Nepal: Preparation of the Agricultural Development Strategy

Transcription

1 Technical Assistance Report Project Number: Policy and Advisory Technical Assistance (PATA) December 2010 Nepal: Preparation of the Agricultural Development Strategy (Cofinanced by the International Fund for Agricultural Development)

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3 CURRENCY EQUIVALENTS (as of 10 November 2010) Currency Unit Nepalese rupee/s (NRe/NRs) NRe1.00 = $ $1.00 = NRs70.70 ABBREVIATIONS ADB Asian Development Bank ADS agriculture development strategy APP agriculture perspective plan ERP expert review panel MOAC Ministry of Agriculture and Cooperatives NADSC Nepal agriculture development strategy conference NASDP national agriculture sector development policy NGO nongovernment organization PSC project steering committee TA technical assistance TOR term of reference TECHNICAL ASSISTANCE CLASSIFICATION Type Policy and advisory technical assistance (PATA) Targeting classification General intervention Sector (subsectors) Agriculture and natural resources (agriculture and rural sector development; agricultural production and markets; irrigation, drainage, and flood protection; land-based natural resources management) Themes (subthemes) Economic growth (promoting economic efficiency, widening access to markets and economic opportunities), environmental sustainability (natural resources conservation, eco-efficiency, environmental policy and legislation), private sector development (policy reforms, private sector investment, privatization) Climate change Adaptation Location impact Rural (high), national (high) Partnership International Fund for Agricultural Development

4 NOTE In this report, "$" refers to US dollars. Vice-President X. Zhao, Operations 1 Director General S.H. Rahman, South Asia Department (SARD) Director T. Matsuo, Agriculture, Natural Resources, and Social Services Division, SARD Team leader Team members Technical expert H. Woldring, Rural Development Specialist, SARD G. Gewali, Senior Project Implementation Officer, Nepal Resident Mission (NRM), SARD S. Subba, Social Development and Gender Officer, NRM, SARD A. Syed, Counsel, Office of the General Counsel A. Tayyab, Head, Project Administration Unit, SARD K. Yokoyama, Principal Water Resources Management Specialist, SARD K. Matsunami, Head, Community of Practice (Agriculture, Rural Development, and Food Security Unit), Regional and Sustainable Development Department In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

5 I. INTRODUCTION 1. The Government of Nepal has requested Asian Development Bank (ADB) assistance in preparing an agriculture development strategy (ADS) with a 20-year vision and a 10-year planning horizon. In 1995, ADB technical assistance (TA) assisted the government in preparing the Agriculture Perspectives Plan, (APP) as Nepal s official agriculture sector framework. 1 In view of changes that were not anticipated under the APP, particularly changes in the form of government, a regional situation shaped by rapidly growing regional trade, climate change impacts becoming real and visible, and the dual impacts of migrant labor and urbanization, the government considers a comprehensive revision of the APP to be necessary. This policy and advisory technical assistance (TA) is based on discussions between the government and ADB during the reconnaissance mission to Nepal in September 2010 and the fact-finding mission in November These missions met with government agencies, the private sector, nongovernment organizations (NGOs), and major development partners. Their findings are incorporated in the design and monitoring framework in Appendix 1. The government has requested that the TA be included in the 2010 TA program. 2 II. ISSUES 2. Nepal is one of the poorest countries in Asia, with per capita income of $462 in 2009 and 31% of the population living in poverty, mostly in rural areas. Agriculture contributes 33% of the gross domestic product. Two-thirds of the population lives in rural areas, where 80% of the workforce engages in subsistence agriculture. Productivity remains one of the lowest in Asia. Constraints are (i) difficult terrain that is vulnerable to climate change and natural disasters such as droughts, floods, and landslides; (ii) poor physical infrastructure; (iii) limited access to inputs, output markets, and financial services; and (iv) low technology base and weak extension. 3. The APP aimed to achieve over 4% annual growth in food grain production and higher rates for high-value products by improving total factor productivity through (i) the liberalization of input and output markets and (ii) prioritized public investments to improve the provision of irrigation, seeds, fertilizer, and agricultural extension, as well as to improve roads. The National Agriculture Policy, 2004 and the National Agribusiness Promotion Policy, 2006 provided further policy guidance. Consequently, agriculture sector growth accelerated from 2.6% in to 3.6% in Yet performance fell short of targets, as the country has become a net importer of food grains and change in the production mix toward high-value products lags. 4. The Three-Year Plan, envisions agriculture changing from subsistence into a competitive commercial sector that generates employment, reduces poverty, and strengthens food security. The National Agriculture Sector Development Priority Plan, links with the 3-year plan as a strategic framework, but a comprehensive plan is required with deeper policy and legislative analysis; clear targets and resource needs; and coordinated arrangements for implementation, monitoring, and evaluation. The plan needs to reflect the current situation and a vision for the future. As migrant labor and urbanization bring social and economic change to rural areas, regional trade is shaped by rapid economic growth in large neighboring countries. Climate change is already having impact at the farm level. The following paragraphs describe major issues. 5. Policy and planning framework. This needs to be reviewed and improved in light of change and the performance of the APP. The 3-year plan proposes policy coordination and integrated economic policy and planning that prioritizes agriculture. This must integrate pricing, 1 ADB Technical Assistance to the Kingdom of Nepal for Agriculture Perspective Plan. Manila (TA 1854-NEP, for $680,000, approved on 24 March). 2 The TA first appeared in the business opportunities section of ADB s website on 14 December 2010.

6 2 taxes, and policy support to enable the private sector to play its critical role in agricultural development, providing inputs, services, and markets for outputs. Issues exist regarding trade; access to suitable land, capital, technology, and markets; and infrastructure. Fixed prices, current tax arrangements, regulation, and state competition discourage private investment in processing and improving quality and food safety. The Agricultural Sector Performance Review noted sector improvement in the 1990s related to policy promoting a market economy, participation, and decentralization. 3 The national agriculture policy emphasized cooperatives as a basis for commercialization, however the legal basis for co-operatives, contract farming and public private partnerships to facilitate investment is problematic. Some 90% of agricultural trade is with India and the People s Republic of China, with which Nepal has a deficit of about 15%. Opportunities include (i) trade agreements and improved border procedures; (ii) replacing imports of cereals, wool, meat, and fruit; and (iii) exporting vegetables, fruit, tea, coffee, spices, and seeds. Meat, dairy, eggs, and high-value crops are successful, but how best to expand production is a challenge. 6. Institutional framework. This must distinguish the roles of the public and private sectors. Decisions regarding the use of irrigation and fertilizer, business structure, and commercialization belong to the private sector. The public sector can provide agricultural support services, infrastructure, markets, policy, and regulation. The impact of reforms under the APP is modest, and challenges remain to (i) improve accountability in fiscal support, (ii) deregulate the fertilizer and dairy industries, (iii) promote rural finance, and (iv) provide adequate technical support services. 7. Productivity, food security, and land reform. Agriculture employs 66% of the work force but contributes only 32% of gross domestic product. 4 The major crops that account for more than 80% of cultivated area rice, maize, wheat, millet, barley, and potatoes are grown primarily for subsistence. Difficult topography, low technology, drought, intense rain, and climate change contribute to keeping yields among the lowest in Asia. Land reform remains a challenge, with 70% of agricultural landholdings smaller than 1 hectare, creating difficulty in aggregation to a more productive scale. Nepal recently became a net food importer, and malnutrition and food scarcity are prevalent. The Nepal Food Corporation cannot fulfill its mandate to ensure food security. Strategies to address production conditions and marketing opportunities in Nepal s diverse agro-climatic regions need to be incorporated into the ADS. 8. Climate change and forestry. Nepal is one of the most vulnerable countries in Asia to climate change, which already causes natural disasters, the loss of pasture and forest, and changes in river hydrology, creating the need for adapted crop varieties. Agriculture, water, and other natural resources are also threatened by strong demand, limited capacity for enforcing conservation measures, and smuggling, which contributes to deforestation and conflict. The new strategy needs to address climate change impact and adaptation by (i) changing crop mixes and land use toward perennial crops, pasture, and agroforestry and (ii) managing grazing to improve land cover. 9. Irrigation and infrastructure. The poor development of roads, markets, and electricity supply (with coverage at only 43%) remain constraints. Irrigation is critical but covers only 2.6 million hectares, or 42% of the cultivated area. Irrigated yield is substantially lower than potential, illustrating the need for better delivery of extension and inputs. There is potential for private sector investment in cost-effective tube wells, micro and minor irrigation, rainwater harvesting, and groundwater use, supported by good practices and value chain development. The 3 ADB Technical Assistance to the Kingdom of Nepal for Agriculture Sector Performance Review. Manila (TA 3536-NEP, for $600,000, approved on 4 December). 4 Government of Nepal Economic Survey. Kathmandu: Ministry of Finance.

7 3 government s district master plans for rural roads and markets need to be integrated with local agriculture planning. 10. Agricultural inputs and vocational skills. Commercial agriculture and improved postharvest techniques and agro-marketing are drivers of sector growth. The challenge is to improve input supply and skills for their use, as well to continue reform. The use of fertilizer and improved seed remains far below APP targets. Quality issues have emerged from inadequate regulation. The privatization of the Agro-Inputs Corporation has not progressed as recommended by the APP. 11. Rural finance. The ADB Rural Finance Sector Development Cluster Program 5 is assisting this requirement for development through policy, legal, regulatory, and institutional reforms, and it suggests that private and NGO services are successful. The challenge is to improve access to finance, reduce transaction costs, and revise distorting policies. 12. Decentralization. After adopting the APP, the government progressed to decentralization with the Local Self-Governance Act, 1999 and now prioritizes development through periodic district development plans, providing a local planning base for an ADS. Programs with budgets and staffing for agriculture and livestock services have been devolved to district development committees. Initiatives have promoted service provision through private and NGO agents in partnership with the Ministry of Agriculture and Cooperatives (MOAC). III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 13. The impact will be sustainable growth in value in an agriculture sector that is more resilient to climate change. The tentative performance targets of 4.7% average annual growth in agriculture and 6.0% agricultural export growth will be reviewed under the TA. These indicators reflect an underlying reduction in poverty, increased farm household incomes, and improved food security supported by the sustainable management of natural resources. 14. The TA will help the government to prepare a comprehensive development strategy for agriculture based on an analysis of the policy and sector situation and wide stakeholder consultation. The outcome will be the draft long-term ADS submitted to the MOAC. The performance indicator is the government s acceptance of the ADS, but it is recognized that commitment to implementing the strategy is outside the scope of the TA. B. Methodology and Key Activities 15. Using the APP and other recent planning framework documents as the foundation, the TA will have four key phases: (i) assessing policy and sector performance and status; (ii) developing a vision for the sector; (iii) developing costed policy and strategy options to achieve the vision; and (iv) preparing the ADS. The pillars of the new strategy are expected to be (i) food security, productivity, connectivity and resilience; (ii) sustainable production and resource management through climate change mitigation and adaptation and improved land and water management and water allocation; and (iii) increased private sector development, delivering fair reward to all stakeholders in the value chain. Indicative priority areas are (i) the greening of agriculture, (ii) commercialization, (iii) an improved business environment, (iv) effective and non- The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature. 5 ADB Report and Recommendation of the President to the Board of Directors: Proposed Sector Development Program Cluster of Loans, Asian Development Fund Grant, and Technical Assistance Grant to Nepal for Rural Finance Sector Development Cluster Program. Manila (Loan 2268-NEP, for $56 million, approved on 26 October).

8 4 distorting price, tax, and support policies; (v) expanded and well-managed irrigation; and (vi) the development of opportunities with comparative advantage for expanded trade. 16. The government s strong ownership of the ADS is essential. The TA will engage stakeholders through (i) the project steering committee (PSC); (ii) thematic groups to work on subsector and cross-sector issues with chairs appointed by the PSC, membership that includes farmer association representatives and agribusiness, and facilitation by TA consultants; (iii) an expert review panel (ERP) of national experts and development partners to peer review the main TA reports; (iv) national and regional consultation workshops; and (v) TA consultant field visits and farmer focus group discussions to identify issues and verify that strategy options are appropriate. Also strengthening ownership of the outcome will be (i) a Nepal ADS conference with TA-sponsored papers on policy options invited from stakeholders, NGOs, and academia; and (ii) the mobilization of two eminent persons to engage more closely with political leaders. 17. Phase 1, in months 1 5, will be an initial assessment of the sector, project scope, and work plan for the TA inception report to be submitted by week 6 following start-up and discussed at a 3-day opening workshop, which will establish the members, roles, and work plans of the thematic groups and ERP. Detailed assessment with field visits, focus group discussions, the review of literature and development of project lessons, and thematic group working sessions with consultants will result in an assessment report by the end of month 4 covering the APP and other policy frameworks, sector status, performance issues, and opportunities. Phase 2, in months 6 8, will develop a vision statement for 2030 that encompasses stakeholders views, clearly identifying the future situation for each subsector in (i) regional consultation workshops; (ii) consultations with senior political leaders, agribusiness, and the communities; and (iii) a national ADS conference to finalize the vision and identify preliminary strategy options. 18. Phase 3, in months 9 14, will be the preparation of detailed policy and strategy options to achieve the vision. The TA will (i) estimate the resources required, benefits and costs, and time frame for each option; (ii) analyze the costs, impacts, benefits, and viability of the options; and (iii) prepare an ADS options report for submission to the PSC, ERP, and thematic groups for review prior to a PSC meeting to consolidate comments and select options. During phase 4, in months 15 24, the TA will prepare the detailed 2030 ADS with road maps and cost estimates to guide implementation. The PSC, thematic groups, and ERP will peer review the draft ADS, on the basis of which the TA will finalize it for submission to the government as the TA outcome. C. Cost and Financing 19. The TA will be financed by (i) a $1,500,000 grant from ADB s Technical Assistance Special Fund (TASF-IV), (ii) a $500,000 grant from the International Fund for Agricultural Development to be administered by ADB, and (iii) $100,000 in counterpart financing from the Government of Nepal. ADB will finance consulting services, workshops, equipment, and operations. Disbursement under the TA will be made in accordance with ADB's Technical Assistance Disbursement Handbook (2010, as amended from time to time). The International Fund for Agricultural Development will also finance consulting services. The government will contribute premises, staff time, a vehicle, government operations, and taxes and duties. The cost estimates and financing plan are in Appendix 2. D. Implementation Arrangements 20. Institutional arrangements. The MOAC will be the executing agency and establish the PSC to guide policy and strategy and coordinate agencies. The PSC will be co-chaired by the MOAC and the Ministry of Finance. PSC members will be staff not lower than joint secretary level in the National Planning Commission, Ministry of Commerce, Ministry of Industry, Ministry

9 5 of Forestry, Ministry of Irrigation, Ministry of Health, Ministry of Local Development, Ministry of Law and Justice, and the private sector, including the Federation of the Nepalese Chambers of Commerce and Industries and apex farmers organizations. The TA will commence in January 2011 and be completed by December The government will (i) appoint a class one or senior class two person as the project director and (ii) assign two full-time senior staff to the TA throughout the TA period. The PSC will appoint a TA coordinating committee chaired by the MOAC to ensure smooth TA operation and the participation of policy, planning, and technical line departments and agencies. 22. The PSC will appoint senior staff to chair the thematic groups and ensure the communication of the many crosscutting issues with other groups. Individual consultants will facilitate and support the groups. Keeping to agricultural issues, thematic groups will address (i) policy, legislation, regulation, and institutional development; (ii) agriculture and livestock, including research and extension; (iii) irrigation; (iv) agribusiness, commerce, and trade; (v) rural finance; (vi) taxation and fiscal policy and strategy; (vii) food security, health, and food safety; (viii) climate change, the environment, forestry, and natural resource management; (ix) land reform and gender and rural social development; and (x) rural infrastructure and local development. 23. The MOAC will provide a minimum of 400 square meters of office space for the term of the TA, a vehicle and driver, communications facilities, and two full-time staffers to coordinate with stakeholders. The TA will provide office refurbishment; furniture; office equipment including computers, printers, a copier, a generator, and internet access; and a second two-wheel-drive vehicle, purchased in accordance with ADB s Procurement Guidelines (2010, as amended from time to time). The TA will hire a driver office staff, including an office administration manager and two office assistants responsible for running the office, accounts, communications, errands, documentation and records, and workshop and travel arrangements. At the completion of the TA, assets will be turned over top the MOAC. 24. Consulting services. The TA will use 48 person-months of international consulting services and 95 person-months of national, including unallocated person-months to address unforeseen issues. ADB will engage consultants in accordance with its Guidelines on the Use of Consultants (2010, as amended from time to time). International consultants and the national deputy team leader will be recruited as individuals. ADB will recruit national consultants through a firm using quality- and cost-based selection at a ratio of 80:20 and bio-data technical proposals. The composition of the consultant team and terms of reference are in Appendix The ADS will be formally disseminated through government mechanisms led by the MOAC, National Planning Commission, and Ministry of Finance. The TA will also disseminate the ADS through stakeholder engagement. The MOAC planning and monitoring and evaluation divisions will evaluate the ADS. It is proposed that ADB undertake a sector review within 5 years of ADS implementation. IV. THE PRESIDENT'S DECISION 26. The President, acting under the authority delegated by the Board, has approved (i) ADB administering a portion of technical assistance not exceeding the equivalent of $500,000 to be financed on a grant basis by the International Fund for Agricultural Development, and (ii) ADB The views expressed herein are those of the consultant and do not necessarily represent those of ADB s providing members, Board the balance of Directors, not Management, exceeding the or staff, equivalent and may of be $1,500,000 preliminary in on nature. a grant basis to the Government of Nepal for the Preparation of the Agricultural Development Strategy, and hereby reports this action to the Board.

10 6 Appendix 1 DESIGN AND MONITORING FRAMEWORK Design Summary Impact Increased agricultural output that is more resilient to climate change Outcome Draft Agricultural Development Strategy, prepared Performance Targets and Indicators with Baselines By December 2016: 4.7% average annual growth in agriculture Average annual growth in agricultural exports of 6.0% per annum By December 2012: Draft strategy agreed by the government and ADB Data Sources and Reporting Mechanisms Macroeconomic accounts, Ministry of Finance Ministry of Trade, Statistics Office, and MOAC Submission of the strategy to MOAC Assumptions and Risks Assumption ADS approved and implemented Risk ADS compromised by the fluid political situation Assumption Consistent engagement between the bureaucracy and political sides of the government Outputs 1. Analysis of agriculture status APP and other recent planning frameworks reviewed Minutes of PSC meeting on APP review Assumption Full participation in ADS process 2. Agriculture vision statement, with indicative pillars, including food security, sustainable production and resource management adapted to climate change, private sector development, and priority areas Analytical report of current situation in agriculture, including policy, legislative, and institutional review Vision statement clearly reflecting results, findings, and consensus derived during extensive stakeholder consultations and the expert panel review 20-year agriculture vision, with baseline indicators and future targets, approved by PSC Minutes of PSC meeting on agriculture vision Risk Key stakeholders not participating in the process 3. Policy and strategy options paper, with benefit cost analysis, covering all subsectors and issues and presented at a national ADS conference PSC able to endorse its preferred policy options based on full knowledge of results of the national conference of stakeholders and development partners and the expert panel review Minutes of PSC meeting to review agricultural sector analysis research papers and policy options papers 4. Strategy and implementation roadmaps developed Stakeholder engagement reflected in strategy formulation and development of implementation road maps Minutes of PSC endorsing strategies and implementation roadmaps

11 Appendix 1 7 Design Summary Performance Targets and Indicators with Baselines Data Sources and Reporting Mechanisms Minutes of PSC meeting to review the draft ADS Assumptions and Risks 5. Project managed effectively Project managed in accordance technical assistance agreement ADB aid memoires and back-to-office reports Activities with Milestones 1.1 Initial sector status and analysis prepared, key policy stakeholders identified, and 3-day opening national workshop for all stakeholders (by week 6) 1.2 Thematic groups formed around key issues, including climate change and food security, with modality and schedules (by the end of month 3) 1.3 Thematic groups meet and contribute to sector analysis (by the end of month 3) 1.4 APP performance and full sector analysis completed (by the end of month 4) 2.1 Thematic group consultations held to agree on ADS pillars and priority areas and develop a 20-year vision statement for agriculture (by the end of month 5) 2.2 Regional stakeholder workshops held to refine the vision statement (by the end of month 6) 2.3 Review of vision statement by expert review panel (by the end of month 6) 2.4 PSC approval of 20-year agriculture vision (by the end of month 8) 3.1 Thematic groups and stakeholders prepare and contribute to policy papers on how to achieve the vision (by the end of month 10) 3.2 Consultants draft policy options and strategy recommendations, incorporating thematic and stakeholder reports, with preliminary cost and benefit analysis (by the end of month 10) 3.3 Review of policy and strategy paper options by expert review panel (by the end of month 11) 3.4 National conference, including all stakeholders and development partners, to discuss policy and strategy options (by the end of month 12) 3.5 PSC consideration of policy options (by the end of month 13) 3.6 PSC endorsement of preferred policy options (by the end of month 14) 4.1 Draft ADS prepared with detailed implementation road maps, including policy and legislative and indicative investment requirements (by the end of month 16) 4.2 Draft ADS discussions with key stakeholders (by the end of month 17) 4.3 Draft ADS finalized for expert review panel review (by the end of month 18) 4.3 Formal submission to the government (by the end of month 19) 4.4 Draft reviewed following comments and ADS finalized (by the end of month 24) Inputs ADB: $1.5 million Item Amount ($ 000) Consultants 1,320 Equipment 40 Workshops 45 and conference Miscellaneous 51 Contingencies 44 International Fund for Agricultural Development: $500,000 Item Amount ($ 000) Consultants Contingencies 31.2 Government: $100,000 Item Amount ($ 000) Office accommodation 40 and transport Remuneration and 40 per diem of counterpart staff Others PSC convened, PMU established, and consultant team leader mobilized (by the start of month 1) 5.2 Policy and advisory technical assistance scope and work plan detailed in inception report and confirmed by PSC (by the end of month 1) 5.3 Expert consultants mobilized according to schedule (months 1 24) 5.4 Inception, interim, draft final, and final reports submitted to PSC and ADB (months 2, 8, 16, and 24) ADB = Asian Development Bank, ADS = agriculture development strategy, APP = agricultural perspectives plan, MOAC = Ministry The of views Agriculture expressed and Cooperatives, herein are those PSC = of project the consultant steering committee. and do not necessarily represent those of ADB s Source: members, Asian Development Board of Directors, Bank. Management, or staff, and may be preliminary in nature.

12 8 Appendix 2 COST ESTIMATES AND FINANCING PLAN ($'000) Total Item Cost A. Asian Development Bank 1. Consultants a. Remuneration and per diem i. International consultants ii. National consultants b. International and local travel i. International ii. Local c. Reports and communications Equipment i. Office equipment a ii. Vehicle b Workshops and conference a. Facilitators and sponsored papers b. Facilities Miscellaneous administration and support costs Contingencies Subtotal (A) 1, B. International Fund for Agricultural Development c 1. Consultants a. International consultant remuneration and per diem b. International travel Contingencies Subtotal (B) C. Government of Nepal 1. Office accommodation and transport Remuneration and per diem of counterpart staff Others Subtotal (C) Total 2, a Equipment includes computers, photocopier/printer/scanner, and internet connectivity hardware. b Vehicle will be purchased not leased as suitable leasing options are not available. c Administered by the Asian Development Bank. This amount includes the Asian Development Bank s administration fee, audit costs, and bank charges, as well as provision for foreign exchange fluctuations, to the extent that these items are not covered by the interest and investment income earned on this grant or by any additional grant from the International Fund for Agricultural Development. The International Fund for Agricultural Development funds will be front loaded. Source: Asian Development Bank estimates.

13 Appendix 3 9 OUTLINE TERMS OF REFERENCE FOR CONSULTANTS 1. The consultants will be responsible for (i) reviewing the agricultural perspectives plan (APP) and other policy and strategy frameworks, analyzing and reporting on its performance and the relevance of its priorities and strategies to the current situation; (ii) assessing and reporting on the current sector situation, constraints, and opportunities, as well as establishing baseline data and future indicators for the vision for 2030 and its supporting monitoring and evaluation; (iii) ensuring stakeholder communication and participation, with each expert facilitating a thematic group and acting as the group reporter; and (iv) contributing to technical assistance (TA) reports and preparing specialist reports including policy and strategy options for the agriculture development strategy (ADS), with details of costs, benefits, and the implementation road map. The schedule includes 2 months of unallocated time for international consultants and 10 months for national consultants. A. Team Leader and Policy and Institutions Specialist (international, 14 person-months) 2. The team leader will coordinate with the project director operationally and report to the project steering committee (PSC) on outputs and to the Asian Development Bank (ADB) project officer regarding terms TA input needs and country policy guidance. The team leader will (i) lead stakeholder consultation and workshops; (ii) supervise the consulting team, maintaining team focus and ensuring that cross-discipline issues and opportunities are addressed; (iii) supervise project office management and project administration in liaison with ADB; and (iv) prepare TA inception, interim (situation and policy assessment), midterm (vision statement), and draft final and final ADS. As the policy and institutions specialist, the consultant will (i) review the country policy and strategy, 3-year plan, APP, and other agriculture policy frameworks, analyzing the performance and relevance of sector objectives in the current and future contexts and preparing a 20-year vision statement with stakeholder consultation; (ii) analyze constraints on achieving policy objectives and reforms, as well as public response to stimuli such as subsidies on inputs and irrigation; (iii) organize, in coordination with the project director and the PSC, the Nepal ADS conference (NADSC) to finalize the sector 20-year vision and preliminary policy and strategy options; and (iv) take responsibility for preparing the draft ADS with implementation road maps and a performance monitoring system based on the policy analysis and feedback. B. Eminent Persons (2 international, 3 person-months each) 3. The eminent persons will report to ADB and the team leader. They will draw on their experience as leaders responsible for policy formulation and strategy implementation in a country where agriculture is successful and internationally competitive and provides major contributions to both the national economy and the well-being of rural society. One eminent person will (i) review the agriculture situation and policy framework and suggest priority areas and issues to be addressed, (ii) provide expert comments on the emerging ADS, (iii) be an external member of the expert review panel, and (iv) provide expert input at the NADSC. The other eminent person will (i) review the agriculture situation and policy framework and suggest priority areas and issues to be addressed, (ii) provide expert comment on the emerging ADS, (iii) articulate the emerging policy and strategy issues and concepts to senior peers in Nepal, (iv) engage major political leaders to ensure their participation in ADS formulation and their understanding and acceptance of the need for reform, and (v) prepare and deliver a keynote speech to the NADSC and make presentations at other stakeholder meetings. C. Agricultural Economist (international, 10 person-months) 4. The economist will report to the team leader and be responsible for (i) coordinating with team specialists to synthesize the agriculture sector economic situation review, analyzing issues,

14 10 Appendix 3 constraints, and opportunities covering agriculture, livestock, forestry, agribusiness, taxation, food security, and trade; (ii) reviewing the sector economic performance of the APP and related strategy; (iii) analyzing the situation, regulations, agreements, constraints, and opportunities regarding local, regional, and global agricultural trade and recommend a strategy to further develop trade agreements and capture benefits; (iv) analyzing the balance of payments in light of exchange rate policy linked to the Indian rupee; (v) preparing a agriculture sector economic analysis paper for the NADSC describing the market failures to be addressed, identifying strategy options to achieve the 2030 vision, and establishing the economic rationale for the strategy; (vi) analyzing the benefits and costs of strategy options and helping the team leader to prepare the ADS; and (vii) conducting an economic and financial analysis of the strategy road map, both with and without subsidy if any, and an analysis of benefit distribution. D. Rural Finance specialist (international, 2 person-months) 5. The rural finance specialist will report to the team leader and be responsible for (i) analyzing the rural finance, microfinance, and banking situation in agriculture, identifying issues, constraints, and opportunities; (ii) preparing a paper on rural finance for presentation at the NADSC and facilitating a thematic group on strategy for rural finance and banking; and (iii) preparing policy and strategy sections for incorporation into the draft ADS. E. Irrigated Agriculture and Water Resources Specialist (international, 4 person-months) 6. The specialist will report to the team leader and be responsible for (i) leading national experts in an analysis of irrigated agriculture and horticulture, identifying constraints and opportunities regarding productivity, farming systems, marginal return per unit of water used, and technology performance; lessons learned; and prospects for development including the modernization of existing systems and extension of new systems; (ii) assessing the impact and effectiveness of irrigation subsidies and making recommendations; (iii) reviewing policy and existing development strategy and institutions and recommending reforms; (iv) reviewing initiatives on water resource management and climate change and identifying strategic agendas for management and adaptation actions including policy and institutional reforms; (v) identifying key development agendas and strategic elements in each agenda and integrating them into an options paper on irrigated agriculture strategy for presentation at the NADSC; and (vi) facilitating a thematic group on irrigated agriculture strategy and preparing sections of the ADS. F. Agriculture and Agribusiness Specialist (international, 3 person-months) 7. Reporting to the team leader, the specialist will guide the national consultants in livestock, agriculture, forestry, and trade and be responsible for (i) analyzing sector constraints and opportunities in production and postharvest, compiling a list best practices and appropriate technologies; (ii) assessing and categorizing products into types based on existing and potential opportunities and comparative advantage, designing a strategy for developing opportunities both upstream and downstream; (iii) analyzing the situation, constraints, and opportunities regarding agribusiness and commerce, designing a strategy to stimulate private investment; (iv) reviewing the food security situation and policy, including the impact of subsidized rice on local producers and markets, and recommending options for improvement with private sector participation; (v) assessing land tenure and productivity and recommending policy to improve productivity, farm security, and land use; (vi) suggesting agro-enterprise opportunities, business structures, and mechanisms such as contract farming to enhance income opportunities for farmers; and (vii) preparing a paper on agribusiness issues and policy options for the NADSC and sections of the ADS.

15 Appendix 3 11 G. Tax Specialist (international, 3 person-months) 8. The specialist will report to the team leader, supervise the national tax specialist, and be responsible for (i) analyzing the tax situation for the agriculture sector and how it influences sector performance and identifying prospects for tax policy and strategy adjustment to achieve more favorable outcomes, (ii) benchmarking tax rates and administration with comparator countries and international practice, (iii) reviewing fiscal stimuli to the sector and their performance, and (iv) preparing a paper on tax issues in agricultural policy and strategy for presentation at the NADSC and sections of the ADS. H. Legislation and Regulation Specialist (international, 4 person-months) 9. The specialist will report to the team leader, supervise national specialists, and be responsible for (i) reviewing and analyzing legislation pertaining to agriculture, including legislation that affects agriculture on trade and commerce, state-owned enterprises, health, the environment, land, and forests; (ii) preparing a paper on agricultural legislation and regulation for presentation at the NADSC, as well as policy and strategy sections and legislation and regulatory amendments for incorporation into the ADS; and (iii) reviewing the draft ADS from a legal perspective and revising it accordingly. I. Deputy Team Leader and Policy and Institutions Specialist (national, 22 personmonths) 10. Under the guidance of the team leader, the deputy team leader will coordinate operations with the project director and be responsible for (i) representing the project and team in stakeholder consultations and workshop presentations, (ii) assisting the eminent persons in all aspects related to their terms of reference (TORs) and dealings with the Ministry of Foreign Affairs, (iii) assisting in supervising the consultant team, and (iv) assisting in supervising project office management. 11. As the policy and institutions specialist, the consultant will (i) identify local informants and information sources in the government, academia, the private sector, and civil society relevant to TA specialists; (ii) obtain policy and institutional documents and help specialists do the same; (iii) assist in analyzing the situation and performance of policy and strategy, including the current 3-year plan, APP, national agriculture policy, national agribusiness promotion policy, and NASDP; (iv) liaise closely with the PSC to foster ownership and support for the policy and strategy as it nears completion; and (v) ensure the ADS follows government strategy, governance, laws, and safeguards guidelines. J. Agricultural Economist (national, 6 person-months) 12. Reporting to the team leader, the economist will work under guidance of the international agricultural economist with the same TORs. K. Agricultural Business and Trade Specialist (national, 3 person months) 13. Reporting to the team leader and coordinating with the international agricultural economist and agribusiness specialist, the specialist will be responsible for (i) analyzing the agricultural commerce-and-trade situation and its trends, performance, issues, and constraints, including processing and manufacturing based on Nepal s agricultural materials; (ii) analyzing commercial structures and modalities in agriculture such as individual transactions, sales contracts, contract farming, advances, auction, and brand-based or licensed trading; and (iii) preparing a paper on agricultural commerce and trade and inputs to the ADS.

16 12 Appendix 3 L. Agricultural Specialists (3 national consultants, 3 person-months each) 14. Reporting to the team leader and coordinating with the international specialists, the three subsector specialists one for agriculture, another for livestock, and the third for forestry and medicinal plant products will each be responsible for (i) a situation review, analyzing issues, constraints, opportunities, and policy impact and performance against the objectives and strategy targets contained in the APP and related strategies; (ii) field visits to elaborate and verify issues, opportunities, and strategy options; (iii) preparing specialist subsector situation analysis and strategy options papers and facilitating a thematic working group; and (iv) preparing sections of the ADS. M. Legislation and Regulation Specialists (5 national consultants, 3 person-months each) 15. The five specialists in (i) food safety and quality, (ii) commerce and trade, (iii) natural resources, (iv) public enterprise reform, and (v) government institutions and planning will report to the team leader through the international legislation and regulation specialist, with whom they will share TORs. N. Irrigation Specialist (national, 6 person-months) 16. The specialist will report to the team leader through the international water resources and irrigation specialist and have similar TORs. The consultant will (i) assess the current situation of irrigation using surface and groundwater, covering performance (productivity, efficiency, sustainability, and effectiveness of institutions), best practices and lessons, and prospects; (ii) assess the impact of subsidies with agriculture economists; (iii) analyze institutional arrangements for irrigated agriculture; (iv) analyze research and extension agendas and outputs from local research agencies, the Ministry of Irrigation, and development organizations; (v) review and report on policy and institutional performance including the APP, developing policy and strategy options for irrigated agriculture including targets, resource requirements, implementation arrangements, costs and benefits; and (vi) prepare the policy, strategy, and perspective plan sections of the draft ADS. O. Tax Specialist (national, 2 person-months) 17. The specialist will report to the team leader and work under guidance of the international tax specialist, with whom he or she will share TORs. P. Agricultural Insurance Specialist (national, 2 person-months) 18. The specialist will report to the team leader, coordinate with the international agribusiness specialist, and will be responsible for (i) reviewing studies and proposals on insurance for crops and livestock, including those related to contract farming, agribusiness, and schemes to compensate losses related to wildlife in and around national parks and reserves; (ii) consulting with commodity associations of the agro-enterprise center of the Federation of Nepalese Chambers of Commerce and Industry, farmers, and landowners to assess the potential for insurance and develop policy and strategy options for insurance schemes; (iii) and writing a report including a situation assessment, issues, and policy and strategy options, as well as writing sections of the ADS. Q. Conference Coordinator and Editor of Proceedings (national, 3 person-months) 19. Under instructions from the team leader, the editor will be responsible for the NADSC, (i) managing the processes of calling for abstracts, selecting candidates, inviting full papers and presentations from experts and stakeholders; (ii) preparing a simple style guide for abstracts,

17 Appendix 3 13 papers, and presentations; (iii) managing the preparation and conduct of the NADSC; and (iv) completing the compilation, editing, and publication of conference proceedings. R. Environment and Climate Change Specialist (national, 6 person-months) 20. Reporting to the team leader, the specialist will be responsible for (i) reviewing information on climate change in Nepal, liaising with other projects and research, and setting out all areas and agendas for mitigation and adaptation; (ii) coordinating with TA subsector specialists toward fulfilling climate change agendas; (iii) coordinating with agencies and ongoing projects regarding the environment, forestry and watershed management, analyzing the present status and issues, policy and institutional frameworks, constraints, issues, lessons, and prospects, future strategy and plans; (iv) assessing the effectiveness of management systems and recommending strategy options; (v) contributing to developing the vision 2030 statement; and (vi) preparing detailed policy and strategy options with details on costs, benefits, decentralized planning, and appropriate implementation arrangements. S. Rural Infrastructure Specialist (national, 3 person-months) 21. The specialist will report to the team leader and be responsible for (i) reviewing the present status and synthesizing the issues of rural infrastructure, asset status (assets created, patterns of management, etc.), policy and institutional frameworks and capacity (including community-based approaches and private sector participation), planning frameworks and implementation status, constraints, issues, lessons, and prospects, along with future strategy and plans; and (ii) preparing detailed strategy options to strategically integrate rural infrastructure and agriculture development to achieve the 2030 vision, including costs, benefits, and appropriate decentralized planning and implementation arrangements. T. Agricultural Research and Extension Specialist (national, 3 person-months) 22. Reporting to the team leader, the specialist will be responsible for (i) reviewing the APP and related agricultural policy framework, its priorities and performance with regard to agricultural research and extension services institutional structure, modalities for planning and prioritization, and funding modalities; (ii) analyzing the performance of research and extension services in terms of research outputs, their dissemination and farmer adoption of technology and best practices, and cost effectiveness; (iii) assessing constraints and opportunities in research and extension institutional structures, modalities, staffing, and resources; (iv) preparing policy and strategy options for an improved research-and-extension system required to achieve the ADS 2030 vision, incorporating a role for private sector and NGO research and extension; (v) elaborating the strategy options with costs, benefits, and implementation arrangements to ensure stakeholder support; and (vi) preparing sections of the ADS. U. Social Development Specialist (national, 5 person-months) 23. The specialist will report to the team leader and coordinate with the gender focal point of Ministry of Agriculture and Cooperatives and ADB for technical advice. The specialist will (i) prepare a social, gender, and poverty analysis of agriculture, identifying issues, constraints, and opportunities; (ii) carry out an in-depth gender and social-inclusion review and performance assessment of existing sector policies, strategy, acts, guidelines, and regulations; (iii) prepare detailed policy and strategy options, with costs, benefits, and implementation arrangements to improve performance regarding poverty, gender, and social inclusion; (iv) prepare an assessment of poverty, gender, and social inclusion in agriculture for presentation at the NADSC and facilitate a rural social development thematic group; and (v) prepare gender and social inclusion policy and strategy sections of the ADS.