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MONTHLY PROGRESS REPORT FAO MONTHLY PROGRESS REPORT Price Transparency
ALL ACP AGRICULTURAL COMMODITIES PROGRAMME EUROPE AN CO MMISSION ACP GROUP OF STATES 6 MONTHLY PROGRESS REPORT FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2010 Eastern and Southern African Region FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS DATE: June 2010 All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 2 1 Introduction In implementing its Contribution Agreement under the AAACP programme , FAO in the period January 2010 to June 2010 has been focusing on four areas of services provision, namely i. Support to the process of sectoral value chain diagnosis and strategy formulation, and associated capacity building in policy analysis, design and implementation; ii. Strengthening producer-market linkages and the institutional capacity of producer organisations; iii. Sustainable increasing productivity, value addition and diversification in cotton-based commodity chains; iv. National and regional level activities to identify and implement options for improved supply chain finance and risk management. 2 Project Activities and Status of Implementation 2.1 Result Area 1 – Development of effective commodity strategies and implementation plans 2.1.1 Activity 1.ESA A01- Support to ITC process of chain diagnosis and strategy formulation Objective of the activity Assist stakeholder preparation to realization of in-depth diagnosis of commodity chain and livelihood systems in selected country/ commodity combinations, the formulation of appropriate commodity development strategies and its validation. Background In Zambia, FAO is supporting the ITC led strategy development process for the cassava sector through participation in stakeholder workshops, undertaking targeted studies and the development of recommendations in support of smallholder participation in the sector. FAO has supported the process since the initial consultation and briefing mission in April 2009, attending both stakeholder workshops and launch event, as well as commissioning studies to fill identified information gaps. Activities in Madagascar have been cancelled as a result of the unrest in early 2009. Activities during the reporting period A value chain mapping and cost analysis was completed in April 2010 and submitted to the National Cassava Committee A survey and associated report was completed by Programme Against Malnutrition (PAM, Zambia) which investigated the determinants of smallholder participation in the process of cassava sector commercialisation. Outputs, results and main lessons: All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 3 Paola Cadoni (2010) Value Chain Mapping and Cost Structure Analysis for Cassava in Zambia. AAACP Paper Series – No. 14 Programme Against Malnutrition (2010) Smallholder Cassava Value Chain Asset Survey. Lusaka, Zambia (draft report). Next steps A key concern raised during the process of strategy development was the ability and willingness of smallholder households to supply what is essentially a food security staple food into developing domestic and export markets. To ensure that the strategy and implementation activities account for this, FAO, with the support of the School of Oriental and African Studies (SOAS) will finalise a series of recommendations (see Activity ESA.A03 below) on mechanisms whereby smallholder market integration can be facilitated. The recommendations will draw upon insights from the SOAS work (non-AAACP) in Zambia, as well as on the outputs of Activities ESA.A03 and ESA.A08 below. The expectation is that these will be used by the National Committee in designing appropriate implementation activities. FAO will also continue to contribute to and comment upon other components of the strategy document and implementation plan as they are finalized during July 2010. Activity 1.ESA.A02 - Policy advocacy in East and Southern African grains markets Objective of the activity To build awareness and capacity relevant to cereal sector trade and domestic policy interventions to: 1. develop a better understanding of the use and impacts of trade policy interventions on cereal value chain stakeholders in East and Southern Africa; 2. build the capacity of local institutions to understand the implications of trade policy use in specific market contexts; and 3. strengthen national, regional and international public-private dialogue relating to the use of trade policy instruments. Background FAO is collaborating with the Eastern Africa Grains Council to improve the process of policy advocacy as it affects grain markets in the region. An initial set of activities was carried out under a letter of agreement with the EAGC, with the aim of developing an action plan for follow up activities in the region. The action plan was to be implemented with Tranche II funding. In the event FAO was not allocated additional funds for the grains sector under Tranche II. In order to ensure maximum impact with the remaining Tranche I funds, FAO is currently, through EAGC and ACTESA, partnering in a regional process of strengthening staple foods trade policy dialogue Activities in the reporting period A value chain analysis and trade policy base line for Zimbabwe was undertaken by BSERT, University of Pretoria in association with local consultants. The draft study, was used as the basis for a National Validation Workshop, held in Harare, Zimbabwe on 18th June 2010 and All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 4 facilitated by ACTESA and local consultants. Following its revision, the study will contribute to a regional policy dialogue process supported by USAID COMPETE and covering seven additional countries in the region. It was planned to complete a similar study in Southern Sudan, but this was not possible for logistical reasons. Outputs, results and main lessons: BSERT, University of Pretoria (2010) The Grain Industry Value Chain in Zimbabwe. Draft Next steps On the basis of inputs from the national consultation, the Zimbabwe study will be finalised. This study along with seven similar country studies commissioned by COMPETE, will form the basis of a regional workshop that will be organized in collaboration with EAGC with assistance from ACTESA, COMPETE and FAO (under the AAACP). Activity 1.ESA.A03 - Assessment of alternative models of public- private partnerships in support of VC development Objective of the activity To determine appropriate mechanisms for state intervention to leverage greater private sector investment and activity in key value chains Background Under a letter of Agreement with the School of Oriental and African Studies, a paper has been commissioned assessing alternative mechanisms for leveraging private sector involvement in support of poorly functioning value chains (see also 1.ESA.A01). Activities in the reporting period A mission was undertaken in May 2010 by FAO and the School of Oriental and African Studies (SOAS) with a view to developing recommendations on how activities identified in the cassava sector strategy can be implemented in a way that is inclusive of different categories of smallholder producer household. This study will draw on the insights from the study on assessing alternative mechanisms for leveraging private sector involvement in the delivery of critical support services. Outputs, results and main lessons See ESA.A01 Status: Closed Spin Offs: Contribution to the development of recommendations in support of the Zambia Cassava Sector Strategy as detailed under ESA.A01 All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 5 2.2 Result Area 2 – Access to and use of markets, production factors and services 2.2.2 East and Southern African Region Activity 1.ESA.A04 - Regional workshops for capacity strengthening of producer organisations Objective of the activity To strengthen the capacity of producer organizations to respond to trends in agricultural markets. Background A first regional workshop took place in December 2008 and was reported earlier. Outputs include a report on the workshop‟s proceedings, of which a hard copy has been sent to all participants and the CU. Next steps Follow-up sub-regional training workshops (Francophone and Anglophone) for farmer organizations are planned to take place before December 2010. Activity 1.ESA.A05 - Support the development of inclusive business models for upstream actors Objective of the activity To identify buyers, agro-enterprises, or small businesses operating in cotton-maize in Uganda, Kenya, and Zambia. Background This activity took place October – December 2009 and was reported on in the last progress report. Outputs include back to office reports which record the learning and results from this activity. As a result business model upgrading activities started in Kenya (see activity 6). As the second tranche proposal for cotton was not approved, funds for follow-up activities in the other countries were much more limited than anticipated. FAO thus undertook a mission to Zambia to identify partners and meaningful activities to be undertaken with the limited funds. Unlike Kenya, in Zambia there are no cotton cooperatives, but ginning companies operate outgrower schemes through which they contract individual farmers, and provide them with pre-financed input packages. However, the two historically dominant companies have reduced their input packages after the latest side-selling crisis in 2006 and the more recently established and smaller companies tend to pre-finance fewer inputs. Recent research found some evidence that companies were overcharging for the inputs. It was decided to focus activities on the identification of ways improve the current input distribution model, especially to increase price transparency for farmers. Terms of reference have been developed, see activity 6. All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 6 Next steps This activity has been closed and implementation continues under A06. Activity 1 - ESA.A06 Support the implementation of inclusive business models to improve farmer-buyer linkages for cotton- maize systems. Objective of the activity Improve farmer-buyer linkages for producers in Kenya and Zambia dependent on cotton-maize systems. Background Missions to the region in 2008-2009 identified target beneficiaries and service providers in Kenya (Farm Concern International (FCI)) and Zambia (The Food Security Research Project (FSRP)) to support with the implementation of this activity. In Kenya, two contracts have been signed with FCI, the first of which resulted in a business model appraisal for three cooperatives in the Nyanza, Eastern and Coastal provinces which described action plans for upgrading the models. The second contract, signed in the last reporting period to assist cooperatives with the implementation of the action plans includes capacity building in; agribusiness management skills for cooperatives to improve market and advisory services provided to members; production and harvesting practices for value addition; diversification and business-to-business partnership strategies. In Zambia, support to the sector is also on strengthening linkages between Cotton Cooperatives and buyers, but with a focus on developing appropriate models to improve the transparency and efficiency of the inputs systems between the two parties. The draft terms of reference (TOR) for the first phase of activities in Zambia was drafted in the last reporting period. The activity will include an (i) appraisal of the current system of input packages and the costs charged to farmers by the main five Cotton companies in the country, the results of which will be presented at a stakeholder workshop to identify a revised system agreed on by all parties for pilot testing. As follow-up funding had not been allocated to the cotton sector for ESA on farme- market linkages the remaining budget from Tranche I had to be consolidated to ensure appropriate follow-up in Kenya and Zambia. Activities in the reporting period Kenya ,draft training materials for assistance to Cotton Cooperatives in Kenya with the implementation of action plans were submitted to FAO by FCI between Dec 09-May 2010. The materials cover topics on organizational and contract negotiation skills, business and financial management, marketing, farm management logistics and quality control, and production. Substantial comments were provided by FAO on the training programme, which FCI is currently revising and will submit by mid- July. As a result the training has been held up and the contract will have a no cost extension until September 2010. All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 7 Zambia Discussions have taken place with The Food Security Research Project (FSRP) which has since been identified as the most appropriate service provider to carry out the work in Zambia. The service provider has been busy however in the past months finishing up other assignments. It is hoped that the contract will be signed with FSRP by the end of July 2010. Next steps - In Kenya training will continue under the present contract until September 2010, after which it will be evaluated if there is still follow-up training necessary to ensure sustainability of the activity. - In Zambia a Letter of Agreement will be signed with FRSP in July 2010. The assessment and stakeholder meeting should be completed by October for the testing to begin during the next cotton season from November 2010 to June 2011. Activity 1.ESA.A07 – Analytical support to UNCTAD in Commodity exchanges (Analysis of obstacles to smallholder participation in commodity exchanges) Objective of the activity Analyse constraints to greater participation of smallholders in national and sub-regional commodity exchanges for selected country/ commodity combinations. Background This activity is contingent upon activities planned by UNCTAD. Activities in the reporting period FAO is undertaking a review of the constraints to smallholder participation in commodity exchanges. Outputs, results and main lessons A draft has been developed Next steps Draft to be circulated to UNCTAD for comments. Finalisation during July 2010 Activity 1.ESA.A08 - Review of alternative models of smallholder organizations Objective of the activity To determine appropriate organisational forms for smallholder organisations in support of the delivery of critical services in different value chains. Background All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 8 FAO has commissioned the School of Oriental and African Studies, to prepare a review on existing organisation forms of smallholder farmers‟ organisation and their contractual relations with other market actors. As with the assessment carried out under Activity 1.ESA.A03, this review was prepared for use as a basis for developing recommendations in support of implementation of the AAACP funded processes of strategy development (See activity 1.ESA.A01). Status: Completed Follow-up/Spin-offs Contribution to FAO workshop on “Policy Interventions and Institutional Innovations in Support of Smallholder Market Participation”. Rome 3 – 4 June 2010 The insights from the report are currently being used to develop specific recommendations for the Zambia cassava sector (see also 1.ESA.A01 and 1.ESA.A03). Activity 1.ESA.A09 – Analytical support to UNCTAD on WRS (Support to extended utilization of warehouse receipt systems). Objective of the activity To determine the feasibility of extension of Warehouse Receipt Systems. Background FAO has envisaged analytical support to UNCTAD‟s activities in promoting and facilitating wider use of WRS. This has been provided through technical support in the form of Workshop participation and document review. The June 2009 workshop organised by the East Africa Grain Council with the collaboration of FAO (see 1.ESA.A02) under the EU AAACP and the Swedish International Development Agency, has also highlighted new aspects and avenues of collaboration with other institutions such as Bourse Africa which are also working in the area of risk management and access to finance with a regional perspective. This regional consultative expert meeting developed a better understanding of the use and impacts of policy interventions on cereal value chain stakeholders in East and Southern Africa. One of the sessions was dedicated to market mechanisms and saw the participation of UNCTAD among others. The workshop constituted also an occasion to initiate new partnerships with regional actors and the complexities of the issues have revamped discussions on the nature of future initiatives and avenues of collaboration in the area of market based risk management mechanisms for cereals. Status: Completed Follow-up/Spin-offs None Activity 1.ESA.A10 - Support activities as per Kenya’s feasibility study to revitalize Kenya’s cotton industry This activity has been cancelled (merged into Activity 1.WST.A06 reported on above) All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 9 Activity 1.ESA.A11 - Support establishment of a cassava commission in Burundi, Rwanda and Uganda This activity has been cancelled. Activity 1.ESA.A12 - Facilitate market linkages between organic cotton producers and the fashion industry (Tanzania, Kenya, Uganda) Objective of the activity In collaboration with UNCTAD, FAO will facilitate market linkages between organic cotton producers and the fashion industry on the basis of existing experiences and stakeholder inputs. Hereby greater awareness of organic cotton as a diversification and as a value added crop will be created, with the objective that this concludes in an increase of the market share of organic cotton in the region. Background A desk study and analysis of the South East African cotton market (Uganda, Tanzania and Kenya) with specific regard to the development of the organic cotton sector and a mission to organic cotton initiatives revealed that soil fertility management in organic cotton is one of the main technical constraints to develop the sector. Activities undertaken in the reporting period: As per the Letter of Agreement which was signed in November with Istituto per la Certificazione Etica e Ambientale (ICEA) -who also undertook the initial study in relation to this activity- on the development and adoption of an Experimental Learning Methodology to be implemented through a network of demonstration and educational farms in rural villages in East Africa, the following activities have been carried out: A proper Problem Diagnosis has been carried out with the active involvement of bioRe to gain a greater understanding of their agricultural and livelihood systems. Farmers will be supported in identifying the problems that are of most concern to them, in describing what actions they have taken in the past to minimize each problem, and in indicating which of the problems have the highest priority. (Report “WP2: Survey on farmers‟ socio-economic realities and felt needs”. A preliminary visit was carried out in January 2010 in order to understand the relevant categories and geographical characteristics of the area. Following that 24 interviews were conducted in the middle of Feb. 2010. Local farmers were identified to be part of the pilot programme (report WP1: Identification of the local farmers) A pilot training module for the Experiential Participatory Learning Methodology on soil fertility management has been prepared together with a Trainer‟s guide. The pilot project is being implemented. A backstopping mission to Meatu by FAO and ICEA was undertaken in June. Outputs, results and lessons learned A back to office report will be prepared on the backstopping mission. Progress reports and two technical reports have been prepared by ICEA and cleared by FAO. All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 10 From the mission, it was clear that there is great community and institutional support on the local level. Measures undertaken to ensure sustainability of the action An experiential and participatory learning methodology has been adopted for enhancing skills transfer and encouraging changes in farmers‟ behaviour. The assumption is that we seldom learn from experience unless we assess the experience, assigning our own meaning in terms of our own goals, aims, ambitions and expectations. From these processes come the insights and the experience takes on added meaning in relation to other experiences. The methodology will include proper tools for its effective implementation. Next steps - Further training activities will be implemented. - The training modules will be evaluated. Activity 1.ESA.A13 - Regional seed systems review for cotton and associated crops and planting materials for cassava Objective of the activity Seed review studies to identify key constraints for poor access to quality seed by smallholder farmers for cotton and associated crops as well as cassava planting materials. The studies will also identify success factors that characterise effective seed models in the region. The findings from the studies will form basis for developing action plans for interventions to improve seed delivery systems. Background FAO commissioned a study to review the seed systems for cotton, cassava and crops grown in association for three countries in Southern Africa (Malawi, Mozambique and Zambia) during September and October 2009. The findings of the study were presented at a Regional GAP workshop (Activity 14) with a recommendation to make a follow up review for the cotton seed sector in Zimbabwe. The Zimbabwe study was conducted in December. The findings are provided in Report entitled: FAO. 2009. Cotton and Cassava Seed Systems in Malawi, Mozambique and Zambia, by V. Gwarazimba. Activities in the reporting period A summary of the findings of the seed review report was included in a presentation made by FAO on „activities on seed related issues in SFS‟ at the workshop for the Harmonised Seed Security Project (HASSP) workshop held in South Africa on 20 to 21 May. The project is implemented by FARNPAN and supports Malawi, Swaziland, Zambia and Zimbabwe. Outputs, results and lessons learned The presentation of the findings from the study provided an opportunity for the four countries to take into consideration the challenges for seed security in the SADC region when developing their action plans for addressing seed security. The participation by FAO in the workshop is an opportunity for providing capacity building support for strengthening efforts to re-establish the Seed Security Network in the All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 11 SADC region. The participation in the network is expected to eventually include all the countries in the region. Next steps The activity is closed. However, the findings from the studies of the seed review will be shared further with many other in the sub-region through the SADC seed network as a way of contributing to the development of strategies for improving seed systems in the countries in the sub-region. Activity 1.ESA.A14 - Regional stakeholder workshop to review and assess capacities for implementing GAP among smallholder farmers Objective of the activity Information exchange on lessons, innovative approaches and development of smallholder proposal to build capacity for increased use of Conservation Agriculture and other Good Agricultural Practices (GAP) concepts to contribute to more efficient sustainable production. Background FAO held a regional GAP workshop for representatives of cotton and cassava producer organisations from four countries in the region (Malawi, Mozambique, Zambia and Zimbabwe) in Lusaka Zambia in September 2009. Participants developed action plans for their countries to address the needs for increased implementation of GAP principles in cotton, cassava. The workshop recommended that a study tour be conducted for Zimbabwe delegates on cotton and cassava activities in Zambia. Activities in the reporting period A study tour has been conducted in March 2010 for eight participants from Zimbabwe to visit the Cotton Research Trust and the cassava primary nursery in Zambia. The delegates included three representatives of the Zimbabwe Farmers Union, two farmers and government officers from the Ministry of Agriculture working on cotton and cassava. Outputs, results and lessons learned The delegation visited the Cotton Development Trust (CDT) a cotton production research institution during the annual field day and was exposed to field demonstrations on cotton that included cotton yield trials (CDT and Dunavant) that covered GAPs in conservation agriculture an other improved agronomic practices such as early planting as well as safe handling and storage of pesticides; trials on plant densities and planting in basins (Conservation farming practice); a cotton- maize-cowpea intercrop- food security demonstration; and a CFU-Conservation Agriculture farm implements demonstration. Delegates also visited Arulussa farm; a private establishment that produces clean cuttings of cassava planting materials for sale to the government, NGOs and directly to farmers for further multiplication and commercial production of cassava. The lessons learnt from the tour are expected to be shared widely with other cotton and cassava growers through the extension and training services of the Zimbabwe Farmers Union and the cotton/cassava producer organisations as a way of contributing to the implementation of GAP in cotton and cassava in Zimbabwe. All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 12 Next steps Due to lack of funding, no further activities have been undertaken, in spite of the fact that opportunities were identified within implementation of the action plans for on- going national projects for cassava and cotton, within AAACP activities on cassava including interventions of the cotton-to-cloth COMESA strategy and the CACESA initiative for cassava. The activity is closed. Activity 1.ESA.A15 - Capacity building on Good Agricultural Practices based on Integrated Pest Management in horticulture Objective of the activity Promote income and market access of farmers and exporters in the horticulture industry in Uganda, by helping stakeholders understand and meet market requirements for Good Agricultural Practices. Background A national Strategy on capacity building for Good Agricultural Practices in Uganda, which has been formulated by the National Steering Committee on Horticulture and GAP (NSC) in 2008 with support from FAO. The action plan of the strategy identified hot pepper and tomato as pilot sub-sectors. Farmer Field School activities have been funded by the FAO-Multidonor Partnership Programme. It is foreseen that this AAACP further contributes to the implementation of the strategy action plan. Activities in the reporting period Activities are likely to take place at a regional level in the second part of 2010 or in 2011, and are being identified with the Horticulture Council of Africa (regional association of exporters). Activity 2.ESA.A03 : Enhancement of the commercialisation of the cassava sector Objective of the activity Improving smallholder farmers‟ incomes and market linkages for cassava by supporting the agribusiness capacity of farmer groups to engage with industrial buyers and in cassava post-harvest value-added activities in rural communities. Background FAO implemented a two year project entitled “Enhancing Food Security in Cassava Based Systems in Zambia and Malawi” (GTFS/RAF/394/ITA) funded by the Italian government, from May 2007 to December 2009. The project strengthened the management and organizational capacities of farmer groups and entrepreneurs, developed skills in cassava production, value addition, marketing and farm business management and attempted to link farmers to various cassava based value chains (for fresh roots, dried chips, feed and flour). The project also sensitised policy makers and the commercial agro-processing sector on the potential cassava offers for economic growth. Building on that experience in Zambia, FAO has participated with ITC in the process of supporting the development of a national cassava sector strategy. Particular foci of FAO support relate to better understanding of the All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 13 propensity of smallholders to generate marketable surpluses of cassava and the determination of finance needs along the chain (see 1.ESA.A01). The strategy shares many common objectives with the previous Italian funded project and thus provides an opportunity to compliment and consolidate the achievements already established. The activities under 2.ESA.A03 therefore focus predominantly on (i) capacity building of farmer organizations in farm management and business skills, quality management for processing and training in collective marketing, logistics and contract negotiation, with visits and workshops organized to share knowledge and good practices at both national and regional levels; (ii) finance needs assessment as a basis for development of appropriate financial packages and (iii) support to the formulation of policy interventions to facilitate cassava sector commercialization. Activities in the reporting period: In Zambia, new implementing partners were identified as the partners under the previous project had been unable to fulfill their commitments. LoAs were signed with Zambia Agribusiness Technical Assistance Centre (for business skills training), Advanced Metal Fabricators (for operation and maintenance of processing equipment). In Malawi, an LoA was signed with Total Land Care (for business skills training) and a contract was issued to an independent consultant to train entrepreneurs in the processing of high quality cassava flour. In Malawi, meetings were held with two of the key agro-industries (Universal Industries and Bakhresa Milling) that are interested in buying cassava chips and flour to facilitate linkages them and the cassava processors. I In Zambia, a contract is being developed with NATSAVE to undertake a finance needs assessment. Outputs, results and main lessons An informal agreement was reached with Universal Industries to purchase cassava flour from the project‟s entrepreneurs for conducting a pilot trial. Tiger Feeds have purchased a trial consignment of cassava chips to use in the feed formulation. In Zambia, several key industries, including Tiger Feeds, have expressed interest in purchasing more produce from smallholders but are concerned about the reliability and volume of supply. Next steps A suitable partner still needs to be identified to provide training in the processing of high quality cassava flour. Trainings of farmers and entrepreneurs in both Malawi and Zambia will start by July 2010 in both countries. Dialogue and negotiation with a variety of agro-industries will continue to facilitate market linkages between industry and cassava processors. All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 14 2.3 Result Area 3 – Market-based instruments to reduce producers’ income vulnerability Activity 1.ESA.A16 - Supply chain risk and finance assessment Objective of the activity Activities in the area of supply chain risk and finance assessment are concentrated in two countries, Zambia and Malawi, and relate to the cassava industry. Given the nature of this crop and its resistance to adverse climatic events, analysis and implementation activities have been concentrated on supply chain finance and an analysis of constraints/risks that may affect linkages and investment in the cassava value chain. Background Following priority setting for AAACP activities, the analysis will be conducted in the cassava sector in Zambia and in Malawi (under activity 2.ESA.A03). FAO has conceived an integrated approach to revitalise the cassava sector by tackling all different aspects from productivity, to institutional set up, supply chain finance and risk management strategies and farmer/buyer linkages. The analysis will be based on the administration of a questionnaire developed under the AAACP. In Zambia, FAO established contacts with other IOs working in the area of risk management and financial inclusion and in tandem with the ITC-led strategy development process, sensitized cassava stakeholders to the subject. In Malawi, FAO is working in close collaboration with its national office and exchanging information with international organizations that are currently involved in cassava value chain development such as the Gates Foundation. Prior to undertaking work on supply chain finance and risk management for the cassava value chain in Malawi, FAO is conducting an analysis to generate a better understanding of the propensity of different categories of smallholder producers to supply cassava to the market and the key determinants of their decisions. This reflects a concern that, although it may have been demonstrated that that the production of cassava products is very profitable, a comercialisation strategy is unlikely to be successful if potential investors are not convinced that there will be a reliable, competitively priced supply of raw material. This will result in a short paper on the determinants of smallholder market participation and will be used to assist in developing a survey which puts greater emphasis on the identification of real or perceived risks along the chain. Following a request by the Mozambique Cotton Institute a mission was undertaken in April 2009 in order to confirm needs, among others, in the area of risk management and access to finance for the cotton sector and to identify potential partners in this area. The Mozambique Cotton Institute and FAO have agreed on planned interventions that have been summarized in an Aide-memoire. The proposal was not accepted for funding under the AAACP. However, the CFC has proposed FAO to work in the area of risk management for the cotton industry through its fast track facility. Even if activities undertaken by the FAO are not formally part of the work under the AAACP, FAO is coordinating with other International Organizations that are working on risk management for the cotton sector under the AAACP such as the WB-ARMT. All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 15 Activities in the reporting period The recent finalization of the ITC-led strategy development process and related establishment of the Cassava Stakeholder Committee in Zambia during early 2010 allowed FAO to initiate discussions on supply chain finance and risk management activities with partners identified during ITC-led workshops. Outputs, results and main lessons The terms of reference for “A survey on financial needs and constraints/risks that affect cassava sector stakeholders‟ access to finance in Zambia” have been agreed with the National Savings and Credit Bank (NATSAVE). The specific objective of the survey is to determine the needs and the constraints that affect the cassava chain stakeholders‟ access to finance. The current survey constitutes an essential starting point to identify feasible value chain finance and risk management schemes to be pilot tested with selected cassava sector stakeholders in Zambia. The implementation of these schemes will build, and capitalize on, existing and potential value chain linkages and will thus involve farmers, processors, buyers and financial institutions who demonstrate interest in participating in the testing activities. The identification of the most suitable financial schemes is also expected to contribute to an increase in the number of bank savings‟ accounts in rural areas. Next Steps The survey in Zambia should be finalized no later than November 2010. The survey in Malawi will be initiated by the end of 2010. These activities will be funded with resources from 2.ESA.A01 Activity 1.ESA.A17 - Import and export risk management for cereals Objective of the activity Evaluation and promote the introduction of risk mitigating tools targeted to public and private sector actors, including small businesses. Background In light of the decision not to provide further funding for work on cereals under Tranche 2, it was decided (as explained under 1.ESA.A02) to align activities A02, A17 and A19 more closely with other donor funded activities currently being coordinated by EAGC to ensure maximum returns to the AAACP work in this area. In discussion with EAGC, and based on the action plan developed with EAGC under activity A02 (see above), it was decided to develop a study at the regional level to assess the feasibility of formal and informal price risk management mechanisms, including improved policy interventions, working capital guarantees and export credit insurance, in the cereal sectors of ESA. Activities during the reporting period FAO is developing the Terms of Reference for an assessment, the main objectives of which will be the following: Identify the main features of risk exposure on the import and export side for the cereal sector in ESA selected countries All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 16 Document the use and assess the effectiveness of trade policy as an instrument for risk mitigation Assess the implications of introducing alternative market based risk management mechanisms in a scenario of restrictions on the use of discretionary trade policy interventions Outputs, results and main lessons None Next steps The assessment of cereal policies and their impact on cereal trade in the Eastern and Southern Africa region will be drafted by December 2010 and will constitute one of the background papers to be presented during the Regional consultations on value chain risk management and finance (Activity 1.ESA.A019). Activity 1.ESA.A18 - Review of Mombassa Tea Auction This activity has been cancelled. Activity 1.ESA.A19 - Regional consultations on value chain risk manage ment and finance Objective of the activity To discuss the possibility of introducing formal and informal risk transfer mechanisms along the value chain capable of enhancing credit collateralization and facilitate access of chain actors to finance. Background The KOW and subsequent consultations indicated that credit availability is limited, among other reasons, due to the presence of high risks that reduce the investment incentives facing individual stakeholders. The sources of such risk vary widely, but include inappropriate policy interventions, extensive market failure as well as climatic events. Based on outputs developed under Activities A02, A16, and A17, and from existing cases and literature from other regions, a regional workshop will be held with a view to identifying solutions ranging from those that account for the linkage between insurance and credit products to those involving improved policy and regulatory environments. The activity will focus on the cereal sector Activities during the reporting period Review of ongoing initiatives in the area of risk management and supply chain finance for cereal in the Eastern and Southern Africa region in order to further define participants and objectives of the workshop planned in 2011 Outputs, results and main lessons None Next steps Implementation of workshop planned in 2011 All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 17 2.4 Result Area 4 – Complementarities and synergies between IOs, EU and ACP actors Inter-agency collaboration - FAO has provided continued and close assistance to the ITC development process in Samoa, Fiji, Grenada, Jamaica, Madagascar, Zambia, and Cameroon and for the Regional Cotton Strategies. More specifically for the reporting period, FAO continued to participate in the strategy development process for cassava in Zambia, coffee in Cameroon, cassava in Guyana and Fruit and Vegetables in Samoa. - FAO‟s participation at IAM meetings, the latest in September 2009 have provided excellent opportunities to exchange information with partner IO‟s on ongoing activities and find synergies and collaboration in specific countries/regions and sub-sectors - EU Africa Partnership on cotton, with COS Cotton member countries. - Collaboration with UNCTAD, for the Caribbean in St Lucia. - Collaboration with the UNDP within the framework of their PFIP (Pacific Financial Inclusion project) and with UNCTAD. - In follow-up to its joint mission in Cameroon in October 2008, FAO and the World Bank have had follow-up meetings to discuss convergent areas of work and to exchange outputs on work to-date in East and West Africa. Participation to consultative meetings at regional/national level - Participation at the ITC national consultative meetings: fruit and vegetable sector in Samoa and cassava in Zambia. These meetings together with individual meetings held with the sector stakeholders contributed in providing inputs for identification of priorities in the area of finance and risk management and to provide insights from FAO into the strategy development process. - FAO also participated in a workshop organised by UNCTAD in Zambia (1.ESA.A07). - FAO organized a regional workshop in Senegal (see activity 1.WST.A01) and in Lusaka (see activity (1.ESA.A14). - To provide inputs for results 1 and 2, with a particular focus on the integration of producer organizations into modern value chains, FAO has, using its field networks, carried out extensive consultations with local chain stakeholders in Samoa, St Vincent, Jamaica, Burkina Faso, Senegal, Sierra Leone, Cameroon and Mozambique and Zambia. Collaboration with Regional organisations - In follow-up to the AAACP twinning decisions, FAO has consulted with ROPPA and SPC to develop the activity fiches for the regional focal points. To implement the fiches, a Letter of Agreement has already been negotiated with SPC. - FAO has also commented on the proposed twinning agreement between ITC and COMESA. Next steps: The negotiations for the Letter of Agreement with ROPPA are already far advanced and both contracts will be signed before the end of January, after which activities can start. All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 18 Collaboration with National and farmers’ organisations - In Kenya in R2 activities related to producer organizations strengthening in support the cotton section will be implemented in collaboration with the regional NGO, Farm Concern International. - In Zambia, activities will be implemented in collaboration with the Cotton Association of Zambia (CAZ). For the regional farm organisation workshop in South Africa in December 2008 and the GAP workshop in Lusaka in September 2009 FAO has collaborated with SACAU. Discussion on modalities of future collaboration is still ongoing for; - Zambia/cassava: collaboration in the area of value chain finance with IFAD and national financial institutions such as Zambian development Bank, NATSAVE and Madison Insurance Company. Under tranche 2 collaboration with TLC and IITA in Malawi is foreseen and a suitable partner for Zambia is being sought. - ESA region/cereal, cassava and cotton: collaboration with Bourse Africa and UNCTAD. Horticulture Uganda Main partners include : - National Steering Committee on Horticulture and GAP. Horticulture Promotion Organization of Uganda (HPOU, exporters apex). Hortexa (exporters organisation). Ministry of Agriculture (MAAIF). Uganda National Bureau of Standards (UNBS). Uganda Export Promotion Board (UEPB). the FAO national IPPM Programme. 3 Information and communication The respective country EC offices are informed when FAO carries out activities under the AAACP. The CU is kept continually up-to-date on activities taking place in the ACP regions, and FAO shares the outputs from these activities via the CU‟s web site. FAO also uses the FAO regional network to share information resulting from AAACP activities. FAO developed an AAACP project web site on inclusive value chains which has been translated into French and Spanish and was launched in June 2010. FAO also developed an AAACP paper series to publish the studies executed in the course of the AAACP project. 4 Programme administration and finance 4.1 Programme management Programme management in this period was dominated by the finalization of activities under Result 1 and implementation of field activities under Result 2 and 3. Activities are carried out in close cooperation with the FAO Sub-regional and country offices. Responsibility lies with officers assigned to particular ACP regions and/or results of the AAACP. Operational aspects will be overseen by the AAACP Project manager. HQ staff directly involved in implementation includes: Federica Angelucci, Heiko Bammann, Caterina Batello, Emily Carroll, Aziz Elbehri, Maaike Loogman, Eva Moller, Jamie Morrison, Maria Pagura, Anne-Sophie Poisot, Florence Tartanac, All ACP Agricultural Commodities Programme - Progress Report for the Period from … to … Page 19 William Settle. Other HQ staff will be involved on the basis of specific requirements and availability. The main contact point for FAO is Siobhan Kelly as AAACP Project manager.
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