FINAL_RFP_KISAN_II.pdf

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1. THIS CONTRACT IS A RATED ORDER RATING PAGE

PAGES

UNDER DPAS (15 CFR 700

2. CONTRACT NUMBER 3. SOLICITATION NUMBER 4. TYPE OF SOLICITATION 5. DATE ISSUED 6. REQUISITION/PURCHASE NUMBER

SEALED BID (IFB)

NEGOTIATED (RFP)

7. ISSUED BY CODE 8. ADDRESS OFFER TO (If other than Item 7)

NOTE: In sealed bid solicitations "offer" and "Offeror" mean "bid" and "bidder".

9. Sealed offers in original and _____________________________ copies for furnishing the supplies or services in the Schedule will be received at the place specified in Item 8, or if hand carried, in the depository located in until local time _______________________ (Hour) (Date)

A. NAME B. TELEPHONE (NO COLLECT CALLS) C. E-MAIL ADDRESS

AREA CODE NUMBER EXT.

(X) SEC. DESCRIPTION PAGE(S) (X) SEC. DESCRIPTION PAGE(S)

PART I - THE SCHEDULE PART II - CONTRACT CLAUSES

A SOLICITATION/CONTRACT FORM I CONTRACT CLAUSES

B SUPPLIES OR SERVICES AND PRICES/COSTS PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.

C DESCRIPTION/SPECS./WORK STATEMENT J LIST OF ATTACHMENTS

D PACKAGING AND MARKING PART IV - REPRESENTATIONS AND INSTRUCTIONS

E X INSPECTION AND ACCEPTANCE 28 x

F DELIVERIES OR PERFORMANCE

G CONTRACT ADMINISTRATION DATA L INSTR., CONDS., AND NOTICES TO OFFERORS

H SPECIAL CONTRACT REQUIREMENTS M EVALUATION FACTORS FOR AWARD

K

REPRESENTATIONS, CERTIFICATIONS AND OTHER

STATEMENTS OF OFFERORS

NOTE: Item 12 does not apply if the solicitation includes the provisions at 52.214-16, Minimum Bid Acceptance Period.

12. In compliance with the above, the undersigned agrees, if this offer is accepted within ________ calendar days (60 calendar days unless a different period is inserted by the Offeror) from the date for receipt of offers specified above, to furnish any or all items upon which prices are offered at the price set opposite each item, delivered at the designated point(s), within the time specified in the schedule.

13. DISCOUNT FOR PROMPT PAYMENT 10 CALENDAR DAYS (%) 20 CALENDAR DAYS (%) 30 CALENDAR DAYS (%) CALENDAR DAYS (%)

(See Section I, Clause No. 52-232-8)

14. ACKNOWLEDGEMENT OF AMENDMENTS AMENDMENT NO. DATE AMENDMENT NO. DATE

(The Offeror acknowledges receipt of amendments to the

SOLICITATION for Offerors and related documents numbered and dated:

CODE FACILITY

16. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER 15A. NAME AND

ADDRESS

OF OFFEROR

(Type or print)

15B. TELEPHONE NUMBER 17. SIGNATURE 18. OFFER DATE

AREA CODE NUMBER EXT.

15C. CHECK IF REMITTANCE ADDRESS IS DIFFERENT FROM

ABOVE - ENTER SUCH ADDRESS IN SCHEDULE

19. ACCEPTED AS TO ITEMS NUMBERED 20. AMOUNT 21. ACCOUNTING AND APPROPRIATION

22. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION: 23. SUBMIT INVOICES TO ADDRESS SHOWN IN ITEM

(4 copies unless otherwise specified) 10 U.S.C. 2304(a) ( ) 41 U.S.C. 253(c) ( )

24. ADMINISTERED BY (If other than Item 7) 25. PAYMENT WILL BE MADE BY CODE CODE

26. NAME OF CONTRACTING OFFICER (Type or print)

Daniel Harter

27. UNITED STATES OF AMERICA 28. AWARD DATE

IMPORTANT - Award will be made on this Form, or on Standard Form 26, or by other authorized official written notice.

(Signature of Contracting Officer)

(REV. 9-97)

10. FOR INFORMATION CALL:

11. TABLE OF CONTENTS

STANDARD FORM 33

SOLICITATION, OFFER AND AWARD

SOLICITATION

OFFER (Must be fully completed by Offeror)

AWARD (To be completed by Government)

SOL-367-17-000001

X

72000

Office of Acquisitions and Assistance (OAA)

USAID/Nepal

GPO Box 295

US Embassy, Maharajgunj

Kathmandu, Nepal

Nepal

N/A

See Cover Letter

See Attached Table of Contents

X 3

X 4

X 7

X 27

X 29

X 43

X 48 x 70 x 85 x 95 x 109

$.00

72000

Office of Acquisition and Assistance (OAA)

USAID/Nepal

GPO Box 295

U.S. Embassy, Maharajgunj

Kathmandu, Nepal

TBD

RFP No.: SOL-367-17-000001- KISAN II

PART I—THE SCHEDULE

SECTION B—SUPPLIES OR SERVICES AND

PRICES/COSTS

B.1 PURPOSE

The purpose of Feed the Future (FTF) Knowledge-Based Integrated Sustainable Agriculture in Nepal

(KISAN) II Project is part of the U.S. Government’s FTF Initiative, and contributing to the Government of Nepal’s (GON’s) Agricultural Development Strategy (ADS).

B.2 CONTRACT TYPE

This is a Cost-Plus-Fixed-Fee Completion Type Contract. For the consideration set forth in the

Contract, the Contractor must provide the deliverables and results described in Section C and Section F on the Contract. The Contractor must also comply with all other Contract requirements.

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

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

Contract, is TBD. The Contractor is not to be paid in excess of the total estimated cost plus fixed fee.

Within the estimated cost plus fixed fee, if any, specified in paragraph (a) above, the amount currently obligated and available for reimbursement of allowable costs incurred by the Contractor (and payment of fee, if any) for performance hereunder is TBD, of this amount $TBD is allocated to Grants under

Contract Letter of Credit (LOC) Payment. The Contractor must not exceed the aforesaid obligated amount.

(b) Funds obligated hereunder are anticipated to be sufficient through TBD.

B.4 CONTRACT LINE ITEM (CLIN)

(a) The Total Estimated Cost for the Period of Contract for five years is as follows:

CLIN 1 - Zone of Influence 1 ($25-29 Million)

Project Implementation:

Grants under Contract : $3,000.000

Fixed Fee:

Total:

CLIN 2 - Zone of Influence 2 ($5-6 Million)

Project Implementation:

Grants under Contract: $500,000.00

Fixed Fee:

Total:

B.5 INDIRECT COSTS

The contract clause entitled “Allowable Cost and Payment (JUN 2013)”, FAR Subpart 52.216-7, specifies that the indirect cost rates shall be established for each of the Contractor’s accounting periods which apply to this contract. 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/

[TBD] [TBD] 3/ 3/ 3/

1/ Base of Application:

Type of Rate:

Period:

2/ Base of Application:

Period:

3/ Base of Application:

Period:

B.6 ADVANCE UNDERSTANDING ON CEILING INDIRECT COST RATES AND FINAL

REIMBURSEMENT FOR INDIRECT COSTS

(1) Reimbursement for allowable indirect costs must be at final negotiated rates but not in excess of the following ceiling rates:

1/ 1/ 1/

[To be determined]

For the Major Subcontractor(s):

1/ 1/ 1/

[To be determined]

(1) 1/to be determined.

(2) The Contractor will make no change in its established method of classifying or allocating indirect costs without the prior written approval of the Contracting Officer.

(3) The Government is not obligated to pay any additional amount on account of indirect costs above the ceiling rates established in the contract.

(4) This understanding does not change any monetary ceiling, obligation, cost limitation, or obligation established in the Contract.

B.7 COST REIMBURSEMENT

The U.S. dollar costs allowable must be limited to reasonable, allocable, and allowable costs determined in accordance with FAR 52.216-7, Allowable Cost and Payment, FAR 52.216-8, Fixed Fee, if applicable, and AIDAR 752.7003, Documentation for Payment. See FAR 52.232-22 Limitation of Funds for notification requirements for incrementally funded awards.

B.8 PAYMENT OF FIXED FEE

Payment of fixed fee, subject to requirements of FAR 52.216-8 and the terms of this contract, may be made upon receipt of a proper invoice. The total amount of Fixed Fee is payable upon receipt of the

Contractor‘s statement that all tasks, reports, plans and deliverables specified in the Contract have been submitted and accepted by the COR. In the event that the Contractor does not provide the tasks, reports, plans and deliverables stipulated in the Contract, the Contracting Officer shall reduce the total amount of fixed fee of the Contract. In the event the work cannot be completed within the estimated cost, the

Contracting Officer may require more effort without an increase in fee, provided the Contract is modified for increases in the estimated cost.

B.9 CANCELLATION, CEILINGS AND DATES

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.

a. Performance under this contract during the second and subsequent years is contingent upon the appropriation of funds. All program years except the first are subject to cancellation. Cancellation must 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.

b. 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. Therefore, the cancellation ceiling pursuant to FAR 17.106-1(c) (1) for each program year is TBD.

[END OF SECTION B]

SECTION C

Statement of Work (SOW)

C.I Scope

Feed the Future (FTF) Knowledge-based Integrated Sustainable Agriculture in Nepal (KISAN) II Project is the U.S. Government’s FTF Initiative, contributing to the Government of Nepal’s (GON’s) Agricultural

Development Strategy (ADS).

C.II Purpose and Project Outcomes

The purpose of KISAN II is to increase the resilience, inclusiveness, and sustainability of income growth in the Zone of Influence (ZOI). This purpose will be achieved through activities directed to specific outcomes under five Components, which will integrate specific cross-cutting objectives:

Outcome

Component 1: Improve the productivity of selected agricultural market systems

Component 2: Strengthen the competitiveness, resilience and inclusiveness of selected agricultural market systems

Component 3:

Component 4:

Strengthen the enabling environment of selected agricultural market systems

Increase ability of vulnerable communities to act on business opportunities within selected market systems.

Component 5: Apply collaboration, learning, and adaptation to market systems development

Cross-cutting objectives:

Integrate resilience; partnerships; gender equality and social inclusion

(GESI); nutrition; climate change adaptation, other natural resources management issues; youth; governance improvement; information and communication technologies; and Geographic Information Systems (GIS technology).

C.III Theory of Change and Development Hypothesis

According to a large body of research (Johnston and Mellor, 1961 and 1968; Johnston and Kilby, 1975), investments in agriculture lead to reductions in poverty through a process of economic structural transformation that includes the growth of sectors other than agriculture and, within agriculture, increases in productivity and the movement of labor from lower- to higher-return activities. In other Asian countries (Reardon, 2014), this transformation has included (1) intensification particularly of staple crops so as to free-up land for higher-value crops; (2) diversification into higher-value commodities; (3) diversification into higher-value non-farm and off-farm enterprises, including agro-processing and other agricultural-related enterprises; and (4) shifts into higher-paying employment opportunities.

In the context of Nepal, this broad theory of change is manifested in the ZOI as follows. For a large share of the population, agriculture has the potential to be a driving force for increasing incomes, and yet productivity is relatively low. Past investments in the ZOI to cost-effectively improve productivity have included: (1) strengthened market access, (2) introduction of new productivity-enhancing technologies,

(3) off-farm activities such as input supply, aggregation and processing, and, (4) coordination of the market through a structured relationship between buyers and suppliers of commodities. These investments have contributed to the intensification of rice, maize, and vegetable production and to increased yields, quality and scale of production. They have also led to diversification into off-season vegetables, maize for animal feed, and, to some extent, medium-fine rice. Where the profitability of agriculture has increased, there are signs of a reduction in male out-migration and the freeing up of labor to engage in higher return activities both on and off farm. Overall, past investments demonstrate strategies and approaches for future investments to build on and deepen in order to achieve increased incomes. The challenges facing youth are getting them more involved in agriculture to stem the out-migration and the Applicant should propose the interventions that would keep youth on the farms and/or more involved in agriculture enterprises in the value chain.

Development Hypothesis. If KISAN II engages in facilitating systemic changes that include: (1) greater climate-smart intensification of staple crops and diversification into higher-value commodities, (2) the strengthening of local market systems to support more competitive and resilient value chains and agricultural-related businesses, and (3) an improved enabling environment for agricultural and market systems development, then KISAN II will achieve sustainable improvements in rural (including agriculture-based) incomes. If diversification of agricultural production makes available more diverse foods and increases incomes, nutrition outcomes will improve, when effectively coordinated with information, awareness, water, sanitation and hygiene (WASH) activities, and behavior change interventions. Successful scaling of these outcomes will depend on addressing key issues of gender, youth, and social inclusion. Thus, if KISAN II increases access to markets and productive resources by women, young people, and other disadvantaged groups, then it will increase its impact on poverty reduction and improve nutrition outcomes.

C.IV Geographic Focus, Target Population, and Commodity Focus

Geographic focus. KISAN II will focus on the 20 districts in the West, Mid-West and Far-West regions defined as the Feed the Future Zone of Influence (ZOI). With Nepal’s new regional definitions, these 20 districts fall within provinces 5, 6, and 7 and include the following districts within these provinces:

• Province 5: Kapilbastu, Palpa, Arghakhhanchi, Gulmi, Banke, Bardiya,

• Province 6: Baitadi, Kailali, Kanchanpur, Doti, Accham, Dadeldhura,

• Province 7: Surkhet, Dailekh, Jajarkot, Dang, Salyan, Rukum, Rolpa, Pyuthan.

The Contractor must prioritize VDCs within these districts in consultation with national and local authorities in a manner that leverages previous activities and progress under KISAN and considers market potential, number of potential beneficiaries, alignment of agronomic conditions with target value chains, and potential to reach youth, women, and marginalized groups.

Due to changing market and climatic change conditions, and the need to respond to the food security situation, the contractor must intensify activities in ZOI I and then expand into ZOI II concentrating on a market systems approach to complement the FFP funded Sabal activity which focuses on agriculture, nutrition, WASH and disaster risk reduction. Priorities include expanding market linkages closer to the

Kathmandu valley and increasing the number of activities in the value chain. ZOI II is the Feed the

Future second Zone of Influence which include the four earthquake affected districts in constitutions number 3. These four ZOI II districts are Makawanpur, Kavrepalanchowk, Sindhupalchowk and

Nuwakot.

A third party will be contracted by USAID/Nepal to conduct the baseline survey in selected VDC. To ensure the baseline survey is conducted in a timely manner, the Contractor must work with the third party contracted to conduct the baseline to ensure alignment with KISAN II M&E Plan and planned activities.

The Contractor must complete VDC identification for implementation within four months of the award date. Within 15 days of VDC identification, USAID, with input from the Contractor, will finalize the

SOW for baseline data collection. The third party contractor will conduct the baseline survey as soon as possible following the contract award and before KISAN II implementation begins.

Target population. Considering the diversity of geographies, farmers, and social and ethnic groups within the ZOI, as well as differences in the degree of exposure to previous agricultural interventions across these groupings, KISAN II will need a framework that lays out these diversities in order to tailor interventions effectively. The geographic diversity is defined in terms of the:

● Terai (the plains)

● Hills (elevated flatlands and hills)

● Mountain region

Using the GON’s terms, the farmer diversity can be defined in terms of:

● Commercial farmers

● Subsistence farmers with profit potential,

● Subsistence/landless farmers without profit potential

The social diversity can be defined in terms of:

● Gender

● Age

● Caste

● Ethnic group

● Migrant returnees

The degree of exposure to previous agriculture-related interventions can be defined in terms of:

● Farmers who need additional capacity building to move onto a sustainable income generation path

● Farmers who are ready to graduate to a higher-return activity or commodity

● Farmers who are ready play the role of a lead farmer/local service provider/champion, and “pull” others into markets.

Because KISAN II will focus on markets and private-sector actors, beneficiaries will primarily self-select rather than being targeted. KISAN II might facilitate linkages between private-sector actors and farmers

(male, female, youth, marginal groups), but it will be up to the farmers themselves whether they want to work, for example, with seed companies in multiplying seed, or with aggregators, traders, or millers interested in buying products.

Recognizing that social and geographic contexts and barriers can create an uneven playing field for some groups, KISHAN II Contractor must apply a “push-pull” approach to its outreach and engagement with those groups. Push strategies help poor farmers and individuals build the capacity to be able to participate in intensification, diversification and value addition activities. Pull strategies increase the demand for smallholder production, labor and related goods and services and improve the affordability and accessibility of skills, resources, inputs and supporting services needed to participate in competitive markets.

Commodity selection. KISAN II Contractor must focus on rice, maize, lentils, vegetables, and one or two yet-to-be-selected commodities. The aim is to allow some flexibility in the selection of additional commodities, based on opportunities and comparative advantage. Another criterion for selecting additional commodities will be their inter-connections with other markets systems and value chains. For example, the focus on maize and the feed industry might suggest a livestock commodity. Selection criteria must also include:

● Growth/competitiveness potential

● Potential for increasing incomes of large numbers of rural households/women/youth/marginal groups

● Existence of lead firms with the resources and incentives to invest in the market system

● Potential for contributing to improved nutrition

● Potential for addressing climate change

C.V. Scope of Work

The Contractor must identify and implement specific activities under the following components and sub-components to achieve measurable results directed to the expected outcomes described for each component below.

C.V.1 Component 1: Improve the Productivity of Selected Agricultural Market Systems

Nepali farmers in the ZOI tend to be focused more on producing for household consumption and subsistence than for commercial markets. Furthermore, weak resilience capacities limit the extent to which farmers are able or willing to assume risk. As a result, many farmers have been slow to adopt varieties, agricultural practices, and technologies that shepherd the transformation from subsistence towards intensification and diversification. When volume and quality of production does not meet market demand, lead firms are prompted to import agricultural products.

In alignment with Nepal’s ADS, the Contractor must explore multiple pathways to increase agricultural productivity, including: (1) the intensification of selected crop/variety demanded by the market in suitable areas through the use of modern technologies and good agronomic practices, incentivized through improved linkages between production sites and markets through value chain actors; (2) diversification of crop/variety and end products in the ZOI that respond to agronomic, productivity, and market potential;

(3) value addition to obtain better prices and access in the markets; (4) sustainability of production and increased resilience to climate change; and (5) effective use of available resources and inputs.

Special attention to the adoption of labor-saving technologies and high-value, lower-effort crops/varieties could not only reduce the labor burden of agriculture, but also reduce production costs, increase labor wages and enhance the return on investment in agriculture. Progress in these areas could help to attract people with entrepreneurial ambitions, including young men and women and returning migrants. Poor households could use their “labor savings” from labor saving technologies to diversify incomes by pursuing both farm and off-farm livelihoods.

1.1 Facilitate intensification and diversification of male and female farmers and socially excluded groups into higher-value commodities

To achieve market systems competitiveness, the Contractor must facilitate approaches to promoting the intensification and diversification of production by male and female farmers and socially excluded groups. Increased productivity of a diverse basket of foods (rice, maize, vegetables, and other commodities) should enable households to meet their consumption needs for nutrient-rich foods, while generating a surplus that responds to market demand. Building on past USAID and GON efforts in the

ZOI, KISAN II must further farmers’ knowledge and use of productivity-enhancing technologies and practices that: (1) increase yields, (2) lower labor burdens and per-unit production costs, (3) improve quality, (4) reduce post-harvest losses, (5) add value (where appropriate), (6) profitably sell surpluses in markets, and (7) conserve the natural resource base.

Combining context-appropriate technical solutions with tangible and intangible [1] incentives on the production side – along with market systems development (Component 2) – is likely to generate better functioning markets (such as price premiums for crops demanded by market) and ensure that farmers perceive (and realize) benefits from the investment of their time and resources.

To achieve its inclusion objective, KISAN II must suitably engage women, youth and socially excluded groups in agriculture development efforts to increase incomes, provide on and off-farm employment opportunities, augment food security and children’s health and nutrition, and empower women and youth.

In this context, KISAN II must identify, adapt, and promote varieties, technologies, and practices that respond to women’s and youth’s nutritional needs, preferences, and risk tolerance, while reducing labor/time burdens.

1.2 Strengthen the capacity of input supply systems to deliver timely and affordable productivity-enhancing technologies

Efforts to facilitate agricultural transformation within the ZOI will only be successful if the input supply system can ensure that male and female farmers, cooperatives, and other market actors can access, afford, and/or finance quality seeds, fertilizer, irrigation, land preparation and harvesting equipment, and post-harvest technologies on a timely basis and in the required quantity. Currently, the availability and delivery of these inputs and related services (e.g. extension services) fails to meet the needs of both farmers and local/national agricultural markets. This failure is due in part to the inadequate capacity of private, public, and cooperative actors involved in the inputs supply system, and to a lack of market orientation on the part of these market actors and the GON input subsidy programs. For example, in some districts, agrovets and government programs tend to supply coarse grain varieties, despite a growing, unmet market demand for medium fine and fine grain rice. KISAN II can work with agrovets to provide small-scale mechanization to increase farm efficiency, increased competitiveness by delivering a better product to the market thereby reducing imports from India.

The Contractor must identify and engage with multiple pathways to strengthen these systems, which may include: (1) improving coordination between private, GON and cooperative actors involved in the input supply chain and lead firms (seed companies, agrovets, and millers) to ensure that supplied inputs and technologies meet both farmer and end-market needs; (2) working with input suppliers to shift from a mindset of solely selling products to a more customer oriented focus that provides information on how to use products and apply good agricultural practices, e.g., improved irrigation canals, water harvesting techniques and low cost drip irrigation; (3) exploring ways to extend financing to farmers; and (4)

Governance reforms in the agriculture related institutions and systems needs to be considered as one of the pathways.

Linkages to finance through USAID/Nepal’s DCA agreement with Laxmi Bank can help input providers and/or lead firms upgrade their capacity to store and distribute inputs and technologies, and on-lend to their customers or farmer networks. The Contractor must leverage the Partnership and Innovation Fund to explore innovative ways to buy down the risks of introducing new inputs, technologies, practices, and business models that extend outreach to currently underserved communities (e.g. those in more distant, hilly regions), women, and youth.

Leveraging efforts to strengthen market systems under Objective 2, the Contractor must promote stronger and more transparent and trusting relationships between farmers and input suppliers, while working with input suppliers, cooperatives, MPSs, DADOs, and perhaps media companies to more widely broadcast information on the benefits of using technologies and practices. Demonstration plots, farmer-to-farmer learning, farmer success testimonials, community information systems, radio, SMS text messaging, and other ICT-based platforms can be effective means of facilitating information flows to producers regarding technologies and practices. In this context, it is important that the Contractor work with actors across the input market system to ensure that women and youth have the information and skills necessary to use mobile technology to check the real time market prices so they will be in a better position to negotiate with buyers and input dealers to achieve a win-win relationship.

1.3 Increase adoption of profitable, productivity-enhancing, and climate-smart technologies by all groups, including youth, women, and disadvantaged groups.

To achieve its agricultural productivity outcome, the Contractor must focus on the adoption of technologies, practices, and strategies such as: stress-tolerant and/or short cycle crop varieties; rain water harvesting techniques and drip irrigation; plastic tunnels and coco-pits; integrated soil fertility management; minimum or zero tillage; Integrated Pest Management (IPM) to reduce chemical pesticides;

bio-pesticides; and other climate-smart and soil anti-erosion practices appropriate to marginal lands in the

Terai and hills of the ZOI.

Through the adoption of climate change-adaptation measures, marginal lands in the ZOI have been converted into productive land for cultivation of high value commodities (e.g. vegetables). While the production of high-value commodities in marginal lands is still in its infancy and needs additional support to bring it to maturation. Facilitating the use of climate-smart agriculture and shifting production patterns could accrue significant benefits to poor and disadvantaged groups by building resiliency to minimize the potential negative impacts from human- and natural disasters, improving nutrition and producing products with favorable market prices. The Contractor must intensify this process, leveraging improvements in input and output market systems to create incentives and reduce the risks to farmers on marginal lands who are undertaking this conversion.

There have been five vegetable specific IPM packages that were field tested, cost effective, and increased vegetable productivity at no additional cost to the farmer by the Integrated Pest Management Innovation

Laboratory led by Virginia Tech University. The Contractor is expected to use these IPM packages, other results, and lessons learned in their proposal as you develop your private sector approach to expand the use of IPM products.

Strategies for fostering adoption used by other Feed the Future activities have included (1) the use of media to disseminate information on technologies, practices, and services; (2) the use of multiple marketing channels for technology dissemination, (3) iterative learning and a strong monitoring system to identify successful approaches to and incentives for adoption, and (4) adaptive management based on a learning process designed to improve long-run management outcomes. The Contractor may strategically use the Partnerships and Innovation Fund to facilitate improved adoption by piloting, testing, adaptation, and scaling of climate smart solutions in a variety of geographic and agronomic contexts.

Component 1 Expected Outcomes:

● 100% of targeted households use at least two high-value and/or stress-tolerant varieties

● Increased yields and volumes of selected crops from baseline by 30% for cereals, 50% for lentil, and 90% for vegetables by women and men, including youth (FTF indicator)

● Increased volume and value of purchases from KISAN II-assisted input suppliers by 90% by male, female, and youth smallholders

● 90% of targeted smallholders, farmer cooperatives, and farmer associations able to meet market quality and standards requirements

● Increased repeat sales through contractual arrangement or through other means demonstrating stronger business relationships between smallholders (Women, men and youth) and private sectors (input suppliers, processors and other)

● 50% of total target beneficiaries are new users of improved inputs, rainfall conservation technologies, and other modern (climate smart) agriculture practice and technologies

● 90% of targeted households accessing information on use of more productive, climate-smart varieties, inputs, technologies and practices through ICT channels

● Reduce post-harvest losses by 50%, through enhanced post-harvest handling

● 33% increase in the number of marginal farmers, women, and households from disadvantaged groups in profitable agribusinesses

C.V.2 Component 2: Strengthen the Competitiveness, Resilience and Inclusiveness of Selected

Agricultural Market Systems

Component 2 includes strengthening the competitiveness, resilience, and inclusiveness of selected agricultural market systems. Agricultural market systems in the ZOI are constrained by a series of factors:

● Inadequate processing and value addition;

● Weak market linkages;

● Insufficient investments in processing, market, and storage infrastructure;

● Limited access to information about what the market is demanding; and

● A lack of trust and transparency amongst market players.

These gaps negatively impact farmers, processors, retailers and consumers alike through higher transaction costs, gaps in quality, and weak resilience to market shocks. Inadequate storage and other post-harvest services and aggregation points increase the costs of millers, processors, and other buyers seeking to expand local supply networks. These gaps leave farmers at the mercy of speculators and the low prices available at harvest time.

Without market information on the varieties and qualities demanded by the market, farmers lose opportunities to move into higher return commodities and products. Essentially the weak governance of key value chains results in high transaction costs, production that fails to meet the demand of higher value markets, and relatively low incomes for farmers. As a result, farmers lack the incentive to invest in new varieties, improved inputs, and modern technologies, impacting current and future yields.

The Contractor must take a market systems approach that leverages: (1) the potential opportunities offered by end markets and the private sector buyers in end market(s); (2) the importance of inter-connections between farmers and the improved inputs and services they need to be able to improve quality and produce competitive products as wells as buyers; (3) engagement with private-sector lead firms; and (4) the relationships and power dynamics among actors that translate into fairly shared benefits to incentivize investment. The Contractor must promote accountability at both government and market systems and strengthen policy regulatory mechanism at the district level and beyond, Some example are civic and joint monitoring of market functioning, taxation, timely payment to the farmers, disclosure of subsidy, costs, profit, distribution of profits, ploughing back of profits in the same area, setting up citizen’s charter – process, prices, among others. The Contractor must aim to facilitate stronger and more efficient supply chains that use coordination and investments in agriculture infrastructure and services to overcome challenges posed by the small, fragmented nature of farming in Nepal, while increasing the yield and income generated from each hectare plowed and sown. It will seek to ensure the resilience and inclusiveness of market systems, which also underlie competitiveness.

The market system must: 1) strengthen freedom of entry and exit for both the market players and farmers, including marginal and land poor farmers; 2) Promote transparency – networking/communication between the project (including the market) and the farmers about the market rules (fairness), educate entrepreneurs about market rules like pricing, cartels, syndicates, early price setting etc.; and 3) Promote accountability at both the government and market system - strengthening policy regulatory mechanism at the district level and beyond, civic and joint monitoring of market functioning, taxation, timely payment to the farmers, disclosure of subsidy, costs, profit, distribution of profits, ploughing back of profits in the same area, setting up citizen’s charter – process, prices, among others.

2.1 Strengthen the organization and coordination of selected market systems

The market-systems approach recognizes that moving a product from production through to end consumers requires catalyzing a transformational process that involves an overall shift from lower- to higher-return activities. The objective of market system development is to catalyze a process that results in a market system that is: (1) competitive, i.e., system actors are able to effectively innovate, upgrade, and add value to their products and services to match market demand and maintain or grow market share;

(2) inclusive, i.e., delivering a sustainable flow of benefits to a range of actors, including the poor and otherwise marginalized, as well as to society as a whole; and (3) resilient, i.e., system actors are able to address, absorb, and overcome shocks in the market, policy environment, resource base, or other aspect of the system.

An important objective of KISAN II is to strengthen the organization and coordination within the system by establishing tighter vertical and horizontal linkages to increase efficiency and incentivize and de-risk upgrading.

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Regarding vertical linkages, buyer-supplier relationships can fall along a continuum from open (often price-based) markets to more directed supply chains with more structured relationships (with or without contracts). Better functioning “directed” supply chains can help provide a demonstration effect of the viability of local supply networks, while proving the bankability of distinct roles and services across a supply chain. KISAN II will explore opportunities to collaborate and partner with lead firms of various sizes, including larger Kathmandu-based firms as well as smaller and medium-sized firms, to learn about effective approaches to commercializing and upgrading agricultural market systems in the

ZOI.

Stronger horizontal linkages in the form of cooperatives, Market Planning Committees (MPCs), or other platforms that aggregate product for multiple producers and market channels are crucial to the efficiency of market systems and the value chains within them. The Contractor must explore pathways for leveraging these platforms to extend outreach – using digital or other solutions – to improve product quality, value addition, and producer profitability. Given the importance of market infrastructure in enabling aggregation and facilitation of both vertical and horizontal linkages, The Contractor must explore innovative ways to promote and de-risk investments in collection sites, warehouses, packaging facilities, and cold-storage, linking investors to USAID/Nepal’s DCA with Laxmi Bank, as appropriate.

2.2 Strengthen lead firms

[3] and other SMEs to support selected market systems

As part of the “market systems” objective, the Contrctor must strengthen lead firms and other small- and medium-scale enterprises (SMEs) that support the competitiveness, resilience, and inclusiveness of the market systems. Lead firms are dynamic SMEs or large firms that have forward/backward commercial linkages with other market system actors as well as the resources and incentives to invest in the improved performance of the system. Lead firms – exporters/buyers, larger scale farmers, input suppliers, and processors – play a critical role in formalizing and investing in the organization of the market system.

Lead firms are often the conduit between smallholders and the end market via key inputs or services needed to meet market requirements. Opportunities to upgrade enterprise capacity and competitiveness vary based on the type of firm and their respective (and possibly evolving) role in a given value chain or market system. For example:

● Aggregators, millers, and other processors and end-market buyers of all sizes may not know how to effectively and profitably source from and manage local smallholder supply networks. They may need to acquire skills in procurement planning, supply chain management and even the delivery of extension services – focused on good agriculture practices (GAP), modern agriculture technologies, superior varieties, and quality inputs– to network farmers.

● Agrovets could offer sought-after inputs and services to farmers through enhanced inventory management and strategies to reach smallholders and underserved areas (while increasing their bottom line), as well as by supplying products that reflect market demand, and applying business models that include a customer focus.

Upgrading and value-addition opportunities exist for enterprises currently looking to offer aggregation, storage, transport, and mechanization services to farmers. As it provides support to lead firms and other

SMEs operating within selected market systems, the Contractor must prioritize enterprise upgrading initiatives likely to: (1) impact a large number of farmers; (2) enhance market access or service delivery to women, previously underserved or marginalized groups; and (3) have a transformational impact on market systems. Business development support, financial facilitation, risk sharing, capacity building, and continuous learning and adaptation of tactics can enable lead firms and other medium, small, and micro-enterprises to identify and pilot new ideas, test new technologies and management practices, and pursue growth strategies within existing and new markets. A process of experimentation and learning will help lead firms to hone an effective supply chain management model. Tactical use of the Partnership and

Innovation Fund could be used to help de-risk and incentivize these activities.

Finally, the Contractor must promote diverse enterprise opportunities to improve the resilience of rural households through diversification into off-farm enterprises. This may require “smart subsidies” and approaches that take into account the risk tolerance of these households.

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This will be especially important for women and marginalized groups who often are systematically excluded from activities beyond farming.

2.3 Enhance financial services markets that serve selected market systems

Achieving transformation in agriculture through intensification, diversification, and increased competitiveness will require capital investments and working capital on the part of farmers and market system enterprises alike. As improvements within local, regional, and national market systems create incentives to invest in new or expanded production, processing capacity, technologies, market infrastructure, and services, the Contractor must strengthen financial services markets that serve these market systems, while promoting the financial inclusion of women, young people, and disadvantaged groups.

Farmers, lead firms, and other SMEs within a selected market system need a variety of financial products to meet their needs, ranging from short-term working capital to medium and long-term investment credit.

Drawing upon identified gaps in, and demand for, different types of financing, the Contractor must work as appropriate with banks, and microfinance institutions (MFIs) to develop diversified offerings for agricultural clients, and build their capacity to serve farmers and enterprises within the ZOI and across targeted value chains.

Building upon financial services development, value chain finance [5] can provide a means to strengthen formal or informal relationships between farmers, financial institutions, and other market system actors.

Value chain finance can include strategic alliances among lead firms (with the collateral to borrow), farmers (with production needed by lead firms), and input suppliers (with the inputs needed by farmers to produce the quality of product needed by buyers). Such arrangements leverage a set of relationships and/or linkages established between the financial provider and one or more market system actors to reduce transaction costs and lower risks.

Various forms of value chain finance have emerged within Nepal’s value chains, and many lead firms are considering ways to integrate value chain finance into their business models. The Contractor must explore opportunities to promote and de-risk a variety of value chain finance solutions that help unlock the potential of market systems, while building trust and ensuring transparency amongst market system actors. This could include linkages with USAID/Nepal’s new DCA initiatives. It might also consider opportunities to leverage mobile money and mobile banking solutions to support broader activity outcomes and market system efficiencies through collaboration with banks (and their agents), mobile companies, and lead firms.

Finally, promoting financial and business literacy – particularly among smallholder farmers, women, youth, and marginalized groups – could complement KISAN II financial services activities and play an important role in promoting inclusion. This requires an understanding of financial behaviors of different social groups, and the interaction of poverty, gender, and life cycle stage in shaping financial behaviors.

2.4 Enhance market infrastructure and other services to support selected market systems

To achieve its competitiveness objective, the Contractor must enhance markets for other services that support agricultural market systems development, such as for small scale mechanization services, business services, storage and warehousing services, processing services, other post-harvest services, transport services, and information services. Post-harvest losses are high in Nepal. Poor roads, improper packaging and handling, inadequate storage, poor quality product (including lack of adherence to health and other quality standards,) insufficient infrastructure and facilities for processing and testing for quality, and a lack of financing for equipment and services all contribute to losses. Post-harvest losses are high, caused by a combination of inadequate storage, insufficient infrastructure and facilities for processing and testing for quality, and lack of financing for equipment and services.

The Contractor must work to facilitate investment in new market infrastructure and services, while building the capacity of enterprises investing in and offering these services. The Partnership and

Innovation Fund can be used to: (1) de-risk investments and pilot new business models and services; (2) explore the means to extend services to new and/or underserved markets and groups (including women and youth); and (3) offer “smart” subsidies to users to stimulate demand for certain services. The

Contractor must use its understanding of selected market systems to work with service markets most likely to unlock farmer, enterprise, and value-chain potential, enhance resiliency, and ensure inclusion of women and youth.

Targeted market infrastructure and services could include:

● Storage/warehousing: On-farm storage and warehousing at collection and town centers are needed to decrease post-harvest losses, enable farmers to secure better prices for their product after the harvest, and facilitate aggregation to attract buyers. Farmers, cooperatives, VDCs, lead firms and other enterprises could invest in this critical market infrastructure.

● Equipment, processing, and mechanization services: Farmers need access to equipment to plow and sow the land as well as to thresh, grade, weigh and package products. They also need processing equipment to add value. The cost of such equipment for poorer farmers is prohibitive, but commercial service providers might be able to extend the outreach and affordability of these services on a fee or rental basis. Women and youth could also establish enterprises to offer these services as a source of non-farm livelihoods.

● Grading, testing and standards adherence services: The availability and use of grades and standards and the ability to test for quality are issues for farmers, buyers, and consumers across the KISAN II ZOI.

Testing for moisture content and aflatoxin (in the case of maize), and testing for pesticide residue (in the case of vegetables) is critical to improving quality, reassuring public concerns about health and safety, and gaining market access. Improvements in quality also require training in quality protocols and adherence to domestic and/or international quality standards.

● Market Information Services: Farmers need access to current market information and projected trends, as well as climate information, to inform production decisions, pursue diversification, adopt good agricultural practices, and connect to markets and buyers. Multiple channels for market information exist, including MPCs, collection centers and warehousing points, VDC markets, agrovets, and appropriate

ICT-based market information systems.

● Business and Training Services: Growing and diversifying profitable enterprises and service provision calls for an array of business, financial, and technical services to access finance, improve management and business practices, develop and market products, meet quality and regulatory standards, and build the capacity of staff and supplier networks. Opportunities exist to build the capacity of local service providers (LSPs) serving farmers, cooperative, and agro-enterprises in the ZOI.

2.5 Expand trade in domestic and regional markets to support agricultural market systems development

While India has a large influence on Nepal’s agricultural markets, trade across Nepal’s open border with

India in the West, and Mid- and Far-West regions is dynamic. Commodities that Nepal cannot produce in sufficient volume, at high enough quality, or at a competitive price tend to flow from India to Nepal.

When deficits in India emerge, commodities such as off-season vegetables flow from Nepal to India.

Alternatively, commodities such as sorted and polished medium fine rice can be competitive with cost-reductions and attention to quality. These dynamics present opportunities for the Contractor to help expand regional and domestic markets for products grown in the ZOI. For illustration, better historical and real-time market information could help farmers and lead firms plan for, produce for, and respond to predictable shortages or increased demand on the Indian side of the border. Diversification into commodities and products that are seasonally competitive and in demand in India, as well as increased value addition, and reductions in production costs could reinforce these efforts. The Contractor must consider interventions that upgrade product quality and strengthen adherence to and enforcement of quality in sanitary and phytosanitary standards (SPS) to enhance market access for Nepali products in

Indian markets.

India’s outsized influence on Nepal’s agriculture presents risks to the resilience of domestic supply chains and agricultural markets. Millers, processors, traders, feed companies, and end-buyers rely on Indian imports to meet their supply needs.