetable activities and livestock activities would be the principle responsibility ofACEOs of the Crops Division and Animal Production and Health Division (APHD) respectively.The PCG would liaise closely with the ACEO Corporate Services on procurement and financialmanagement aspects and with the ACEO Policy and Planning on M&E.

Implementation Arrangements: Matching Grant Program (MGP)

7. The SACEP Matching Grant Program (MGP) will be jointly implemented by MAF, DBSand SBEC. Responsibility for overall coordination will lie with the Project Coordinator. AMatching Grants Steering Committee (MGSC) chaired by the Project Coordinator and includingrepresentatives from MAF (Crops Division, Policy and Planning Division, and APHD); MOF;SBEC; DBS and the private sector would be established to provide overall guidance for theimplementation of the MGP and endorsement of proposals for funding.

8. The MGP would provide matching grants equal to 50 percent of the capital investmentand start-up working capital costs of eligible investments in fruit and vegetable and livestockproduction and marketing. Of the remaining investment and start-up working costs required, 30percent could be financed by a commercial loan from DBS and 20 percent would come fromfarmer equity. Recipients of matching grants that can provide 50 percent equity would notrequire a DBS loan. Applicants with approved business plans would be eligible for loanguarantees under SBEC 's existing loan guarantee program. In-kind labor contributions couldaccount for the 20 percent equity contribution.

Selection and Implementation of Proposals

9. Step 1: Promotion and Registration of Interest. The MGP would be well publicizedduring the Project Inception Workshop to ensure every farm household has fair and equal access.Following the Inception Workshop, a mass media campaign would be organized by the PCG toinform rural communities about the MGP. Through the mass media campaign, farmers/agro-entrepreneurs interested in applying for a matching grant would be invited to register theirinterest with the PCG in MAF.

10. Step 2: Participation in Farm Enterprise Investment Workshops. MAF together withSBEC would then jointly organize a series of Farm Enterprise Investment Workshops forfarmers/agro-entrepreneurs who have registered their interest in applying for a matching grant.The workshops would address issues such as group formation (member selection process, groupmanagement arrangements, marketing arrangements etc); matching grant selection criteria(beneficiary eligibility); beneficiary contributions (equity requirements) and loan repaymentobligations. Interested farmers/agro-entrepreneurs would be assisted by MAF and SBEC to formproduction/marketing groups, as relevant.7

11. Step 3: Preparation of Concept Notes. Individual farmers/agro-entrepreneurs and farmerorganizations interested in participating in the matching grant program would prepare and submita short Concept Note using a standard template describing the proposed investment, marketing

7For organic products, WIBDI would also likely be involved.

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plan, group structure (as relevant), budget and implementation timeframe. SBEC and MAFwould provide some support under the project for the development of these initial ConceptNotes. It is expected that all fruit and vegetables growers would operate in marketing groups, ifthey are to access the MGP; while in the livestock sub-sector, farmer group formation would befacilitated for activities such as cassava production and processing, and shared access to anupgraded bull (i.e. a small group of farmers may jointly invest in an upgraded bull). Otherwise,livestock producers would be expected to operate individually.

12. Step 4: Eligibility Screening. The Concept Notes would be screened by the MGSC andeligible applicants would be invited to participate in an Investor Training Program organized bySBEC. Each Applicant would receive confirmation or acknowledgement of preliminaryacceptance or rejection of their Concept Note (with reasons in writing submitted to Applicantsfor any rejection) from the PCG.

13. Step .5: Investor Training Program and Preparation of Business Plans. S BEC wouldorganize an investor training program for potential MGP participants, focusing on marketingissues, enterprise cash flows and development of business plans. After this training, eachfarmer/agro-entrepreneur would be assisted by SBEC business advisers to prepare their ownbusiness plan and loan application. Each individual fruit and vegetable farmer would be eligibleto receive a matching grant to support one acre of production only. To encourage and reward socalled, "nucleus" farmers to organize and lead a marketing group, they would also be eligible toreceive grant funding for one acre of production, but could re-apply for additional 1-acre grantseach year of SACEP (to a maximum of 5 acres) to expand their operation provided the group isoperating effectively as determined by group member feedback. The maximum grant amount foran individual would be USD$7,000.

14. Step 6: Business Plan Screening and Submission of Loan Applications. MAF wouldscreen each business plan to ensure that the proposed activities are technically viable. MAFwould also undertake environmental and social screening and assist with identification of anymitigation measures and preparation of EMPs. Once the technical, environmental and socialscreening process is completed by MAF, SBEC would provide an offer of loan guarantee andassist Applicants to submit their loan application to DBS, either individually or jointly.

15. Step 7: Business Plan Approval and Signature of Grant Agreements. DBS would usetheir normal lending criteria to assess the viability of each application and make the finaldecision on loan approval. DBS would inform the PCG of the approval or rejection ofapplications. Applicants whose loans are approved by DBS would then be invited to sign aGrant Agreement. Grant recipients would be required to open a separate sub-project bankaccount at any commercial bank for the MGP. In cases where applicants can provide 50 percentequity and do not require a loan, the final business plan approval will be made by the MGSC.Applications whose loans are not approved will also receive prompt notification from the PCG.

16. Step 8: Implementation of Approved Business Plans. Payments would be disbursed to therecipient's sub-project account by DBS (loan component) and the PCG (grant component). Thenumber of payment tranches and the milestones and reporting arrangements that need to be metin order to receive subsequent tranches would be specified in the Grant Agreement and wouldvary depending on the nature of the investment activity. The DBS loan component would be in

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the form of a line of credit which will be drawn down in line with the disbursement schedule inthe Grant Agreement. A suitable grace period for commencement of loan repayments would beincluded in the loan terms to accommodate the anticipated revenue stream from the concernedinvestment. The maximum grace period would be 12 months. Interest would accrue on theamount of the loan that is drawn down, but payments would be deferred until the grace periodexpires. Recipients of matching grants will follow simple procurement procedures for purchaseof capital items and these would be detailed in a Matching Grants Manual in the PIM. TheMatching Grants Manual in the PIM would include a list of eligible expenditures.

17. Step 9: Implementation Support and Monitoring. The PCG together with SBEC andDBS will undertake monitoring and provide implementation support for MGP activities. Staff ofthe PCG, SBEC and DBS will make regular on-site visits. Such monitoring would be done on arandom basis at the discretion of the PCG. Each project would be visited at least once every sixmonths. Every project will be visited before the release of the second tranche payment.

18. Business Standards and Dispute Resolution. Business standards (including processingtime lines and confidentiality rules) would be applied to maximize the responsiveness of theProject and would be specified in the PIM. The PIM would also include provisions for disputeresolution, which are also part of the Grant Agreement.

Financial Management, Disbursements and Procurement

19. The financial management assessment was carried out in accordance with the "Funa ,alManagement Practices in World Bank-Financed Investment Operations ", issued by theFinancial Management Sector Board on November 3, 2005 and further rationalized in the"Principles Based Financial Management Practice Manual" issued by the Board on March 12010. Under the Bank's OP/BP 10.02 with respect to projects financed by the Bank, theborrower and implementing agency are required to maintain financial management systems -

including accounting, financial reporting, and auditing systems adequate to ensure they canprovide the Bank with accurate and timely information regarding the project resources andexpenditures.

20. Overall, the financial management arrangements satisfy the financial managementrequirement as stipulated in OP/BP 10.02 subject to implementation of agreed actions andmitigating measures. The assessed financial management risk of the project before the mitigatingmeasures is considered substantial and could be reduced to moderate after the proposed andexisting mitigating measures are implemented and have shown effective impact. The main risksrelating to this project are limited FM capacity within the implementing agency, which couldlead to poor keeping of accounting records, poor adherence to the internal controls already inplace within the Samoan Government and transcription errors within the project accountingrecords as the actual payments are made by the MOF initially out of the government bankaccount. The mitigating measures to be implemented to reduce the risks associated with thecurrent Financial Management System are: (i) the establishment of a Project Coordination Group(PCG) which will include a full-time Financial Management Officer; a part-time FinanceAdvisor will also be employed initially to aid in the setting up of the project accounts; (ii)development of Project Implementation Manual which includes a Financial Management section;and (iii) monthly reconciliation of project accounts to the government records.

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21. Budgeting Arrangements. Donor funded development expenditure (loans and grants) isincluded in the estimates and in-year reports, but there is no reporting of any developmentexpenditure in the public accounts. Currently three year rolling budgets are prepared annually byMAF and submitted to MOF for review and finalization. The budgets are approved byParliament. The detailed budget for the first 3 years of the project will be prepared initially bythe Finance Advisor and subject to annual reviews. The budget will be consistent withprocurement plan but will include additional expenditure not covered in the procurement plan.The Financial Management Officer will monitor the budget throughout the life of the project.

22. Accounting Arrangements. The PCG will prepare the accounting documentation foreach transaction and remit to the MOF for payment. MOF will make the payment and record theinformation into GOFAR (Government Finance and Reporting System) which is Finance Oneaccounting software. It is well established and is operated centrally by MOF although eachdepartment has access to its own department information and can input limited financial data intothe system. Currently no provision has been made for projects to input directly into GOFAR oruse the chart of accounts set up in Finance One. MOF enters the transactions into a one line inthe chart of accounts. As part of its ongoing control system, all project-related transactions willbe reviewed by the SAO prior to payment and recording in the accounting system.

23. As the GOFAR is only recording project expenditure under one line the project will berequired to maintain additional accounting records to enable dissection of information forreporting purposes. To ensure adequate resources are available to complete the accounting tasksa part-time FM advisor will assist in the setting up of the project accounts and a full-timeFinance Management Officer will be funded by the project.

24. Internal Controls. The GOS accounting processes ensure authorization and paymentprocesses are clearly segregated. All the payments vouchers will be prepared by the PCG,authorized by MAF (responsible ACEOs/CEO) and reviewed by MOF (ACU) before payment isprocessed through MOF. Any assets purchased in the project will be recorded on an assetsregister maintained by the project. PCG will reconcile the payments on its system with thosefrom the GOFAR system as part of normal monthly reporting.

25. A Project Implementation Manual (PIM) has been developed which includes a FinancialManagement section which provides guidelines on the internal controls and procedures for theproject. The PIM also outlines the procedures for the Matching Grants Program and includes alisting of eligible and ineligible expenditures for this program. Adherence to the ProjectImplementation Manual will form part of the documentation to be reviewed as part of the auditprocedures to be performed annually by the SAO as part of the project-specific audit. There iscurrently limited Internal Audit Service capacity within MAF and this cannot be relied upon toprovide assurance hence other migration measure listed in the section will provide the necessaryassurance.

26. Flow of Funds. Flows of funds between the World Bank and MAF are organizedaccording the traditional disbursement procedures of the Bank. A Designated Account (DA) willbe opened at the Central Bank of Samoa (CBS) and will be managed by MOF (ACU) and thePCG. Payments to suppliers will be prepared by MAF and reviewed by MOF (ACU) beforeprocessing through the government and then on a monthly basis the government account will be

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reimbursed from the DA. There will be monthly reconciliations of the DA and these will beforwarded to the PCG.

27. Financial Reporting. The GOFAR system does not allow for the automatic generationof the Interim Financial Reports (IFRs) necessary for project management as the projecttransactions are all entered into the one account code. In addition while accruals can begenerated through GOFAR, commitments (signed contracts that have not yet been expended) arenot accounted for. Hence to obtain reports by component and sub-component the project willmaintain its own accounting records either on spreadsheet or in an off the shelf accountingpackage that meets the project reporting requirements' needs. The project will be required toprepare quarterly IFRs in a format agreed to with the Bank. The IFRs will be required to besubmitted not later than 45 days after the end of the reporting period. The IFRs will be preparedby the PCG in consultation with MOF.

28. External Audit. Samoa Audit Office (SAG) will conduct an annual audit of the projectaccounts and these will be received by the Bank within 6 months of the end of each of thereporting periods. The SAG has extensive experience in auditing government departments andWorld Bank funded projects and is an auditor acceptable to the Bank. As the expenditure for theMatching Grants Program has a greater risk of non compliance with documentationrequirements, the SAG will be requested to look specifically at the funds expended on grants aspart of their annual audit of the project and FM implementation reviews will also focus on thisexpenditure.

Disbursement Procedures

29. The project will use four Disbursement Methods: Advance, Reimbursement and DirectPayment and Special Commitment.

30. In order to facilitate the means of payment for the majority of day-to-day expenses, aDesignated Account will be opened to enable the Bank to advance funds to the project. TheACU/MOF and MAF will comprise the authorizing officers. The documentation required for thereplenishment of the advance will be by Statement of Expenditure and while documentation willnot be required to be sent, except for those contracts subject to prior review, the project will beexpected to retain documentation for audit and review by World Bank staff. To satisfyreplenishment requirements for the MGP evidence will need to be provided that the advancedfunds have been expended.

31. The PCG will prepare all Withdrawal Applications and it will send the WithdrawalApplications along with accompanying documentation to ACU/MOF for checking, signing andsubmission to the World Bank.

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32. The project will have 4 disbursement categories and the amounts are outlined in thetables below:

Category Amount of the Credit Percentage ofAllocated (expressed Expenditures to be

in SDR) Financed(inclusive of Taxes)

(1) Goods, works, non-consulting services,consultants' services, Training and OperatingCosts, for the Project (excluding Parts 1(b), 1(e) 3,036,049 1000%and 2(b) thereof )

(2) Matching Grants under Parts 1(b) and 2(b) 1,127,666 1000% of amountsof the Project disbursed

(3) Goods, non-consulting services,consultants' services, Training and OperatingCosts for the Field Slaughter Service under Part 110,563 1000%

1(e) of the Project

(4) Goods, works, non-consulting services,consultants' services, Training and OperatingCosts for the Abattoir under Part 1(e) of the 925,722 100%o

Project

TOTAL AMOUNT 5,200,000

Category Amount of the Grant Percentage ofAllocated (expressed Expenditures to be

in US$) Financed(inclusive of Taxes)

(1) Goods, works, non-consulting services,consultants' services, Training and OperatingCosts for the Project (excluding Parts 1(b) and 3,732,655 100%o

2(b) thereof)

(2) Matching Grants under Parts 1(b) and 2(b) 1,154,182 1000% of amountsof the Project disbursed

(3) Goods, non-consulting services,consultants' services, Training_ and OperatingCosts, for the Field Slaughter Service under Part 113,163 100%o

1(e) of the Project

TOTAL AMOUNT 5,000,000

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33. To the extent practicable, the proceeds of the FPCR Grant would be disbursed on accountof expenditures for the project before disbursements of the proceeds of the IDA Credit.

34. The project with also have a retroactive financing from the Credit of up to 520,000SDRfor payments made up to 12 months prior to the signing of the Financing Agreement for EligibleExpenditures under Category (1).

Procurement

35. Procurement-related Risk Assessment and Mitigation Actions. Regulations relating topublic procurement in Samoa are covered in the Treasury Instructions, the Public FinanceManagement Act 2001, the Cabinet-approved B4 Schedule of Authorities, and the GovernmentProcurement Guidelines, but they do not fully comply with the Bank's guidelines. Under the B4Schedule, the Tenders Board and the Cabinet approve contract awards over WST 100,000 (aboutUS$44,000 equivalent) and WST500,000 (about US$220,000 equivalent) respectively. TheMinistry of Agriculture and Fisheries (MAF) has not implemented a Bank-financed project inover 20 years, and has limited capacity to manage procurement activities under the project. MAFcurrently procures small-value contracts under shopping procedures, managed by its CorporateServices Division.

36. The overall procurement-related risk is rated high and, subject to implementation ofagreed mitigation measures, will be upgraded to moderate.

37. The table in the next page summarizes the procurement-related risks and mitigationmeasures (MM) under the project.

38. Guidelines. Procurement will be carried out in accordance with the World Bank's"Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans andIDA Credits & Grants by World Bank Borrowers, January 2011"; and "Guidelines: Selection andEmployment of Consultants under IBRD Loans and IDA Credits & Grants by World BankBorrowers, January 2011"; and the provisions stipulated in the Legal Agreements. Specificrequirements relating to national competitive bidding will be included in the Legal Agreements.Approval of contract awards by the Tenders Board and the Cabinet will follow the Government'sB4 Schedule of Authorities. In case of any discrepancies in the decision-making process betweenthe Bank's Guidelines and the Government's Guidelines, the former shall prevail.

39. Works. Works to be procured include upgrading of facilities on government farms,construction of nurseries, sheds, post-entry quarantine facilities, and an abattoir, refurbishing ofMAF offices and laboratories. Except for one works contract to be procured under InternationalCompetitive Bidding, other works will be procured following National Competitive Bidding orShopping procedures as appropriate, based on the agreed procurement thresholds.

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RiskRisk After

Risk Before Mitigating Measures (MM) MMM

Delays in decision-making * Appoint project-dedicatedand protracted approval H procurement staff (advisor and Mprocess due to capacity principal procurement officer)limitations, by credit effectiveness, who

will track the decision-makingImproper implementation of and approval process andprocurement activities report quarterly on two agreedunder the project (in terms indicators [(i) time fromof efficiency, competition bid/proposal opening toand transparency) due to contract award; (ii) contractinadequate in-house implementation delays] duringcapacity and expertise, and implementation.

Disincentive to competition * Procurement training will bedue to the lack of a system provided to the project at theto resolve complaints. start up of the project.

* Utilize the existing TendersBoard complaints reviewprocess to address allcomplaints relating to theproject, with adequaterecording and reporting inplace.

* Publish (through website/press)contract award decisions andother related information.

* Assign project-dedicated spacefor safe and securerecordkeeping.

Non-transparency in the H Include in the PIM, procedures Mprocurement of nucleus for nucleus stock procurementbreeding stock and planting and supply, as agreed with thematerial due to inadequate Bank, by negotiations.controls.Non-compliance with S Appoint a project-dedicated Magreed procedures and mis- senior officer to monitor anduse of funds under the report on procurement underMatching Grants Program, the MGP.due to poor oversight.Substandard goods or S Assign or hire dedicated Mworks, loss of benefits, technical staff for contractshortened project life, management, quality assurancewaste, theft due to poor and inventory control duringcontract management. project implementation, as

needed.

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40. Goods. Goods to be procured include vehicles, office furniture and equipment, software,communication material, farm machinery, equipment and tools, laboratory equipment, mobileslaughter service units, specialized abattoir equipment, nucleus breeding livestock, poultry, andnew varieties of fruits and vegetables. Except for three relatively large goods to be procuredunder International Competitive Bidding, procurement of goods will follow NationalCompetitive Bidding or Shopping procedures as appropriate, based on the agreed procurementthresholds. Subject to prior agreement with the Bank, some goods may be procured thoughDirect Contracting in accordance with paragraphs 3.7 (a), (b), (c) or (d) of the Bank'sProcurement Guidelines. Detail procedures in respect of the procurement of nucleus breedinglivestock, poultry, and new varieties of fruits and vegetables are described in paragraph 32below.

41. Livestock, Poultry, Fruits and Vegetables. In view of the small numbers of breedinglivestock to be procured, the most competitive method feasible but including Direct Contracting,depending on the type of livestock, will be used based on previous practices followed by MAF.Breeding livestock (cattle, pigs, sheep), will be procured from selected stud stock farms in theregion (primarily from New Zealand, Australia, and Fiji). For the procurement of cattle(estimated to cost up to US$250,000 per contract), MAF will obtain a list of reputed stud"livestock agents", from Trade Commissions representing the selected source countries. Theagents will recommend source farms for procurement of the breeding livestock, based on pre-export conditions, genetic testing, and quarantine requirements, in accordance with theGovernment of Samoa's regulations. MAF will then send its teams to the selected farms to makethe final selection of stock required. Breeding sheep stock (estimated to cost between US$10,000to US$45,000 per contract), will be procured from Fiji and Australia, as has been the practicebefore. Breeding pig stock (estimated to cost US$25,000 per contract) would be procuredfollowing similar procedures to cattle. Day-old chicks and/or fertilized poultry eggs (estimated tocost US$1,000 per contract), seed and planting material of new varieties of fruits and vegetablesidentified by MAF (estimated to cost US$2,000 per contract), will be procured under DirectContracting procedures. Once the stock have been identified and purchase orders issued to thesuppliers, MAF would seek quotations from reputed export companies for aggregation ofpurchased livestock, obtaining all clearance certificates in the country of origin, and the transportand delivery of the selected stock to Samoa. Sample documents (GOS requirements, request forquotation, purchase order/contract forms) will be reviewed by the Bank prior to the firstcontracting process being initiated.

42. Matching Grants. Under the Matching Grants Program, farmers will procure livestockand planting material, goods for upgrading/new farm facilities, and consumables for the firstcycle of production, following Community Participation in Procurement (CPP) procedures,acceptable to the Bank. Livestock and planting material will be procured by farmers fromGovernment farms and nurseries, or from the private sector. Each year of the Project, MAF willprepare lists of potential reputed suppliers and their indicative prices, for each type of goodswhich would be made available to all farmers participating in the MGP. Farmers will procure thegoods under direct contracting procedures, from the supplier/s of their choice from the MAFlists. Each such goods contract is estimated to cost about less than US$3,000. These procedureswill be detailed in the PIM. The Small Business Enterprise Centre (SBEC), a not-for-profitentity, will be assisting farmers to develop and implement their business plans, which willinclude a simple procurement plan. The project will finance equipment and technical support to

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SBEC to carry out its functions under the project. The Procurement Officer (MGP) will carry outrandom procurement checks under the MGP, in coordination with SBEC.

43. Non-Consulting Services. Non-consulting services include the hiring of media servicesand event organizers for information and education campaigns. Such services will be procuredunder Shopping procedures, or Direct Contracting when more than one service provider is notavailable but subject to the Bank's prior review.

44. Consultant Services. Consultant services include individual consultants hired for theProject Coordination Group (PCG) along with expert services relating to MAF regulatory andextension functions, crop and livestock production, marketing and hygienic livestock slaughter.A firm to be hired to provide related expert services under a single consultancy will be selectedunder Quality & Cost-Based Selection (QCBS) procedures. For services estimated to cost lessthan US$100,000 equivalent per contract, short lists may entirely comprise national consultants(firms registered or incorporated in the country). Individual consultants will be selected inaccordance with section V of the Bank's Consultant Guidelines, and may be single-sourced inaccordance with paragraph 5.6.

45. Operating Costs. Activities relating to managing the project, including staff travel andoffce utilities, and supporting project operations (including project-related trial operations), willbe financed under the project, and implemented in accordance with existing governmentprescribed limits and procedures acceptable to the Bank.

46. Retroactive Financing. Advance procurement activities, in the aggregate of US$100,000,have been initiated and will be eligible for reimbursement under retroactive financing. Theseinclude selection of key individual consultants for the Project Coordination Group, drafting oflivestock slaughter legislation, undertaking the Cattle Census, and procurement of offcefacilities for the PCG. These individual contracts will be eligible for reimbursement underretroactive financing. All such procurement, including advertising, shall be carried out inaccordance with the Bank's Guidelines in order for the contracts to be eligible for Bankfinancing, and will be subject to prior review by the Bank.

47. Procurement Plan. The initial Procurement Plan (PP) was finalized during appraisal, withprocurement methods and activities subject to prior review identified, based on the agreedprocurement and prior review thresholds. The finalized plan and updates will be published on theBank's website, and on the MOF/MAF website. A summarized procurement plan is provided inTable 2 below.

TABLE 2: SUMMARIZED PROCUREMENT PLAN

Estiated No. of Review by Bank Planned Start ofPackage type Total Cost pakgs (ro/PstAcinDe

(US$ mln) pakgs (ro/PotAcinDe

Works procured under ICB 0.5 1 Prior review. 4/15/20 14

Works procured under NCB 0.7 8 Prior review first 3 pkgs. 4/15/2012

Works procured under Shopping 0.1 4 Prior review first 2 pkgs. 4/15/2012

36

Goods procured under ICB 0.7 3 All Prior review. 4/15/20 12

Goods procured under NCB 0.4 4 Prior review first 3 pkgs. 2/15/2012

Goods procured under Shopping 0.6 50 Prior review first 2 pkgs. 2/15/2012

Liesoc pocre ude Dret 0.4 6 All prior review. 8/15/20 12ContractingNon-consulting services under 0.5 20 Prior review first two pkgs. 2/15/2012Shopping (campaigns)

Consulting firms 2.0 5 Prior review >US$0.1mln 2/15/2011

Prior review >US$0.05Consulting individual consultants 2.1 20 mln; & all long-term, legal 12/15/2011

& procurement.

Single-source selection 0.04 1 All prior review. 12/15/2011

Environmental and Social (including safeguards)

Social Issues

48. Three safeguard policies have been taken into consideration from a social perspective:

(a) OP/BP 4.10 Indigenous Peoples;

(b) OP/BP 4.11 Physical Cultural Resources; and

(c) OP/BP 4.12 Involuntary Resettlement.

49. Screening for Indigenous Peoples: The ethnic structure in Samoa is predominantly ethnicSamoan (92.60%) with a minority of Europeans and biracial European/Polynesian. It wasconfirmed that there are no separate indigenous peoples in Samoa and therefore this policy is nottriggered.

50. Screening for Physical Cultural Resources: The project would not finance any activitiesthat would have an impact on physical cultural resources; and screening procedures incorporatedwithin the ESMF exclude all demand-driven subprojects likely to have this impact. Thereforethis policy is not triggered.

51. Screening for Involuntary Resettlement: There will not be involuntary land acquisition,involuntary resettlement or destruction of physical assets under the project. Any project activitiesinvolving involuntary land acquisition will be excluded and this will be specified in both theESMF and the COEP (which in turn will be mentioned in a legal covenant).

52. To enhance the inclusiveness of the project and ensure no potential beneficiaries areexcluded, rural households would be actively encouraged to participate in the project through amass media campaign initiated soon after implementation begins. This would be followed by aseries of structured workshops, following fa'a Samoa protocols, with a broad range ofparticipants. During these workshops, all aspects of the project would be explained in detail,including the beneficiary eligibility criteria and requirements for participation in the project. Arange of producer association models would be supported under the project, including one based

37

on Village Development Councils, to ensure all social groupings are covered by the project.Monitoring and evaluation of the project would address specific social indicators.

53. In general, there are no social issues that are likely to adversely affect the project becauseall farming households would have the opportunity to benefit from the project; traditional rightsor entitlements are not affected; and there would be no conflicting demand on resources. Thereare no adverse effects anticipated from the project. One risk might be that participatinghouseholds over commit themselves financially, but implementation arrangements recognize thisand mitigation arrangements would be put in place to avert this problem, including pre-investment training and extensive follow-up programs addressing technical and business issues.

Environmental Issues

54. Two environment safeguard policies are triggered by the project: OP/BP 4.01 onEnvironmental Assessment and OP 4.09 on Pest Management. An Environment and SocialManagement Framework (ESMF) has been prepared in accordance with the Samoa NationalEnvironmental Act, and applicable World Bank safeguards policies and procedures. The ESMFanalyses the positive and negative impacts of the different types of sub-projects that will befinanced. It also sets out the principles, procedures and guidelines for screening environmentaland social impacts of individual sub-projects that will be identified and implemented duringproject implementation, mitigation measures, implementation arrangements, the monitoring planand provisions for training and capacity building. A separate code of environmental practice wasalso prepared for the construction and operation of the abattoir. The COEP also serves as thesubproject environmental management plan or EMP for the abattoir.

55. Potential Environmental Impacts and Mitigation Measures: The results of the ESMFindicate that, in general, the proposed Project would have minimal negative environmentalimpacts. By implementing recommended mitigation measures presented in the ESMF, theoverall environmental impacts of the project should be positive.

56. The potential negative impacts on the environment during implementation would betemporal and of low magnitude. Potential negative impacts could include increased use of agro-chemicals for crop production activities; potential increase in soil erosion due to rock removalactivities associated with fruit and vegetable production, especially on sloping lands; andcontamination/pollution of surface and groundwater due to increased nutrient application orimproper livestock waste disposal. The identified impacts are minor and short term and could beminimized or eliminated by implementation of mitigation measures proposed in the ESMF.Among the sub-projects, the construction of the proposed abattoir and waste generated during itsoperation would have some environmental impacts if the wastes are not managed properly.Effective waste management facilities such as wastewater treatment would be constructed as partof the abattoir. The COEP/EMP spells out the measures that need to be followed for the design,construction and operation of the abattoir. Mitigation measures specified in the COEP/EMPwould focus on control of impact levels to minimize problems from odors and animal waste.Waste disposal from the field slaughter service would be by deep burial on site with appropriatesite selection and waste disposal procedures. An Integrated Pest Management (IPM)Plan, including measures to strengthen the institutional capacity of MAF to promote the use ofIPM in project areas has been prepared and is part of the ESMF.

38

57. The potential transmission of pathogens, antibiotics and their resistant strains fromlivestock to humans under the project may pose a health risk. To minimize this risk, the ESMFrequires that livestock farmers properly manage manure, including composting before it is usedon cropland, or before disposal. This is especially true if animals, especially pigs, are confined tosheds. It is expected that any health risks and the potential of disease transmission incidence canbe greatly reduced through implementation of these measures.

58. The environmental and social benefits of the project far outweigh the negative impacts.The introduction of better soil fertility management and integrated pest management under thefruit and vegetable component, and the introduction of high yielding livestock breeds, pastureimprovement, and improvement of animal feed quality under the livestock component of theproject are expected to generate positive social and environmental impacts.

59. Design, review and approval procedures: All investments supported under the Projectwill need to comply with national and local environmental requirements and World Banksafeguards policies (these are detailed in the ESMF). A screening checklist has been developedas an annex to the ESMF to be used for the social and environmental screening of each sub-project. Where applicable, an EMP or a separate EIA (although based on the screening, it ishighly likely that an EIA would only be required for the construction and operation of theabattoir in Upolu) would be prepared and approved following domestic approval procedures.

60. Public Consultation and Information Disclosure. The proposed project has gainedstrong support from farmer associations and individual livestock and fruit and vegetableproducers and government authorities in both Upolu and Savai'i. During preparation publicconsultations were conducted included meetings with local residents, communities, localgovernment representatives and non-governmental-organizations, including women's groups.The ESMF has been disclosed in the Bank's InfoShop. The ESMF has also been disclosed locallyin the local language and has been made available on MAF's website.

61. Capacity of safeguards implementation. The current institutional capacity of MAFstaff to implement most of the measures outlined in the ESMF is considered to be weak,particularly due to lack of staff with a background in natural resource management, soil science,and social sciences. A full-time environmental and social management officer (ESMO) will berecruited in the Project Coordination Group and will be responsible for overseeing the social andenvironmental screening, preparation of EMPs, and monitoring implementation of these plans.There is also provision for part-time TA to the PCG on social and environmental management.The TA will support the capacity building of the MAF in implementing the ESMF and preparingand implementing Integrated Pest Management Plans.

62. The main agency responsible for environmental protection in Samoa is the Planning andUrban Management Agency (PUMA), which is the regulatory agency within the Ministry ofNatural Resources, Environment, and Meteorology (MNREM). The Ministry of NaturalResources, Environment and Meteorology (MNREM) is a well-organized agency with goodexperience in environmental impact assessment and environmental management plans, and isfamiliar with Bank environmental safeguards. The ESMO would be trained and accredited byPUMA so that they can review and approve/decline the proposed sub-projects based on the

39

environmental and social screening and send the completed reports to PUMA on a biannual basis

for review.

Monitoring & Evaluation

63. The project M&E system will track the project Results Framework indicators to assessoverall project performance. It will also track environmental and social indicators to assess theeffectiveness of environmental and social mitigation measures. The PCG will have overallresponsibility for M&E and related reporting requirements, and provide periodic monitoring dataon project activities. MAF's Policy and Planning Division is responsible for monitoring theAgriculture Sector Plan performance indicators and has an existing Management InformationSystem (MIS). The existing MIS would be adapted to enable Project specific M&E data to beintegrated into the existing system. A framework for project M&E would be established atproject inception with the assistance of appropriate technical assistance. A full-time M&E officerwill be recruited and will be a member of the PCG. GIS information will be collected on thelocation of individual farms where project activities are being implemented and this informationwill be analyzed together with existing soil and land-use maps to monitor land use changes.

64. Data collection would be conducted at the following stages: (i) project inception, as partof a combined cattle census and baseline survey, to assign initial values to project indicators andfacilitate planning of the hygienic field slaughter services; (ii) annual surveys of supermarkets,hotels and restaurants to assess the volumes of locally sourced livestock products and fruits andvegetables being sold; (ii) mid-course of project implementation, to update measurement ofresults indicators for the Mid-term Review, through a first repeater survey; and (iii) at projectcompletion, to assess the final project results and impacts, through a second repeater survey. Thedata collected would be gender-disaggregated and include relevant environmental and socialdata. Project data would be summarized on a semester basis, and included in the semi-annualprogress reports.

65. Monitoring and evaluation for the MGP, including regular monitoring of milestones andprogress with implementing grant-funded activities, will be undertaken jointly by MAF's PCG,the APHD and the Crops Division together with officers from SBEC and the DBS. Separatebaseline data would be collected for each participant in the MGP and annual beneficiary surveyswould be undertaken to gauge farmer perceptions of the effectiveness of the applied research andextension activities promoted by the project. Approximately US$ 500,000 has been allocated forspecific M&E activities. In addition the project will support incremental staff in SBEC.

40

Annex 4: Operational Risk Assessment Framework (ORAF)

Samoa: Samoa Agriculture Competitiveness Enhancement Project (P115351)

Stakeholder RiskRaigMdrt

Description: Risk Management:

Despite improvements in productivity and the quality of Work with farmers and buyers to ensure market linkages work well and conduct campaigns todomestically produced fruit and vegetable and livestock actively promote consumption of domestically produced quality meat and fruit/vegetables.products, major domestic buyers (including hotels, restaurants Rs:Cin tg:Ipeetto uand supermarkets) continue to import rather than buy locally.Dae

CapacityRaigHh


.A full-time matching grants officer will be recruited in the Project Coordination Group (PCG)Implmenatin o theMathin Grnts rogam MGP is and will be responsible for overall coordination and oversight of all MGP activities.

delayed due to poor coordination between MAF, SmallBusiness Enterprise Center (SBEC), and the Development Resp: Client Stage: Implementation Due 30-Apr-2012 Status: Not Yet DueBank of Samoa (DBS), and inadequate oversight. MAF lacks Date:procurement and financial management capacity and Risk Management:experience with World Bank funded projects thereby delayingimplementation. MAF advisory staff are unable to implement A Project Coordination Group (PCG) will be set up, comprising seven full time experienced staffProject activities in a timely manner leading to implementation including a Project Coordinator, 2 Procurement Officers (one to oversee procurement under thedelays. matching grants program) , a Financial Management Officer. Environmental and Social

Management Officer, Matching Grants Officer and an M&E Officer. Additional short-term TAwill be financed to ensure adequate technical capacity in the PCG. The Project Coordinator andthe Principal Procurement Officer will be recruited by February 29, 2012 under retroactivefinancing and undertake advance procurement actions prior to Project effectiveness. Intensiveprocurement and FM implementation support missions and training are planned to support thePCG, particularly in the first six months following effectiveness. Capacity building support willalso be provided by the MOF under its PFM reforms program.

Resp: Client Stage: Implementation Due 30-Mar-20 12 Status: Not Yet DueDate:

41

Risk Management:

A skill-gap analysis and intensive initial training is planned to ensure that MAF advisorycapacity is strengthened and that staff are able to carry out Project activities.

Resp: Client Stage: Implementation Due 31-Aug-20 12 Status: Not Yet DueDate:

Design Rating High


Some aspects of the Project, particularly activities related to A significant amount of well targeted experienced Technical Assistance (TA) will be financed toimportation of live breeding stock, the mobile hygienic ensure there is sufficient capacity to implement these activities and upgrade the skills of Animalslaughter services and the construction of the abattoir in Upolu Production and Health Division (APHD). In addition, proposed new senior staff focusing onwill be technically and managerially challenging, given the these activities will need to be recruited in APHD from the start of the project.current experience of MAF and particularly AnimalProduction and Health Division (APHD) to undertake these Note: TA will be recruited prior to importation of the breeding stock and commencement ofactivities. hygienic field slaughter activities.

Resp: Client Stage: Implementation Due Status: Not Yet DueDate:

Social and Environmental Rating Moderate


All farm enterprise investments, which are small in scale, and will be undertaken at theIntesifed aricltual ativtie coud hve ome egaive community or individual household level, will be screened for environmental and social impacts.envionmnta orsocil ipacs. oor ast maageent Only those farm investments posing minimal risk would be approved for financing through therelaed o te aattir oul pos anenvronentl rsk. Matching Grants Program. Integrated Pest Management will be promoted and supported under

the Project. It has been noted that there are no issues on involuntary resettlement since theabattoir will be constructed on Government land. The safeguards policy on Indigenous Peoplesdoes not apply to Samoa because Samoans consider themselves coming from a commonethnicity.

Note: Due date is prior to the submission of the matching grants program (MGP) proposals.

Resp: Client Stage: Implementation Due Status: Not Yet DueDate:

Risk Management:

An environmental and social management framework is being developed detailing the processand procedures for screening environmental and social impacts of agricultural activities, themeasures to address the impacts, if any; the pest management plan; and institutionalarrangements and capacity building, among others. In addition, an Environmental Code ofPractice was developed for the construction and operation and maintenance of the abattoir to be

42

constructed on Upolu, which will be located on Government-owned land that is free of anysettlers. The construction of the abattoir will commence in the 4th year of projectimplementation.

Note: Due date is prior to the submission of the matching grants program (MGP) proposals andprior to issuing tender documents for the abattoir construction.

Resp: Client Stage: Implementation Due Status: Not Yet Due

Date:

Program and Donor Rating Low


There are no identified program and donor risks. On thecontrary, the only significant donor activity in the agriculture Sae u ttssector is the positive demonstration effect from the Sino- Rs:Date:Samoan Agriculture Technical Cooperation Project which'complements activities planned under SACEP.

Delivery Monitoring and Sustainability Rating High


Full-time dedicated staff are being recruited into the PCG to Key staff including the Project Coordinator and Principal Procurement Officer will be recruitedensure there is adequate capacity and experience to implement prior to effectiveness and provided adequate training. The Project Coordinator, who will alsoand monitor project activities. The main risk is related to lack serve as the Agriculture Sector Coordinator, will participate in the monthly consultations forof familiarity with IDA processes and procedures. Sector Coordinators organized under the Public Finance Reform Program in Samoa.

Participation in these consultations will enable the Project Coordinator to gain greater familiaritywith IDA processes and procedures by interacting with Coordinators of other IDA-fundedprojects in Samoa.

Resp: Client Stage: Implementation Due 28-Feb-2012 Status: Not Yet DueDate:

Overall Risk Rating Rating High

Comments: The overall implementation risk is rated as High. T he high risk rating stems from the weak implementation capacity of MAF and the lack ofexperience with implementing an IDA-funded project. There is a shortage of skilled technical and managerial staff in the sector and the existing staffs in MAF donot have all the necessary skills required to implement the full range of project activities. The establishment of a full-time PCG strengthened by selectiveinternational technical assistance is intended to partially mitigate this risk. Project activities will be implemented in a phased manner to ensure that the requisiteskills and arrangements are in place prior to proceeding with more technically and managerially complex activities such as the design, construction and operationof the abattoir in Upolu. Further mitigation will be through the substantial capacity development and training programs. Significant investments will be made inupgrading the institutional capacity of MAF and broadening the skill-base of MAF staff.

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Annex 5: Implementation Support Plan


Implementation Strategy

1. The Bank's implementation support strategy for the project reflects the keyimplementation risks identified in the ORAF. Risks considered to be "high" relate toimplementing agency capacity; design; and delivery monitoring and sustainability. Theproposed mitigation measures to contain these risks are integrated into various project designfeatures and targeted technical assistance and have been set out in Annex 3.

2. The implementation capacity risk stems from the shortage of skilled technical andmanagerial staff in the agricultural sector and the fact that the Ministry of Agriculture andFisheries (MAF) has no recent experience with implementing an IDA project. The establishmentof a full-time Project Coordination Group (staffed by national consultants) strengthened byselective international technical assistance is intended to mitigate the implementation capacityrisk. The Bank task team has provided substantial support during project preparation tocompensate for the lack of experience and capacity in MAF, and will continue to do so duringproject implementation as elaborated below in the Implementation Support Plan.

3. Project activities will be implemented in a phased manner to ensure that the requisiteskills and arrangements are in place prior to proceeding with more technically and manageriallycomplex activities such as the design, construction and operation of the abattoir in Upolu.Significant investments will be made in upgrading the institutional capacity of MAF andbroadening the skill-base of MAF staff.

4. Overall responsibility for project implementation and monitoring lies with MAF. AProject Implementation Manual (PIM) has been prepared and outlines the processes to befollowed by MAF, SBEC and others agencies and institutions involved in implementing projectactivities. The PIM includes detailed information on implementation arrangements and activities,fiduciary aspects (including procurement and financial management), safeguards,implementation arrangements for the matching grant program, draft terms of reference for allstaff of the PCG and key technical assistance; and the monitoring and evaluation arrangements.

Implementation Support Plan

5. The day-to-day operations of the project will be supported by the task team in Sydneywho will provide regular advice and guidance on technical matters as well as procurement andfinancial management to MAF, SBEC and other entities involved in implementing the project.Safeguards support would be provided by staff in the Bank's Manila country office andadditional support would be provided from headquarters in Washington DC, as needed. TheBank will hire specialized consultants to provide additional support on technical issues, andreview technical documents. Formal missions will be conducted three times in the first year ofimplementation and then at least semi-annually thereafter. There will also be regular follow-upthrough the World Bank Liaison Office in Samoa.

44

6. The following support is anticipated to be required to ensure due diligence and providetechnical inputs:

(a) Technical inputs. For livestock-related activities technical inputs will be needed forreviewing the draft Slaughter and Meat Supply Act; finalizing arrangements for theimportation of livestock; and reviewing implementation of extension activities, trainingprograms, institutional strengthening and farm enterprise investments. Similarly for fruitand vegetable activities, technical inputs will be required for reviewing implementationof extension activities, training programs, institutional strengthening and farm enterpriseinvestments. For both livestock and fruit and vegetable activities, inputs would also berequired for technical reviews of procurement documents. Engineering inputs arerequired to review construction plans, bid documents, and bid evaluation reports,particularly for the abattoir but also for the various renovations to buildings and farmfacilities. During construction and commissioning, technical supervision will be providedto ensure that technical contractual obligations are met.

(b) Fiduciary requirements and inputs. Training will be provided by the Bank's financialmanagement specialist and the procurement specialist (both based in Sydney) before thecommencement of project implementation. The team will also provide regular support tothe financial management and procurement officers in the PCG. Supervision of financialmanagement and procurement matters will be carried out semi-annually as part of theproject supervision plan.

(c) Social and Environmental Safeguards. The environmental safeguards specialist willensure that the environmental procedures followed are in line with Bank's policies andthose procedures laid out in the ESMF and COEP. As needed, the environmentalspecialist, in consultation with the Task Team Leader, will involve other specialists toprovide guidance on environmental matters and environmental safeguards. Specialisttechnical advice will be needed to review the abattoir design.

(d) Financial/economic. A sample of approved business plans for farm enterpriseinvestments will be reviewed from both a financial and technical perspective. Thesereviews will be undertaken periodically and will be combined with regular supervisionmissions.

7. The core staff skill mix required is summarized below and the information provided is onan annual basis. In addition to the matrix presented below, specialists will be drawn in to supportproject implementation.

45

Focus areas for implementation support:Time Focus Skills Needed Resource EstimateFirst twelve months * Review of draft Slaughter LietcSpiast$5,0

and Meat Supply Act andarrangements for importation AgiutrlSeaisof livestock andestablishment of the field InrsucreEgerslaughter service

* Review of identification and EvrnetlSfgadtrialing of improved plantingmaterialSoilsfgad

* Review of institutionalstrengthening and training Leaactivities

* Training on environmental Prcemnsafeguards from MAF andSBEC staff FnnilMngmn

* Engineering inputs fortechnical review ofComnctnsSeiltprocurement documentsrelated to renovations of Ecnmsbuildings and farm facilities

* Procurement and Financial MoirngadElutnManagement

* Review of communications,outreach and trainingprograms related to thematching grant program

* Overall implementation

12-8 mnth Liestck:Revewig oeraion Livestock Specialist $150,000

invetmens; feld laugterAgricultural Specialist

stregtheingand xtenionInfrastructure Engineer

Frui an Vegtabe: Rvieing Environmental Safeguards

insttutinalstregthningand Social safeguards

reltedto xpots nd rgaics Legal

Procurement

Financial Management

Communications Specialist

Economist

Mo4oin6n vauto

Skills Mix Required: ___________________

Time Core Skills Needed Number of Number of Trips CommentsStaff Weeks Annually

_________________________________Per Year ____________

First twelve monthsTask Team Leader 12 3 Sydney basedFinancial Management 4 2 Sydney basedSpecialistProcurement Specialist 4 3 Sydney basedSafeguards Specialist 4 2 Manila based/Environmental SafeguardsSafeguards Specialist /Social 3 1 Manila basedSafeguardsCommunications Specialist 1 As required Sydney basedTechnical Specialists 16 As required ConsultantsLivestock Specialist

Agricultural SpecialistInfrastructure Engineer

_______M&E _____ ________

_________Operations Support 4 As required Sydney based

12-48 monthsTask Team Leader 10 2 trips Sydney basedFinancial Management 2 2 Sydney basedSpecialistProcurement Specialist 3 2 Sydney basedSafeguards Specialist 6 2 Manila based/Environmental SafeguardsSafeguards Specialist /Social 2 1 Manila basedSafeguardsCommunications Specialist 1 As required Sydney basedTechnical Specialists 12-16 As required ConsultantsLivestock Specialist

Agricultural SpecialistInfrastructure Engineer

_______M&E _____ ________

_________Operations Support 4 As required Sydney based

47

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