44321-013: Climate Resilient Rice Commercialization Sector

Safeguards Due Diligence Report Project Number: 44321-013 December 2019 Cambodia: Climate Resilient, Rice Commercialization Sector Development Program (1688 Rice Mill) Prepared by Ministry of Economy and Finance for the Royal Government of Cambodia and the Asian Development Bank. This safeguards due diligence report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. 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. MINISTRY OF ECONOMY AND FINANCE Program Management Office (PMO) Climate Resilient Rice Commercialization Sector Development Program (Rice-SDP) Due Diligence Report on Social Safeguard of Paddy Drying and Storage (PDS) Facility within 1688 Rice Mill 1 | Page MINISTRY OF ECONOMY AND FINANCE Program Management Office (PMO) Climate Resilient Rice Commercialization Sector Development Program (Rice-SDP) Due Diligence Report on Social Safeguard of Paddy Drying and Storage (PDS) Facility within 1688 Rice Mill ___________________________________________________________________ I. Summary of Public Consultation 1. The Royal Government of Cambodia (RGC) has received loans and grants financing from the Asian Development Bank (ADB) and other sources towards the cost of the Climate-Resilient Rice Commercialization Sector Development Program ("Rice-SDP"). The Rice-SDP supports the implementation of the ‘Policy on the Promotion of Paddy production and Rice Export’ of the RGC. It is designed to help transform the predominantly subsistence rice sector into a commercially oriented one by improving household and national food security and expanding rice export through (i) removing the legal and regulatory constraints inhibiting rice commercialization; (ii) improving productivity of paddy crops and consistency in quality of milled rice; (iii) enhancing rice value chain support services; and (iv) addressing risks of climate change through mitigation and adaptation. The Rice-SDP is operating in three provinces which have high levels of rice production, namely Battambang, Kampong Thom and Prey Veng Provinces. 2. During the design of the Rice-SDP, the inadequate capacities of the post-harvest infrastructure to handle the increasing volumes of wet paddy were identified as a serious constraint. The infrastructure to handle, dry and store, and transport the volumes of wet paddy is not sufficiently developed despite significant private investment in drying, storage and milling facilities in recent years. Establishment of paddy drying, and storage (PDS) facilities are therefore one of the key activities under the Rice-SDP to help accommodate paddy supplies at peak periods after harvest to ensure better quality for processing and retained added value in Cambodia. 3. The Ministry of Economy and Finance (MEF) is the Executing Agency (EA) of the Rice- SDP and has established a Program Management office (PMO). The PMO has established a PDS Selection Committee in cooperation with the Ministry of Agriculture, Forestry and Fisheries/National Implementation Office (MAFF/NIO) and the three Provincial Implementation Offices (PIOs) who will participate in the entire PDS procurement process. 4. The Rice Millers eligible to avail the concessional loans from Rice-SDP to establish the PDS Facilities are selected following a cumbersome process. Upon receipt of the expression of interest (EOIs) from the Rice Millers, the PMO conducted a feasibility study through engaging an independent firm, assessed the Rice Millers’ PDS business proposals, and came up with a Final Ranking of the Rice Millers before employing a DD & CS (detailed design and construction supervision) firm to support the Rice Millers. The final ranking of the Rice Millers was endorsed 2 | Page by the PDS Selection Committee. The 1688 Rice Mill is ranked first in Kampong Thom province and therefore got selected to avail the concessional loan for establishment of PDS Facility. 5. An initial environmental examination (IEE) for the proposed PDS Facility at 1688 Rice Mill in Kampong Thom has been prepared covering all facets of environmental safeguards including policy principles, subproject scope, context and environment (physical, biological and socio- economic resources), anticipated environmental impacts and mitigation measures, analysis of alternatives, information disclosure, consultation and participation, grievance redress mechanism (GRM), a rapid environmental assessment, an environmental management plan (EMP), an environmental monitoring plan, institutional arrangement and responsibilities, etc. A brief description of the subproject area including socio-economic characteristics is described under para 6 & 7 below. 6. Rural livelihoods in Kampong Thom are predominantly based on agriculture. Farming is the main source of income for the majority of households in the subproject area, while other income is obtained from off-farm employment in construction, other industries, government employment, and trading. A minority of rural households derive income from fishing, though this activity is merely a supplementary activity for part of the year. Rice production is the mainstay of the rural economy in most areas. The total paddy production in Kampong Thom province was about 709,844 tons out of which wet season production was 522,914 tons and that of the dry season was 186,930 tons. Rice crop production has changed from traditional farming to mechanized farming through the use of modern agricultural equipment, rice seed, chemical fertilizer and pesticide, even though the increase in seasonal rice crop production is limited due to absence of irrigation facility (Source: Kampong Thom Development Plan 2015-2019). 7. Many rural families do not have regular cash incomes, either because of access constraints, lack of landholdings and shortage of employment opportunities. Many families are dependent on remittances by family members working away from home, most often in the construction and garment industries and/or as overseas migrant workers. Alleviating poverty became RGC’s highest priority according to its Millennium Development Goals in 2008. Thereafter, sustained efforts by RGC led to the decrease in poverty rate from 47.8% in 2007 to 13.5% in 2014. But the rural poverty incidence where 90% of the poor live fell from 24.6% in 2009 to 20% in 2012. Based on the Kampong Thom Development Plan, the poverty level in Stoung district of Kampong Thom province where the proposed PDS Facility is located has reduced from 37.9% in 2008 to 22.8% in 2018 (Source: Kampong Thom Provincial Department of Planning, 2019). The proposed PDS Facility is expected to significantly contribute to a qualitative improvement in the villagers living standards as they will get opportunity to expand their rice business as the Rice Miller will buy more paddy from them than earlier times, farmers will be able to save on transportation cost as they do not have to transport the paddy very far, and also they can work as labor at the Facility to earn income. 8. Following the endorsement by the PDS Selection Committee, both the PMO and the DD & CS firm worked with the 1688 Rice Mill and completed the initial survey for detailed design, verification of the proposed location, site layout for construction, system and process design, machine layout drawings, detailed design and specifications of equipment, and budget estimates for the Facility. The proposed PDS Facility shall be constructed on an area of 3,600m2 (around 3 | Page 0.36 hectare) within the existing Rice Mill compound of the 1688 Rice Mill situated along the National Road No. 6, Sla Village, Trea Commune, Stoung District in Kampong Thom province. The existing Rice Mill is located on a single piece of 5 hectares of fully fenced land owned by the Rice Miller (land title issued by Provincial Department of Land Management and Urban Planning- “PDLMUPC”, Kampong Thom, on 12 November 2010 attached as annex II). The proposed Facility will have a drying capacity of 300-800 tons per day (TPD) of wet paddy and the proposed works will mainly involve construction of a dryer of a size of 24 m x 60 m x 21 m (Width x Length x Height), a storage building of a size of 24 m x 50 m x 17 m (Width x Length x Height) and a concrete yard for paddy receiving area of a size of 24 m x 40 m. (See annex III: Detail Design of PDS Facility for 1688 Rice Mill). 9. After completing the detailed design of the Facility, a Rice-SDP technical team comprising of MEF/PMO officials and consultants, MAFF/NIO officials and consultants, and IRE (DD&CS Consultant for establishment of PDS Facility) together with the provincial officials conducted a Public Consultation Meeting on social safeguards impact assessment for the proposed PDS Facility within the existing business compound of the 1688 Rice Mill. The main focus of the assessment was to avoid risks (such as validation of private land title, boundary conflict with neighbors if any, safety during construction activities, and impact of new PDS facilities at the proposed site - see annex I: Minutes of Public Consultation Meeting) and support the Rice Miller to strengthen his/her safeguard systems and develop the capacity to manage environmental and social risks. 10. The Public Consultation Meeting

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