DRAFT_SOO_-_PRFS-LD_Program.pdf

Poverty Reduction and Food Security – Livestock Development (PRFS – LD) Program

Section C – DRAFT Statement of Objectives

Introduction

The USAID/Zimbabwe Mission has as one of its development objectives to “improve food security in target areas.” Both the Mission’s Humanitarian Assistance and Resilience Office (HAR) and the

Economic Growth Office (EG) share this objective, with HAR focusing on beneficiaries that are typically more vulnerable and in more extreme poverty, and EG focusing on beneficiaries that are typically poor but with some productive assets.1 In addition, EG programs focus on beneficiaries in Natural Regions III, IV, and V, while HAR programs focus on beneficiaries in Natural Regions IV and V2. The two programs are complementary and together strive to achieve the Mission’s Development Objective of “Food

Security in Target Areas Increased”.

The development program described in this Statement of Objectives is intended to focus primarily on poor beneficiaries (some beneficiaries may be categorized as being in extreme poverty). The Poverty

Reduction and Food Security (PRFS) program targets assistance to four sub‐sectors: high value crops, staple food crops, beef cattle, and dairy cattle. The overall objectives of the PRFS Program are to (1) reduce rural poverty and improve food security of targeted smallholder agricultural producers through increased agricultural production, productivity, and market linkages, (2) improve the nutrition and hygiene practices leading to improved nutrition status of beneficiary households, and (3) strengthen local capacity to implement agricultural development programs.

PRFS seeks to address food security at the household, community, and national levels. At the beneficiary level, all beneficiary households are expected to suffer from poverty and food insecurity to varying degrees. Some beneficiary households will not have access to sufficient food (from their own production as well as purchased food) to be able to eat three nutritionally dense meals per day, 12 months per year. Other beneficiaries have adequate access to food to be able to eat three meals per day, 12 months per year, but eat a nutritionally poor diet and therefore suffer from varying degrees of malnutrition. The PRFS program is expected to address both of these issues by: 1) increasing the quantity, quality and diversity of food crop production, leading to increased sales and income, and 2)

1 In accordance with international definitions, extreme poverty is measured as the percentage of the population living on less than $1.25 per day (in 2005 prices). The Zimbabwe National Statistics Agency (Zimstat) uses a food poverty line to measure extreme poverty. The Food Poverty Line (FPL) which is defined as income needed to purchase a basket of food that meets minimum nutritional and caloric requirements, is set at $1.07 per person per day, and is the threshold for extreme poverty. The Total Consumption Poverty Line (TCPL), that uses the FPL as a base and adds minimum other consumption expenditures on housing, health care and other basic needs, is set at $2.52 per person per day, and is the threshold for poverty.

2 See Annex D for descriptions of the natural regions. Natural Region III is located mainly in the mid‐altitude areas of the country and receives annual rainfall of 500‐750 mm. Natural Region IV is located in the low‐lying areas and receives annual rainfall of 450‐650 mm. Natural Region V is located in lowland areas below 900 meters above sea level and receives erratic annual rainfall of less than 650 mm.

effecting nutritional behavior change at the household level leading to improved quantity and quality of food consumed. In addition, most beneficiary households and communities are likely to have Water, Sanitation, and Hygiene (WASH) deficits and will benefit from the hygiene messaging and behavior change interventions provided by this program. At the community and national levels, Zimbabwe struggles with periodic droughts, periodic and seasonal food production deficits, high prices, a stagnant economy, high unemployment, and a weak private sector, leading to high levels of poverty and food insecurity. The PRFS program is expected to help tackle these challenges through increased national food production, increased income, increased private investment, increased employment, and a rejuvenation of the private sector. Targeted increases in annual production resulting from PRFS (by year

5) are approximately 25,000 metric tons of maize, 2.0 million kg of beef, and 15.6 million liters of milk.3

These equate to meeting the annual average consumption for 225,000 people for maize, 1.0 million people for dairy, and 475,000 people for beef. A substantial quantity of additional horticultural vegetables and fruit will also be produced as a result of PRFS interventions4. PRFS will, therefore, contribute to improving both household and national food security and poverty reduction.

The overarching PRFS Program includes the following four components:

Component 1: high value crops

Component 2: staple foods and pulses

Component 3: beef cattle

Component 4: dairy cattle

This Statement of Objectives focuses on two components of the PRFS Program: development of the beef and dairy cattle sectors (Components 3 and 4 above). A separate assistance award will be made under the PRFS‐Crop Development Program (via a separate RFA) for high‐value food crops (Component

1 above) and staple foods and pulses (Component 2 above).

C.1 Background

C.1.A. Overview of Zimbabwe’s Economy, Agriculture, and Food Security Situation

Prior to 2000, Zimbabwe was the breadbasket for Southern Africa. Zimbabwe was the third largest exporter of tobacco in the world, the largest beef exporter in Africa, and was a major producer of milk, sugar, fruit, and horticultural products. Agriculture was the mainstay of the economy, including the manufacturing sector, given the huge demand for processing of agricultural products. The forward and backward linkages that agriculture had to manufacturing and services were the engines of growth for the economy. Agriculture in 2000 represented 51 percent of total export earnings; however, this fell to

29 percent in 2008. Presently, agriculture contributes between 15‐20 percent of overall GDP.

Since 2000, Zimbabwe has experienced a series of economic, political, and social shocks (induced by the

Fast Track Land Reform Program and hyperinflation) resulting in loss of livelihoods, increasing poverty

3 This is based on average annual consumption of 15 liters/capita of milk, 4.3 kg/capita/year of meat, and 110 kg/capita/year of maize 4 The quantity will depend on the mix of crops, as well as the number of hectares of each.

and human displacement, and reduced food security. The formal economy virtually ceased to function in 2007 and 2008, the years in which hyperinflation culminated, and started to rebound in 2009 after the adoption of a multi‐currency regime. With few opportunities for formal employment, which is estimated at less than 20 percent of the workforce, most Zimbabweans engage in subsistence agriculture or other informal employment. Agricultural production declined by 79 percent between

2002 and 2008, and gross domestic product (GDP) fell by more than 50 percent between 2000 and 2008.

The 2008/2009 agricultural season saw the country’s worst crop failure in history due to economic mismanagement, lack of access to seeds and fertilizer, and uneven rainfall.

Since 2009 the economy has begun to recover from the crisis as a result of the installation of a multi‐ currency regime which quickly brought inflation under control, as well as liberalization of certain agricultural markets. Economic growth rebounded from 2009 through 2013, with GDP growth ranging from 10 percent to 12 percent in the early recovery years to 3 percent or less in 2013. Store shelves, which were largely empty in 2007/2008, are now well‐stocked, though primarily with imported goods.

Agriculture also enjoyed strong growth ranging between 15‐17 percent during the recovery period, but production levels in most value chains remain far below levels achieved in the late 1990s. For instance, while Zimbabwe was a net exporter of dairy products in the 1990s, today it imports approximately 60 percent of its dairy needs. Zimbabwe also imports between 25 percent and 30 percent of its cereal needs (maize, rice, and wheat) whereas in the 1980s, cereal production met or exceeded consumption levels. The once thriving export horticulture market is now a small fraction of pre‐2000 levels, and the export beef market no longer exists.

The steady and precipitous decline in the agricultural sector from 2000 to 2009 had a devastating impact on the country. The agricultural sector has been severely affected by an exodus of entrepreneurs, management, and skilled labor due to forced evictions, more favorable opportunities in other countries, and lack of profitability and business incentives. Liquidity, both within the agricultural sector and the financial sector, is at very low levels, creating a shortage of credit and very high interest rates for those who are able to secure credit. Unclear land tenure arrangements impede the use of land as loan collateral. Many agri‐businesses and banks are very weak and under‐capitalized. Agricultural input producers, including suppliers of fertilizer, chemicals, and feed, are operating at well under 50 percent of their capacity because of the collapse of the sector. In addition, poor infrastructure, high costs, the country’s indigenization policy (requiring indigenous majority ownership), and perceptions of high levels of corruption, weak rule of law, weak business enabling environment, and high country risk combine to dramatically reduce the level of foreign direct investment in Zimbabwe.

As a result of the economic crisis and agricultural decline, in 2009 humanitarian agencies provided emergency food assistance to approximately seven million people—more than half the nation’s population. However, as noted above, since 2009 Zimbabwe has partially recovered from its economic and food security crisis. The need for emergency food aid has declined substantially, but recurrent drought continues to pose a major threat to food security. In 2013/14, humanitarian agencies provided food assistance to approximately 1.5‐2.0 million people in the aftermath of a drought in 2012/13. Due to higher and more consistent rainfall, production from the 2013/14 agricultural season was substantially higher than the previous season, but an estimated 565,000 people will still require food aid in 2014/15. Lack of access to year‐round water and irrigation leaves hundreds of thousands of rural households vulnerable to drought and other periodic shocks.

In spite of the challenges and the exodus of skilled personnel mentioned above, Zimbabwe has a wealth of agricultural and agro‐business technical experts and advisors. There also exists an agro‐ manufacturing infrastructure base, although it is largely outdated and in need of new equipment and additional capital. In addition, compared to most African nations, Zimbabwe is blessed with an educated work force. Finally, there are ready markets for many cash crops such as tea, sugar, cotton, poultry, dairy, beef, and horticulture, as well as the staple food crops such as maize, groundnuts, and sugar beans.

C.1.B. Poverty in Zimbabwe

A recent national poverty survey5 defines extreme poverty using a Food Poverty Line (FPL) which is defined as income needed to purchase a basket of food that meets minimum nutritional and caloric requirements, is set at $1.07 per person per day, and is the threshold for extreme poverty. The Total

Consumption Poverty Line (TCPL) uses the FPL as a base and adds minimum other consumption expenditures on housing, health care and other basic needs, is set at $2.52 per person per day, and is the threshold for poverty.

According to the Poverty, Income, Consumption and Expenditures Survey (PICES), conducted in

2011/2012, Zimbabwe has among the highest poverty rates in Africa. Seventy‐six percent of rural households are poor (i.e., household income is below the TCPL), and nearly 23 percent are extremely poor (i.e., household income is below the FPL). Poverty prevalence is even higher for communal farming households, where 82 percent are poor, and 26 percent are extremely poor. Prevalence varies significantly by province and by district. For example, as seen below, over 35 percent of households in

Matabeleland North are extremely poor, while almost 82 percent of households are poor.

5 Zimbabwe’s national statistics office (ZIMSTAT) carried out a 12‐month household survey covering over 30,000 households’ income, and consumption expenditure patterns from June 2011 to June 2012, the so called Poverty, Income and Consumption Expenditure Survey (PICES). See Annex C for more information.

See Annex C for further details, including a map showing poverty indices by district.

Food insecurity and high levels of poverty in communal farming areas are driven by many factors that include a focus on subsistence agriculture, production of low value crops, lack of appreciation and understanding that farming is a business6, lack of knowledge and application of good agricultural practices, lack of finance to access sufficient quantities of high quality inputs, and a lack of relationships with and linkages to providers of inputs and buyers of surplus output. While government and donor programs have provided free or subsidized inputs in recent years, they tend to be provided in insufficient quantities to drive productivity improvement and noticeable increases in income. In addition, the national agricultural extension service lost many of its experienced extension officers during the crisis years, and lacks resources to effectively reach the more than 1.5 million communal farmers, resulting in low productivity gains. The national average yield for maize production has ranged between 600 – 700 kilograms/hectare in recent years, with the national average reaching 850 kilograms/hectare in the 2013/14 season due to improved rainfall conditions7. Reliance on government or donor input programs and production of maize or other low value crops, often with very little surplus, has trapped smallholder farmers in a cycle of poverty, food insecurity, and dependency.

C.1.C. Malnutrition: Under‐nutrition, Underweight, and Stunting in Zimbabwe

6 One of the ways this manifests itself is a cultural tendency to retain cattle until they die or until money is needed for school fees, funerals, weddings, etc., rather than viewing them as productive business assets that should be sold at their prime to maximize income. Another manifestation is the lack of record keeping and lack of understanding of the profitability of the various farm enterprises undertaken by each household.

7 Note that this is the national average across all types of farms including communal, small‐scale commercial, A1, A2, and peri‐urban. The average for communal farms in 2013/14 was 500 kg/hectare.

Malnutrition in Zimbabwe, especially as manifested in stunting in children less than five years of age, remains a challenge. According to the Multiple Indicator Cluster Survey (MICS) 2014, more than one‐ quarter of all children (28 percent) are stunted (8. While the average is 28 percent, in some districts stunting rates exceed 40 percent. Research studies have demonstrated that stunting is linked to diminished intellectual function and achievement in school, reduced lifetime earnings, and adverse pregnancy outcomes later in life.9

The MDG goal of reducing the under‐weight population by one‐half will not likely be achieved by 2015.

The latest figures indicate that 11 percent of children under five years is underweight10. Currently, an estimated 140,000 children die before their fifth birthday (under‐five mortality rate (U5MR) of

75/1000)11. Although the causal factors are many, malnutrition is one of the leading underlying causes of under‐five deaths. Prevalence of micronutrient deficiencies is high across all population sub‐groups of Zimbabweans. Vitamin A deficiency affects 35.8 percent of pre‐school children and 20 percent of pregnant women12. About 56 percent of pre‐school children and 28 percent of pregnant women are anemic (DHS (2010‐11)), and about 16 percent of school children suffer from iodine deficiency (MoHCW

& UNICEF (2009)). In general, nutritional deficits are much more common in rural areas than in urban areas. See Annex E for maps and additional information regarding malnutrition in Zimbabwe.

Malnutrition in Zimbabwe is caused, at least in part, by poor dietary diversity – maize in various forms comprises a large percentage of the calories consumed by Zimbabweans. Diets are predominantly plant‐based (especially starchy plants) and therefore proteins and vitamins are not consumed regularly and in sufficient quantities by the majority of rural Zimbabweans to provide the minimum recommended daily allowance. In addition, low rates of exclusive breastfeeding are also attributed to poor nutritional outcomes for children less than two years of age. Finally, illness (such as diarrhea, dysentery, and cholera) caused by unsafe water, poor hygiene, and poor sanitary conditions leads to low absorption of the nutrients that are present in insufficient quantities in the foods consumed.

C.1.D. Gender and Agriculture

Consistent with USAID’s Gender Equality and Female Empowerment Policy, USAID/Zimbabwe seeks to integrate gender equality and female empowerment into the PRFS program. Studies show that integrating gender and empowering women not only raises the well‐being of women, but also leads to better societal outcomes. A study conducted by the Food and Agriculture Organization (FAO) estimated that if women had the same access to productive resources as did men, they could increase yields on their farms by 20‐30 percent, raising agricultural production by 2.5‐4 percent, and reduce the number of

8 ZimStat, 2014, Multiple Indicator Cluster Survey 2014, Key Findings Report, page 14.

9 Presentation by Dr. Jeffrey K. Griffiths, Director, USAID Innovation Lab for Nutrition – Africa and Professor of Public Health & Medicine, Tufts University School of Medicine, February 2014 10 ZimStat, MICS 2014, page 14.

11 Ibid.

12 WHO (1999).

food insecure persons by up to 150 million.13 A gender analysis conducted in Zimbabwe in 201214 revealed that women comprise more than half of the agricultural labor force, typically performing such tasks as planting, weeding, watering, and harvesting. However, they frequently lack decision‐making control over the financial proceeds from marketing farm output, as well as decisions to sell cattle. In addition, women often do not have control over land or large livestock, and generally lack access to credit. There are also significant workload imbalances in rural households, as women tend to not only perform much of the agricultural field work, but also fetch water and firewood, prepare food for the household, clean the home, and care for the children and elderly. Finally, women have traditionally been excluded from most leadership roles in community organizations, whether they are farmers unions or commodity associations, irrigation committees, or milk collection centers. While some of these gender imbalances are beginning to change (partially due to the exodus of men seeking employment in other countries and the consequent high levels of female‐headed households), there is still need for significant improvement in gender equity. The national constitution which was approved in 2013 provides for and requires much greater gender equity throughout society, but there are many measures that need to be taken to realize its ideals and objectives.

C.1.E. Youth and Agriculture

Zimbabwe has an agriculture based economy which provides employment and income for 60 – 70 percent of the population and has the potential to increase employment opportunities especially for young people. According to a 2012 study done by the Food, Agriculture and Natural Resources Policy

Analysis Network (FANRPAN), the subsistence nature of smallholder agriculture has contributed to entrenched negative perceptions by young people of the sector15 who view farming as doing back‐ breaking labor in the fields and getting little to show for it. Nonetheless, agriculture is one of the engines driving the Zimbabwe economy. Experience from the current USAID/ Zimbabwe‐supported programs have shown that where markets and incomes are involved, young people are keen to engage in agriculture. Young people have been involved in a recently‐completed dairy project, and in the production of high value crops such as bananas, cherry peppers, and paprika. Farmers have given testimonies of their sons and daughter leaving formal employment to get engaged in agriculture.

Critical to this shift in mindset has been training in farming as a business, technical training, market linkages, contract farming arrangements, access to finance and young people realizing that they could make money through agriculture.

13 Hafez Ghanem, The State of Food and Agriculture 2010‐11: Women in Agriculture: Closing the Gender Gap for

Development (Rome, The Food and Agricultural Organization, 2011).

14 See “USAID/Zimbabwe Gender Analysis and Assessment for Feed the Future Programming”, Prepared for USAID by ACDI/VOCA and Banyan Global, January 2012.

15“Current and Emerging Youth Policies and Initiatives with a Special Focus on Link to Agriculture: Zimbabwe Case Study Report.” April 2012.

In a 2013 report, Agriculture as a Sector of Opportunity for Young People in Africa, the World Bank highlighted that agriculture is Africa’s largest employer and has the potential to absorb millions of new job seekers. According to the report, increased focus on agriculture could enhance productivity, reduce food prices, increase incomes and create employment. Young people’s involvement in this process is crucial; the profession’s requirements for energy, innovation, and physical strength make it ideally suited for young people in the 15 to 34 year‐old age range.

C.1.F. Recent History of USAID Agriculture and Food Security Programming in Zimbabwe

Since 2002, USAID has provided emergency humanitarian assistance in Zimbabwe. In 2009, USAID expanded to “humanitarian plus” programming, which included a more robust democracy program and a re‐entry into agriculture and economic growth sectors. In FY 2009 and 2010, as part of the Mission’s early Relief to Development Transition (R2DT) process, USAID initiated economic growth, livelihood, and recovery activities targeted at increasing agricultural productivity and incomes to complement humanitarian interventions and provide a more comprehensive response. These programs included the

Title II emergency‐funded Promoting Recovery in Zimbabwe (PRIZE) project that aimed to improve resiliency and initiate the transition from emergency response to development. Additionally, USAID commenced eleven Economic Support Fund (ESF)‐financed agriculture sector and livelihood development activities focused on increased production and expanded commercialization for viable farmers. One of the key livelihood grants was the dairy development activity implemented by Land

O’Lakes from January 2010 to November 2013.

In October 2010, the Mission commenced two programs focused on agricultural development. The

Zimbabwe Agricultural Income and Employment Development Program (Zim‐AIED) focuses on increasing incomes, food security, and employment for 150,000 poor rural smallholder households. Zim‐AIED has developed demonstration plots, trained farmers in good agricultural practices and farming as a business, facilitated the development of market linkages with input suppliers and buyers, and facilitated access to credit through the Agritrade credit component. The Zim‐AIED program will end in September 2015.

The Zimbabwe Agricultural Competitiveness Program (Zim‐ACP) focuses on improving the policy and enabling environment for agriculture. Zim‐ACP accomplished its objectives by strengthening civil society organizations such as farmers unions and commodity associations, building their capacity to conduct high quality evidence‐based analyses of policies and regulations, and strengthening their capacity to effectively advocate for appropriate policies and regulations which will support improved competitiveness in various agricultural value chains. The project will end in February 2015. Follow‐on activities are being developed.

In June 2013, USAID/Zimbabwe initiated two five‐year development food aid programs, Amalima and

“Enhancing Nutrition, Stepping Up Resilience and Enterprise” (ENSURE). These programs, implemented by CNFA and World Vision respectively and their consortia partners, work with vulnerable households in ten districts in Manicaland, Masvingo, and Matabeleland North and South that have received food aid for the past several years and to develop resiliency and self‐sufficiency at the household and community levels. The programs will rehabilitate or build community assets such as irrigation schemes and dip tanks, and promote conservation agriculture, market linkages, nutrition, hygiene, and community and household resilience targeted at approximately 600,000 individuals or approximately 120,000 vulnerable households. See Annex B for further information about Amalima and ENSURE.

In 2014, the Mission will launch a new Water, Sanitation, and Hygiene activity implemented by

Development Aid from People to People (DAPP) and Zimbabwe Applied Health Education and

Development (ZimAHEAD). This new activity will address significant WASH needs in several rural areas, and will include training on health, nutrition, hygiene, how to grow and prepare healthy foods, and training on soil and water conservation; repair of existing wells, boreholes, and pumps; construction of new wells, water pans for cattle drinking points, household hand washing systems, and latrines; and establishment and strengthening of community health clubs. These interventions will complement the agricultural development and income generation interventions of Zim‐AIED, providing a more robust, holistic set of solutions to poor rural beneficiary households.

C.2 Program Objectives

USAID/Zimbabwe’s new Poverty Reduction and Food Security Program (PRFS) aims to: (1) reduce rural poverty and increase incomes and food security of targeted smallholder agricultural producers through increased agricultural production and productivity, and market linkages; (2) improve the hygiene and nutrition practices leading to improved nutritional status of beneficiary households; and (3) build the capacity of local organizations to implement agricultural development activities funded by USAID. The first two objectives are consistent with the Agency’s and Bureau for Food Security’s objectives to reduce poverty by 20 percent and reduce stunting by 20 percent. The third objective is consistent with the

Agency’s USAID Forward objective to build local implementation capacity.

These objectives are described in more detail below.

The first objective of USAID/Zimbabwe’s overarching PRFS Program is to reduce household poverty and increase incomes and food security of smallholder agricultural producers through increased agricultural production and productivity. Specifically for components 3 and 4 (beef and dairy cattle), the Mission seeks to sustainably increase annual agricultural incomes by an average of $1,200 per year for 3,000 beef farmers and by $2,000 per year for 2,000 dairy farmers (see table below for additional details).

The targeted, aspirational increase in annual agricultural incomes (by year 5) is broken out by component as follows:

Target by Year 5

Component Number of Beneficiary

HHS

Average Increase in HH Agricultural

Income

Average Total HH Agricultural Income16

Percent Reduction in

Poverty (HHs)17

Component 3: Beef Cattle

3,000 $1,200 $1,600 60 percent

Component 4: Dairy 2,000 $2,000 $2,500 70 percent

Under Objective 1, the PRFS – Livestock Development (PRFS‐LD) Project will focus exclusively on

Components 3 and 4. The economic objective of the beef cattle component is to enable each beneficiary household to own a minimum herd size of approximately 15‐20 beef cattle by Year 5 such that the household could sell a minimum of four head of cattle per year on a sustainable basis through formal market channels (market value of approximately $1,600 ‐ $3,200)18.

The economic objective of the dairy component is to enable each beneficiary household to own a minimum of three high quality milking cows with a minimum average yield of 12 liters/cow/day (300 days/year) by Year 5, with linkages (i.e., regular milk deliveries) established between beneficiary households and nearby sustainable milk collection centers. A household generating that volume of milk should earn a profit (revenue less costs) of at least $2,700 per year19.

The second objective of the PRFS program is to improve access to and utilization of nutritious foods and improve hygiene behaviors for all beneficiary households. The targeted, aspirational increase in household nutrition and hygiene behaviors (by year 5) is broken out as follows:

Nutrition & Hygiene Practices Target by Year 5

Exclusive Breastfeeding At least 50 percent of children under 6 months of age in beneficiary households exclusively breastfed20

Household Dietary Diversity At least 70 percent of beneficiary households consistently consume at least 5 of 10 food groups (see Annex H)

Hygiene At least 70 percent of beneficiary households

16 Note that Total HH Agricultural Income figures in this table assume a baseline HH agricultural income of $400 per year for Component 3 and $500 per year for Component 4. Targets for average baseline HH agricultural income in Year 5 will have to be adjusted based on actual baseline data collected in Year 1.

17 Note: the figures in this column refer to the percent of targeted beneficiary households which will be assisted to rise above the poverty line by increasing their household income from agriculture.

18 Assuming a minimum herd size of 15‐16, if 50 percent of the herd is female (7‐8), and 50 percent of those females (4) have calves every year (the national calving rate was 49 percent in 2013), once the operation reaches a steady state run rate, approximately 4 animals would reach maturity for marketing every year. At a minimum price of $400/head, farmers would generate $1,600/year in revenue. With good fattening practices and access to a competitive auction market, farmers should realize higher prices than $400/head.

19 Assuming a minimum profit of $0.25 per liter. This assumes a sales price of $0.50 per liter with a 50 percent margin. Some local sales through informal channels will realize higher prices. Note that USAID’s Land O’Lakes dairy development activity reported final year gross margin per dairy cow of $1,199 for beneficiaries, which is 33 percent higher than the assumptions used in this document.

20 According to the ZimStat Multiple Indicator Cluster Survey 2014, Key Findings Report, page 16, the percentage of children under six months of age exclusively breastfed was 41 percent in 2014.

practicing at least 4 out of 6 good hygiene practices (See Annex H)

The third objective of the PRFS program is to build the institutional capacity of local implementing organizations. USAID intends to increase significantly the degree of local participation in implementation of its food security and agricultural development programs. While many local organizations have relevant experience, they may still lack capacity in specific institutional areas, e.g., monitoring systems, reporting, financial management, and regulatory compliance. In addition, some of the organizations may lack technical skills in specific areas. Objective 3 of the PRFS program will increase the capacity (knowledge, skills, and implementation effectiveness) of local implementing partners (both direct awardees and sub‐contractors/sub‐grantees under components 1‐4 of this program) to implement USAID agricultural development activities. Objective 3 of the PRFS program will also facilitate the sharing of best practices, techniques, manuals, and tools, as well as coordination between implementing partners under USAID’s Development Objective 2. USAID will include a clause in the award document with the local organization informing that a third party contractor will provide assistance in capacity building.

Institutional Capacity Building Target by Year 3

Increased institutional capacity Average increase of at least 25 percent on an organizational assessment scorecard administered pre‐ and post‐assistance to each local awardee or sub‐contractor/sub‐grantee.

In addition to the three primary objectives described above, the program has several additional objectives as follows. See the table below for more specific quantitative aspirational targets for these objectives.

Significantly increased agricultural yields and gross margins (per animal).

Established market linkages between smallholder farmers and buyers. Potential buyers include contract farming organizations, agro‐processors, wholesalers, retailers, traders, hotels and lodges, agro‐dealers, and exporters.

Smallholder farmers successfully transitioned from largely subsistence farmers to small‐scale commercial farmers. Increased ability of smallholder farmers to operate their farms as businesses. Increased understanding of and application of business skills such as budgeting, record keeping, calculation of profit and loss, negotiation, etc.

Increased access to credit and other banking services via linkages between farmers and agro‐ business owners and financial institutions.21

Increased implementation of new technologies and management practices.

21 The Mission expects to have a new Development Credit Authority (DCA) loan guarantee agreement with one or more banks and/or microfinance institutions operational in late 2014. The new loan guarantee agreement will stimulate lending to the agricultural sub‐sectors targeted under the PRFS program.

Increased gender equality, women’s empowerment, and effective equitable inclusion of women in all activities, leadership roles, and credit opportunities.

OTHER OBJECTIVES Aspirational Target by Year 5

Significantly increased yield per dairy cow.

Minimum of 12 liters/cow/day for 300 days per year.

Significantly increased gross margin per animal.

Dairy: Minimum of $900/cow/year

Beef: Minimum of $300/animal sold

Established market linkages between smallholder farmers and buyers.

Dairy: 100 percent of beneficiaries sell at least 80 percent of their milk production to formal milk collection centers on a monthly basis

Beef: 80 percent of beneficiaries sell at least one head of beef cattle annually to formal buyers (e.g., abattoirs, auctions, etc.)

Increased ability of smallholder farmers to operate their farms as businesses.

80 percent of beneficiaries able to successfully do each of the following:

‐ Develop a budget for each farm enterprise

‐ track income and expenses in a record book

‐ calculate profit/loss for each major farm enterprise

Increased access to credit and other banking services via linkages between farmers and agro‐business owners and financial institutions

At least 50 percent of beneficiary farmers borrow at least once to finance purchase of livestock or other capital investment

Increased adoption of new and improved technologies, or management practices by smallholder farmers

100 percent of beneficiary farmers adopted at least 1 improved technology or management practice.

75 percent of beneficiary farmers adopted at least 3 improved technologies or management practices.

Increased gender equality, women’s empowerment, and effective equitable inclusion of women in all activities, leadership roles, and credit opportunities

Minimum of 50 percent of all lead farmers and leadership roles held by women in Milk Collection

Centers, Irrigation Management Schemes, and other similar local farmer organizations

C.3 Operating Constraints

Target Beneficiaries: Target beneficiaries are primarily smallholder farmers, although for the dairy component the program may also include small scale commercial farmers up to a maximum of 30 percent of the total dairy beneficiary population (i.e., up to 600 of the target 2,000 dairy beneficiaries)22.

All beneficiary households should (a) have agriculture as their primary source of livelihood and income

(at least 75 percent of total household income); (b) have a baseline annual agricultural income of less than $50023, (c) should meet the USAID Bureau for Food Security definition of smallholder farmers (i.e., control no more than 5 hectares of land and own no more than 10 head of cattle or equivalent smaller livestock); and (d) cultivate or utilize communal land. Where small‐scale commercial farmers are included, their land holdings will exceed the five hectare limit for smallholders, but they should still meet the income conditions (a) and (b) above. Per USG policy and legal restrictions, no assistance will be provided to government ministries, parastatals, or to individuals/entities on the U.S. Treasury

Department Office of Foreign Assets Control’s sanctions list24. USG policy also restricts assistance to farmers operating on contested land.

USG policy prohibits assistance to farmers for the production or marketing of tobacco. While it is permissible to assist tobacco growers in their production of food crops, experience suggests that tobacco growers focus the majority of their attention and resources on their tobacco crops to the detriment of their food crops, due to the high profit nature of tobacco. As a result, the program will focus on smallholder farmers that do not grow tobacco.

Target Sectors: The PRFS‐LD program will focus on beef cattle (component 3) and dairy (component 4).

These value chains have demonstrated potential to substantially increase smallholder farmers’ incomes and lift smallholders out of poverty. They will also serve to diversify beneficiaries’ diets, providing additional protein, as well as sufficient income to purchase foods which are not produced on the farm.

Each of these components is discussed in greater detail below.

Component 3: Beef Cattle

Approximately 68 percent of all cattle are owned by smallholder farmers in communal areas, with 58 percent of those cattle in drier areas such as Midlands, Masvingo, and Matabeleland

North and South25. The beef cattle production component will focus primarily on households in

22 Note: Small‐scale commercial farmers are included as potential beneficiaries for the dairy component due to their important potential role providing larger quantities of milk to milk collection centers, thereby helping the milk collection centers achieve economies of scale more quickly than would be possible if the program were to focus solely on communal farmers.

23 Note: here and throughout this document household agricultural income includes the market value of all crops and livestock that is produced on the homestead, whether it is consumed by the household or sold.

24 See http://www.treasury.gov/resource‐center/sanctions/Programs/pages/zimb.aspx for additional information.

Should law and/or policy restrictions change, USAID will apprise the contractor and make any necessary amendments to this provision.

25 See Annex F for a chart showing distribution of cattle by land ownership type by province.

Natural Regions IV and V (including at irrigation schemes in those areas), and take advantage of the natural biological growth of the herd to build household assets and a stable source of recurring income over time. This component will emphasize upgrading herd quality, expansion of household herds, and linkage to appropriate markets to facilitate regular income generation.

Component 4: Dairy Cattle

National dairy production declined by approximately 90 percent during the crisis years as a result of the fast Track Land Reform Program and the hyperinflationary period. While some recovery has occurred, Zimbabwe still imports 60 percent of its dairy products (compared to its status as an exporter in 1999). In fact, dairy production declined by 3 percent in 2013 from

201226. There is ample opportunity for smallholder farmers to expand their production of milk.

The dairy cattle production component will focus primarily on households in Natural Regions III and IV, and, like the beef cattle component, will also take advantage of the natural biological growth and healthy maintenance of the herd to build assets and income over time.

Furthermore, dairy beneficiaries will benefit from daily milk sales and periodic cattle sales to obtain reliable, recurring income27.

While the PRFS‐LD Program does not anticipate sufficient funds for significant capital investments, new milk collection centers may be constructed or better equipped through partnerships with the private sector or other donors. The program may also leverage private sector funds from processing firms, financial institutions28, or other donors to provide loan capital to assist smallholder farmers in procuring high quality dairy cattle as well as development of small‐scale infrastructure such as additional milk collection centers.

Geographic Focus: The geographic focus for the PRFS‐LD program is communal and old resettlement lands in Natural Regions III, IV, and V (See Annex D for a map and description of the natural regions).

The following table illustrates the expected relationship between Components, Natural Regions, and number of beneficiary households.

Component Natural Region III

Natural Region IV

Natural Region V

# Targeted HHs29

Rationale

Component 3:

Beef Cattle

Not a focus

Yes Yes 3,000 Beef cattle have traditionally been raised in regions IV and

26 “First Round Crop and Livestock Assessment 2013/14 Seasons”, Ministry of Agriculture, Mechanization, and Irrigation Development, March 2014, page 38.

27 A Cost Benefit Analysis conducted for USAID/Zimbabwe’s agriculture portfolio by USAID economists (Joshua Smith and Paul Pleva) estimated that, on average, for every dollar spent on dairy smallholder farmers obtained $12.40 in economic benefits.

28 The Mission’s dairy development activity managed by Land O’Lakes developed a credit facility (DairyFin) in partnership with MicroKing to provide loans for acquisition of high quality dairy cows to smallholder farmers.

29 Number of Targeted Households is based on experience with current agricultural programming in Zimbabwe, including cost per beneficiary, and estimated budget levels for each component. Offerors should propose targets and clearly articulate the logic and calculations used to derive those targets.

V. Crop production is very difficult in those regions except on irrigation schemes.

Component 4:

Dairy Cattle

Yes Yes Not a focus ‐ Only if linked to irrigation schemes

2,000 Dairy cattle can be raised successfully in Natural Regions III and IV. Natural Region V is too dry to successfully raise dairy cattle except near irrigation schemes where cattle can benefit from crop residues and water.

While Natural Regions I and II have adequate and reliable rain fall to support agricultural production, they are not the focus of this program because they are higher potential areas for agriculture, and food insecurity is not as significant an issue in those regions. In addition, only nine percent of communal land is in Natural Regions I and II30. While there is poverty in all regions (including pockets of relatively deep poverty in some parts of Natural Regions I & II), rural poverty and food insecurity rates tend to be higher in Natural Regions III, IV, and V and are therefore the more appropriate focus of a poverty reduction and food security program. See Annex C for a map showing poverty levels and Annex D for a map showing

Natural Regions in Zimbabwe.

The program approach should specify targeted geographic implementation areas (at the district level, and if possible, the ward level ) and corresponding justification utilizing all available information including other donor programs and data on poverty, food insecurity, nutritional gaps, and food sufficiency gaps to determine proposed geographic areas (See Annexes A, B, C, D, and E for further information). The program will consider logistical costs when selecting target sites, and select sites in close proximity to each other (to the extent feasible) to reduce travel time and costs for field personnel.

The program will also consider opportunities to leverage complementary assistance provided by USAID

(e.g., Amalima and ENSURE) and other donor programs.

Nutrition and Hygiene: While increases in household income do not always lead to improved nutritional status of all members of the household, there is good evidence to suggest that increases in women’s income result in improvements in nutritional status of all members of the household.

According to a World Bank report, there is strong evidence that “over 50 percent of the reduction in child underweight from 1970 – 1995 is attributable to improvements in women’s status. In agricultural activities, increasing women’s discretionary income and reducing women’s time and labor constraints appear to be especially important to improve nutrition.”31

30 According to the FAO, 9 percent of communal land is in Natural Regions I & II, 17 percent is in Natural Region III, and 74 percent is in Natural Regions IV & V. See http://www.fao.org/docrep/009/a0395e/a0395e06.htm 31 “Improving Nutrition through Multisectoral Approaches: Agriculture and Rural Development”, The World Bank, January 2013, page 3.

In addition to women’s empowerment stimulating change in nutrition outcomes, there is also strong evidence that “nutrition education enhances dietary consumption.”32 Furthermore, there is strong evidence that improved hygiene leads to improved nutritional status and increases in children’s heights.33 Research and experience also suggests the importance of interventions such as targeting pregnant and lactating women, exclusive breastfeeding, nutritional interventions focused on the first

1,000 days of a child’s life, the nutritional content of various foods and particular varieties of crops being grown by the household, importance of dietary diversity and incorporating certain food groups into the diet, etc.. USAID’s Multisectoral Nutrition Strategy 2014‐2025 cites evidence on the importance of using a multisectoral approach to raise nutritional statuses.

This PRFS agricultural development program aims to bring about significant increases in household income, while empowering women, increasing their income and decision making roles, and encouraging use of labor saving technologies, with expected indirect positive impacts on household nutrition. The program will incorporate appropriate activities to effect good nutrition and hygiene practices and to raise nutritional statuses in beneficiary households. The goal of the nutrition and hygiene intervention is to utilize low‐cost approaches to improve household nutrition choices and hygiene practices, thereby contributing to improved nutrition outcomes among beneficiaries. See Annex H for some of the nutrition and hygiene practices that are considered best practices.

Provision of Inputs: The program will not provide subsidized agricultural inputs (seeds, fertilizer, chemicals, veterinary supplies, etc.) or cattle to smallholder farmers. Any inputs or cattle which are provided under the PRFS‐LD Program will be provided strictly on a fully cost‐recoverable basis, except in the case of centralized demonstration plots where the produce does not accrue to the benefit of any specific individual household. While provision of cost‐recoverable inputs for fodder crop production is not prohibited under this program, it should be used primarily to demonstrate the benefits of good agricultural practices combined with using high quality inputs and adequate quantities of fertilizer to smallholder farmers. The program will seek and facilitate more sustainable approaches to input provision such as credit from financial services providers, credit from dairy processors or abattoirs, and the use of electronic or pre‐payment schemes (e.g., paper vouchers) purchased by farmers to pre‐buy inputs for the next season using proceeds from the sale of cattle or milk. The Mission’s new

Development Credit Authority (DCA) loan guarantee program with financial institution(s) (planned for launch in FY 2015) is one resource that should complement this program’s efforts to link farmers producing higher value products to credit providers for purposes of procuring inputs or cattle. Another resource is the DairyFin credit product managed by MicroKing which was established with initial seed funding from USAID’s dairy development program (managed by Land O’Lakes). Any inputs which are provided on a cost‐recoverable basis to smallholder farmers should be provided for a maximum of two

32 Ibid.

33 “Open defecation is linked to a 1.24 standard deviation decrease in the height of children. Open defecation and a lack of sanitation in an household, along with country GDP, predict child height more than mother’s height or education; governance; or infrastructure.” AAAS presentation by Dr. Jeffrey K. Griffiths, Director, USAID Innovation Lab for Nutrition – Africa and Professor of Public Health & Medicine, Tufts University School of Medicine, February 2014 agricultural seasons to each farmer, with explicit efforts made to migrate farmers to more sustainable options by the third season.

Gender : The PRFS‐LD program (components 3 and 4) will seek to ensure that women comprise at least

50 percent of the beneficiaries, and will promote the utilization of labor‐saving technologies and innovations to reduce the time‐intensity of relevant agricultural tasks, e.g., water provision, that especially affect women who typically also incur a higher share of household responsibilities.34 The…