Ministry of Agriculture Development Department of Agriculture

Raising Incomes of Small and Medium Farmers Project

Agribusiness Grant Facility Guidelines

Table of Contents
Table of Contents .................................................................................................................... b Abbreviations ........................................................................................................................... i Section I: Introduction ............................................................................................................. 1 1. 2. 3. 4. Introduction ..................................................................................................................... 1 Objective ......................................................................................................................... 2 Adjustment in the Guidelines .......................................................................................... 2 Role of Partner Organizations and Service Providers ..................................................... 2

4.1. Agro Enterprise Center ................................................................................................... 2 4.2. Nepal Rastra Bank .......................................................................................................... 3 4.3. SNV Nepal ...................................................................................................................... 4 4.4. National Service Provider (National NGO) ...................................................................... 5 4.5. NGO for Disadvantage and Marginal Farmers ................................................................ 5 4.6. Local Service Providers (Local NGO) ............................................................................. 5 4.7. District Agriculture Development Office .......................................................................... 5 4.8. Nepal Agricultural Research Council .............................................................................. 6 4.9. Department of Cooperatives ........................................................................................... 6 Section II: The Grant Making Process .................................................................................... 7 1. 2. 3. 4. 5. 6. 7. 8. Independent Appraisal Panel (IAP) ................................................................................. 8 Types of Grantee ............................................................................................................ 8 Eligibility .......................................................................................................................... 8 Ineligibility ........................................................................................................................ 9 Grant Categories ........................................................................................................... 10 Type of Grant/ Support Areas ....................................................................................... 12 Cost Share/Match ......................................................................................................... 12 Application and Award .................................................................................................. 13

8.1. Grant Applications ......................................................................................................... 13 8.2. Assistance to Prepare Business Plans and Grant Applications .................................... 13 8.3. Selection Criteria ........................................................................................................... 14 8.3.1. 8.3.2. 8.3.3. Pre-screening the application ................................................................................ 14 Assessment by IAP ................................................................................................ 14 Grant Application Assessment Criteria .................................................................. 15

8.4. Grant Agreement and Commissioning .......................................................................... 16 8.5. Administration of Grants ................................................................................................ 17 8.6. Monitoring and Evaluation Framework .......................................................................... 17 8.6.1. Monitoring .............................................................................................................. 18
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8.6.2. 8.7.1. 8.7.2. 8.7.3. 8.7.4. 1. 2. 3.

Evaluation .............................................................................................................. 20 Modification ............................................................................................................ 21 Suspension ............................................................................................................ 22 Termination of the Contract ................................................................................... 22 Grant Completion and Closeout ............................................................................. 23

8.7. Modification, Suspension or Termination ...................................................................... 21

Section III: Easy to Follow Guidelines and Templates .......................................................... 24 Call for Grant Application .............................................................................................. 24 Grant Applications ......................................................................................................... 24 Business Plans.............................................................................................................. 25

3.1 Production Plan ............................................................................................................... 25 3.2 Marketing Plan ................................................................................................................ 26 3.4 Management Plan ........................................................................................................... 26 3.5 Financial Plan ................................................................................................................. 26 3.6 Business Development Plan ........................................................................................... 26 4. 5. 6. Guideline for Technical Performance Reports .............................................................. 27 Performance Report Submission .................................................................................. 27 Performance Report Organization and Content ............................................................ 27

7. Annual Reports ................................................................................................................. 29 8. Business Completion Reports ........................................................................................... 29 9. Performance Report Follow-Up ........................................................................................ 30 10. Guideline for Financial Report ....................................................................................... 30 Annexes ................................................................................................................................ 32 Annex 1: Call for Grant Application ....................................................................................... 32 Annex 1-Form 2: Grant Request Form ................................................................................. 33 Form 3: Applicants Profile .................................................................................................... 34 Annex 2: Business Plan ........................................................................................................ 35 Annex 3: Technical Performance Reports ............................................................................ 48 Annex 4: Financial Forms ..................................................................................................... 56 Annex 5: Evaluation Criteria for Business Plan..................................................................... 60 Annex-6: Monitoring and Evaluation Format ......................................................................... 62 Annex 7: Business Amendment and/or Time Extension Request Form ............................... 65 Annex 8: Contract Termination/suspension letter ................................................................. 66 Annex 9: Grant Completion and Closeout letter.................................................................... 67 Appendices ........................................................................................................................... 68 Appendix 1: List of High Value Commodities ........................................................................ 68

Appendix 2: Tripartite Agreement Template ......................................................................... 71 Appendix 3: Applications /file management checklist ........................................................... 75 Appendix 4: Grant Recipient Verification Form ..................................................................... 76 Appendix 5: ADBs Prohibited List ........................................................................................ 77 Appendix 6: ADBs Safeguard Policy .................................................................................... 78 Appendix 7: Training Content of AGF Guideline ................................................................... 84

Abbreviations
ADB- Asian Development Bank AEC- Agro Enterprise Center AGF- Agribusiness Grant Facility AIC- Agriculture Input Company AMIS- Agriculture Market Information System ASP- Agriculture Service Provider MWDR- Mid Western Development Region DADO- District Agriculture Development Office DAG- Disadvantaged Group DCCI- District Chamber of Commerce and Industry DDC- District Development Committee PAN- Permanent Account Number DFO- District Forest Office PD- Project Director DOA- Department of Agriculture PMU- Project Management Unit DOLIDAR- Department of Local Infrastructure Development and Agriculture Road ESMS- Environmental and Social Management System FG- Farmers Group FNCCI- Federation of Nepalese Chamber of Commerce and Industry FWDR- Far Western Development Region GESI- Gender Equity and Social Inclusion GON- Government of Nepal PSC- Project Steering Committee RAD- Regional Agriculture Director RF- Resettlement Framework SNV-Stichting Nederlandse Vrijwilligers (Foundation of Netherlands Volunteers) SOE- Statement of Expenditure VAT- Value Added Tax WDO- Women Development Office NARC- Nepal Agricultural Research Council NGO- Non Governmental Organization NRB- Nepal Rastra Bank PAM- Project Administration Manual HVC- High Value Commodity IAP- Independent Appraisal Panel IP- Indigenous People LASP-Local Agriculture Service Provider M&E- Monitoring and Evaluation MOAD- Ministry of Agricultural Development

Section I: Introduction 1. Introduction

The Government of Nepal (GON) and Asian Development Bank (ADB) signed a grant agreement on March 16, 2011 whereby the ADB will provide a grant amounting US dollars 20.10 million (twenty million and one hundred thousand United States Dollars) towards the implementation of the Raising Incomes of Small and Medium Farmers Project (hereinafter referred to as the Project). The Project duration is 6 years, effective from 14 June 2011 and expected to end on 30 June 2017. The Project covers 10 districts1 within the Mid-West (MWDR) and Far - West (FWDR) Development Regions of Nepal. The Ministry of Agriculture Development (MOAD) is the Project executing agency, and the implementing agencies are the Department of Agriculture (DOA), Nepal Rastra Bank (NRB) and Agro Enterprise Centre (AEC) of the Federation of Nepalese Chambers of Commerce and Industries (FNCCI). The Project will reduce the market and business risks faced by small and medium farmers diversifying into high value commodities (HVC)2 in 10 districts of the Mid-west and Far-west development regions of Nepal. The two regions of Nepal have the lowest human development indices due to limited investment in physical, social and economic infrastructure and poor access to services. Poverty incidence is, on the average, high for both regions. Within regions, the hill areas suffer higher rates of poverty where up to 70% of households fall below the poverty line. Small farmers incomes are limited by (i) low returns from traditional agricultural commodities, (ii) small and declining farm sizes with low productivity, and (iii) a supply-driven production system that has not captured potential market benefits for high value commodities. The Project will assist small and medium farmers to diversify their crops into HVC by establishing market linkages; providing capital for inputs and improved technology; and for building post harvest value chain infrastructure including storage, packaging, grading, and processing. Project grants will be provided to (i) Disadvantaged Groups, small and medium farmers that are members cooperatives (agriculture or multipurpose) with established market supply agreements for initial inputs and farm technology, and (ii) post harvest enterprises for development of value chain infrastructure to support market supply agreements. The Project will outsource service delivery to nongovernment organizations (NGOs) and the private sector for farmer mobilization, training, production, and business planning business planning and feasibility studies to access Project funding. The Project impact will be increased profitability of small and medium farms. The outcome of the Project will be increased production of HVC by small and medium farmers with supply agreements. Since the growing of HVC such as vegetables, fruits, spices and other non-cereal crops has always been the domain of women, the Project will especially increase womens cash income contribution to their households. The Project is expected to benefit an estimated 17,800 farm households that would grow HVC crops on the average in 0.4 ha for existing farmer groups and 0.25 ha for the disadvantaged groups.
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Mid-western Development Region- Banke, Bardia, Dang, Surkhet, Dailekh and Far-western Development RegionKailali, Doti, Dadeldhura, Baitadi, Darchula 2 High Value Commodities (HVC) are agricultural crops and other non-livestock based commodities, e.g., honey which generate a higher rate of return to the farmer per hectare than the production of staple crops such as cereals.
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The Project outputs comprise: (i) establishing agribusiness grant facility for building HVC value chains in mid west and far west region (ii) formulating business plans for producing and adding value to HVC in the far-west and mid-west; (iii) ensuring effective and efficient project management. The Executing Agency and Nepal Rastra Bank (NRB), as partners of the Project fund flow mechanism, will establish the Agribusiness Grant Facility (AGF). The facility will operate as a separate, local currency, second generation imprest account in the Nepal Rastra Bank (Nepalgunj Branch), from which grants will be disbursed direct to Project beneficiaries having their applications approved. Once the application has been approved, the applicant will enter into a tripartite contract with Project Management Unit (PMU) and NRB pursuant to which disbursement of first installment will be made to the applicants' bank account through NRB upon request of PMU. Applicants will procure goods and services as agreed in the contract agreement following commercial practices and provide procurement and related documents to the PMU for review. Upon proof of eligibility, the PMU will recommend to NRB to release subsequent installments.

2. Objective
The objective of the AGF Guideline is to provide an efficient mechanism for funding agribusiness activities in the Project area. The specific objectives of the AGF Guidelines are to i. ii. iii. iv. v. Provide clear-cut/precise guidelines for grant application procedure Provide process for applications evaluation and approval Have basis for contractual arrangements Make provision for smooth fund flow to the beneficiaries and Effective implementation and reporting of the grant proceeds

3. Adjustment in the Guidelines

Provisions in the AGF guidelines may be revised based on lesson learned and endorsed by the Project Steering Committee.

4. Role of Partner Organizations and Service Providers

The Partner organizations for AGF are NRB, AEC, and the PMU. Other stakeholders involved directly or indirectly in the success of AGF outcomes are National On-farm Service Provider, Local Level NGO Service Providers, DADO, Nepal Agriculture Research Council and Department of Cooperatives. Their role in AGF is briefly described below:

4.1.Agro Enterprise Center

AEC shall carry out the Project with due diligence and efficiency, and in conformity with the terms and conditions agreed upon with the separate contract with ADB and GON. AEC will be responsible for securing markets and supply contract agreement between growers and buyers. More specifically AEC will provide:
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(i) access to FNCCIs 700 members that include the majority of domestic enterprises involved in agribusiness, (ii) local presence in the two regions and Project districts that will be strengthened and sustained after the Project, and (iii) their leadership in developing agribusiness service capacity building products that the AEC can supply to Project beneficiaries. AEC will support planning for securing markets, development of training programs, and review of business plans and grant applications. AEC will work with the PMU in defining post harvest training programs that will be implemented by private sector service providers. The contracting of these service providers will be undertaken by PMU with AEC support. AEC will, through their staff support, the PMU by reviewing of all application for grants. AEC will work closely with SNV to provide training to service providers as required through the market linkage and promotion programs by private service providers. AEC, under separate PMU contract will expand the AEC agriculture market information system (AMIS) with systems for data analysis, data collection and access established in the two development regions. Support the PMU implement post harvest and market linking programs Facilitate Business to Business linkages Develop value chain integration business plans. Develop and manage agriculture market information systems and networks, and transfer knowledge amongst stakeholders and assist the private sector agribusiness including agriculture cooperatives to facilitate a multiplier effect to value chain actors Mobilize market buyers and identify their needs for HVC in the two regions. Build awareness of market opportunities and the identification of buyers and potential market chain participants. Provide training to local agriculture service providers and post harvest agribusiness service providers in agriculture market information system (AMIS), agribusiness awareness, supplier agreements and product promotion. Develop supply agreements and contracts for the supply of produce in demand. Facilitate resolving any disagreement existed during the implementation of supply contract between HVC producers and traders. Work with the prequalified local agriculture service providers (ASP) and post harvest businesses to develop business plans with investment proposals for essential market chain infrastructure. Plan and deliver a market linkage program that identifies buyers and then links these to potential suppliers. Promote HVC market networking and networks within the two Project regions in support of PMU. Work with SNV and PMU to develop agribusiness and value chain knowledge products. Participate in the assessment of Project grant applications to ensure all applicants have established supply agreements and that they meet the criteria for applications

4.2.Nepal Rastra Bank

Open and maintain a special Agribusiness Grant Facility account in Kathmandu and Nepalgunj on the terms and conditions satisfactory to the government and ADB.

Use Grants available through the government for making subgrants3 to the qualified applicants upon approval of PMU, in accordance with the terms of the Grant Agreement, Project Agreement and the PAM and apply exclusively to the cost of Goods, Works and Consulting Services and other items of expenditure required to carry out the Qualified Subproject4. Verify whether PMU has obtained ADBs prior approval on awarding grant exceeding the equivalent of $100,000 or is not in agreement with the recommendations of IAP. Provide each subgrant by an AGF Grant Agreement with the Qualified Applicants in a form acceptable to ADB, rights adequate to protect the interests of the government, NRB and ADB. Carry out the Project with due diligence and efficiency and in conformity with sound applicable technical, financial, business, and development practices. Maintain records and accounts on the progress of the Project and of each Qualified Subproject (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the operations and financial condition of NRB. Promptly inform ADB and PMU of any condition which interferes with, or threatens to interfere with, the progress of the Project. Exchange views through representatives with regard to any matters relating to the Project, NRB and the Grant. Furnish to ADB and PMU all such reports and information, to the extent available with it, as ADB and PMU shall reasonably request concerning (i) the Grant and the expenditure of the proceeds thereof; (ii) the Project; (iii) the Qualified Applicants, the Qualified Subprojects and the subgrants; and (iv) any other matters relating to the purposes of the Grant. Periodically send status report on the utilization of the subgrants to PMU . Maintain linkages with financial organizations (banks, cooperatives and NGOs) in accessing microfinance by beneficiaries. Monitoring and supervision of sub grants and report to ADB and PMU.

4.3.SNV Nepal
Provide agribusiness and value chain technical backstopping Provide technical advice to the PD and the PMU staff to improve project implementation and management. Provide technical training and support to LASPs and DOA staff in the analysis and implementation procedures to ensure that the Project is market led. The backstopping will include advising, mentoring training and supporting services providers to develop processes, business models and plans which link agribusiness with producer groups using contract farming and other approaches. Advice ASPs of new varieties and technologies which can enhance agribusiness opportunities. Provide advice and support to PMU and AEC and its contracted service providers in linking with export and partnership opportunities in other countries especially the South Asia Region. Assist contracted service providers with developing input supply models for producer groups that utilize cooperatives and associations with farmer group linkages.

Subgrants for the purpose of Agribusiness Grant Facility means Agribusiness Grant or Grant in this guideline. Subproject means Business for the purpose of AGF
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Provide Project Management Staff, AEC with training and development support in the monitoring and evaluation and results management system of the Project. Assist PMU and AEC to develop a system for knowledge management and ensure its adoption and use through the project implementation structure including the definition of processes for capture of relevant data, information and the development of knowledge products and their communication. Assist AEC in upgrading its current AMIS.

4.4.National Service Provider (National NGO)

Support, supervise, monitor and provide quality control over the local service providers. Provide awareness and training to local service providers. Assist PMU organizing farmer tours and field days. Provide technical on-farm consulting services to the PMU and the LSPs Work closely with the PMU to develop and build agribusiness and HVC knowledge products.

4.5.NGO for Disadvantage and Marginal Farmers

Form new groups or revitalize existing groups of Disadvantaged and Marginal Farmers. Support in leasing land for HVC production. Develop production and business plans for DGMF Training Need Assessment DGMF Provide Group Management Support and convert DGMF groups to farmer cooperatives. Monitoring and evaluation of the development of the beneficiaries, and reporting to PMU Provide PMU with monthly and quarterly reports on implementation progress Provide support to NTSP on training topics.

4.6.Local Service Providers (Local NGO)

Supply social mobilizers having experience in agriculture technology, preferably JT, JTA. Provide project awareness and training programs to farmer group members Develop production and marketing plans for beneficiaries with supply agreement. Strengthen farmer cooperatives which have HVC supply contracts for effective financial system and governance rules. Provide technical support for the production of HVC and their subsequent marketing. Support AEC in supply agreement between growers and buyers. Coordination among concerned stakeholders at district level. Act as office support unit for PMU at district level. Work closely with PMU, AEC and SNV.

4.7.District Agriculture Development Office

Help provide technical training to LSPs Support LASPs in training farmers Monitoring of farm group achievement
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Monitoring of grant fund use and impacts on farm and post harvest operations Reporting to PMU and the annual evaluation meetings Development of HVC best management practice extension programs Support in collection of business plan from beneficiaries Support PMU in field verification of proposed agribusiness Copy of tripartite agreement will be made available to District Agriculture Development Committee (DADC) through DADO immediately after agreement

4.8.Nepal Agricultural Research Council

Provide Advisory Service in HVC technologies Make available HVC technologies that can be introduced and scaled-up in Project districts Participatory research of HVC Participate, as an ASP, in the Projects demand driven research programs.

4.9.Department of Cooperatives
Assist in forming and managing cooperatives with special focus on transforming existing agriculture groups into cooperatives through its divisional offices.

Section II: The Grant Making Process

The Agribusiness Grant Facility (AGF) will be established by the Executing Agency and NRB as part of the Project fund flow mechanism. The facility will operate as a separate local currency second generation imprest account in the Nepal Rastra Bank (Nepalgunj Branch) from which grants will be disbursed direct to Project beneficiaries that have approved applications. The AGF shall be used to finance three categories of beneficiaries with confirmed HVC supply agreements (i) post harvest entrepreneurs (ii) farmer cooperatives, and (iii) DAG farmers' groups. The grants shall be provided on the basis of (i) a business plan for the post harvest enterprise having market demand and overall feasibility (financial, technical, managerial, institutional, social and environmental) (ii) a farmer cooperative with production, marketing plans and supply agreement of HVC. For this each farmer group shall aggregate the area of each member under selected HVC and prepare group production and group marketing plan. Then they will forward their final plan to their farmer cooperative and the cooperative shall aggregate inputs across its groups/members for a single application on behalf of its members. The farmer cooperative will be the initial beneficiary of the Project Grant and will on behalf of its members purchase eligible goods and services and then distribute these to its members. DAG/IP Farmers groups not affiliated to a cooperative will forward their application directly to the Project. Farmer cooperatives not having farmers groups to their affiliation can apply as a single applicant. Approval of AGF grant applications will be based on the recommendation of the Independent Appraisal Panel (IAP) assessment of each application, field verification by project team including DADO representative and the PD/PMU and NRB entering into a contract with the applicant for the implementation of the proposal. Any application that the PD seeks to approve without IAP recommendation requires the PD to obtain ADBs prior approval for the contract. This approval will require (i) a copy of the IAP recommendation, (ii) a copy (in English) of the application, and (iii) detailed justification from the PD for inclusion of the application. Once an application has been approved, the applicant will enter into a contract with NRB and PMU, pursuant to which disbursement will be made to the applicant. Applicants can choose to get first installment in advance. Applicants other than DAG farmers shall have to produce evidence of initial investment in subproject. The advance amount shall not exceed one fifth budget of the total business budget but this will not apply in case of procurement of equipment which require full payment at a time. Applicants will procure according to commercial practices and provide procurement document to the PMU for review. Upon proof of eligibility, the PMU will recommend NRB to release funds in installments to the beneficiary bank account. Should the appraisal panel findings be disregarded, the project director must obtain ADBs prior approval before any contract or disbursement is undertaken. For all grants over $100,000 the project director must obtain ADBs prior approval. The PMU will approve the AGF proposal within 30 days of the last date of proposal submission. A performance target is set that 90% of successful applications will receive initial disbursements within 30 days of approval by the appraisal panel. The balance funds will be released to the beneficiary bank account upon submission of the invoice and liquidation of the earlier advance. Funds used for ineligible expenditures must be refunded to ADB. ADB, in consultation with the government, reserves the right to reassign fund management if performance targets are not achieved on a quarterly basis. ADB also reserves the right to review all Agribusiness Grant Facility documents. In case of credible evidences of misuse of AGF funds, PMU reserves the right to recover the disbursed fund from the beneficiaries.
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1. Independent Appraisal Panel (IAP)

An IAP will be established with the purpose of examining, appraising and recommending the Applications for Project Grants and making important recommendation on project affairs. The IAP will comprise the following members: (i) Regional Agricultural Directors (RADs) of the MWDR and FWDR- Joint Chairpersons5, (ii) Representative, FNCCI, or a Private Sector representative- Vice Chairperson (iii) Technical Officer, PMU Member Secretary, (iv) Gender and Social Inclusion Officer, PMU Member (v) Environment Officer, PMU - Member The ex-officio members of the IAP will be convened by PSC under the advice and recommendation of the PD, PMU. Project Director of the Project will play as facilitating role in IAP. Chief of District Agriculture Development Office will be an invitee member of IAP for AGF proposals of the respective district. A quorum of three is required for the assessment of all applications. A roster of Technical Specialists, Financial Specialist, and Management Specialist will be maintained at PMU to review the AGF proposal. Qualification, experience, terms of service and remuneration of the specialists will be decided by PSC, and PMU will make call for specialists application. These specialists will work as peer reviewers of the AGF proposal. The IAP will meet at the premises of the PMU when required.

2. Types of Grantee
DAG Farmers Groups, Agriculture Cooperatives / Multipurpose Cooperatives engaged in agriculture related activities and Agribusiness Enterprises

3. Eligibility
Following Registered6 groups and entrepreneurs with business activities involved with HVC agricultural products produced or processed in the Project districts are eligible to receive AGF grants: i. ii. iii. DAG Farmer groups Agriculture cooperatives, Multipurpose Cooperatives engaged in agriculture related activities Agribusiness Enterprises

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The relevant RAD will chair meetings of the IAP depending on the region from which the application emanates. DAG Farmers group registered in DADO, Firms registered in Cottage and Small Industries Office, Agriculture Cooperatives/ Multipurpose cooperatives registered according to Cooperatives Act 1992, Agribusiness Enterprises registered according to Company Act 2006.
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4. Ineligibility

Staff of MOAD or any of its line agencies, including enterprises with shares or equity involvement of individuals (or their relatives) in the public sector including political representatives, and its contracted service providers, and their family members Single agriculture producer i.e. a small farmer, individuals, political organizations, foreign-owned and government institutions, and religious groups Any entity registered outside the project district The Project does not accept or will cease processing applications from any enterprise or person who,

is bankrupt or being wound up, is having their affairs administered by the courts, has entered into an arrangement with creditors, has suspended business activities, is subject to court proceedings in relation to those business activities, or is in any analogous situation arising from a similar procedure provided for in the laws and regulations of Nepal or any other country; has been convicted of an offence concerning professional conduct, fraud, corruption, involvement in a criminal organisation or any other illegal activity by a judgment that has the force of res judicata (against which there is no right of appeal); is guilty of grave professional misconduct proven by any means that the Project can justify; has not fulfilled obligations relating to the payment of taxes or social security contributions provided for in the laws and regulations of Nepal; has been declared to be in breach of contract for failure to comply with contractual obligations in connection with any procurement or grant procedure similar to that offered by the Project; is subject to any conflict of interest arising from the application or the subsequent implementation of the activity financed by AGF grant; is guilty of misrepresentation in supplying information in any AGF grant application; has tried to influence the Project staff in the process of evaluation of their application; is for any reason deemed to be ineligible for receipt of AGF grant support by the Government or ADB; If the Project determines at any time during the processing of the application or subsequent to the disbursement of a grant that the applicant is ineligible according to the above criteria, it may immediately cease processing the application or take appropriate steps to recover any funds already disbursed from the grantee.

5. Grant Categories
Agribusiness grants are categorized into three broad headings. They are Grant Category I: Production Input including Cost of Leasing Land Grant Category II: Farm Development and Technology Grant Grant Category III: Post Harvest Value Chain Investments

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Figure 1: Agribusiness Grant Award Flow Diagram

Call for Application

Required Documents Eligible Applicants DAG Farmers Groups Agriculture and Multipurpose Cooperatives Agribusiness Enterprises Institution Registration VAT/PAN Registration
(Farmers groups and cooperatives are exempted from VAT/PAN)

Institutional Profile HVC Supply Agreement Applications

Grant Category Production Inputs Farm Development and Technology Post Harvest including processing

Business Plan Production Plan Marketing Plan Financial Plan Management Plan Business Development Plan
Apply

Fail

Pre-screening Pass

Fail

Assessment by IAP Pass

Approve withmajor amendment

Approve with minor amendment

Tripartite Contract Agreement Contract Administration Contract Close out

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6. Type of Grant/ Support Areas

1. AGF proposals for HVCs that can be supported by the project are presented in appendix 1. 2. Land leasing for HVC production. This will be for disadvantaged groups and indigenous peoples (DGMF) and will support up to a maximum of US$ 3000 per group for the first two years. The application can be made by DAG/IP farmers groups not affiliated to any cooperative or by cooperatives on behalf of their DAG/IP farmers groups. 3. Farm development and technology grants for HVC production. This includes on-farm capital, training or research investments, including nurseries, small scale irrigation and water harvesting works that are owned, managed and maintained by DAG farmers, agriculture cooperatives, Multipurpose Cooperatives and the application can be made by these groups. 4. Market linked agriculture cooperatives and medium sized enterprises for post harvest HVC investment. This is supported for the cost of equipment, and installation where applicable, for transport, storage, grading, processing and marketing of HVC. The application can be made by agriculture cooperatives, multipurpose cooperatives with agriculture activities or agribusiness enterprises. 5. Farm inputs to HVC farmer group members (for new HVC and one year only and limited to seed, fertilizer and plant protection materials). The application can be made by DAG famers groups or agriculture cooperatives, multipurpose cooperatives with agriculture activities. 6. Cooperative support packages for office equipment and accounting and management systems. This is not a sole package. This can be made available for agriculture cooperatives, multipurpose cooperatives with agriculture activities applying for other grant type or support areas. 7. Alternative energy for remote processing and post harvest operations. This is also not a sole package. This can be made available to Grant Category III applicants based on their business proposal.

7. Cost Share/Match
Cost-sharing or matching refers to that portion of project or program costs not borne by ADB. All contributions, including cash and third party in-kind contributions, are accepted as part of the recipients cost-sharing or matching when they meet the criteria established in the standard provision governing recipient contributions. It is usually expected that the grantee will make some contribution to the activity for which they are seeking funding. This can be either in-kind (such as labour and materials) or cash. The purpose of the matching requirement is to leverage additional resources towards achieving the programs objectives and to give the grantee a stake in the outcome of the activity.

Table 1: Cost Share by Grant Type

Eligible group / grant type Maximum grant ($) US$3,000 per group, Grant Contribution per cent ADB Year 1- 100 Beneficiary Contribution per cent -

1. Land leasing for HVC production to

Government -

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disadvantaged and indigenous farmers groups (DGMF)

($342/ha.) Year 2- 50 ($171/ha.) 50 15 35

2. Farm development and technology grants for HVC production 3. Market linked agriculture cooperatives and medium sized enterprises for post harvest HVC investment 4. Farm inputs to HVC farmer group members (for new HVC and one year only and limited to seed, fertilizer and plant protection materials )

50,000

15

35

250,000

50

15

35

General groups$700/ha of HVC

50

15

35

5. Cooperative support Packages 6. Alternative energy for remote processing and post harvest enterprises

DAG farmers$900 /ha of HVC 5,000

100

50

15

35

5,000

50

15

35

8. Application and Award 8.1.Grant Applications

Applicants are required to prepare business plans which outline the development or expansion of business activity for HVCs. All business plans and applications must be prepared in the format outlined in Section III. Applications must meet the selection criteria and requirements. Business plans and applications must be well prepared and will be assessed carefully by the Independent Appraisal Panel with all recipients obliged to participate in Project monitoring, impact assessments, evaluations, and audit procedures. Applications must reach the Project Director, PMU, Nepalgunj through DADO, DDCI or as indicated in the call notice within the prescribed date and time.

8.2.Assistance to Prepare Business Plans and Grant Applications

The Project will support the Agro-Enterprise Center (AEC), National NGO, Local NGO, and NGO for DAG to help applicants prepare sound, viable and sustainable business plans, and to prepare the Project Grant Applications. AEC agribusiness specialists based in Kathmandu,
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Nepalgunj and in the regions will provide detailed guidance to applicants to prepare business plans and to facilitate links to buyers and markets, as well as sources of specialized inputs needed for the business plan, such as processing equipment and supplies. NGOs will be hired to help identify and organize groups and enterprises that have viable business potential. Staff of DADO, SNV as well as National NGO, NGO for DAG and Local NGO will support farmers for their capacity building. They will also provide technical advice and carry out extension activities of the high value commodities.

8.3.Selection Criteria 8.3.1. Pre-screening the application

The grant application and business plan will be pre-screened by PMU before forwarding it to the IAP for assessment. Pre-screening will be done on the following aspects. 1) Application entry date- Is the application entered at PMU or prescribed place within due date and time? 2) Authorized signature of the applicant and seal- Has the applicant signed and stamped on each page of the document? Look for the evidence of the applicants authority on behalf of the applying entity. 3) Evidence of the legal status of the entity/applicant and its compliance to local and national law and regulations- Is it registered legally and renewed timely? Look for supporting documents attached with the application. 4) Taxation registration number (if applicable) and evidence- Where applicable look for the VAT/PAN registration number and its evidence. 5) Evidence of land ownership (registration, land owner card (Lal Purja), lease or user right). 6) Business plan- Is the business plan included? If included also look for, grant amount requested for. The requested grant amount should not be less than $1500 and not exceed $250,000 7) Compliance with the call for application- check for the overall compliance with the call for application notice.

8.3.2. Assessment by IAP

The Business Plan and Grant Application will be considered by the Independent Appraisal Panel with expertise in technical matters in business development, financial analysis, environmental protection, social and gender improvement, and corporate governance. The assessment will be based on the viability, sustainability, and impact of the Business Plan, the quality and thoroughness of its preparation, and the soundness of documentation and evidence provided. Applications for Grants must provide full details and must be able to pass through close scrutiny and assessment against instructions below and the selection criteria. The Applicant must show they are competent and have excellent understanding of the business; demonstrate that it will benefit HVC agribusiness; and that there will be no negative social or environmental impacts. The application may be approved, rejected, or the Applicant may be requested to provide additional information. The application will be assessed on the basis of the following criteria.

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8.3.3. Grant Application Assessment Criteria

IAP will review or make to review each application against the eligibility criteria mentioned below. 1) Eligibility of the applicant- Check the application against Para 3. Eligibility and Para 4. Ineligibility above and decide on the eligibility of the applicant 2) Eligibility of the Agribusiness Activities and Facilities- Check the application against Para 5. Type of grant/support areas and Para 6. Cost share/match above and decide upon the eligible agribusiness activity and facility. The following concerns/areas are not eligible for grants. i. ii. iii. iv. v. vi. vii. Items on ADBs Prohibited List (Appendix 4) Activities that do not comply with ADBs safeguard policy (Appendix 5) No subproject classified as Category A7 for environmental safeguards Land purchase, unless resettlement costs are incurred Business operating and trading capital Speculative investment Study tours

If the Project determines at any time during the processing of the application or subsequent to the disbursement of a grant that the applicant is ineligible according to the above criteria, it may immediately cease processing the application or take appropriate steps to recover any funds already disbursed from the grantee Upon approval of the eligibility, IAP will send the applications to concerned specialist(s) for business plan assessment and evaluation. Peer reviewers for business plan assessment and evaluation will be 1-3. The average score will be taken for final assessment by IAP. Peer reviewers will assess the business plan on the following criteria. 1. Business development plan a. Specifications of the items required for the planned development (facilities and equipment for Production). b. Cost and Finance table: all items and costs for items proposed for the planned business development, and the source of finance for each (i.e. the business owner, Agribusiness Grant, participating financial institutions (if any). c. Annual business work plan d. Corporate Social Responsibility (CSR) in case of Agriculture Cooperative and Agri-business Entrepreneur applicant 2. Production Plan a. Description of the products or services

Category A. A proposed project is likely to have significant adverse environmental impacts that are irreversible, diverse, or unprecedented. These impacts may affect an area larger than the sites or facilities subject to physical works. An environmental impact assessment (EIA), including an environmental management plan (EMP), is required. This has to be prepared by the proponent.
15

b. Description of the production process, and facilities, equipment and labor involved c. Sources and annual quantity of inputs and raw materials (including procedures to ensure safety, quality, and sustainability of supply) d. Quantity of annual production 3. Marketing Plan a. b. c. d. e. Sales plan (history and forecast) Buyers: description, location, status (confirmed or potential) Distribution process Pricing plan Competitive strategy (competing products and businesses, quality management, differentiation)

4.

Management Plan a. Management structure b. Workers ( jobs allocation, number of full-time and part time workers; plan for employment of local people) c. Sources of facilitators, Advisors (if proposed) d. Community consultation e. Compliance (permits or other written evidence from planning and regulatory authorities approving business operations and any planned civil works, if required)

5. Financial Plan a. Statement of Assets (evidence of business premises land ownership, lease or legal use right) b. Statement of Liabilities c. For proposals between $1,500 and $10,000: Assess on the basis of Basic Cash Flow statement only. d. For proposals exceeding $10,000: Also assess on the basis of Profit and Loss Account; Balance Sheet; Financial Projections (at least 5 years) After assessing the business plan on the above aspects each peer reviewer will evaluate the business plan on the criteria given in annex 5. IAP will make overall review of the evaluated applications and recommend for approval or rejection.

8.4.Grant Agreement and Commissioning

After assessment of the application IAP will recommend either to accept or reject or request the applicant for further information and clarification on the proposal. The Project will verify the approved applicant on the prescribed format provided in Appendix 3. Project Director will approve the application as recommended.

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Should the appraisal panel findings be disregarded, the project director must obtain ADBs prior approval before any contract or disbursement is undertaken. For all grants over $100,000 the project director must obtain ADBs prior approval The successful applicant will be invited for tripartite agreement between the Applicant, NRB and PMU at the latters office. This Agreement will be a legal contract binding the Applicant, PMU and NRB to fulfill the conditions of the Grant Agreement. Conditions will include the schedule of Grant payments, the Applicants reporting and acquittal requirements and monitoring schedule. The Grant Agreement must be signed and witnessed, and have a original copy for each party. Once this contract has been concluded, the PD will request NRB to release the first Installment to the grantee on the terms and conditions set forth in the agreement. PMU will issue letter to proceed to the grantee and the grantee has to commission the work as specified on the plan of action.

8.5.Administration of Grants
The grantee shall procure the agreed goods and services using normal commercial practices. The grantee must provide evidence of purchase documentation to the PMU. PMU will review if expenses are eligible and will request the NRB to release subsequent installment to be deposited into the beneficiary bank accounts. Beneficiaries can have their account in any commercial bank in Nepalgunj or other locations at their choosing. Fund replenishment following disbursement of Project grants will be by SOE and replenishment procedures triggered by the PMU. The grantee will have to submit bimonthly, trimester and annual report of the business to the PMU. If PMU is ensured of the business activities running as planned, only then will request NRB to release subsequent installment. It is anticipated that the cost sharing portion of the beneficiary be spent first. The administration of grants will be supported by the partner organizations and service providers of the Project (Section I Para 3). Payment will be made on trimester basis upon submission of trimester progress report. Grantee will receive payment within two weeks provided the documents are complete. Final payment shall only be made upon submission of project completion report.

8.6.Monitoring and Evaluation Framework

Monitoring is the routine collection and analysis of information to track progress against set plans and check compliance to established standards. Evaluations involve identifying and reflecting upon the effects of what has been done, and judging their worth. Timely and reliable monitoring and evaluation (M&E) makes it possible to identify trends, strengths and areas for improvement in our work. Monitoring and evaluation contributes to:

Performance by providing evidence-based reporting that informs management and decision making. Accountability and compliance by demonstrating whether or not our work has been carried out as agreed and in compliance with established standards.
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Organizational learning and knowledge sharing by reflecting upon and sharing experiences and lessons learned. Stakeholder feedback, especially beneficiaries, with mechanisms for people to express perceptions, as well as any grievances or complaints. Celebrate our work by highlighting our accomplishments, building morale and support for our work.

8.6.1. Monitoring
Agribusiness grant facilities will be monitored on the basis of following frameworks and data generation for this purpose will be disaggregated to satisfy the framework. I. Compliance and safeguard monitoring Compliance monitoring of agribusiness grants will be undertaken by local service providers and reviewed by national service provider and IAP. Safeguard compliance will be monitored by PMU and the safeguards staffs/specialists who will report on compliance of ESMS, GESI and RF. II. Performance and Impact Monitoring Monitoring and evaluation of technical and financial performance of agribusiness activities will be made on the basis of cumulative analysis of four sources of information. These four sources are: I. II. III. IV. Bimonthly, Trimester and annual and project completion reports submitted by respective agribusiness enterprises, and periodic reports of ASPs and DADOs. Project stakeholders meetings recommendations, suggestions and decisions. Reports of agribusiness monitoring and supervision visit by the Project staff, DADO Staffs, and ASPs. Complaint redressal logbook maintained at PMU

I.

Progress reports

Every agribusiness enterprise receiving agribusiness grant from the project are mandated to submit bimonthly report, trimester report, annual report and project completion report on prescribed format (technical as well as financial)8. These reports will be analyzed to judge against the set standards and milestones. Similarly DADOs of ten Project districts shall submit a copy of their regular progress report to PMU as per DOA guidelines.

II.

Project stakeholders meetings

Project stakeholders meetings will be held on a regular basis and as needed based on the nature of the committee formed. The following committees have been constituted or proposed to be constituted in the Project. a) District Level

Reporting formats templates are provided in section III of this guideline

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District Agriculture Development Committee This committee is chaired by DDC chairperson in the absence of whom is chaired by the Chief District Officer. This meeting is held quarterly and discusses about coordination, agricultural planning, monitoring and evaluation issues. This is a permanent and authentic committee in the district. This committee will be responsible to monitor agribusiness activities as well. In the Project districts this committee will make arrangement to include Local NGO of RISMFP as an invitee member of the committee. A copy of tripartite agreement should be made available to DADC through DADO immediately after agreement. b) Central level Project Steering Committee: Overall interagency coordination will be achieved through a Project Steering Committee (PSC) at central level. The Committee will comprise of the following: Project Steering Committee: Secretary, MOAC (Chairperson),Joint Secretary (Planning), MOAC, Director General, DOA, Representatives of Department of Cooperatives (DOC), Ministry of Finance (MOF), National Planning Commission (NPC), Department of Food Technology and Quality Control (DFTQC), Ministry Local Development, Representative of NRB, Representative of FNCCI, and Project Director, PMU. Executive Director, NARC. Regional Agriculture Director from Mid West and Far Western Development Region are invitee members. The PSC will be responsible for (i) review implementation performance and reporting to the EA and PD on options to improve the effectiveness and efficiency of the Project, (ii) provide inter agency coordination linkages for the IA and PMU, and (iii) ensure that the Project is consistent with Government Policy and Project Agreements. The Project will make arrangements for timely submission of reports and meetings minutes to the PMU. PMU will take records of all the four things viz Progress Reports /and Other Reports, Meeting Minutes, Complaint logs and Public Audit Report. These four varieties of information will be assessed and drawn out the conclusion. III. Field Monitoring Reports Project Management Unit will document field monitoring reports submitted by project staff (mandatory), partner organizations (AEC, NRB, SNV) and ADOs as well as ASPs and analyze them. Each business will be monitored and inspected at least once in every cropping season by DADO and LSP and twice during the entire business period by PMU staff. Monitoring is necessary for PMU once before second installment release and once before termination of the business. IV. Complaint Redressal Mechanism

The Project will establish a complaint redressal mechanism to address public grievances and dissatisfaction on the project activities. For this a simple mechanism to collect their complaints and grievances in a prescribed format (Annex 6-Form 1) is designed. The stakeholders can lodge their complaint through e-mail or by post or drop in complain box or hand delivers at respective DADO or PMU, Nepalgunj. The complaints thus received will be tabulated in a complaint log (Annex 6-Form 2). This will be analyzed and action taken accordingly.

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Information collected from all the four sources mentioned above will be documented by the Project in a handy format- Agribusiness Monitoring Matrix (Annex 6-Form 3). Information received from each source will be tabulated in the form. The Project will examine authenticity and reliability of information by cross check. After judging their reliability the Project will verify status of the business in question and register actual status on the last column of the matrix. Assessment of the business status will be made bi-monthly in this matrix and recommendation(s) made to properly run the business.

8.6.2. Evaluation
Evaluation provides the means to assess whether the Project is meeting its targeted objectives and the impacts. a) Process and Performance Evaluation The process and performance evaluation will be done by M&E division of MOAD in coordination with PMU and DOA with support from the experts if necessary. Process and performance evaluation coincides with the semi-annual/annual reports produced through monitoring. This will provide ways to improve project implementation process adopted, access performance of implementers and suggest if new strategies should be adopted. b) Impact Evaluation Impact evaluation will be done by independent evaluators contracted by PMU. Evaluation will attempt to find answers to the following questions: i. What are the overall positive impacts of the granted agribusiness in raising net income of small and medium farmers who participated in the business? Can we provide a strong basis for creating policies and programs that will encourage agriculture development to occur through formation of farmer cooperatives that focus on HVCs and are directly linked to markets in order to reduce poverty and possibly spur greater economic growth? What are the average effects to a farmer participating in the business (compared to not participating) on net income and other measures of welfare? What are the distributional effects of the business? What are the characteristics? (Including institutional capacity) of farmers/farmer groups who are more successful at increasing their net income in both percentage and absolute terms? Is there a basis for developing policies that focus on particular farmer groups either to maximize the programs impacts or minimize inequality or disparities between disadvantaged groups and encourage more inclusive growth patterns? What are the effects on gender and social inclusion in reducing disparities among members of society? What are factors affecting a farmers participation in the project? Can we develop targeting policies which can encourage more participation by people who can maximize the benefits of the program? What are the effects on DAGs and other farmer groups in terms of institutional development? Suggest policy options for institutional development of farmer groups. What are the impacts of the business on land use, natural resources, and environmental degradation such as soil and water quality?

ii. iii.

iv. v.

vi. vii.

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c) Public Audit The grantee shall be responsible to have at least one public audit of its business before completion of the business. For this local residents and representatives, media persons and business stakeholders, PMU and DADO should be invited for public hearing of the business, its impacts and outcomes. The report should be sent to DADO and PMU.

8.7.Modification, Suspension or Termination 8.7.1. Modification

Grantees are not encouraged to modify the business after contract agreement. However under special circumstances the grantee can make request for modification of the business with recommendation from service providers after one crop cycle of HVC. PD may approve the modification request without variation in cost. Contract time extensions are based on the ability to demonstrate that delays have occurred in the program schedule affecting business completion date. All time extension should be based on delays beyond the grantees control, many of them as part of change order requests. Provision for time extension is normally specified in contracts terms and conditions. Time extension requests are normally claimed due to the following circumstances: I. II. III.
IV.

Legal issues are affecting the business completion or the grantees performance The Project asks for a delayed start New or Extra Work not included in the original scope or contract Unusual or adverse weather conditions

Time extensions will be denied by the following reasons:

When the delays claim is caused by the grantee. When there is insufficient or inadequate workforce Underperforming by the grantee, specifically procuring long lead items When the business is affected by normal weather delays. When requesting a time extension certain steps must be followed, otherwise the time extension might not be approved. Normally, the grantee should notify the Project, when any issue might affect the work schedule. A formal letter must be addressed to the Project requesting the time extension and the reasons why those days should be added to the work schedule. If the time extension is granted, then the Project Director must answer by written and a change order will be issued. Time extension requests should be made not less than three months of business completion, if not; the time extension claim will be rejected. The time extension requests must contain the following supporting documents:

Indicate specific issue causing delays List of activities from work schedule being affected by the aforementioned issue Exact amount of time being requested specifying working days or calendar days Sketches, photographs, or pictures of progress Indicate the actions the grantee has taken to avoid or minimize other delays.

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Extension of business period/ time extension can be made only one time with valid and genuine reason for which the format provided in Annex 7. The cost incurred due to time extension should be borne by the grantee. Prior approval of ADB will be necessary for modification of business incurring more than $100,000.

8.7.2. Suspension
Agribusiness grant disbursement will be suspended and grantee asked to halt the implementation process till remedied, if the Project finds that (i) the business is not done as planned (ii) there is a sudden threat to environment that was not foreseen (iii) the Project finds activities done on ADBs prohibited list (iv) misappropriation and misuse of grant money (v) Not adhered to ADB Safeguard Policy 2009 Grantee will be notified to correct the maladies within the prescribed period. If corrected within the given time the suspension order will be withdrawn. If the maladies in question are not corrected within the prescribed period, the contract will be terminated effective from the date of suspension.

8.7.3. Termination of the Contract

There may be five reasons to terminate the contract. 1) Contract Termination by Completion of the Contract Terms A contract can be terminated when each party has performed its duties pursuant to the terms of the contract. In such an instance, the contract terminates as a matter of law.

2) Contract Termination by Agreement A contract can include provisions whereby the parties agree in the contract itself that the contract terminates upon the occurrence of a specific event.

3) Contract Termination By Inability to Perform A contract can be terminated when something unforeseeable occurs that prevents the parties from following through with the contract. This situation is referred to as "impossibility of performance."

4) Contract Termination by Breach of Contract A contract can end when one party breaches the terms of the contract. Such a breach can occur in one of several ways. First, where a party fails to perform as agreed upon in the contract, there is a breach of contract. Moreover, one's failure to abide by the terms of the contract constitutes a breach of contract.

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Additionally, one party can do something to prevent the other party from performing his or her duties under the contract. 5) Contract Termination by Fraud A contract can be terminated by what is referred to as "fraud in the inducement." Fraud in the inducement occurs where a party intentionally misleads the other party into entering the contract.

To ensure no charge can be made for wrongful termination you should be sure that cause exists for termination and procedures are followed to terminate properly. Steps to proper termination Prior to termination the grantee can elect to suspend the work if timely payment is not made by the NRB. This is safer course of action than termination, and it allows the Project a chance to cure. If the grantee must terminate for cause (s)he must provide a 7 day written notice to the Project. Although not required prior to termination, the Project can elect to exercise its right to stop work prior to taking the more drastic remedy of termination. The Project can stop the work if it is not proceeding in accordance with the plans and the Grantees breach is substantial. This is recommended first step prior to termination. Further the Project can elect to carry out portions of the work itself, provided it follows the notice requirements and gives the Grantee an opportunity to comply. Prior to termination the Project must give a 7 day written notice to the Grantee. The Project will issue a termination letter to the grantee as provided in Annex 8.

8.7.4. Grant Completion and Closeout

Upon completion of all approved activities and/or the expenditure of all funds in conformance with the existing rules and regulations, the Grantee enters the final phase of agribusiness grant facility of the Project, grant close out. It is very important that closeout activities be completed in a timely manner. As soon as the grantee reaches 90 percent drawdown of agribusiness grant, the Project will send a preliminary closeout letter. The letter will state that the Grantee has 90 days after completion of all grant activities to submit the following. A copy of the business completion performance report, technical and financial, if all the activities have been completed. A copy of the final audit, including the audit opinion and statement on compliance. An accounting of all acquired properties and its proper disposition. An accounting of any anticipated excess fund in the Grantee account. If so it must be refunded to NRB.

Upon receipt of the requested information, the Project will conduct a review of the grants progress towards completion, satisfaction of the Project objective and beneficiary data, and other necessary management requirements. If no additional information is needed, the Project
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will approve the Grantees completion of closeout; and issue Grant Completion and Closeout letter (Annex 9).

Section III: Easy to Follow Guidelines and Templates 1. Call for Grant Application
The Project will call for grant application from eligible entities in national, local newspaper, FM radios and website giving a minimum of one month duration for submission. Call for grant application will be made in every three months. Call for grant application should include, apart from others, Eligible applicant Eligible support areas/type of grants Deadline for submission of application Place of submission Documents to be included along with the application Other legal provisions of grant application

The template for call for grant application is given in Annex 1- Form 1.

2. Grant Applications
1) If you are a registered DAG/IP farmers group and not affiliated to any cooperative, and if you have a signed supply agreement with buyers You can apply for Production inputs (fertilizer, seed and plant protection cost for the first crop grown under the Project); and Cost of Leasing Land (up to a maximum of $3000 per group for the first two years). 2) If you are a registered agriculture cooperative/multipurpose cooperatives engaged in agriculture activities and if you have, (i) Signed supply agreement with buyers, (ii) HVC production/processing/marketing experience , (iii) Group members having a farm of less than 2.0 ha, (iv) Have access to actual or potential HVCs markets You can apply for Farm Development and Technology Grant (on-farm capital, training, research investments, nurseries, small scale irrigation and water harvesting works that are owned, managed and maintained by farmers groups) through your cooperative. 3) If you are a agribusiness enterprise or cooperative and you have (i) Signed agreement with suppliers/growers You can apply for Post Harvest Value Chain Investments

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Grant application Format is given in Annex 1- Form 2 The purposes of the Business Plan and Grant Application are to provide: (i) Evidence of the legal status of the business entity (the Applicant) and its compliance to local and national law and regulations; (ii) Information for assessment of the business viability, the impact on people in the project area, the environmental impact; (iii) Specifications and costs of the items proposed to be financed with Grant assistance. All Agribusiness Grant applications must include the following information: I. II. III. IV. V. VI. VII. Type of business structure (Farmers group, cooperative, company, etc.) Business Address (location and contact details) Name(s) of responsible person(s) and contact details Taxation Registration Number (VAT/PAN) Bank account details (Name of Bank, Address, Account holders name and account number ) Evidence of land ownership (Provide documents of registration, lease or user right) Copy of HVC supply agreement with the farmers groups/ traders/processers

See Annex 1- Form 2: Application Form and Form 3: Applicants Profile

3. Business Plans
(Grant Category I applicants applying for grants below $10,000 can simply fill up the forms/ templates provided for business planning and need not explain the following)

3.1 Production Plan

Describe the product and explain how it is produced I. II. III. IV. Description of the products or services Description of the production process, and facilities, equipment and labor involved Sources and annual quantity of inputs and raw materials (including procedures to ensure safety, quality, and sustainability of supply) Quantity of annual production Grant category 1- (Production Input including Cost of Leasing Land) applicant should describe the above after filling the form provided in Annex 2- Form 2 Grant category 2 (Farm Technology Investment Financial Assistance) and Grant category 3 (Post harvest value chain investments) applicant should describe the above after filling the form provided in Annex 2-Form 3

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3.2 Marketing Plan

Describe how the product is sold I. II. III. IV. V. Sales plan (history and forecast) Buyers: description, location, status (confirmed or potential) Distribution process Pricing plan Competitive strategy (competing products and businesses, quality management, differentiation)

Describe the above after filling the form provided in Annex 2-Form 4.

3.4 Management Plan

Describe how business is managed i. ii. iii. iv. Management structure (brief description of positions and roles, name(s) of top management) Workers (description of jobs, number of full-time and part time; mandatory: plan for employment of local people) Sources of Contractors, Advisors (if required) Community consultation: mandatory (at a minimum, the applicant must hold a meeting with people who live next to the business, or who may be affected by the business; minutes of the meeting signed by people attending the meeting must be included in the application) Compliance (permits or other written evidence from planning and regulatory authorities approving business operations and any planned civil works)

v.

Describe the above after filling the form provided in Annex 2-Form 5

3.5 Financial Plan

Describe the financial status of the business (i) Statement of Assets (mandatory: evidence of business premises land ownership, lease or legal use right) Statement of Liabilities For proposals between $1,500 and $10,000: Basic Cash Flow statement For proposals exceeding $10,000: Profit and Loss Account; Balance Sheet; Financial Projections (at least 5 years)

(ii) (iii) (iv)

The related forms are provided in Appendix 2-Form 6

3.6 Business Development Plan

Once you have planned the business you should now have business development plan. Describe the plan and costs to develop the business
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(i)

(ii) (iii) (iv)

(v)

Describe the plan for business development. Business development plan can be made through SWOT analysis or Logical Frame work or any other model you wish to follow. The objective, goal and strategy must be clear. Cooperatives and agri-entrepreneurs must propose Corporate Social Responsibility (CSR) Specifications of the items required for the planned development (typically these will be facilities and equipment for Production) For purchase of goods and services exceeding NRs 300,000, provide 3 price quotations based on the specifications. Cost and Finance table: list all items and costs for items required for the planned business development, and the source of finance for each (i.e. the business owner, Agribusiness Grant). If the business must borrow from a bank, a letter from the bank must be provided. Annual business work plan: Provide monthly work schedule of the business.

4. Guideline for Technical Performance Reports

Performance Reports are a significant tool for informing the Project regarding business development and outcomes and in maximizing dissemination and utilization of the funded business results and findings. Annual and Business Completion Reports provide the grantee the opportunity to document their innovative program from inception to completion and to assist the Project to understand the experience and its implications for others. Success of a grant project is not measured by whether or not the project achieved anticipated outcomes, but rather by the lessons learned through the project and how well they are articulated so as to inform future activity.

5. Performance Report Submission

Bimonthly reports are due one week after every two months. Trimester reports are due 15 days after each four month and Annual Reports are due 30 days after each year. Business Completion Reports are due within 45 days of the business completion date. Grantees are asked to submit one copy of the performance report in electronic format. Electronic format may be submitted by e-mail, or on CD. Grantees forwarding a CD or disk, or who have brochures, or other product attachments that are not available in electronic format, may hand deliver these at the Project Office in person or through the service providers. Reports sent by e-mail should be sent to the e-mail address of RISMFP. Signatures on the report Title page may be scanned and included with the electronic report. Where this is not possible, an unsigned copy may be submitted via e-mail and the authorised representative may visit the Project Office any time within one month after due date to sign the documents. If it is not possible to submit electronically, please submit two hard copies of the report to the Project. Trimester report should be submitted using the template provided in Annex 3- Form 1. All reports should be sent to PMU and copy to DADO and NRB.

6. Performance Report Organization and Content

Below is a description of the content for each section required for annual and Final Reports listed in the order they should appear in your report. Grantees should direct any questions they may have about report content to their service provider.

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Performance Report Organization Summary

Annual Reports Title Page Activities and Accomplishments Appendix

Business Completion Reports

Title Page Table of Contents Executive Summary Introduction Activities and Accomplishments Appendix

Performance Report Contents

A. Title Page (All Performance Reports) The title page should contain the following information: Business Title Business Manager contact Information including grantee organization name, address, phone number and e-mail address AGF Grant Award Number Total Business Period Reporting Period (Bimonthly, Trimester and Annual Reports Only) The Date of Report

B. Table of Contents (Business Completion Reports Only) A table of contents should contain page references to all major sections of the report. List all main headings on the left side, and type corresponding page numbers for the start of each heading on the right. C. Executive Summary (Business Completion Report Only) All Business Completion Reports must begin with a 1 page Executive Summary. An Executive Summary should capture the projects purpose and scope; target population; results/important findings and lessons learned; products developed (including intended use and audience); program and policy implications; and recommendations, if any. D. Introduction (Business Completion Reports Only)

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The introduction should provide a brief overview of the business and any background information that is necessary to understand the business planning strategies, goals, objectives, activities, and findings. E. Activities and Accomplishments The Activities and Accomplishments section serves as the body of your report. Below is the outline of the areas to be covered for Annual Reports as well as for Business Completion Reports. For each of these reports, grantees are asked to respond to a series of questions. Grantees should organize this section of their report by listing the question, followed by the response. F. Appendix (All Performance Reports) Include a copy of each business product as a separate attachment and identify each by capital letters in sequence, i.e. A, B, C, etc.

7. Annual Reports
1. What did you accomplish during this reporting period and how did these accomplishments help you reach your stated business goal(s) and objective(s)? Please note any significant project partners and their role in business activities. 2. What, if any, challenges did you face during this reporting period and what actions did you take to address these challenges? Please note in your response changes, if any, to your business goal(s), objective(s), or activities that were made as a result of challenges faced. 3. How have the activities conducted during this reporting period helped you to achieve the measurable outcomes identified in your business proposal? 4. What was produced during the reporting period and how have these products been distributed/ marketed?

8. Business Completion Reports

1. What measurable outcomes did you establish for this business and what indicators did you use to measure performance? To what extent did your business achieve the outcomes? 2. What, if any, challenges did you face during the business and what actions did you take to address these challenges? 3. What impact do you think this business has had to date?- i) social impact, ii) environmental impact iii) economic impact etc. What are the lessons you learned from undertaking this business? 4. What will happen to your business after this grant has ended? Will business activities be sustained? Will business activities be replicated? If the business will be sustained or replicated what other funding sources will allow this to occur? Please note your significant partners in this business and if/how you will continue to work on this activity.
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9. Performance Report Follow-Up

Upon receipt of each Performance Report, the Monitoring Officer will review the report and communicate with the grantee should there be any questions or concerns. Monitoring Officer is required to complete a Grants Monitoring Statement following the receipt of each report which summarizes the report and any follow-up recommendations and designates each report as either acceptable or unacceptable. If a report is found to be unacceptable, the Monitoring Officer makes recommendations for any corrective action to be taken. Approved Performance Reports become a part of the official grant file.

10. Guideline for Financial Report

As a basic principle, funds are released on the basis of agreed work plans and budgets. Training and guidance can be given by the service providers before implementation if there is any doubt on the correct procedures. 1. The agribusiness grant is approved as in the business plan. Based on the type of grant requested agribusiness grant will be either to support HVC production or Post Harvest Activities. Basically HVC production support is provided to DAG farmers groups or cooperatives and Post Harvest Support to Farmers cooperatives and agribusiness enterprises. 2. The procedures for both are similar, although the business plans require detailed work plans to be developed for each business year, within an overall framework; on the other hand the post harvest business have clear work plans drawn up from the start of the business, which generally require little alteration during implementation. 3. The Project has four forms (see Annex 4) which are used for financial reporting by the grantee. o FORM 1 Advance application form o FORM 2 Trimester Financial Reporting Form. o FORM 3 Annual Financial Reporting Form o FORM 4 Business Completion Financial Reporting Form. The trimester, annual, and business completion financial report should submitted along with the physical progress reports. 4. The aim has been to keep the forms as simple as possible, whilst maintaining the maximum amount of transparency and accountability. 5. As soon as the agreement has been signed between the applicant, NRB and the Project the first release of funds can be made. For this to happen the project must draw up a work plan, based on the business plan, which indicates the fund requirement for the first trimester (four months). Generally, the Project intends to have the grantees share spent first during the first trimester and the grantees claim the trimester expenditure upon completion of the first trimester. The grantee can demand for first trimester budget in advance, if necessary. For this, grantees other than farmers groups shall have to produce evidence of initial investment in subproject. Fill up Form 1 and submit to the Project for checking and approval. 6. Once the forms have been verified, the Project requests NRB to release the fund for implementation of sub project.

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7. At the end of the fiscal year, an Annual Financial Report (Annex 4-Form 3) is submitted to the Project and Business Completion Financial Report (Annex 4-Form 4) is submitted along with business completion report within 45 days after the completion. 8. During the project period, PMU and NRB will regularly monitor the financial transaction of the business. 9. For auditing purpose, the grantee should employ the professional auditors affiliated to the Institute of Chartered Accountants of Nepal. 10. All business expenditure records are made available to the auditors. PMU and NRB expect all businesses to abide by their institutional accounting rules which must be in accordance with the rules and regulations of Government of Nepal. 11. The Auditor's report will be made available to concerned grantee on completion of the audit. Any deficiencies noted in the report will be expected to be acted upon promptly.

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Annexes Annex 1: Call for Grant Application

Form 1: Call for Grant Application
Government of Nepal Ministry of Agriculture Development Department of Agriculture

Raising Incomes of Small and Medium Farmers Project Project Management Unit, Nepalgunj Call for Agribusiness Grant Facility Application Government of Nepal has received grant from the Asian Development Bank towards the cost of Raising Incomes of Small and Medium Farmers Project in Banke, Bardia, Dang, Surkhet, and Dailekh districts in Mid-western Development Region and Kailali, Doti, Baitadi, Dadeldhura and Darchula districts in Far-western Development Region. The Project will assist small and medium farmers for crop diversification to high value commodities by establishing market linkages, providing capital for inputs and improved technology, and for building post harvest value chain infrastructure including storage, packaging, grading and processing. The Project intends to apply part of the proceeds of the grant to the eligible applicants to carry out agribusiness activities in the Project districts. Therefore the Project now invites application from (specify eligible applicants) for (mention different grant categories). The applicants should note that: 1. The application form and other related formats are available at Project Management Unit, Nepalgunj or can be downloaded from the website: www.rismfp.gov.np 2. The application should be addressed to the Project Director, Raising Income of Small and Medium Farmers Project, Project Management Unit, Nepalgunj 3. The application should reach the Project Management Unit, Nepalgunj on or before (mention date and time) 4. If the last date of submission of the application falls on public holiday, it will be carried over to the next working day. Applications received after the deadline will not be considered. 5. The standard forms provided by the Project should be used for the application, otherwise the application will not be considered. 6. All the applications will be subjected to documentary, technical, managerial, social & environmental, economical and financial checking. 7. The decision on the approved application will be posted on PMU notice board and the Projects website where the list approved as well as rejected applications will be displayed. 8. The Project reserves the right to approve or not to approve the application without assigning any reason what so ever. 9. For further information the applicant can contact the Project Management Unit, Nepalgunj (Phone No) or visit the website given above.

Project Director

32

Annex 1-Form 2: Grant Request Form

[Date] To Project Director Raising Income of Small and Medium Farmers Project Project Management Unit Nepalgunj

Subject: Grant Application for [Business Name]

Dear Sir/Madam, I would kindly request assistance of the RISMFP Agribusiness Grant Facility Fund to support [Applicants Organization] to implement business activities described in the attached business plan and annexes, which has an estimated total value of Rs_____________. [Applicants Organization] agrees to contribute goods and services valued at Rs_____________ to the business, while AGF fund will provide Rs______________. The project will be implemented in the period of ________ months as of the date of final approval. I have neither received grant from any other source for this business nor have any such business being run through grant. Thank you for considering this application. Sincerely, ________________________ [Name] [Title & Organization] Address

Attachment 1. 2. 3. 4. Grant applicants profile Business Plan ................... ...................

33

Form 3: Applicants Profile

1. Name of the business: 2. Type of business structure 3. Date of Registration 4. Business Address Place: Ward No: VDC/Municipality: District: 5. Name(s) of responsible Name: person(s) and contact details Phone No: Fax No: 6. Taxation Registration Number (VAT/PAN): (Optional for FGs) 7. Bank account details: Name of Bank: Address: Account holders name: Account number: 8. Applicants Experience and Capacity (manpower, equipments, facilities, network etc) Phone No: Fax No: e-mail: Farmers group Cooperative Agribusiness entrepreneur

e-mail:

9.

Any other information the applicant wishes to furnish (not exceeding one page)

34

Annex 2: Business Plan

Annex 2-Form 1: Group Profile Name of HVC: Area of Production: ha Land Type: Khet/ Bari, Irrigated/Unirrigated Production site: PlaceWard NoVDC.District HVC supply agreement with: Number of farmers involved: Name of farmer Male/Female DAG/ IP/ Others Member in FG Executive/general Area under HVC Owned/Leased

Total
Note: Mandatory to the entire applicant. Grant category III applicants such as processors and traders should provide profile of the group with whom the HVC supply agreement is made.

35

Annex 2-Form 2: Production Estimate for Grant Category I (Production input including Cost of Leasing Land)
S. N. I 1 2 3 4 5 6 Particulars
Unit Rate

Year 1
Quantity Amount Rate

Year 2
Quantity Amount Rate

Year 3
Quantity Amount

II 1 2 3 4 5 6 III

IV

Materials Planting materials FYM Fertilizers Plant protection chemicals Irrigation Growth regulator & foliar nutrients Staking/mulching.. . Sub Total I Labour Land preparation Sowing/Planting Weeding/Plant care Application of fertilizers, pesticides, etc. Irrigation Harvesting & packing Sub Total (II) Leasing Land Total (I + II +III) Rounded Off to Production Main Product Bi-product Cost of Production/Kg Note: please refer Annex 2- Form 5.2 (specifications) for rate and quantity)
36

Annex2-Form 3: Production Estimate for Grant Category II and III (Farm Development and Technology Grant, Post Harvest Value Chain Investments)

S.N I 1 2 3 II 1 2 3 4 III 1 2 3 IV 1 2 3 V 1 2 3 VI VII

Description Facilities

Unit

Rate

Amount/Val ue

How it is produced ( Describe the Processing technique)

Final Product Quantity Rate Amount

Equipment

Labor

Inputs

Raw Material

Total

Note: Please refer Annex 2-Form 5.2 (specifications) for rate and quantity

37

Annex 2-Form 4: Marketing Plan

Annex 2-Form 4.1: Sales Plan (to be filled by all applicants) Product description Total Quantity* Sales history (annual volume of sale before Project) Estimated volume of sale with Project Year 1 Year 2 Year 3

*derived from annex 2-form 2 for grant category I and form 3 for grant category II and III Annex 2-Form 4.2: Buyers (to be filled by all applicants) Description Location Buying Capacity Status ( confirmed/potential)

Annex2-Form 4.3: Distribution Process (to be filled by all applicants) Sales Product Farm gate Vendor Quantity of Sales through Retailer Whole seller

Exporter

Annex 2-Form 4.4: Pricing Plan (to be filled by cooperatives and agribusiness entrepreneurs only) Product specification Retail price Volume* 1 Whole sale price Volume* 2 Volume* 3 Pricing Strategy

*specify volume size viz. weight of the consignment ( 1 quintal, 1 full truck load etc) Annex 2-Form 4.5: Competitive strategy (to be filled by cooperatives and agribusiness entrepreneurs only) Your Product Specification Your Competitors Product Specification How do you cope with the difference? How will you maintain the quality of your product? What will be your competitive strategy? Low Price Assured Others supply (specify)

Quality Product

38

Annex 2-Form 5: Management Plan

Annex 2-Form 5.1: Management Structure (to be filled by cooperatives and agribusiness entrepreneurs only)
Staff Position Manager Storekeeper Accountant Procurement Sales person Supervisor .. .. Workers Full time Part time Contractor/Advisor (if any) .. Number Local Roles Outsider Remarks

A. B.

Community Consultation: (Provide minute of the meeting signed by the community members attending the meeting. Compliance: (Provide copy of permits or other written evidence by regulatory authorities approving business operations and any planned civil works, if required)

39

Annex 2-Form 5.2: Production specification (to be filled by grant category I applicants with the help of project technicians)

I 1 2 3 4 5 II 1 2 3 4 5

Technical Parameters Variety Spacing Plant Population (no./ha) or seed rate (kg/ha) Fertilisers (g/plant/year of age) or kg/ha

Yield (no. of fruits/tree) or kg/ha Economic Parameters Planting Material (Rs/ seedling) or (Rs/kg) Labour wage rate (Rs/ manday) Bullock hire or tractor hire rate Rs/hour or /day FYM or compost (Rs/ quintal) Fertilizers (Rs/ kg) : Nitrogen (Rs./Kg) based on Urea P2O5 (Rs./kg) based on TSP K2O (Rs./kg) based on MOP ZnSO4 (Rs./Kg) FeSO4 (Rs./Kg) MnSO4 (Rs./Kg)

Plant protection chemicals : (Name) .Rs/l or Rs/kg . ..

Weedicides (Name) .

Growth regulators (Name). .

7 8

Sale price (Rs.per 100 fruits) or Rs/kg Economic life (in case of horticultural crops and MAPS)

Note: Applicants have to prepare specifications for grant category II and III according to the nature of the business.

40

Annex 2- Form 5.3 Mitigation Plan ( to be filled by cooperatives and agribusiness entrepreneurs ony)
Business Impact Risk and assumption 1. 2. 3. 4. Environmental Impact During Production During Processing During Marketing Nature and extent Coping Strategy

Social Impact

41

Form 5.3: Work Plan (to be filled by all the applicants)

Activities Land acquisition (leasing) Land Preparation / establishm ent of PH unit Procureme nt of inputs/ raw materials Intercultura l operation/p rocessing Harvesting Packaging Selling Market study .. ..

Year 1 J F M

Year 2 J F M

Year 3 J F M

Note: This is a design only and is not realistic. You should shade activities according to what you will actually do. Activities may differ according to business.

42

Annex 2- Form 6: Financial Plan Form 6.1: Cost and Finance Table (to be filled by all the applicants)
S. N. Particulars Year 1 Year 2 Year 3

Total Amount
I 1 2 3 4 5 6 7 8 9 II 1 2 3 4 5 6 Sub Total (II) Labour Materials

AGF

Applicant

Total Amount

AGF

Applicant

Total Amount

AGF

Applicant

III

Facilities . Subtotal III

IV

Equipment

43

S. N.

Particulars

Year 1

Year 2

Year 3

Total Amount
.. . Subtotal IV V Raw material .. .. Subtotal V III IV Leasing Land Support for Cooperative Total

AGF

Applicant

Total Amount

AGF

Applicant

Total Amount

AGF

Applicant

44

Form 6.2: Balance Sheet (to be filled by cooperatives and agribusiness entrepreneurs)
Balance Sheet as of.. Capital and liabilities Capital +Net profit -Drawings Sundry creditors Bills payable Loan on mortgage Bank overdraft Outstanding expenses Amount Rs Assets and Properties Cash in hand Cash at Bank Plant and Machinery Furniture and fixtures Land and building Sundry debtors Bills receivable Goodwill Investment Tools and implements Prepaid expenses Amount Rs

--------------------

------------------------

Form 6.3: Profit and Loss Account (to be filled by cooperatives and agribusiness entrepreneurs)
Debit Particulars To gross loss transferred from trading account To salaries To Rent To Telephone charge To General expenses To Sundry expenses To Production expenses To marketing expenses . Net profit transferred to capital account ------------------Amount (Rs) Credit Particular By gross profit transferred from trading account By interest of fix deposit in bank By discount received By Other income By Miscellaneous revenue receipts .. . Amount (Rs)

Net loss transferred to capital account -------------------

Form 6.4: Financial Projections (to be filled by cooperatives and agribusiness entrepreneurs)
Profit and expenses Revenues Cost of sales Gross profit Accounting Advertising and promotion Bank charges Production cost Depreciation Office supplies Telephone . . Earnings before taxes taxes Net profit Year 1 Year 2 Year 3 Year 4 Year 5

45

Form 6.5: Cash Flow Projection (applicable to cooperatives and agribusiness entrepreneurs)
Description Operating profit Add: depreciation Working capital investment Cash from operations Interest expense Income taxes Net cash before debt payment Debt payment Change in cash Cash reconciliation Beginning cash Change in cash Ending cash Year 1 Year 2 Year 3 Year 4 Year 5

46

Form 6.6: Basic Cash Flow Statement (to be filled by grant category I applicants)
Description 1. Money Received -Cash from sales -Payment received -New loans -New Investment .... Total Received 2. Money Spent -Cash spending -Bill payment -Repay loans -Purchase assets ........ Total Spent Cash Flow Cash Balance Period.................. Period............. Period............

47

Annex 3: Technical Performance Reports

Annex 3-Form 1: Bimonthly/Trimester Performance Report
Grant Number:

Grantee:
Address: Person Completing Report: Telephone Number: Date:

Reporting Period (Check One and Enter Year)

First Trimester Second Trimester Third Trimester ( ( ( ) ) )

Report Due
November 15th March 15th July 15th

1. Major Activities/Accomplishments: List major business activities this reporting period. (Include activities begun this period, those completed since previous period, and those begun in the previous period and continuing this period.) Specify the types of services provided, particularly, those services identified as priority services under this grant.

2. Problems Encountered: List any problems experienced during the reporting period. Include actual/anticipated slippage in task completion/ implementation dates and any deviations from original business plan. Also, indicate any steps undertaken to address problems.

48

3. Significant Findings or Events: List any significant findings or events that occurred during the trimester.

4.

Dissemination Activities: List information dissemination activities carried out during the reporting period. Attach copies of any newspaper, or magazine articles or other published materials considered relevant to the business project activities or used for business information or public relations purposes.

5. Other Activities: List any other business activities not noted earlier.
49

6. Activities Planned for Next Reporting Period: List major activities planned for next reporting period.

50

Activities and Accomplishments

SN Activities Unit (3) (1) 1 2 (2) 4+5+6+7+8 Land acquisition (leasing) Land Preparation/ establishment of PH unit Procurement of inputsl/ raw materials Intercultural operation/processing Harvesting Packaging Selling Market study .. .. Year 1 (4) Year 2 (5) Business Target Year 3 Year 4 (6) (7) Year 5 (8) Total (9) (10) (11) 10+11 9-12 Business Achievement Till Last This Trimester Trimester This Year (12) Remaining (13)

3 4 5 6 7 8

Appendix Include a copy of each business product as a separate attachment and identify each by capital letters in sequence, i.e. A, B, C, etc.

51

Annex 3-Form 2: Annual Performance report

1. 2. Business Title: Business Manager: Institution name: Address: phone number: e-mail address: AGF Grant Award Number: Total Business Period:

3. 4. 5. 6.
7. 8.

9. Reporting Period: 10. The Date of Report

Activities and Accomplishments

SN Activities Unit (3) (1) 1 2 3 4 (2) 4+5+6+7+8 Land acquisition (leasing) Land Preparation/ establishment of PH unit Procurement of inputs/ raw materials Intercultural Year 1 (4) Year 2 (5) Business Target Year 3 Year 4 (6) (7) Year 5 (8) Total (9) (10) (11) 10+11 9-12 Business Achievement Till Last This Trimester Trimester This Year (12) Remaining (13)

52

5 6 7 8

operation/processing Harvesting Packaging Selling Market study ..

53

Appendix Include a copy of each business product as a separate attachment and identify each by capital letters in sequence, i.e. A, B, C, etc.

Annex 3-Form 3: Business Completion Reports Title Page

1. Business Title: 2. Business Manager: 3. Organization name: 4. Address: 5. Phone number: 6. e-mail address: 7. AGF Grant Award Number: 8. Total Business Period: 9. Reporting Period: 10. The Date of Report:

Table of Contents Executive Summary Introduction Activities and Accomplishments

54

SN

Activities Unit (3) Year 1 (4) Year 2 (5)

Business Target Year 3 Year 4 (6) (7)

Year 5 (8)

Total (9)

Business Achievement Till Last This Trimester Trimester (10) (11)

This Year (12) 10+11

Remaining (13) 9-12

(1) 1 2

(2) 4+5+6+7+8 Land acquisition (leasing) Land Preparation/ establishment of PH unit Procurement of inputs/ raw materials Intercultural operation/processing Harvesting Packaging Selling Market study ..

3 4 5 6 7 8

Appendix
Include a copy of each business product as a separate attachment and identify each by capital letters in sequence, i.e. A, B, C, etc.

55

Annex 4: Financial Forms

Annex 4-Form 1: Advance Application Form
Grant No: Business Title: Fiscal Year: Business Year: Trimester period covered by expenditure: From: To:

Description Activity 1 Activity 2 Activity 3 Activity 4 Activity.n Total

Estimated expenditure Grant

Matching

56

Annex 4-Form 2: Trimester Financial Report

Grant No: Business Title: Fiscal Year: Business Year: Trimester period covered by expenditure: From: To:

Description

Total Budget

Budget Released

Expenditure

Budget Remaining

Budget for Next Trimester

Grant

Matching

Total

Grant

Matching

Total

Grant

Matching

Total

Grant

Matching

Total

Grant

Matching

Total

Activity 1 Activity 2 Activity 3 Activity.n Total

Total Budget Release:

Total Expense: Actual Expense after due advance deduction: Account No:

Bank Balance: Advance Due: Bank Name:

57

Annex 4-Form 3: Annual Financial Report

Grant No: Business Title: Fiscal Year: Business Year:

Description

Total Budget

Budget Released

Expenditure

Budget Remaining

Budget for Next year

Grant

Matching

Total

Grant

Matching

Total

Grant

Matching

Total

Grant

Matching

Total

Grant

Matching

Total

Activity 1 Activity 2 Activity 3 Activity 4 Activity.n Total

Total Budget Release: Bank Balance: Actual Expense after due advance deduction: Bank Name:

Total Expense: Advance Due:

Account No:

58

Annex 4-Form 4: Business Completion Financial Report.

Grant Number : Business Title: Grantee Business Manager: Business Start Date: Business Completion date: Total Budget: Agreement date:

S. N

Activities

Total Approved Budget Grant Matching

Total Budget released Grant Matching

Total Expenditure Grant Matching

Advance balance Grant Matching

Budget balance Grant Matching

1 2 3 n.. Sub total [A] Overhead % Contingenc y% Sub Total [B] Vat 13 % Grand Total

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Annex 5: Evaluation Criteria for Business Plan

S.N Assessment Criteria 1. Farmer outreach: For Cooperative or Agribusiness entrepreneur a contractual arrangement for supply of HVC with farmer groups for the partnership needs to be made before the submission of the proposal. For farmer groups HVC supply agreement with postharvest processors or traders Farmers group/ cooperative/ entrepreneurs strength. Judge their strength to do the business proposed Innovative features: The business plan must be innovative in one or more aspects: technological innovation (e.g. choice of HVC), institutional arrangement, or pubic goods element translating farmers challenges into opportunities, corporate social responsibility etc. Economic/Managerial/Financial/Technical aspects: The business and investment plan demonstrates long term economic gains and is financially and technically sound, viable and sustainable. Assess specifications, competitive analysis, needs identification, market acceptance, unique capabilities, sales/promotion plans and projections, general economics of the business Environmental aspects: Positive environmental impacts would earn extra points for business proposals (e.g., for the use of environmentally friendly technologies, erosion control measures, safeguard against activities that may lead to negative environmental impacts like increased soil erosion, excessive use of chemicals or have mitigation plans in place to ensure the environmental safeguard policy is complied with). Social inclusion: The business plan evaluation criteria would give extra points for the following socials aspects: gender

Your assessment

Score

Maximum Score 10

2.

10

3.

15

4.

35

5.

10

6.

10

60

7.

development, gender equity, targeting the poor, Indigenous Peoples and disadvantaged groups. For example, eligible proposals from women headed businesses and households would be given extra points in the evaluation weighting system. The matching grants would meet the costs of farm inputs and farm development and technology; goods, materials and on-farm works to increase production and productivity, and postharvest handling undertaken by smallholder farmer cooperatives/farmers groups agribusiness entrepreneurs. Ineligible expenditures would include expenses related to (farm) land except for DAG farmers groups who can avail cost for land leasing, family labor contribution, working capital, recurrent expenses, normal business costs and technologies which infringe with the existing laws and regulations

10

Total score Overall impression of the evaluator: Recommendation 1. Can be approved with minor changes 2. Can be approved with major changes a. b. c.

100

3. Can be rejected, because. (give reasons) Signature of the evaluator: Name: Date:
61

Annex-6: Monitoring and Evaluation Format

Annex6-Form 1: Project/programme feedback Project/
o be in by the person filing the complaint

Name: Address: Other relevant claimant information: Sensitivity of complaint: (circle or highlight one) Description of complaint:

Low

Medium

High

Description of expected outcome/response

By signing and submitting this complaint, I accept the procedure by which complaints will be processed and dealt with. I have been informed of the terms for appeal. Date: Signature :............... to be filled in by staff Response/remedy to the complaint: Response/remedy was: (delete as appropriate) Date: Complaint Redresser Staff name: Signature: 5. RECEIPT to be filled in by staff and cut off and given to person filing the complaint Complaint number (unique number): Expected date of response: Place to receive response: Complaint Entry Staff signature: Date: Accepted/Not appealed/Appealed to:

62

Annex 6-Form 2: Complaints log

Name: Business: Business Location: Business Manager: Business Sector: S.N. Name of Date Complaint Details of Person Sensitivity Action Completion complainant type* (from complaint reported level taken date list of to (escalation, categories) resolution etc) 1 2 3 4 5 6 7

*Complaint Categories 3. 4. 5. 6. 7. 8. 9. Graft ( corruption) Favouritism Work Delayed Non-transparency Misbehave Social discrimination Environmental negligence

63

Annex 6-Form4: Agribusiness Monitoring Matrix

Business Activities

Target/Mile stone

Progress Report

Status as Reported Through Committee Monitoring Visits Complaint Meetings Redressal

Status Verified by the Project

Activity 1 Activity 2 Activity 3 Activity ..n Correction Measures Recommended

1. 2. 3. ....

..... ....

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Annex 7: Business Amendment and/or Time Extension Request Form

Grant Number: Program Year: Name of the Organization: Name of the business: Grant Amount: The (institution) hereby requests Business Amendment From: To: Time Extension: From: To: Reasons for business change and/or time extension Business funds expended Grant Fund Rs. to date: Business Component Component

Matching Fund Rs

Expected Completion Date

Updated business work plan/ schedule

For business amendments, provide specifics on the change in business components. If applicable, provide a revised budget

Provide any additional information you feel would assist the Project in evaluating your request. For example, a contingency plan to mitigate further project delays and/or a listing of resources that will be used to complete the business

Signature of Business Manager or Chief of the Institution Date Recommended by.. (Service Provider)

65

Annex 8: Contract Termination/suspension letter

Date Mr(s)/ Miss. xxx (Name) (post) (Company) (Address) Dear Mr(s)/Miss xxx, This letter confirms our decision today that your contract on (name of the business) signed on (insert contract agreement date) with the Project and NRB is terminated/suspended for cause, effective immediately. The agribusiness grant you have been awarded for (name of the business), as discussed during the termination/suspension meeting, is terminated/suspended because you committed (mention the cause(s) or default) after being informed by both the Project and NRB, that the Project would not support your business unless the defaults corrected. You are given (insert period) time to correct the default failing which your contract will be terminated9. Payment for your accrued expenses will be included in your final payment. We can transfer your payment to your bank account or you can make arrangements to pick it up. Please let us know if we can assist you during your future efforts. The Project hopes the continuity of your business activity even after the termination of grants Regards, Project Director

This sentence will be used in suspension letter only

66

Annex 9: Grant Completion and Closeout letter

Date Mr(s)/ Miss. xxx (Name) (post) (Company) (Address) Subject: Closeout (grant No....Name of business....) Dear Mr(s)/Miss xxx, Congratulations on successfully completing your business. We appreciate your cooperation during this grant program and commend you on your commitment to improving the income of small and medium farmers in your community. Our records indicate that all funds have been expended and all proposed activities completed.
10

This grant is closed pending the Projects receipt and approval of your final audit. Any findings noted in that audit will be the responsibility of the ....... (Company name). We congratulate you once again and look forward to working with you in the future. Sincerely, Project Director

10

Use this paragraph if final audit report is not available at the time of issuing this letter.
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Appendices Appendix 1: List of High Value Commodities (Identified & Prioritized in Workshops conducted by RISMFP)
No. Districts Cereal & Vegetabl e Seed
Rice, Wheat, Lentil, Maize, Mustard 1 Banke

Vegetable s
Tomato, Onion, Cabbage, Cauliflower, Green peas, Potato, Cucurbits, Capsicum, Melons and Pointed gourd Tomato, Onion, Cabbage, Cauliflower, Green peas, Potato, Cucurbits, Capsicum, Melons and Pointed gourd Tomato, Onion, Cabbage, Cauliflower, Green peas, Potato, Cucurbits, Capsicum, Melons and Pointed gourd Tomato, Onion, Cabbage, Cauliflower, Green peas, Potato, Cucurbits,

Fruits
Banana , Papaya, Mango, Litchi

NTFP
Lemon grass, Asparagus , Mentha, Camomile,

Spices
Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Others
Honey, Mushroo m

Rice, wheat, Lentil, maize, Mustard 2 Bardia

Banana , Papaya, Mango, Litchi

Lemon grass, Asparagus , Mentha, Camomile and Stevia

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m Bel

Rice, wheat, Lentil, maize, Mustard 3 Kailali

Banana , Papaya, Mango, Litchi

Lemon grass, Asparagus , Mentha, Camomile,

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m

Dang

Rice, wheat, Lentil, Maize, Mustard

Banana , Papaya, Mango, Litchi

Lemon grass, Asparagus , Mentha, Camomile,

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m

68

Capsicum, Melons and Pointed gourd Maize, wheat and Vegetable seed (Radish, pea, Bean, Rayo, Cress) Maize, wheat and Vegetable seed (Radish, pea, Bean, Rayo, Cress) Maize, wheat and Vegetable seed (Radish, pea, Bean, Rayo, Cress), Soya bean Maize, wheat and Vegetable seed (Radish, pea, Bean, Rayo, Cress) Maize, wheat and Vegetable seed (Radish, pea, Bean, Rayo, Cress), Ground nut, Soybean Off season Vegetable (Tomato, Cauliflower, Cabbage, Capsicum, Bean, Peas, Radish) Off-season Vegetable (Tomato, Cauliflower, Cabbage, Capsicum, Bean, Peas, Radish) Off season Vegetable (Tomato, Cauliflower, Cabbage, Capsicum, Bean, Peas, Radish) Off season Vegetable (Tomato, Cauliflower, Cabbage, Capsicum, Bean, Peas, Radish) Off season Vegetable (Tomato, Cauliflower, Cabbage, Capsicum, Bean, Peas, Radish) Banana , Papaya Timur, Chiuri, Amla, Camomile Ginger, Turmeric, Garlic, Coriande r and dry Chilly Honey, Mushroo m

Surkhet

Dailekh

Citrus, Banana , Papaya, Pear, Walnut

Chiuri, Timur, Amla

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m

Dadeldhur a

Citrus, Banana , Pear, Walnut

Cinnamon, Amla, Ritha

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m

Citrus, Walnut

Timur,

Baitadi

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m

Citrus, Walnut

Chiuri, Timur, Rittha

Doti

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m

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10

Darchula

Maize, Wheat & Vegetable Seed (Radish, Pea, Bean, Rayo, Cress)

Off season Vegetable (Tomato, Cauliflower, Cabbage, Capsicum, Bean, Peas, & Radish)

Citrus, Walnut

Chiuri, Timur, Rittha, Cinnamon

Ginger, Turmeric, Garlic, Coriande r and dry Chilly

Honey, Mushroo m

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Appendix 2: Tripartite Agreement Template

This agreement made on this ________th day of _________________ 20___ between 1. Mr/Mrs_________________________________S/o D/o) ___________________________, R/o_____________________________________________________________(Name and Address), authorized representative of ----------------------------(Name of Farmers group/ Cooperative/Company) Hereinafter learned as `Grantee' which term shall unless repugnant in the context shall include his/her heirs, executors, administrators and assigns) of the First Part. 2. Raising Income of Small and Medium Farmers Project (RISMFP) Project Management Unit Nepalgunj hereinafter referred to as the Project which term shall unless repugnant to the context shall include its successors, administrators and assigns of the second part. 3. Nepal Rastra Bank a body corporate constituted under the Nepal Rastra Bank Act 2002, represented by one of its branches situated at Nepalgunj hereinafter termed as the Bank which expression shall unless repugnant to the context shall include its assigns, administrations and successors of the third part. 4. AND whereas the Grantee has been approved to receive a grant not exceeding Rs_______for _______________________________( name of the approved business) to be implemented by the grantee as per agreement dated 16 March 2011 between ADB and the Government of Nepal; and between ADB and Nepal Rastra Bank wherein the Bank is required to make payment(s) to the grantee upon approval of the grant by the Project in lump sum/ installments as provided under the terms of condition. 5. AND WHEREAS the grantee, the Project and the Bank has entered/agreed to enter into the Grant Agreement incorporating therein the terms and conditions regarding Agribusiness Grant for implementation of agribusiness activities. 6. That the Project hereby authorizes the Bank to make disbursement(s) of the approved grant to the grantee directly to the grantee account in the commercial bank not exceeding the amount recommended by the Project. 7. That the Bank shall maintain a separate account of the grantee and adjust the payment received by it from the ADB towards the cost of above said agribusiness grant in favor of the grantee. IN WITNESS WHEREOF THE parties hereto have signed this Agreement on the day, month and Year above first written.

Name and address of the Grantee .. (Signature of the grantee) WITNESSES (Signature with full names & addresses)

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1. 2. Signature on behalf of the Bank

WITNESSES (Signature with full names & addresses) 1. 2. .. Signature on behalf of the Project WITNESSES (Signature with full names & addresses) 1. 2. Terms and conditions 1. This agreement shall come into effect when it is signed by the grantee, the Bank and the Project, and the Grant Agreement is declared effective. This agreement shall continue to be valid until the completion date indicated in this contract or such other date as may be agreed between the Grantee, the Project and the Bank. The total duration of the business will be as stated in the business plan submitted to the Project by the Grantee. The Grantee is responsible for successfully completing the business within the specified period (insert approved business duration) The grant will be used only in respect of the components of the business plan and work plan thereof. Any subsequent amendments must be agreed in writing with the Project and the Bank. The Grantee cannot incur expenditure in excess of the financial limit set out above without the Projects written approval. The grant will be disbursed based on expenditure and subject to correct usage, satisfactory progress and financial reports being received. The Business Manager will be the authorized person of the concerned institution. Should the Business Manager be replaced for any reason, the institution will appoint a suitable candidate with prior consent of the Project. The Grantee will submit following reports
72

2.

3.

4. 5.

6.

7.

8. 9.

10.

11.

12. 13. 14.

15. 16. 17. 18.

19.

I. Trimester Performance Reports- every four months (three times a year) II. Trimester Financial Report every four months ( three times a year) III. Annual Performance Report- every year IV. Annual Financial report every year V. Business Completion Report- once at completion of the business. The chief of the institution of Grantee will allow the Project and the Bank staff or others nominated by the Project and/or Bank to visit premises and business sites and to inspect any records pertaining to the business as the Project and/or Bank may require, both during and after the business. The Bank will make funds for the business available on a trimester (four month) basis. The procedure and conditions for disbursement of these funds are as follows: An amount equivalent to the approved trimester budget can be disbursed by the Project in advance for the business if requested by the Grantee. Alternatively, the Grantee may wish to carry out the trimester business activities, initially from their own matching fund and later can claim the incurred expenses from the Project as a reimbursement (within the approved trimester budget limit). The Grantees with the exception of farmers groups should present to the Project a bank guarantee for one year or the business period against the amount advanced. If the payment extends for more than a year the bank guarantee should correspond to the duration until the advance is paid back. The Grantees will provide a detailed statement of income and expenditure and a bank statement of each reporting period. Documents need to be signed by the Business Manager. Funds may be moved between grant eligible activity lines with the agreement of the Project. A full written justification for such movement should be made. Funds will be released, by the Bank, directly to the Business bank account of the Grantee. Notification of any transfer will be sent to the Business Manager. Only claims and payments authorised by the Business Manager, or a person nominated by him/her and approved by the Project may be paid by the Bank from the funds allocated under the conditions of this grant. The Business Manager will submit to the Project financial statements of expenditure for each reporting period. Reports will pass to the Project Management Office either directly or as required by the grantee institution or organisation. Reports should follow the format and frequency which will be provided by Project. As the business progress, there are invariable reasons for changing some elements and the Project must be kept fully informed. Any significant changes must be approved by the Project. All claims and statements must be certified by the Business Manager, in the following words: [statements of expenditure]: The payments detailed above have been actually and necessarily made on the (insert name of business) as specified in the Agreement signed with the Project and Bank. Signed: Dated:

20. Failure to provide a satisfactory account of expenditure may result in the immediate suspension or termination of the Project funding and in the refund to the Bank of any funds which, in the opinion of the Project, has not been satisfactorily accounted for. If the Project
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considers that there has been a fraudulent use of its funds, it reserves the right to involve the police and to take legal action. 21. Details of the Grantees bank account are given below. If during the lifetime of the business any of these details change, please inform the Project immediately. Bank Name and Full Address: Bank Account Name: Bank Account Number: Names of Signatories and their positions: 22. Any unspent balance from grant on completion of the business must be refunded to the Bank. 23. For auditing purpose the grantee should employ the professional auditors affiliated to the Institute of Chartered Accountants of Nepal. 24. If in the opinion of the Project it appears desirable that this Agreement should be terminated for any reasons, the Project may at any time inform the Grantee of its decision by a written instruction to that effect. The Grantee will submit an account in writing which will state the amount claimed, taking into account all fees and costs properly incurred or committed by the Grantee in relation to the Agreement which cannot be recovered, and taking into account outstanding advances. 25. If payments are within the financial limit and not subject to dispute, the Bank on the recommendation of the Project will pay all sums due and outstanding under the terms of the Agreement up to and including the date of termination. 26. The grantee who terminates the business agreement after the release of the first instalment amount from the Bank without a written permission of the Project or displays a lack of interest in program implementation, depicts ulterior motives and financial irregularities, and like, will be blacklisted and subjected to appropriate legal actions as per the rules and regulations of the Government of Nepal. 27. If the performance of the Agreement by either party is delayed, hindered or prevented, or is otherwise frustrated by reason of force majeure (war, civil commotion, fire, flood, action by any government or any event beyond the reasonable control of the party affected) then the party so affected will promptly notify the other party in writing specifying the action of the force majeure and of the anticipated delay in the performance of the agreement. 28. From the date of that notification the Project may at its discretion either terminate the Agreement immediately, or suspend the performance of the Agreement for a period not exceeding six months. 29. In the event of the Agreement being terminated by reason of force majeure the Project will submit an account in writing which will state the amount claimed taking into account all fees and costs properly incurred or committed by the grantee in relation to the Agreement which cannot be recovered, and taking into account outstanding advances. If payments are within the financial limit and not subject to dispute, the Bank will pay all sums due and outstanding under the terms of the Agreement up to and including the date of termination.

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Appendix 3: Applications /file management checklist

[Please check ()] 1. Application 2. Institution Registration Certificate 3. VAT/PAN Registration Certificate 4. Land ownership document 5. HVC supply agreement 6. Business Plan 7. Others (please specify)

Verified by................ Name.................... Post..................

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Appendix 4: Grant Recipient Verification Form

Grant No.:
Name of the Organization Type of the Organization Address Contact Address Organization Registration Organizations working area Grant Category

Farmers Group Ward No.Phone No

Farmers Cooperative

VDC/MCPFax Date

Agribusiness Enterprises District e-mail Place

Production Inputs including cost of leasing land With whom

Farm development and Technology grants

Post Harvest Value Chain Investments

HVC supply agreement HVC Supply quantity

Amount (Rs.)

For how long

Agreement date

Business Name Land ownership Type Business Manager Contact address Contract Agreement Date Contract Period

Own Phone

Lease Fax

Cooperative e-mail

From

T0

Verified by.(sign)
Name: Post: Date:

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Appendix 5: ADBs Prohibited List

ASIAN DEVELOPMENT BANK PROHIBITED INVESTMENT ACTIVITIES LIST The following do not qualify for Asian Development Bank (ADB) financing: (ii) (iii)
1

(iv) (v) (vi) (vii) (viii) (ix) (x) (xi)

production or activities involving harmful or exploitative forms of forced labor or child 3 labor; production of or trade in any product or activity deemed illegal under host country laws or regulations or international conventions and agreements or subject to international 4 5 phaseouts or bans, such as (a) pharmaceuticals, pesticides, and herbicides, (b) ozone6 7 8 depleting substances, (c) polychlorinated biphenyls and other hazardous chemicals, (d) wildlife or wildlife products regulated under the Convention on International Trade in 9 and (e) transboundary trade in waste or Endangered Species of Wild Fauna and Flora, 10 waste products; production of or trade in weapons and munitions, including paramilitary materials; 11 production of or trade in alcoholic beverages, excluding beer and wine; production of or trade in tobacco; gambling, casinos, and equivalent enterprises; 12 production of or trade in radioactive materials, including nuclear reactors and components thereof; production of, trade in, or use of unbonded asbestos fibers; commercial logging operations or the purchase of logging equipment for use in primary tropical moist forests or old-growth forests; and marine and coastal fishing practices, such as large-scale pelagic drift net fishing and fine mesh net fishing, harmful to vulnerable and protected species in large numbers and damaging to marine biodiversity and habitats.

ADB. 2009. Safeguard Policy Statement. Manila. 2 Forced labor means all work or services not voluntarily performed, that is, extracted from individuals under threat of force or penalty. 3 Child labor means the employment of children whose age is below the host countrys statutory minimum age of employment or employment of children in contravention of International Labor Organization Convention No. 138 Minimum Age Convention. www.ilo.org. 4 A list of pharmaceutical products subject to phaseouts or bans is available at http://www.who.int.
1

A list of pesticides and herbicides subject to phaseouts or bans is available at http://www.pic.int. 6 A list of the chemical compounds that react with and deplete stratospheric ozone resulting in the widely publicized ozone holes is listed in the Montreal Protocol, together with target reduction and phaseout dates. Information is available at http://www.unep.org/ozone/montreal.shtml. 7 A group of highly toxic chemicals, polychlorinated biphenyls are likely to be found in oil-filled electrical transformers, capacitors, and switchgear dating from 1950 to 1985.
5 8A

list of hazardous chemicals is available at http://www.pic.int. list is available at http://www.cites.org.

9A

As defined by the Basel Convention; see http://www.basel.int. 11 This does not apply to project sponsors who are not substantially involved in these activities. Not substantially involved means that the activity concerned is ancillary to a project sponsor's primary operations. 12 This does not apply to the purchase of medical equipment, quality control (measurement) equipment, and any equipment for which Asian Development Bank considers the radioactive source to be trivial and adequately shielded. 13 This does not apply to the purchase and use of bonded asbestos cement sheeting where the asbestos content is less than 20%.
10

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Appendix 6: ADBs Safeguard Policy

(http://www.adb.org/sites/default/files/pub/2009/Safeguard-Policy-Statement-June2009.pdf)

1. Environmental Safeguards Objectives: To ensure the environmental soundness and sustainability of projects and to support the integration of environmental considerations into the project decision-making process. Scope and Triggers: Environmental safeguards are triggered if a project is likely to have potential environmental risks and impacts. Policy Principles: 1. Use a screening process for each proposed project, as early as possible, to determine the appropriate extent and type of environmental assessment so that appropriate studies are undertaken commensurate with the significance of potential impacts and risks. 2. Conduct an environmental assessment for each proposed project to identify potential direct, indirect, cumulative, and induced impacts and risks to physical, biological, socioeconomic (including impacts on livelihood through environmental media, health and safety, vulnerable groups, and gender issues), and physical cultural resources in the context of the projects area of influence. Assess potential transboundary and global impacts, including climate change. Use strategic environmental assessment where appropriate. 3. Examine alternatives to the projects location, design, technology, and components and their potential environmental and social impacts and document the rationale for selecting the particular alternative proposed. Also consider the no project alternative. 4. Avoid, and where avoidance is not possible, minimize, mitigate, and/or offset adverse impacts and enhance positive impacts by means of environmental planning and management. Prepare an environmental management plan (EMP) that includes the proposed mitigation measures, environmental monitoring and reporting requirements, related institutional or organizational arrangements, capacity development and training measures, implementation schedule, cost estimates, and performance indicators. Key considerations for EMP preparation include mitigation of potential adverse impacts to the level of no significant harm to third parties, and the polluter pays principle. 5. Carry out meaningful consultation with affected people and facilitate their informed participation. Ensure womens participation in consultation. Involve stakeholders, including affected people and concerned nongovernment organizations, early in the project preparation process and ensure that their views and concerns are made known to and understood by decision makers and taken into account. Continue consultations with stakeholders throughout project implementation as necessary to address issues related to environmental assessment. Establish a grievance redress mechanism to receive and facilitate resolution of the affected peoples concerns and grievances regarding the projects environmental performance.
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6. Disclose a draft environmental assessment (including the EMP) in a timely manner, before project appraisal, in an accessible place and in a form and language(s) understandable to affected people and other stakeholders. Disclose the final environmental assessment, and its updates if any, to affected people and other stakeholders. 7. Implement the EMP and monitor its effectiveness. Document monitoring results, including the development and implementation of corrective actions, and disclose monitoring reports. 8. Do not implement project activities in areas of critical habitats, unless (i) there are no measurable adverse impacts on the critical habitat that could impair its ability to function, (ii) there is no reduction in the population of any recognized endangered or critically endangered species, and (iii) any lesser impacts are mitigated. If a project is located within a legally protected area, implement additional programs to promote and enhance the conservation aims of the protected area. In an area of natural habitats, there must be no significant conversion or degradation, unless (i) alternatives are not available, (ii) the overall benefits from the project substantially outweigh the environmental costs, and (iii) any conversion or degradation is appropriately mitigated. Use a precautionary approach to the use, development, and management of renewable natural resources. 9. Apply pollution prevention and control technologies and practices consistent with international good practices as reflected in internationally recognized standards such as the World Bank Groups Environmental, Health and Safety Guidelines. Adopt cleaner production processes and good energy efficiency practices. Avoid pollution, or, when avoidance is not possible, minimize or control the intensity or load of pollutant emissions and discharges, including direct and indirect greenhouse gases emissions, waste generation, and release of hazardous materials from their production, transportation, handling, and storage. Avoid the use of hazardous materials subject to international bans or phaseouts. Purchase, use, and manage pesticides based on integrated pest management approaches and reduce reliance on synthetic chemical pesticides. 10. Provide workers with safe and healthy working conditions and prevent accidents, injuries, and disease. Establish preventive and emergency preparedness and response measures to avoid, and where avoidance is not possible, to minimize, adverse impacts and risks to the health and safety of local communities. 11. Conserve physical cultural resources and avoid destroying or damaging them by using fieldbased surveys that employ qualified and experienced experts during environmental assessment. Provide for the use of chance find procedures that include a pre-approved management and conservation approach for materials that may be discovered during project implementation.

2. Involuntary Resettlement Safeguards Objectives: To avoid involuntary resettlement wherever possible; to minimize involuntary resettlement by exploring project and design alternatives; to enhance, or at least restore, the livelihoods of all displaced persons in real terms relative to pre-project levels; and to improve the standards of living of the displaced poor and other vulnerable groups.
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Scope and Triggers: The involuntary resettlement safeguards covers physical displacement (relocation, loss of residential land, or loss of shelter) and economic displacement (loss of land, assets, access to assets, income sources, or means of livelihoods) as a result of (i) involuntary acquisition of land, or (ii) involuntary restrictions on land use or on access to legally designated parks and protected areas. It covers them whether such losses and involuntary restrictions are full or partial, permanent or temporary. Policy Principles: 1. Screen the project early on to identify past, present, and future involuntary resettlement impacts and risks. Determine the scope of resettlement planning through a survey and/or census of displaced persons, including a gender analysis, specifically related to resettlement impacts and risks. 2. Carry out meaningful consultations with affected persons, host communities, and concerned nongovernment organizations. Inform all displaced persons of their entitlements and resettlement options. Ensure their participation in planning, implementation, and monitoring and evaluation of resettlement programs. Pay particular attention to the needs of vulnerable groups, especially those below the poverty line, the landless, the elderly, women and children, and Indigenous Peoples, and those without legal title to land, and ensure their participation in consultations. Establish a grievance redress mechanism to receive and facilitate resolution of the affected persons concerns. Support the social and cultural institutions of displaced persons and their host population. Where involuntary resettlement impacts and risks are highly complex and sensitive, compensation and resettlement decisions should be preceded by a social preparation phase. 3. Improve, or at least restore, the livelihoods of all displaced persons through (i) land-based resettlement strategies when affected livelihoods are land based where possible or cash compensation at replacement value for land when the loss of land does not undermine livelihoods, (ii) prompt replacement of assets with access to assets of equal or higher value, (iii) prompt compensation at full replacement cost for assets that cannot be restored, and (iv) additional revenues and services through benefit sharing schemes where possible. 4. Provide physically and economically displaced persons with needed assistance, including the following: (i) if there is relocation, secured tenure to relocation land, better housing at resettlement sites with comparable access to employment and production opportunities, integration of resettled persons economically and socially into their host communities, and extension of project benefits to host communities; (ii) transitional support and development assistance, such as land development, credit facilities, training, or employment opportunities; and (iii) civic infrastructure and community services, as required. 5. Improve the standards of living of the displaced poor and other vulnerable groups, including women, to at least national minimum standards. In rural areas provide them with legal and affordable access to land and resources, and in urban areas provide them with appropriate income sources and legal and affordable access to adequate housing. 6. Develop procedures in a transparent, consistent, and equitable manner if land acquisition is through negotiated settlement to ensure that those people who enter into negotiated settlements will maintain the same or better income and livelihood status.
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7. Ensure that displaced persons without titles to land or any recognizable legal rights to land are eligible for resettlement assistance and compensation for loss of nonland assets. 8. Prepare a resettlement plan elaborating on displaced persons entitlements, the income and livelihood restoration strategy, institutional arrangements, monitoring and reporting framework, budget, and time-bound implementation schedule. 9. Disclose a draft resettlement plan, including documentation of the consultation process in a timely manner, before project appraisal, in an accessible place and a form and language(s) understandable to affected persons and other stakeholders. Disclose the final resettlement plan and its updates to affected persons and other stakeholders. 10. Conceive and execute involuntary resettlement as part of a development project or program. Include the full costs of resettlement in the presentation of projects costs and benefits. For a project with significant involuntary resettlement impacts, consider implementing the involuntary resettlement component of the project as a stand-alone operation. 11. Pay compensation and provide other resettlement entitlements before physical or economic displacement. Implement the resettlement plan under close supervision throughout project implementation. 12. Monitor and assess resettlement outcomes, their impacts on the standards of living of displaced persons, and whether the objectives of the resettlement plan have been achieved by taking into account the baseline conditions

3. Indigenous Peoples Safeguards Objectives: To design and implement projects in a way that fosters full respect for Indigenous Peoples identity, dignity, human rights, livelihood systems, and cultural uniqueness as defined by the Indigenous Peoples themselves so that they (i) receive culturally appropriate social and economic benefits, (ii) do not suffer adverse impacts as a result of projects, and (iii) can participate actively in projects that affect them. Scope and Triggers: The Indigenous Peoples safeguards are triggered if a project directly or indirectly affects the dignity, human rights, livelihood systems, or culture of Indigenous Peoples or affects the territories or natural or cultural resources that Indigenous Peoples own, use, occupy, or claim as an ancestral domain or asset. The term Indigenous Peoples is used in a generic sense to refer to a distinct, vulnerable, social and cultural group possessing the following characteristics in varying degrees: (i) self-identification as members of a distinct indigenous cultural group and recognition of this identity by others; (ii) collective attachment to geographically distinct habitats or ancestral territories in the project area and to the natural resources in these habitats and territories; (iii) customary cultural, economic, social, or political institutions that are separate from those of the dominant society and culture; and (iv) a distinct language, often different from the official language of the country or region. In considering these characteristics, national legislation, customary law, and any international conventions to which the country is a party will be taken into account. A group that has lost collective attachment to

81

geographically distinct habitats or ancestral territories in the project area because of forced severance remains eligible for coverage under this policy. Policy Principles: 1. Screen early on to determine (i) whether Indigenous Peoples are present in, or have collective attachment to, the project area; and (ii) whether project impacts on Indigenous Peoples are likely. 2. Undertake a culturally appropriate and gender-sensitive social impact assessment or use similar methods to assess potential project impacts, both positive and adverse, on Indigenous Peoples. Give full consideration to options the affected Indigenous Peoples prefer in relation to the provision of project benefits and the design of mitigation measures.I dentify social and economic benefits for affected Indigenous Peoples that are culturally appropriate and gender and intergenerationally inclusive and develop measures to avoid, minimize, and/or mitigate adverse impacts on Indigenous Peoples. 3. Undertake meaningful consultations with affected Indigenous Peoples communities and concerned Indigenous Peoples organizations to solicit their participation (i) in designing, implementing, and monitoring measures to avoid adverse impacts or, when avoidance is not possible, to minimize, mitigate, or compensate for such effects; and (ii) in tailoring project benefits for affected Indigenous Peoples communities in a culturally appropriate manner. To enhance Indigenous Peoples active participation, projects affecting them will provide for culturally appropriate and gender inclusive capacity development. Establish a culturally appropriate and gender inclusive grievance mechanism to receive and facilitate resolution of the Indigenous Peoples concerns. 4. Ascertain the consent of affected Indigenous Peoples communities to the following project activities: (i) commercial development of the cultural resources and knowledge of Indigenous Peoples; (ii) physical displacement from traditional or customary lands; and (iii) commercial development of natural resources within customary lands under use that would impact the livelihoods or the cultural, ceremonial, or spiritual uses that define the identity and community of Indigenous Peoples. For the purposes of policy application, the consent of affected Indigenous Peoples communities refers to a collective expression by the affected Indigenous Peoples communities, through individuals and/or their recognized representatives, of broad community support for such project activities. Broad community support may exist even if some individuals or groups object to the project activities. 5. Avoid, to the maximum extent possible, any restricted access to and physical displacement from protected areas and natural resources. Where avoidance is not possible, ensure that the affected Indigenous Peoples communities participate in the design, implementation, and monitoring and evaluation of management arrangements for such areas and natural resources and that their benefits are equitably shared. 6. Prepare an Indigenous Peoples plan (IPP) that is based on the social impact assessment with the assistance of qualified and experienced experts and that draw on indigenous knowledge and participation by the affected Indigenous Peoples communities. The IPP includes a framework for continued consultation with the affected Indigenous Peoples communities during project implementation; specifies measures to ensure that Indigenous Peoples receive culturally appropriate benefits; identifies measures to avoid, minimize, mitigate, or compensate
82

for any adverse project impacts; and includes culturally appropriate grievance procedures, monitoring and evaluation arrangements, and a budget and time-bound actions for implementing the planned measures. 7. Disclose a draft IPP, including documentation of the consultation process and the results of the social impact assessment in a timely manner, before project appraisal, in an accessible place and in a form and language(s) understandable to affected Indigenous Peoples communities and other stakeholders. The final IPP and its updates will also be disclosed to the affected Indigenous Peoples communities and other stakeholders. 8. Prepare an action plan for legal recognition of customary rights to lands and territories or ancestral domains when the project involves (i) activities that are contingent on establishing legally recognized rights to lands and territories that Indigenous Peoples have traditionally owned or customarily used or occupied, or (ii) involuntary acquisition of such lands. 9. Monitor implementation of the IPP using qualified and experienced experts; adopt a participatory monitoring approach, wherever possible; and assess whether the IPPs objective and desired outcome have been achieved, taking into account the baseline conditions and the results of IPP monitoring. Disclose monitoring reports.

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Appendix 7: Training Content of AGF Guideline

Module 1: Introductory 1. 2. 3. 4. Project introduction Project objective Project components Role of partner organizations and service providers

Module 2: Agribusiness Grant Facility 1. 2. 3. 4. Agribusiness definition Types of grantee and their eligibility Agribusiness categories and support area Matching fund requirement for different grantees and different grant categories

Module 3: Grant award process 1. Call for grant application 2. Necessary documents to apply 3. Business plan- different components of a business plan (Production plan, marketing plan, management plan, financial plan, and business development plan), hands on exercise on business planning. 4. Grant applications pre-screening criteria 5. Grant application assessment criteria for IAP 6. Contract with successful applicants- tripartite agreement between the applicant, NRB and the Project Module 4: Grant commissioning, implementation, monitoring and evaluation 1. 2. 3. 4. 5. 6. Different committees for AGF implementation and monitoring (existing and Proposed) Monitoring frame work Evaluation process Guideline for Technical performance reports Guideline for financial performance reports Contract modification, suspension, termination and close out

84