Attachment_J.1_SOOLivestock.pdf

Afghanistan Value Chains - Livestock Statement of Objectives

Afghanistan Value Chains - Livestock At A Glance

Purpose: Strengthen the private sector’s capacity to effectively link Afghan producers to domestic and international markets, and to grow the agriculture sector through interventions at all levels of livestock value chains.

Scope: A five-year contract (a three-year base period plus a two-year option period).

Place of Performance: The Activity must work in all of the economic zones listed: North, South, East, and West.

Goal and Purpose: The Goal of the Afghanistan Value Chains - Livestock activity is to strengthen the private sector’s capacity to effectively link Afghan producers to domestic and international markets, and to grow the agriculture sector through interventions at all levels of livestock value chains—a process which will naturally be led by the private sector.

The activity’s Sub-Purposes are:

• Productivity of Key Livestock Value Chains Increased;

• Commercial Viability of Livestock-related Agribusinesses Increased; and

• Public and Private Livestock-related Agricultural Service Delivery Strengthened.

It also has cross-cutting objectives of:

• Women’s Equality and Empowerment Increased; and

• Youth Participation in the Agribusiness Sector Increased.

Background and Results Framework of USAID/Afghanistan’s Office of Agriculture

Rural areas accommodate a large majority of the Afghan population and the highest concentration of poverty (80 percent of poor Afghans live in rural areas)1; and in these areas agriculture is the main source of livelihood. While various sectors are required to address Afghanistan’s development needs, World Bank analysis indicated that agriculture will provide a vital source of Gross Domestic Product (GDP) growth, subsistence, and employment2.

Agriculture and agriculture-related activities play a critical role in employing 59 percent of the labor force and contributing 31 percent of the country’s Gross GDP3. Until the mineral and non-agricultural manufacturing sectors fully develop, the agriculture sector will be the greatest generator of the foreign exchange and government revenue (inclusive of agriculture exports) needed to help offset projected reductions in foreign aid. The Government of Islamic Republic of Afghanistan (GIRoA) sees the agriculture sector as the largest contributor and driver of economic growth, job creation and poverty reduction and is committed to pursuing

1 World Bank. 2015. Afghanistan - Country snapshot.

2 World Bank. 2016. The World Bank Group in Afghanistan: Country Update.

http://documents.worldbank.org/curated/en/933571475754352955/The-World-Bank-Group-in-Afghanistan-country-update 3 World Bank. 2015. Afghanistan - Country snapshot. http://documents.worldbank.org/curated/en/307891467998464206/Afghanistan- Country-snapshot

ATTACHMENT J.1

http://documents.worldbank.org/curated/en/307891467998464206/Afghanistan-Country-snapshot http://documents.worldbank.org/curated/en/307891467998464206/Afghanistan-Country-snapshot comprehensive development in the sector. Thus, the agriculture sector will remain critical to Afghanistan for the foreseeable future.

GIRoA’s strategy for economic growth and poverty reduction includes development of perennial horticulture and livestock as key activities.

Sub-sector Contribution to National GDP

Share of Agricultural GDP Contribution to Employment

Livestock $ 0.68 billion 15% 1.1 million FTE jobs

The livestock sub-sector exports livestock products—mostly skins, wool, and cashmere—but it imports much larger amounts (by value) of live animals, meats, eggs, and dairy products. The livestock sub-sector could also substantially contribute to employment, replace imports, and expand more exports.

While positive agricultural developments have occurred over the past decade (2006-2016), currently Afghanistan’s productivity and competitiveness in many commodities significantly lag behind neighboring countries and its own historical levels. The World Bank noted that in the 1970s, Afghanistan was a top exporter of horticultural products (e.g., 20 percent of raisins in the world market), a significant exporter of wool, carpets, and leather goods, and a small exporter of cereals. The country was also self-sufficient in meat, milk and cereals. However, because most of the agricultural infrastructure—rural roads, storage facilities, and irrigation systems—was destroyed by 30 years of conflict, and the Afghan population has also grown rapidly, the country became an importer of wheat, meats, and dairy products.

USAID’s assistance to Afghanistan’s agricultural sector alone, from fiscal year 2002 to fiscal year 2014, has been over $2.6 billion. During much of the past 14 years, USAID’s development efforts in the agriculture sector were driven, to a significant extent, by counter-insurgency objectives and the necessity to meet the most immediate, short-term needs of the country. The counter-insurgency focus led to a large portion of USAID’s portfolio being dedicated to stabilization efforts conducted within a “whole-of-government” approach4, and consisted of quick-impact activities meant to (a) provide immediate employment and income in insecure areas, and (b) address grievances and sources of conflict within communities. However, other than the rehabilitation of road and irrigation infrastructure, most stabilization activities had a short-term focus and often involved the subsidized distribution of goods and services, particularly seed, fertilizer, and capital assets to farmers. Since 2006, USAID’s agriculture portfolio has slowly transitioned towards more market-driven, private sector driven, value chain oriented, and sustainable development activities. USAID intends to continue in this direction, 4 The U.S. Department of Agriculture (USDA), for example, fielded agricultural advisors on Provincial Reconstruction Teams (PRTs) and embedded advisors within MAIL, while also implementing its own stand-alone programs generally with USAID funds. The U.S. Army Corps of Engineers did a significant amount of work in the irrigation and watershed management sector, including providing assistance in dam rehabilitation. The State Department’s Bureau for International Narcotics and Law Enforcement (INL) was involved in funding alternative development efforts. The U.S. military implemented the Commander’s Emergency Response Program (CERP), which provided military commanders with resources to fund short-term reconstruction activities. The military also fielded Agribusiness Development Teams (ADTs), which were composed of Army National Guard soldiers with backgrounds and expertise in various sectors of agribusiness and agriculture. ADTs provided training and advice to Afghan universities, provincial ministries, and local farmers. The Pentagon also funded a Task Force for Business and Stability Operations, which carried out various agriculture-related activities.

by shifting towards adding value to production through improved marketing, processing, and exporting, and through strengthening private sector linkages with Afghan producers.

Another important factor relates to long-term trends in donor resources, including USAID funding. Afghanistan’s growth in the agricultural sector over the past decade, along with a considerable portion of the country’s employment and service delivery, remains directly or indirectly tied to donor assistance programs. However, in the next ten years, the level of international support is expected to decline to annual levels that are more consistent with those of other developing countries. Therefore, achieving USAID’s ambitious agricultural objectives with declining resources necessitates a reconfiguration of approaches and a consolidation of efforts in programming. Moreover, USAID’s agricultural activities must demonstrate measurable outcomes and a more sustainable trajectory, recognizing that Afghanistan’s population will remain dependent on agriculture for the foreseeable future, and addressing President Ashraf Ghani’s critique that the overall aid system in the country is antiquated and in need of a major overhaul.5

USAID/Afghanistan’s Office of Agriculture follows this Results Framework:

Key Constraints The activity will have to take into account several operating constraints, which include, but are not limited to:

• Limited expansion of critical support to supply chain improvement for the domestic market, and inadequate facilitation of exports to regional and international markets working through the Afghan private sector.

5 According to President Ghani, “the aid system, which was designed for a different era, is now deeply out of synch with the challenges of the contemporary world. The central task that the aid system should perform—namely, generating prosperity by bringing a global knowledge of stocks and flows to countries without it—is not being done.” [Fixing Failed States, p.86]

DO 1

Sustainable Agriculture-led Economic Growth Expanded

IR 1.1

Employment Opportunities Increased

Sub IR 1.1.1 Equitable Access to Financial Services Increased

Sub IR 1.1.2 Competitiveness of Businesses and Entrepreneurs

Increased

Sub IR 1.1.3 Regional Trade Increased

IR 1.2 Vibrant and Prosperous Agriculture Sector Developed

Sub IR 1.2.1 Productivity of Key Agricultural Crops Increased

Sub IR 1.2.2 Commercial Viability of Agribusinesses

Increased

Sub IR 1.2.3 Public and Private Agricultural Service Delivery

Sub IR 1.2.4 Natural Resource Management Practices

Improved

IR 1.3 Access to Infrastructure Services Increased

Sub IR 1.3.1 Access to Electricity Increased

Sub IR 1.3.2 Sustainability of Transportation Infrastructure

Increased

Sub IR 1.3.3 Access to Water and Sanitation Infrastructure

Increased

• Lack of more financially viable, labor-intensive crop alternatives to opium poppy cultivation, as well as the inability of the Ministry of Counter Narcotics (MCN) to manage its own alternative livelihoods programs and create licit economic opportunities.

• Widespread lack of access to finance and credit.

• A poor business enabling environment and need for policy and regulatory reform

USAID/Afghanistan Office of Agriculture’s Development Hypothesis and Theory of Change

USAID’s current Development Hypothesis for agricultural programming is as follows:

IF private-sector-led economic growth is strengthened, agricultural productivity and food security is increased, water management systems are established, and human and institutional capacity is increased, THEN a vibrant and prosperous agriculture sector will be developed.

Accordingly, USAID’s future investments in agriculture and agribusiness will be directly linked to broader economic growth activities such as developing small and medium enterprises (SMEs), and improving the enabling environment for business. Moreover, with the expansion of agricultural productivity, investment in domestic and international market expansion for agricultural products, and reduced livestock mortality through improved veterinary care, household incomes and employment will substantially increase. USAID’s focus on agribusinesses will be targeted toward Afghan firms that have the potential to serve as “anchors” for key value chains in the agricultural sector, especially those that are best positioned to put investment capital to use, benefit from international partnerships, and generate both supply and demand for “upstream and downstream6” Afghan firms and farms.

Activities will also focus on addressing the demand for agricultural goods and services by partnering with the private sector to develop inclusive, growth-oriented agricultural value chains.

In addition to identifying constraints to businesses performance and sales and determining ways to improve production and quality within selected livestock value chains (e.g., dairy, poultry, beef, etc.), USAID activities will strengthen local technical capacity as well as facilitate the interaction among various “actors” (i.e., farmers, agricultural input providers, millers, traders, buyers) in these value chains. Envisioned for implementation across the country, these demand-driven and market-based solutions will contribute to increased licit agricultural production, which will elevate farmer livelihoods beyond subsistence production into enhanced commercial viability. USAID activities are expected to contribute to growth in domestic and international sales of agricultural goods and services in targeted value chains.

6 Upstream farms produce the basic or raw materials, while upstream firms process these raw materials into intermediary products. On the other hand, downstream firms process the output of upstream firms into a finished or different product. For example, upstream grape farmers produce the grapes that upstream firms turn into raisins, and these raisins are combined with other dried fruits and nuts by downstream firms and turned into mixed fruits and nuts in packs or cans.

Results Expected of Afghanistan Value Chains - Livestock

USAID/Afghanistan, intends to launch a five-year activity (a three-year base period plus a two-year option period) with the purpose of developing a vibrant and prosperous agriculture sector. It will be nation-wide in scope.

Interested parties are requested to propose a comprehensive strategy for achieving objectives and ensuring the activities are sustainable. While interested parties have flexibility to propose their own solutions, major expectations and performance indicators are described below to guide the interested parties in preparing their suggested initiatives/ideas.

Purpose: Vibrant and Prosperous Agriculture Sector Developed (As stated in the introduction, this means to strengthen the capacity of the private sector to effectively link Afghan producers to domestic and international markets, and to grow the agriculture sector through interventions at all levels of livestock value chains.)

o Productivity of Key Livestock Value Chains Increased;

o Commercial Viability of Livestock-related Agribusinesses Increased; and o Public and Private Livestock-related Agricultural Service Delivery Strengthened.

Cross-Cutting Management Objective: Women’s Equality and Empowerment Increased Cross-Cutting Management Objective: Youth Participation in Agribusiness Sector

Increased

Although the above represent the core of the Afghanistan Value Chains - Livestock Purpose and Objectives, interested parties are encouraged to consider how their proposed approaches can contribute to both IR 1.1 and IR 1.2 of the Results Framework depicted on Page 4, and to all seven Sub-IRs beneath IRs 1.1 and 1.2, as well as contribute to the broad objective of increasing overall opportunities for licit crop production in Afghanistan.

Topline Indicators for Afghanistan Value Chains - Livestock

Ultimately, there are two key aspects that would illustrate meaningful progress towards the overall activity goal: Increased productivity and increased incomes. Although USAID is not mandating specific indicators, it is envisioned that the interested parties will develop indicators that are appropriate to the context and intent of the activity. For example:

• Topline productivity indicators should define “productivity” broadly. Rather than just looking at improvements at the farm level, the activity should be seeking to assess the productivity of the livestock value chain as a whole. This could include factors such as product quality; consistency of supply; value added from transformation, processing and marketing; increased domestic and export sales; successfully obtaining certifications for the products (i.e., to enable export); growth of the private sector related to that value chain; development of sustainable financing mechanisms within the value chain; etc.

• Topline income indicators should, as far as possible, examine changes in income both in direct activity participants, but also in the wider populations and/or communities in which the activity operates. The intent is to assess what types of income effects the activity brings about for local economies.

• To the extent feasible, interested parties are also encouraged to consider topline indicators related to increased employment.

All interested parties are invited to design an activity that shows tangible results and contributes towards the above listed indicators. The results will be tracked against a baseline that the Contractor shall research and establish after the award is made. . While Afghanistan is not a Feed the Future Focus Country, USAID suggests examining the standard indicators provided in the Feed the Future Indicator Handbook7 for standard indicators. While interested parties have flexibility to propose their own solutions, major expectations and performance indicators are described below to guide the interested parties in preparing their suggested initiatives/ideas.

Examples of additional indicators that demonstrate results vis-à-vis the Purpose and Sub- Purposes include, but are not limited to:

Outcome Example Indicators Employment Opportunities Increased (IR 1.1)

* Number of full-time equivalent (FTE) jobs created with USG assistance

Equitable Access to Financial Services Increased (Sub-

IR 1.1.1)

* Number of MSMEs, including farmers, receiving bank loans from USG-supported financial intermediaries

* Value of agricultural and rural loans as a result of USG assistance

Vibrant and Prosperous Agriculture Sector Developed (IR 1.2)

* Value of exports of targeted agricultural commodities as a result of USG assistance

* Value of national sales of targeted commodities as a result of USG assistance

* Number of households benefitted by agriculture and/or alternative development interventions in targeted areas

Productivity of Key Agricultural Crops Increased (Sub-IR 1.2.1)

* Percentage change in productivity of key agricultural crops [or livestock] as a result of USG assistance

* Number of farmers growing high value crops [or raising livestock] as a result of USG assistance

* Number of farmers and others who have applied new technologies or management practices as a result of USG assistance

Commercial * Number of firms (excluding farms) or civil society organizations (CSOs)

7 https://feedthefuture.gov/resource/feed-future-performance-indicators-under-global-food-security-strategy

Outcome Example Indicators Viability of Agribusinesses Increased (Sub-

IR 1.2.2)

engaged in agricultural and food security-related manufacturing and services that have increased profits or become financially self-sufficient with USG assistance

* Value of incremental sales by agribusinesses as a result of USG assistance

* Number of MSMES (including small holder farmers) linked to larger-scale firms as a result of USG assistance to the value chain

* Number of for-profit private enterprises, producers organizations, water users associations, women’s groups, trade and business associations, and community-based organizations (CBOs) that applied improved organization-level technologies or management practices with USG assistance

Natural Resources Management Practices Improved (Sub-

IR 1.2.4)

* Number of people with improved economic benefits derived from sustainable natural resource management and/or biodiversity conservation as a result of USG assistance

* Number of farmers applying improved natural resource management practices with USG support

Women's Equality and Empowerment Increased (IR 2.3)

* Proportion of female participants in USG-assisted programs designed to increase access to productive economic resources (assets, credit, income or employment)

Youth Participation in Agribusiness Sector Increased

* Number of youths who start working in agribusinesses in targeted value chains as a result of USG assistance.

All interested parties are invited to submit indicators and targets for the results areas that do not have explicit indicators or targets set already.

Grants

Although USAID does not wish to place limitations on interested parties—who are encouraged to be creative in developing a technical approach—this activity is not envisioned to involve being carried out through grants.

Geographic Focus

The Activity must work in all of the economic zones listed: North, South, East, and West.

The Activity will concentrate its agricultural activities in areas of Afghanistan that have the greatest potential for producing sustainable economic growth, which currently are in the Regional Economic Zones (see Map). These areas have the preponderance of economic activity and potential for key agricultural crops; the greatest concentrations of population; existing and planned physical and financial infrastructure; accessible resources; and access to domestic and international markets. The Activity’s interventions will build on these existing comparative advantages, with investments focusing on agricultural value chains and agribusinesses.

The eastern economic zone connects agricultural and extractive industry production and processing centers to the border with Pakistan, thus accessing both domestic and export markets.

It also links Kabul, via Parwan, with the northern corridor.

The northern economic zone has the advantages of (a) a significant size of productive, arable land (roughly half of all irrigated acreage in Afghanistan and 70 percent of all rain-fed arable land), and the (b) presence of primary trade routes to the North that act as alternatives to the unstable routes through Pakistan.

The southern economic zone has one of the most agriculturally productive regions of Afghanistan.

The western economic hub holds significant potential for economic growth.