RFP_SOL-117-16-000003_FINAL.pdf

Request for Proposals (RFP) No.: SOL-117-16-000003 Issue Date: June 10, 2016 Questions Due: June 16, 2016 at 5pm, Kyiv local time Closing Date: July 11, 2016 at 5pm, Kyiv local time

Subject: Request for Proposal (RFP) # No. SOL-117-16-000003

“USAID High Value Agriculture Activity”

Dear Prospective Offerors:

The United States Agency Mission for International Development in Moldova (USAID/Moldova), through the Regional Contracts Office (RCO) in Kyiv is seeking proposals from qualified companies and organizations interested in implementing the “USAID High Value Agriculture Activity” (formerly “Ag Lead”) as described in this solicitation.

Any questions regarding the RFP’s requirements must be submitted to Michael Capobianco and Larissa Lomonosova via e-mail at mcapobianco@usaid.gov and llomonosova@usaid.gov no later than 17:00 hours Kyiv time, June 16, 2016.

Subject to availability of funds, USAID contemplates award of a Cost-Plus-Fixed-Fee (CPFF) Completion type contract for a period of five (5) years from the date of award. The total estimated value of the award is $20 million - $24 million.

Proposals must be received electronically on or before the closing date stipulated above to provide the services and deliverables specified in the below RFP. Proposals must be sent via e-mail attachments to mcapobianco@usaid.gov and llomonosova@usaid.gov by the closing date and must conform to all requirements outlined in Section L.

Any amendments to this solicitation will be issued and posted on the FedBizOpps website (www.fbo.gov) along with the RFP. Offerors are encouraged to check the website periodically.

It is the responsibility of the Offeror to ensure that solicitation or any amendments to it has been received from Internet in its entirety and USAID bears no responsibility for data errors resulting from transmission or conversion processes. Oral instructions, answers or guidance from any USAID source prior to the award of the contract shall not be binding. More details regarding proposal submission please see in Section L of this RFP.

This request in no way obligates the USAID to award a contract, nor does it commit USAID to pay any cost incurred in the preparation and submission of your proposal. We look forward to receiving and reviewing your proposals.

Regards, /S/

Michael Capobianco Contracting Officer USAID Regional Mission for Ukraine, Belarus, Moldova and Cyprus mailto:mcapobianco@usaid.gov mailto:llomonosova@usaid.gov mailto:mcapobianco@usaid.gov http://www.fbo.gov/

PART I - THE SCHEDULE

SECTION B - SUPPLIES OR SERVICES AND PRICE/COSTS

B.1. PURPOSE

The purpose of this contract is to provide technical assistance as described in detail in Section C, Statement of Work.

B.2. CONTRACT TYPE

This is a Cost-Plus-Fixed-Fee (CPFF) Completion type contract. For the consideration set forth below, the Contractor shall achieve the results and perform the tasks in Section C in accordance with the performance standards specified herein.

B.3. OBLIGATED AMOUNT

TBD

B.4. PRICE/COST SCHEDULE

(i) The estimated cost for the performance of the work required hereunder, exclusive of fixed fee, if any, is _______ [ TBD ]. The fixed fee, if any, is ________ [ TBD ]. The estimated cost plus fixed fee, if any, is _____ [ TBD ].

(ii) Within the estimated cost plus fixed fee (if any) specified in paragraph (i) 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 shall not exceed the aforesaid obligated amount.

B.5. BUDGET

TBD

B.6. INDIRECT COSTS

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:

Description Rate Base Type Period

TBD TBD 1/ 1/ 1/

TBD TBD 2/ 2/ 2/

1/ Base of Application: TBD

Type of Rate: TBD Period: TBD

2/ Base of Application: TBD

Type of Rate: TBD

Period: TBD

B.7. PAYMENT OF FIXED FEE

In accordance with FAR 52.216-8 “Fixed Fee”, USAID reserves the right to withhold a reserve not to exceed $100,000. The Contracting Officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. The Contracting Officer may release up to 90 percent of the fee withholds under this contract based on the Contractor’s past performance related to the submission and settlement of final indirect cost rate proposals.

B.8. MULTI-YEAR CONTRACT AND CANCELLATION CEILING

This contract is considered non-severable, and is therefore a multi-year contract as defined in FAR 17.103.

Therefore, this contract is subject to the requirements of FAR 17.106.

Performance under this contract during the second and subsequent program years is contingent upon the appropriation of funds. All program years except the first are subject to cancellation. Cancellation shall occur by the dates specified below if the Contracting Officer:

1. notifies the Contractor that funds are not available for contract performance for any subsequent program year; or

2. fails to notify the Contractor that funds are available for performance of the succeeding program year.

Cancellation Ceiling:

This is a CPFF type contract where the Contractor is authorized to be reimbursed for all costs which are allowable in accordance with FAR 52.216-7, “Allowable Costs and Payment.” Therefore, the Contractor will not incur any costs which would have been amortized over the life of the contract should the contract be cancelled in accordance with FAR 52.217-2.

The Government's liability for cancellation charges shall not exceed $0. This amount will be reduced in accordance with FAR 17.106-1(c)(1) at the conclusion of each program year, as follows:

Program Year Cancellation Date Cancellation Ceiling Year 1: 2016/2017 N/A N/A Year 2: 2017/2018 March 31, 2017 $0 Year 3: 2018/2019 March 31, 2018 $0 Year 4: 2019/2020 March 31, 2019 $0 Year 5: 2020/2021 March 31, 2020 $0

[END OF SECTION B]

SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

C.1. Title

USAID High Value Agriculture Activity

C.2. Introduction

The goal of the “USAID High Value Agriculture Activity” is to further stimulate the transformation of the Moldovan high-value agricultural (HVA) sector into an engine of economic growth for the country leading to improved competitiveness and higher living standards for rural Moldovans in the long term. The objectives of the activity are to:

1. Expand trade and strengthen linkages to domestic, regional and international markets for targeted value chains

2. Improve productivity, post-harvest handling and private sector capacity to comply with European and international standards in targeted value chains

3. Increase capacities of member-based groups (producer groups, Water User Associations (WUAs) and industry associations) to serve their members in targeted value chains

4. Improve the enabling environment leading to increased investments and an improved workforce in key value chains.

C.3 Background

General Economic Context: Moldova’s real GDP grew 4.6 percent in 2014, but has been slowing down since the third quarter of 2015. According to a recent IMF and World Bank forecast, the economy is projected to go into a 2 percent recession in 2015, reflecting the negative shocks from external demand, remittances and financing. The forecast for 2016 is also less optimistic with a projected GDP growth of 0.5 percent and a forecast for 2017 of only 2.5-4%, as main trading partners from the Commonwealth of Independent States (CIS) are expected to recover only gradually, and trade growth with the EU I is not robust enough yet to offset lost sales to the CIS countries. In the longer term, strong reforms in all sectors of the economy are needed to improve the living standards of Moldova’s citizens.

Despite the fact that Moldova’s economy has performed well in 2014, unfavorable regional and domestic environment issues started to affect Moldova’s growth. Consumer inflation increased to the upper bounds of the target range of the National Bank of Moldova. The current account deficit widened to 5.7 percent of GDP in 2014, due to a sharp drop in remittances and foreign investments. Moldovan currency depreciated by over 20 percent against US dollar, while foreign reserves declined by 25 percent, though they are still covering 3 months of imports. The government managed to maintain fiscal discipline in 2014, yet in 2015 it faced fiscal pressure challenges for the higher expenditures introduced in mid-2014. To overcome these financial problems, Moldova needs strong economic growth.

Moldova remains vulnerable to the geopolitical tensions, the soundness and transparency of the banking sector is compromised, and the fiscal management pressures are increasing. The new government is taking steps to limit the banking sector crisis, control inflation and shelter the economy from additional shocks. In June 2016, the new GOM is expected to negotiate a new country program with IMF, which is critical for further stabilization of the macroeconomic context.

Agricultural Sector Overview: Two decades ago, the agriculture sector made up 35 percent of Moldova’s GDP, and the country was a major supplier of agricultural products to the Russian and Eastern European markets (World Bank 2012a). While the sector remains important today, accounting for over 50 percent of the country’s exports, its share of GDP has slipped to 12.6 percent in 2014 (National Bureau of Statistics (NBS) data). The agriculture sector employs approximately 30 percent of Moldovan citizens, yet poverty has been a persistent problem among agricultural stakeholders with poverty rates for farmers at 36 percent and agricultural workers at 45 percent (World Bank 2012b).

Transition to high value agriculture has been slow due to a number of factors, including high investment requirements, low irrigation potential and availability as well as stringent food safety requirements.

Insufficient access to quality inputs remains a constraint for competitiveness in a number of subsectors.

Agriculture producers rely mainly on imported seeds and seedlings and are the most affected by the lengthy and costly variety registration procedures. The testing and registration requirements regulating imports of seeds and seedlings are important constraints and are singled out by stakeholders as an obstacle to production of more competitive crop varieties due to costs and delays.

In the wake of Moldova’s signing the Deep and Comprehensive Free Trade Area (DCFTA) and Association Agreement with the EU in 2014, Russia, the largest importer of Moldovan fresh agricultural products, imposed a ban on key imports of fresh and processed Moldovan agricultural products. This trade ban further underscores the vulnerable situation of the Moldovan agricultural sector, heavily dependent on a single volatile market, and highlights the need for more agricultural products and more diversified markets.

Stakeholder consultations during the USAID Country Development and Cooperation Strategy (CDCS) development process challenged the long-held understanding that Moldova had a ready and skilled workforce in place to respond to increased employment opportunities. On the contrary, employers and industry associations in many sectors agree that their primary need, outside of reform of business regulations, is for skilled workers. With up to 25% of the active labor force already outside the country, and a lack of coordination between the public and private sectors in technical and vocational education, labor scarcity is not a surprise.

C.4. Relationship to the Government of Moldova National Strategy for Agriculture and Rural Development for the period 2014-2020, and other donors

The Government of Moldova’s key priorities for the country’s HVA sector, as laid out in the National Strategy, include:

• Increase access to irrigation and improve on-farm water management practices;

• Facilitate improved variety testing and registration to increase producer access to improved seeds and seedlings;

• Support investments in post-harvest infrastructure (pre-cooling, cold storage, grading, sorting, packing/packaging, cold chain transportation);

• Connect agricultural education as well as agricultural research and innovation to the private sector;

• Support creation and functioning of agricultural producer groups;

• Reverse the decline of the food agro-processing industry;

• Reform the National Food Safety Agency to support exports; specifically, develop simplified, integrated, and customer-friendly procedures and documentation based on risk assessment.

C.5. Coordination with other Donors

In performing the High Value Agriculture activity, the contractor must complement the efforts of other donors working in the agricultural sector. The contractor must particularly focus on creating strong coordination mechanisms and building synergies with the IFAD, World Bank and EU agricultural support programs.

This activity, via this contract, may also be used as an instrument for other donor co-funding, such as the Government of Romania, the Government of Czech Republic, and the Dutch Government. Other donors may fund a series of specific sub-activities that would fall under High Value Agriculture’s objectives. The contractor’s interventions must be designed and implemented to allow for scaling up as a result of additional donor funds for activities if they become available.

C.6. Strategy

In developing and delivering all interventions and work under this contract, the contractor must follow the below overarching strategies:

Link buyers to producers/producer organizations/associations to meet their requirements: Examples include establishing a mechanism whereby wholesalers and retailers inform producers about in-demand varieties or preferred packing and sorting techniques, or attracting international buyers to select Moldova a hub for their regional HVA processing and operations.

Facilitate/support key infrastructure investments: Examples include grading/sorting, packing, processing, and cold storage centers that would allow suppliers to meet buyer requirements efficiently and at scale. This shall be accomplished in close collaboration with the IFAD, Polish Credit, EIB, and other investment programs, through improvements in the operation of packing and cold storage centers by providing support on a cost-sharing basis on design, business plan development, and efficient operation of equipment and facilities. Any construction (as defined by USAID’s Automated Directive System) must be performed under firm fixed price subcontracts. Other subcontract types may be used only when authorized in writing by the CO.

Private sector-driven and owned: The contractor’s interventions must ensure that private sector actors are empowered to take risks, invest and drive the competitiveness strategy. The contractor must facilitate, mentor and/or support, but not lead, the process of firm- and value-chain change. The contractor must serve the needs of the private sector; not vice versa. The project will help the private sector in voicing its needs for reform but will not, itself, “drive” a reform process.

Competitiveness driven: The contractor’s technical assistance and market development support must be based on the ability of a commodity to compete in target markets (local and export) over the long-term.

Sustained competitiveness will then require a focus on buyers’ needs, including product (e.g., quantity and quality) and delivery (e.g., dependability and quick response time) characteristics. Further, buyer needs must be met vis-à-vis competitors; thus, an understanding of competitors and the structure of the end market is necessary to selected value chains.

Rely on market facilitation rather than direct provision: The Contractor must facilitate private actors to address key constraints in the value chain, but not provide needed services or products itself. To illustrate, where a business service – HACCP (Hazard Analysis and Critical Control Points) training – is key to addressing a binding and recurrent constraint in a value chain, the project should not provide these services itself but should rather look for private sector providers of this service. In cases where service providers do not exist or the service is not being provided to those who need it, the project should facilitate the emergence of a market, promote embedded services (provided by an actor in the chain), and/or devise payment and/or delivery mechanisms that improve service access and stimulate the creation of a competitive market for the service in question.

Flexibility to respond to new opportunities and changing conditions: To be successful in promoting private sector development, especially where markets are dynamic or even volatile, flexibility is critical. To meet its goal and objectives, the contractor and their interventions must be flexible to respond to changing market conditions.

Integrate local context and priorities: All developing countries are faced with a wide range of issues that must be considered as part of any private sector project, including environmental degradation, effects of population health, and disadvantaged populations such as women, people with disabilities, and lesbian, gay, bisexual, transgender and intersex (LGBTI) populations, religious minorities, and isolated rural communities. Proper consideration of these issues within the context of a viable private sector development strategy is critical to enhancing the longer-term impacts of the project.

C.7. Work Requirements and Illustrative Results

The following section describes the contractor’s objectives and provides illustrative results. It provides a brief description of the development context under each of the four objectives, as well as a set of guiding principles for the contractor in addressing the objectives. The contractor must develop and deliver interventions which help achieve the objectives. The contractor shall implement a set of interventions based on their potential to realize systemic changes in targeted value chains and accelerate the growth of the HVA sector, which must be tailored to the Moldovan development context and maturity of the targeted value chains.

The work of High Value Agriculture on increasing the Moldovan agribusiness competitiveness in high potential value chains is nation-wide, including the left-bank region of Transnistria and Gagauzia. While the contract does not include a stand-alone component supporting Transnistrian farmers/agribusinesses, the Contractor must include cross-cutting support to Transnistian agribusinesses/emerging sector associations/producer groups on a demand-driven basis, given the realities of the operating environment in the region. The emphasis should be on building cross-bank cooperation and developing business between the two banks and building on the significant progress and successes made under past USAID support in this region.

Primary program beneficiaries are expected to be primarily small and medium agricultural producers, emerging producer organizations (associations, cooperatives, Water Users Associations (WUAs), member-based informal farmer groups), sector industry associations, and individual agribusinesses engaged in agricultural input supply, processing, service provision, marketing, storage, branding, transport, export, etc.

On the workforce development side, program beneficiaries are expected to be agricultural education and research bodies, public and private extension bodies. On the policy/enabling environment side, primary project beneficiaries are expected to be local NGOs active in the agricultural/policy development area, relevant Government bodies such as the Ministry of Agriculture, and relevant sector associations.

The Contractor must assess activities and interventions that engage women and youth across all four objectives of High Value Agriculture, including as beneficiaries of the Innovation and Technology Transfer Fund. The Contractor shall identify specific interventions that promote youth engagement in targeted value chains that offer opportunities for youth productive employment and income generation.

C.7.1. Expand trade and strengthen export linkages to domestic, regional and international markets for targeted value chains

The contractor must develop and deliver interventions that expand trade and strengthen export linkages to domestic, regional, and international markets with a primary focus on value chains assisted by past USAID activities. These value chains include apples, table grapes (especially seedless), stone fruit, and to a lesser extent extended season vegetables in greenhouses. In addition to these value chains the Contractor must conduct value chain and sector analyses to identify a minimum of two additional value chains to work with.

These sector analyses must be performed in cooperation with and under the direction of USAID staff and must be analytical, robust, strategic, and grounded in the agricultural and economic sciences.

The contractor’s solutions and interventions must be viable and scalable, capable of driving change across an entire value chain. The contractor must develop exit and sustainability strategies for each of the targeted value chains and for the initiatives proposed, and to implement these within the project performance period.

Based on USAID’s initial analysis, several potential new value chains that could be assisted include:

• The Nut Value Chain. Hazelnuts and other nuts in select markets where there is no conflict with the

Mission-approved Bumpers Amendment Analysis, as the world-wide nut market is exploding in growth and the opportunities for Moldovan producers are abundant. These products have access to the EU market and are currently being exported to the EU and other markets.

• The Honey Value Chain. The upside potential for Moldovan honey is vast, according to reliable market intelligence sources. The export of honey doubled from 2000 to 2012, due to climatic conditions and limited capital needs. With proper certified lab analyses, Moldovan honey has excellent export prospects, as indicated by increased demand for Moldovan honey at numerous trade shows in the EU and in the Middle East. It will be important to develop a strategy which is scalable to a level to have significant economic impact.

• The Berry Value Chain. A diversity of berry crops, including strawberries, raspberries, blackberries, and blueberries, have excellent production potential in Moldova. The soils and agro-climatic conditions are ideally suited for strawberry, raspberry, and blackberry production. The soils can also be acidified to become appropriate for blueberry production. Berry crops have a strong demand in Moldova and a number of processed forms of these berries can be produced that have strong export market potential (e.g. various frozen forms and juice). The domestic and export market prices for berry crops are generally high and these small fruits are some of the most profitable HVA crops worldwide.

• The Medicinal & Aromatic Plants & Essential Oils (MAP) Value Chain. Thirty years ago, Moldova was one of the leading exporters of essential oils in Europe and was producing about 186 tons of essential oils. According to Ministry of Agriculture statistics, Moldova ranks number 10 worldwide in the exports of lavender oil. Currently, perfume oil crops occupy only 1,600 hectares in Moldova and only 15 manufacturers are involved in the production of essential oils in Moldova.

• The Organic HVA Value Chain: Niche export market opportunities in the EU exist for organically-grown fruits and vegetables from Moldova. Market development efforts would focus on this product line, for both fresh and agro-processed products.

• Tree Fruit, Grape, and Berry Nursery Stock. Recent assessments have shown that the lack of domestic certified and disease-free planting stock is a critical constraint to the development of the fruit and nut crop industry in Moldova. In the past Moldova was a strong exporter of planting stock to the CIS region and a solid base of tree fruit nursery growers already exists in the Jora de Sus, Jora de Jos, and Lopatna areas. The soil and agro-climatic conditions in Moldova are favorable for the nursery production of planting stock of numerous tree fruit, grapes, and berry crops. Moldovan nurseries lack in-vitro tissue culture stock used for producing virus-free plant material.

The Domestic Market

The domestic retail market for fresh fruit and vegetables presents a growing opportunity for increasing incomes of local producers and for import substitution. The retail sector in Moldova is in transition. While trade in these crops is still dominated by open markets that are supplied with both local and imported products, modern supermarkets are rapidly gaining market share as increasing numbers of urban consumers seek the greater convenience that such markets provide. As a result several foreign and local supermarket chains are now competing for the general grocery business. It is generally true, however, that the fresh produce departments have lagged behind in development compared to other departments (dry goods, frozen food, etc.) reflecting the traditional dominance of the sector by the open air markets. The poorly developed wholesale infrastructure and the difficulty in contracting with reliable local producers for necessary items (and in particular for fresh fruit and vegetables) has been a long standing challenge for these supermarket chains. Imports still account for an estimated 70% of total fruit and vegetables sold in the supermarkets, indicating that there is a significant opportunity for substitution of imports and using more locally sources produce in retail.

Illustrative Results:

• Increased exports of assisted enterprises/producer groups in selected agricultural value chains

• Increased sales of assisted enterprises/producer groups in selected agricultural value chains

• New high-export and revenue generating value chains assessed, identified and assisted under High Value Agriculture

• New international export market contracts established on behalf of assisted enterprises/producer groups

• Export market linkages established for at least 3 new markets

• Industry Quality Seal programs for targeted value chain commodities developed and successfully piloted

• Expanded number of value-added agricultural products meeting international quality and food safety standards

• Increased knowledge and use of market information by producers/agribusinesses in target value chains

• Increased awareness/knowledge among international buyers about targeted Moldovan value chains

• Increase Moldovan branding into targeted markets. Sector-level branding campaigns in targeted markets implemented.

C.7.2. Improve productivity, post-harvest handling and private sector capacity to comply with European and international standards in targeted value chains

Despite recent gains in labor productivity1 and crop yields, numerous improvements are still needed to overcome existing constraints in crop production practices, harvesting methods, postharvest care, and packaging in HVA value chains. The existing constraints result in low crop yields, short product postharvest life, low market quality, and limited duration of product availability. Adoption of the improved production and postharvest care practices will result in more consistent supplies of higher quality products, which is required by the HVA sector to be competitive in domestic and international markets. The significant EU trade liberalization prospects offered by Moldova’s entering into a DCFTA and Association Agreement with the EU represent a major window of opportunity and incentive for the sector to increase productivity and modernize the post-harvest/processing infrastructure meeting EU standards and requirements regarding packaging, labeling, food safety, and marketing of agricultural products to the EU market.

The development of a high-quality post-harvest value chain infrastructure is a key priority to developing and ensuring consistent and value-adding Moldovan HVA exports to strategic end markets. Numerous studies have confirmed that lack of modern post-harvest infrastructure is one of the critical gaps impeding the speedy development of a robust export oriented HVA sector. Though significant progress has been made over the past 5 years to introduce in Moldova the main elements of a cold chain system - including pre-cooling, cold storage, and grading, sorting, packaging, cold transportation, only a fifth of the cold-storage demand is being satisfied2.

1 Labor productivity doubled in Moldova from 2000 to 2010, though it remains still below 2000 USD and well below Eastern-European average (5000 USD).

2 Source: National Agriculture and Rural Development Strategy for the period 2014-2020

Over the past five years USAID assistance facilitated over $15 million in new post-harvest investment in targeted HVA value chains. Through targeted demonstration activities, producers, traders, cold store operators and exporters were trained on critical production and post-harvest technologies (such as cold wall forced air cooling and hydro cooling for cherries, girdling techniques and anti-hail nets for table grapes, harvesting platforms in apple orchards, mulch formation technologies for strawberries, pre-cooling and introducing SO2 pads for table grapes, use of weather stations in apple orchards, construction of energy-efficient greenhouses, etc. ) that had been missing. Wider adoption of these technologies will enable Moldovan producers to extend produce shelf life and reduce unit costs and to gain export market share and profitable prices in the off-season.

The contractor must work to improve productivity, post-harvest handling and private sector capacity to comply with European and international standards in targeted value chains. The contractor must develop and deliver targeted training and technical assistance to further improve on-farm water delivery methods, coupled with improved production and postharvest care practices for a diversity of crops. The contractor’s training support and information dissemination to producers, WUA members, and other agriculture sector stakeholders must provide the foundation for improved crop yields, better soil management, and more consistent supplies of high quality products demanded in the domestic market and regional export markets.

The training beneficiaries must include both existing HVA producers and farm operations that are interested expanding their marketing opportunities for HVA products and/or changing cropping patterns to transition from grains to fruit and vegetable production. Targeted groups of beneficiaries within this activity must include small and medium farm operations located in the 10 irrigation areas rehabilitated under the MCC Compact and where the MCC-established WUAs are functioning, as well as small and medium farm operations with a commercial interest in HVA production in other regions of Moldova. The contractor must target farm operations producing HVA either as individual producers and/or as part of existing and newly established farmer-based business and marketing cooperatives/emerging producer groups. In addition, to promote a holistic value chain approach, non-agribusiness small and medium-sized enterprises connected/supporting the selected value chains must be screened for assistance needs and engaged in activity interventions as appropriate.

• Increased private sector capacity for product certification and standardization in line with EU standards and international market requirements;

• Increased number of higher value-added products (processed/fresh) meeting international product certification;

• Increased adoption of new production/PHH technologies and management practices among farmers, processors, groups;

• Increase in annual per hectare farm yield by targeted crop commodities;

• Increased investment in post-harvest infrastructure (foreign direct and other domestic partnerships) in Moldovan high-value agriculture producers or value-chain businesses;

• Leveraged partnerships with other donor agricultural programs to enable B2B linkages/technology transfer/innovation flow between EU-Moldovan agribusiness/consulting entities;

• Partnerships established with international technology/input suppliers to enable transfer of advanced production/processing/post-harvest technologies;

• Local capacity established to produce/test/certify domestic virus-free certified planting stock material for select value chains;

• Facilitated private sector partnerships, providing domestic lab testing capabilities for soil/plant analysis/etc.

C.7.3. Strengthen capacities of member-based groups (producer groups, WUAs) and industry associations offering high-value services to their members

A critical element in strengthening Moldova’s export marketing capacity is the development of strong sector associations and member-based groups that work together to improve Moldova’s agricultural competitiveness by improving coordination, services and information exchanges between producers, processors, and exporters. Developing Moldovan standards of quality, consistent quantities and branding through these associations is critical to Moldova’s ability to enter new markets, or increase market share of current markets.

The private sector agricultural enterprises in Moldova are small and fragmented by international standards.

As a result, the transaction costs to sell their produce on international markets, or for processors to source raw materials from them, are too high. In this environment, market access is extremely limited, and both production and innovation stagnate. Producers/industry associations can be effective in giving farmers and agribusinesses access to international markets by organizing advertising and the aggregation of products, providing technical assistance in meeting quality standards, lowering agricultural input costs and in disseminating production technology. Such associations have been shown to be highly effective in raising industry standards for performance and quality, and lowering transportation and marketing costs. They can be critical to the successful advertising and marketing of their members’ products.

The contractor’s interventions supporting this objective shall target assistance to three categories of member-based organizations:

1. Emerging industry associations for the selected value chains,

2. Emerging producer groups/cooperatives/joint-marketing bodies in the select value chains;

3. Ten Water Users Associations (WUAs) created and supported under the MCC Compact.

Over the past decade, USAID programs have been supporting and nurturing the institutional and organization capacities of a few nascent sector associations, but much remains to be done to further enhance their capacities and make them fully sustainable and add value to their members. A major focus of continued engagement with producer and industry associations must be to support development of sustainable financing mechanisms for these groups, and to find ways for them to bring in more members, especially among individual farmers, informal producer groups, and SMEs. Services that the producer and industry associations might provide to their members include business management, financing, information and communications technology, risk management tools such as insurance, product aggregation and storage, agro-processing, transportation services, and sales and marketing.

Moldova, like other former Soviet states, suffers from the legacy of land collectivization and the kolkhoz system of farm organization. One of the most noticeable implications of this legacy is distrust among farmers and farmer organizations, resulting in extraordinary difficulty in organizing democratic farmer-owned businesses such as cooperatives. The cooperative model has proven successful throughout the world in assisting small-scale farmers to gain economies of scale in purchasing inputs, providing services, and marketing products, but has barely taken hold in Moldova.

Status and Needs of Agricultural Associations and Farmer-Based Organizations

The Fruit Producers and Export Association (Moldova Fruct) and the Grape Growers and Exporters Association of Moldova are private, non-profit industry associations that play a key role in supporting their members with marketing assistance, market price information, technical assistance, and advocacy on issues of importance to HVA producers, traders, exporters and agro-processors. These two organizations, however, need to develop a more sustainable financing mechanism to fund their activities.

Except for the national agricultural promotion organizations discussed above, private sector farmer associations and farmer-owned businesses in Moldova are small in number and limited in influence.

Numerous informal producer groups exist in Moldova and new groups are emerging, such as a recently-organized association of organic producers of Moldova. However, most “groups” are not legally organized into any sort of association, organization or business, and are quite weak in their negotiating positions vis-à-vis companies and buyers they deal with directly.

The Contractor must strengthen existing producer organizations (cooperatives, associations, farm groups) in high potential sub-sectors, helping them become effective service providers to their membership and successful business enterprises. The contractor’s efforts must include follow-on assistance to producer organizations and farmer groups which received assistance under the World Bank MAC-P project, a well as other donor support, or participated in previous USAID programs. The contractor must also seek to develop new, business-oriented producer organizations. Assistance will focus on building selected organizations into competitive agribusiness firms, capable of responding to market opportunities and delivering effective services to their members.

Under past USAID support for agricultural competitiveness, USAID has built the capacity of key agricultural sector associations and think-tanks to enhance their lobbying and advocacy functions. The contractor’s interventions must build on and support the continued development of these local organizations.

In addition, in coordination with and subject to USAID approval, the Contractor shall assess the capacities of existing stakeholders and will propose to USAID one or more potential value chain/agricultural sector association to be mentored and prepared by the Contractor for a future direct USAID award in the final year of the High Value Agriculture Activity.

Support to the Water Users Associations created under the MCC Compact

The future development of the HVA agricultural sector and the pace of transition to a higher value added agricultural production heavily depends on expanded producer access to high-quality, competitively priced water for crop irrigation, as well as for food production and processing.

Over the past two decades irrigated surfaces in Moldova have decreased from 230,000 ha of arable land, about 11.8 percent of all arable land, to about 144,600 ha of irrigated land or 7.2 percent of arable land. The GOM’s “National Strategy on Agriculture and Rural Development” (2014), estimated that 60 percent of Moldova’s 78 centralized irrigation systems needed to be rehabilitated, and that only 10 to 20 percent of irrigable land was actually being irrigated.

The development hypothesis assumes that supporting WUAs to evolve into strong and self-financing organizations, will in turn support increased agricultural productivity in targeted value chains, as well as a transition to high-value agriculture, and ultimately to expanded economic growth in the rural economies and the agricultural sector. Using the WUA model for accessing irrigation services, farmers have more control over their own use of water, and over the costs for irrigation water supply, so they manage the system in the most appropriate way based on local decision-making and market opportunities and requirements.

Following the completion of the MCC Compact in 2015, the WUAs are at a critical juncture and face several internal and external threats. The WUAs depend on membership fees and irrigation water charges to finance the administration, operations and maintenance costs of the systems. According to a recent assessment, to the percentage of WUA members’ current in their dues, ranges from 100 percent to 50 percent. In addition, only two WUAs are currently collecting water fees. These nascent organizations need additional capacity building and support to achieve financial sustainability and to maintain their systems and staff to oversee operations over the next few years as they gain management experience and establish cash flow from membership fees and irrigation water charges.

The contractor must deliver interventions that further the WUAs on the path toward organizational maturity and self-sufficiency and help them diversify the services provided to their members. This includes provision of basic technical and administrative support to the WUAs to ensure their ability to maintain the irrigation systems and thus their long-term sustainability.

• Increased number of agricultural member-based organizations (producers groups, WUAs, cooperatives, etc.) providing access to modern technology and new markets to their members;

• Increased number of new services that members can access from industry associations/WUAs;

• Expanded membership base of member-based organizations;

• Increased agricultural sales (export and domestic) via group-based organizations (producer groups, WUAs, sector associations);

• Increased organizational and management capacity of associations and member-based organizations in targeted value chains;

• New export promotion/branding/technical training/quality assurance programs launched and managed by industry associations for their members;

• Expanded partnerships/linkages/cooperation programs between local industry associations and EU-counterpart organizations leading to new management/organizational practices;

C.7.4. Improve the enabling environment leading to increased investments and an improved workforce in key value chains

Partnerships for Workforce Development Recent studies indicate that; only 40 percent employers are “satisfied by the quality of the training of the graduates of vocational/technical institutions,” and 68 percent indicated they had incurred additional training costs for those graduates. The report concluded that the development of linkages between the vocational schools and the private sector is crucial to the success of any reforms in this sector.

The lack of coordination/exchanges between the public and private sectors with regard to technical and vocational education in the agricultural sector is an important barrier to developing a competitive, skilled workforce for the targeted value chains. By including job skills development as part of the value chain approach through the contract, the missing connections between the educational sector and the private sector can be restored, leading to a more competitive workforce in targeted value chains.

It should be noted that initial steps in bridging this gap have been undertaken though the launch of several “Sector Committees” to function as bridges between the educational system and the needs and demands from industry and the labor market. One of the six Sector Committees being supported under the EU project is “The Agriculture and Food Industry Sector Committee”. The 2014 annual report of the sector committee on agriculture, as well as the 2015 plan of activity for agriculture offering more detailed information about the status of this committee can be accessed on the EU VET project website3.

The contractor’s interventions targeting workforce development supporting this objective must assess demand for job skills development in the HVA agricultural sector, with a primary focus on skills needed in the targeted value chains, and to identify workforce development opportunities between industry associations, private sector and academic/vocational/technical sector. Using this information the contractor must conceptualize and develop private-sector driven partnerships between the local and international

3 http://www.eu-vet-project-gopa.md agricultural education institutions, donors and the private sector that will lead to increased availability of a skilled workforce responding to market demand. In developing the High Value Agriculture workforce development interventions, the Contractor shall closely explore partnerships with leading donors in this sector, and shall ensure coordination with the Ministry of Agriculture and its subordinated units/institutions on the upcoming agricultural sector education reforms as per the National Strategy.

A potential tool under this objective could be the structuring of Public-Private Partnership(s) (PPP) that will combine the assets and experiences of the private sector – corporations, foundations, nongovernmental organizations (NGOs), universities, local businesses– leveraging their capital and investments, creativity and access to markets to address the lack of skilled workers in targeted sectors. These could leverage private sector funding and create a sustainable model for vocational skill development, building on relationships and competencies established as part of previous USAID activities.

Partnerships addressing value chains’ infrastructure needs: The role of the private sector in supporting the investments addressing critical value chain infrastructure gaps – from production, post-harvest, processing, compliance with industry standards and certifications – is critical, as neither the public sector nor Moldova’s multilateral donors have adequate resources to address the challenge. The contractor must provide support for PPP development supporting value chain infrastructure (including through selective cost-share using a grant fund that advances the competitiveness of the key agricultural value chains targeted under this activity (see section C.8, below). The Contractor shall employ an approach that will institutionalize PPP development through a comprehensive approach to value chain development.

Lack of access to finance and know-how impede progress in the emergence of properly integrated post-harvest infrastructure. Access to finance to underpin critical post-harvest investments and adoption of modern technologies/standards has lagged due to a number of emerging factors. Several large-scale donor-funded programs supporting infrastructure investments (Polish Credit and the EIB Garden of Moldova investment programs) did not take off as planned in 2015. This delay in access to cheaper longer term financing resources for the agricultural sector, arrears in state subsidy payments for investment components, coupled with the banking sector crisis the sharp depreciation of the Moldovan currency (estimated at 36%), significantly limited access to finance for the agribusiness community.

The contractor must coordinate and explore collaborative partnerships with other donor programs that are coming on-line to respond to the need for financing of post-harvest infrastructure investments. The contractor must address access to finance as a cross-cutting issue, exploring various approaches, as well as complementing and leveraging existing mechanisms and credit lines available from the EU, EIB, IFAD, EBRD, Polish Credit, the World Bank and other donors, for key agricultural value chains supported by the contractor. In addition, the contractor must explore leveraging regionally-funded investments and must facilitate the introduction of different mechanisms for financing producers and producer groups.

The contractor’s interventions must also support stronger linkages between the financial sector and the agricultural sector, leading to enhanced investment opportunities in agricultural post-harvest infrastructure and processing. The contractor must propose innovative and creative approaches to attract significant private resources through public private partnerships, both with Moldovan and international companies, sector organizations, and other donors.

A subset of the contractor’s interventions under this objective shall leverage PPPs for improving the policy and enabling environment for the selected value-chains. This must be done through collaborative, responsive and dynamic strategic partnerships with the emerging agricultural associations, WUAs, private/public extension services and relevant public agricultural institutions. The contractor shall focus on strengthening business associations, and increasing their role industry development and their capacity for advocacy and dialogue with the government. In addition, the contractor’s activities must address industry-specific legal, regulatory and administrative factors identified as inhibiting industry growth and investment, through representative organizations.

• New partnerships established between the educational/research sector and the agribusiness sector leading to a more competitive workforce in targeted value chains;

• New up-to-date courses and other skills development programs meeting value chain workforce skills needs developed and implemented;

• Increased access to market-demanded plant varieties and agricultural inputs as a result of policy reforms;

• Increased private sector investment through PPPs and other instruments addressing critical value…