Amendment 03_RFP 72036722R00005 USAID Agricultural Inputs.pdf

AMENDMENT NO. 03, RFP NO. 72036722R00005 DATE: May 19, 2022

Issuance Date: March 24, 2022

Closing Date/Time for Questions: March 31, 2022, 9:00 a.m. Eastern Time

Closing Date/Time for Receipt of Proposals: June 13, 2022, 9:00 a.m. Eastern Time

Subject: Request for Proposals (RFP) No. 72036722R00005 USAID Agricultural Inputs

The United States Agency for International Development (USAID) is seeking proposals to provide technical assistance and support to USAID/Nepal’s Economic Growth Office to increase the availability, accessibility, and use of agricultural inputs and technology for critical agricultural value chains, as described in the attached Request for Proposals (RFP). USAID anticipates the award of a Cost-Plus-Fixed Fee (CPFF) Completion type contract for an anticipated five-year period. The overall estimated cost of this procurement is between $19.9 million and $24.9 million.

USAID invites all interested and responsible organizations to submit offers in accordance with the requirements of this solicitation. USAID will conduct this procurement as a full and open competition.

The procedures set forth in Federal Acquisition Regulation (“FAR”) Part 15 will govern the procurement. Proposals will be accepted from eligible organizations. USAID encourages participation to the maximum extent possible of small business concerns, small, disadvantaged business concerns and women-owned small business concerns in this activity as prime contractor or as a subcontractor.

The geographic code for this procurement is 937, and the NAICS code is 541990, All Other Professional, Scientific, and Technical Services.

Please refer to Section L for information regarding proposal requirements. Offerors should take into account the expected delivery time required by the proposal transmission method, and they are responsible for ensuring proposals are received at USAID by the due date and time as specified above.

Failure to comply with the submission date will deem any submission unacceptable and it will not be reviewed or evaluated. Section M states the criteria by which proposals will be evaluated. Faxed proposals are not acceptable, nor will they be reviewed or evaluated. Pursuant to Block 12 of Standard Form 33 of this RFP, offers must remain valid for 220 days.

Any questions regarding the RFP’s requirements must be submitted no later than the time and date stated above to Contracting Officer, Robyn Bertholon, at rbertholon@usaid.gov, and Acquisition and Assistance Specialist, Nalinee Wichetthumsak at nwichetthumsak@usaid.gov.

mailto:mtelevantos@usaid.gov mailto:nwichetthumsak@usaid.gov

Solicitation No.: 72036722R00005

This RFP in no way obligates USAID to award a contract nor does it commit USAID to pay any cost incurred in the preparation and submission of a proposal. Award of a Contract under this RFP is subject to availability of funds and other internal USAID approvals. This RFP can be viewed and downloaded from www.sam.gov. USAID bears no responsibility for data errors resulting from transmission or conversion processes. Further, be aware that amendments to solicitations are occasionally issued and will be posted on the same website from which you downloaded the solicitation. USAID advises to regularly check the above website for amendments.

Sincerely, --/s/-- Maria Televantos Contracting Officer USAID/Nepal http://www.sam.gov/ http://www.fedbizopps.gov/

Table of Contents

PART I-SCHEDULE 8

SECTION B – SUPPLIES OR SERVICES AND PRICE/COSTS 8

B.1 PURPOSE 8

B.2 CONTRACT TYPE 8

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT 8

B.4 BUDGET 8

B.5 INDIRECT COSTS AND ADVANCED UNDERSTANDING ON CEILINGS 9

B.6 COST REIMBURSABLE 9

B.7 PAYMENT OF FIXED FEE 9

SECTION C – DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK 11

C.1 TITLE OF ACTIVITY 11

C.2 PURPOSE 11

C.3 BACKGROUND 11

C.4 PROBLEM STATEMENT 12

C.5 RELATIONSHIP TO USAID’S STRATEGIC GOALS 13

C.6 RELATIONSHIP TO HOST COUNTRY STRATEGY 14

C.7 DEVELOPMENT HYPOTHESIS 14

C. 8 RESULTS FRAMEWORK 15

C.9 OBJECTIVES 17

C.10 CROSS-CUTTING COMPONENTS 22

C.11 RESULTS 23

C.12 GRANTS UNDER CONTRACT (GUC) 25

C.13 COMPLEMENTARY ACTIVITIES 26

C.14 ACTIVITY PARAMETERS 26

SECTION D – PACKAGING AND MARKING 32

D.1 AIDAR 752.7009 MARKING (JAN 1993) 32

D.2 BRANDING STRATEGY 32

D.3 BRANDING IMPLEMENTATION PLAN (BIP) AND MARKING PLAN (MP) 33

SECTION E – INSPECTION AND ACCEPTANCE 34

E.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE 34

E.2 INSPECTION AND ACCEPTANCE 34

E.3 RESPONSIBLE OFFICIAL 34

SECTION F – DELIVERIES OR PERFORMANCE 35

F.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE 35

F.2 PERIOD OF PERFORMANCE 35

F.3 AUTHORIZED WORK DAY/WEEK 35

F.4 PLACE OF PERFORMANCE 35

F.5 REPORTS AND PLANS 35

F.6 MINIMUM DELIVERABLES OR RESULTS MATRIX 46

F.7 PERSONNEL 48

F.8 PERFORMANCE MONITORING STANDARDS 50

F.9 AIDAR 752.242-70 PERIODIC PROGRESS REPORTS (OCT 2007) 50

F.10 AIDAR 752.7005, SUBMISSION REQUIREMENTS FOR DEVELOPMENT EXPERIENCE

DOCUMENTS (SEPT 2013) (Class Deviation OAA-DEV-13-01c) 51

SECTION G—CONTRACT ADMINISTRATION DATA 52

G.1 AIDAR 752.7003 DOCUMENTATION FOR PAYMENT (NOV 1998) 53

G.2 CONTRACTING OFFICER’S AUTHORITY 54

G.3 ADMINISTRATIVE CONTRACTING OFFICE 54

G.4 PAYING OFFICE 54

G.5 INVOICING INSTRUCTIONS 55

G.6 CONTRACTING OFFICER’S REPRESENTATIVE (COR) 55

G.7 TECHNICAL DIRECTIONS/RELATIONSHIP WITH USAID 55

G.8 ACCOUNTING AND APPROPRIATION DATA 57

SECTION H – SPECIAL CONTRACT REQUIREMENTS 57

H.1 AUTHORIZED GEOGRAPHIC CODE 58

H.2 ELECTRONIC PAYMENTS SYSTEM 58

H.3 LIMITATION ON ACQUISITION OF INFORMATION TECHNOLOGY (April 2018) (DEVIATION

NOs. M/OAA-DEV-FAR-20-3c and M/OAA-DEV-AIDAR-20-2c) (APRIL 2020) 59

H.4 LOGISTICS SUPPORT 60

H.5 ADS 302.3.5.19 USAID-FINANCED THIRD-PARTY WEB SITES (NOV 2017) 60

H.6 RESTRICTIONS AGAINST DISCLOSURE (MAY 2016) 62

H.7 ENVIRONMENTAL COMPLIANCE 62

H.8 ADS 302.3.5.21 SUBMISSION OF DATASETS TO THE DEVELOPMENT DATA LIBRARY

(DDL) (October 2014) 64

H.9 AIDAR 752.228-3 WORKERS’ COMPENSATION INSURANCE (DEFENSE BASED ACT)

(DEC 1991) 65

H.10 PROHIBITION OF ASSISTANCE TO DRUG TRAFFICKERS 67

H.11 EXECUTIVE ORDER ON TERRORISM FINANCING 68

H.12 FOREIGN GOVERNMENT DELEGATIONS TO INTERNATIONAL CONFERENCES

(JAN 2002) 68

H.13 LIMITING PLASTIC POLLUTION AND MISMANAGED WASTE (MARCH 2020) 68

H.14 CONSENT TO SUBCONTRACT 68

H.15 EXCHANGE VISITORS AND LEARNING ACTIVITIES 69

H.16 AIDAR 752.222-70 USAID DISABILITY POLICY (DEC 2004) 70

H.17 CONFLICTS OF INTEREST 70

H.18 DISCLOSURE OF INFORMATION 72

H.19 AIDAR 752.7032 INTERNATIONAL TRAVEL APPROVAL AND NOTIFICATION

REQUIREMENTS (APR 2014) 72

H.20 ADDITIONAL REQUIREMENTS FOR INTERNATIONAL TRAVEL 73

H.21 LANGUAGE REQUIREMENTS 73

H.22 PRESS RELATIONS 73

H.23 STANDARDS OF CONDUCT -- IMPROPER BUSINESS PRACTICES 73

H.24 ELECTRONIC AND INFORMATION AND COMMUNICATION TECHNOLOGY

ACCESSIBILITY (APRIL 2018) 74

H.25 LOCAL TAXES 75

H.26 EMERGENCY PREPAREDNESS AND RESPONSE PLAN (EPRP) (M.O. No. 304.1) 75

H.27 GRANTS UNDER CONTRACT 77

H.28 SEXUAL MISCONDUCT (DECEMBER 2020) 79

H.29 PERSONNEL COMPENSATION (JULY 2007) 79

H.30 ADDITIONAL REQUIREMENTS FOR PERSONNEL COMPENSATION 79

H.31 AIDAR 752.231-71 SALARY SUPPLEMENTS FOR HOST GOVERNMENT EMPLOYEES

(MAR 2015) 81

H.32 GENDER CONSIDERATION 81

H.33 ACKNOWLEDGEMENT AND DISCLAIMER (DECEMBER 1991) 82

H.34 SUBCONTRACTING PLAN AND REPORTING 82

PART II – CONTRACT CLAUSES 83

SECTION I – CONTRACT CLAUSES 83

I.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE 83

I.2 FAR 52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998) 83

I.3 AIDAR 752.252-1 AIDAR SOLICITATION PROVISIONS INCORPORATED BY

REFERENCE (MAR 2015) 86

I.4 FAR 52.203-13 CONTRACTOR CODE OF BUSINESS ETHICS AND CONDUCT (NOV 2021)87

I.5 FAR 52.204-1 APPROVAL OF CONTRACT 90

I.6 FAR 52.222-36 EQUAL OPPORTUNITY FOR WORKERS WITH DISABILITIES (JUN 2020) 90

I.7 FAR 52.222-50 COMBATING TRAFFICKING IN PERSONS (NOV 2021) 91

I.8 FAR 52.223-99 ENSURING ADEQUATE COVID-19 SAFETY PROTOCOLS FOR FEDERAL

CONTRACTORS (OCT 2021) (DEVIATION #M/OAA-DEV-FAR-22-01c) 97

I.9 52.229-8 TAXES – FOREIGN COST-REIMBURSEMENT CONTRACTS (MAR 1990) 98

I.10 AIDAR 752.229-71 REPORTING OF FOREIGN TAXES (JULY 2007) 99

I.11 AIDAR 752.231-72 CONFERENCE PLANNING AND REQUIRED APPROVALS (AUG 2013)

[DEVIATION (APR 2020)] 100

I.12 AIDAR 752.245-70 GOVERNMENT PROPERTY – USAID REPORTING REQUIREMENTS

(OCT 2017) 103

I.13 AIDAR 752.7013 CONTRACTOR-MISSION RELATIONSHIPS (OCT 1989)

[DEVIATION (JUN 2020)] 104

PART III—LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS 106

SECTION J—LIST OF EXHIBITS AND ATTACHMENTS 106

PART IV – REPRESENTATIONS AND INSTRUCTIONS 107

SECTION K – REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF

OFFERORS 107

K.1 NOTICE LISTING FAR SOLICITATION PROVISIONS INCORPORATED BY REFERENCE107

K.2 FAR 52.204-8 ANNUAL REPRESENTATIONS AND CERTIFICATIONS (SEP 2021) 107

K.3 FAR 52.204-20 PREDECESSOR OF OFFEROR (AUG 2020) 112

K.4 FAR 52.204-24 REPRESENTATION REGARDING CERTAIN TELECOMMUNICATIONS

AND VIDEO SURVEILLANCE SERVICES OR EQUIPMENT (NOVEMBER 2021) 113

K.5 FAR 52.204-26 COVERED TELECOMMUNICATIONS EQUIPMENT OR SERVICES-

REPRESENTATION (OCT 2020) 116

K.6 FAR 52.209-5 CERTIFICATION REGARDING RESPONSIBILITY MATTERS (AUG 2020) 116

K.7 FAR 52.209-7 INFORMATION REGARDING RESPONSIBILITY MATTERS (OCT 2018) 119

K.8 FAR 52.209-11 REPRESENTATION BY CORPORATIONS REGARDING DELINQUENT

TAX LIABILITY OR A FELONY CONVICTION UNDER ANY FEDERAL LAW (FEB 2016)120

K.9 FAR 52.209-12 CERTIFICATION REGARDING TAX MATTERS (OCT 2020) 121

K.10 FAR 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (FEB 1999) 121

K.11 FAR 52.222-25 AFFIRMATIVE ACTION COMPLIANCE (APR 1984) 121

K.12 FAR 52.230-1 COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATION

(JUN 2020) 122

K.13 FAR 52.230-7 – PROPOSAL DISCLOSURE-COST ACCOUNTING PRACTICE CHANGES

(APR 2005) 124

K.14 FAR 52.232-40 PROVIDING ACCELERATED PAYMENTS TO SMALL BUSINESS

SUBCONTRACTORS (DEC 2013)[(DEVIATION JUN 2020)] 125

K.15 INSURANCE – IMMUNITY FROM TORT LIABILITY 125

K.16 AUTHORIZED NEGOTIATORS 125

K.17 SIGNATURE 126

SECTION L – INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS 127

L.1 FAR 52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE

(FEB 1998) 127

L.2 FAR 52.216-1 TYPE OF CONTRACT (APR 1984) 127

L.3 FAR 52.233-2 SERVICE OF PROTEST (SEP 2006) 128

L.4 GENERAL INSTRUCTIONS TO OFFERORS 128

L.5 PROPOSAL DELIVERY INSTRUCTIONS 129

L.6 INSTRUCTIONS FOR THE PREPARATION OF THE TECHNICAL PROPOSAL 131

L.7 INSTRUCTIONS FOR THE PREPARATION OF THE COST/BUSINESS PROPOSAL 136

L.8 GOVERNMENT OBLIGATION 146

L.9 WAIVERS UNDER FAR PART 4.2101 PROHIBITION ON COVERED TELECOMMUNICATIONS

AND VIDEO SURVEILLANCE SERVICES AND EQUIPMENT (DECEMBER 2021) 146

SECTION M – EVALUATION FACTORS FOR AWARD 149

M.1 GENERAL INFORMATION 149

M.2 TECHNICAL PROPOSAL EVALUATION CRITERIA 149

M.3 COST EVALUATION 151

M.5 SOURCE SELECTION 152

M.6 CONTRACT AWARD 153

ATTACHMENT J.1 - INITIAL ENVIRONMENTAL EXAMINATION #ASIA 21-081 AND ASIA

BUREAU AND OFFICE OF AFGHANISTAN AND PAKISTAN AFFAIRS

(OAPA) PROGRAMMATIC INITIAL ENVIRONMENTAL EXAMINATION

(PIEE) – EMERGING THREATS (COVID 19) - ASIA 20-042 154

ATTACHMENT J.2 - CONTRACTOR PAST PERFORMANCE INFORMATION MATRIX 155

ATTACHMENT J.3 - USAID SMALL BUSINESS SUBCONTRACTING PLAN TEMPLATE

AND ATTACHMENT A: SMALL BUSINESS UTILIZATION PLAN

TEMPLATE 156

ATTACHMENT J.4 - USAID/NEPAL DIGITAL AGRICULTURE ECOSYSTEM ASSESSMENT 157

PART I-SCHEDULE

SECTION B – SUPPLIES OR SERVICES AND PRICE/COSTS

B.1 PURPOSE

The purpose of this Contract is to provide services that fall within the Statement of Work (SOW) specified in Section C of this Activity, titled, “USAID Agricultural Inputs.”

B.2 CONTRACT TYPE

This is a cost-plus-fixed-fee (CPFF) completion type contract. For the consideration set forth in the contract, the Contractor must provide the deliverables or outputs described in Section C and F in accordance with the performance standards specified herein.

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

(a) The estimated cost for the performance of the work required hereunder, exclusive of fixed fee, if any, is TBD. The fixed fee for the contract period is TBD. The total estimated cost plus fixed fee is TBD.

(b) Within the estimated cost plus fixed fee specified in paragraph (a) above, the amount currently obligated and available for reimbursement of allowable costs incurred by the Contractor (and payment of fee, if any) for performance hereunder is TBD. The Contractor must not exceed the aforesaid obligated amount unless authorized by the Contracting Officer pursuant to the clause of this contract titled “Limitation of Funds” (FAR 52.232-22).

B.4 BUDGET

(a) The budget for this contract is as follows:

Line Item Total

Direct Costs Subcontracts Grants under Contract $3,000,000 Indirect Costs Total Estimated Cost Fixed Fee Total Cost plus Fixed Fee

(b) The inclusion of any costs in the above cost categories does not obviate the requirement for prior approval by the Contracting Officer of cost items designated as requiring prior approval by any of the terms and conditions of this contract, including the applicable cost principles (see FAR § 52.216-07, “Allowable Cost and Payment”); nor does it constitute a determination of allowability by the Contracting Officer of any item of cost, unless specifically stated elsewhere in this contract. Also, these amounts may not be adjusted without a written modification signed by the Contracting Officer. The Contractor must not bill any amounts against this contract in excess of the amounts specified for each line item.

B.5 INDIRECT COSTS AND ADVANCED UNDERSTANDING ON CEILINGS

Pending establishment of revised provisional or final indirect cost rates, allowable indirect costs shall be reimbursed on the basis of the following negotiated provisional or predetermined rates and the appropriate bases for the Contractor:

Contractor Fringe Rate %

Overhead Rate %

Overhead Ceiling Rate%

G&A Rate %

G&A Ceiling Rate %

PRIME (Insert Name) Base of Application Source: (insert) Period: (insert)

NOTE: Insert additional indirect rates as needed for the Contractor in the above table.

*Special Note: The un-shaded columns in the indirect cost table are the current approved indirect cost rates for the Contractor.

The Contractor will make no change in its established method of classifying or allocating indirect costs that impacts this contract without the prior written approval of the Contracting Officer.

Reimbursement for indirect costs must be at final negotiated rates, but not in excess of ceiling rates specified above.

The Government must not be obligated to pay any additional amount associated with indirect costs above the ceiling rates established in the contract. This advance understanding must not change any monetary ceiling, cost limitation, or obligation established in the contract.

Note: Contractors are allowed to recoup indirect costs (OH, G&A, etc.) as other direct costs if it is part of the contractor’s usual accounting procedures, consistent with FAR Part 31 and the contractor’s NICRA.

B.6 COST REIMBURSABLE

The U.S. dollar costs allowable must be limited to reasonable, allocable and necessary costs determined in accordance with FAR 31 (Contract Cost Principles), FAR 52.216-7 (ALLOWABLE COST AND PAYMENT), FAR 52.216-8 (FIXED FEE), if applicable, and USAID Acquisition Regulation (AIDAR) 752.7003 (Documentation for Payment).

B.7 PAYMENT OF FIXED FEE

Pursuant to FAR 16.306(d) “Cost-Plus-Fixed-Fee Contracts”, a percentage (60%) of the payment of the fixed fee under this contract is tied to the completion of the deliverables/results described in

Section C and F.6 of this contract and in accordance with the approved Fee Schedule below.

[Table to be completed by the Offeror and incorporated into the award in accordance with Section L.7]:

Deliverable/Result Achievement Threshold

% of Fee Fee ($)

TBD TBD TBD TBD

TBD TBD TBD TBD

TBD TBD TBD TBD

Upon successful completion of a deliverable, the Contractor must provide evidence of its achievement to the Contracting Officer’s Representative (COR) and the Contracting Officer (CO).

Upon COR receipt and written acceptance of a deliverable, the Contractor must submit an invoice for the amount of the associated fee including evidence of completion of the deliverables for which fee is claimed.

Payment of the remaining (40%) of fixed fee, subject to the terms stated in FAR 52.216‐8, may be made upon receipt of a proper invoice. Subject to FAR 52.216‐8, Fixed Fee, payment of fixed fee shall be allocated based upon the proportion of the invoiced amount in the period covered by the invoice to the total estimated cost of the periods of the contract not including fixed fee.

In the event of discontinuance of the work in accordance with the clause of the contract entitled “Termination (Cost Reimbursement)” (FAR 52.249-6), the fee must be re-determined by mutual agreement equitably to reflect the reduction in the work actually performed. The amount by which such fee is less than, or exceeds, payments previously made on account of the fee must be paid to, or repaid by the Contractor, as applicable.

[END OF SECTION B]

SECTION C – DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

C.1 TITLE OF ACTIVITY

The title of this activity is USAID Agricultural Inputs.

C.2 PURPOSE

The purpose of this activity is to increase the availability, accessibility, and use of agricultural inputs and technology to improve Nepal’s agricultural productivity. This will contribute to improved resilience, competitiveness, and inclusion in the agriculture sector.

USAID Agricultural Inputs will be implemented through four interlinked objectives:

● Objective 1: Demand- and supply-responsive and financially viable seed system improved

● Objective 2: Soil fertility management and fertilizer distribution system improved

● Objective 3: Climate adaptive and sustainable irrigation management system improved

● Objective 4: Agricultural mechanization enhanced

C.3 BACKGROUND

Agriculture plays a dominant role in Nepal’s economy, contributing 27 percent to the national gross domestic product (GDP)1. Only about 15 percent of Nepal’s land is arable, upon which more than 60 percent of the total population depends for their daily livelihood2. However, agriculture has underperformed, averaging only three percent annual growth in the last two decades, barely keeping up with the pace of population growth. The situation is expected to deteriorate further due to the widespread impact of the COVID-19 pandemic on agricultural businesses and supply chains.

Agricultural productivity remains relatively low compared to its potential due to limited use of improved inputs and technologies, and widespread reliance on subsistence farming. Nepal’s crop yields relative to other South and Southeast Asian countries are notably low, except lentil and cauliflower, confirming there is considerable upside potential (Table 1). Low productivity in agriculture manifests into low competitiveness and ultimately into low agricultural incomes. This situation has triggered in-country and out-country migration of males in search of jobs, leading to the feminization of agriculture. A study conducted by Food and Agriculture Organization (FAO) highlighted that traditional patterns of the division of labor have been changing due to migration and long-term absence of men from agricultural fields3. Consequently, this migration of men has not only increased the workload of women, but also caused poor agricultural performance due to labor scarcity and lack of access to credit for agricultural inputs. Most smallholder farmers, specifically women, youth, and members of marginalized communities, are held back by lack of access to and insufficient availability of critical inputs and technology such as improved seed, appropriate fertilizers, irrigation, and agricultural equipment.

1 https://npc.gov.np/images/category/15th_plan_English_Version.pdf 2 https://data.worldbank.org/indicator/AG.LND.ARBL.ZS?locations=NP 3 http://www.fao.org/3/CA3128EN/ca3128en.pdf https://npc.gov.np/images/category/15th_plan_English_Version.pdf https://data.worldbank.org/indicator/AG.LND.ARBL.ZS?locations=NP http://www.fao.org/3/CA3128EN/ca3128en.pdf

Table 1: Selected Country Yields (Mt/Ha), 2018

Crops Bangladesh India Nepal Pakistan China

Rice 4.74 3.88 3.51 3.84 7.03

Maize 8.21 3.02 2.59 4.79 6.10

Lentils 1.14 0.73 1.26 0.47 2.57

Cauliflowers/ broccoli

14.10 19.17 19.21 16.83 19.60

Tomatoes 13.69 24.65 - 9.44 59.25 Source: faostat (2018)

In this context, USAID’s past and current agricultural development activities focus on strengthening the market system of agricultural inputs including seed and fertilizer and key agricultural products such as Rice, Maize, Lentil, Vegetable, and Goat, which resulted in increased agricultural productivity and competitiveness. The Contractor must strengthen the agricultural input market system by building on the accomplishments of USAID activities that have advanced productivity and competitiveness gains in the Feed the Future Zone of Influence (ZOI). Specifically, the Contractor must build on the groundwork laid by USAID’s Nepal Seed and Fertilizer (NSAF)4 activity, and must employ lessons learned from USAID’s Knowledge-Based Integrated Sustainable Agriculture in Nepal (KISAN) II5 and Cereal Systems Initiative for South Asia (CSISA) III6 activities. Together, these activities have increased the incomes of commercial and smallholder farmers and agribusinesses, and point to public and market weaknesses where strategic investments can leverage significant returns.

C.4 PROBLEM STATEMENT

There are five critical constraints in Nepal’s agricultural input market system that must be addressed for a meaningful impact on the commercialization of agriculture: 1) a poor policy environment for private sector investment; 2) inadequate business development services (BDS) for the agricultural input micro, small, and medium enterprises (MSMEs); 3) inefficient agricultural input supply chains;

4) weak capacity of local governments to plan and implement programs related to agricultural inputs; and 5) farmers’ low level of awareness, knowledge, and uptake of improved inputs and technologies.

Specifically in the seed sub-sector, cumbersome seed registration mechanisms and prohibitive regulatory provision for hybrid seed production impede private seed businesses. In the case of

4 NSAF reports: https://dec.usaid.gov/dec/search/FusionSearchResults.aspx?q=NSAF 5 KISAN II reports: https://dec.usaid.gov/dec/search/FusionSearchResults.aspx?q=kisan 6 CSISA reports: https://dec.usaid.gov/dec/search/FusionSearchResults.aspx?q=CSISA https://dec.usaid.gov/dec/search/FusionSearchResults.aspx?q=NSAF https://dec.usaid.gov/dec/search/FusionSearchResults.aspx?q=kisan https://dec.usaid.gov/dec/search/FusionSearchResults.aspx?q=CSISA fertilizer, public sector dominance in importing and distributing fertilizer with a subsidy mechanism creates an economic disincentive to the private sector. The current fertilizer distribution system is ineffective, inefficient, and non-responsive to location and crop specific demand. Similarly, unsustainable management of water resources threatens the availability and use of water for irrigation. Adoption of modern agricultural equipment is held back by demand-side constraints, such as lack of women friendly equipment designs, lack of awareness and capital among smallholder farmers, and poor maintenance service systems for agricultural equipment including lack of maintenance service providers, poor knowledge and skill of existing maintenance service providers, and lack of spare parts for the maintenance of agricultural equipment in rural areas.

Due to these and other systemic constraints, the accessibility, availability, and use of improved agricultural inputs and technologies are low. This makes farming and agribusiness less profitable and therefore a less attractive employment and business option for rural populations.

C.5 RELATIONSHIP TO USAID’S STRATEGIC GOALS

This Activity will contribute to the achievement of USAID/Nepal’s Country Development Cooperation Strategy (CDCS)7 Development Objective 2: Broad-based and inclusive economic growth fostered, and specifically to Intermediate Result (IR) 2.1: Inclusive, private sector driven growth in agriculture promoted. In order to effectively achieve its objectives, activities that support USAID/Nepal’s CDCS will need to address the key underlying development challenges of advancing federalism, inclusion, and resilience.

Federalism: The Contractor must support the agriculture sector’s transition to federalism as outlined in Nepal’s Agricultural Development Strategy. This includes strengthening all tiers of governments’ capacity to develop an enabling policy environment and establish effective coordination and collaboration mechanisms to plan and deliver public services related to agricultural inputs. The Contractor must build the capacity of Lumbini, Sudurpaschim, Karnali, and Bagmati Provinces and municipal governments on improving public-private partnerships, public service delivery, and establishment of coordination mechanisms between and among sub-national and national governments.

Inclusion: The Contractor must promote appropriate technology and inclusive business practices that address the needs and aspirations of those excluded from the formal agricultural sector, particularly women, youth, and marginalized communities. Marginalized communities in Nepal may include Dalits, Madhesi Other Caste, Janajatis, Muslims, other ethnic and religious minorities, people with disabilities, and LGBTQI+ persons. The Contractor must work with these communities to identify the main barriers to their entry into the formal agricultural sector, and work with these communities and the public and private sectors to overcome those barriers.

Resilience: The Contractor must promote climate resilient agricultural inputs and technologies such as drought tolerant varieties, sustainable fertilizer and water management, and zero-tillage farm equipment to build a resilient farming system. Additionally, the Contractor must facilitate and build capacity of the private sector to adopt resilient business practices, such as digitizing supply systems

7https://www.usaid.gov/nepal/cdcs https://www.usaid.gov/nepal/cdcs and promoting business insurance schemes. The Contractor must promote resilience in agricultural input systems broadly, not just to climate change but to other types of shocks and stresses.

The Contractor must complement ongoing FTF activities and contribute to the U.S. Government’s Global Food Security (GFSS) Country Plan8 for Nepal, directly addressing Objective 1: Inclusive and sustainable agriculture-led economic growth and Objective 2: Strengthened resilience among people and systems. The Contractor must collaborate and align with any future GFSS strategy for Nepal. Similarly, the Contractor must also contribute to USAID’s strategy for advancing America’s Indo-Pacific vision by fostering the country's economic growth through increased competitiveness of Nepali agriculture. Finally, the Contractor must contribute to USAID/Nepal’s mitigation of, and recovery from, the second order economic and food security impacts of COVID-19 by stabilizing agricultural input market systems, supporting the Government of Nepal (GON) to prevent the backsliding of competitive input systems, and ensuring increased and sustained access to critical inputs during and after the pandemic and related economic downturn, and in the face of future shocks.

C.6 RELATIONSHIP TO HOST COUNTRY STRATEGY

The Contractor must contribute to the GON’s long-term vision for agricultural development, the Agricultural Development Strategy (ADS).9 Specifically, the Contractor must contribute to achievement of the ADS targets under four priority components: Governance, Productivity, Competitiveness, and Profitable Commercialization. The Contractor must also directly contribute to achievement of the GON’s targets in its National Seed Vision 2013-202510 and collaborate closely with local, provincial and federal governments and support these GON entities to build a strong enabling environment for the private sector. The Contractor must build the capacity of the three tiers of government for planning, coordinating, and delivering agricultural input related programs, policies, and plans.

C.7 DEVELOPMENT HYPOTHESIS

This Activity targets systemic change in agricultural input market systems linked to output markets, with a specific focus on the rice, maize, lentil, and vegetable value chains in the ZOI.

The development hypothesis is:

If commercial incentives improve for MSMEs to invest in improved and climate resilient agricultural inputs;

and if MSME capacity is strengthened to capitalize on business opportunities and cope with shocks;

8 https://www.feedthefuture.gov/resource/global-food-security-strategy-gfss-nepal-country-plan/ 9 https://www.adb.org/sites/default/files/project-document/78233/43447-022-nep-tacr-01.pdf 10 http://extwprlegs1.fao.org/docs/pdf/nep147056.pdf https://www.feedthefuture.gov/resource/global-food-security-strategy-gfss-nepal-country-plan/ https://www.adb.org/sites/default/files/project-document/78233/43447-022-nep-tacr-01.pdf http://extwprlegs1.fao.org/docs/pdf/nep147056.pdf and if the Government of Nepal improves access to and availability of agricultural inputs and water resource management services;

and if women, youth, and marginalized farmers have gender friendly and inclusive access to and awareness of how to effectively use critical agricultural inputs, then, Nepali producers will increase the efficient use of improved agricultural inputs and technology, which will lead to higher productivity, competitiveness, and resilience, and foster agriculture-led economic growth.

C. 8 RESULTS FRAMEWORK

The following figure outlines the results framework for USAID Agricultural Inputs.

Figure 1: Results Framework

C.9 OBJECTIVES

The Contractor must achieve the below listed objectives to meet the Activity purpose.

Objective 1: Demand- and supply-responsive and financially viable seed system improved

The seed system in Nepal includes both informal and formal seed systems, with the formal seed system accounting for less than 20 percent of the seed supply. Nepal’s seed industry depends on imports and an informal seed system, and lacks the capacity to respond to ever increasing demand for improved seeds. Low technical capacity of seed companies, inadequate investment, and a poor enabling environment have impeded the growth of the seed industry. Most seed companies import improved seeds, while some also import foundation seeds and inbred lines, particularly from China, India, and Thailand. Seed companies and farmers groups/cooperatives involved in seed production lack the technical capabilities to produce foundation seed. Similarly, only three private seed companies have recently received licenses from the Nepal government for hybrid seed production and distribution, but they lack technical and investment capacity.

Thus, lack of access to foundation seed for multiplication is a major concern. Similarly, the seed sector regulatory framework is inadequate as indicated by Enabling the Business for Agriculture (EBA).11 It takes 611 days to register a new cereal variety. The seed quality regulation system is also inefficient and ineffective. On the demand side, farmers lack awareness and knowledge on the use of improved seeds, which results in a low seed replacement rate (vegetables: 40%;

cereals: 10%).12

In this context, under Objective 1, the Contractor must at a minimum focus on the following key components:

(a) Improving investment opportunities in improved seed businesses: The Contractor must identify and address key policy challenges in areas including, but not limited to, the exchange of genetic materials, new variety registration, hybrid seed production by seed companies, and the development of strategies to engage with government systems for policy advocacy to create an improved enabling environment for seed businesses.

(b) Improving and strengthening the seed business ecosystem: The Contractor must improve access to various business development services such as finance, information, and raw materials to seed companies by creating a viable and strong seed business ecosystem. Initially, the Contractor must conduct, at a minimum, further analysis on both supply and demand side issues, gender and inclusion constraints, and the current state of play of business development services and what incentives need to be created to strengthen their functions. Ultimately for this component, the Contractor must contribute to improving seed companies’ production and sales of improved seed and increase the share of domestic seed in the market.

(c) Increasing the availability of climate resilient and improved crop varieties: The Contractor must build the technical capacity of seed companies and public sector stakeholders such as the

11EBA, 2019: https://openknowledge.worldbank.org/bitstream/handle/10986/31804/9781464813870.pdf 12 NepalSeed Vision 2013-2025: http://extwprlegs1.fao.org/docs/pdf/nep147056.pdf https://openknowledge.worldbank.org/bitstream/handle/10986/31804/9781464813870.pdf http://extwprlegs1.fao.org/docs/pdf/nep147056.pdf

NARC and the Seed Quality Control Center (SQCC) to develop new seed varieties, including hybrid seed, and to commercially multiply and maintain inbred lines. The Contractor must assess the existing technical capacity of the public sector, seed companies, and seed producer groups;

identify key technical and investment gaps and barriers including gender and inclusion barriers;

and develop a strategy to address them. The Contractor must increase the technical and institutional capacity of seed producer groups, with a primary focus on seed companies led by women, youth, and marginalized groups, to increase seed multiplication. Similarly, the Contractor must identify and implement a business model to strengthen commercial relationships between seed companies and seed producers.

(d) Improving access to and use of climate resilient and improved seed varieties: The Contractor must strengthen last mile supply chain networks through business linkages and networking. The Contractor must deliver technical knowledge and information to the farmers, especially women, youth, and marginalized farmers as part of a product promotion strategy that improves equity, access to, and use of climate resilient and improved varieties of the targeted crops for smallholder farmers, including women, youth, and marginalized households. Similarly, the Contractor must improve the seed replacement rate at the farm level.

Objective 2: Soil fertility management and fertilizer distribution system improved

Only 50 percent of Nepali farmers have access to chemical fertilizers, and those who do mostly apply high doses of government-subsidized Nitrogenous fertilizer, ignoring other macro- and micro-nutrients. This approach ultimately compromises soil fertility. Current fertilizer use is around 86 kilograms per hectare of land, which is quite low compared to the South Asian average of around 161 kilograms per hectare.13 This is largely due to Nepal’s existing fertilizer policy, which provides little space or incentive for private sector participation. Under the current policy, the GON essentially has full control of fertilizer supply to the domestic market. The GON imports fertilizer from the international market, channels it through its parastatal companies, and distributes it to farmers through cooperatives at a 40 percent subsidy. At present, the private sector is allowed to distribute at the local level only in areas where no cooperatives are present.

On the demand side, farmers' poor knowledge of soil fertility management practices is another key issue to improving soil fertility. The GON’s decision to allocate a huge portion of the imported fertilizer to Urea import leads to a highly unbalanced distribution and use of fertilizer (the proportion of fertilizer import is typically Urea: 67 percent; diammonium phosphate (DAP):

30 percent; and potash: 2.2 percent), and leads to low fertilizer use efficiency against a large fiscal burden, with the fertilizer subsidy accounting for 20-25 percent of Nepal’s agriculture budget annually.

As indicated by the World Bank’s Enabling Business in Agriculture project (EBA),14 Nepal’s regulatory mechanism for fertilizer business is very cumbersome. Nepal scores very low (11.1 out of 100) in the EBA index for fertilizer because (i) it takes 1,125 days to register a new product and (ii) the cost to register is 596 percent of income per capita. Average fertilizer prices are relatively high and, as indicated by the EBA, costly relative to agriculture incomes. While

13 Based on World Bank estimation, 2018: https://data.worldbank.org/indicator/AG.CON.FERT.ZS?locations=NP 14 EBA, 2019 (https://openknowledge.worldbank.org/bitstream/handle/10986/31804/9781464813870.pdf) https://data.worldbank.org/indicator/AG.CON.FERT.ZS?locations=NP https://openknowledge.worldbank.org/bitstream/handle/10986/31804/9781464813870.pdf

Nepal’s fertilizer imports continue to increase, these fertilizers are usually of very low quality.

The EBA Quality of Fertilizer Regulation index (range from 0-6) gives Nepal a score of 2.

In this context, under Objective 2 the Contractor must at a minimum focus on the following key components:

(a) Improving access to quality fertilizer, at the right time, and in the right quantity: The Contractor must improve farmers’ access to and use of balanced fertilizer by addressing the key loopholes and constraints in the existing procurement and distribution mechanisms. The Contractor must improve equitable access to fertilizer in rural areas, particularly to women, youth, and marginalized communities and develop an intervention plan to strengthen private sector participation along with cooperatives in fertilizer distribution and marketing that matches demand and supply by location and crops. The Contractor must closely collaborate with the GON and the private sector and support the reform of specific policies and regulations, continuing the work of NSAF, to restructure the subsidy regime to promote more balanced fertilizer use. Similarly, in light of COVID-19, which disrupted fertilizer imports and distribution, there is an opportunity to introduce a more sustainable, efficient, cost-effective, and commercially viable fertilizer marketing system that will increase access to and efficient use of appropriate fertilizers, including when the country faces future shocks and market disruptions.

(b) Improving the effectiveness and efficiency of fertilizer subsidies: The Contractor must implement innovative solutions in partnership with the GON to improve the equitable access, effectiveness, and efficiency of the GON’s fertilizer subsidy. This could include, for example, a voucher system or ICT-based tracking system.

(c) Enhancing fertilizer use efficiency: The Contractor must improve fertilizer use efficiency at the farm level specifically for women, marginalized, youth, and smallholder farmers. To achieve this, the Contractor must implement innovative solutions to support farmers in diverse socio-economic and agro-ecological contexts to adopt proper nutrient management, including the four Rs of the right source, right rate, right time, and right place for application of fertilizers. For this, the Contractor must facilitate GON revisions to the outdated fertilizer recommendations for major cereal crops and promote a balanced soil fertility management system. The Contractor must also increase farmers’ awareness, particularly for women, youth, and marginalized communities, on judicious and balanced fertilizer use and soil fertility management practices.

(d) Strengthening commercial opportunities for balanced fertilizer production and distribution:

The Contractor must strengthen the policy environment and build the capacity of the private sector for balanced fertilizer promotion. There are potential agro entrepreneurs ready to invest in blended fertilizer and micronutrient production businesses but they are cautiously waiting to see how government policy and regulations for these products play out. The Contractor must understand the economic viability of blended fertilizer promotion in Nepal and develop a strategy to engage with the GON. The Contractor must also support the private sector’s advocacy with the GON to create an enabling environment for blended fertilizer as well as micronutrient production and promotion in Nepal, resulting in increased private sector investment in the fertilizer business.

Objective 3: Climate adaptive and sustainable irrigation management system improved

Nepal’s irrigation potential is largely untapped as just 6.7 percent of available water is used for irrigation. Specifically, irrigation infrastructure has been developed to serve 1.3 million ha of land out of a total 2.6 million ha of cultivated land, comprising 972,000 ha surface water irrigation and 359,000 ha of groundwater irrigation.15 Only 30 percent of surface water-irrigated land has year-round irrigation facilities. This is largely due to inadequate investment by the government and private sector on irrigation infrastructure to respond to the ever increasing water demand for agriculture and other purposes.

The current practices of water resource management for irrigation have many flaws that have impacted its wider access and use in agriculture. The most prominent issue is unsustainable groundwater extraction in many Terai districts that surpass the recharge capacity causing water table depletion. The situation has been further aggravated by poor conservation and management practices in the water recharge zone of the Churia Range. Most of the small irrigation systems rely on forest-fed (rainfed) river systems which dry up during the summer, but there is no strategy or practice of conjunctive use of available water resources. Such irrigation schemes often perform at suboptimal levels due to lack of proper operation and maintenance. Further, many farmers in rural areas have started bearing the brunt of climate change impact on the traditional water reservoirs which has increased pressure on available water resources.

Participation and leadership of women, youth, and marginalized communities in water-user groups/associations is very poor. Weak women’s participation and leadership at the institutional and policy levels limit women’s decision making and contribute to lower gender-responsive resource allocation. Similarly, women, youth, and marginalized groups have poor knowledge and access to alternative irrigation technology, such as solar water lifting. Additionally, these groups generally lack capital to invest in irrigation technology. More importantly, the irrigation market has not identified women, youth, and marginalized groups as an important market segment, and research on irrigation technology innovation and its use has not considered the specific socio-economic context of youth and various marginalized groups, or gender-related and other barriers.

In this context, under Objective 3, the Contractor must at a minimum focus on the following key components:

(a) Improving access to irrigation for commercially oriented agriculture: The Contractor must improve access to irrigation for smallholders, women, youth, and marginalized communities that results in an increased area of irrigated crops. The Contractor must consider local context specific solutions to improve access to irrigation that include, but are not limited to, public and private sector investment in irrigation infrastructure, promotion of climate adaptive water resource management practices, strategies to improve groundwater replenishment, improvement in the performance of existing irrigation schemes through improved operation and maintenance systems, and market-based solutions to water scarcity with private sector engagement in the focus value chains.

15 Water for Sustainable Food and Agriculture, 2017: http://www.fao.org/3/i7959e/i7959e.pdf http://www.fao.org/3/i7959e/i7959e.pdf

(b) Enhancing water use efficiency: The Contractor must enhance demand side management of available water for irrigation to ensure improved water use efficiency in agriculture. To achieve this, the Contractor must promote practical solutions to improve farmers’ knowledge and practices on enhancing water use efficiency in agriculture.

(c) Enhancing capacity of local government, civil society, and private sector for sustainable water resource management: The Contractor must enhance the institutional, technical, and organizational capacity of local government, water users groups, and the private sector; establish inclusive information management systems for sustainable water resource management; and institutionalize sustainable water management systems. The Contractor must analyze existing federal water resources management policies using a gender responsive lens, identify key policy intervention areas, and improve the policy environment for sustainable water resource management.

Objective 4: Agricultural mechanization enhanced

Traditionally, Nepal was a labor surplus country. However, a massive outmigration of men from the countryside has led to the feminization of agriculture, putting immense pressure on the availability of labor. Similarly, inadequate use of modern equipment in farming has led to low labor productivity in agriculture, driving down potential profit. In response, the use of modern agricultural equipment like mini-tillers has increased with significant subsidy support from the GON. Recent research shows that mini-tillers yield an average 27 percent productivity improvement in rice for users versus non-users16. Mini-tillers reduce the costs for tillage and/or weeding by 100,000 Nepali Rupees per hectare. Notably, the smallest farmers get the highest productivity increases. Women farmers also benefit substantially from the adoption of mini-tillers with respect to time savings for care work. Pay-for-service models, such as custom hiring centers and other providers of on-farm and post-harvest machinery services, have proven effective in rural areas and should be further supported and scaled. This sector is, however, beset with some unique policy constraints that reduce the pace of its scaling up. The high customs duty on spare parts for agricultural machinery and weak capacity for maintenance at the local level are two of the greatest challenges. In addition, the lack of women-friendly farm equipment, poor knowledge and awareness among rural women on modern agricultural equipment, and poor investment capacity of smallholders, women, youth, and marginalized farmers in modern agricultural equipment are key issues. Similarly, while most agricultural machinery is targeted toward primary production, there is an opportunity to increase the availability and affordability of agricultural equipment for post-harvesting and processing. This would help to increase labor productivity and overall efficiency of the agricultural value chain.

In this context, under Objective 4, the Contractor must at a minimum focus on the following key components:

(a) Increasing uptake of modern agricultural equipment in primary production and post-harvest operation: The Contractor must address the low adoption of agricultural equipment in the small farm and small agro-processing business context, specifically among women, youth, and

16 https://repository.cimmyt.org/bitstream/handle/10883/20154/60364.pdf?sequence=1&isAllowed=y https://repository.cimmyt.org/bitstream/handle/10883/20154/60364.pdf?sequence=1&isAllowed=y marginalized farmers, and design a strategy for increasing these groups’ access to and use of appropriate machinery.

(b) Increasing investment in agricultural equipment related businesses: The Contractor must unlock policy constraints to the production, promotion, and use of agricultural equipment. This includes, but is not limited to, tax policy on spare parts imports, policy for the promotion of domestic equipment manufacturing companies and attracting international joint venture initiatives in manufacturing agricultural equipment, and increasing investment in local manufacturing units for producing agricultural equipment.

(c) Improving access to maintenance services for agricultural equipment: The Contractor must support development of new agricultural equipment maintenance service providers and strengthen the technical capacity of existing providers. The Contractor must increase access of smallholder farmers, including women, youth, and marginalized communities, to improved maintenance services for agricultural equipment. The Contractor must facilitate or otherwise catalyze maintenance service systems that are location and client specific and are commercially viable and scalable.

C.10 CROSS-CUTTING COMPONENTS

Digital Technologies: The effective deployment of digital technologies for agricultural inputs can realize significant cost savings and productivity gains for government and private companies when used to: improve transparency, add traceability, match supply to demand, spot new threats, and create investment opportunities. The public and private sectors use digital technologies to manage seed production, soil fertility, water resources, supply chains, and subsidies. Each of these domains feature in the Activity, so digitization is a cross-cutting theme. Potential targets for digital support include:

● Paperless program management systems for agricultural subsidies

● Supply-demand database for seed and fertilizer

● Seed system mobile traceability for seed inspectors

● Database/catalog of inbred lines that the private sector can access

● Cloud-based fertilizer recommendations linked to Nepal’s Digital Soil Map

● Digital finance

● Digital literacy to cooperatives and farmers groups

● Digital agricultural information system

● Water resource monitoring

USAID Nepal Mission has carried out assessment on Digital Agricultural Ecosystem in Nepal to inform the design process (See Attachment J-4, “USAID/NEPAL DIGITAL AGRICULTURE ECOSYSTEM ASSESSMENT”).