Project Administration Manual Project Number: 40534-01 Loan Number: {LXXXX } 3 June 2010

The People’s Republic of Bangladesh: Second Crop Diversification Project

Contents ABBREVIATIONS 1 I. PROJECT DESCRIPTION 2

A. Summary of Project Rationale, Location and Beneficiaries 2 B. Impact and Outcome 3 C. Outputs 3 D. Special Features 5

II. IMPLEMENTATION PLANS 6 A. Project Readiness Activities 6 B. Overall Project Implementation Plan 7 C. Implementation Details 9 D. Credit Line Implementation 18

III. PROJECT MANAGEMENT ARRANGEMENTS 22 A. Project Stakeholders – Roles and Responsibilities 22 B. Key Persons Involved in Implementation 24 C. Project Organization Structure 25 D. Project Staffing 26 E. Gender Action Plan 27

IV. COSTS AND FINANCING 29 A. Detailed Cost Tables 30 B. Cost Estimates by Expenditure Category 38 C. Expenditure Accounts by Financier 39 D. Expenditure Accounts by Components 40 E. Expenditure Accounts by Year 42 F. Allocation and Withdrawal of Loan Proceeds 43 G. Contract and Disbursement S-curve 44 H. Fund Flow Diagram 45

V. FINANCIAL MANAGEMENT 46 A. Financial Management Assessment 46 B. Disbursement 46 C. Accounting 48 D. Auditing 48

VI. PROCUREMENT AND CONSULTING SERVICES 49 A. Advance Contracting and Retroactive Financing 49 B. Procurement of Goods, Works and Consulting Services 49 C. Procurement Plan 51 D. Consultant's Terms of Reference 53

VII. SAFEGUARDS 66 VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION 67 A. Project Design and Monitoring Framework 67 B. Monitoring 70 C. Evaluation 71

D. Reporting 72 E. Stakeholder Communication Strategy 72

IX. ANTICORRUPTION POLICY 74 X. ACCOUNTABILITY MECHANISM 75 XI. RECORD OF PAM CHANGES 76 APPENDIXES 1. Indigenous People's Development Framework 2. Initial Environmental Examination, Environmental Assessment and Review Procedures

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Department of Agricultural Extension (DAE) and Bangladesh Bank are wholly responsible for the implementation of the ADB financed Second Crop Diversification Project, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by DAE and Bangladesh Bank of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan Agreement and Project Agreement. Such agreements shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement and Project Agreement, the provisions of the Loan Agreement and Project Agreement shall prevail.

After ADB Board approval of the Project's report and recommendations of the President, changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

Abbreviations

ADB = Asian Development Bank DAE = Department of Agricultural Extension GAP = gender action plan HDTC = horticulture development training center HVC = high-value crop LGED = Local Government Engineering Department MFI = microfinance institution NCDP = Northwest Crop Diversification Project NGO = nongovernment organization OFSSI = on-farm, small-scale infrastructure PAM = project administration manual PIU = project implementation unit PMU = project management unit PPMS = project performance management system SAAO = sub-assistant agriculture officer SCDP = Second Crop Diversification Project SOE = statement of expenditure SPS = Safeguard Policy Statement TOT = training of trainers

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I. PROJECT DESCRIPTION

A. Summary of Project Rationale, Location and Beneficiaries

1. Bangladesh is one of the world's poorest countries, and is at high risk from climate change particularly due to its low lying position along the Bay of Bengal. Regional inequality exists between the east and west of the country, with the west showing a poverty incidence that is 14 percentage points higher than in the east.1 Land and its cultivation is Bangladesh’s most basic resource with over 75% of the population directly or indirectly engaged in agriculture. Rice is the dominant crop contributing most to self sufficiency in food grains and hence food security. However, the emphasis placed on rice production has resulted in increased dependency on imported foodstuffs, particularly fruit, which remains unaffordable to many poor consumers. Therefore, increase in high-value crop (HVC)2 production including fruit is of critical importance for reducing imports and enhancing affordable and varied nutritious diets for the poor. Fertile, well-drained soils, abundant supplies of water for irrigation, a varied climate that favors a range of crops, and low daily wage rates all contribute to the comparative advantage for growing HVCs in Bangladesh. 2. ADB is assisting inclusive economic growth and poverty alleviation in Bangladesh through its strategic priorities as identified in the country partnership strategy for 2006–2010.3 The Project is a follow on to the successful ADB-assisted Northwest Crop Diversification Project4 (NCDP), which was recently completed in June 2009 and substantially raised the incomes of small and marginal farmers of northwest region. The Project will build on the successful activities of NCDP and expand into new areas, especially the southwest of Bangladesh. The proposed Project will complement the support provided under NCDP, particularly through promoting value addition to HVCs, strengthening value chain integration by developing backward and forward linkages between farmers and consumers, and including service provision by private sector agribusinesses and technically and financially qualified microfinance institutions (MFIs) and wholesale banks. Climate resilient crop varieties and cropping patterns and technology will be tested and disseminated to help farmers adapt to climate change. 3. The project area, comprising (i) 43 upazilas in 18 districts of Barisal, Dhaka, and Khulna divisions in the southwest, and (ii) 9 upazilas in 9 districts of Rajshahi and Rangpur divisions in the northwest,5 contains some of the country's poorest people and least economically developed and most climate vulnerable areas. The regional focus of the Project helps address the growing east/west divide in the incidence of poverty and economic development of the country. The direct beneficiaries of the Project will be marginal, small and medium farmers with land holdings up to 3 hectares. Landless people will also benefit through generated employment opportunities in rural areas.

1 The poverty headcount ratio is 47%–54% in western Bangladesh, and 36%–39% in eastern Bangladesh. 2 HVCs are defined as agricultural crops which will give a higher rate of return per hectare than high yielding winter

(boro) rice. 3 ADB. 2005. Country Strategy and Program (2006-2010): Bangladesh. Manila. 4 ADB. 2000. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

People's Republic of Bangladesh for the Northwest Crop Diversification Project. Manila. 5 NCDP covers the northwest region only. Though the Project covers the same districts as NCDP in the northwest

region, the Project’s targeted upazilas are different from the NCDP upazilas.

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B. Impact and Outcome 4. The project impact will be increased rural income in 27 districts of the southwest and northwest of Bangladesh. The project outcome will be improved efficiency and value addition of HVC production. C. Outputs 5. Project outputs include (i) increased HVC production and commercialization; (ii) reduced HVC postharvest losses, improved product quality and value addition, and enhanced market efficiency; (iii) enhanced capacity of public sector institutions and participating partners supporting farmers to increase their incomes; and (iv) increased participation of women in commercial agricultural activities. The outputs will be delivered through five components.

1. HVC Production Support 6. Project farmers will be provided with the latest HVC production technology using lessons learned in the NCDP and through close consultation with farmers. Extension will be through institutional and field based training, demonstration plots and cross-field learning, dissemination of brochures, motivational tours, agricultural fairs, and ongoing extension services provided by the Department of Agricultural Extension (DAE). Technologies will include integrated pest management techniques; reduced and zero tillage practices; green and organic manuring; controlled environment agricultural technology; and mechanization for cultivation, harvesting and post harvest handling. High quality planting material will be supplied to farmers from the horticulture development training center (HDTC)6 nurseries. Women will be trained, equally with men, and have equal access to all project benefits. 7. Focus will be given to crops with a proven market demand, high profitability per hectare, and potential for commercialization in comparison to high yielding boro rice. A range of high value fruits, vegetable, pulses and spices will be supported as well as cut flowers, potted plants and foliage production, and value addition to coconuts, such as coir and virgin coconut oil production. Profitable farming systems involving inter-cropping will be promoted. The Project will also pilot test climate resilient drought, flood and salinity tolerant varieties of crops to facilitate adaptation by HVC farmers. These activities will focus on pilot locations in drought prone areas in the northwest, and cyclone, flood surge, and salinity vulnerable areas in the southwest, following a vulnerability assessment to develop effective adaptation options and strategies.

2. Value Addition Support 8. To take advantage of value addition options and improve marketing efficiency, marginal, small and medium farmers must aggregate their produce as the small individual farmer does not have the necessary economy of scale, capacity or knowledge to operate beyond basic farm gate level. The Project will provide farmers and farmer community groups7 with training and awareness-raising in value addition options to improve their production and marketing decisions, increase their marketing efficiency, and raise profitability.

6 The Project will rehabilitate and upgrade 6 HDTCs in the southwest of Bangladesh under component 4. HDTCs in

the northwest were upgraded and rehabilitated under NCDP. 7 Existing farmer community groups, including those already operating under component 1 and those under other

donor projects with the same beneficiaries as the Project, can be supported under this component.

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9. To reduce post harvest losses and improve produce quality, on a cost-sharing basis, the project will support farmer community investment in low cost on-farm, small-scale infrastructure (OFSSI), which may include, (i) on (or near) farm collection and post harvest handling centers, including washing, drying, sorting, grading, and packaging facilities; and (ii) small scale cool, cold, dry storage, and market related transport facilities. Farmer communities, supported by DAE and contracted service providers, will be responsible for the identification of the investment, preparing and submitting a proposal to the project management unit (PMU) for evaluation, provision of land, and operation and maintenance of OFSSI facilities. The Local Government Engineering Department (LGED), under a memorandum of understanding, will assist the PMU in the evaluation of proposals and contractors who will be hired through a PMU-led tendering process to carry out the work. The construction works through to completion will be supervised by LGED field staff.

3. Credit Support 10. Funds required for HVC diversification exceed the savings of most small farmers,8 and therefore access to credit is needed. The Project will provide credit to around 175,000 HVC farmers through financially sound MFIs experienced in agriculture credit, following a similar and successful partnership approach demonstrated under NCDP and ADP. Credit phasing will follow and be linked to DAE farmer training and the establishment of demonstration plots.

4. Institutional Strengthening 11. Trainers and staff in DAE and participating MFIs, at upazila and district levels, will be trained so that they can deliver training and extension services in HVC production and value addition to farmers. Department of Agricultural Marketing staff will also participate in the value addition training. Training will also cover gender awareness and environmental issues, including adaptation of farming systems to climate change. 12. Following surveys and needs assessments, DAE district and upazila offices and HDTCs, primarily in the southwest region, will be rehabilitated and equipped. Vehicles will be provided, mainly at upazila level, to facilitate communication between project implementers and farmers, and to transport planting and other necessary materials for farmer field days and demonstrations. The Project will also undertake a feasibility study on setting up a quality standards certification system for fruits and vegetables at farm level to facilitate access to domestic retail markets, including supermarkets, and to reduce food contamination.

5. Project Implementation Support 13. A PMU and 2 regional project implementation units (PIUs) will provide implementation support, consisting of staff, office facilities and equipment, transport,9 consulting services, and liaison and development coordination with other ministries and donors. One community facilitator for each upazila will be hired by PMU to (i) assist DAE staff in the identification of

8 Subborrowers rarely have more than Tk1,500 in savings. HVC investment for 0.2 hectare, the average land size

available for HVCs for small and medium farmers, requires Tk12,000 on average. 9 To undertake project activities efficiently at the field level, 35 double cabin pickups are required for 35 upazilas to

enable DAE staff to transport materials for the establishment and maintenance of demonstration plots and carrying materials for farmer training and field days. Two jeeps for the PMU and one jeep in each PIU are needed for supervision and monitoring project activities. 38 motorcycles are needed for 38 upazila where road condition is substandard to allow field staff to provide extension services to farmers. Two further motorcycles, one in each PIU will be purchased to enable PIU staff to also visit locations with poor road conditions.

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communities and mobilization and training of farmers interested in project participation, (ii) assist with gender awareness activities, (iii) liaise with MFIs, and (iv) assist in promoting value addition activities within communities. Baseline surveys, and regular monitoring and evaluation will be undertaken. PMU will establish and maintain a project website to disclose information about project activities, including procurement procedures and results. LGED will appoint a project coordinator to liaise with DAE on OFSSI activities. D. Special Features 14. Geographic Targeting. The Project addresses the east/west poverty divide by focusing on the southwest and northwest regions that are the poorest and least economically developed areas. 15. Climate Change Adaptation. The Project mainstreams climate change issues by adaptation measures through piloted activity to test and disseminate climate resilient cultivars and technology to assist farmers adapt to the negative effects of climate change. 16. Focus on Value Addition. The Project focuses on a core group of HVCs in the horticulture, floriculture, and spices subsectors which have proven market demand, are suitable and acceptable to small and medium farmers, and have a high profitability per hectare. The Project focuses on the seamless integration of agricultural production and value addition and marketing activities to support forward and backward linkages. 17. Socially Inclusive Participation. The Project includes measures to ensure participation of the rural poor and disadvantaged such as marginal and small farmers, and to increase participation of women in all aspects of agricultural production and marketing. The Project integrates technical and financial services to farmers and fosters a strong partnership between DAE, MFIs, and services providers in the field for supporting farmers.

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Months Indicative Activities 1 2 3 4 5 6 Who responsible

Advance contracting actions: starting recruiting consultants

June 2010

DAE

Retroactive financing actions Not applicable

Establish project implementation arrangements

Completed DAE

ADB Board approval June 2010

ADB

Loan signing July 2010

ADB/ERD

Government legal opinion provided July 2010

MLJPA / ERD

Government budget inclusion July 2010

DAE / MOA / MOF

Loan effectiveness July 2010

ADB / ERD

ADB = Asian Development Bank, DAE = Department of Agricultural Extension, ERD = Economic Relations Division, MLJPA = Ministry of Law, Justice and Parliamentary Affairs, MOA = Ministry of Agriculture, MOF = Ministry of Finance.

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B. Overall Project Implementation Plan10

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Component/Activity Implementation

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4Project Start Up Period PSC established PMU and PIUs key staff appointed MFIs selected Agreements and operating arrangements with wholesale banks and MFIs effective Hire of consultants Hire of community facilitators 1. HVC Production Support 1.1 TOT courses for DAE and MFI staff 1.2. Farmer HVC training 1.3. Farmer field days / demonstration plots 1.4. District agriculture fairs 1.5. DAE Dhaka project review workshops 1.6. DAE regional project review workshops 1.7. SAAO district workshops 1.8. SAAO motivational tours 1.9. Lead farmer motivational tours 1.10. DAE field extension supports 1.11. Revision of training programs 2. Value Addition Support 2.1. Identification of communities and groups 2.2. Recruiting service providers 2.3. Awareness raising and training 2.4. Identification and design of OFSSIs 2.5. Submission and evaluation of OFSSIs

10 Based on fiscal year, 1 July – 30 June.

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Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Component/Activity Implementation

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 42.6. Funding and construction of OFSSIs 2.7. OFSSI operation 2.8. Continued field level supports

3. Credit Support 3.1. PMU, wholesale banks, MFIs agreeing credit planning

3.2. Preparing and distributing credit information

3.3. Credit training to farmers

3.4. Credit disbursed to farmers

4. Institutional Strengthening

4.1. DAE and DAM staff training in value addition

4.2. DAE staff training in gender awareness

4.3. Climate change adaptation training to DAE staff

4.4. Gender Action Plan implementation

4.5. Rehabilitating / upgrading DAE district offices

4.6. Upgrading HDTCs in southwest

4.7. Vehicles and equipment procurement and provision

4.8. Food quality standards and certification feasibility study

5. Project Implementation Support 5.1. Promoting and disseminating project information

5.2. Project implementation planning

5.3. Designing and carrying out baseline survey

5.4. Establishing PPMS

5.5. Benefit monitoring and evaluation

5.6. Mid-term review

5.7. Government project completion review DAE = Department of Agricultural Extension, DAM = Department of Agricultural Marketing, HDTC = horticulture development training center, HVC = high-value crop, MFI = microfinance institution, OFSSI = on-farm small-scale infrastructure, PIU = project implementation unit, PMU = project management unit, PPMS = project performance management system, PSC = project steering committee, SAAO = sub-assistant agriculture officer, TOT = training of trainer.

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C. Implementation Details

1. Project Districts and Upazilas 18. The following overall methodology, criteria and rationale were used to determine areas to be covered by the Project:

(i) An assessment and analysis of the agro climatic, agronomic, social, and environmental conditions.

(ii) The extent of poverty and potential for mainstreaming women. (iii) The physical accessibility and infrastructure (particularly roads and transport,

power and water situation). It is important that project beneficiaries are easily accessible.

(iv) The level of risk related to both environmental factors (the negative impact of climate change and susceptibility to natural hazards and catastrophes such as drought proneness, flood surges, cyclones, salinity vulnerability) and law and order and conflict situations. It is important that the areas to be included are not considered too risky by the project’s participatory financial institutions.

(v) The establishment of a short list of key project focus crops based on the results and recommendations of the Northwest Crop Diversification Project (NCDP) with the addition of potential new (non NCDP) high-value crops (HVCs) in the southwest region.

19. The selected project areas include approximately 1.6 million households with a potential 240,000 farmer beneficiaries of HVC production and value addition support. The districts and upazilas included are as follows:

SOUTHWEST NORTHWEST Division Districts Upazilas Division Districts Upazilas DHAKA Faridpur Sadar, Madhukhali, Nagarkanda Rangpur Dinajpur Birampur Gopalganj Muksudpur, Tungipara Lalmonirhat Hatibandha Rajbari Sadar Kurigram Nageswari Madaripur Rajoir, Kalkini Gaibandha Sadullapur Shariatpur Bhedergonj, Jajira RAJSHAHI Bogra Sonatala KHULNA Kushtia Sadar, Mirpur Nawabganj Sadar Jessore Jhikorgachha, Sadar, Monirampur,

Sarsha Rajshahi Godagari

Satkhira Sadar, Debhata Nator Bagatipara Magura Sadar, Sreepur Pabna Pabna Sadar Jhenaidah Harinakunda, Sadar, Kotchandpur,

Maheshpur,

Chuadanga Sadar, Damurhuda, Jibannagar Meherpur Sadar, Mujibnagar Narail Sadar Khulna Daulatpur, Dumuria Bagerhat Sadar, Mollahat, Fakirhat BARISAL Barisal Babuganj, Gournadi, Sadar,

Ujirpur, Agailjhara

Jhalakathi Sadar Pirojpur Nazirpur, Nesarabad (Swarupkathi)

TOTAL 18 43 TOTAL 9 9

2. Potential High-Value Crops 20. The NCDP identified of 33 different crops having higher profitability per hectare than high yielding boro rice varieties, and found 11 crops more prominent and suitable for

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commercialization due to their popularity in terms of area coverage and marketability. Based on the assessment and analysis of the suitability of these crops, and other HVCs more suitable to the southwest region, in terms of the agro climatic, agronomic, social, and environmental conditions pertaining in the project areas, the Project will focus on the following crops that have a proven market demand and potential for commercialization:

Vegetables Spices Fruits Others - Summer Tomato - Brinjal (Egg plant) - Bitter gourd - Pointed gourd - Country bean

- Onions -Garlic (Zero tillage) - Ginger - Chili - Onion seed

- Banana - Litchi - Jujube - Mango - Guava - Papaya

- Maize (relayed with potato)/ mung beans - Coconut - Flowers

Source: Asian Development Bank estimates. 21. The above list is a guide and other crops may be introduced during project implementation if they meet the key criteria of farmer acceptance and need, suitability to the location, enhanced profitability per hectare, and market demand. Each upazila can have its specific HVCs to promote, determined by the most popular and profitable crops in each upazila.

3. Implementation Arrangements for Production Support (Component 1) 22. The overall implementation of this component will be undertaken by the Department of Agricultural Extension (DAE) supported by participating microfinance institutions (MFIs) and service providers.

a. Project Promotion and Training

23. Project promotion and awareness campaigns: The project management unit (PMU), supported by project consultants, will design, plan and coordinate the campaigns. The campaigns will be implemented on a phased program throughout the project area, at union and village level by the project implementation units (PIUs) and DAE district and upazila officers, supported by MFIs and service providers as required. The campaigns should be completed by the end of the first year of the Project. 24. Training of Trainers (TOTs): TOTs will be provided by the international and national consultants, in appropriate disciplines, who will design the course curricula and deliver the training courses which will be coordinated by PMU. Selection of course participants will be undertaken by PMU, under guidance and recommendation of the DAE head office and district offices. Preference will be given to conducting training courses at horticultural development training centers (HDTCs) but other suitable agricultural training facilities, as identified by PMU, will be used when HDTC facilities are unavailable. PMU will coordinate the timing of, and participation in, TOT courses covering HVC production, value addition, gender, environmental, and climate change awareness and adaptation.

b. Project Motivation

25. DAE workshops: PMU will organize and implement workshops, to be held annually in Dhaka and at regional level on project progress towards achieving its objectives, and to discuss any problems of implementation and motivation.

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26. Sub-Assistant Agricultural Officer (SAAO) workshops: PIUs and DAE district and upazila officers will implement workshops, specifically for SAAOs, on project progress towards achieving its objectives, and to discuss any problems of implementation and motivation at field level. Workshops will be held annually in each district covered by the Project. Implementation will be supported by the international and national consultants. 27. SAAO extension tours: PIUs, assisted by PMU agriculture marketing officer, gender officer, and community development and rural credit specialist, will organize and implement tours of project areas specifically for SAAOs to assist them in understanding the needs and motivation of farmer beneficiaries.

c. Farmers Support

28. Community group identification, mobilization and formation: Implementation of this activity, at the outset of the Project, will be driven by participating MFIs and technically qualified service providers, supported by DAE officers at upazila and field level. Surveys of existing community groups will be designed by the community development and rural credit specialist. Implementation will be undertaken at union and village level applying participatory appraisal sessions with farming communities, to establish farmers' needs and motivational requirements to diversify into HVCs. DAE will liaise and coordinate with other complementary donor project management staff (including community coordinators) at upazila and district level. There are many existing community groups, formed under other projects which have the same beneficiaries and operate in the same upazilas. These existing groups, or some of their members with common interests in crop diversification and value addition, should be interested in project participation. Service providers together with SAAOs will also identify individual farmers, within communities, who have a common interest in forming a group for cooperation and coordination on training, credit, agricultural inputs, value addition and marketing, and who need project support and assistance in formation procedures and operation. 29. Farmer training: DAE district and upazila agriculture officers and service providers will implement on-farm and community based training courses for men and women farmers using the curriculum, training materials, and methodology developed at TOT courses. 30. Demonstration plots and field days: SAAOs will implement field training days at planting and harvest times for groups of 40 to 60 farmers, linked to using suitable roadside plots of specific HVCs provided by lead farmers. Guidelines for conducting field days and demonstration plot presentation will have been developed in the TOT courses. 31. Rural credit: Training on rural credit loan application assessment and disbursement under this component will be implemented by participating MFIs. 32. Farmer motivational tours: DAE supported by service providers will organize farmers’ motivational tours to neighboring locations to enable them to learn from examples of successful HVC production techniques. Farmers to be selected for participation in these tours will, primarily, be those that play a lead role in the farming community and who show an innovative approach to HVC production. 33. Agricultural fairs: To promote HVC diversification and commercialization, two agricultural fairs will be held every year from 2011 at district level on a rotational basis. The fairs will be organized by the regional and district offices of DAE, and coordinated by PMU and PIUs.

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d. Climate Change Adaptation 34. The Project will pilot test climate resilient drought, flood and salinity tolerant varieties of crops to facilitate adaptation by the HVC farmers. Activities will focus on pilot locations in drought prone areas in the northwest, and cyclone, flood surge, and salinity vulnerable areas in the southwest, following an vulnerability assessment to develop effective adaptation option and strategies. An important aspect of adaptation strategy will be awareness raising among farmers about climate change vulnerabilities through orientation meetings, demonstrations and farmers’ field days, and motivation of farmers to comprehend the climate change impacts on farming and their adaptation needs. Adaptation options in the growing of any HVC will be practiced at individual household levels, and the overall response portfolio will be community based, which will be facilitated by the agriculture extension staff. Changes in farming practices and methods will be encouraged including zero or no tillage, expansion of kitchen gardens around households, changing planting and harvesting times, promoting crop species suited to drier, flooding and saline conditions, and protecting croplands against increased flooding and saline water intrusion. DAE will also partner with Bangladesh Agriculture Research Institute and other relevant organizations to obtain new climate change adaptation technologies for dissemination to farmers. 35. Actions concerning piloting and disseminating to farmers climate change adaptation options and techniques will be coordinated by PMU. Implementation will take the form of: (i) identification of adaptation options and measures, appropriate to the Project, in terms of agronomic management, water harvesting and exploitation, water use efficiency, alternative crop enterprises including the development of resilient varieties of fruits, vegetables, spices and pulses, and post harvest handling practices; and (ii) identification of pilot areas, new farming techniques and crops.

e. Gender Equity 36. Women will be trained, equally with men, and have equal access to all project benefits, including access to planting materials, technology and credit. Women, being responsible for feeding the family, are particularly affected by climate change due to its potential detrimental effects on household food security. Women will participate fully in awareness raising training, demonstration and field testing of potentially resilient crops. Additionally, they will be encouraged to plant household gardens with climate change resilient food crops.

4. Implementation Arrangements for Value Addition Support (Component 2) 37. DAE will be responsible for the overall administration and supervision of this component that will result in better community awareness of value addition opportunities and OFSSI investments. For effective implementation, DAE will contract service providers, selected from qualified nongovernment organizations (NGOs), agribusinesses, commodity traders, agro-processors, agricultural producers and/or trader associations, and research institutions to deliver technical services under this component.

a. Section of Service Providers 38. Under a bidding process, PMU will advertise and request expressions of interest from service providers who can apply to be implementers of all, or part of activities under component 2, in one or more project upazilas.

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39. Selection criteria for service providers. Service providers will need to meet the following criteria:

(i) have proven experience of not less than three years in HVC production, post harvest handling, agricultural marketing and value chain integration;

(ii) have worked with farmers to achieve increased value of production output; (iii) have a cadre of skilled staff able to carry out the proposed work; (iv) have a legal status and recognition that allows the service provider to operate as

proposed; (v) have at least three years experience in working with not less than 10

communities and have achieved the respect and trust of the communities in which they have worked;

(vi) have the ability, with the participation of community investors, to carry out technical and financial feasibility studies of proposed investments and to assist the community investors in the implementation of their investment; and preferably

(vii) have the capacity to develop and provide service support to at least five OFSSIs under the Project

40. In the demonstration of experience and capacity, potential service providers will need to clearly indicate how they have promoted forward and backward value chain linkages and the addition of value to agricultural production within farming communities. Examples could include:

(i) the provision of marketing extension services and training to farming communities in post harvest technology and value addition options;

(ii) establishment of produce collection and purchase centers for farmers; (iii) establishment, in production areas, of post harvest handling operations, including

collection centers, washing, cleaning, sorting, grading, storage and distribution facilities;

(iv) establishment of fruit and / or vegetable marketing projects (pilot or otherwise) with the aim of linking production and post harvest treatment at farm level via value chain management more directly to end consumers through retailers, such as supermarkets;

(v) establishment of low cost agro-processing ventures for fruit vegetable, spices and coconuts located in production areas; and

(vi) the branding and promotion of agricultural produce for sale to premium markets. 41. Service provider evaluation. The evaluation of proposals and letting of a subsequent contract to service provider(s) will be through a committee comprising the PMU Project Director or his representative, the Head of the PIU covering the proposed area of operations of the service provider(s), and the consultant Team Leader or the Deputy Team Leader. The selection process will conform to ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). The proposal(s) from service providers must directly show and result in specific output(s) for which the service provider(s) in conjunction with the communities will be responsible. Each agreement between DAE and a service provider shall have terms and conditions acceptable to ADB including a statement of the upazilas in which the service provider will operate, the role of DAE and the service provider in value addition support to farmers, the type(s) of value addition support to be supplied, the operational and coordination arrangements between DAE and the service provider, and the target number of farmers to be supported per upazila.

b. Value Addition Training and Promotion 42. Activities will be carried out collaboratively between DAE field staff, consultants, community facilitators, MFIs and service providers working in project areas. Initially, consultants

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shall deliver TOT courses on value addition to agricultural crops to DAE officers, service providers, and selected community group leaders. Courses will cover

(i) best practice post-harvest handling techniques, new technology on transport from farm to collection centers, and washing, sorting, grading, packaging, and storage;

(ii) marketing techniques including obtaining relevant price information, networking with other stakeholders, bargaining and negotiation, contractual obligations, and branding of produce; and

(iii) farmer group management and organization, administration, bookkeeping and accounts, financial management, report writing and the importance of transparency of activities involving group sales.

43. TOTs in value addition will be implemented in a similar manner to TOT under component 1. The recipients of TOT instruction will deliver institutional and field-based courses to farmers and farmer community group members to raise their awareness of the various value addition options. Community group training and awareness raising in value addition options will be devised with consultant assistance and carried out by DAE staff assisted by community facilitators. Service providers may also participate in and assist with this training according to sub-regional attributes and potential. The training will cover post harvest handling techniques, group management and administration for community groups, and agricultural marketing. 44. Training and promotional activities on improved market access and efficiency support will be led by service providers supplying ongoing networking, operational support and guidance to community groups to achieve their desired outputs. Contracted service providers will advise and assist farmer groups to:

(i) make informed pre-season decisions on what crop to plant based on agricultural market knowledge and trends in production and consumer preferences;

(ii) acquire innovative post harvest technology to reduce losses and improve quality; (iii) enter into mutually beneficial seasonal or long term supply contracts for raw and

value added produce through networking with large traders, seed merchants, retailers, agro-processors and exporters;

(iv) sign seasonal out-grower contracts with larger farmers to take advantage of premium prices offered for larger volumes of produce; and

(v) sell branded produce at premium prices through the establishment of a recognized name in the market.

45. DAE and service providers will also support linking farmers to the central and district market centers constructed under NCDP. Women will participate equally with men in all activities fostering HVC value addition and in particular will be supported in improving post harvest handling techniques and in the bargaining and negotiation aspects of marketing, where they lack capacity.

c. On-Farm Small-Scale Infrastructures 46. OFSSI-related activities will follow after earlier community and farmer group development, HVC training, and credit delivery to HVC farmers. OFSSI investment will be dependent on community participation and support and this will be engendered through value-added awareness training conducted in communities with identified OFSSI potential. In the training courses, and subsequently, participants will be encouraged to identify potential OFSSI investments and the technical and financial supports needed. This will provide an indication of the types and locations of potential OFSSI investments.

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47. OFSSI Eligibility Criteria. Service providers will primarily assist communities in the preparation of OFSSI proposals that will need to fit the following criteria:

(i) be from a formal or informal farming group of not less than 20 farm households, in existence for a minimum of 1 year with the legal status to allow the group to enter into contracts with third parties;

(ii) be a sound and binding agreement between participating farmer investors; (iii) contain lead farmer group members who have participated in the Project’s

training courses on HVC production and value addition; (iv) be market driven involving HVCs with proven actual or potential demand, and

illustrate backward and forward linkages along the value chain; (v) involve women on an equal basis with men in the investment plan; (vi) be acceptable by the community as a whole and have no environmentally

negative effect; and (vii) show the potential for commercial viability.

48. OFSSI evaluation. The OFSSI proposal will be evaluated by the PMU with the assistance of LGED11 and the consultants. The evaluation process will follow a written format devised by the consultants in collaboration with PMU staff. The OFSSI proposal needs to show

(i) the concept of the investment, its location, ownership, details of management, number of beneficiary households, and details of land access and ownership;

(ii) the design and cost of fixed investments including cost of community inputs and contractors;

(iii) an estimate of investment needed for working capital; (iv) the estimated revenues, expenditures and cash surpluses expected from the

investment; and (v) an outline of financing for the investment including community financing in cash

and in-kind and a requested amount of grant funding that is limited to 75% of investment cost that includes fixed asset and working capital investment.

49. OFSSI contract awards and construction. If the OFSSI proposal is accepted, the civil/mechanical/electrical works and supply of machinery and equipment will be let out on tender. In the evaluation, preference will be given to proposals that include the use of community investor labor in construction. LGED will oversee the work of the works contractor. The project will monitor the time taken from date of submission of a community proposal to the PMU and the start of construction through a selected contractor. All payments to service providers and contractors will be through nominated bank accounts. The PMU will be responsible for monitoring and reporting on the classification, performance and outreach of these facilities each six months.

5. Implementation Arrangements for Credit Support (Component 3) 50. MFI staff will have discussed loan terms and conditions with farmers. Loans to farmers will be on an individual basis with the collection of loan repayments facilitated by borrowers gathering at a common place and time to make repayments. SAAOs and MFI field staff will liaise closely at field level to coordinate extension and credit services. MFIs will meet together under project coordination to select and agree on which upazila or union each MFI will service under the Project and set out numbers of HVC farmers that it expects to reach in each six months. The Project will coordinate similar meetings and reviews every six months.

11 Under a Memorandum of Understanding with DAE, LGED will receive a lump sum fee to cover costs of evaluation

and field supervision.

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6. Enhanced Implementation and Coordination of Components 1, 2 and 3 51. The implementation of the Project will be facilitated through the use of community facilitators who will be involved in assisting in activities in components 1, 2, and 3 of the Project. The respective roles of DAE and MFI staff and community facilitators and the terms of reference for community facilitators and their hires are set out as follows: 52. DAE Field Staff. Farmer HVC extension and training will be provided by DAE field staff through the following processes:

(i) promotion of SCDP benefits to farmers though advertisements, pamphlets and field days;

(ii) establishment of demonstration plots; (iii) conducting field days based on demonstration plots and/or lead farmer

examples; (iv) providing extension advice to groups of farmers at key times in each season;

(v) taking lead farmers on field trips to nearby locations demonstrating innovative practices;

(vi) providing training courses for farmers on different HVCs; (vii) providing training to MFI trainers and staff on HVC production; and (viii) coordinate and promote training and investment activities related to post-harvest handling of HVCs. 53. Activities in (i), (ii), (iii), (v) above are community focused while activities in (iv) and (vi) are group-focused. With the recommended bottom-up approach, activities usually occur at the community level prior to group formation. Community facilitators will assist DAE staff with (i), (iii), (iv), (v), (vi) and (viii) in identification, farmer mobilization and general communications. Their other activities are shown below. MFIs will coordinate with DAE in farmer group formation and the training of MFI trainers and staff. 54. MFI Staff. MFIs and their staff will focus on credit delivery and loan repayment. Credit services will be facilitated through the formation of groups of farmers who will meet together at a particular location and time to make loan repayments and make requests for new loans. The formation of the group will be driven by the convenience of loan repayment. The group may or may not comprise the same members as those in item (iv) above serviced by DAE field staff. Some farmers will not be borrowers. It will be in the interests of the MFIs to ensure their borrowers receive good training and extension services from DAE and this will encourage full coordination between DAE and MFI staff in group formation. Care is needed to ensure that credit delivery to farmers does not precede proper training and extension from DAE. 55. Community Facilitators. Community facilitators will be hired by the PMU at level 12 or higher to encourage farmer community participation in the project and raise the empowerment of communities and their awareness in advanced agricultural practices. The annual work program of the community facilitators will be determined by the head of the PMU and the heads of the two PIUs in consultation with the consultant Team Leader. Community facilitators will report to the PIU relevant to their location on their activities that will: a. assist DAE staff in:

(i) the identification of communities and numbers of farmers interested in SCDP participation;

(ii) the mobilization of farmers into the various HVC training courses; (iii) the provision of community-targeted farmer field days.

b. assist DAE and the Gender Specialist to:

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(iv) identify women leaders within communities and work with them to assist in the formation and regular operation of women’s discussion groups;

(v) assist DAE trainers in the implementation of gender awareness training; (vi) generally encourage the participation of women in SCDP activities; (vii) assist in the identification of IPs and devising ways to ensure their full

participation in SCDP. c. assist DAE and the Community Development and Rural Credit Specialist to:

(viii) work with communities to identify and promote OFSSI investment opportunities;

(ix) liaise with DAE in the selection of OFFSIs and the identification of technical supports and service providers required to carry out OFSSI investment;

(x) assist the CDRC Specialist and service providers in carrying out awareness training in post-harvest activities.

56. Eligibility criteria for community facilitators. Community facilitators will live within the upazila that they serve. They will have a tertiary qualification in agriculture and, preferably, rural sociology, economics or finance. They will be computer literate and have had at least three years post-graduate work experience relevant to their proposed hire. This work may have been with an NGO or agricultural service firm or government agency. They will have knowledge of agricultural issues at small and medium farmer level, and of cross cutting issues affecting rural communities, such as food security and adaptation to climate change effects and gender awareness. Experience in working with donor assisted projects in the agriculture and rural development sectors is desirable. It is important that they are able to travel freely within their upazila. 57. Recruitment of community facilitators. The community facilitator positions will be advertised and a short listing made of not more than three suitable applicants for each upazila. Final selection will be made by a committee comprising the PMU Project Director or his representative, the Head of the PIU covering the proposed area of operations of the community facilitators, and the consultant Team Leader or the Deputy Team Leader. Written evaluations of the community facilitators at final selection will be available for ADB inspection.

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D. Credit Line Implementation

1. Eligibility Criteria for Participating Microfinance Institutions

58. The Microcredit Regulatory Authority has licensed more than 500 nongovernment organizations (NGOs) to provide credit services as microfinance institutions (MFIs). A shortlist of MFIs must be developed for the project, based on the following criteria. For eligibility for consideration by the selection committee, an MFI must

(i) hold a current license issued by the Microcredit Regulatory Authority to provide credit;

(ii) be the subject of a due diligence report provided by the government and satisfactory to the Asian Development Bank (ADB);

(iii) have an average expenses–revenue ratio over the last 3 years of less than 90%; (iv) have at least 3 years of satisfactory financial performance and operating

experience in managing development partner project funding of services to individual borrowers in the agriculture sector as shown in financial statements and satisfactory external audit reports;

(v) have a total loan portfolio of at least Tk500 million and an agricultural loan portfolio of not less than Tk100 million;

(vi) have not less than 15,000 active borrowers and classified loans of less than 10% of total loan portfolio;

(vii) have total net loans outstanding equal to at least 1.5 times total borrowing; (viii) have a net worth of not less than Tk100 million and a capital adequacy ratio of at

least 15%; (ix) have not less than 10 head office professional staff and 40 field credit staff; (x) have a board of directors with at least one director with more than 5 years

experience in financial planning, and with at least 2 directors with not less than 5 years experience in the oversight of microfinance or banking operations;

(xi) have a chief executive officer with at least 10 years experience in microfinance with at least 5 years in a management position and a chief financial officer with a tertiary degree, at least 5 years of satisfactory work experience in accounting and finance with not less than 3 years experience in microfinance or banking, and preferably a professional accounting qualification;

(xii) have acceptable corporate and financial governance and management practices that clearly demonstrate (a) ability to manage and account for financial intermediation operations separate from, and independently of, its other activities; and (b) transparent financial disclosure policies and practices;

(xiii) have a record of satisfactory compliance with all Bangladesh prudential, regulatory, and supervisory standards and instructions applicable to it as a bank or MFI (as applicable) in the borrower’s territory;

(xiv) have demonstrated commitment to the development of financial services for landless and small-scale farmers through a strategy statement in its corporate plan; and

(xv) have adequate policies, systems, and procedures to assess and monitor the economic, social, and environmental impact of subprojects in accordance with parameters established by ADB for this purpose.

59. Following selection, a participating MFI must continue to satisfy all requirements listed in items (i)–(xv) of para. 1, and the following additional requirements:

(i) maintain liquid funds (cash and demand deposits) always more than 10% of the total of savings and borrowing liabilities;

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(ii) present to the wholesale bank and ADB unqualified audited financial statements within 6 months of the close of the financial year;

(iii) develop and maintain satisfactory 3-year rolling work plans demonstrating relevance of the activities to be undertaken under the project; and

(iv) develop and maintain sound and transparent procedures and methodologies for selecting subborrowers, including assessment of the commercial viability of the proposed subproject.

60. Less than 10 NGOs meet the required eligibility criteria. Smaller well-performing MFIs that fit some of these criteria have borrowing capacities ($0.1 million–$0.3 million) that limit their project involvement. Many other MFIs are overextended in their borrowing and are unable to participate in the project within the next 2–3 years.

2. Eligibility Criteria for Wholesale Banks

61. Wholesale banks will need to (i) hold and maintain a bank rating (such as from Credit Rating Information and

Services Limited) in the A category (A– to A++); (ii) have at least 3 years experience in lending to not less than 5 NGOs and hold a

current loan portfolio of not less than Tk700 million in NGO lending with aggregate classified NGO loans of less than 5%;

(iii) be prepared to maintain in place project-related loan agreements with participating MFIs for approximately 11 years; and

(iv) be acceptable to ADB.

3. Lending and Re-lending Terms and Conditions for the Credit Line

62. Within the credit line component of Special Drawing Rights 17,296,000, the government will make available to Bangladesh Bank such amount in domestic currency at a rate of 2% for a term of 16 years including a grace period of 8 years. The government will take the foreign exchange risk. Such financing will be effected through a subsidiary loan agreement between the Finance Division and Bangladesh Bank, with terms, conditions, and implementation arrangements satisfactory to ADB. 63. Loans to wholesale banks. Bangladesh Bank will onlend to each of BASIC Bank and Eastern Bank an indicative 50% of the credit line component funds in domestic currency at 3.0% per annum for 16 years including a grace period of 6 years. Such financing will be effected through wholesale bank financing agreements with terms and conditions and implementation arrangements satisfactory to ADB. 64. Onlending by wholesale banks to participating MFIs and the revolving fund. The wholesale banks will onlend these funds to the participating MFIs at 6.5% per annum on their outstanding balances over 11 years. The financing of annual requests by MFIs for lending to new farmers will be for a tenor of 3 years including a 12-month grace period for principal followed by quarterly payments of interest and principal. Repayments of principal on these loans will be made into a revolving fund opened by the wholesale bank for each MFI borrower. Subject to satisfactory performance, an MFI will be eligible to redraw funds from the revolving fund every 6 months to meet loan requirements of high-value crop (HVC) farmers. The term for borrowing from the revolving fund will be 12 months including any grace period that may be agreed between the wholesale bank and the MFI. At the end of 6 years, the outstanding balances of the 3-year tenor loans and borrowing from the revolving fund will be combined and converted to a term loan with a tenor in the range of 5 years, to be finally determined by the

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relevant wholesale bank, with equal quarterly payments of interest and principal. During this period, principal repayments received from MFIs by the wholesale banks will be paid to Bangladesh Bank in accordance with the obligations set out in the wholesale bank financing agreements. Bangladesh Bank will, in turn, pay these amounts within 5 working days to the Finance Division. Such financing will be effected through wholesale bank financing agreements on terms and conditions satisfactory to ADB. Wholesale banks will take the credit risk in lending to participating MFIs. 65. Onlending by participating MFIs to qualified farmers. The participating MFIs will make subloans to qualified marginal, small, and medium farmers for the purpose of diversification into HVCs and postharvest value addition activities other than construction of on-farm, small-scale infrastructures. The participating MFIs will absorb the credit risk in lending to subborrowers. Participating MFIs will follow their own lending procedures, terms, conditions, and pricing in making loans to subborrowers. Loan sizes to farmers will average Tk12,000, with most loans within the range of Tk5,000–Tk20,000. The participating MFI making the subloan will determine the loan size; provided that the maximum loan size does not exceed Tk300,000. Subloans may be extended to farmers who (i) have landholdings not exceeding 3.0 hectares, and (ii) have carried out at least 2 seasons of HVC diversification activity on land under their cultivation or have previously undergone training for HVC diversification. Except for lending for tree crops, most lending will be seasonal with a term of 4–7 months. 66. The term and schedule of repayments of the subloans will take into account the schedule for harvest and postharvest activities typical for the farming activity and the particular HVC to be financed by a subloan under the project. The participating MFIs will adapt existing approaches to provide customized procedures appropriate to the farming activity and the particular HVC being financed by a subloan under the project, including scheduling repayments to reflect seasonal patterns of income generation. 67. The rate charged to the subborrower will fully take into account the recovery cost of lending, including any increase due to inflation, plus a spread to cover administration expenses including project and technical support, the provision of grace periods to subborrowers, and subborrower credit risk. Without limiting the foregoing, Bangladesh Bank regulation may apply to set a ceiling acceptable to ADB on the lending rate to subborrowers. 68. Loans to the participating MFIs will be subject to annual review by the wholesale banks and can be called up at any time, in full or in part, if the wholesale bank, in its sole discretion, considers the credit risk of the participating MFI to be excessive. In the case of a premature call-up, the wholesale bank will repay to Bangladesh Bank, within 3 months, the amount of principal due from the MFI or, with Bangladesh Bank approval, hold these funds for lending to an alternate and approved participating MFI.

4. Disbursement Procedures

69. For the credit line, the participating MFIs will set out 3-year financial forecasts, updated every 6 months and incorporating the financing needs for the upcoming year, for lending to HVC farmers by union or upazila, number of farmers, and financing requirements from the project. The wholesale banks will assess the financial feasibility of the plans and broadly determine the amount of project financing and repayment capacity of each participating MFI. Each year, the participating MFIs will apply to the wholesale banks for funds to disburse to new subborrowers based on the annual plan, agreed by the project management unit and wholesale banks. The wholesale bank will request these funds from Bangladesh Bank, which in turn will request the funds from ADB. On receipt of these funds, Bangladesh Bank will disburse them to the

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wholesale bank within 5 working days and the wholesale banks to the participating MFIs within 3 working days. The participating MFIs will lend these funds on an annual basis to their new subborrowers and provide a statement of expenditure to the wholesale bank to be sent on to Bangladesh Bank. 70. Relending to prior subborrowers will be financed out of project funds previously received by the participating MFIs and either held within the participating MFI or accessed out of the revolving funds established within the wholesale banks to hold principal repayments from the participating MFI. A revolving fund for each participating MFI will be held within its wholesale bank lender to hold all principal repayments being made from successive annual loans. Access to the revolving fund will commence for eligible participating MFIs in good standing 6 months following the start of principal repayments on the first annual loan. Funding for increases in lending to HVC farmers will be requested from ADB until the limit of the credit line is reached—expected in the final year of the project. Notwithstanding the foregoing, ADB reserves the right to disallow disbursements to any wholesale bank or participating MFI not conforming to any of the eligibility criteria applicable to it during implementation until such time as compliance is achieved.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities

71. The DAE will be the executing agency for components 1, 2, 4, and 5. Bangladesh Bank through its Agricultural Credit Department will be the executing agency for component 3. DAE and Bangladesh Bank have implemented numerous donor assisted projects and have the organizational structure, skills, and financial management system to implement the Project. 72. The PMU will be established within DAE to facilitate, coordinate, and supervise project activities including coordinating with Bangladesh Bank on component 3. Two PIUs will be established: one in Jessore to cover the southwest project area, and one in Bogra to cover the northwest project area. PIUs, under PMU oversight, will coordinate daily field-level activities of DAE district and upazila officers, SAAOs and service providers. PIUs will be located in DAE district offices. To avoid delays in project start up, ADB has recommended that the Government engage experienced staff from NCDP for the Project. 73. Bangladesh Bank will be responsible for managing and overseeing the flow of funds for the credit line (component 3), assisted by BASIC Bank, Eastern Bank, and participating MFIs which meet the Project's selection criteria. A MFI selection committee consisting of the project director, authorized representatives from Bangladesh Bank, Microcredit Regulatory Authority, BASIC Bank, and Eastern Bank will be responsible for the final selection of up to ten participating MFIs based on the selection criteria and financial due diligence assessments. 74. Overall coordination among agencies will be achieved through a project steering committee chaired by the Secretary of the Ministry of Agriculture (MOA), and consisting of representatives from DAE, Bangladesh Bank, Bank and Financial Institutions Division, Implementation Monitoring and Evaluation Division, Economic Relations Division, Planning Commission, Bangladesh Agriculture Research Institute, LGED, BASIC Bank, Eastern Bank, and participating MFIs. The project steering committee will convene its meeting at least twice a year. 75. Regular stakeholder participation and consultation will be undertaken during the implementation of the Project. The PMU will organize and conduct regular workshops with DAE officials, MFIs, and service providers, to review progress, identify problems, and discuss remedial action. Ongoing participatory and regular focus group sessions will be held with farmer community groups and groups of women to assess their needs and discuss project progress and activities. Project Stakeholders Management Roles and Responsibilities

• Executing Agency:

DAE for components 1, 2, 4, 5

Overall project oversight and management through PMU and two PIUs

Managing and implementing HVC production support, value addition support, institutional strengthening, and project implementation support

Coordinating with Bangladesh Bank, wholesale banks, and participating MFIs on component 3 activities

Monitoring and evaluation of project implementation progress and impacts

Preparation and submission of project progress reports and completion report

DPP preparation and revisions Work plan and budget preparation

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Project Stakeholders Management Roles and Responsibilities

• Executing Agency: Bangladesh Bank for component 3

Regulatory authority of banks and MFIs Managing and implementing the credit support component Supervising the performance of wholesale banks and participating

MFIs Member of the selection committee for participating MFIs

• Wholesale banks

(BASIC Bank and Eastern Bank)

Providing finance to partner MFIs and monitoring implementation Overseeing MFI operations to ensure efficiency Supporting beneficiaries awareness raising and credit training

• MFIs

Disbursing and recovering loans to project beneficiaries Supporting identification of beneficiaries Providing credit training to beneficiaries Supporting beneficiaries awareness raising and ensuring that their

voices and needs are heard by project implementers

• Service providers

Partnership, through service provision contracts, for marketing and value addition support

Provision of skills and knowledge of post harvest handling and technology, and marketing and agro-processing

• Beneficiaries

Participating in production, post harvest, value addition, including

marketing activities Participating in consultation, development work, skills development

training, service delivery program as well as receiving benefits Participating in farmer community groups, and women groups Raising voices and awareness of project issues such as gender

development and adaptation to climate change Providing in-kind investment share for OFSSIs, and owning and

managing OFSSI operations

• Ministry of Agriculture

Chairing project steering committee Decision making, coordination, and support Providing policy support and guidance

• LGED

Assisting the PMU in the evaluation of OFSSI proposals and contractors

Supervising the OFSSI construction works through to completion by LGED field staff

• ADB

Monitoring and guiding project progress on, among others, implementation, consultant recruitment, contract award and disbursement, compliance with loan covenants and safeguards

Reviewing and approving consultant recruitment, participating MFIs selection, civil works contract award

Replenishing imprest accounts and making disbursements Undertaking project review at least twice a year Undertaking comprehensive mid-term review and project

completion review Recommending and ensuring project adjustments as required

ADB = Asian Development Bank, DAE = Department of Agricultural Extension, HVC = high-value crop, LGED = Local Government Engineering Department, MFI = microfinance institution, OFSSI = on-farm small-scale infrastructure, PIU = project implementation unit, PMU = project management unit, SAAO = sub-assistant agricultural officer.

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B. Key Persons Involved in Implementation

Executing Agencies Department of Agricultural Extension Officer's Name Mr. Md. Sayeed Ali

Position Director General Telephone 880-2-9140857, fax +880-2-9111502 Email address dg@dae.gov.bdOffice Address: 2nd Floor, Middle Building, Khamarbari Farmgate, Dhaka-1215, Bangladesh Officer's Name ___________ Position Project Director Telephone 880-2-9115127, fax +880-2-9112959 Email address ___________ Office Address: 6th Floor, Middle Building, Khamarbari Farmgate, Dhaka-1215, Bangladesh

Bangladesh Bank Officer's Name Mr. S.M. Moniruzzaman Position General Manager, Agricultural Credit Department Telephone 880-2-7120947, fax +880-2-7119499 Email address sm.moniruzzaman@bb.org.bdOffice Address: 30 Storied Building (25th Floor) Motijheel C/A, Dhaka 1000, Bangladesh

ADB Division Director Staff Name: Thevakumar Kandiah

Position: Country Director Bangladesh Resident Mission Telephone No. 880 2 815 6000-6016 Email address hcarlsson@adb.org

Mission Leader Staff Name Jiangfeng Zhang Position Senior Country Economist Bangladesh Resident Mission Telephone No. 880 2 815 6000-6016 Email address jzhang@adb.org

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C. Project Organization Structure

Project Steering Committee

Executing Agency for Credit Management

Bangladesh Bank

Principal Executing Agency

Department of Agricultural Extension

Microfinance Institutions

Wholesale Banks

Project Management Unit

Regional Project

Implementation Unit (2)

Service Providers

DAE District and Upazila

Offices

PROJECT BENEFICIARIES

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D. Project Staffing

1. Project Management Unit (PMU)

Position No. Responsibilities Project Director (PD) 1 Overall management and supervision of the project implementation; coordination

with the project steering committee; the Asian Development Bank, and other project participating agencies; managing and directing PMU and project implementation unit (PIU) staff; overall coordination of consultants inputs; responsible for all report submission.

Senior Monitoring and Evaluation Officer (SMEO)

1 Responsible for coordination and analyses of all monitoring and evaluation activities, including poverty, gender, and environment impacts.

NGO and Credit Management Officer (NCMO)

1 Liaison and coordination with (i) participating microfinance institutions (MFIs) disbursing credit to project beneficiaries; (ii) service providers for component 2; and (iii) community development and rural credit specialist / consultant.

Agriculture Marketing Officer (AMO)

1 Coordination of all post harvest handling and marketing activities; coordination of inputs of marketing specialists and food safety and quality specialists; liaison with service providers in coordination with the NCMO.

Planning and Budget Officer (PBO)

1 Responsible for preparation of annual budgets, financial control, annual accounts and reports; supervision of monthly management accounts, disbursement of PMU related activity funds.

Gender Officer (GO) 1 Working with the gender and social development specialist to implement and monitor the progress of the gender action plan.

Accounts Officer (AO) 1 Preparation and submission of accounts under supervision of the PBO. Monitoring and Evaluation Officers (MEO)

2 Assist the SMEO in the collection, compilation, consolidation, and analyses of relevant data from all project activities.

Information Technology Officer (ITO)

1 To ensure the smooth operation and maintenance of project computers and other communication equipment.

Office Manager (OM) 1 Responsible for daily administration of the PMU, procurement of office supplies, maintenance of office equipment and supervision of PMU drivers and vehicles.

Computer Operators 3 Responsible to the ITO. Personal Assistant (PA) to PD 1 Responsible for PD appointments, meeting arrangements, file and record upkeep,

and PMU communication equipment. Drivers 5 I driver for PD; 1 driver for general PMU duties; 3 drivers for consultancy team. Ancillary Support Staff 4 2 peons; 1 sweeper; 1 night guard. TOTAL 24

2. Project Implementation Units (PIUs)

Position No. (x2)

Responsibilities

Regional Project Manager (RPM)

1 Overall management, supervision and coordination of the implementation of field based project activities in the region; coordination with the PMU, district department of agricultural extension (DAE) staff; participating MFIs and other stakeholders; management and direction of PIU staff; responsible for submission of monthly, quarterly, and annual reports.

Community Liaison Officer (CLO)

1 Liaison with district and upazila level community officers and sub-assistant agricultural officers.

Monitoring and Evaluation Officer (MEO)

1 Assist the PMU SMEO and MEOs in the collection, compilation, and consolidation of relevant data from all project activities at field level.

Accountant / Office Manager (AOM)

1 Preparation of monthly and annual accounts to the PMU.

Computer Operator 1 Responsible to the AOM. Driver 1 Driver for PIU activities as required. Ancillary Staff 2 1 Peon; 1 Sweeper. TOTAL 8 x 2 = 16

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E. Gender Action Plan 76. A significant number of women participate in agricultural sector including high-value crops (HVCs). However, the contribution of women often remains unrecognized. The effective participation of women in HVC production and value addition is limited, due particularly to their limited ownership of land, low access to training and extension activities, and social customs. Experience from the Northwest Crop Diversification Project (NCDP) showed that knowledge about improved technologies has increased women's confidence, and that participation in groups has improved their position in the community. Their access to extension agencies is critical for the success of the endeavors. Support for linking them with market has been a weak area and needs to be strengthened and entrepreneurial traits to be nurtured.

77. The gender action plan (GAP) takes into account the lessons learned from NCDP, identifies needs of women and addresses them under each project component in achieving the project outcome. The goal of the GAP is to increase women's effective participation in the HVC sub-sector and thereby contribute towards their economic and social empowerment. More specifically, the GAP will

(i) ensure and enhance women farmer’s increased participation in HVC production; (ii) increase the capacity of women, through training, awareness, identification of

options in value addition, and technological demonstrations, to participate in post harvest and marketing management;

(iii) support the raised profile, participation, and acceptance of women in agricultural enterprise decision-making through group cohesiveness and solidarity; and

(iv) develop women as important contributors to economic growth. 78. Ongoing participatory and regular focus group sessions will be held with farmers' community groups and groups of women to assess their needs and discuss project progress and activities. The Project has allocated resources for activities identified and has provision for the input of a national gender specialist. A full time gender officer is to be located in the project management unit (PMU). The GAP will have the following activities: COMPONENT ACTIVITIES, PARTICIPANTS AND TARGETS 1.HVC Production Support

• Undertake promotional and awareness campaign targeting rural farmers, community groups and women and include methodology to reach rural women

• Undertake training of trainers (TOTs) for the Department of Agricultural Extension (DAE) and nongovernment organization (NGO staff with at least 20% women participants

• Include gender concepts, ways to identify and address the needs of women, methods of mobilizing women farmers and supporting them in post harvest and marketing activities in TOT contents and materials for DAE and project staff

• Discuss the issues, problems and prospects of addressing women's needs, targets, successes, failure based on gender disaggregated data at the annual motivation workshops at the central and field levels for DAE and project staff

• Include and discuss the issues, problems and prospects of addressing women's needs, targets, successes, failure annually based on analysis of gender disaggregated data at the central and field levels and the district level workshops for sub-assistant agriculture officers (SAAOs)

• Organize SAAO extension tours and include all available women SAAOs • Include activities to study and review gender related actions during extension tours • Identify and organize around 240,000 beneficiaries farmers with 50% women • Integrate gender perspectives in all training curricula • Train farmers on HVC production technology (50% of the trainees to be women • Impart gender awareness training to 85% of all beneficiary farmers (men and women) • Support demonstration plots on high-value crops (HVCs) (40% of the demonstration plots will be

of women) • Organize farmers field days (1000 field days and 50% participants will be women) • Arrange farmer motivational tours in neighboring locations (40% will be women) • Organize agricultural fairs (30% stalls for women) • Include women farmers in training on floriculture and nursery development -30% women in 100

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courses • Impart awareness training for women in climate change adaptation options and strategies with

50% women participants • Arrange pilot field testing of climate change resilient crops, and, particularly their use in

household gardens (50% of participants to be women)

2. Value Addition Support

• Identify and form community groups for value addition with 30% women • Impart TOT for DAE and NGO staff on value addition with gender perspectives • Impart community group management, agricultural marketing and value addition training to DAE

and service providers' group management staff (20% women) and community leaders (20% women)

• Develop flip chart and training materials for farmer training with gender perspectives and distribute to staff and farmer groups

• Offer training and awareness raising on value addition options, market opportunities, and pricing for 25,000 women farmers

• Support female farmers to be under supply contract with large farmers, traders, seed merchants and processors

• Provide credit to women farmers individually or jointly for value addition activities • Orient women farmers to take advantage of small infrastructure • Orient 10,000 women group members in post-harvest handling techniques and involve them in

the bargaining and negotiation aspects of marketing • Support women to participate in ownership and management of on-farm, small-scale

infrastructures including in the signing of contractual documents

3. Credit support

• Provide rural credit for HVCs (50% of the borrowers will be women in number and 40% of the volume)

• Impart training to farmers on lending and assessment procedure and credit management (50% women)

• Orient women farmers on control over and use of money • Develop modality and documents to ensure that wives and husbands co-sign loan agreements

4. Institutional Strengthening

• Develop training curricula for basic GAP training for DAE, microfinance institutions (MFIs), NGOs and participating service providers

• Impart 3 days basic GAP training for 300 DAE, NGO and MFI officers (20% female staff) • Develop training curricula on TOT techniques for trainers integrating gender perspectives • Arrange 3 days institution based GAP TOT training for 78 upazila DAE officers (20% women) • Develop an operational handbook for conducting group- and community-based training including

gender perspectives in HVCs, social and poverty issues (one handbook for each workers at the community level)

• Distribute the handbook among project staff and DAE district and upazila officers and SAAOs and organize 2 day orientation on the contents of the handbook and on conducting group based training

• Organize meetings on gender and social aspects at the group level based on a planned curriculum for 12,000 groups

• Upgrade office infrastructure (ensure that women are employed as laborers and core labor standard are followed)

5. Project Implementation Support

• Identify a gender focal point within PMU • Recruit and deploy female staff in PMU and in the field by DAE, MFIs, and service providers

(20%) • Conduct baseline survey covering women and identify their involvement, interest, and needs • Study feasibility to reflect involvement, interest, potential, problems of women in HVC value

chain • Develop gender based monitoring indicators and integrate in project performance management

system • Orient staff and ensure regular collection of gender disaggregated data for monitoring and

ensure analysis and reporting

29

IV. COSTS AND FINANCING

79. The project investment cost is estimated at $45.81 million, including taxes and duties of $1.39 million. The total cost includes physical and price contingencies, and interest charges during implementation. 80. The Government has requested a loan of $40 million equivalent from ADB’s Special Funds resources to finance 87% of the project cost. The Government is to provide $5.42 million equivalent to finance 12% of the project cost including, (i) 50% of district agriculture offices and HDTC upgrading cost; (ii) 100% of the operation and maintenance of the upgraded district agriculture offices and HDTC facilities and incremental staffing; (iii) 100% of project staff salaries; and (iv) 100% of taxes and duties. Farmer communities will provide about $0.39 million equivalent to finance 1% of the project cost by contributing to 25% of the OFSSI construction cost (in kind and land contribution).

30

A. Detailed Cost Tables

Table 1. HVC Production Support )

Totals (US$ Including Quantities Contingenci

es Unit 2010 2011 2012 2013 2014 2015 Total Unit

Cost ($)

I. Investment Costs A. Training and extension Agriculture fairs No. - 1 2 2 2 2 9 1,000 10,073 DAE ToT /a staff 16 20 14 10 10 10 80 47.307 4,218 MFI ToT trainee days 60 40 97 38 78 38 351 4.731 1,853 MFI staff training trainee days 264 320 520 552 667 449 2,77

2 3.639 11,274

MFI/farmer workshops No. 15 30 30 30 30 30 165 436.681 80,496 DAE Dhaka workshops No. 2 4 4 4 4 4 22 1,310.04

4 32,199

DAE field workshops /b No. 3 3 3 3 3 3 18 727.802 14,623 DAE SAAO staff training /c trainee days 200 400 800 1,60

0 3,00

0 - 6,00

0 21.834 146,531

SAAO staff workshops /d No. 25 25 25 25 25 25 150 436.681 73,115 SAAO refresher training /e courses - 6 6 6 6 6 30 7,278.02 244,184 SAAO extension tours /f No. - 480 480 480 480 480 2,40

0 29.112 78,139

SAAO preparation annual plans /g LS 121,858 Project promotion /h LS 56,493 Farm field days No. 70 90 120 140 180 300 900 29.112 29,341 Demonstration plots No. 700 900 1,50

0 1,75

0 2,43

0 2,72

0 10,0

00 72.78 814,767

Introductory training /i trainees 480 480 - - - - 960 3.639 3,872 Farmer HVC training /j trainee days 11,8

04 46,8

64 69,3

36 83,8

96 101,

514 122,

832 436,

246 3.639 1,939,455

Farmer motivational tours farmers 1,400

1,800

3,000

3,500

4,860

5,440

20,000

6.55 146,658

Subtotal 3,809,148 B. Community Supports Community facilitators /k No. 24 48 48 48 48 48 264 2,241.12

1 600,903

Community facilitator training /l No. 24 24 - - - - 48 58.224 3,097 Gender awareness TOT /m No. - 78 78 - - - 156 21.834 3,787 Gender training DAE & MFI staff staff - 100 100 100 - - 300 15.284 5,106 Women leadership discussion groups /n No - 24 48 48 48 48 216 262.009 63,339 Gender awareness training materials /o amount 162,909

31

Subtotal 839,141 C. Consultants 1. International Consultants /p Hoticulture & Spices

Specialist/Team Leader months 3 12 9 6 6 - 36 24,000 874,940

Floriculture Specialist months - 3 3 - - - 6 24,000 145,549 Seed Production Specialist months - 3 3 - - - 6 24,000 145,549 Subtotal 1,166,039 2. National consultants /q Horticulture and Spices Specialist months 3 9 9 9 6 - 36 4,000 145,890 Floriculture Specialist months - 4 6 6 2 - 18 4,000 72,975 Gender & Social Development

specialist months 3 9 9 9 3 3 36 4,000 145,951

Subtotal 364,817 Subtotal 1,530,855 Total 6,179,145 _________________________________ \a HVC production and community mobilization \b Held at divisional level \c HVC production and extension services \d District: 50 participants - block supervisors \e One week courses for better-performing SAAO staff

\f 1200 SAAOs at 2 trips each \g Lumpsum payment Tk1000 per SAAO to participate in annual planning and reviews

\h PMU expenditure calculated at Tk140,000 per district for promotional materials and media \i Farmer leaders in each of 48 upazila: half day course

\j Base numbers shown-20% contingeny added to allow some joint husband/wife participation \k Salary Tk10,305 times 13 months, plus travel Tk15000, plus communications Tk5000

\l 3 day training \m Initial and refresher training \n 20 women leaders per upazila meet quarterly to encourage women participation in SCDP \o Flipcharts, handbooks, training and extension materials \p Monthly rate includes fee, remuneration, per diems, international and domestic air travel, visas etc \q Monthly rate incudes fee, remuneration, outstation per diem, domestic airfares etc

32

Table 2. Value Addition Support )

Totals (US$ Including Quantitie s Contingenc

ies Unit 201

0 201

1 201

2 201

3 201

4 201

5 Tot

al Unit Cost ($)

I. Investment Costs A. On-farm small scale infrastructures On-farm small scale infrastructures No - 24 48 48 60 60 240 5,822.416 1,564,804 LGED on-site supervision /a No - 24 48 48 60 60 240 109.17 29,340 Subtotal 1,594,144 B. Community awareness in value addition Awareness training LS 224,649 Post-harvest technology/management /b LS 272,131 Investment identification and support LS 272,114 Subtotal 768,894 C. Consultants 1. International consultants Agriculture Marketing Specialist months - 6 6 3 - - 15 24,000 364,219 2. National consultants Post Harvest Technology/Marketing Specialist /c months 3 12 12 12 12 3 54 4,000 219,139 Rural Infrastructural Engineer months - 3 3 3 3 - 12 4,000 48,693 Community Development & Rural Credit

Specialist months 3 9 9 9 3 3 36 4,000 145,951

Subtotal 413,783 Subtotal 778,002 D. Unallocated /d LS 650,460 Total 3,791,500 _________________________________ \a Lumpsum per OFSSI investment \b Improved market access & efficiency support: training &/or service providers \c Deputy team leader \d For activities to be identified during the Project.

33

Table 3. Credit Support (US$) Totals Including

Contingencies ($)

Unit FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Total I. Investment Costs A. Credit line amt 1,673,945 3,639,010 4,221,252 4,657,933 5,385,735 5,922,125 25,500,000 Total 1,673,945 3,639,010 4,221,252 4,657,933 5,385,735 5,922,125 25,500,000

34

Table 4. Institutional Strengthening )

Totals (US$

s Including

Quantitie Contingencies

Unit 2010

2011

2012

2013

2014

2015

Total

Unit Cost ($)

I. Investment Costs A. Climate Change Adaptation Training of trainers /a No - 10 10 - - - 20 65.502 1,457 DAE staff training trainee

days - 1,0

00 1,0

00 1,0

00 1,0

00 - 4,0

00 3.639 16,243

Pilot projects /b LS 13,980 Subtotal 31,679 B. Vehicles Jeep No. - 4 - - - - 4 61,135.371 246,987 Pickup double cabin No. 6 30 - - - - 36 32,751.092 1,189,847 Subtotal 1,436,834 C. Motorcycles No. 25 15 - - - - 40 1,746.725 70,349 D. Furniture and equipment Furniture LS 49,341 Computer sets No. 30 30 - - - - 60 1,528.384 92,391 Photocopiers No. 30 30 - - - - 60 2,183.406 131,987 Overhead projectors No. - - - - - - - - TV sets No. - - - - - - - - Fax machines No. 24 24 - - - - 48 218.341 10,559 Air conditioners No. - - - - - - - - Digital cameras No. 30 30 - - - - 60 291.121 17,598 Refrigerator/freezers No. 6 - - - - - 6 873.362 5,266 Power tillers No. - 12 - - - - 12 800.582 9,703 Power sprayers No. 13 48 29 - - - 90 363.901 33,071 Meeting amplifiers No. - - - - - - - - Megaphones No. 24 24 - - - - 48 100.437 4,857 Footpumps No. 25 25 43 - - - 93 100.437 9,428 Subtotal 364,201 E. Certifications Standards LS 4,049 F. DAE staff training Value addition /c LS 20,131 Gender awareness training trainee

days 160 320 320 320 320 320 1,7

60 61.135 120,208

Gender ToT /d No. - 78 - - - - 78 61.135 5,298 Subtotal 145,636 G. HDTC Improvements

35

Upgrade dormitories No. - 2 2 2 - - 6 77,632.213 518,705 Walls and roads LS 465,577 Nursery upgrades No. - 3 3 - - - 6 36,390.102 242,758 Equipment LS 222,229 Furniture LS 17,655 Tissue culture training No. - 10 - - - - 10 21,834.061 242,576 Subtotal 1,709,501 H. Rehabilitation DAE offices LS 1,172,959 I. National Consultants Climate Change Adaptation/Environmental Specialist months 3 9 9 9 3 3 36 4,000 145,951 Training Management Specialist months 3 9 9 9 3 3 36 4,000 145,951 Food Safety & Quality Specialist months - - 3 - - - 3 4,000 12,138 Subtotal 304,041 J. International Consultants Quality Standards & Certification Specialist months - - 3 - - - 3 24,000 72,829 Total 5,312,079 _________________________________ \a For 10 trainers \b 10 pilot projects \c Approx 60 staff each year \d Training of DAE trainers on GAP

36

Table 5. Project Implementation Support Totals (US$) Including Quantities Contingenc

ies Uni

t 201

0 201

1 201

2 201

3 201

4 201

5 Tot

al Unit Cost ($)

I. Investment Costs A. Website set up & operation Website licence No 1 - - - - - 1 1,222.707 1,229 Hardware /a set 1 - - - - - 1 2,000 2,010 Contractor /b LS 45,517 Telephone connection No. 1 - - - - - 1 21.834 22 Server & connection fees LS 23,397 Staff training LS 80 Subtotal 72,255 B. Furniture & equipment Office furniture set

s 8 - - - - - 8 727.802 5,852

Photocopiers No. 3 - - - - - 3 2,183.406 6,583 Computer sets No. 5 - - - - - 5 1,528.384 7,680 Telephone/fax No. 3 - - - - - 3 218.341 658 Subtotal 20,773 C. Surveys & information Monitoring and evaluation LS 81,888 Baseline survey LS 66,330 Mid-term survey LS 66,760 Project completion LS 67,699 Subtotal 282,678 D. National consultants BME Specialist months 3 3 2 3 2 3 16 4,000 64,933 Total Investment Costs 440,639 II. Recurrent Costs

A. PMU/PIU O&M expenses PMU/PIU O&M /c LS 1,683,854 B. PMU/PIU Staffing PMU Officers /d LS 371,148 PMU staff /e LS 162,526 PIUs: Officers /f LS 182,515 PIUs: staff /g LS 107,341 Drivers for upazila pickups /h LS 327,184 Subtotal 1,150,714

C. HDTC staffing

37

HDTC professional staff No. 8 8 8 8 8 8 48 2,343.523 114,148 HDTC laborers No. 116 116 116 116 116 116 696 903.93 638,411 HDTC support staff No. 5 5 5 5 5 5 30 1,171.761 35,671 Subtotal 788,230 Total Recurrent Costs 3,622,798 Total 4,063,437 _________________________________ \a Computer, software, UPS, printer, connections \b Design, setup website, provide manual and training, annual support \c Based on NCDP inflation-adjusted costs \d 11 officers with gratuities paid out in final year \e 15 staff with gratuities paid out in final year \f 3 officers in each PIU with gratuities in final year \g 5 staff in each PIU with gratuities paid out in final year \h 35 drivers for the 35 double cabin pickups

38 B. Cost Estimates by Expenditure Category

(Taka) (US$) %

Total Base Local Foreign Total Local Foreign Total Costs I. Investment Costs A. Costs 1. Extension Services and Community Development 1.1 Training, extension & workshops 168,471,358 112,314,239 280,785,597 2,452,276 1,634,851 4,087,127 9 1.2 Gender awareness 9,403,239 5,063,283 14,466,522 136,874 73,701 210,575 - 1.3 Community facilitators 40,646,760 - 40,646,760 591,656 - 591,656 1 Subtotal 218,521,358 117,377,522 335,898,879 3,180,806 1,708,552 4,889,358 11 2. Civil Works 2.1 Building rehabilitation 73,826,949 73,826,949 147,653,898 1,074,628 1,074,628 2,149,256 5 2.2 On-farm small scale infrastructures 38,400,000 57,600,000 96,000,000 558,952 838,428 1,397,380 3 Subtotal 112,226,949 131,426,949 243,653,898 1,633,580 1,913,056 3,546,636 8 3. Credit line 1,751,850,002 - 1,751,850,002 25,500,000 - 25,500,000 59 4. Consulting Services 4.1 International consultants - 123,660,000 123,660,000 - 1,800,000 1,800,000 4 4.2 National consultants 66,020,700 - 66,020,700 961,000 - 961,000 2 Subtotal 66,020,700 123,660,000 189,680,700 961,000 1,800,000 2,761,000 6 5. Value addition service providers 11,109,450 7,406,300 18,515,750 161,710 107,806 269,516 1 6. Vehicles and Motorcycles 6.1 Vehicles 39,120,000 58,680,000 97,800,000 569,432 854,148 1,423,581 3 6.2 Motorcycles 1,920,000 2,880,000 4,800,000 27,948 41,921 69,869 - Subtotal 41,040,000 61,560,000 102,600,000 597,380 896,070 1,493,450 3 7. Equipment & furniture 17,086,320 25,629,480 42,715,800 248,709 373,064 621,773 1 8. Surveys, studies & evaluation 11,307,600 7,538,400 18,846,000 164,594 109,729 274,323 1 9. unallocated 44,686,602 - 44,686,602 650,460 - 650,460 1 Total Investment Costs 2,273,848,981 474,598,651 2,748,447,631 33,098,238 6,908,277 40,006,516 92 II. Recurrent Costs A. Project Implementation PMU/PIU staff expenses 77,823,480 - 77,823,480 1,132,802 - 1,132,802 3 PMU/PIU O&M expenses 114,000,000 - 114,000,000 1,659,389 - 1,659,389 4 HDTC staffing expenses 53,364,600 - 53,364,600 776,777 - 776,777 2 Total Recurrent Costs 245,188,080 - 245,188,080 3,568,968 - 3,568,968 8 Total BASELINE COSTS 2,519,037,061 474,598,651 2,993,635,711 36,667,206 6,908,277 43,575,483 100 Physical Contingencies 37,795,550 30,737,377 68,532,927 550,154 447,415 997,568 2 Price Contingencies 159,301,510 96,975,874 256,277,384 168,195 104,914 273,109 1 Total PROJECT COSTS 2,716,134,120 602,311,902 3,318,446,022 37,385,555 7,460,606 44,846,161 103 Interest During Implementation - 69,487,670 69,487,670 - 965,723 965,723 2 Total Costs to be Financed 2,716,134,120 671,799,572 3,387,933,693 37,385,555 8,426,329 45,811,884 105

39

C. Expenditure Accounts by Financier

(US$) The Government ADB Farmers Communities Total

Amount % Amount % Amount % Amount % I. Investment Costs A. Costs 1. Extension Services and Community Development 1.1 Training, extension & workshops 0 - 4,733,046 100.0 - - 4,733,046 10.3 1.2 Gender awareness 0 - 235,141 100.0 - - 235,141 0.5 1.3 Community facilitators - - 600,903 100.0 - - 600,903 1.3 Subtotal 0 - 5,569,090 100.0 - - 5,569,090 12.2 2. Civil Works 2.1 Building rehabilitation 1,200,000 50.0 1,200,000 50.0 - - 2,400,000 5.2 2.2 On-farm small scale infrastructures 0 - 1,173,603 75.0 391,201 25.0 1,564,804 3.4 Subtotal 1,200,000 30.3 2,373,603 59.9 391,201 9.9 3,964,804 8.7 3. Credit line - - 25,500,000 100.0 - - 25,500,000 55.7 4. Consulting Services 4.1 International consultants - - 1,822,013 100.0 - - 1,822,013 4.0 4.2 National consultants - - 974,165 100.0 - - 974,165 2.1 Subtotal - - 2,796,178 100.0 - - 2,796,178 6.1 5. Value addition service providers 0 - 301,454 100.0 - - 301,454 0.7 6. Vehicles and Motorcycles 6.1 Vehicles 402,314 28.0 1,034,521 72.0 - - 1,436,834 3.1 6.2 Motorcycles 19,698 28.0 50,652 72.0 - - 70,349 0.2 Subtotal 422,011 28.0 1,085,172 72.0 - - 1,507,183 3.3 7. Equipment & furniture 175,873 28.0 452,246 72.0 - - 628,119 1.4 8. Surveys, studies & evaluation 0 - 306,074 100.0 - - 306,074 0.7 9. unallocated - - 650,460 100.0 - - 650,460 1.4 Total Investment Costs 1,797,885 4.4 39,034,277 94.7 391,201 0.9 41,223,363 90.0 II. Recurrent Costs A. Project Implementation PMU/PIU staff expenses 1,150,714 100.0 - - - - 1,150,714 2.5 PMU/PIU O&M expenses 1,683,854 100.0 - - - - 1,683,854 3.7 HDTC staffing expenses 788,230 100.0 - - - - 788,230 1.7 Total Recurrent Costs 3,622,798 100.0 - - - - 3,622,798 7.9 Total PROJECT COSTS 5,420,683 12.1 39,034,277 87.0 391,201 0.9 44,846,161 97.9 Interest During Implementation - - 965,723 100.0 - - 965,723 2.1 Total Disbursement 5,420,683 11.8 40,000,000 87.3 391,201 0.9 45,811,884 100.0

40

D. Expenditure Accounts by Components

(US$) HVC Value Project Production Addition Credit Institutional Implementation Support Support Support Strengthening Support Total I. Investment Costs A. Costs 1. Extension Services and Community Development 1.1 Training, extension & workshops 3,812,245 496,780 - 423,940 80 4,733,046 1.2 Gender awareness 235,141 - - - - 235,141 1.3 Community facilitators 600,903 - - - - 600,903 Subtotal 4,648,289 496,780 - 423,940 80 5,569,090 2. Civil Works 2.1 Building rehabilitation - - - 2,400,000 - 2,400,000 2.2 On-farm small scale infrastructures - 1,564,804 - - - 1,564,804 Subtotal - 1,564,804 - 2,400,000 - 3,964,804 3. Credit line - - 25,500,000 - - 25,500,000 4. Consulting Services 4.1 International consultants 1,384,965 364,219 - 72,829 - 1,822,013 4.2 National consultants 145,890 413,783 - 304,041 110,450 974,165 Subtotal 1,530,855 778,002 - 376,870 110,450 2,796,178 5. Value addition service providers - 301,454 - - - 301,454 6. Vehicles and Motorcycles 6.1 Vehicles - - - 1,436,834 - 1,436,834 6.2 Motorcycles - - - 70,349 - 70,349 Subtotal - - - 1,507,183 - 1,507,183 7. Equipment & furniture - - - 604,086 24,034 628,119 8. Surveys, studies & evaluation - - - - 306,074 306,074 9. unallocated - 650,460 - - - 650,460 Total Investment Costs 6,179,145 3,791,500 25,500,000 5,312,079 440,639 41,223,363 II. Recurrent Costs A. Project Implementation PMU/PIU staff expenses - - - - 1,150,714 1,150,714 PMU/PIU O&M expenses - - - - 1,683,854 1,683,854 HDTC staffing expenses - - - - 788,230 788,230 Total Recurrent Costs - - - - 3,622,798 3,622,798 Total PROJECT COSTS 6,179,145 3,791,500 25,500,000 5,312,079 4,063,437 44,846,161 Taxes - 312,961 - 1,071,155 6,729 1,390,845 Foreign Exchange 2,992,162 1,622,395 - 2,709,167 136,882 7,460,606

42

E. Expenditure Accounts by Year

(US$) Totals Including

Contingencies

2010 2011 2012 2013 2014 2015 Total I. Investment Costs A. Costs 1. Extension Services and Community Development 1.1 Training, extension & workshops 210,798 835,640 742,193 840,561 1,025,159 1,078,694 4,733,046 1.2 Gender awareness - 51,006 58,079 56,409 55,457 14,190 235,141 1.3 Community facilitators 54,056 108,650 108,813 109,248 109,794 110,343 600,903 Subtotal 264,853 995,296 909,085 1,006,218 1,190,411 1,203,228 5,569,090 2. Civil Works 2.1 Building rehabilitation - 619,337 620,266 500,792 328,980 330,625 2,400,000 2.2 On-farm small scale infrastructures - 155,249 310,964 312,208 392,211 394,172 1,564,804 Subtotal - 774,586 931,230 813,000 721,191 724,797 3,964,804 3. Credit line 1,673,945 3,639,010 4,221,252 4,657,933 5,385,735 5,922,125 25,500,000 4. Consulting Services 4.1 International consultants 84,420 634,280 643,324 280,295 167,385 12,309 1,822,013 4.2 National consultants 92,460 223,210 231,637 224,439 135,745 66,673 974,165 Subtotal 176,880 857,490 874,960 504,735 303,130 78,982 2,796,178 5. Value addition service providers - 56,976 59,976 60,216 61,988 62,298 301,454 6. Vehicles and Motorcycles 6.1 Vehicles 197,489 1,239,345 - - - - 1,436,834 6.2 Motorcycles 43,886 26,463 - - - - 70,349 Subtotal 241,376 1,265,808 - - - - 1,507,183 7. Equipment & furniture 181,339 239,498 95,766 55,619 55,898 - 628,119 8. Surveys, studies & evaluation 83,709 17,466 84,252 17,562 17,650 85,437 306,074 9. unallocated 650,460 - - - - - 650,460 Total Investment Costs 3,272,562 7,846,129 7,176,520 7,115,283 7,736,002 8,076,867 41,223,363 II. Recurrent Costs A. Project Implementation PMU/PIU staff expenses 171,305 172,157 172,415 173,105 173,971 287,761 1,150,714 PMU/PIU O&M expenses 277,948 279,330 279,749 280,869 282,273 283,685 1,683,854 HDTC staffing expenses 130,110 130,758 130,954 131,478 132,135 132,796 788,230 Total Recurrent Costs 579,363 582,245 583,118 585,452 588,379 704,241 3,622,798 Total PROJECT COSTS 3,851,924 8,428,374 7,759,639 7,700,735 8,324,381 8,781,108 44,846,161

43

F. Allocation and Withdrawal of Loan Proceeds

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS

(Second Crop Diversification Project)

CATEGORY ADB FINANCING Amount Allocated SDR Number Item Category Subcategory

Percentage and Basis for Withdrawal

from the Loan Account

1 Extension Services and Community Development

3,777,000 100 percent of total expenditure*

2 Civil Works 1,610,000

2A Field-Level Agriculture Office Building Rehabilitation

814,000 50 percent of total expenditure

2B On-farm small-scale infrastructures 796,000 75 percent of total expenditure

3 Credit Line 17,296,000 100 percent of total expenditure

4 Vehicles and Motorcycles

736,000 72 percent of total expenditure

5 Equipment and Furniture

307,000 72 percent of total expenditure

6 Consulting Services 1,896,000 100 percent of total expenditure*

7 Value Addition Service Providers

204,000 100 percent of total expenditure*

8 Surveys, Studies, and Evaluation

208,000 100 percent of total expenditure*

9 Interest Charge 655,000 100 percent of amount due

10 Unallocated 442,000

Total 27,131,000 * Exclusive of taxes and duties imposed within the territory of the Recipient.

44

G. Contract and Disbursement S-curve

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

2011 2012 2013 2014 2015 2016

Fiscal Year

mill

ion

$Cumulative Contract AwardCumulative Disbursement

H. Fund Flow Diagram

Interest change at 1.0% per annum during grace period, and 1.5% thereafter

Asian Development Bank

PMU Imprest Account for components 1, 2, 4 & 5 Held in Bangladesh Bank

Credit Component Imprest Account Held in Bangladesh Bank

2.0% interest charge

Bangladesh Bank Disburse to wholesale banks and receive loan repayments; regulate and supervise banks

3.0% interest charge

Consultants, suppliers, service providers, community facilitators, contractors, etc.

6.5% interest charge

Wholesale Banks Disburse to and receive repayments from MFIs

Microfinance Institutions Lend to and receive repayments from farmers

Cost recovery interest rate

45

High-Value Crop Farmers

46

V. FINANCIAL MANAGEMENT A. Financial Management Assessment 81. A financial management questionnaire was completed for DAE. No substantive financial management risks are seen. DAE and Bangladesh Bank have implemented numerous donor assisted projects including the prior Northwest Crop Diversification Project (NCDP) and have the organizational structure, skills, and financial management system to implement the Project. B. Disbursement 82. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),12 and detailed arrangements agreed upon between the Government and ADB. 83. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),13 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (SPS Appendix 5) to subprojects financed by ADB. 84. To ensure effective project implementation and timely disbursement, immediately after loan effectiveness the Government will establish two separate imprest accounts for the Project in Bangladesh Bank: one for PMU for components 1, 2, 4, and 5; and the other for Bangladesh Bank for component 3. To access imprest account funds, PMU and Bangladesh Bank will be responsible for (i) preparing disbursement projections, (ii) collecting supporting documents, (iii) preparing withdrawal applications and (iv) sending them to ADB in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). Based on the withdrawal applications, ADB will fund project imprest accounts on a reimbursement basis. 85. The statement of expenditure (SOE) procedure will be adopted to facilitate reimbursement and liquidation. The imprest accounts and SOE procedure will be established, maintained, and audited in accordance with ADB’s Loan Disbursement Handbook. The initial amount to be deposited into the imprest accounts, collectively, will not exceed the estimated expenditures for the next 6 months, or 10% of the loan amount, whichever is lower. The SOE procedure is applicable for reimbursing eligible expenditures or any individual payment not exceeding $100,000 and liquidating advances provided in the imprest accounts. 86. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet14 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the imprest account has been duly opened. 87. No disbursement will be made into imprest accounts of the Project until a project director with the requisite skills, experience and capacities necessary for the Project and satisfactory to ADB has been appointed and the PMU and the two PIUs have been established and made operational in a manner satisfactory to ADB.

12 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf13 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf14 Available in Appendix 29 of the Loan Disbursement Handbook.

47

88. No disbursement will be made into the imprest account for the credit support component of the Project until:

(i) The subsidiary loan agreement between Finance Division and Bangladesh Bank, and wholesale bank financing agreements between Bangladesh Bank and each of BASIC Bank and Eastern Bank, have been signed and delivered to ADB in form and substance satisfactory to ADB.

(ii) The committee for selection of participating MFIs has been established with five members, approved by ADB, representing the Project Director, Bangladesh Bank Agricultural Credit Department, Microcredit Regulatory Authority, and each of the two wholesale banks.

(iii) ADB has received not less than one executed onlending agreement between at least one wholesale bank and at least one participating MFI, selected in compliance with the agreed criteria, in form and substance satisfactory to ADB.

89. For every liquidation and replenishment request of the imprest account, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the imprest account is maintained, and (b) the Imprest Account Reconciliation Statement reconciling the above mentioned bank statement against the executing agency’s records.15 90. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.16

91. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. 92. In addition to imprest fund and SOE procedures, the executing agency may also use any of the following disbursement procedures: 17

(i) direct payment procedure, where ADB, at the executing agency’s request, pays a designated beneficiary directly (Chapter 7 of the Loan Disbursement Handbook provides details). This procedure is used mainly for payments of large contracts, progress payments, consultants’ fees, or procurement of goods;

(ii) reimbursement procedure, where ADB pays from the loan account to the Government’s account or, in some cases, to the project account for eligible expenditure which have been incurred and paid for by the project out of its budget allocation or its own resources (Chapter 9 of the Loan Disbursement

15 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook. 16 Checklist for SOE procedures and formats are available at:

http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdfhttp://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xlshttp://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xlshttp://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xlshttp://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls

17 Available at: http://www.adb.org/documents/handbooks/loan_disbursement/chap-06.pdf

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Handbook provides details). This payment procedure is commonly used for local currency costs, petty purchases and small works; and

(iii) commitment procedure, where ADB at the executing agency’s request, provides a irrevocable undertaking to reimburse a commercial bank for payments made or to be made to a supplier against a letter of credit financed from the loan account (Chapter 8 of the Loan Disbursement Handbook provides details). This procedure is used mainly for payments of importation costs of goods.

C. Accounting 93. DAE, Bangladesh Bank, wholesale banks, and participating MFIs will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices or those prescribed by the Government's accounting laws and regulations. PMU will be assigned sufficient and qualified accounting staff, including a planning and budget officer and an accounts officer. D. Auditing 94. DAE, Bangladesh Bank, wholesale banks, and participating MFIs will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing (for the wholesale banks and participating MFIs) and/or in accordance with the Government's audit regulation (for DAE and Bangladesh Bank) by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agencies. The annual audit report will include a separate audit opinion on the use of the imprest accounts and the SOE procedures. The Government, DAE and Bangladesh Bank have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. 95. The wholesale banks will follow their normal practice of hiring external auditors to examine and verify the correctness of their accounts, including the project credit line, as presently required by their shareholders and Bangladesh Bank. The MFI annual financial statements and operations of the project credit line will be subject to external audit by firms acceptable to the wholesale banks and Bangladesh Bank. The MFIs will maintain computerized records that show, separately, loans made under original disbursement and loans made out of the revolving funds.

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VI. PROCUREMENT AND CONSULTING SERVICES A. Advance Contracting and Retroactive Financing 96. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Guidelines (2010, as amended from time to time) (ADB’s Procurement Guidelines)18 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time) (ADB’s Guidelines on the Use of Consultants).19 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower, DAE, and Bangladesh Bank have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 97. The Government may undertake advance action for recruiting consultants to facilitate commencement of the Project. No other advance contracting or retroactive financing is envisaged.

B. Procurement of Goods, Works and Consulting Services 98. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines. Before the start of any procurement ADB and the Government will review the public procurement laws of the Government to ensure consistency with ADB’s Procurement Guidelines. 99. The PMU will be responsible for the procurement of all goods, related services, and civil works under the Project. The small and widely dispersed civil works on OFSSIs of up to $30,000 can be undertaken by the community, following the community participation guide as specified in para. 3.17 of the Procurement Guidelines. Shopping will be used for works exceeding $30,000 but no more than $100,000. For works valued at more than $100,000 but no more than $1,000,000, civil work contracts will be required and procured by PMU on the basis of national competitive bidding in accordance with the Government’s procurement procedures acceptable to ADB. Supply contracts for equipment or materials exceeding $1.0 million will be procured following international competitive bidding, and those not exceeding $1.0 million but more than $100,000 will be awarded on the basis of national competitive bidding, without limiting the option of the Borrower to apply national competitive bidding to contracts for lower amounts. Shopping will be used for procuring readily available off-the-shelf goods valued up to $100,000. The procurement of goods and services by credit subborrowers will be undertaken by respective beneficiaries in accordance with established private sector or commercial practices, which are acceptable to ADB, as described in para. 3.12 of the Procurement Guidelines. 100. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C. 101. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants.20 The terms of reference for all consulting services are detailed in Section D. An estimated 349 person months (66 international, 283 national) of consulting services are required to (i) facilitate project management and implementation, and (ii) strengthen the institutional and

18 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf19 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf20

Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/

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operational capacity of the executing agencies. Consultants will be recruited through a firm using quality- and cost-based selection with a standard quality-cost ratio of 80:20. Service providers for component 2 will be recruited using either consultant qualifications selection or the least cost selection, depending on the nature of the assignment and size of the contract.

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C. Procurement Plan

Project Information Project Name Bangladesh: Second Crop Diversification Project Project Number 40534-01 Project Cost $45.81 million Of Which ADB Loan Amounts $40.0 million Executing Agency Department of Agricultural Extension Approval Date of Original Procurement Plan 3 June 2010 Approval of most recent Procurement Plan Not applicable Publication for Local Advertisements Target in third quarter of 2010 Period covered by this Plan 18 months from date of loan effectiveness

Procurement Thresholds for Goods & Related Services, Works and Supply

Procurement Method Threshold (US$) Goods

International Competitive Bidding (ICB) >1,000,000 National Competitive Bidding (NCB) >100,000 and </= 1,000,000

Usage subject to the provisions of NCB annex Shopping </= 100,000

Works ICB >1,000,000 NCB >100,000 and </= 1,000,000

Usage subject to the provisions of NCB annex Shopping >30,000 and </=100,000 Community participation </=30,000, in accordance with Procurement Guidelines (2007)

para. 3.17, and PAI 3.05H and PAI 5.12

Procurement Thresholds for Consulting Services Procurement Method Threshold (US$) Quality Cost Based Selection (QCBS) >200,000 Consultants Qualifications Selection (CQS) </=200,000 Least Cost Selection (LCS) </=100,000

Goods and Works Contracts in Excess of $100,000

Contract Description Estimated Cost

($ millions) Number of Contracts

Procurement Method

Expected Date of Advertisement

Prior Review(Yes/No)

Agriculture Field Office Upgrading

2.40 Multiple NCB June 2011 Yes

OFSSIs 1.56 Multiple Shopping June 2011 Yes Vehicle and Motorcycles

1.51 Multiple ICB/NCB October 2010 Yes

Equipment and Furniture

0.63 Multiple ICB/NCB October 2010 Yes

Consulting Services Contracts in Excess of $100,000

Contract Description Estimated Cost

($ millions) Number of Contracts

Procurement Method

Expected Date of Advertisement

Prior Review(Yes/No)

Consultants 2.80 1 QCBS (Full technical

proposal)

July 2010 Yes

Service Providers 0.30 Multiple CQS/LCS (Bio-data)

September 2010 Yes

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National Competitive Bidding

1. General 102. The procedures to be followed for national competitive bidding shall be those set forth for the National Open Tendering Method in the Government’s Public Procurement Rules, 2008 (as updated and issued pursuant to the Bangladesh Public Procurement Act, 2006) with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the Procurement Guidelines.

2. Advertising 103. Bidding of NCB contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB’s website via the posting of the Procurement Plan.

3. Anti-Corruption 104. Definitions of corrupt, fraudulent, collusive and coercive practices shall reflect the latest ADB Board-approved Anti-Corruption Policy definitions of these terms and related additional provisions (such as conflict of interest, etc.).

4. Location of Bid Submission 105. Submission of bids to ‘primary’ and ‘secondary’ locations, or ‘multiple droppings’ of bids, shall not be required or allowed. Advertisements and bidding documents shall specify only one location for delivery of bids.

5. Rejection of All Bids and Rebidding 106. Bids shall not be rejected and new bids solicited without ADB’s prior concurrence.

6. Member Country Restrictions 107. Bidders must be nationals of member countries of ADB, and offered goods must be produced in member countries of ADB.

7. Lottery 108. A lottery system shall not be used to determine a successful bidder, including for the purpose of resolving deadlocks.

8. Qualification Requirements 109. A successful bidder must be determined by an assessment process that shall include the application of qualification requirements to all bids.

9. Rejection of Bids 110. A bid shall not be rejected on the grounds that its bid price is not within a percentage range above or below the contract estimate.

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D. Consultant's Terms of Reference

Technical Staff Input – Person Months

International 1. Team Leader / Horticulture and Spices Specialist 36 2. Agricultural Marketing Specialist 15 4. Floriculture Specialist 6 5. Seed Production Specialist 6 6. Quality, Standards, and Certification Specialist 3

Total International Consultants 66 National 1. Post Harvest Technology and Marketing Specialist / Deputy Team Leader

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2. Floriculture Specialist 18 3. Horticulture and Spices Specialist 36 4. Benefit Monitoring and Evaluation Specialist 16 5. Gender and Social Development Specialist 36 6. Community Development and Rural Credit Specialist 36 7 Training Management Specialist 36 8. Food Safety & Quality Specialist 3 9. Rural Infrastructure Engineering Specialist 12 10. Climate Change Adaptation/Environmental Specialist 36

Total Domestic Consultants 283 GRAND TOTAL 349

1. International Consultants

a. Team Leader/Horticulture and Spices Specialist (36 person months) 111. The consultant will work closely with the Project management and implementation units (PMU/PIUs), participating banks and microfinance institutions (MFIs), and service providers to assist the HVC farmers under the Project and link them to extension and credit services. The consultant will also work with the DAE and National Horticulture and Spices Specialist and prepare detailed production technology of the project’s selected high value vegetables, fruits and spices, and assist the Training Management Specialist in planning and conducting Training of Trainers (TOT) courses for the horticulture and spices aspects of farmer training programs. The consultant will also ensure that all consultants comply with and report according to the consultation and participation plan, gender action plan, and core labor standard in their respective areas of work. 112. Reporting to ADB and the Project Director of the SCDP, the consultant will:

(i) advise the Project Director on project planning and implementation issues, providing assistance with work planning, scheduling and coordination of inputs, determination of priorities and management of project resources;

(ii) provide overall team leadership for supervision and coordination of activities of the consultants, including briefing consultants on their arrival and jointly formulating individual work plans consistent with those of the Project;

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(iii) recommend solid actions for PMU/PIUs to address all identified issues; take recommendations of consultants and, with DAE counterparts, ensure recommendations are acted upon;

(iv) identify constraints in the horticulture and spices subsectors, including access to resources, availability and quality of inputs, technology, post-harvest storage, marketing, transport, and financial returns to producers;

(v) evaluate the policy, regulatory, and institutional framework for the development of the horticulture subsector;

(vi) in consultation with the international and national Agricultural Marketing Specialists, identify varieties of horticultural and spice products that have the most potential for domestic and export sales, and for increasing domestic value addition;

(vii) assess the potential for organic fruits, vegetables, especially in the export market, and identify areas in the global market that provide opportunities for domestic producers;

(viii) evaluate the available training of producers and other stakeholders in horticulture and spices and recommend ways to improve the knowledge of farmers and primary processors at “on farm” level;

(ix) using the findings from horticulture and spices subsector assessments, and in collaboration with the international and national Agricultural Marketing and Horticulture and Spices Specialists formulate an action plan for the Project to improve input supplies, production, handling, post-harvest storage, transport, and processing of each major category of horticultural products; and recommend options for value addition and strategies for the development of marketing channels considering gender based needs;

(x) assist DAE and consultants in the review and analysis of studies undertaken by the Project and assist in implementing recommended actions;

(xi) identify and include in training and work, actions farmers may take to improve their incomes from the production and marketing of HVCs;

(xii) prepare selection criteria for post-harvest investment proposals/requests and assist PMU in reviewing and selecting the proposals for support funding;

(xiii) assist in developing and delivering capacity enhancement activities in DAE and its field network;

(xiv) supervise and support the implementation of the gender action plan and development of training materials and courses on gender awareness and HVC production;

(xv) work with the Benefit Monitoring and Evaluation Specialist to establish and institutionalize reporting formats; ensure the preparation and timely submission of project reports, studies and promotional materials/activities, including the quarterly project progress reports and project completion report to the Government and ADB, and ensure that gender, indigenous people, and social indicators and results are integrated and standards of quality and timeliness are properly met;

(xvi) assist in sorting out any issues or problems which may develop between the consultants or between the consultants and other project staff and keep the Project Director and the ADB Project Officer advised of any such developments and discuss with them the appropriate action to take;

(xvii) participate in the supervision and review of the implementation of activities funded by the Project; assist in the update of the project performance management system; keep the ADB appraised, through regular reports, of progress in the implementation of the Project and especially of any issues or delays arising, and provide advice on appropriate remedial measures;

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(xviii) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants; and

(xix) undertake any other duties as may be reasonably assigned by the Project Director.

113. The consultant will prepare a work plan for approval by the Project Director and ADB Project Officer within 10 working days of signing of the contract. Work progress, discussions, sharing of issues should be done on a continuous basis and as and when required or asked for. The consultant will need to submit quarterly reports. The content of the reports should clearly highlight project progress, and issues and solution taken, both quantitatively and qualitatively. The Team Leader will ensure that each consultant provides a satisfactory written report of their activities and recommendations at the completion of their assignments. 114. He/she will have at least a Masters Degree with specialization in horticulture (vegetables and fruit) and spices production, or agricultural economics, processing, marketing and resource management. He/she should have wide experience in rural development and farm production and marketing linkages. He/she will have at least 10 years experience in advising government on policies and strategies, be familiar with ADB project implementation and management procedures, and have previous satisfactory experience in leadership. The consultant should also have relevant work experience in the South Asian region.

b. Agricultural Marketing Specialist (15 person months) 115. The Agricultural Marketing Specialist will supervise and advise on the initial investments and their implementation in Project Component 2 (Value addition Support). He/she will report to the PMU Project Director, and work closely with the National Post Harvest Technology and Marketing Specialist, and the PMU Agricultural Marketing Officer on all relevant areas of marketing. 116. The Specialist will have the following responsibilities:

(i) conduct an initial and detailed review and analysis of the current marketing systems prevailing in Bangladesh for HVC particularly fruit and vegetables, floriculture products, spices, and coconut products, The review should include Bangladesh’s current status in meeting domestic and international quality requirements, demand potential for the Project’s focus crops, and, the availability of timely and appropriate agricultural marketing information to farmers (men and women);

(ii) carry out value chain analysis for the main HVC being promoted by the Project, gaps identified in the chain, and advise on the forward and backward linkages that may be developed to the benefit of the Project’s main farmer beneficiaries, and their groups considering the specific needs and potentials for women;

(iii) design and assist in appropriate marketing training courses for farmer groups, to include post harvest quality control, price bargaining and negotiation, longer term seasonal contract rights and obligations, strategies to sell into higher price periods in the seasonal cycle through storage and forward commitments with methodology and contents suitable and required for women;

(iv) advise on and assist in the development, operations, monitoring and review of appropriate forms of on-farm, small-scale infrastructure (OFSSI) investments; and

(v) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

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117. The specialist should hold a Masters Degree in agricultural development, economics or marketing and have at least 15 years experience in providing similar consultancy advice in South and South East Asia.

c. Floriculture Specialist (6 person months) 118. The Floriculture Specialist will undertake the following:

(i) prepare the detailed production technology of the selected flowers (rose, tuberose, gerbera, gladiolus, marigold and others including pot and cut flowers) of SCDP in relation to appropriate varieties and their suitability for different locations, input use, cultivation techniques, intercultural operations, different crop care activities, critical times of growth, sensitivities, special requirements, pest management, harvesting and post-harvest handling and care required by the growers;

(ii) provide suggestions/recommendations for required measures or practices to solve or tackle various problems encountered in production of the selected flowers/ornamentals as assessed through a short survey among growers producing those in the SCDP areas;

(iii) prepare guidelines for DAE’s demonstration plots with the selected flowers in selected spots of the SCDP upazilas;

(iv) investigate the potential and improvement of flowers and ornamentals in the market and suggest appropriate additional activities to introduce and/or popularize new items, such as pot plants and other ornamentals;

(v) prepare training manuals for selected flowers for DAE and other personnel of SCDP as required and conduct training sessions on these, as and when required;

(vi) liaise and consult with other such specialists in the country or abroad through internet or correspondences, as will be applicable, for technology updates and problem-solving;

(vii) incorporate principles of good agriculture practice for the production programs and demonstrations;

(viii) assist the Training Management Specialist in planning and conducting TOT courses for the flowers and ornamentals production training programs to raise local expertise to international standards;

(ix) undertake periodic regular visits of SCDP areas to ascertain that appropriate technologies are followed in DAE’s demonstration plots, and farmers’ training sessions are conducted as per required quality and content; and

(x) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

119. The Specialist will have:

(i) at least a Masters Degree with specialization in floriculture or ornamental horticulture;

(ii) at least 10 years practical experience in production or rose, tuberose, gerbera, gladiolus, marigold and others, including pot and cut flowers;

(iii) thorough knowledge of the working and management of covered houses like lath house, shade houses, net houses, glass houses, etc;

(iv) a sound knowledge of Bangladesh and/or South/South East Asian agriculture with experience of floriculture in similar agro climatic and social environment;

(v) a thorough knowledge of flower harvest and handling, packaging, carrying, storing, waste prevention and related marketing skills;

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(vi) required expertise in manual and guidelines development and conducting training classes;

(vii) ability to appreciate the local customs, social and institutional environments, their dynamics, role of NGOs and the private sector, relevant global issues and the constantly evolving market;

(viii) ability to work in a team, collaborate with people and organizations of diverse backgrounds.

d. Seed Production Specialist (6 person months)

120. The Seed Production Specialist will undertake the following:

(i) prepare the detailed technology for production of HVC seeds as will be determined by SCDP; detailing their input use, cultivation techniques, intercultural operations, different crop care activities, critical times of growth, sensitivities, special requirements, pest management, harvesting and post-harvest handling and care required by the farmer;

(ii) provide suggestions/recommendations for required measures or practices to solve or tackle various problems encountered in selected seeds production as assessed through a short survey among farmers producing those in the SCDP areas;

(iii) prepare, in the same way, the guidelines for DAE’s demonstration plots with the selected seed crops in selected spots of the SCDP upazilas;

(iv) provide guidance in construction and management of special structures like, greenhouses, net houses, shade houses for necessary seeds, planting materials, plants and crops;

(v) prepare training manuals for all the relevant seeds production for the DAE and other personnel of SCDP as required and conduct training sessions on these, as and when required/planned;

(vi) liaise and consult with other such specialists in the country or abroad through internet or correspondences, as will be applicable, for technology updates and problem-solving;

(vii) incorporate principles of good agriculture practice for the production programs and demonstrations;

(viii) assist the Training Management Specialist in planning and conducting TOT courses for the relevant training programs, in a way that local expertise of international standards grow in related vegetable seed production and that women can equally participate in the process;

(ix) undertake periodic regular visits of the SCDP areas to ascertain that appropriate technologies are followed in DAE’s demonstration plots, and farmers’ training sessions are conducted as per required quality and content; and

(x) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

121. The International Seed Production Specialist will have:

(i) at least a Masters Degree in Plant Breeding or Seed Science; (ii) at least 10 years practical experience in quality seed production, processing and

storage of HVC seeds; (iii) a thorough knowledge of construction and management of structures, such as

net houses, shade houses, and glass houses; (iv) a thorough knowledge of seed quality, phytosanitary standards, and rules, and

their application procedures;

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(v) a sound knowledge of Bangladesh and/or South/South East Asian agriculture with experience of seed production in similar agro climatic and social environment;

(vi) required expertise in manual and guidelines development and conducting training classes;

(vii) ability to appreciate the local customs, social and institutional environments, their dynamics, role of NGOs and private sector, the global relevant issues and the constantly evolving market; and

(viii) ability to work in a team, collaborate with people and organizations of diverse backgrounds.

e. Quality, Standards, and Certification Specialist (3 person months)

122. The Quality, Standards, & Certification Specialist will provide intermittent inputs to the DAE under Component 4 (Institutional Strengthening), and work closely with the National Food Safety and Quality Specialist. The Specialist will undertake a feasibility study on establishing a Quality and Certification service for fruit and vegetables within DAE. The Specialist will investigate the following:

(i) the current status of food safety certification in Bangladesh, and the institutions with a mandate to undertake such activities, together with their acceptability to consumers, retailers and exporters;

(ii) the demand from retailers for certification, by DAE, of farmers’ group’s produce in term of safety related to controlled inputs of pesticides, herbicides and fertilizers. (known elsewhere in the region as “safe fruit and vegetables” certification);

(iii) the capacity and resources required by DAE in terms of qualified staff and laboratory and other testing equipment;

(iv) estimate the costs of follow on activities should the feasibility study prove positive;

(v) the demand and potential for developing future compliance with overseas export certification, for example, organic certification and other standards in the international fruit and vegetable sector; and which are the appropriate Bangladesh institutions to handle international certification and whether DAE has a role to play, other than at farm level; and

(vi) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

123. The specialist will have a Masters Degree in Food Technology, and at least five years experience in quality standards and certification systems preferably with experience in the South and South East Asian Region.

2. National Consultants

a. Post Harvest Technology and Marketing Specialist / Deputy Team Leader (54 person months)

124. The National Consultant will work to the same terms of reference as the International Agricultural Marketing Specialist with additional responsibilities in post harvest technology training and overall project management. The consultant will ensure compliance and reporting of activities according to the consultation and participation plan, gender action plan, and core labor standard in their respective areas of work.

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125. The specialist should hold a Masters Degree in agricultural marketing, and post harvest technology and have at least 10 years experience in providing similar consultancy advice in Bangladesh. Similar experience in South and South East Asia will be an advantage.

b. Floriculture Specialist (18 person months) 126. The National Floriculture Specialist will work to the same terms of reference as the International Floricultural Specialist. He/she will have a Masters Degree that includes specialization in floriculture or ornamental horticulture and at least five years of experience in these fields. Related experience gained outside Bangladesh will be an advantage.

c. Horticulture and Spices Specialist (36 person months) 127. The Horticulture and Spices Specialist will undertake the following:

(i) prepare the detailed production technology of selected high value vegetables, fruits and spices of SCDP in relation to appropriate varieties and their suitability for different locations, input use, cultivation techniques, intercultural operations, different crop care activities, critical times of growth, sensitivities, special requirements, pest management, harvesting and post-harvest handling and care required by the farmer;

(ii) prepare the above guidelines for the SCDP areas (upazilas) considering the suitability in terms of the soil, land and climatic conditions of the areas and their variations. S/he will need to consult the latest data on the agro-ecological parameters and make the recommendations accordingly;

(iii) provide suggestions/recommendations for required measures or practices to solve or tackle various problems encountered in production of the selected vegetables, fruits and spices that may be accessed through a short survey among farmers producing those in the SCDP areas;

(iv) investigate the potential and improvement of vegetables, fruits, and spices in the market and suggest appropriate additional activities to introduce and/or popularize new crops/varieties;

(v) prepare guidelines for DAE’s demonstration plots with high value vegetables, fruits and spices in different spots of the SCDP upazilas;

(vi) prepare training manuals for the selected vegetables and spices for the DAE and other personnel of SCDP as required and conduct training sessions on these, as and when required/planned;

(vii) liaise and consult with other such specialists in the country through internet, meetings, visits, seminars relevant workshops, other agricultural institutes, and regional research stations, for vegetables and spices production technology updates and problem-solving;

(viii) incorporate principles of good agriculture practice for the production programs and demonstrations;

(ix) assist the Training Management Specialist and Gender Specialist in planning and organizing TOT courses for vegetables and spices production training programs ensuring women's participation and integrating their needs in the contents;

(x) undertake periodic regular visits of the SCDP areas to ascertain that appropriate technologies are followed in the DAE’s demonstration plots, and farmers’ training sessions are conducted as per required quality and content; and

(xi) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

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128. The selected Horticulture and Spices Specialist will have: (i) a Masters Degree with specialization in vegetables and fruits and knowledge of

spices; (ii) at least 10 years experience in research and production of vegetables and

spices; (iii) a thorough knowledge of the horticulture production sector with emphasis on

vegetables, fruits and spices, policies, constraints, and potentials; (iv) thorough knowledge and understanding of the standards in food quality and

safety requirements; (v) required expertise in manual and guidelines development and conducting training

classes; (vi) ability to understand the social and institutional environments, their dynamics,

role of NGOs and private sector, the global relevant issues and the constantly evolving market; and

(vii) ability to work in a team, collaborate with people and organizations of diverse backgrounds.

d. Benefit Monitoring and Evaluation Specialist (16 Person Months)

129. In close cooperation with the team leader and the PMU, the consultant will:

(i) set out a participatory benefit monitoring and evaluation design and program that is in line with ADB’s project performance management system (PPMS) framework that supports data requirements (segregated by gender) of a results-based management system;

(ii) define indicators and targets for all desired project outputs, outcomes, and impacts for annual and/or episodic points in the project cycle;

(iii) ensure the PPMS provides a clear indication of project efficiency (planned outputs against allocated inputs) and effectiveness (achievement of project outcomes and impacts as a consequence of implementing planned interventions);

(iv) set out a periodic program of, and initiate, PPMS activities to assess whether project inputs are delivering expected benefits to the intended beneficiaries;

(v) design PPMS to detect deviations between the plan and execution of the Project so that deviations between the plan and achieved results (outputs, outcomes, and impacts) will be recognized by project management in a timely manner and allow corrective management actions and decisions to be taken;

(vi) design PPMS to incorporate benchmark, and subsequent, financial, physical and socioeconomic surveys that allow for the analysis of data, and set out reporting tabular formats to be followed;

(vii) design annual, mid-term and final, benefit monitoring reports for submission to stakeholders, ensure data collection is adequate, and assist with the formulation of data for the reports; and

(viii) work closely with PMU and the regional PIUs, wholesale banks and MFIs to ensure monitoring and evaluation requirements of each participant are adequately met.

130. The consultant will have a Masters Degree in economics, agricultural economics, marketing or business management. He/she will have at least six years of agricultural experience and, preferably, at least three years experience of working with financial institutions and NGOs. Experience with externally funded development programs would be desirable, preferably with experience in agricultural production and improved market linkages.

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e. Community Development and Rural Credit Specialist (36 person months)

131. The specialist will liaise, coordinate and assist MFIs in the disbursement and management of the credit line and in developing community support for post-harvest facility investments. The consultant would work in the first four years of the project for a period of 36 months. Specifically, the consultant will:

(i) work with the wholesale banks and the MFIs to ensure project activities proceed smoothly and in a coordinated manner;

(ii) carry out due diligence of MFIs as required and analyze and report on their performance and eligibility to participate in the Project;

(iii) liaise with and coordinate plans of the MFIs for the provision of credit services in each of the Project upazila;

(iv) advise the PMU, PIUs and wholesale banks on the implementation of plans and constraints to implementation as they are identified;

(v) work with PMU and MFIs in the identification of communities that have a potential to invest in and operate post-harvest facilities;

(vi) assist the PMU in arrangements and drafting agreements to hire MFI staff, or staff of other organizations, to work with communities;

(vii) assist the Agricultural Marketing Specialist and the Post Harvest Technology and Marketing Specialist, farming communities and service providers in the preparation and implementation of post-harvest facilities;

(viii) advise on ways to facilitate post-harvest facility investments; (ix) advise the PMU on the provision of matching grants for post-harvest facilities; (x) advise the PMU and Bangladesh Bank as necessary on the selection of

additional MFIs and NGOs for credit-service delivery and for community support mobilization;

(xi) provide oversight and direction to the Community Facilitators; and (xii) work with the Climate Change Adaptation/Environmental Specialists in ensuring

environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

132. The consultant will possess a Masters Degree in business administration, economics or social sciences. A minimum of 10 years of experience at a senior level in an NGO and/or in project management is also required with at least five years experience in rural credit. Preferably, the consultant will have at least 5 years experience working in international donor-funded projects. S/he must possess report writing skills and computer literacy.

f. Gender and Social Development Specialist (36 person months) 133. The Specialist will ensure the rights and safety of women engaged in HVC production and marketing activities being promoted and supported by the Project, and ensure that women are especially able to benefit from the opportunities presented by the Project. The Specialist will work with all consultants and supervise the implementation of the gender action plan in all components and ensure monitoring and reporting of progress/results. The major duties of the Specialist will be:

(i) orient DAE, NGOs and Project staff on the Gender Action Plan, related gender and social issues in HVC production and value addition and on their roles in promoting gender equality;

(ii) review the programs of DAE and participating NGOs and encourage them to focus on and involve women to the maximum extent possible. Make constructive suggestions to NGOs as to how this might be done so that they can be incorporated into their business and operational plans;

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(iii) publicize the Project among indigenous people, women’s groups and associations and carry out continuous promotion among women’s groups and associations, encouraging them to apply for credit under the Project;

(iv) publicize the successes of women farmers under the Project to encourage others to come forward and take advantage of the Project’s potential benefits;

(v) conduct studies to assess current situation of public market management and impediments to women in accessing the market and suggest remedial measures;

(vi) determine training needs of women farmers and organize training programs for them; ensure women's participation in training opportunities for women farmers and entrepreneurs interested in improving production to market linkages ventures;

(vii) orient DAE and Project staff on 'Gender and Agribusiness' – develop module and impart training;

(viii) work with DAE and interested organizations to develop in-house trainers to impart training on entrepreneurship development including the development of manuals, provision of illustrations and materials and implementation of training courses;

(ix) conduct a baseline survey on sample Project beneficiaries from gender dimensions, identify needs and potentials and ensure that they are addressed;

(x) work with the Benefit Monitoring and Evaluation Specialist to develop a data base with appropriate gender based monitoring indicators to highlight project effects on women empowerment, livelihood improvement and social development;

(xi) highlight project effects through case studies that illustrate women empowerment dimensions of the project beneficiaries; and

(xii) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

134. The Specialist will have a relevant Masters Degree qualification and have demonstrated ability over at least five years to work with and effectively promote the participation of women entrepreneurial activities. He/She will have appropriate qualification in any discipline of social studies, or development studies with demonstrated experience in (i) gender development and social inclusion practices, (ii) training management/facilitation, designing extension materials/publications and institutional networking, and (iii) working with public as well as private sector and NGO stakeholders and systems.

g. Training Management Specialist (36 person-months) 135. The Training Management Specialist will carry out the following responsibilities:

(i) consult and cooperate with the different horticulture and other production specialists for the whole program of training so that the courses can be of quality and effective to meet the required objectives of the Project;

(ii) lead the training needs assessment, guide the specialists accordingly and define the benchmark in the training needs assessment report;

(iii) lead and coordinate the design and development of training contents with in-house expertise, and other authoritative sources on the basis of the training needs assessment for use in training courses;

(iv) particularly emphasize improved training methodology for the training and its delivery to be of quality so as to have a lasting effect;

(v) work closely with the Gender and Social Development Specialist and the Community Development and Rural Credit Specialists to ensure that contents, logistics and methodologies of training consider needs of women and indigenous peoples.

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(vi) work with trainers in the structuring and development of training covering farmer field days, motivational tours, training of DAE staff, training of DAE extension staff and the training of MFI credit staff;

(vii) revise courses and curriculum periodically as required to make them relevant to attendees and relevant to the goals of the Project;

(viii) assist MFI to prepare their staff training programs for HVC lending and suggest links between MFIs and other sources of HVC expertise for training purposes;

(ix) oversee the implementation of the training programs ensuring that courses are held, that attendees are properly chosen, and that follow up courses are provided for the attendees after the initial exposure;

(x) develop a system of post-course evaluation by trainees (at the closing of the training and of sample trainees in the field after a reasonable period of time) so as to assess the effectiveness of extension and training;

(xi) assist in the development of a cadre of in-house trainers of DAE to impart training on HVC development and assist in the production of manuals, illustrations, materials and impart training; and

(xii) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

136. The Training Management Specialist will have:

(i) at least a masters degree in either agriculture economics or any discipline of social science having very good knowledge of agriculture;

(ii) at least 10 years practical working experience with NGOs, government agencies or commercial enterprises in the field of human resources development;

(iii) a thorough knowledge and skill in training needs assessment, curriculum development, training design & methodologies, presentation, evaluation, and feed-back implementation;

(iv) required expertise in manual and guidelines development and conducting training classes;

(v) ability to appreciate the local customs, social and institutional environments, their dynamics, role of NGOs and private sector, the global relevant issues and the constantly evolving market; and

(vi) ability to work in a team, collaborate with people and organizations of diverse backgrounds.

h. Food Safety and Quality Specialist (3 Person Months)

137. The National Consultant will work with and to the same terms of reference as the International Quality Standards and Certification Specialist. 138. The specialist will have a Masters degree in food safety and technology, and 10 years experience in Bangladesh public or private sector institutions implementing food safety and quality and standard certification.

i. Rural Infrastructure Engineering Specialist (12 Person months) 139. The consultant will provide intermittent inputs under component 2 with particular reference to OFSSI investments. He/she will support and advise farmer community groups, DAE staff, and Project service providers in the identification and implementation of OFSSI investments. Specifically the consultant will:

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(i) participate, with DAE upazila officers, service providers and community facilitators in farmer community group needs assessments regarding the identification of potential on farm small scale infrastructure (OFSSI) investments;

(ii) assist farmers’ groups to undertake surveys of available OFSSI sites, advise and participate in the design and costing of the facility; and the extent to which labor and materials for construction can be supplied from within the group itself;

(iii) where necessary and appropriate assist PMU in the identification, and contracting of, preferably; local contractors;

(iv) assist service providers and farmer groups in preparing an application for OFSSI funding support for submission to the PMU;

(v) provide ad hoc technical support as required by farmers groups in operating and maintaining OFSSI;

(vi) provide support to all aspects of project implementation requiring rural infrastructure experience and expertise as requested by the PMU; and

(vii) work with the Climate Change Adaptation/Environmental Specialists in ensuring environmental considerations are fully incorporated in all activities of the project and in recommendations made by project staff and consultants.

140. The specialist will have a minimum of a master’s degree in civil engineering and a recognized professional qualification, with at least 10 years experience in the rural infrastructure sector. Experience in working with donor projects will be an advantage.

j. Climate Change Adaptation/Environmental Specialist (36 person months)

141. The Specialist will work in collaboration with the PMU and DAE in advising DAE and Project-related staff and consultants on environmental matters including climate change impact issues, mitigating actions, and adaptation strategies and options. Specifically, the specialist will:

(i) periodically review and report on the impact of Project actions on the environment and determine the nature and extent of environment impact, if any, caused by the Project;

(ii) conduct surveillance of the environmental status of HVC farms in respect to soil structure, erosion, state of chemical fertilizer and pesticide uses, availability and use of organic manure, and evaluate the efficacy and success of IPM practices;

(iii) assist in facilitating participatory planning and governance activities and the implementation of the initial environmental examination recommendations;

(iv) advise and support DAE in building in-house capacity for the training of DAE staff to carry out initial environmental examination for its projects, awareness-building of and motivating farmers on environmental issues, and providing support for on-farm involvement of women in HVC cultivation;

(v) assess potential impacts related to changing climatic conditions on different HVCs in terms of soil health, flooding, salinity and atmospheric warming;

(vi) advise DAE on mitigation and adaptation options to cope with climate change impacts;

(vii) prepare guidelines and manuals in English and Bengali on climate change impacts and adaptation measures for mid and senior level officers of DAE as well as for field level staff;

(viii) prepare training modules and organize at least two interactive training workshops each year for each of two groups covering district level and upazila level DAE officers in the SCDP area; and

(ix) train upazila level DAE officers as trainers for climate change impacts and adaptation so that they can provide related training to HVC farmers.

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142. The Specialist will have appropriate Masters Degree and at least 10 years experience working on environmental issues. Preferably at least five years of this experience will have been working in the public sector. Past participation in relevant overseas studies, conferences and research will be desirable attributes.

3. Output Requirements 143. The Consultant’s outputs will include contributions to the Project’s milestones, relating to their expertise, including the inception, semi-annual, mid-term, final and completion reports. All consultants will integrate activities and report on implementation of the consultation and participation plan, gender action plan and core labor standard in their respective areas of work. Each individual international and domestic consultant will deliver, to the Team Leader, an inception report, regular progress reports, and a final report on the completion of his/her inputs to project implementation in accordance with his/her terms of reference. The Team Leader will determine the timing of each consultant’s outputs at the outset of their involvement with the project and deliver their reports, with comments on quality, to the PMU.

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VII. SAFEGUARDS

144. Resettlement. The Project is of category C on involuntary resettlement. The envisioned interventions will not entail adverse social or resettlement impacts. The Project will work with farmers working on their own or leased land. Limited construction may take place, which mostly will be on government land, existing rights of way or lands owned by the beneficiaries themselves. The Project will exclude any subprojects that will entail land acquisition or any involuntary resettlement including relocation. If any involuntary resettlement issues are identified during the implementation, the Government will inform ADB of the nature and magnitude of such issues, and will prepare appropriate resettlement plans to address them adequately, as per the Safeguard Policy Statement. Until ADB reviews and approves such planning documents, the Government should not proceed with land acquisition and project-related physical activities. 145. Indigenous Peoples. The Project is of category B on indigenous peoples. The Project will not have negative impact on indigenous peoples. The adoption of a demand-driven approach will enable indigenous peoples to participate and benefit from the Project. The Project will identify whether there are indigenous peoples when starting project implementation in each project upazila through a survey. If identified, the indigenous people will be supported to be involved in crop diversification and value addition activities, through developing and implementing an indigenous people action plan as specified in the indigenous peoples development framework (Appendix 1). 146. Environment. The Project is of category C on environment, due to that there may be minor adverse impacts like soil erosion, and harmful effects from excessive use of chemical fertilizers and pesticides. Measures to mitigate such effects and monitoring and compliance tasks have been outlined in the Initial Environment Examination and Environmental Assessment and Review Procedures (Appendix 2). Special consideration will be given to the potential impacts of climate change on the project goals to promote HVCs, and the Project has incorporated detailed adaptation options including developing and disseminating new climate change resilient crop species. Moreover, actions and measures are included to strengthen the in-house capacity of DAE in dealing with environmental issues with special reference to climate change impacts. 147. See Section VIII.B for safeguards monitoring.

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VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

Design Summary Performance Targets and Indicators with Baselines

Data Sources and Reporting Mechanisms

Assumptions and Risks

Impact

Increased rural income in 27 districts of the southwest and northwest of Bangladesh

Headcount ratio of indication of rural poverty in western Bangladesh reduced by 2% from 47%–54% (2008) to 45%–52% by 2020

Farmer incomes increased by 20% by 2020 (2008 baseline: Tk8,200/month per household)

Employment in agriculture in western Bangladesh increased by 5% (2008 rural employment rate: 55%)

Annual agricultural production and productivity, trade, and household income data by BBS

Assumption

Effective project implementation by DAE and participating MFIs and service providers

Risk

Natural disasters such as floods and cyclones, and negative impact of climate change

Outcome

Improved efficiency and value addition of HVC production

Improved quantity, quality, regularity, and value of HVCs in response to market demand, and public health and environmental requirements

Women involved in commercial agricultural production and marketing increased by 10% by 2016

Women’s access to rural finance for HVC production and marketing increased by 20% by 2016

Annual district, upazila, union, and village statistics and accounts by DAE

Project quarterly and annual progress reports by the PMU

Review missions by ADB, twice a year

Project completion report by DAE, IMED, and ADB within 3, 9, and 18 months of project completion respectively

Assumptions

Government will maintain and improve the enabling environment for the commercialization of agriculture

Rural infrastructure will be developed and improved and sustained to support HVC production and market access

Risk

Delays to the start up of project implementation

Outputs

1. Increased HVC production and commercialization

At least 50,000 hectares converted to HVC production by 2016

Completion of 523,000 person-days of farmer training

10,000 HVC demonstration plots set up

900 farmer field days conducted by 2016

Adaptation to the negative effects of climate change targeted through at least five replicable pilot projects established in the drought-prone areas of the northwest, and five in the southwest areas vulnerable to cyclones and salinity

Assumption

Willingness of potential beneficiaries to participate in the project

Regular monitoring of project statistics by the PMU, PIUs, and DAE field officers

Quarterly and annual reports on project progress by the PMU

Risk

Poor market connectivity affecting food and input prices and diversification into HVCs

2. Reduced HVC postharvest losses,

At least 25 farmer community groups establish direct linkages

Regular monitoring of production and sales

Assumption

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Design Summary Performance Targets and Indicators with Baselines

Data Sources and Reporting Mechanisms

Assumptions and Risks

improved product quality and value addition, and enhanced market efficiency

with retailers through seasonal contracts or contract farming by 2016

240 OFSSIs established and operating by 2016

Postharvest losses reduced by 10% by 2016

statistics by the PMU, PIUs, and service providers

Quarterly and annual reports on project progress by the PMU

Willingness of potential beneficiaries to participate in the project and apply knowledge transfer in postharvest handling and marketing

3. Enhanced capacity of public sector institutions and participating partners in supporting farmers to increase their incomes

DAE’s extension services improved in terms of number and regularity of farm advisory visits for HVC production and postharvest support, compared with 2010 baseline

120 staff from DAE and MFIs receive 1,190 TOT days of HVC production and extension training courses by 2016

Loan portfolio of $25.5 million for 175,000 farmer borrowers

6 HDTCs in the southwest region upgraded and operating for institutional training courses and nursery management by 2016

Feasibility study on farmer quality, standards, and certification system for fruit and vegetables completed and accepted by DAE

Regular monitoring of project statistics by the PMU, PIUs, and DAE field officers

Quarterly and annual reports on project progress by the PMU

Annual financial statements of participating financial institutions

Assumption

Government policies supporting participating MFIs disbursing credit to farmers at full cost recovery

4. Increased participation of women in commercial agricultural activities

At least 85,000 women farmers trained and involved in HVCs

78 trainers developed as gender awareness specialists through TOT courses

300 DAE and MFI staff receive gender awareness training in HVCs and value addition

At least 18 women leaders identified in each upazila to help promote women under the project

At least 10 women actively involved in each OFSSI investment and operations

Climate change adaptability training and improved farming practice have at least 50% female participation

Wives and husbands cosign loan agreements

At least 80% of female credit recipients actively manage the credit

Regular monitoring of project statistics by the PMU, PIUs, and participating MFIs and service providers

Quarterly and annual reports on project progress by the PMU

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Activities with Milestones Inputs

Loan

ADB: $40 million

Item Amount ($ million)

Extension services and community development

5.5

Civil works 2.4

Credit line 25.5

Consulting services 2.8

Service providers 0.3

Vehicles and motorcycles

1.1

Equipment and furniture

0.5

Surveys, studies, and evaluation

0.3

Interest during implementation

1.0

Unallocated 0.6

Government: $5.4 million

Item Amount ($ million)

Civil works 1.2

Vehicles and motorcycles

0.4

Equipment and furniture

0.2

PMU, PIU, HDTC staff expenses

2.0

PMU and PIU operation expenses

1.6

Farmer communities: $0.4 million

Item Amount ($ million)

Project start-up a. PSC established by July 2010 b. Subsidiary loan agreement between Bangladesh Bank and BASIC Bank and Eastern

Bank signed by July 2010 c. The PMU and PIUs set up, key staff appointed, and operating by August 2010 d. Recruitment of consultants and community facilitators by the PMU by November 2010 e. Participating microfinance institutions selected by December 2010 f. Onlending agreements (including operating arrangements) between wholesale banks

and participating MFIs signed by December 2010 1. HVC production support (component 1) 1.1 First TOT courses for DAE and participating MFI staff started by December 2010 1.2 Institutional farmer training started by January 2011, and ongoing 1.3 Farmer field days and demonstration plots started by April 2011 1.4 First agricultural fairs held in Jessore and Bogra by July 2011 1.5 First DAE project review workshop held in Dhaka by March 2011 1.6 First SAAO motivational tours held by May 2011 1.7 First SAAO workshops held by July 2011 1.8 First lead farmer motivational trips held by September 2011 1.9 First regional project review workshops held in Jessore and Bogra by September 2011 2. Value addition support (component 2) 2.1 First participating community groups identified by January 2011 2.2 First service provider recruited by January 2011 2.3 First group postharvest training and awareness raising in value addition held by April

2011 2.4 First applications from communities for OFSSI support received by July 2011 2.5 First construction of OFSSI facilities by September 2011 2.6 First OFSSI operating by May 2012 3. Credit support (component 3) 3.1 Project credit-related information prepared and published by January 2011 3.2 Agreement with MFIs on project locations by January 2011 3.3 First field workshops on credit held by February 2011 3.4 Farmer training workshops on credit started by February 2011 3.5 First tranche of credit disbursed to farmers by March 2011 4. Institutional strengthening (component 4) 4.1 Gender action plan implementation started by July 2010 4.2 DAE staff training started by January 2011 4.3 Rehabilitation of DAE district offices started in January 2011 and finished by June 2012 4.4 Upgrading of HDTCs started by April 2011 and finished by June 2013 4.5 Food quality standards and certification feasibility study started by April 2012 5. Project implementation support (component 5) 5.1 Project area-wide promotion and awareness programs started by October 2010 5.2 Baseline survey started by January 2011 and completed by May 2011 5.3 Project performance management system established by August 2011 5.4 Midterm review completed by July 2013 5.5 Independent monitoring and evaluation reports completed and submitted by April 2013

and September 2015

Civil works 0.4

ADB = Asian Development Bank; BBS = Bangladesh Bureau of Statistics; DAE = Department of Agricultural Extension; HDTC = horticulture development training center; HVC = high-value crop; IMED = Implementation Monitoring and Evaluation Division; MFI = microfinance institution; MOA = Ministry of Agriculture; OFSSI = on-farm, small-scale infrastructure; PIU = project implementation unit; PMU = project management unit; SAAO = subassistant agricultural officer; TOT = training of trainer. Source: Asian Development Bank estimates.

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B. Monitoring

1. Project Performance Monitoring

148. PMU shall establish and maintain a systematic project performance management system (PPMS), satisfactory to ADB, as part of its management information system, within four months of project effectiveness. The PPMS shall support gender-disaggregated data requirements of a results-based management system. Key performance indicators in the design and monitoring framework, disaggregated by commodities/ regions/ institutions/ service providers, will be the basis for the PPMS. Yearly indicator values will be monitored during the project life. Benefits of the Project to climate change adaptation will be evaluated. Bangladesh Bank shall provide data in respect of component 3 required for the PPMS, including the size, composition and performance of the subloan portfolios at participating MFIs which need to track and report the delivery and utilization of the credit by gender, commodity, region, and size of farm. 149. Within 9 months of project effectiveness, PMU shall have through surveys at the upazila level established the baseline for each such indicator. The PPMS will (i) provide clear assessment of project efficiency (planned outputs against allocated inputs) and effectiveness (achievements of outcomes and impacts resulting from planned interventions); and (ii) identify deviations between project plan and execution, including compliance with eligibility criteria. PMU shall on the basis of PPMS recognize deviations on a timely basis and undertake prompt corrective action. A monitoring team will be established within PMU and PIUs to ensure operation of the PPMS for all project component activities. The progress and performance of the Project shall be monitored, reviewed and reported to ADB following the initial baseline survey and annually thereafter through annual benefit monitoring reports based upon the PPMS. 150. The design and monitoring framework already includes indicators for inclusion in the PPMS. The baseline survey will also provide additional measures to be incorporated in the PPMS and mid-term and final surveys will provide more detailed measures of effectiveness of the poverty and social action plans. MFIs will be required to supply information on the use of credit by gender. Areas of HVCs grown under the Project will be monitored. In addition to providing agronomic information, these data will also show labor employment and size of farms plots. Data will also be collected concerning community involvement in value addition training and OFSSI investments and numbers of farmer owners including gender. 151. Disaggregated baseline data for output and outcome indicators gathered during project processing will be updated and reported quarterly through the DAE quarterly progress reports and after each ADB review mission. These quarterly reports will provide information necessary to update ADB's project performance reporting system.21 To support midterm and project final review missions, independent impact evaluation surveys and studies will be accomplished and the reports will be transmitted to ADB at least 4 weeks before the respective missions. The surveys should complement the benchmark data and measure the degree to which the Project has attained outputs, outcomes, and impacts; closely reflecting the indicators of the design and monitoring framework.

2. Compliance Monitoring

21 ADB's project performance reporting system is available at:

http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool

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152. The status of compliance, including actions taken to comply, with the loan covenants will be monitored and updated in the ADB's project performance reporting system. The monitoring mechanism will include (i) regular review and verification by the ADB project officer; (ii) field level monitoring and evaluation; (iii) monitoring and reviewing of relevant indicators in PPMS; (iv) reviewing annual audited financial statements; (v) project website access; (vi) project review missions and the mid-term review; and (vii) receipt and/or approval by ADB of required documents. Updated covenants should be appended to the quarterly and annual progress reports that will be submitted by the PMU.

3. Safeguards Monitoring 153. Environment. DAE endorsed the Project's Initial Environmental Examination, and the Environmental Assessment and Review Procedures, on 1 February 2010. The Initial Environmental Examination has identified and set out environmental concerns and how they are to be addressed and monitored. The checklists to be applied against project activities will be distributed to DAE field staff. In consultation with DAE staff and local inhabitants, including village leaders, 10 pilot initiatives will be established under the supervision of the environment consultant to demonstrate actions that may be taken to mitigate concerns such as erosion, salinity, poor cultivation techniques, green manuring and flood protection. The use of these as demonstrations for farmer field days will be monitored by the consultant. The consultant will also train DAE staff in environmental issues. All these activities will be reflected in the quarterly project reports. 154. Resettlement. The Project will closely monitor that (i) farmers are working on their own or leased land; (ii) the limited construction take place on government land, existing rights of way or lands owned by the beneficiaries themselves. Any subprojects that will entail land acquisition or any involuntary resettlement including relocation will be disallowed. 155. Indigenous People. DAE endorsed the Project's Indigenous Peoples Development Framework on 14 January 2010. If indigenous peoples are found in the project area during implementation, special care will be taken to address their needs through development and implementation of an indigenous peoples action plan within the indigenous peoples framework. The baseline survey will include the identification of indigenous people and their numbers involved in project HVC land areas. Their special needs, if any, will be identified and defined for inclusion in the PPMS accompanied by the preparation of an indigenous peoples development plan that will be submitted to ADB for approval and then implemented. Indigenous peoples needs will be determined through the baseline survey and regular updating of information in PPMS plus mid-term review.

4. Poverty and Social Action Plans 156. The Project recognizes the following key elements for poverty and social action and reflects them in the Project's consultation and participation plan: (i) the Project is demand and market driven with improved capacity building of farmer capacity in value addition; (ii) value chain integration is critical and led by involving private sector agribusiness, not the Government; (iii) farmer community group activity in value addition and marketing is the key to improving farmers’ incomes; (iv) access to affordable rural credit is critical; (v) active involvement of women in commercial agriculture is essential to make the optimum use of human resources. C. Evaluation

157. The Project has made special provisions to strengthen the field monitoring through, among others, (i) MFIs and service providers working in partnership with the field level

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agriculture offices, (ii) regular monitoring and evaluation on the project activities by the monitoring team of the Project, (iii) standard requirements of Bangladesh Bank and the wholesale banks in their supervision of the MFIs, (iv) the undertaking of annual project benefit and impact assessment. 158. ADB and the Government will review the Project at least twice a year covering: performance of executing and implementing agencies and stakeholders; progress of implementation; compliance with loan assurances; inclusion of marginalized groups. ADB and the Government will undertake a comprehensive midterm review of the Project 36 months after project effectiveness to identify problems and constraints encountered and suggest corrective measures. Specific items to be reviewed include (i) project management and implementation effectiveness; (ii) compliance with safeguard measures; (iii) implementation of the gender action plan; (iv) effectiveness of capacity building of farmers and DAE; (v) extent to which crop diversification and value addition objectives are being met; (vi) lessons learned, good practices and innovations, and their replicability; and (vii) any other issue agreed upon by the Government and ADB. Technical, budgetary, and design modifications could be considered based on the results of the review. Within 3 months of the Project’s physical completion, DAE will submit to ADB a project completion report covering project implementation, cost, outputs and benefits, and other information requested by ADB.22

D. Reporting

159. DAE will submit quarterly and annual project progress reports to ADB, in a format consistent with ADB's project performance reporting system. The reports will include information on the Project’s physical progress and component status. The annual reports need to detail (i) progress achieved by output as measured through the indicator's performance targets, (ii) key implementation issues and solutions; (iii) updated procurement plan; and (iv) updated implementation plan for next 12 months. Within 3 months of the Project’s physical completion, DAE will submit to ADB a project completion report covering project implementation, cost, outputs and benefits, and other information requested by ADB. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency audited financial statements, together with the associated auditor's report, should be adequately reviewed. 160. Copies of all studies and surveys conducted through PMU will also be provided to ADB. In addition, the wholesale banks and MFIs will provide quarterly reports to ADB and the PMU, through Bangladesh Bank, detailing amounts and numbers of project loans disbursed for that quarter and cumulatively, and loan classification by numbers of active borrowers and amounts of loans outstanding. E. Stakeholder Communication Strategy

161. At project startup, DAE will disseminate information about the project to farmers through its field staff network, the distribution of pamphlets, the use of radio and television and by holding introductory workshops for lead farmers and community leaders in each upazila. 162. The community facilitators will assist in the dissemination of information and the mobilization of farmers for training in HVCs and, later, participation in value addition training and OFSSI investments. The facilitators will also assist in gender awareness activities and the identification of indigenous peoples, and encouraging their (if identified) participation in the Project.

22 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar.

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163. The MFIs through their network of offices, generally at union level, will inform farmers about credit services available under the Project and encourage farmers to participate in HVC training and field days as well as in, later, attending courses on credit access and management. 164. A project website will be established at PMU to provide transparency on project details including procurement.

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IX. ANTICORRUPTION POLICY

165. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.23 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of DAE, Bangladesh Bank, BASIC Bank, Eastern Bank, participating MFIs, and all project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.24 166. To support these efforts, relevant provisions are included in the loan agreement, project grant agreement, and the bidding documents for the Project. 167. Financial management assessment and due diligence has been done on the proposed executing agencies and participating financial institutions. Project-specific measures to enhance governance and prevent corruption during implementation, designed with the stages of project implementation and the disbursement chain in mind, include

(i) advance selection of the wholesale banks on the basis of agreed criteria; (ii) formation of a committee of stakeholders to select participating MFIs according to

agreed criteria; (iii) establishing transparent procedures for financial transactions; (iv) application of the standard requirements of Bangladesh Bank in its supervision of

wholesale banks and, through them, the MFIs; (v) the requirement for PMU and PIUs to follow government rules and procedures for

all expense and revenue items including cash and the proper and accurate maintenance of financial records; and

(vi) establishing a project website at PMU to provide transparency on project details including procurement.

168. Further, PMU shall within 9 months of project effectiveness prepare a grievance redress mechanism, acceptable to ADB, and appoint a credit management officer in the PMU to receive and resolve complaints or grievances or act upon reports from stakeholders on misuse of funds and other irregularities, including relating to interactions between participating MFIs and project beneficiaries. 169. Project services will be described by the PMU, with consultant assistance, in pamphlets to be distributed among local governments, rural communities, farmers, and social and financial service providers. At the completion of each training course and motivation tour, trainees will be asked to complete an evaluation of the course. These evaluations will be kept on file and made available for inspection. All reporting, including surveys and reviews required by the Government and ADB will follow formats agreed in advance by oversight bodies. The provision of reports will be diarized showing dates of their completion and names and signatures of recipients of the reports. A report distribution list will specify reports to be distributed to district, upazila and union representatives, and private sector parties. Credit services will be subject to three levels of oversight: Bangladesh Bank, wholesale banks, and external auditors of banks and MFIs. Subborrowers will be computer coded and identifiable to enable in-field verification of, and interviews with, loan recipients. Financial performance indicators have been set so as to monitor the efficiency and correctness of financial services.

23 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf24 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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X. ACCOUNTABILITY MECHANISM

170. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.25 171. Further, PMU shall within 9 months of project effectiveness prepare a grievance redress mechanism, acceptable to ADB, and appoint a credit management officer in the PMU to receive and resolve complaints or grievances or act upon reports from stakeholders on misuse of funds and other irregularities, including relating to interactions between participating MFIs and project beneficiaries.

25 For further information see: http://compliance.adb.org/.

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XI. RECORD OF PAM CHANGES

172. {All revisions/updates during course of implementation should retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the PAM.}

Indigenous People's Development Planning Document

Appendix 1

Indigenous People's Development Framework Document Stage: Final Project Number: 40534-01 January 2010

BAN: Second Crop Diversification Project

Prepared by the Department of Agricultural Extension for the Asian Development Bank (ADB).

The indigenous people's development framework is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature.

INDIGENOUS PEOPLE'S DEVELOPMENT FRAMEWORK

I. Indigenous people in Bangladesh

1. More than 45 indigenous ethnic groups with a population of nearly 2 million are living in Bangladesh1. According to the indigenous people (IP) representatives the number is about 3.0 million. The IPs are concentrated in the Chittagong Hill Tracts districts, where they are the majority. Different groups of IPs maintain individual traditions, identification, economic systems and customs and generally live isolated in the hilly or forest areas of the bordering districts with India and Myanmar and lead subsistence/poor livelihood patterns. The development initiatives do not generally benefit the IPs equally and particularly at times they are adversely affected and marginalized by development process. In some instances, IPs face eviction, loss of resources for livelihoods etc. The main demand of IPs is official recognition of traditional and customary land rights. Therefore, appropriate consideration of the IPs' concerns and needs to plan the development services deserves due attention. II. Rationale

2. ADB's new Safeguard Policy suggests to design and implement projects in a way that fosters full respect for indigenous people identity, dignity, human rights, livelihood systems, and cultural uniqueness as defined by indigenous people themselves so that they receive culturally appropriate social and economic benefits, do not suffer adverse impacts as result of projects and can participate actively in projects that affect them. The Constitution of Bangladesh provides for taking special measures for the development of any backward section of the society. The Second Crop Diversification Project (SCDP) will operate within this context and will support IPs to benefit from the project services.

III. Project Background

3. SCDP is a “follow on” Project to the Northwest Crop Diversification Project (NCDP) supported by ADB in Bangladesh. The NCDP worked with Santal community and integrated them in the NCDP farmers groups and they were given same project support and no special project intervention was required. The SCDP will operate in 43 upazilas of 18 districts of South and Southwest and 9 upazilas of 9 districts in the Northwest with the aim to reduce poverty by improving farmers’ incomes. The Project will foster the commercialization of agriculture through interventions to promote diversification into high-value crop (HVC) production and value addition. The Project will also strengthen institutional capacity of the Department of Agricultural Extension (DAE) – the lead executing agency of the Project to address the needs of IPs. Project impact, outcome and outputs will be achieved through the implementation of 5 components, (i). HVC Production Support; (ii) Value Addition Support; (iii) Credit Support; (iv) Institutional Strengthening; and (v) Project Implementation Support.

4. In South and Southwest, the IPs are mostly located in the remote coastal areas that may not suitable for high-value crops cultivation due to the soil and climatic condition. In some of the selected upazilas of the Northern region Santal and Orao communities are living. Besides, some low caste Hindu professional communities like cobbler, fishermen are also part of the community. These communities are often excluded, marginalised and sometimes behave as IPs. As secondary occupation, almost all are engaged in agriculture. Women play a very important role in the field and post harvest agricultural activities. Most of these communities are landless and rely on agriculture labourer, open water fishing etc. Some people of these communities have land and they practice indigenous crop production techniques/subsistence agricultural practices with very low yields.

1 As per Census, 2001 the total number of indigenous (officially ‘tribal people) people in Bangladesh was 1.77 m.

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5. The project has not yet identified all individual beneficiaries, which will be done through a survey following an agreed criteria after the commencement of the Project. At this point it is only known that IPs might be found in some of the upazillas and they should be supported to benefit from the project addressing of their needs. The Project will provide all necessary and specially required services to address the needs of identified IPs to ensure that the benefit from the extension, credit and other services related to crop diversification, HVCs cultivation, value addition and marketing.

IV. Objective of the IPDF 6. The objectives of this IPDF are to ensure that all IPs including the marginalized ethnic minority groups have equal access to project services and benefits. V. Strategy for Ensuring the Participation of Affected IPs 7. The following strategies are included in the Project to support participation of the IPs:

(i) Within the first year of project implementation, the Project will complete a

baseline survey of the project area to identify beneficiary groups and identify the number and ethnicity of any IP groups living in the project area.

(ii) If IPs are found in the area, the survey will also determine (i) potential positive

and negative impacts on IPs; (ii) whether these groups are involved or interested in HVC cultivation and value addition; (iii) how they can be involved in the Project activities; (iv) whether there will be any change in their livelihood activities; (v) necessity of alternative livelihood options; (vi) whether they could be integrated in the regular groups of HVC or need to be organized in separate groups; and (vii) any special efforts that need to be integrated in the Project activities.

(iii) Based on the findings, the Project will develop an action plan to ensure equal

participation and access for different IP groups. The action plan will address issues like, selection criteria, method of organizing, need for awareness raising program and subjects, selection of crops, types of training, requirement of additional support for credit operation, if any etc.

(iv) The Project will allocate resources and technical support for the

implementation of the action plan integrating the activities in the annual work plan.

VI. Strategy to Ensure Project Benefit and Mitigate any Adverse Impact 8. If IPs are identified in the Project area, the IP Action Plan will ensure mitigating any adverse impact. As the Project is not undertaking any major infrastructure activities, there will be no resettlement requirements. The Project will also support farmers having own or leased land. Therefore, IPs will not be adversely affected in a major way. However, some IPs doing sharecropping or cultivating own land may be affected by the intervention. The Project will bring the identified IPs in the beneficiary groups to benefit them. The following issues will be addressed: (i) compensation for loss of livelihoods; (ii) aspirations, needs and preferred alternative options; (iii) local social organization, cultural beliefs, resource use pattern of the affected IPs; (iv) potential positive and negative impacts on IPs; (v) measures to avoid, mitigate, compensate for adverse project effects; (vi) measures to ensure project benefits will accrue to IPs; (vii) measures to strengthen social and technical capabilities of the partners NGOs to address IP issues; (viii) budget allocation; (ix) technical assistance; and (x) monitoring.

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9. The IP specific action make take the form of: (i) incorporating IPs (who might be excluded from the Project) in the beneficiary groups; (ii) incorporating IP specific needs (that may not be addressed by the Project) into the Project plan; and (iii) a common action plan incorporating IP's needs where IPs live with the non-IP people in the same project location; and (iv) additional awareness raising, training, credit and other activities addressing the needs of IPs. Staff training activities will include topics related to IP.

10. The IP Action Plan will be submitted to ADB for approval and concurrence.

VII. Institutional Arrangements for Preparation and Implementation of IPDF

11. Project Management Office (PMO) will be responsible to address IP concerns and ensure their participation. The Project, upon completion of the Survey will clearly identify IPs and prepare the IPDF. The Community Development and Rural Credit Specialist (CDRCS) will support preparation and implementation of the IPDF. One staff will be identified as IP focal point in PMO who will work closely with the CDRCS. VIII. Cost Estimate and Financing 12. The Project budget will allocate adequate resources for various components and activities of the Project to implement the IPDF. Budget for awareness raising, training and other related activities will be integrated in the line item budget with specific mention of the activities. The CDMS will support implementation. IX. Monitoring and Evaluation 13. The Department of Agricultural Extension (DAE) will be responsible for implementation, monitoring and evaluation of the IP action plan within this IPDF. The Project will collect baseline data and regularly analyze project outputs, and impact indicators considering impact on IPs and include this in regular MIS and reporting system.

The initial environmental examination, and environmental assessment and review procedures are documents of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature.

Environmental Assessment Report

Appendix 2

Initial Environmental Examination, Environmental Assessment and Review Procedures Project Number: 40534-01 February 2010

BAN: Second Crop Diversification Project

Prepared by the Department of Agricultural Extension for the Asian Development Bank (ADB).

INITIAL ENVIRONMENTAL EXAMINATION ABBREVIATIONS ADB Asian Development Bank AEZ Agroecological Zone BARI Bangladesh Agricultural Research Institute BCCSAP Bangladesh Climate Change Strategy and Action Plan BWDB Bangladesh Water Development Board DAE Department of Agricultural Extension DAM Department of Agricultural Marketing DOE Department of Environment DTW deep tubewell EA environmental assessment ECA Environment Conservation Act ECR Environment Conservation Rules EIA Environmental Impact Assessment FFS Farmer Field Schools GBM Ganges-Brahmaputra-Meghna GDP gross domestic product GHG greenhouse gas HVC high-value crop IEE Initial Environmental Examination IPCC Intergovernmental Panel on Climate Change IPM integrated pest management MOEF Ministry of Environment and Forest NAPA National Adaptation Program of Action NCDP Northwest Crop Diversification Program NEMAP National Environment Management Action Plan NEP National Environment Policy NGO non-government organization PRRA Participatory Rapid Rural Appraisal PMU Project Management Unit REA Rapid Environmental Assessment RRA Rapid Rural Appraisal SCDP Sustainable Crop Diversification Project SEMP Sustainable Environment Management Program SIEE Summary Initial Environmental Examination STW shallow tubewell UNDP United Nations Development Program UNFCCC United Nations Framework Convention on Climate Change

CONTENTS I. INTRODUCTION A. Background B. Scope of the IEE Study C. Policy, Legal and Administrative Framework II. DESCRIPTION OF THE PROJECT A. Type of the Project B. Location C. Project Components III. DESCRIPTION OF THE ENVIRONMENT A. Biophysical Conditions B. Socioeconomic Conditions IV. SCREENING OF POTENTIAL ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES A. Methodology B. Environmental Parameters and Impact Assessment C. Issue of Climate Change D. Mitigation Measures V. INSTITUTIONAL REQUIREMENTS AND ENVIRONMENTAL MONITORING PLAN A. Institutional Strengthening: Status and Needs B. Monitoring Plan VI. PUBLIC CONSULTATION AND INFORMATION DISCLOSURE VII. FINDINGS AND RECOMMENDATIONS VIII. CONCLUSIONS

I. INTRODUCTION A. Background 1. Bangladesh is a densely populated agrarian country, with about 148.63 million people (mid-2009 estimate) squeezed in an area of 147,570 sq km. The population density – around 1007 persons per sq km – is one of the highest in the world. Population pressure on natural resources has led to its overexploitation and consequent environmental degradation. During the last three decades, the country has succeeded in modestly reducing the rate of annual population growth. The growth rate of 2.5 percent in 1974 for a population of 76 million (recorded during the first census of 1974 after independence), has come down to 1.5 percent in 2001. Despite intensified population control efforts, Bangladesh’s population is expected to be near 180 million by 2025, when the population density will rise to over 1200 persons per sq km. 2. About three fourths of the country’s population is directly or indirectly dependent on agriculture for their livelihood, although this sector contributes only 16.23 percent to the Gross Domestic Product (GDP) at constant prices. Land is the principal resource base in Bangladesh. However, only two thirds of the lands are cultivable, and the possibility of any areal expansion of agricultural activity is almost nil. Although the average cropping intensity has risen to 180 percent on account of double and triple cropping with the help of irrigation, the yield per unit of land is one of the lowest in the world. Urban population in the country now accounts for nearly 26 percent of the total national population, and it is growing at the rate of about five percent per annum. 3. Poverty is the key socioeconomic issue in Bangladesh. About 40 percent of the total population remains below the upper poverty line (with a per capita daily intake of less than 2122 calories), while a fourth of the population is classified as ‘absolute poor’ or living below the lower poverty line (with a per capita daily intake of less than 1805 calories). On account of scarcity of agricultural land, lack of employment opportunities and inadequate physical infrastructure, the process of pauperization has accelerated in rural areas, leading to a steady stream of rural to urban migration. Poverty is more pronounced among women. The vast majority of women, especially in rural areas, are not only poor, but are also significantly marginalized in terms of socioeconomic and legal status, including accessibility to resources. There is notable regional disparity in the incidence of poverty among the six divisions of Bangladesh. The eastern part of the country has lower proportions of people living below the upper poverty line; they range from 32 percent in Dhaka to 34 percent in Chittagong and Sylhet divisions. On the other hand, the proportions of people living below the upper poverty line in Khulna and Barisal divisions (in the southwest) are 46 and 52 percent respectively, while the figure for Rajshahi division (in the northwest) is 51 percent. 4. Since the principal means of livelihood in Bangladesh is agriculture, the vision of this sector is to enhance growth through development and dissemination of sustainable technologies, which are ecologically adaptable, economically profitable, can diversify cropping patterns and generate new employment. In conformity with this vision, the expected outcomes of the Second Crop Diversification Project (SCDP) are enhanced food production and value addition to high-value crops (HVC), higher levels of farm incomes, greater employment opportunities, and higher levels of food security. The increase of rural incomes will directly help in improving food security, and generate the income to facilitate the rural households without sufficient access to land resources to meet their domestic demand for rice.

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B. Scope of the IEE Study 5. The principal objectives of the SCDP are (a) to replicate and broaden some of the successful components of the NCDP in Rajshahi division (in the northwest) and (b) to expand the activities to parts of southwestern districts with high crop value potential. The specific objectives of the SCDP are (a) HVC production and value addition; (b) farmers’ group formation and credit support; and (c) on-farm, small-scale infrastructure support. The SCDP does not include any component or activity involving construction and infrastructure improvement except limited construction related to the upgrading/rehabilitation of horticulture development training centers and the upazila agricultural offices. Although the NCDP (which ended in June 2009) did not include environmental assessment (EA) as an integral part of its activities, it did put a lot of emphasis on the maintenance of good agricultural environment, and the issue was given high priority at the field level. While planning project programs/activities in the NCDP, special care was taken to include environment-friendly activities. With a view to minimizing and mitigating any potential negative or adverse impacts of project actions, the field programs and demonstration exercises of the NCDP focused attention on discouraging the sole use of chemical fertilizers and encouraging organic manures or compost. Besides, environment-friendly integrated pest management (IPM) practices have been encouraged through training and demonstration in order to lessen the use of pesticides. 6. Since the project actions under the SCDP are believed to be benign and they do not involve infrastructure construction, their potential environmental impacts are expected to be limited and minimal. Nonetheless, as part of the project formulation, and in accordance with the Asian Development Bank’s (ADB) requirements, it was considered essential to carry out an environmental investigation in the project area with a view to reviewing environmental implications, and identifying and assessing potential negative impacts (if any). In consideration of the nature of the SCDP’s project actions and the preparation of the ADB’s Rapid Environmental Assessment REA) checklist, the project is classified as ‘Category C.’ An Initial Environmental Examination (IEE) report was prepared with a view to reviewing the environmental implications of the project. Field visits to sample sites in the project area for environmental assessment (including public consultation) were done (using a field survey checklist) in the month of August 2009.

7. The scope of the IEE included: (a) a review of the policies and guidelines of the Asian Development Bank and the

Government of Bangladesh; (b) an examination of the salient biophysical and socioeconomic conditions of the

project area; (c) an identification of the relevant environmental parameters in the project area

through scoping and literature review; (d) an assessment of the magnitude of the potential impacts of the project actions; (e) assessment of the potential climate change impacts on the project, and

evaluation of response strategies and adaptation measures in collaboration with horticulture extension specialists; and

(f) preparing the Initial Environmental Examination (IEE) report and the Summary Initial Environmental Examination (SIEE) report in the ADB format, which include mitigation measures and guidelines for compliance monitoring during implementation.

8. The IEE was conducted following the environmental policies and guidelines of the Asian Development Bank. Two documents of the Bank provided the basic framework for the IEE, viz.,

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Environmental Policy of the ADB (2002) and ‘Environmental Assessment Guidelines (2003). In addition to the Bank’s guidelines, the IEE also took into consideration the policies and guidelines of the Department of Environment (DOE) of the Government of Bangladesh.

C. Policy, Legal and Administrative Framework 9. Since the mid-1980s, there had been a growing awareness and understanding in Bangladesh that the natural resources and the environment of the country are being degraded. The Government of Bangladesh recognizes the importance of environmental sustainability as the basis for long term development in the country. In 1989, the Ministry of Environment and Forest (MOEF) was created, and within the ministry, the Department of Environment (DOE) was formed as the principal implementing line agency for all environmental actions. Bangladesh is a signatory to Agenda 21 of the 1992 Earth Summit, and it is committed to implement the international legal instrument in its national policies and programs. A National Conservation Strategy was prepared by the Government in 1991, which formed the basis for the formulation of the National Environment Policy (NEP) in 1992. The principal objectives of the NEP are:

(a) maintenance of the ecological balance; (b) protection against natural disasters; (c) prevention of all types of activities related to pollution and environmental

degradation; (d) ensuring environmentally sound development in all sectors; and (e) ensuring sustainable, long term, environmentally congenial utilization of all

natural resources. 10. Since most development activities in almost all sectors involve environmental issues, the National Environment Policy spelt out specific obligations and tasks for such sectors as agriculture, industry, energy, water, forestry, biodiversity, fishery, urbanization, population and health. At the policy level, environmental awareness is demonstrated by the fact that the government has so far signed, ratified and acceded to over 25 environment-related international conventions, protocols and treaties. Some of the notable ones among them are the Ramsar Convention on Wetlands, Montreal Protocol on Ozone Layer Depletion, Agenda 21, United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol, Convention on Biological Diversity, and Convention to Combat Desertification. The close relationship between environment and national development planning is embodied in the National Environment Management Action Plan (NEMAP), completed in 1995 with assistance from the UNDP. As a follow-up of the NEMAP and to concretize its vision, the Government executed a UNDP funded Sustainable Environment Management Program (SEMP) between 1998 and 2004, which emphasized several capacity building components of environmental management. The Government has prepared a National Adaptation Program of Action (NAPA) in 2007, which outlines several climate change adaptation options for the country. A more comprehensive document on climate change, titled ‘Bangladesh Climate Change Strategy and Action Plan’ (BCCSAP), is now in its final stage of approval by the Government, and it is expected to serve as the framework to combat climate change over the next 10 years. The Government has also decided to form climate change cells in all ministries to monitor the activities to mitigate climate change impacts and suggest remedial programs.

11. Bangladesh has a wide range of laws and regulations related to environmental parameters, and many of them date back to pre-independence days. Some of these are: the Canals Act (1864), the Irrigation Act (1876), the Agriculture and Sanitary Improvement Act (1920), the Forest Act of 1927, amended in 1989, the Factories Act (1965), the Pesticides

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Ordinance (1971), the Wild Life Preservation Act (1974), and the Environment Pollution Control Ordinance (1977). However, the most recent and the most important of the environmental laws are the Environment Conservation Act (ECA) of 1995 and the Environment Conservation Rules (ECR) of 1997. The ECR spells out rules and regulations for the enforcement of the ECA. Under the ECR, various development interventions are grouped into three main categories: Green (no environmental assessment required), Orange (IEE required) and Red (EIA required) – in accordance with increasing potentials for adverse environmental impacts. The project interventions under the SCDP fall into Orange category, and thus require the preparation of the IEE report. Both the ECA and the ECR cover a wide range of environmental issues, but they are neither fully comprehensive nor unambiguous, and demonstrate the characteristics of a collection of ad hoc rules. A more recent legislation for enforcement has been the formulation of the Environment Court Act of 2000, which is authorized to try cases related to offences under the ECA/ECR.

II. DESCRIPTION OF THE PROJECT A. Type of the Project 12. The Second Crop Diversification Project (SCDP) is a ‘follow on’ project to the Northwest Crop Diversification Project (NCDP), which was completed on 30 June, 2009. The proposed SCDP will aim to build on the positive achievements of the NCDP, and apply the lessons learned from that project in the SCDP in order to attain sustainable agricultural development objectives. The overarching goals of the new project are to (a) enhance farm incomes; (b) alleviate rural poverty; (c) increase food crop production and value addition; (d) increase food security; (e) increase income generating opportunities for the rural population; (f) facilitate commercialization of agriculture; and (g) stimulate the economy in the proposed project locations. The project actions will include consolidation of the NCDP areas in the northwestern districts (Rajshahi division), and expansion into the southwestern districts of Khulna, Barisal and Dhaka divisions.

13. The SCDP will specifically focus into: (a) demonstration and dissemination of up to date technology in the cultivation of

HVCs; (b) mobilization of farmer groups and providing credit assistance and technical

guidance to small and marginal farmers (with land holdings of 0.2 to 1.5 ha) to encourage them to grow HVCs; and

(c) providing guidance and credit for post harvest value addition and marketing. 14. About 33 HVCs were promoted under the NCDP, although only 11 were considered suitable for commercialization. The SCDP proposes to add some new HVCs not included in the NCDP, which would be more suitable agroecologically in the southwestern districts like coconut and floriculture. The SCDP will not include any agribusiness component, or involve in the construction/rehabilitation of rural markets, or engage in any adaptive research activity. It is expected that the project will comply with ADB’s and the Government’s safeguard requirements in terms of environmental impact. The proposed interventions of the project should not entail adverse environmental impacts in the area. The project is classified as a Category C project, and an Initial Environmental Examination (IEE) exercise is conducted in order to review the environmental implications of the project actions.

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B. Location 15. The SCDP area comprises (i) 18 districts in southwestern Bangladesh (south and southwest of the Ganges-Padma river) – five districts of Dhaka Division, three districts of Barisal Division, and ten districts of Khulna Division; and (ii) nine districts in the northwest – four distrcts of Rangpur Division, and five districts of Rajshahi Division. Each district is divided into several upazilas (subdistricts) for administrative purposes. The TA project preparatory team, in consultation with the DAE officials, selected 2/3 upazilas from the 27 districts. The total number of selected project upazilas is 43 in the southwest (Table 1), and 9 in the northwest. The NCDP, which ended in June 2009, included 16 districts of Rajshahi Division, consisting of 127 upazilas. However, 60 upazilas among them were served under the NCDP, while 67 upazilas remained unserved. Nine such unserved upazilas from nine districts are included in the SCDP. The 60 upazilas in the remaining nine districts of Rangpur and Rajshahi Divisions served under the NCDP will also receive reinforced consolidation of their programs under the SCDP. The nine districts and the nine upazilas of Rangpur and Rajshahi Divisions (in the northwest), which are included for project actions under the SCDP are: (upazila in parentheses) – Pabna (Sadar), Nator (Bagatipara), Rajshahi (Godagari), Bogra (Sonatala), Nawabganj (Sadar), Gaibandha (Sadullapur), Kurigram (Nageswari), Dinajpur (Birampur), and Lalmanirhat (Hatibandha). C. Project Components 16. The SCDP beneficiaries are small and medium farmers (owning 0.2 – 3 ha of land), and marginal farmers (owning 0.02 – 0.2 ha of land). The project is also likely to benefit some landless farmers, who can rent farmland for cultivation, and the sharecroppers or leaseholders. The proposed project is comprised of the following five components:

(a) HVC production support; (b) Value addition support; (c) Credit support; (d) Institutional strengthening; and (e) Project implementation support.

17. The proposed SCDP is expected to take off in July 2010, and will be completed in six years, i.e., in June 2016.

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Table 1 SCDP Districts and Upazilas

SOUTHWEST NORTHWEST Division Districts Upazilas Division Districts Upazilas DHAKA Faridpur Sadar, Madhukhali, Nagarkanda Rangpur Dinajpur Birampur Gopalganj Muksudpur, Tungipara Lalmonirhat Hatibandha Rajbari Sadar Kurigram Nageswari Madaripur Rajoir, Kalkini Gaibandha Sadullapur Shariatpur Bhedergonj, Jajira RAJSHAHI Bogra Sonatala KHULNA Kushtia Sadar, Mirpur Nawabganj Sadar Jessore Jhikorgachha, Sadar, Monirampur,

Sarsha Rajshahi Godagari

Satkhira Sadar, Debhata Nator Bagatipara Magura Sadar, Sreepur Pabna Pabna Sadar Jhenaidah Harinakunda, Sadar, Kotchandpur,

Maheshpur,

Chuadanga Sadar, Damurhuda, Jibannagar Meherpur Sadar, Mujibnagar Narail Sadar Khulna Daulatpur, Dumuria Bagerhat Sadar, Mollahat, Fakirhat BARISAL Barisal Babuganj, Gournadi, Sadar,

Ujirpur, Agailjhara

Jhalakathi Sadar Pirojpur Nazirpur, Nesarabad (Swarupkathi)

TOTAL 18 43 TOTAL 9 9

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III. DESCRIPTION OF THE ENVIRONMENT A. Biophysical Conditions 18. The area included within the SCDP varies significantly in terms of agroecological characteristics. The nine districts in the northwest primarily include four agroecological zones, demonstrating significant differences in soil, relief and physiography. These zones are Old Himalayan Piedmont Plain, Teesta Meander Floodplain, Karatoya-Bangali Floodplain, and Ganges River Floodplain. The 18 districts in the southwest mainly fall into three agroecological zones (AEZ): High Ganges River Floodplain (Kushtia, Meherpur, Chuadanga, Jessore, Jhenidah, Magura and parts of Narail); Low Ganges River Floodplain (Rajbari and Faridpur); and Ganges Tidal Plain (Satkhira, Khulna, Bagerhat, Barisal, Jhalakathi and Pirojpur). In addition, pockets of Gopalganj-Khulna Beels (lowlands) AEZ are included in Gopalganj and northeastern parts of Khulna districts.

1. Northwestern Districts 19. The northern parts of the SCDP experience flash floods following heavy rainfall in the adjoining hills of Indian state of Meghalaya. The principal rivers draining this area are the Teesta, Karatoya, Atrai, Dharla and Dudhkumar. In the Old Himalayan Piedmont Plain (mainly the districts of Thakurgaon and Dinajpur), soils are deep and permeable, and predominantly sandy loams, and the region has complex relief patterns. Groundwater is available at relatively shallow or moderate depths, but surface water availability for dry season irrigation is limited. The primary development constraint in this zone is flash flood in the pre-monsoon period.

20. The zone of Teesta Meander Floodplain largely comprises the districts of Rangpur, Lalmanirhat, Nilphamari, Gaibandha and Dinajpur (southern part). Most parts have broad floodplain ridges and almost level basins. The higher parts of the floodplain are flood-free, while moderate flooding occurs in the basin centers. Loamy soils predominate, especially on the higher lands, while silty clay loams are found in lower sites. Groundwater is available at shallow depths throughout the zone; however, surface water from rivers flowing through the region are also available seasonally. The primary development constraint is spillover from flash and riverine floods.

21. The Karatoya-Bangali Floodplain occupies the districts of Sirajganj and Bogra (eastern part). Before the construction of the flood protection embankment along the right bank of the Brahmaputra-Jamuna river, this area was extremely vulnerable to flooding. Since the construction of the embankment, seasonal shallow flooding is common in floodplain basins. Silt loams and silty clay loams predominate on the ridges, while heavy clays occupy basin centers. Surface water is available in large quantities from the Jamuna river, but its exploitation often becomes problematic due to the rivers erratic bank erosion behavior. Following the building of the flood protection embankment, cropping has intensified considerably in this region. The primary development constraints are deep flooding in basins, and frequent breach of the embankment (mainly due to poor maintenance).

22. The Ganges River Floodplain occupies the district of Rajshahi (excluding the northern part), and parts of Natore and Pabna districts. The western part of this zone is relatively higher (in Rajshahi). There is predominance of silt loams and silty clay loams on the ridges, while basins and lower sites are mainly clay soils. Some river channels have become silted over the years, and hence, drainage in some depressions is poor. The western part suffers from periodic

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droughts and surface water availability is seasonal. The primary development constraints are rainfall variability and drought proneness.

2. Southwestern Districts 23. The High Ganges Floodplain (on the right bank of the Ganges-Padma river) is comprised of older sediments, is relatively high and is often referred to as ‘moribund delta’ to denote the absence of active delta building processes. It occupies the districts of Kushtia, Meherpur, Chuadanga, Jessore, Jhenaidah, Magura and Narail. This zone exhibits similar characteristics of the Ganges River Floodplain of the northwestern districts. Soils are silt loams and silty clay loams on higher land levels with clayey soils dominating the basins and lower elevations. Surface water from the Ganges is used for irrigation through the Ganges-Kobadak Project, although the flow in the river has diminished due to upstream abstractions. Groundwater reserves are generally satisfactory, but it does show symptoms of salinity in the southern part of the zone. Flood proneness in this area is relatively less than further east in the Low Ganges Floodplain. 24. The Low Ganges Floodplain covers the districts of Rajbari, Faridpur and the adjoining parts. This zone is somewhat lower lying, which experiences moderately deep to deep flooding with delta building processes being active. This is a typical meander floodplain with numerous inter-ridge depressions and cut-off channels. Seasonal flooding is common from ponded rainwater and raised water table following heavy rainfall. Soils are basically same as in the High Ganges Floodplain, with clayey soils being more extensive in the basins. Surface water is available from rivers and beels (water holding depressions), while groundwater is susceptible to salinity in some parts during the dry season. The primary development constraint is occasional deep flooding over large areas. 25. The Ganges Tidal Plain covers the districts of Satkhira, Khulna, Bagerhat, Pirojpur, Barisal and Jhalakathi. This zone is crisscrossed by many tidal streams and creeks, and the gradient of the land is monotonously flat. Construction of coastal embankments since the 1960s has protected parts of this area from tidal incursion of saline water, while non-poldered (or non-embanked) areas are regularly flooded with silty tidal water. There is a general pattern of loamy soils on the river banks with heavy silty clays in the extensive basins. Surface water supply is plentiful due to the presence of numerous streams and channels. However, salinity from tidal effect is a serious constraint in its use, which, nonetheless, is much less saline in the monsoon season due to high flows in the rivers from upstream sections. Groundwater is saline in near-surface aquifers, though freshwater could be extracted from depths of more than 250 meters. In the past two decades, the proliferation of commercial shrimp farms (locally known as ghers or ponded water enclosures) in this zone has exacerbated the problem of salinity in the soil. The southern part of the districts of Satkhira, Khulna and Bagerhat is occupied by the Sundarban mangrove forest. The primary development constraints of this zone are inadequate land transportation facilities, and the vulnerability to seasonal tropical cyclones and the accompanying storm surges. 26. The Gopalganj-Khulna Beel, occupying the district of Gopalganj and northeastern parts of Bagerhat and Khulna districts, is an almost level, low lying basin. The region is deeply flooded in the rainy season, and basin centers remain wet through the dry season. The basin soils are acidic and clayey, while loams are found on narrow strips along river banks. Surface water is plentifully available for irrigation, though salinity becomes a problem toward the end of the dry season in the southern sections of the zone. The primary development constraints are poor peaty soils in some sections, and slow drainage.

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3. Climate

27. The climate of the project area can be described as Tropical Monsoon – characterized by warm, humid summers and cool, dry winters. The areas, however, experience noticeable spatial variations in temperature and rainfall. Mean temperatures in the northwest range from 16O – 18O C in January to 28O – 29O C in July, although the temperature in April may rise above 40O C in Rajshahi and Nawabganj districts. Mean temperatures in the southwest range from 18O – 19O C in January to 27.5O – 29O C in July, with April temperature often rising above 40O C in Chuadanga and Kushtia districts. Variations in mean annual rainfall are more pronounced in the SCDP area than in the eastern parts of the country. The amount of rainfall generally diminishes from east to west. The average annual rainfall varies from 2000 mm in the districts of Pirojpur and Jhalakati (in the southwest) to less than 1400 mm in Rajshahi and Nawabganj districts (in the northwest). Nearly 80 percent of the rainfall is concentrated in the months of June to October. The northwestern districts occasionally experience drought periods in the pre-monsoon months (March-May), which is likely to become more frequent and severe under climate change impacts. Norwesters (pre-monsoon thunderstorms) and tornadoes are other climatic hazards in the project area, while the southern districts of the SCDP frequently experience devastating tropical cyclones – originating from the Bay of Bengal – accompanied by 5-10 meter high storm surge. B. Socioeconomic Conditions 28. The total area of the SCDP is 13,012 sq km (10,288 sq km in the southwest and 2,724 sq km in the northwest), which is about 8.8 percent of the total area of the country. The SCDP area is inhabited by 13.72 million people (2009 estimate) (2.75 million in the northwest and 10.97 million in the southwest), which is about 9.3 percent of the national population. Generally speaking, the project area has population density close to or lower than the national average of around 1007 persons per sq km (based on the 2009 estimated population of 147.86 million). The population in the project area is predominantly rural.

29. The dominant form of economic activity in the project areas is agriculture – focused on rice cultivation. The favorable physical environment with fertile floodplains has helped to produce a high intensity of agricultural land use. Agricultural activity is concentrated in three cropping seasons: Kharif I (pre-monsoon), Kharif II (monsoon or rainy season), and Rabi (dry season). Besides rice farming (aus, aman and boro), other crops grown in these areas include jute, cotton, sugarcane and a variety of vegetables, fruits and spices – some of the last three groups of crops are labelled as HVCs, on which the SCDP is dedicated to for promotion.

30. Transport infrastructure in the SCDP area is reasonably well developed, which indeed is a prerequisite for the successful promotion and marketing of HVCs. A network of National Highways, Regional Highways, Zila and upazila roads along with feeder routes of Union roads provides a dense coverage of land transport routes throughout the area. The Lalan Bridge on the Ganges between Pabna and Kushtia districts is the main land transport link between the northwestern districts and the southwestern districts. Next to it lies the Hardinge Bridge which provides a north-south railway link between the northwest and the southwest. The northwestern districts are linked to the rest of the country through road-cum-rail Bangabandhu Bridge across the Jamuna river, while two ferry crossings on the Padma river offer links between the southwestern districts and the eastern part of the country. Inland water transport is of local importance throughout the region, although it assumes considerable significance in the extreme southwestern districts where tidal creeks and channels predominate.

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IV. SCREENING OF POTENTIAL ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES

A. Methodology 31. Environmental assessment (EA) is an integral part of resource development planning. It is essential that environmental issues are properly evaluated in terms of impacts and relevance, and are integrated into each stage of the project cycle. The proposed actions under the SCDP involve interventions in the promotion of HVCs in dispersed locations - mainly in the southwestern districts and on a minor scale in the northwestern districts – with varied agroecological traits. In conforming to the requirements of preparing an Initial Environmental Examination (IEE) report, a methodology was developed in accordance with the ADB’s environmental assessment guidelines. The period of preparing the IEE was from July 2009 to September 2009, and field visits for data collection were done in August 2009. 32. The task of preparing the IEE report consisted of the following sequential components:

(a) Familiarization with and review of project actions of the NCDP; (b) Identification and screening of the environmental parameters relevant to the

proposed project actions in the SCDP area (both in the southwest and the northwest) through a scoping process;

(c) Assessment of the magnitude of the potential negative impacts for relevant environmental parameters through the use of Rapid Rural Appraisal (RRA) techniques in sample sites;

(d) Formulation of avoidance/mitigation measures to address the potential negative impacts, and preparation of a monitoring program during the period of project implementation;

(e) Outlining a set of recommendations/suggestions for institutional strengthening of the Department of Agricultural Extension (DAE) to develop its in-house capability in environmental assessment tasks, especially issues of climate change impacts.

33. A scoping process was used to identify the major environmental issues/parameters/components relevant to the project actions, and prepare the checklist for field assessment. Scoping was done through using ‘rapid rural appraisal’ (RRA) methods, integrating knowledge from the ADB guidelines, relevant literature and the DAE personnel, discussions with horticultural extension specialists, opinions from concerned people, and information obtained from the local people (respondents), which included farmers, traders, retailers, school teachers, village elders as well as from direct observation. Field visits to sample sites in the project area also yielded information on the perception and priorities of the stakeholders in different zones. 34. Field assessment using the checklist was completed at 11 sample sites in the northwestern districts in the second week of August, while in the southwestern districts, 16 sample sites were covered in the fourth week of August (Table 2). (In some upazilas, more than one sample site was chosen).

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Table 2 Location of Sample Sites for Field Assessment

District Upazila

Northwest Taraganj Rangpur Kaharol Dinajpur

Biral Dinajpur Aditmari Lalmanirhat Rajarhat Kurigram

Govindaganj Gaibandha Shibganj Bogra

Mahadevpur Naogaon Southwest

Jhikargachha Jessore Kotchandpur Jhenaidah Maheshpur Jhenaidah

Sadar Chuadanga Jibannagar Chuadanga

Salikha Magura Sreepur Magura

Madhukhali Faridpur Dumuria Khulna

Tala Satkhira Sadar Bagerhat

Fakirhat Bagerhat

B. Environmental Parameters and Impact Assessment 35. Scoping and field visits to sample sites identified the environmental parameters/components (relevant to the project actions) which are susceptible to be affected, and the perceptions of the local population on the general environmental health and climate change issues. The checklist used during the field survey in the sample sites to obtain environmental data is given in Table 3.

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Table 3 Checklist of Environmental Parameters

Environmental Parameters/Components

Soil health: erosion potential, fertility loss, salinity etc. Land level: relief pattern; suitability for HVCs; drainage potential; waterlogging Flood proneness: incidence; frequency; duration; depth; magnitude Water availability: rainfall; surface water; groundwater Irrigation: needs; potential; modes Use of chemical fertilizers: need; types; benefits and problems; level of satisfaction; awareness of health hazards Use of pesticides/insecticides: need; benefits and problems; level of satisfaction; awareness of health hazards; awareness or knowledge of alternate methods IPM: awareness; level of use and satisfaction General environmental health: awareness; perception of any change or degradation; and nature of identifiable change/degradation elements Climate change impacts: level of awareness; perception about the significance of climate change; knowledge or ideas about climate change adaptation measures 36. Information obtained through field visits regarding potential impacts of project actions and the people’s perception about environment and climate change are summarized in the following paragraphs. 37. Soil. Soils in most parts of the project area are loamy, and are generally considered fertile, although fertility loss from repetitive plowing requires regular use of fertilizers. Soil erosion potential is low; however, since many high value vegetables and spices would be sown on raised or higher grounds, protection and monitoring of soil erosion are necessary. Owing to the loamy texture of the soil, its moisture retention capacity is good, except in sandy loams where permeability is high and greater inputs of irrigation will be needed for winter vegetables. The project actions are not expected to cause any negative impact on the soil health. 38. Land level. The project area is largely a riverine floodplain area demonstrating characteristic features of ridges (higher land) and basins (low lying). Hence, tree crops, vegetables and spices, which can be damaged from waterlogging in depressions, have enough scope for cultivation on ridges and elevated lands. There is no likelihood of any significant problem with land levels in the project area for HVC cultivation. 39. Flood proneness. About 20-22 percent of the country is flooded almost every year even under normal monsoon conditions. However, some parts in the southwest like the districts of Faridpur, Rajbari and Gopalganj experience both rainwater and riverine flooding, while the southern districts of Satkhira, Khulna, Bagerhat, Pirojpur, Jhalakathi and Barisal are tidally flooded (with saline water). Hence, in these districts, caution will be required in selecting the sites for HVCs, so that they do not suffer from floods and waterlogging. The floodability of these sites might further accentuate through higher rainfall in a climate change scenario over the next few decades. 40. Water availability. Rainfall in the SCDP area is generally considered adequate for horticulture, especially summer vegetables like aubergine or eggplant, onion, tomato, jujube, hybrid maize, ginger, mango, litchi, banana etc. Surface water from rivers and streams in the eastern parts of the SCDP are plentiful for vegetable planting. In the dry season, there is need

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for irrigation from groundwater sources. The large scale cultivation of HVCs as a commercial enterprise is not expected to deplete either surface or ground waters, or cause any problem in water resources management nor alter the regional hydrology. In the southern districts of the SCDP area, however, salinity in both water and soil is a problem in the dry season, where some vegetables, which are not salt-tolerant, may not be successfully grown. 41. Irrigation. Horticulture in the winter or dry season requires irrigation in most parts of Bangladesh. Groundwater recharge from monsoon rains provides sufficient reserves for withdrawal in the dry season. Most farmers prefer privately owned shallow tubewells (STW) for irrigation. In this sector, and an informal water market has emerged in the rural areas, where water is sold by STW owners to those who do not have them. Deep tubewells (DTW), which are very expensive to install are owned by the public sector, and owing to the unreliable supply of diesel and electricity, these are not heavily relied upon for vegetable farming. There is no firm indication that groundwater withdrawal for horticulture is lowering the water table. 42. Fertilizers. Fertilizer is the most important complementary factor in the success of HVC cultivation. The use of chemical fertilizer has been consistently increasing in the cultivation of rice and all other crops since the mid-1970s. All respondents, without exception, in both northwestern and southwestern sample sites, said that they regularly use chemical fertilizers like urea, potash, triple super phosphate and ammonium sulfate in their vegetable and spice growing fields. All of them expressed an opinion that they will not be able to get good harvest without the use of chemical fertilizers. Nonetheless, about 70 percent of the respondents also use organic manure like cow dung (which has become increasingly scarce due to the fall in livestock population), and compost or green manure. Some respondents do recognize the probable harmful effects of excessive use of chemical fertilizers, though they do not foresee any significant alternative inputs. 43. Pesticides/Insecticides. In all the sample sites, the respondents perceive pesticides as the ‘panacea’ for the control of agricultural pests. They view the use of pesticides as indispensable for a successful harvest, even though many of them accept the fact that widespread and indiscriminate use of pesticides are harmful to human health and are also a threat to the sustainability of agricultural production. It was observed in some sample sites (both in the northwest and the southwest) that the farmers are aware of the integrated pest management (IPM) practices, mainly advocated by agriculture extension workers and some NGOs. However, they are not satisfied that the IPM practices can or do control pests to the full extent, and hence, they have no alternative but to use chemical pesticides. It is understood that the IPM practices are not fully ingrained into the psyche of the farmers. 44. General environmental health. Older respondents over the age of 40 unanimously agree that the physical environment of their habitat has changed in recent decades, mostly for the worse. As evidence they point out several changes in the environment viz., erratic rainfall, greater frequency of floods and waterlogging, late onset and late departure of monsoon, hotter summers, milder and shorter winters, loss of vegetative cover, and insufficient water flow in rivers in the dry season. The local population is, however, unsure as to the causes of such decline of environmental health nor can they differentiate between natural and anthropogenic causes. 45. Climate change awareness. The majority of the respondents, especially the younger persons, have heard about global climate change and its implications for Bangladesh. This was made possible largely through mass media tools, especially radio and television. The older population is least concerned with it since the phenomenon is a distant possibility and they are

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mostly preoccupied with immediate livelihood concerns. The young, however, seem to ponder over the problems that might come in 20 or 30 years in their lives due to global warming, but are generally fatalistic in approach and thoughts. When the recurrence of such events like high intensity rainfall, frequent floods and drought, warmer winters, increased frequency of cyclones and storm surges (in the coastal districts) are mentioned to them, most of them are in agreement with the increased incidence of such environmental hazards, but they are unable to relate to or perceive them as climate change impacts. C. Issue of Climate Change 46. The Fourth Assessment Report (2007) of the Intergovernmental Panel on Climate Change (IPCC) has now firmly established that human actions are altering the climate through global warming as a result of greenhouse gas (GHG) emissions. The IPCC predicts that, for the next 20 years, atmospheric warming at a rate of 0.2O C per decade is expected. And by the year 2100, the ‘best estimate’ prediction is that average global temperature may rise between 1.8O C and 4O C, although it could possibly be as high as 6.4O C. Exactly how high the temperature may rise depends on what degree of action is taken at present to stop greenhouse gas emissions. It is believed that, if current trends are followed, average global temperatures may rise by 1 – 3O C by the middle of this century. 47. The long term impacts of global warming and climate change are far reaching and diverse. For different parts of the world, the current precipitation patterns will change causing more floods and droughts, the ecosystem for crop production will alter affecting the existing land use pattern, biodiversity will be threatened, ice caps and glaciers will melt, sea level will rise, storms and cyclones will be stronger, human health will be adversely affected, and above all, an extremely high monetary cost will be involved for mitigating and adapting to such changes. Sea level, a vital issue of concern for Bangladesh, is expected to rise by 18 to 59 cm by 2100, with ‘best estimates’ of around 40-45 cm. 48. The IPCC Report of 2007 also predicts that, in South Asia, monsoon rainfall will increase, resulting in higher flows in the monsoon season in the rivers, which flow into Bangladesh from India, Nepal, Bhutan and China. Higher rainfall and meltwater from the Himalayan glaciers are likely to increase river flows in the medium term, but the consequence of glacial retreat (due to melting) would gradually decrease river flows and cause water stress in northern South Asia, including Bangladesh during the next few decades. Bangladesh is widely recognized to be one of the most vulnerable countries in the world to climate change impacts, and the poor in the country will be the most serious sufferers. 49. In terms of the impact of climate change, few places in the world will experience the range of effects and the severity of changes that will occur in Bangladesh. In sum, these will include: average temperatures rising; rainfall being higher in the monsoon causing more floods, yet lesser in the dry season causing prolonged droughts and soil moisture deficiency; melting of Himalayan glaciers (source areas of Bangladesh’s rivers) altering the hydrological cycle; more intense tornadoes and cyclones; and progressive rise of sea level in the Bay of Bengal, displacing coastal communities and pushing the salinity front further inland.

1. Vulnerability of the Agriculture Sector to Climate Change 50. The agriculture sector is particularly sensitive to climate change, because crop yields depend directly on climatic conditions like temperature and rainfall patterns. In tropical countries, even small amounts of warming will lead to declines in the amount of crop harvest.

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Agriculture in Bangladesh is highly vulnerable to variations in weather patterns and climate variability, and is, therefore, extremely at risk from climate change, which will affect food security – especially in the salinity-prone southern districts and the drought-prone northwestern districts. Generally speaking, crop agriculture in Bangladesh is susceptible to such hazards or problems like flash flood, floods from overspilling of rivers, drought, saline ingress, soil fertility and organic matter depletion, and diminishing surface water flows in the dry season. 51. Since livelihoods and the primary economic activities in Bangladesh pivot around agriculture in Bangladesh, adverse impacts on this sector from climate change present a formidable challenge for efforts to reduce poverty and achieve the Millennium Development Goals. Prolonged stresses from climate variability and change will not only negatively affect the poor people’s food intake, health and livelihoods; they will also push vulnerable households into a persistent poverty trap with diminishing coping capabilities. 52. Under a climate change scenario, warmer temperature, milder winter, heavy rainfall, drought, excessive or inadequate soil moisture, increasing soil and water salinity in the south, and flooding will disrupt food production and rural livelihoods in Bangladesh. Climate change studies have predicted that all seasons in the Ganges-Brahmaputra-Meghna (GBM) Basins will get warmer, with an increase in extreme temperatures. This warming is predicted to be more pronounced from December to May, with average winters by 2050s being around 1.9O – 2.4O C warmer in Bangladesh; which will have serious implications for winter season HVCs. The effect of temperature rise on agriculture is complex due to a number of interplaying factors. Higher carbon dioxide (a greenhouse gas) levels and solar radiation can, theoretically, increase food production (due to greater photosynthesis), but this will only benefit agriculture in the short term. Indirect effects on crops such as more flooding, higher evapotranspiration and lowering of soil moisture levels, droughts, an increase in pests and crop diseases, and heat stress will negate the former benefits in the long term leading to overall lower production. 53. While too little water leads to vulnerability of crop production, too much water can also have deleterious effects of productivity through adversely affecting soil properties, damaging plant growth, and delaying farm operations. The summer season of Bangladesh is dominated by the moisture-laden southwest monsoon, which occurs from June to October and conditions the seasonal cycles. As a result of climate change impact, the increase of monsoon rainfall in the GBM basins (northern South Asia including Bangladesh) is predicted to be larger from around 4-8 percent by the 2020s and 9-10 percent by the 2050s, while winter rainfall is expected to reduce by 4-5 percent by the 2050s. High intensity rainfall will become more common, and this is likely to adversely affect farm incomes through increased soil erosion (and crop loss therefrom) and inability to cultivate land due to prolonged waterlogging. 54. Droughts are a regular phenomenon in northwestern Bangladesh (between November and May), which are predicted to be more frequent and acute due to climate change impacts. Drought refers to a condition when the moisture availability at the plant roots is less than adequate. The area affected by droughts is expected to get larger with symptoms of total failure of winter rains, late arrival or early departure of monsoon rains, or significant failure of monsoon rains. Climate change induced erratic rainfall over Bangladesh contributing to more severe droughts is a matter of serious concern for the Rabi (dry) season farming of Boro rice, wheat and the winter vegetables/spices etc. Groundwater supplies have allowed irrigation in vast areas of Bangladesh over the past several decades for dry season farming, including vegetable cultivation. Although higher rainfall in the monsoon period might help recharging groundwater, it will, nonetheless, be subjected to acute stress owing to overextraction and reduced winter rainfall amount under droughty conditions. The melting and retreat of the Himalayan glaciers will

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lead to water surface water shortages and decreased groundwater recharge potential, making the effects of seasonal droughts even more severe. 55. Sea level rise from global warming will significantly alter the agricultural ecosystem of the southern districts of Bangladesh. The relative importance of sea level rise in the Bay and natural subsidence of the delta from sediment overload is not precisely known. The Bangladesh Water Development Board (BWDB) estimated that the combined effect of global warming and subsidence will result in a net sea level rise of around 30 cm by 2020 and 50 cm by 2100. The realistic (‘best estimate’) assumption is that sea level will probably be at least 40-45 cm higher than today’s level; and possibly as high as one meter in the worst case scenario – in which case, the entire Sundarban forest in southwestern Bangladesh may go under sea water by the end of this century. The phenomenon of sea level rise is a very slow process, and hence, the displacement of communities (about 40 million currently living in the coastal zone) will take place very slowly over the years due to combined effects of flooding, storms and surges, increase of soil and water salinity, and above all, loss of livelihoods. The SCDP districts which will be affected by sea level rise related hazards are Satkhira, Khulna, Bagerhat, Pirojpur, Barisal and Jhalakathi. Hence, these districts will need special ‘salt-tolerant’ crop strategy to address the climate change impacts. 56. According to the IPCC predictions, tropical cyclones will be stronger in future all over the world, including those originating in the Bay of Bengal. These massive storm systems combine the effects of heavy rainfall, high winds lashing the coast, and storm surges. The devastating effects will include greater damage to crops, windthrow (uprooting) of trees, death and injury, loss of livestock, and losses of individual property and community infrastructure. As a result of climate change, warmer sea surface temperatures in the Indian Ocean and the Bay of Bengal will generate more intense cyclones that move toward the Bangladesh coast, and have a landfall with wind speeds of more than 220 km per hour. Storm surges in which sea water is pushed far inland by the strong cyclonic winds are far more devastating than the actual winds generated by the cyclone. One estimate suggests that the number of people currently under direct threat of severe cyclonic surge flooding (about 7-8 million) will double by 2050. The SCDP districts which are vulnerable to cyclones and storm surges are Satkhira, Khulna, Bagerhat, Pirojpur, Barisal and Patuakhali.

2. Adaptation Strategies/Options 57. There are two broad categories of response options to meet the challenges of climate change: mitigation and adaptation. Mitigation refers to actions that would prevent or restrict the emission of greenhouse gases, and this has little relevance for Bangladesh, whose GHG emission level is miniscule. Adaptation, on the other hand, involves conscious adjustments to changing conditions due to global warming. In the agriculture sector, such adaptation to climate change impacts would include adjustments and changes to land use, cropping practices and patterns, crop selection as well as crop management techniques. 58. Coping strategies in agriculture in order to adapt to climate change impacts like flooding, drought or salinity can be categorized as:

(a) traditional, e.g. locally managed practices like excavation of derelict ponds for water conservation, excavation of drainage canals, rainwater harvesting etc.;

(b) government supported actions such as expansion of deep tubewell (DTW) irrigation for large number of households, maintenance and re-excavation of drainage canals, and dredging of silted up streams/rivers;

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(c) alternative and autonomous adaptation practices such as selecting crops and fruit trees which are more resilient to changed conditions of soil characteristics and atmospheric humidity (increased proneness of floods and drought), and expand homestead vegetable and fruit gardening; and

(d) technology-driven efforts such as developing new species of crops which will be tolerant of salinity, drought, and stagnant water.

59. Although the science of climate change is now well established, its predicted effects on communities are a fairly new and poorly understood issue for most people. The level of awareness on climate change issues is, therefore, rather low, especially in developing countries like Bangladesh. The most important prerequisite for any adaptation for the SCDP vis-a-vis climate change impacts is expert, dedicated and participatory extension service by the DAE at the field level. 60. In this project, adaptation options to climate change impacts on agriculture will include pilot testing of climate resilient drought, flood and salinity tolerant varieties of crops to facilitate adaptation by the HVC farmers. An important aspect of adaptation strategy will be awareness building among the farmers about climate change vulnerabilities through orientation meetings, demonstrations and farmers’ field days, and motivation of the farmers to comprehend the climate change impacts on farming and their adaptation needs through extension services. This extension service will have two objectives:

(a) Awareness raising among the farmers about climate change vulnerabilities and

their perceptions on climate change scenario through orientation meetings, demonstrations, and field days; and

(b) Motivation of the farmers to understand the climate change impacts and their adaptation needs for their farming, and to willingly participate in learning and adapting coping strategies.

61. Although adaptation options in the growing of any HVC will be practiced at individual household levels, yet, the overall response portfolio must be community based, which will be facilitated by the agriculture extension staff. Field visits, discussion with horticulture specialists and literature review have helped to outline the following adaptation options/strategies for the SCDP in respect to climate change impacts. Changes in farming practices/methods will be encouraged including zero or no tillage of maize and garlic, expansion of kitchen gardens around households, changing planting and harvesting times, promoting crop species suited to drier, flooding and saline conditions, and protecting croplands against increased flooding and saline water intrusion.

(a) Community based adaptation. The starting point should be with the assumption that “local people are the real experts”, since they can perceive best about any changes that are occurring in the weather and climate sectors, and they have traditional responses to cope with many climate variabilities. The salient traits of local and indigenous knowledge in agriculture are that their methods are locally appropriate, flexible, and both socially and environmentally acceptable. Any adaptation effort in disaster preparedness and any climate change impact mitigation must include this locally available knowledge in order to attain sustainability. Since the coping strategies of the poor farmers are often constrained by lack of resources and information, there is a concomitant need to supplement with scientific expertise on future climate change impacts and probable adaptation options. The blending of this scientific knowledge with local

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knowledge and coping mechanisms will enable the building up of a strong community based adaptation response. Although adaptation options in the growing of any HVC will be practiced at individual household levels, yet, the overall response portfolio must be community based for its success and acceptability.

(b) Disaster preparedness. This is a concept which is ingrained at the policy making

level in Bangladesh for all kinds of natural disasters. In basic terms, it refers to vulnerable peoples’ activities to develop resilience, minimize losses, adapt measures to respond to hazards, and make a sustainable recovery. In the SCDP, the farmers will have to be provided with facilities and opportunities for preparing themselves against adverse impacts of climate change. These will have two components: (i) non-structural and (ii) structural. Non-structural components include making them aware of the probable consequences of climate change on their crops and cropping practices, and providing knowledge-based information about the probable ways as to how they can gradually accommodate to the changing climatic environment. Structural components will include physical adaptation measures like construction of new and rehabilitation of existing embankments/polders along the flood-prone rivers and the coastal zone (as measures against flooding and salinity intrusion), tank and pond excavation for retaining rain water, and large scale tree plantation to increase vegetative cover in the drought-prone districts of the northwest.

(c) Microfinance. Since credit support or assistance is one of the components of the

SCDP, this tool could also be used for climate change adaptation, and help households reduce their vulnerability to climate by helping them in selecting ‘climate change tolerant’ HVC species, diversifying their farm output portfolio, and avoiding income losses. Interested households can also be given an opportunity to adjust their loans - where HVC cultivation is highly vulnerable to climate change – in order to change and/or diversify livelihoods for adapting to future situations. Recognizing that micro credit does not bring any relief to the ‘poorest of the poor’, small and medium farmers of the SCDP can surely qualify for credit support to catalyze enhancement of capabilities for reducing their livelihood vulnerability.

(d) Zero or no-tillage. The National Adaptation Program of Action (NAPA) reports

that the wet bed zero or no-tillage adaptation technique has been used in parts of the country for potato cultivation after flash floods had destroyed transplanted aman crop in the fields. This practice requires little land preparation and uses the beneficial moisture in the soil, retained after water recession. Minimal tillage also helps to retain natural fertility in the soil. As an adaptation option, this practice of tillage can be used for cultivating relatively quick growing maize, garlic and other suitable vegetable or spice crops.

(e) Household vegetable gardens. It is understood that HVCs generally occupy two

types of land levels: Medium Highland (flood depth of 30-90 cm) and Highland (flood depth below 30 cm). The areal extent of these types of land will change and shrink due to increased inundation under a climate change scenario. Hence, the intensification and expansion of vegetable or ‘kitchen’ gardens around homesteads could be an option to produce HVCs when their farm areas outside the homesteads will become smaller or disappear. The concept of vegetable

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gardens can be reinforced further by encouraging the farmers to grow such varieties of vegetables which are less vulnerable to climate change stresses (heavy rainfall, salinity or drought).

(f) Water conservation. Since periodic droughts in Bangladesh are expected be

more frequent due to climate change, water conservation, especially in the northwest, is of vital importance. Adaptation options to conserve water would include excavation or recovery of derelict ponds, construction of concrete cisterns (in khas or government land) to hold rainwater, extend irrigation facilities through conserved rainwater, building earth walls or ‘bunds’ around farm plots to prevent soil erosion from wind and rain, and using deep tubewells (DTW). Caritas, an international NGO, reports that in the dry Barind Tract of northwestern Bangladesh, an indigenous adaptation option is practiced by ‘drip-feed’ irrigation of household vegetable gardens using old plastic bottles with a string inserted through a hole in the cap and leading to the base of the plant.

(g) Change in planting and harvesting times. It is very likely that climate change will

cause erratic rainfall patterns in Bangladesh – like shifting of the monsoon maxima later in the rainy season, late arrival and late departure of the monsoon winds, heavy rainfall of short duration causing prolonged submergence etc. All these changes will impact the crop planting and harvesting schedule. Hence, this schedule (crop planting and harvesting of HVCs) will have to change and adjust with the changing climatic conditions. For example, in southern dry region of Sri Lanka, the farmers are advised to delay the planting of vegetables by several weeks in order to synchronize with late arrival of the rains. The extension workers of the DAE will have to pilot such advisory actions in order to sensitize the farmers about the need for change in cropping practices.

(h) Cropland protection. The adaptation options for adverse climate change impacts

on agriculture are anticipatory. The need to protect croplands growing HVCs and cereals requires serious planning, and in some cases, might require large investments. The best example is provided by the need for building flood protection embankments and coastal polders to protect valuable, but vulnerable, croplands from excessive and extensive floods, and from salt water intrusion. Fruit trees along with fodder producing species can be planted along riverbanks and irrigation canals to stabilize the banks to minimize water-induced soil erosion which will increasingly threaten the croplands. One other cropland protection option is to strengthen further the coastal afforestation program with salt tolerant trees (like mangrove species) as a defensive measure against the impacts of wave action, and salt water intrusion. In inland locations too, more tree belts around agricultural lands can help reducing evapotranspiration from crops, and thus, minimize water loss.

(i) Reorganizing crop basket and practices. This option refers to perceptible

changes in response to climate change impacts. It means that the type of HVCs cultivated in any given site may need to be reorganized – with some crops being dropped or some crops being added to the list – depending upon emerging favorable or adverse conditions. For example, ‘arum’ as a water tolerant species can displace those HVCs, which cannot withstand prolonged inundation. Likewise, ‘jujube’ can be planted on a wider scale as relatively sturdy crop in drought-risk areas. Besides, the technique of ‘floating gardens’ is another

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adaptation option, also known as ‘hydroponics’ – meaning ‘growing plants in nutrient containing water without soil’. This practice will be suitable for the beel (lowlands) areas of Gopalganj, Pirojpur and Barisal districts (and other areas which may become inundated from sea level rise). It basically involves the formation of floating platforms of water hyacinth and other aquatic plants bonded together with bamboo poles, and matted with agricultural residues to make the bed for growing both summer and winter vegetables. (Maize, beans, and squash have been grown on such floating gardens for thousands of years in Mexico, locally known as ‘chinampa’).

(j) Supporting research. In the context of climate change impacts on agriculture, it is

imperative to develop new and improved varieties of all types of crops (cereals as well as vegetables and fruits) to withstand the climatic changes such as floods and waterlogging, high temperature, milder winter, droughts, salinity etc. The NAPA of 2005 and the Bangladesh Climate Change Strategy and Action Plan (now awaiting final approval from the Government) have both recommended research toward developing climate resilient new crop species. Research is essential to develop and field test alternative crop species, adapted to likely future conditions, so that choices are available to farmers as climate conditions change. Research for newer varieties of HVCs and other adaptive technologies is to be an integral part of adaptation strategy against climate change. The SCDP can obtain knowledge and assistance from Bangladesh Agricultural Research Institute (BARI) and other research centers, and disseminate information to and assist the farmers engaged in HVC cultivation with the goal of enhancing their capability to meet challenges of heat, submergence and floods, drought, salinity etc.

D. Mitigation Measures 62. The IEE of the proposed project actions indicates that they will not have any major negative impact on the environment. The few potential adverse impacts of low to medium magnitude, which have been identified, relate to soil of the HVC farms, fertilizer use and pesticide use. The following paragraphs set out the recommended measures to avoid, minimize and mitigate the potential negative impacts.

1. Soil 63. The most likely adverse impact on soil in the HVC farms is erosion during and after heavy rainfall. The magnitude of soil erosion and consequent silt runoff will depend on the rainfall (which is likely to increase under climate change impacts), and the extent of vegetation around farm plots. The silt runoff may also cause unwanted sedimentation in irrigation and drainage channels around the plots. If the vegetable farms are located on relatively higher grounds, especially around homesteads, the erosion potential by both wind and water flowing down the gullies will be greater depending upon the angle of slope with the surrounding land. Soil materials eroded from the farm plots will not only remove the fertile topsoil, but also carry residual chemicals from fertilizers and pesticides used by the farmers. The recommended mitigating measures against soil erosion are (a) regular surveillance of erosion prone sites, (b) maintenance of the slopes of the HVC plots to the surrounding lower lands, preferably at a ratio of 1:2, (c) control of agricultural inputs and cropping practices, e.g., minimizing uses of chemical fertilizers and pesticides, and (d) tree plantation along the aisles of farm plots (which will protect

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the plots against wind and gully erosion and their caretaking by locally organized community groups.

2. Chemical Fertilizers 64. In most cases, it is virtually impossible to sustain crop production without adding nutrients. After each harvest, the naturally occurring soil nutrients are removed, and so have to be replaced, and this is commonly done through an input of inorganic or chemical fertilizers. In the project area too, the application of chemical fertilizers is widespread in the cultivation of vegetables, spices and perennial trees. The two serious adverse impacts of such large scale use of chemical fertilizers are the progressive decay of soil health from repetitive applications of chemicals, and pollution of water bodies and streams from runoff carrying the fertilizer residues into them. Efforts had been made during the NCDP implementation to train and motivate the HVC farmers in using organic manure in lieu of chemical fertilizers; however, field assessments during the preparation of this report indicate that the farmers still have strong preference for chemical fertilizers. 65. Despite the apparent preference for chemical fertilizers among the farmers in the project area, it is imperative to train, motivate and persuade them in using organic manure – the rationale being the prevention of health hazards from chemicals. Therefore, it is necessary for DAE staff to provide training courses to HVC farmers in order to use organic manure. There are several organic sources of nutrients for cultivation with varying techniques in their preparation and use. Some of the more relevant ones are listed below as mitigation against chemical use.

(a) Animal manure. Cow dung and animal litters, including poultry droppings, are probably the cheapest type of organic manure in rural Bangladesh. They are generally more efficient than inorganic compounds, and focus on recycling of nutrients. Animal manures positively affect soil structure and water retention, and also benefit soil organisms. However, there is a caveat to expecting any large scale expansion of cow dung use in the agricultural fields because of the dwindling livestock population, and the use of dung as fuel for cooking in many households.

(b) Composting. This is an age-old technique of organic farming, generally known in

rural Bangladesh, and practiced by many farmers along with the use of chemical fertilizers. Composting combines the use of animal manures, crop residues and green materials, and household organic wastes. All these materials are more or less available in most rural households. (Water hyacinth is one commonly available raw material that makes good compost). The materials are heaped or placed in a pit and covered with soil in such manner that anaerobic decomposition can take place. Harmful substances and toxic products of metabolism are broken down, while pathogens, and the seeds and roots of weeds are destroyed by the heat generated within the compost heap. Composting is particularly suitable for tropical countries like Bangladesh because the organic matter stores nutrients and prevents leaching. It also improves soil moisture retention (especially vital under drier conditions) and aeration of the soil.

A complementary technique to composing is ‘vermiculture’ – the cultivation of worms to speed up the production of compost and improve its quality. Vermicompost is cheaper to produce than chemical fertilizers, is environment-friendly; and it promotes better root growth, and improves fertility, soil aeration

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and texture, and soil moisture retention – the latter is an important attribute for climate change adaptation. Extension tasks in the SCDP should give special priority toward motivating farmers in compost production.

(c) Green manures. The most suitable green manure crops are leguminous plants

that can obtain nitrogen from the air. The impact of legumes grown together with crops or used in crop rotation reduces the need for nitrogen fertilizers. They increase nutrient levels as well as improve the physical properties of the soil. Other than leguminous beans, dhaincha or ‘sesbania’ (a water-tolerant crop) is often grown and then plowed into the soil as green compost in many areas of Bangladesh. The interplanting of maize (an HVC in the SCDP) with legume crops will increase the yield and at the same time, reduce the demand for chemical fertilizers. In the SCDP area, the farmers will require training to get them into wider practice of using green manures in their fields.

(d) Blue-green algae and Microbial solution. These are two futuristic sources of

organic manure, which may have potential for use in Bangladesh in the long run. Blue-green algae is an important source of nitrogen that fixes atmospheric nitrogen while living in cavities in the leaves of a small fern, called ‘Azolla’ – growing in the rice field waters. It has been successfully used to fertilize rice field in India and China, and is considered an important resource-conserving technology. Use of blue-algae as organic manure is known to significantly reduce the need for nitrogen fertilizers. Rigorous extension and motivation exercises will be required to introduce and popularize the blue-algae manure in the SCDP.

66. In a similar vein, one other innovative organic fertilizer is microsoil – a microbial solution – which is a compound of two microbes, currently a favorite fertilization mode in developed countries. The solution is sprayed over the plants along with water, while some organic manure is added at the plant roots which can create a favorable environment for worms to grow and enrich the soil. Microbial solutions are now available in Bangladesh, and they can be introduced at some selected pilot stations.

3. Pesticides/Insecticides 67. In the past, pesticides and insecticides were considered as the ‘panacea’ for the control of agricultural pests. They may provide temporary relief, but it is now widely accepted that indiscriminate and excessive use of pesticides and the long term dependency on them threaten the sustainability of agricultural production. Besides, in addition to health hazards to both the farmers and the consumers, the widespread use of pesticides leads to negative environmental impacts, including toxicity in rivers and streams which receive runoff from farmlands. 68. The answer to the problem in using chemical pesticides is the concept of ‘integrated pest management’ (IPM), which is a pest control strategy that uses a variety of complementary measures: use of mechanical and physical devices, genetic, biological, cultural, and chemical management. These measures are implemented in three stages: prevention, observation and intervention. It is an ecological approach with the main goal of significantly reducing or eliminating the use of pesticides, while at the same time, managing pest populations at an acceptable level. 69. In Bangladesh, IPM activities first started in 1981 in the rice fields. Soon afterwards, the program was reinforced throughout the country, and the government and the donor community

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were in full agreement for its promotion in minimizing the use of pesticides. In 2002, the Government formulated the National Integrated Pest Management Policy. The follow-up of this policy was in the form of providing IPM training to build and strengthen the capacity of the Department of Agricultural Extension (DAE), and the introduction of Farmer Field Schools (FFS) for training of farmers in IPM practices. Several NGOs were also trained to help expand the IPM activities in rural areas. It is expected that the DAE will be able to provide training and outreach services to the growers of HVCs in the SCDP and significantly reduce the amount of pesticide use. 70. IPM is suitable for all types of agriculture including the cultivation of vegetables, spices and fruit trees, which are targeted as HVCs in this project. The DAE staff, in collaboration with farmers, can initiate the program in several sequential steps. These are (a) proper identification of pests; (b) learning the life cycle of the pest and the host; (c) monitoring or sampling pest population in order to take preventive or curative action; (d) establishing action threshold, which, in reality, means determining as to what number of pests can be tolerated (depending upon the crop in the field); and (e) choosing an appropriate combination of management strategies. 71. The following IPM strategies or practices are suggested for adoption in the SCDP to reduce and minimize the use of chemical pesticides; since none of them succeeds singly, a combination of the options should be decided upon by the project implementers. It should be added, though, that the success of IPM practices in the area depends on the strength of the DAE staff on this issue and their dedication to the training and motivation of the farmers. Therefore, it is necessary for DAE staff to provide training courses to HVC farmers in order to adopt IPM practices.

(a) Use of resistant varieties. A major line of defense against the use of pesticides is to plant crops that are genetically resistant to the likely pests and diseases. Much of the success in modern cropping system has centered upon developing varieties resistant to pests and diseases. The small and medium farmer beneficiaries of the SCDP could be provided with resistant HVCs as an alternative to pesticides. It can only happen if the DAE, the implementing agency, does get involved with research organizations and universities to identify and develop new pest-resistant varieties of the crops selected in different areas. A close collaboration among these organizations are, therefore, essential in this effort.

(b) Using indigenous knowledge. Many farmers have traditional pest control

knowledge of some locally available compounds which can repel, deter or kill poison pests of their crops. These are normally selective in their actions, killing harmful pests and not predators or ‘friendly’ pests, and do not contaminate the environment. In some parts of Asia and Africa, the compounds made from the seed kernel of ‘neem’ trees are widely used – which deter pests and mites, but do not harm birds or bees. Indigenous knowledge in fighting pests in the project area should be explored and the farmers could be encouraged to apply them to crops which are compatible to them.

(c) Bacterial pesticide use. Pesticides based on compounds of bacteria are also

helpful in disabling the pests and reducing their population. Experiments suggest that some bacteria are even effective in controlling crop diseases. The DAE can collaborate with research organizations in developing programs for examining the potential of such bacterial pesticides and the scope of their use in the SCDP.

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(d) Biological control. Natural biological processes and materials can also provide

pest control, with minimal environmental impact, and often at low cost. The main focus here is on promoting beneficial insects as predators or ‘natural enemies’, which eat or consume harmful pests. Some pest populations can also be controlled by disrupting their reproduction. Synthetic chemicals that mimic pheromones – which are hormones released by female insects to attract males – will greatly reduce the chances of mating by confusing male insects, while the release of large numbers of pre-sterilized males will result into most matings being sterile. With support from the DAE, it is very likely that the SCDP beneficiaries will actively accept and practice this option.

(e) Mechanical control. This is another age-old technique practiced by the farmers in

Bangladesh. The methods include simple hand-picking, erecting insect barriers, using light and other insect-attracting traps, vacuuming, and tillage to disrupt pest breeding.

(f) Participatory management. This is indeed the core theme for the success of IPM.

All pest control activities or options must have a format of close collaboration between the DAE – as the project implementing agency – and the beneficiaries in the field. Participatory extension tasks in IPM should include demonstration and training on IPM practices, orientation meetings, field days, farmer field schools, community rallies, and formation of IPM clubs. The DAE already has a lot of experience in these activities, and they can be strongly involved in motivating the farmers in IPM practices.

V. INSTITUTIONAL REQUIREMENTS AND ENVIRONMENTAL

MONITORING PLAN A. Institutional Strengthening: Status and Needs 72. The Ministry of Agriculture is one of the key ministries of the Government of Bangladesh. Among the different line agencies of the Ministry of Agriculture, a more high profile unit is the Department of Agriculture Extension (DAE). The Department of Agricultural Extension is the largest public sector extension service provider in Bangladesh. Its mission is to provide need-based extension services to all categories of farmers and to enable them to optimize their resource use – in order to promote sustainable agricultural and socioeconomic development. The core functions of DAE include increasing agricultural productivity, human resource development and technology transfer. The Department of Agricultural Extension is tasked with the obligations to (a) prepare feasible and compatible programs for the proper use of cultivated land on the basis of demand for different crops, (b) monitor the supply and availability of quality seeds, fertilizers, irrigation, pesticides etc. in order to facilitate farming activities, (c) prepare an anticipatory report on the increase/decrease of crop-wise demand for different agricultural inputs, and (d) use both audio and visual media for rapid dissemination of agricultural technologies. 73. Agriculture is one of the key sectors which are directly influenced by climatic elements, especially rainfall and temperature. It is, therefore, expected that the Department of Agricultural Extension (DAE), which is mandated to extend outreach services to the farmers, should be adequately equipped to deal with environmental issues related to the farming of different crops. Indeed, it is more imperative now because of concerns about impending climate change

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impacts. It is understood that several environmental training courses were conducted for the DAE personnel in the past under different projects, although – due to lack of continuity and linkage – no institutional memory has been built up on environmental assessment tasks. In the absence of a permanent ‘environment cell or unit’ within the DAE, it was not possible for the organization to develop and sustain such activities as impact assessment, monitoring and evaluation of environmental issues related to the organization’s activities. The environmental component in its extension activities was thus missing or inadequate. 74. Since 2005, there exists a unit within the DAE, called ‘Disaster Risk Management and Climate Change Adaptation Core Group’, headed by the organization’s Director General. The members, numbering 10-12 officers from different projects of the DAE, meet occasionally to review and update disaster and environment related issues/activities. However, owing to the Core Group members’ engagement, as full-time officers, in other routine assignments, this group could not act proactively in any agenda fully devoted to environmental hazards and climate change impacts. For example, the ongoing Phase II of the FAO-funded ‘Livelihood Adaptation to Climate Change’ project in the DAE and its Phase I, had undertaken training programs for the DAE officials as well as grassroots stakeholders with a view to raising awareness about climate change impacts in the crop sector. Since it was a project-based activity, it produced immediate benefits, but not sustainable dividends in respect to the DAE’s in-house capacity building in environmental management. 75. It is proposed in this report that, as part of DAE’s institutional strengthening activity, there should be an input of one environmental consultants (with climate change impact expertise), who will be engaged with project actions intermittently over the project period, especially devoted to the issue of Climate Change impacts on HVC cultivation. The principal assignments of the environmental consultants will be to identify and monitor the climate change impacts on the growing of vegetables, spices, fruits and other HVCs, and advise the project personnel on remedial and adaptation measures. The process will be participatory with full and active involvement of the farmers growing HVCs. Concurrently, the environmental consultants will be entrusted with the task of organizing and administering training modular courses for the DAE staff (both at the district and upazila levels) and other stakeholders on climate change impacts, environmental assessment and monitoring, social impact assessment, and public consultation/participation including Participatory Rapid Rural Appraisal (PRRA) techniques. The output of these training courses will be a progressive sensitization of the DAE staff about the climate change issue with respect to agriculture and food security. The environmental consultants will work in close cooperation with the Project Management Unit (PMU) of the SCDP. B. Monitoring Plan 76. Environmental monitoring will be carried out during both the project implementation phase and the post-project (long term) phase under the baseline (current) scenario as well as under the climate change scenario (medium to long term). The objectives of environmental monitoring for the SCDP would be a continuous surveillance program to identify/detect both positive and negative impacts on the cultivation of HVCs. It will basically consist of two parts:

(a) to detect at the project implementation phase any environmental effects (predicted and unpredicted) in relation to project actions; and

(b) to ensure compliance with the various mitigation measures to prevent/avoid/minimize potential negative impacts (e.g., pesticide use),

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especially in the context of climate change implications, both at the project implementation and post-project phases.

77. The responsibility of monitoring during the project implementation phase will lie with the DAE staff, trained in environmental issues and climate change impacts during the project implementation as well as post-project phases.

78. Monitoring tasks will focus on:

• Soil erosion in and around horticulture farms and orchards; • Periodic testing/surveillance of soil health: fertility loss, nutrient needs etc.; • Drainage conditions and prevention of waterlogging; • Need for excavation of new canals or re-excavation of existing silted up canals

after recession of annual flood waters; • Flood protection embankment maintenance and rehabilitation; • Operation and maintenance of irrigation canals; • Ensuring irrigation efficiency in the farm plots and prevention of water wastage; • Surveillance of excessive use of chemical fertilizers; • Surveillance of excessive use of pesticides/insecticides; • Awareness and promotion of IPM practices; • Awareness and promotion of organic fertilization techniques; • Awareness building of climate change impacts and dissemination of adaptation

options or strategies; and • Periodic assessment of increased incidence and magnitude of climatic hazards

(due to climate change) like flooding, drought, high intensity rainfall (i.e., excessively heavy rainfall of short duration), soil and water salinity, tropical cyclone and storm surges in the coastal districts, and providing extension assistance in adaptive and coping strategies.

VI. PUBLIC CONSULTATION AND INFORMATION DISCLOSURE

79. The proposed SCDP had participatory consultations as one of the basic tasks in project design and formulation. As part of the preparation task, it was decided to consult representatives of different stakeholders and potential beneficiaries in the project area and receive their feedback with a view to finding out their perceptions, needs, expectations and grievances. Two workshops were held to disseminate the information about the proposed project actions and learn from the participants their views on the project objectives and actions. The first workshop was the Inception Workshop, held in Dhaka on July 8, 2009, while the second workshop was the Regional Stakeholders’ Workshop in Jessore on July 30, 2009. Each workshop was attended by about 35-40 stakeholders, which included the officials of the project implementing agency – the DAE, representatives of potential NGOs who may be associated with the project in credit support and assistance, farmers’ representatives (i.e., potential beneficiaries in the field), representatives of banks and women’s groups. 80. The focus of the Inception Workshop was on technical sessions organized into group discussions and a plenary session to summarize the outcome. Three groups were formed for in-depth discussion on (a) Technology demonstration for HVCs, including crop selection criteria; (b) Post harvest technology and market support; and (c) Credit support to the farmers by banks and NGOs, as well as on cross cutting issues involving crop diversification goals under the SCDP.

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81. The format for the Regional Stakeholders’ Workshop in Jessore was somewhat different from the Inception Workshop in that all participants got an opportunity to express and share their thoughts with the entire group in an open discussion forum. At the outset, the Team Leader outlined the goals, objectives, project components, and the implementation phases and strategies of the SCDP. Two plenary sessions were organized. In the first plenary session, the consultants presented the project related crop production support, and rural credit issues, followed by open discussion among the participants. The second plenary session was focused on post harvest handling and market support issues, social impact and gender issues, and environmental issues, including the implications of climate change impacts on the HVCs. This session too, was followed by open discussion by the participants. The issue of environment and climate change is included as one of the investigation themes of the project preparation task. During the workshop, all participants were unanimous in expressing their opinion that the SCDP actions are not expected to cause any significant adverse environmental effect in the region. Many participants were, however, not fully aware of the far reaching implications of climate change and their impacts on agriculture, although they were receptive to learning more about it. 82. Participatory consultations also formed an integral part of field assessment of the environmental impacts and climate change issues in the sample sites. The use of RRA methods enabled the investigator to interact with 61 respondents (27 in the northwest and 34 in the southwest) in 27 sample sites of 20 upazilas. These interactions included informal interviews with local people (farmers, housewives, retailers, vendors, school teachers, roadside tea shop owners and other key informants). They freely discussed their problems about the present cropping practices (including fertilizer and pesticide use), environmental changes as well as about the large uncertainty (reflecting a kind of fatalistic attitude) regarding climate change impacts. A significant aspect of public consultations on environmental issues is that the local population is generally aware of the important local environmental problems, and they are in favor of local and minor interventions to protect their lands in terms of flood hazards, waterlogging, irrigation facilities, and improved forecasts on heavy rainfall. Nonetheless, almost all respondents expressed support and approval of the SCDP objectives in promoting HVCs and commercialization of such crops.

VII. FINDINGS AND RECOMMENDATIONS 83. The Second Crop Diversification Project falls under Category B on the basis of findings from the Initial Environmental Examination (IEE) and the completion of the Rapid Environmental Assessment (REA) checklist, which reviewed the environmental implications of the project. An IEE was carried out to screen the potential adverse impacts of the project interventions and suggest avoidance/mitigation measures. Environmental issues and parameters that are relevant to the project were identified through literature review and scoping. Apart from direct and current relationships of environmental issues with the program of promoting HVCs in the project area, probable climate change impacts and adaptation options were also given special attention. 84. Scoping and field visits to 27 sample sites, using a field survey checklist, identified the environmental parameters/components (relevant to the project actions) which are susceptible to be affected, and evaluated the perceptions of the local population on the general environmental health and climate change issues. These parameters include soil, land levels, drainage, irrigation and water availability, flood proneness, general environmental health, use of chemical fertilizers and pesticides, and climate change awareness. Field assessments confirmed that the project actions related to soil, fertilizer use and pesticides are the only three parameters which have minor negative environmental impacts.

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85. There was some awareness among the respondents about the impending climate change, but the perception about its significance or magnitude of impact was very low. Since the current scientific evidence of global climate change is unequivocal, it was necessary to examine its impact on the agriculture sector in Bangladesh, and explore the potential adaptation options, especially with regard to HVCs. Agriculture in Bangladesh is highly vulnerable to variations in weather patterns and climate variability, and is, therefore, extremely at risk from climate change, which will affect food security – especially in the salinity-prone southern districts and the drought-prone northwestern districts. Generally speaking, crop agriculture in Bangladesh is susceptible to such hazards or problems like flash flood, floods from overspilling of rivers, drought, saline ingress, soil fertility and organic matter depletion, and diminishing surface water flows in the dry season. Field visits, discussion with horticulture specialists and literature review have helped to identify some doable adaptation options/strategies for the SCDP in respect to climate change impacts. These include community based measures and disaster preparedness, micro credit support to the farmers for adapting new technologies or measures, practices of zero-tillage and water conservation, expansion of homestead vegetable gardens, changing sowing and harvesting times, protecting farm lands from flooding with embankments and polders, changing the land use and cropping practices in tandem with changing demands of weather and climate, and greater emphasis on research to develop new crop species which will be tolerant of heat, water, drought and salinity (all of which will exacerbate with global warming). 86. Several mitigation measures are suggested to meet the problems of soil erosion, and excessive use of chemical fertilizers and pesticides. The suggested mitigation measures against soil erosion are regular surveillance of erosion prone sites, and community based tree plantation along the aisles of farm plots. It was found during field visits that the farmers are aware of and also using, to some extent, organic manures in association with chemical fertilizers. Likewise, IPM practices are also known, but have limited usage. Extension services promoting different types of organic manure (like animal wastes, compost and green manure), and IPM practices (like biological and mechanical controls, use of resistant varieties of crops and indigenous knowledge) are recommended. 87. The DAE, which is the implementing agency of the SCDP, needs to be strengthened substantially to deal with environmental issues related to agriculture. The present ‘Disaster Risk Management and Climate Change Adaptation Core Group’, headed by the Director General of the DAE, must be made proactive in order to develop in-house capability for environmental assessment. During the tenure of the project, a consultancy input is proposed as a measure to strengthen the environmental capacity of the DAE through imparting training to its staff, both at the district and upazila levels, as well as advising in the field on climate change adaptation strategies. 88. An environmental monitoring plan is also proposed, to be carried out during both the project implementation phase and the post-project (long term) phase under the baseline (current) scenario as well as under the climate change scenario (medium to long term). The objectives of environmental monitoring for the SCDP would be a continuous surveillance program to identify/detect both positive and negative impacts on the cultivation of HVCs. The project staff, trained in environmental issues and climate change impacts, will work out monitoring and compliance programs during the project’s implementation. 89. On the basis of the findings of the IEE – including through public consultations at the workshops and at the grassroots level in the field - it is concluded that the project is not expected to impact the environment adversely, and that a detailed Environmental Impact

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Assessment (EIA) is not required for this project. Hence, this IEE, along with its mitigation, monitoring, and institutional programs, becomes the completed environmental assessment (EA).

VIII. CONCLUSIONS 90. The IEE for the proposed project was carried out in accordance with the environmental assessment (EA) guidelines of the ADB, supplemented by the guidelines of the Government of Bangladesh. The IEE has determined that the project actions will not have any significant negative environmental impacts. The IEE, however, has revealed that there could be some minor adverse impacts like soil erosion, and effects from excessive and continued use of chemical fertilizers and pesticides. Measures to mitigate minor adverse effects, and monitoring and compliance tasks have been outlined in this report. Special consideration was given to the potential impacts of climate change on the project goals to promote HVCs, and the IEE has suggested certain adaptation options vis-a-vis HVCs to deal with changing climatic conditions – including developing and disseminating new climate change resilient crop species. Finally, several actions and measures are suggested to strengthen the in-house capacity of the DAE in dealing with environmental issues with special reference to the climate change impacts.

ENVIRONMENTAL ASSESSMENT AND REVIEW PROCEDURES

A. INTRODUCTION

1. Background 1. Bangladesh is a small country with a very large population. Population pressure on natural resources has contributed to their overexploitation and consequent environmental degradation. Bangladesh is predominantly an agrarian society. About three fourths of the country’s population are directly or indirectly dependent on agriculture for their livelihood, although this sector contributes only 16.23% to the Gross Domestic Product (GDP). Poverty is the major problem in Bangladesh. About 40 percent of the population remains poor (with a per capita daily intake of less than 2122 calories), while about a third of the population is classified as ‘absolute poor’, having a per capita daily calorie intake of less than 1805. 2. The development of agriculture sector is a top Government priority in poverty reduction strategy, and crop diversification into high-value crops (HVC) is a key area of strategic focus under agriculture and rural development activities. The principal characteristics of the agrarian economy of Bangladesh are:

• all arable land has been used and there is almost no scope for any areal expansion;

• the trend in land holdings is towards greater fragmentation and subdivision;

• agricultural activity is primarily concentrated on producing food crops with rice being the dominant crop;

• agricultural intensification is widespread through multiple cropping, use of high yielding varieties of seeds, fertilizers and pesticides; and

• there is a discernible growing trend towards replacing cereals with HVCs. 3. Land is the principal resource base in Bangladesh, and is the mainstay of the country’s agricultural economy. Yet, agricultural land is progressively diminishing on account of the expansion of urban settlements and infrastructure. Farm ownership size is skewed with about 88 percent of total farms being under 1.0 ha, occupying some 60 percent of the total farm land area. 4. The Asian Development Bank (ADB) is one of the major development partners in Bangladesh’s economic growth, social advancement and poverty reduction efforts. The Asian Development Bank’s (ADB) Environmental Policy mandates the consideration of environment in all aspects of ADB’s operations. The Environment Policy and Operations Manual (OM 20): Environmental Considerations in ADB Operations outline ADB’s environmental assessment procedures and requirements. Indeed, environment is considered at all stages of the ADB’s activities from country strategy and program development through Project Preparation Technical Assistance (PPTA) and loan processing to completion. The project preparation activity for the proposed Second Crop Diversification Project (SCDP) includes the task of conducting an Initial Environmental Examination (IEE) of the project actions. The project (SCDP) is classified as a Category B project according to the ADB’s Environmental Assessment Guideline 2003. ADB

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defines ‘environmental impact’ as any change that activities associated with a project may cause in the environment, including impacts on socioeconomic conditions, health, indigenous peoples, and cultural heritage.

2. Project Objectives 5. The overarching goal of the Second Crop Diversification Project (SCDP) is to reduce poverty in the rural communities of western Bangladesh promoting cultivation of HVCs and commercialization of agriculture. The project is expected to (a) increase marginal, small and medium farmers’ incomes; (b) generate rural employment opportunities through commercialization of agriculture; (c) mainstream women in farming enterprises; (d) enhance food security and provide improved nutrition; and (e) stimulate the rural economy in the western parts of Bangladesh, where some districts have a higher ratio of poor population than the national average. 6. The SCDP will specifically focus into:

(a) demonstration and dissemination of up to date technology in the cultivation of HVCs;

(b) mobilization of farmer groups and providing credit assistance and technical guidance to small and marginal farmers (with land holdings of 0.2 to 1.5 ha) to encourage them to grow HVCs; and

(c) providing guidance and credit for post harvest value addition and marketing.

7. The project’s outcome will be improved production, value addition, and marketing efficiency of HVCs, such as fruits, vegetables, flowers, cereals, pulses and spices within the project area. The proposed SCDP area comprises nine upazilas in nine districts of Rajshahi Division in the northwest of the country, and 43 upazilas in 18 districts of Khulna, Barisal Divisions, and part of Dhaka Division in the southwest of the country. The total area covered by the project is 13,012 sq km, inhabited by about 13.72 million (2009 estimate) people.

3. Purpose of the EARP 8. The present document ‘Environmental Assessment and Review Procedures’ (EARP) has been developed on the basis of the findings and recommendations of the Project Preparation Study - conducted by the ADB, in collaboration with the Department of Agricultural Extension (DAE) of the Ministry of Agriculture - in the preparation of the proposed SCDP. The purpose of the EARP is to guide the DAE and the consultants on environmental issues in the task of implementing the various components of the Project. During the implementation period, all activities related to potential environmental impacts will be carried out in accordance with ADB’s Environmental Guidelines in tandem with the Government of Bangladesh’s environmental assessment requirements. The IEE prepared as part of the Project Preparation Study has outlined mitigation measures for some minor potential negative environmental impacts, and monitoring plans for both the implementation and post-project phases, and it is expected that the EARP will support the integration of these measures and practices in the project design.

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B. OVERVIEW OF TYPE OF SUBPROJECTS TO BE ASSESSED

1. Main Project Components 9. The proposed development objectives of the SCDP are to enhance food production and value addition to HVCs, increase farm incomes and generate employment opportunities with a view to ensuring sustainable economic growth in 48 upazilas (39 in the southwest and 9 in the northwest) of western Bangladesh. The SCDP beneficiaries are small and medium farmers (owning 0.2 – 3 ha of land), and marginal farmers (owning 0.02 – 0.2 ha of land). The project is also likely to benefit some landless farmers, who can rent farmland for cultivation, and the sharecroppers or leaseholders. The proposed project is comprised of the following five components: 10. Component 1. HVC Production Support. This component will be implemented by the Department of Agricultural Extension, in active collaboration with non-government organizations (NGO). The project will provide small and medium farmers with HVC production technology by the demonstration and dissemination of the latest techniques consistent with good sustainable practices. The most appropriate types of technology for development of HVC production by farmers will be determined by using the lessons learned in the ADB-funded Northwest Crop Diversification Project (NCDP), which ended in June 2009, and participatory consultation with farmers. The dissemination of technologies will include Integrated Pest Management (IPM) techniques; reduced and zero-tillage practices; green and organic manuring; controlled environment agricultural technology (e.g., green house); and mechanization for land preparation, harvesting and post harvest handling. Farmer groups will be mobilized for technology demonstration and dissemination. 11. Component 2. Value Addition Support. The implementation of this component will be led by the participating NGOs and private sector agribusinesses under the overall supervision of the DAE. The project will facilitate key agricultural sector stakeholders to work together to increase the commercialization of HVC cultivation, and farmer groups will be supported in improving post harvest handling and marketing efficiency. This component will specifically promote and finance the concept of ‘farmer group small scale marketing infrastructure’ through investments on cost sharing basis. The proposed investment must demonstrate that it (i) adds value to HVCs; (ii) involves selected HVCs that have a known, proven, or demonstrable market demand; (iii) benefits other agricultural stakeholders and the community as a whole; (iv) improves the efficiency of the value chain; (v) has built in provisions for long term sustainability; (vi) provides a strong impact on poverty reduction and improving gender equality in the community; and (vii) incorporates ‘public good’ content, i.e., in the public interest. This component will also provide finance to farmers, community based organizations, and participating NGO’s for certain non infrastructure investments. 12. Component 3. Credit Support. This component will provide a loan portfolio covering HVC diversification support credit, as needed by beneficiaries. Individual farmers within groups (having an average of 20 farmers) will be provided with credit through shortlisted NGOs under an agreed schedule and time frame. This component comprises three main activities: (a) identification of beneficiaries and farmers’ credit group formation; (b) HVC production credit and support; and (c) marketing support credit. At the end of the project, the outstanding loan balance of each NGO will be

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converted to a 10 year term with equal six monthly repayments of interest and principal. These loans will be subject to annual review by the wholesale banks. 13. Component 4. Institutional Strengthening. This component will support the strengthening and capacity building of the DAE through training; staffing; equipment provision; and provision of a quality standards certification system for fruits and vegetables, linked to domestic and export compliance requirements, operated by the DAE. About 80 trainers will receive training in HVC technologies and 163 field staff will be trained by the trainers in HVC production. Staff will also receive training in climate change and in gender awareness. Further support will be provided through 159 workshops being held at head office and district levels during project implementation. 14. Component 5. Project Implementation Support. This component will be implemented by the executing agency, i.e., the Department of Agricultural Extension. The following activities will be undertaken under this component: (a) awareness building; (b) baseline surveys; (c) feasibility studies; (d) linkage with relevant projects; (e) monitoring and evaluation; (f) staffing; and (g) overall project coordination and supervision.

2. Potential Impacts

15. The interventions under the SCDP primarily involve the promotion and dissemination of HVC cultivation technology in dispersed locations, and do not include any infrastructure construction program. Hence, potential adverse environmental effects are expected to be minimal, which can be mitigated/avoided through appropriate mitigation measures. During field visits for the preparation of the IEE, potential impacts of project actions and the people’s perception about environment and climate change were assessed. The three parameters of potential adverse environmental effects are soil erosion, chemical fertilizers, and pesticides.

16. Soil erosion potential is low; however, on raised or higher grounds, protection and monitoring of soil erosion are necessary. The most likely adverse impact on soil in the HVC farms is erosion during and after heavy rainfall. The magnitude of soil erosion and consequent silt runoff will depend on the rainfall (which is likely to increase under climate change impacts), and the extent of vegetation around farm plots. The silt runoff may also cause unwanted sedimentation in irrigation and drainage channels around the plots. If the vegetable farms are located on relatively higher grounds, especially around homesteads, the erosion potential by both wind and water flowing down the gullies will be greater depending upon the angle of slope with the surrounding land. Soil materials eroded from the farm plots will not only remove the fertile topsoil, but also carry residual chemicals from fertilizers and pesticides used by the farmers. The recommended mitigating measures against soil erosion are (a) regular surveillance of erosion prone sites, (b) maintenance of the slopes of the HVC plots to the surrounding lower lands, preferably at a ratio of 1:2, (c) control of agricultural inputs and cropping practices, e.g., minimizing uses of chemical fertilizers and pesticides, and (d) tree plantation along the aisles of farm plots (which will protect the plots against wind and gully erosion and their caretaking by locally organized community groups.

17. Some parts of the SCDP area in the southwest like the districts of Faridpur, Rajbari and Gopalganj experience both rainwater and riverine flooding, while the southern districts of Satkhira, Khulna, Bagerhat, Pirojpur, Jhalakathi and Barisal are

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tidally flooded (with saline water). Hence, in these districts, caution will be required in selecting the sites for HVCs. In the southern districts of the SCDP area, salinity in both water and soil is a problem in the dry season, where some vegetables, which are not salt-tolerant, may not be successfully grown. Horticulture in the winter or dry season requires irrigation in most parts of Bangladesh. An informal water market has emerged in the rural areas, where water is sold by STW owners to those who do not have them.

18. All respondents during the sample site surveys said that they regularly use chemical fertilizers and all of them expressed an opinion that they will not be able to get good harvest without the use of chemical fertilizers. Nonetheless, about 70 percent of the respondents also use organic manure like cow dung, compost or green manure. Some respondents do, however, recognize the probable harmful effects of excessive use of chemical fertilizers. The recommended mitigation measures against chemical fertilizer use are promotion of such uses/practices of animal manure, composting, green manure, blue-green algae and microbial solutions. Despite the apparent preference for chemical fertilizers among the farmers in the project area, it is imperative to train, motivate and persuade them in using organic manure – the rationale being the prevention of health hazards from chemicals. Therefore, it is necessary for DAE staff to provide training courses to HVC farmers in order to use organic manure.

19. The use of pesticides in the project area is very widespread – considered an essential input for a successful harvest - even though many farmers accept the fact that indiscriminate use of pesticides are harmful to human health. In the project area, the farmers are aware of the integrated pest management (IPM) practices, mainly advocated by agriculture extension workers and some NGOs. However, they are not satisfied that the IPM practices can or do control pests to the full extent, and hence, they have no alternative but to use chemical pesticides. It is understood that the IPM practices are not fully ingrained into the psyche of the farmers. The DAE staff, in collaboration with farmers, can initiate the program in several sequential steps. These are (a) proper identification of pests; (b) learning the life cycle of the pest and the host; (c) monitoring or sampling pest population in order to take preventive or curative action; (d) establishing action threshold, which, in reality, means determining as to what number of pests can be tolerated (depending upon the crop in the field); and (e) choosing an appropriate combination of management strategies.

20. The following IPM strategies or practices are suggested for adoption in the SCDP to reduce and minimize the use of chemical pesticides: (a) use of pest-resistant crop species; (b) using indigenous/traditional knowledge; (c) biological and mechanical control; (d) bacterial pesticide use; and (e) participatory management, in which the DAE has sufficient experience in motivational work with the farmers. It should be added, though, that the success of IPM practices in the area depends on the strength of the DAE staff on this issue and their dedication to the training and motivation of the farmers. Therefore, it is necessary for DAE staff to provide training courses to HVC farmers in order to adopt IPM practices.

21. In this project, adaptation options toclimate change impacts on agriculture will include pilot testing of climate resilient drought, flood and salinity tolerant varieties of crops to facilitate adaptation by the HVC farmers. An important aspect of adaptation strategy will be awareness raising among the farmers about climate change vulnerabilities through orientation meetings, demonstrations and farmers’ field days, and motivation of the farmers to comprehend the climate change impacts on farming and

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their adaptation needs. Although adaptation options in the growing of any HVC will be practiced at individual household levels, yet, the overall response portfolio must be community based, which will be facilitated by the agriculture extension staff. Changes in farming practices/methods will be encouraged including zero or no tillage of maize and garlic, expansion of kitchen gardens around households, changing planting and harvesting times, promoting crop species suited to drier, flooding and saline conditions, and protecting croplands against increased flooding and saline water intrusion.

C. COUNTRY’S ENVIRONMENTAL ASSESSMENT AND REVIEW ROCEDURES 22. The Government of Bangladesh (GOB) is committed to undertake environmental assessment for each new development project and prepare mitigation, monitoring and management plans with a view to minimizing or preventing potential disbenefits. The Government of Bangladesh recognizes the importance of environmental sustainability as the basis for long term development in the country. In 1989, the Ministry of Environment and Forest (MOEF) was created, and within the ministry, the Department of Environment (DOE) was formed as the principal implementing line agency for all environmental actions. Bangladesh is a signatory to Agenda 21 of the 1992 Earth Summit, and it is committed to implement the international legal instrument in its national policies and programs. A National Conservation Strategy was prepared by the Government in 1991, which formed the basis for the formulation of the National Environment Policy (NEP) in 1992. The principal objectives of the NEP are:

(a) maintenance of the ecological balance; (b) protection against natural disasters; (c) prevention of all types of activities related to pollution and environmental

degradation; (d) ensuring environmentally sound development in all sectors; and (e) ensuring sustainable, long term, environmentally congenial utilization of all

natural resources.

23. At the policy level, environmental awareness is demonstrated by the fact that the government has so far signed, ratified and acceded to over 25 environment-related international conventions, protocols and treaties including Agenda 21, United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol, Convention on Biological Diversity, and Convention to Combat Desertification. The linkage between environment and national development planning is embodied in the National Environment Management Action Plan (NEMAP), completed in 1995 with assistance from the UNDP. As a follow-up of the NEMAP and to concretize its vision, the government executed a UNDP funded Sustainable Environment Management Program (SEMP) between 1998 and 2004, which emphasized several capacity building components of environmental management. The Government has prepared a National Adaptation Program of Action (NAPA) in 2007, which outlines several climate change adaptation options for the country. A more comprehensive document on climate change, titled ‘Bangladesh Climate Change Strategy and Action Plan’ (BCCSAP), is now in its final stage of approval by the Government, and it is expected to serve as the framework to combat climate change over the next 10 years. 24. Bangladesh has a wide range of laws and regulations related to environmental issues. An early legislation impinging directly upon environmental conservation was the Environment Pollution Control Ordinance of 1977. However, a comprehensive

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environmental law was passed by the national Parliament in 1995, known as the Environment Conservation Act (ECA), which replaced the 1977 ordinance. The ECA was followed by one other legislation in 1997 – the Environment Conservation Rules (ECR). The ECR spells out specific rules and regulations for the enforcement of the ECA. Under the ECR of 1997, 186 types of projects and industries are grouped into four categories according to the extent of their potential adverse environmental impacts. The four categories are: Green (least harmful with no potential negative impacts); Orange `A’ and `B’ (some potential for negative impacts requiring IEE); and Red (high potential for negative impacts requiring full-blown EIA). It is mandatory for all proposed projects to obtain Environmental Clearance Certificate from the DOE. According to the ECR of 1997, the activities of the SCDP fall under the category of Orange `B’, and therefore, an Initial Environmental Examination (IEE) is sufficient to assess environmental assessment of the project interventions. It is, therefore, concluded that a detailed follow-up EIA is not required for the project. D. SPECIFIC PROCEDURES TO BE USED UNDER THE SECTOR LOAN

1. Responsibilities and Authorities 25. The Ministry of Agriculture (MOA) has the overall responsibility for policy matters on the proposed loan for this project. The principal executing agency will be the Department of Agricultural Extension (DAE) of the Ministry of Agriculture. The DAE, the largest extension provider in Bangladesh, has considerable experience in project management, especially with the recently completed Northwest Crop Diversification Project (NCDP). Bangladesh Bank will be the second executing agency, and through the Agriculture Credit and Special Programs Department (ACSPD), will mange the credit line for the borrowers. The daily management of the credit line will be through two wholesale banks that take the funds from Bangladesh Bank and lend to NGOs that directly lend to HVC farmers and investors in post-harvest facilities. The wholesale banks will be responsible for the final selection of NGOs to which they will lend. NGOs will be actively engaged in the project implementation. The Project Management Unit (PMU) will constitute a shortlist of NGOs willing to participate in the project. 26. Credit will be provided to individual farmers within groups with each group having an average 20 farmers. Many of the groups are already in existence with group members involved in traditional agriculture. Loan disbursements will take place at the NGO branch. Lending will be on an individual farmer basis. The amount of credit to a borrower will depend on the types of HVCs, their areas, their profitability, and the credit history of the farmer. The PMU will coordinate all meetings related to loan disbursement. 27. A Project Management Unit (PMU), headed by a full-time Project Director, will be established at the DAE headquarters in Dhaka. The Project Director will be responsible to the Director General of the DAE for the overall implementation, monitoring and supervision. The PMO will initiate and supervise all project actions, implement the mitigation and monitoring tasks of the IEE, and the Gender Action Plan, undertake overall monitoring/evaluation activities, maintain financial accounts, prepare periodic progress reports and the project completion report. The PMU will maintain close working partnership with the DAE staff at the district, upazila and block levels. The PMU will be assisted in its tasks by international and domestic consultants in different sectors, including one environmental consultants with climate change expertise. The DAE will engage consulting services in accordance with ADB’s Guidelines on the Use of

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Consultants and other arrangements satisfactory to ADB. In addition to the Project Director, management responsibilities will be delegated at the regional levels to two Project Implementation Units (PIU) – one in Jessore for the southwestern districts and the other in Bogra for the northwestern districts. 28. Interagency coordination will be achieved through a project coordination committee chaired by the Secretary of the Ministry of Agriculture, and consisting of those agencies involved in the project, together with the Economic Relations Division of the Ministry of Finance, the Planning Commission, the Implementation, Monitoring and Evaluation Division of the Ministry of Planning, and a representative of each of the Divisional Commissioners of the Rajshahi, Khulna, Barisal and Dhaka Divisions.

2. Environmental Criteria of Subproject Selection

29. Of the 25 districts under the SCDP (16 in the southwest and 9 in the northwest), one to three upazilas were prioritized for project intervention on the basis of a number of social, economic and environmental indicators such as poverty level, food security, market value and export potential of HVCs, farmer acquaintance, input availability, land suitability, location specificity, environment-friendliness as well as accessibility. Local people will be consulted to elicit their views and perceptions before finalizing the specific HVCs for particular locations. Environmental conditions which will influence the selection procedure will include such parameters as (a) soil health, (b) land level, (c) flood proneness and regional hydrology, (d) surface and groundwater availability, (e) amount of rainfall, (f) drought potential, (g) water and soil salinity, and (h) potential impacts of climate change. 30. On the other hand, the following criteria will be used for excluding sites which might have significant negative environmental impacts:

(a) Ecologically sensitive area such as reserved forests, wildlife habitat etc.; (the SCDP area does not include any site within the Sundarban Reserved Forest)

(b) Potential for disrupting the life and property of the indigenous or tribal population; (There is no significant indigenous population in the SCDP area which would be impacted by the project)

(c) Need for significant amount of land acquisition and resultant compensation; (Since no infrastructure construction is planned within this project, land acquisition, resettlement and compensation are not required)

(d) Potential for permanent drainage obstruction and resultant flooding; (no water structures are planned under this project which could disturb the regional hydrology)

(e) Significant encroachment on wetlands causing their shrinkage; (no low lying areas, water bodies or wetlands will be used for HVC cultivation) and

(f) Encroachment on cultural features like places of worship, graves/cemeteries, historical monuments etc.; (no such encroachments are envisaged)

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3. Procedures for Environmental Assessment of Subprojects 31. The SCDP is classified as a Category B project and an IEE report has been prepared during the project formulation phase. The basic infrastructural facilities for marketing, to be constructed by the farmer community groups themselves, are very minor civil works of improvised nature, and will neither have any adverse environmental effect nor will require any resettlement task. The consultant on environment and climate change will be able to identify potential adverse environmental and social impacts of any project action, and propose mitigation measures, if needed. They will also perform the role of facilitators for training and sensitizing the project implementation staff on environmental issues, especially climate change issues. 32. Environmental assessment of subprojects will involve three phases: (a) project preparation; (b) implementation; and (c) post-project. The first task in preparing the IEE report in the project preparation phase is to screen and identify potential positive and negative environmental impacts of the subproject, and review the available literature and data on environmental conditions of the district in which the subproject is located. This will be followed by preparing a detailed checklist of environmental parameters to be examined and assessed for the subproject through field inspection. These checklists will be formatted in accordance with the ADB’s Guidelines, and include such impact issues (for assessment) as soil health, land level and topography, flooding conditions, water availability, regional hydrology, use of chemical fertilizers and pesticides, and perception of climate change impacts. The Environmental Specialist will analyze and interpret the data to prepare the IEE report for the subproject, which will include suggested measures for mitigation of potential negative environmental impacts and outline the monitoring plan to ensure compliance of the mitigation measures. During the phase of project implementation phase, the environmental consultant will intermittently review the impacts of project actions on local and regional environment; conduct surveillance of the HVC farms with respect to soil erosion, fertilizer and pesticide use, and success of IPM practices; advise the PMU on mitigation and adaptation options to cope with climate change impacts; advise and support the DAE in building its in-house capacity for environmental assessment through training programs and workshops; and motivate the HVC farmers on all aspects of the changing climate in the region. 33. During the post project phase, the environmentally trained and sensitized DAE staff will mainly focus on environmental monitoring tasks with a view to identifying long term impacts. The monitoring plan prepared in the IEE report will involve supervision and surveillance of enhancement in the use of organic manure, acceptance of IPM practices by the HVC farmers, local drainage conditions, local flood protection needs and measures, measuring awareness and acceptance levels of adaptation options and coping strategies for climate change impacts etc. E. EARP COMPLIANCE WITH ADB SAFEGUARD POLICIES 34. All standard requirements for environmental assessment for sector loans are being applied in accordance with ADB’s `Environmental Assessment Guidelines’. Since the project has very limited potential for adverse environmental impact (soil erosion, fertilizer and pesticide), full-blown EIA is not required for them nor is there any requirement for preparing an Environmental Management Plan (EMP). In the task of compliance monitoring and supervision the environmental assessment requirements and safeguard policies of ADB will also be fully conformed to.

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35. The small structures to be constructed in dispersed locations for marketing of HVCs will use mutually arranged private lands, and will not require any land acquisition. The implementation period is six years and it is recommended that the implementation tasks be closely monitored in order to evaluate the project’s efficiency and effectiveness. Hence, regular reviews are to be carried out by ADB on a quarterly basis and will be supplemented by a mid-term review at the end of 36 months. The mid-term review will be conducted jointly by the government and the ADB during the third year of project implementation. The mid-term review will evaluate all aspects of the project design, implementation and management, including environmental and social impacts. 36. Both ADB and the Government of Bangladesh require that development projects do not result in unacceptable damage to cultural heritage. The SCDP is involved in the promotion of HVC cultivation on existing farm lands, and the project actions do not have any potential for adverse environmental impacts to sites and structures of cultural value (viz., mosques, temples, churches, graves, archaeological remains, aesthetic locations). 37. Stakeholder participation will be an integral part of the project design, implementation and monitoring. The PMU and the PIU will work closely with the local government leaders in the project area to ensure that the local community needs are satisfactorily met through the project implementation and that gender equity is attained in benefit sharing and employment opportunities. In accordance with international labor requirements, no child labor will be engaged at any stage of project implementation. F. STAFFING REQUIREMENTS AND BUDGET 38. Environmental assessment and related monitoring/supervision tasks will be carried out by one environmental consultant with climate change expertise – one with agriculture/horticulture specialization and the other with specialization in environmental science. During the project implementation period, they will have a total input of 36 person-months. It is expected that the environmental consultants of the project will work in close collaboration with the Department of Environment in order to remain updated on all environmental assessment requirements and comply with all rules and regulations. The environmental consultant will work in close collaboration with the environmentally trained DAE staff at the district and upazila levels. The cost estimates for environmental assessment/monitoring/supervision under the project will be worked out in detail by the PMU.