Attachment_J.14_-_PAD_1.2.pdf

AGRICULTURE

CONSOLIDATED PROJECT APPRAISAL DOCUMENT (PAD)

INTERMEDIATE RESULT 1.2

VIBRANT AND PROSPEROUS AGRICULTURE SECTOR

DEVELOPED

APRIL 3, 2017

PUBLIC VERSION

ATTACHMENT J.14

TABLE OF CONTENTS

1. Project Purpose ……………………………………………………………………………….1

2. Context …………………………………………………………………………………….….2

3. Relationship to the Mission 3-year Plan for Transition…………..…………………………...5

4. Project Description…………………………………………………………………………….6

4.1. Intended Outcomes……………………………………………………………………

4.1.1. Component 1: Trade and Agribusiness…………………………………………………………10

4.1.2. Component 2: Production and Productivity…………………………………………………..11

4.1.3. Component 3: Support Conditions to Create Viable Alternatives to Poppies …………12

4.1.4. Component 4:Human and Institutional Capacity Enhancement………………………….13

4.1.5. Component 5: Environment and Natural Resources Management………………………14

4.2. Risk Assessment and Mitigation …...…………………………………………………..15

4.3. Geographic Focus ………………………………………………………………………17

5. Other Leveraged Resources………………………………………………………………….19

6. Summary of Conclusion from Analyses……………………………………………………..22

6.1. Gender Analysis……………………………………………………………………

6.2. Climate Change Analysis …………………………………………………………..24

7. Management and Implementation Plan……………………………………………………...26

8. Project Monitoring, Evaluation and Learning (MEL) Plan………………………………….26

8.1. Monitoring…………………………………………………………………………...26

8.2. Evaluation……………………………………………………………………………28

8.3. Learning……………………………………………………………………………...29

9. Annexes……………………………………………………………………………………...32

ACRONYMS

AAD Activity Approval Document

AAEP Afghanistan Agricultural Extension Program

ABADE Assistance in Building Afghanistan by Developing Enterprises

ACE Agricultural Credit Enhancement

ADF Agricultural Development Fund

ADS Automated Directives System

ADTs Agribusiness Development Teams

AGRED Agricultural Research and Extension Development

AMELP Activity Monitoring, Evaluation, and Learning Plan

AOR Agreement Officer’s Representative

ARTF Afghanistan Reconstruction Trust Fund

ATAR Afghanistan Trade and Revenue Project

CAR Central Asian Republics

CBCMP Capacity Building and Change Management Project

CERP Commander’s Emergency Response Program

CHAMP Commercial Horticulture and Agricultural Marketing Program

CLA Collaborating, Learning, and Adapting

COR Contracting Officer’s Representative

DAIL Directorate of Agriculture, Irrigation and Livestock

DAO District Agriculture Office

DFID Department for International Development

DO Development Objective

DQA Data Quality Assessment

EMD Enterprise and Market Development

FAIDA Financial Access for Investing in the Development of Afghanistan

FAO Food and Agriculture Organization

FASAL Fostering Afghanistan’s Sustainable Agribusiness and Livestock

FY Fiscal Year

EU European Union

GDP Gross Domestic Product

GoA Government of Afghanistan

GRAIN Grain Research and Innovation

HED Home Economics Directorate

HFZ Helmand Food Zone

ID Irrigation Directorate

INL International Narcotics and Law

INOP Improving Nutrition Outcomes

IP Implementing Partner

IR Intermediate Result

KFZ Kandahar Food Zone

MAIL Ministry of Agriculture, Irrigation and Livestock

MCN Ministry of Counter Narcotics

MEL Monitoring, Evaluation and Learning

MT Metric Ton

NPP National Priority Programs

OAA Office of Acquisition and Assistance

OAG Office of Agriculture

OBM On-Budget Assistance Monitor

OEG Office of Economic Growth

OED Office of Education

OFWM On-Farm Water Management

OPPD Office of Program and Project Development

PAD Project Appraisal Document

PIO Public International Organization

PMP Performance Management Plan

PPWP Portable and Productive Water PAD

PRTs Provincial Reconstruction Teams

RADP Regional Agriculture Development Program

RAIN Rehabilitating Afghanistan Irrigation Network

SAAF Strengthening Afghan Agriculture Faculties

SME Small and Medium Enterprise

SOAG Strategic Objective Grant Agreement

SWIM Strengthening Watershed and Irrigation Management

TA Technical Assistance

TEC Total Estimated Commitment

USAID U.S. Agency for International Development

USDA U.S. Department of Agriculture

USG U.S. Government

WB World Bank

WEAI Women’s Empowerment in Agricultural Index

WTO World Trade Organization

PROJECT APPRAISAL DOCUMENT (PAD) OVERVIEW

Name of Project Vibrant and Prosperous Agriculture Sector

Developed Project (DO 1; IR 1.2)

Project Purpose Vibrant and Prosperous Agriculture Sector

Developed by: increasing the productivity of key licit crops and livestock; supporting commercially viable agriculture markets for

Afghan products; improving public and private agricultural service delivery; improving natural resource management practices; and, increasing equitable access to agriculture credit and competitiveness of agribusinesses and entrepreneurs.

Life of Project February 2017 - January 2024

Implementers On- and Off-budget partners, Public

International Organizations (PIOs), and sub-awards to local organizations.

Implementing Mechanisms Acquisition and Agreement instruments, Afghanistan Reconstruction Trust Fund

(ARTF), Grants and Sub-grants, Grants Under

Contracts, Fixed Amount Reimbursement

Agreement

Responsible Offices Office of Agriculture (OAG)

1. PROJECT PURPOSE

The purpose of the Project is to develop a vibrant and prosperous agricultural sector in

Afghanistan by, increasing the productivity of key licit crops and livestock; increasing availability of fortified foods; supporting commercially viable agriculture markets for Afghan products; improving public and private agricultural service delivery; and improving natural resource management practices, while increasing equitable access to financial services

(agriculture credit) and competitiveness of agribusinesses and entrepreneurs. The Project consolidates existing OAG programming and anticipates new programs in support of developing

Afghanistan’s agriculture sector.

In order to advance the transition towards Afghan-led development, the Office of Agriculture

(OAG) proposes this Project, which will define the nature and intent of all OAG activities. The aim of the Project is to strengthen the capabilities of private enterprises to link to domestic and international markets. The basic premise of the Project is that agricultural-led economic growth is the key to rural poverty reduction and lessening Afghanistan’s dependency on foreign aid.

The activities operating under the Project will use the principles of collaboration, learning, and adaptive management (CLA) to leverage Afghan public and private sector investments and international donor assistance already underway throughout the country.

Progress towards this Project’s purpose contributes to USAID’s Development Objective (DO) 1:

“Sustainable Agriculture-Led Economic Growth Expanded.”

To track achievement of the Project purpose, indicators from the DO level and two Intermediate

Results (IRs) of the Mission’s Performance Management Plan will be used:

IR 1.2 Vibrant and Prosperous Agriculture Sector Developed IR 1.1 Employment

Opportunities Increased

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

USG assistance [Baseline: $90,393,134 Baseline month and year:

September 2016]

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

642,607 Baseline month and year:

September 2016]

* Value of national sales of targeted commodities as a result of USG assistance [Baseline: $441,004,000 Baseline month and year:

September 2016]

* Number of households benefited by agriculture and alternative development interventions in targeted areas [Baseline: 4,108,412

Baseline month and year: September 2016]

Percent of people living on less than $1.25/day (Prevalence of Poverty)

Percentage increase in household income from licit agriculture in targeted areas

*Baseline for these Development Objective level indicators will be determined in 2017.

Further details on the sub-IRs supported by the Project and relevant indicators are found in

Section 3 – Project Description.

2. CONTEXT

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) , 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 GDP growth, subsistence, and employment . 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 Domestic Product (GDP) . Until the mineral and non-agricultural manufacturing sectors 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 Afghanistan (GoA) sees the agriculture sector as the largest contributor and driver of economic growth, job creation and poverty reduction and is committed to pursuing comprehensive development in the sector. Thus, the agriculture sector will remain critical to Afghanistan for the foreseeable future.

According to the World Bank , actual cultivated area is substantially less than the 7.8 million hectares of arable land (only 12 percent of 65 million hectares). Agriculture is mainly rain-fed because of lack of irrigation, characterized by smallholder production , and is mostly subsistence. Wheat is the most important cultivated crop as evidenced by Afghanistan having the world’s highest annual wheat consumption (160 kilograms/person), and over 66 percent of cultivated land is for food crops (i.e., vegetables and perennial horticultural crops) for household consumption. Despite the fact that farming is devoted to cereal production and food crops, Afghanistan remains highly food-insecure due to low productivity, requiring it to import 30-60 percent of cereals annually together with imports of dairy products, chicken and eggs. The agriculture sector must have continuing productivity improvements on rain-fed farming and small-scale livestock, as these provide subsistence for the poor

The government’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

Horticulture US$ 1.40 billion 34% More than 2 million people

Livestock US$ 0.68 billion 15% 1.1 million FTE jobs

World Bank. 2015. Afghanistan - Country snapshot.

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 World Bank. 2015. Afghanistan - Country snapshot.

http://documents.worldbank.org/curated/en/307891467998464206/Afghanistan-Country-snapshot Ibid.

Average farm size is 0.4 to 1.0 hectare for small-scale producers and one to two hectares for large-scale producers, while average size for livestock farming is 1.3 cows and 10 sheep and goats.

World Bank. 2015. Poverty Status Update.

6.7 percent

The horticulture subsector is key for employment/labor absorption; particularly by shifting agriculture from low value/low input/less labor intensive crops (such as grains) to high value/high input/labor intensive crops (produce from orchards and vineyards). At different times of the year, a wide range of crops mostly for export are produced in 14 percent of the total irrigated land area, which include grapes, pistachio, pomegranates, almonds, apricots, apple and melon. On the other hand, the livestock subsector exports livestock products—mostly skins, wool, and cashmere—but it imports much larger amounts (by value) of live animals, meats, eggs, and dairy products . While Afghanistan is currently developing promising horticulture value-chains (i.e., pistachios, fresh grapes, almonds, raisins, and saffron), the livestock subsector 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.

Productivity of cereal crops is low at only 2,020.6 kg/hectare , due to a lack of improved seeds and the poor transfer of modern farming skills. For instance, irrigated wheat is a priority commodity where the World Bank Agriculture Sector Review advocates expanded investment, because it could increase agricultural growth quickly and lead to significant growth in agricultural employment and rural transformation

. However, Afghanistan’s overall wheat yields lag behind other countries in the region

. Adverse weather conditions also contributed to a recent decline in agricultural production of 5.7 percent in 2015, and agricultural production in

2016 has been disrupted by crop diseases and pests

Decades of conflict likewise eroded institutional capacity to provide technical services, such as regulations or the teaching of new techniques. Agricultural extension services mainly suffer from the absence of a realistic policy, the poor planning capacities at the ministry level and the lack of

World Bank. 2015. Afghanistan - Country snapshot.

http://documents.worldbank.org/curated/en/307891467998464206/Afghanistan-Country-snapshot Cereal yield in 2014 (http://data.worldbank.org/country/afghanistan)

10 The World Bank set a goal of increasing the area planted in irrigated wheat by 10 percent over the next decade from the current

1.2 million ha, by rehabilitating existing irrigation systems and increasing irrigated wheat yields from a current level of 3.0

MT/ha to 4.5 MT/ha. In addition to improved irrigation and access to fertilizer, good quality seed of wheat (varieties adapted to local conditions and suitable for local markets) is needed, particularly rain-fed wheat varieties which could significantly improve yields in 1.4 million ha in Afghanistan (USAID 2014).

World Bank (2014), Islamic State of Afghanistan Agricultural Sector Review: Revitalizing Agriculture for Economic Growth, Job Creation and Food Security, June 2014 12 Wheat yields vary widely across the country, with average irrigated yields at their lowest in Ghor province at 1.1 MT/ha and at their highest in Wardak province at 3.9 MT/ha. The lowest rainfed yields are also in Ghor at 0.3 MT/ha. The highest rainfed yields are in Balkh and Takhar at 1.6 Mt /ha (USDA 2014).

World Bank. 2016. Afghanistan - Country snapshot.

funds/budgets to deliver extension services

. Extension workers have low technical capacity and also lack the knowledge sharing capacity to engage with farmers.

While USAID has contributed in the area of quality fruits and nuts production as well as the importance of cold storage in the value chain, there are still various trade impediments to fresh fruit exports. These obstacles are in the aspects of cargo transportation (air, land and sea), packaging, import duties, post-harvest and value addition, and export promotion

. Among these impediments, the main ones—particularly in land transport of Afghan exports of fruits and vegetables through Pakistan and the Wagah border crossing into India—are bribes extorted by illegal actors, and delays resulting in breaks in the cold chain and eventual spoilage of produce

Afghan exporters also noted that the lack of cold storage facilities for produce and available financing, government corruption, and inadequate transportation are the most common barriers to building their businesses

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” approach

, 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. Starting in 2006, USAID’s agriculture portfolio has slowly transitioned towards more market-driven, value chain oriented, and sustainable development activities. The Project intends to complete the transition towards a more private sector, demand-driven agribusiness/agro-industrial economic structure, by shifting towards adding value to production through improved marketing, processing, and exporting.

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. Achieving USAID’s ambitious agricultural objectives with declining resources

World Bank (2010). “Constraints to Agricultural Extension Service Delivery” (Powerpoint slides).

15 Extension officers have a low level of technical training and are not knowledgeable of the latest agricultural technologies, and there is training plan for them.

16 Includes poor communication and mobilization skills of extension workers, and no plans or funding for information campaigns for farmers 17 Commercial Horticulture and Agricultural Marketing Program. 2014. Impediments to Fresh Fruit Exports.

18 Commercial Horticulture and Agricultural Marketing Program. 2014. Afghanistan-Pakistan Trade Barriers: A Case Study.

19 Commercial Horticulture and Agricultural Marketing Program. 2014. Survey of Afghan Agricultural Exporters 20 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.

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.

Therefore, there is an ardent challenge for USAID to demonstrate with evidence, through this

Project, how the Mission’s investments are addressing the main challenges in Afghan agriculture:

● Limited irrigation systems, inefficient on-farm water management practices, and inadequate capacity in the use of modern inputs and technology, resulting in low yields;

● 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;

● 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; and

● Lack of depth in the capacity of MAIL and MCN in key functions (like extension and research), and ineffective coordination among MAIL directorates and sub-national governance entities such as the Provincial DAILs and District Offices.

The lag in these four areas reduces incentives to improve production, and impedes efforts to increase economic growth and reduce poverty. In order to transform Afghan agriculture from subsistence to market-oriented production systems, it is critical to have a Project which has activities to directly pursue economic growth and poverty reduction.

3. RELATIONSHIP TO THE MISSION’S 3-YEAR PLAN FOR TRANSITION

The Project supports USAID’s Plan for Transition (2015-2018) (Mission Plan), which defines the strategy as the Mission moves from stabilization programming towards longer-term development. The three-year Plan is based on the premise that agriculture-led economic growth will become the main source of increased government revenue, replacing donor assistance and providing for basic service delivery. More specifically, the Project mainly supports the following

Development Objective (DO), Intermediate Results (IR) and Sub-Intermediate Results (Sub-IR):

21 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 1.2: 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 Strengthened

Sub-IR 1.2.4: Natural Resource Management Practices Improved

This Project also contributes to Equitable Access to Credit Increased (Sub-IR 1.1.2) by providing access to financial services for the agricultural sector; Policies and Procedures

Improved (Sub-IR 3.2.2) by providing capacity building and policy support to the MAIL at the national and sub-national levels; and Women’s Equality and Empowerment Increased (Sub-IR

2.3.1) by advancing women’s participation in agriculture. Likewise, the U.S. Government remains committed to helping GoA disrupt the country’s opium-based informal economy and strengthen its control over Afghanistan, as first elaborated in the 2006 U.S. Counternarcotics

Strategy for Afghanistan.

Based on this relationship with the Mission Plan and its Results Framework, the Project requires coordination between OAG and the Offices of Economic Growth (OEG), Infrastructure (OI), the

Gender Office, and Health and Nutrition (OHN). This Project is intended to be implemented for seven years (2017-2023). Because the Plan for Transition expires in 2018, this project will be revised as needed, through the use of Learning Agendas

, and other methods, upon approval of the Mission’s new Country Development and Cooperation Strategy (CDCS).

4. PROJECT DESCRIPTION

USAID Afghanistan employed a rigorous analytic approach to conceptualize the Vibrant and

Prosperous Agriculture Sector Developed Project Appraisal Document (PAD). The initial conceptualization of the basic framework for the PAD was informed by the Government of

Afghanistan’s Comprehensive Agriculture Development Priority Program under the Afghan

Peace and Development Strategy. The analytic approach utilized was influenced by the following overarching questions:

What are the critical challenges and issues directly impacting food security that best be addressed by the mission with reduced resources?

Is there evidence that addressing these constraints will have substantial impact?

Where is the strongest alignment of USAID Afghanistan’s priorities and comparative advantage?

The mission then developed a highly integrated PAD by applying the following strategic filters:

Target a small number of agricultural commodities: USAID Afghanistan commissioned agricultural sustainability assessment of 2015; and Dalberg’s “Afghanistan Agricultural

Assessment and Framework Development” of April 2011.

[1] U.S. Department of State, U.S. Counternarcotics Strategy for Afghanistan, August 2007. The most recent report is: Office of National Drug Control Policy, U.S. Counternarcotics Strategy for Afghanistan, 2013.

[1] The WHITEHOUSE, Office of National Drug Control Policy, https://www.whitehouse.gov/ondcp/afghanistan-southwest-asia 23 The CLA principles are detailed in USAID’s ADS-201.3.5.19, and at the USAID Learning Lab.

Address limited segments of the value chain: Informed by Dalberg’s “Afghanistan

Agricultural Assessment and Framework Development” of April 2011; and various case studies undertaken by USAID Afghanistan’s Commercial Horticulture and Agricultural

Marketing Program and Incentives Driving Economic Alternatives—North, East and

West (IDEA-NEW).

Geographically focused and prioritized investments in private markets: Informed by

Dalberg’s “Afghanistan Agricultural Assessment and Framework Development” of April

2011; and the World Bank’s “Enhancing Food Security in Afghanistan: Private Markets and Public Policy Options” of August 2005.

Focus on a farmer centric approach: Support 15 of 16 immediate priorities and enabling factors of the Government of Afghanistan in alignment with the Brussels commitment and the Afghan Peace and Development Strategy. It is also informed by Altai

Consulting’s “Constraints to Agricultural Extension Service Delivery of March 2014.

Lesson’s learned in implementing agricultural Activities in Afghanistan: Learning and adapting approaches were gleaned from several final reports of previous USAID

Afghanistan’s activities in the country such as (i) Afghanistan Vouchers for Increased

Production in Agriculture, (ii) Accelerating Sustainable Agriculture Program, (iii)

Incentives Driving Economic Alternatives—North, East and West (IDEA-NEW), (iv)

Southern Regional Agricultural Development Program, (v) Afghanistan Water and

Agriculture Technology Transfer program, (vi) Alternative Development Programs –

East, North, South and South-West, (vii) Commercial Horticulture and Agricultural

Marketing Program, and others.

This Project consolidates and continues elements of a number of active USAID activities, by consolidating in a lone PAD the prior planning in earlier PADs and Activity Approval

Documents (AADs) under the old project design guidance. Consequently, this PAD adopts and extends the authorizations of ongoing awards to the Project completion date of FY 2024. Moving forward, planned activities and follow-on ones under existing mechanisms will be approved hereunder this Project’s PAD.

The Project’s Development Hypothesis 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.

The Project’s 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. The Project’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 downstream

” Afghan firms and farms.

The Project will increase agricultural productivity and strengthening upstream and downstream linkages in the value chains for licit high-value produce. To boost the private sector side of the agricultural sector, on-farm training in best practices and technology along with technical assistance (TA) will be provided to SMEs to strengthen their capacity. Activities will 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 value chains, activities operating under the Project will strengthen local technical capacity as well as facilitate the interaction among various “actors” (i.e., farmers, agricultural input providers, millers, traders, buyers) in the assisted 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. OAG activities are expected to contribute to the MAIL-estimated $2.5 billion in domestic and international sales of agricultural goods and services in targeted value chains.

To assist the government side of the sector, the Project will provide TA to the Ministry of

Agriculture, Irrigation and Livestock (MAIL) and its Directorates, provincial offices (PAILs), and district agriculture offices (DAOs) to strengthen Afghan capacity to provide extension services and credit to farmers, improve policies and research aimed at increasing production and investment, and effectively handle water resource and irrigation management. The Project will also continue to build/enhance the systems (i.e., financial, administrative, etc.) within MAIL, PAILs and the DAILs, and formulate all relevant policies and procedures related to human and institutional capacity enhancement and gender mainstreaming. Given resource limitations, strategic public investments for the rehabilitation of irrigation systems will also be made. The

Project will likewise sustain advisory support to the Afghan government’s Agriculture

Development Fund (ADF) towards the provision of more credit to agribusinesses.

The reduction of poppy cultivation, particularly on the arable and better-irrigated lands where the government exercises its authority, will likewise contribute to the sustainable development of the agriculture sector. The Project’s alternative development activities will support appropriately tailored strategies (defined with and owned by rural communities) for smallholder farmers

, so that the agricultural alternatives are economically viable for the transition away from poppy.

24 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.

Realizing Self Reliance Paper, Commitment to Reforms and Renewed Partnership, GNU, December 2014

4.1 Intended Outcomes. The suite of activities under this Project ultimately contributes to the achievement of DO 1 (Sustainable Agriculture-led Economic Growth Expanded) of the

Mission’s Results Framework. To develop a vibrant and prosperous agriculture sector, the intended outcomes illustrated in the logic model must be realized:

The Project’s specific outcomes and their corresponding activities (active and planned) are categorized under agriculture sub-sectors, which are called Project Components in this PAD.

Agricultural Sector Developed

Increased

DO1

Sustainable Agriculture-led Economic

Growth Expanded

Agricultural Crops Increased

Agricultural Service Delivery Strengthened Sub IR. 1.2.4

Improved

Financial Services Increased

and Entrepreneurs Increased

Services Increased

Increased

Sub IR. 1.3.2

Sustainability of Transporta on

Infrastructure Increased

4.1.1 Component 1: Trade and Agribusiness

Outcome

Indicators

Employment

Opportunities Increased

(IR 1.1)

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

Vibrant and Prosperous

Agriculture Sector

Developed (IR 1.2)

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

Productivity of Key

Agricultural Crops

Increased (Sub IR 1.2.1)

* Number of farmers growing high value crops as a result of USG assistance

* Number of hectares with increased high value crop production as a result of USG programs

Commercial Viability of

Agribusinesses Increased

(Sub-IR 1.2.2)

* Number of agriculture-related enterprises supported by USG interventions

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

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)

The Project will promote growth by adding value to the agriculture value chains, from production to marketing, with a number of activities that address key constraints in agricultural commodities’ trading and agribusinesses. Activities have linked Afghanistan’s horticulture production to regional markets in India and the Middle East through the United Arab Emirates.

Afghanistan’s sweet pomegranates, award-winning saffron, and quality dried fruit and nuts continue to attract attention from international buyers at the Gulfood—the world’s largest food exhibition—held in Dubai. Facilitated trade deals have increased exports by an additional 41,315 metric tons (worth $79.5 million) of fresh and dried fruits, nuts, and cashmere

. Current and future activities will continue to lead efforts in facilitating access to local and international markets for agribusinesses and farmers. OAG will collaborate with the Office of Economic

Growth in facilitating export to international markets. Activities under this PAD will support the facilitation of access to specialized lines of credit (i.e., financial products designed for agribusinesses, women, and farmers). Activities will also support the development of new agribusinesses, and enable farmers to improve the quality and quantity of their products.

26 This Component also contributes to Mission PMP Sub IR 1.2.3, “Private Agricultural Service Delivery Strengthened”. This Sub-IR is measured using a lower level output indicator (Number of individuals who have received USG supported short-term agricultural sector productivity or food security training). The Agricultural Credit Enhancement II (ACE-II) activity and the Commercial Horticulture and

Agricultural Marketing Program (CHAMP) report on this indicator.

27 Reported by ACE-II and CHAMP 28 Reported by CHAMP 29 Reported by ACE-II 30 Ibid.

31 Reported by CHAMP 32 Ibid.

33 Reported by ACE II and CHAMP 34 Reported by CHAMP 35 Ibid.

36 as of end-June 2016

4.1.2 Component 2: Production and Productivity

Indicators

Employment

Opportunities

Increased (IR 1.1)

* Number of full-time equivalent (FTE) jobs created with 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 benefited by agriculture and 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 as a result of USG assistance

* Number of hectares under improved technologies or management practices 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

* Number of farmers growing high value crops as a result of USG assistance

* Number of hectares with increased high value crop production as a result of USG programs

Commercial

Viability of

Agribusinesses

Increased (Sub-IR

1.2.2)

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

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)

Collectively called the Regional Agricultural Development Program (RADP), these activities constitute the foundational platform of OAG’s agricultural program, by focusing on (i) integrated value chain facilitation and increasing the private sector’s development role, (ii) broad geographic coverage designed to impact hundreds of thousands of families, and (iii) the key growth drivers. Future activities under this Project may prioritize a commodity-specific value chain approach across the country to leverage on efficiencies gained from scale, coordination or harmonized approach, and implementers’ technical niche.

In line with efforts to improve household level food security by improving agricultural productivity and the nutritional status of Afghan farmer households, the Project also has activities which strengthen and scale-up wheat flour fortification in medium and large mills in

Afghanistan, and pre-fortify imported flour from Pakistan.

37 This Component also contributes to Mission PMP Sub IR 1.2.3, “Private Agricultural Service Delivery Strengthened”. This Sub-IR is measured using a lower level output indicator (Number of individuals who have received USG supported short-term agricultural sector productivity or food security training). The Regional Agriculture Development Programs – North, South and East all report on this indicator.

38 Reported by Regional Agriculture Development Program - North (RADP-North) 39 Ibid.

40 Reported by RADPs-North, South, and East 41 Ibid.

42 Ibid.

43 Ibid.

44 Ibid.

4.1.3 Component 3: Support Conditions to Create Viable Alternatives to Poppies

Indicators

Employment Opportunities

Increased (IR 1.1)

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

Vibrant and Prosperous

Agriculture Sector

Developed (IR 1.2)

* Number of households benefited by agriculture and alternative development interventions in targeted areas

Productivity of Key

Agricultural Crops

Increased (Sub-IR 1.2.1)

* Number of hectares under improved technologies or management practices 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

* Kilometers of irrigation canals, drainage ditches, market feeder roads, and/or other measureable municipal services and/or market infrastructures rehabilitated

Commercial Viability of

Agribusinesses Increased

(Sub-IR 1.2.2)

* 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

An activity of this Project—the Kandahar Food Zone (KFZ)—is collaborating with national and provincial authorities in Kandahar to demonstrate a sustainable model of competitive livelihoods which would be alternatives to growing poppies. Among others, KFZ has rehabilitated 1,953 kilometers of irrigation infrastructure, which increased water availability for approximately

489,000 hectares of agricultural land and resulted in farmers able to diversify production, increase the total land farmed, and raise the volume and value of crops. To provide alternative livelihood options for individuals and households engaged in illicit agriculture, future programming in this Project will draw on lessons learned from KFZ, prior counter narcotics activities, and critical intervention priorities stated in the Alternative Development Options

Assessment

. Said priorities include the continuing provision of water and irrigation at district level; promotion of multiple cropping systems and technology transfer (greenhouse and low/high tunnel technology) for high-value, annual and perennial crops

; development of certified nurseries (for seeds/seedlings and saplings) and market information networks; expansion of cold storage facility capacity and operational efficiency and creation of village/district packing centers; enhancement of livestock production; creation of viable opportunities for off-farm rural employment

; and visible enhancement of security/state presence in high risk areas.

45 This Component also contributes to Mission PMP Sub IR 1.2.3, “Private Agricultural Service Delivery Strengthened”. This Sub-IR is measured using a lower level output indicator (Number of individuals who have received USG supported short-term agricultural sector productivity or food security training). The Kandahar Food Zone (KFZ) activity reports on this indicator.

46 Pragma Corporation, for RADP-South (2016). “Alternative Development Options Assessment” (Powerpoint slides).

47 Annual crops include vegetables, saffron, legumes and cereal grains. Perennial crops include nuts (pistachio, almonds, walnuts) and fruits

(pomegranates, apricots, apples, plums, and peaches).

48 Off-farm employment in canneries, drying centers, tanneries, dairy farms, dairies, packing centers and hubs with cold storage, refrigerated transport, cashmere and wool processing into cloth and garments.

4.1.4 Component 4: Human and Institutional Capacity Enhancement

Indicators

Productivity of Key

Agricultural Crops

Increased (Sub-IR

1.2.1)

* Number of hectares under improved technologies or management practices 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

* Number of technologies or management practices under research, under field testing, or made available for transfer as a result of USG assistance

Sub IR 1.2.1:

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)

Through its activities, the Project’s support to MAIL focuses on modernizing the State’s role in the sector. The capacity building intervention aims to professionalize public administration in agriculture, deepen administrative and technical capacity, and strengthen communication between MAIL and its Directorates, PAILS and DAOs. The strengthening of research and extension services of MAIL, as well as the managerial and institutional capacity of MAIL and the DAILs, is contributing to the successful execution of their mandates, inclusive of effective delivery of public agricultural services to farmers and herders.

To address the remaining gaps in agricultural extension service delivery and build an affordable, manageable, and accountable extension system model, the Project will continue to support MAIL in providing further (a) technical guidance (technology and practices) to staff and extension agents as they deliver demand-driven extension services which will raise yields and lower crop losses, and (b) assistance to the MAIL Directorates of Extension and Research in Kabul and their respective PAIL branches for coordinated extension service delivery. Likewise, the Project will also invest in research activities to create national capacity for a wheat breeding program, which is important to achieving growth, equity and food security.

49 This Component also contributes to Mission PMP Sub IR 1.2.3, “Private Agricultural Service Delivery Strengthened”. This Sub-IR is measured using a lower level output indicator (Number of individuals who have received USG supported short-term agricultural sector productivity or food security training). The Afghan Agriculture Extension Program II (AAEP II) and Capacity Building Change Management

Project II (CBCMP II) report on this indicator.

50 Reported by AAEP II 51 Reported by AAEP II

4.1.5 Component 5: Environment and Natural Resources Management

Outcome Indicators

Employment Opportunities

Increased (IR 1.1)

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

Vibrant and Prosperous

Agriculture Sector

Developed (IR 1.2)

* Number of households benefited by agriculture and alternative development interventions in targeted areas

Productivity of Key

Agricultural Crops

Increased (Sub-IR 1.2.1)

* Number of hectares under improved technologies or management practices 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 Viability of

Agribusinesses Increased

(Sub-IR 1.2.2)

* 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

* Kilometers of irrigation canals, drainage ditches, market feeder roads, and/or other measureable municipal services and/or market infrastructures rehabilitated

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)

The OAG decided in 2014 to curtail its biodiversity funding and focus its resources on planned irrigation and watershed management activities

, which were more closely aligned with the outcomes of the agriculture portfolio. Building on the gains of past activities which supported improved water and watershed management, the Project is (a) co-funding with the World Bank the On-Farm Water Management Project (OFWMP), and (b) designing two activities which would deepen Afghan national capacity in irrigation management. (See section on “Other

Leveraged Resources for details.) These activities are programmed under a separate Project (and

PAD), but are knitted geographically to existing OAG activities to ensure their sustainability

(through irrigation and healthy watersheds).

Assumptions. There are specific conditions critical to this Project’s successful achievement of its outcomes, but are outside of its control. Security efforts must be sufficient to improve freedom of movement, and allow farmers and buyers to have reduced encounters with insurgents and face fewer bribery checkpoints as they bring produce to markets. Given that access to finance is critical for modernizing Afghan agriculture and that demand for finance is high, financial intermediaries need to develop an increased preference for agriculture-related lending. While no country is exempt from natural disasters, it is hoped that the impact on the population would not

52 This Sub-IR is also measured using a lower level output indicator (Number of individuals who have received USG supported short-term agricultural sector productivity or food security training). The Sustainable Watershed and Irrigation Management (SWIM) activity reports on this indicator.

53 This realignment was reflected in the Mission’s USAID/Afghanistan’s “Ten-Year Strategy for Transformation” which does not specifically identify biodiversity conservation as a priority for Mission resources and, instead,…