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ASIAN DEVELOPMENT BANK TAR: RES 36472 PROPOSED TECHNICAL ASSISTANCE FOR THE SEVENTH AGRICULTURE AND NATURAL RESOURCES RESEARCH AT INTERNATIONAL AGRICULTURAL RESEARCH CENTERS November 2002 ABBREVIATIONS AARNET – Asian Vegetable Research and Development Center Regional Network ADB – Asian Development Bank ANRR – agriculture and natural resources research ANRRD – Agriculture, Natural Resources and Rural Development ASEAN – Association of Southeast Asian Nations AVRDC – Asian Vegetable Research and Development Center CGIAR – Consultative Group on International Agricultural Research CIAT – International Center for Tropical Agriculture DMC – developing member country EA – Executing Agency IARC – international agricultural research center ICAR – Indian Council of Agricultural Research ICRISAT – International Crops Research Institute for the Semi-Arid Tropics IFPRI – International Food Policy Research Institute ILRI – International Livestock Research Institute IPGRI – International Plant Genetic Resources Institute Lao PDR – Lao People’s Democratic Republic M&E – monitoring and evaluation NARS – national agriculture research system NGO – nongovernment organization PAANSA – Policy Analysis and Advisory Network of South Asia PRC – People’s Republic of China RETA – regional technical assistance SAI – South Asia Initiative SWNM – soil, water, and nutrient management TA – technical assistance USAID – United States Agency for International Development WTO – World Trade Organization NOTE In this report, “$” refers to US dollars. This report was prepared by Pratima Dayal, Senior Agriculture Specialist, Agriculture, Natural Resources and Social Sectors Division, Regional and Sustainable Development Department. I. INTRODUCTION 1. The Asian Development Bank (ADB) has been providing support to agriculture research since 1975, as a means of enhancing crop and livestock productivity, fostering environmental sustainability of agricultural systems, and reducing poverty in much of rural Asia. A policy on agriculture and natural resources research (ANRR)1 was formulated and approved in 1995, which reiterated the strong need for sustained assistance to research and particularly to the member centers of the Consultative Group on International Agricultural Research (CGIAR). The ANRR policy also recommended channeling ADB support for ANRR directly to the international centers through an annual regional technical assistance (RETA) modality that supports a package of high priority research proposals from international agricultural research centers (IARCs). Accordingly, the first RETA was approved in 1996 for $5.2 million,2 and five more RETAs have been approved since, the last one being in 2001.3 2. During 2002, 11 IARCs submitted 14 research proposals to ADB for funding. These were reviewed by the members of the Agriculture, Natural Resources and Rural Development (ANNRD) Committee4 at a meeting held on 4 April 2002. The following criteria were endorsed for selecting proposals for funding: (i) linkage and likely impact of the proposal on poverty, including indirect impact, such as through capacity building for national agricultural research and extension systems, and for policymakers; (ii) direct relevance to ADB operations; and (iii) readiness and completeness of the proposal. The Committee also decided to additionally consider the capacity and past performance of the sponsoring IARC and the emphasis in the proposal on technology transfer to farmers and national partners. Accordingly, each proposal was evaluated, and four were selected for inclusion in the proposed RETA for the Seventh Agriculture and Natural Resources Research at International Agricultural Research Centers. These include three research projects submitted by CGIAR centers—the International Center for Tropical Agriculture (CIAT), the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT), and the International Food Policy Research Institute (IFPRI)—and one by a non-CGIAR center—the Asian Vegetable Research and Development Center (AVRDC).5 II. ISSUES 3. Despite the dramatic economic transformation that swept Asia in the last half of the 20th century, the Asia and Pacific region still accounts for more than half of the world’s 1.2 billion poor, who live in extreme poverty and subsist on less than $1 a day. Measured by the headcount ratio, the incidence of poverty is the highest in South Asia, where, despite increased urbanization, a vast majority of the poor still live in rural areas. Poverty and rural economic advancement therefore assumed the highest priority in the international development agenda, and various summits have proclaimed strong commitments to poverty reduction. The United Nations Millennium Declaration of September 2000 adopted poverty reduction as its main agenda and pledged to bring down the numbers of people living in extreme poverty to half by 2015. ADB declared poverty reduction as its overarching goal in March 2000 and initiated partnership agreements with its developing member countries (DMCs) to achieve this objective. 1 ADB. 1995. The Bank’s Policy on Agriculture and Natural Resources Research. Manila. 2 ADB. 1996. Regional Technical Assistance for Agriculture and Natural Resources Research at CGIAR Centers. Manila. 3 ADB. 2001. Regional Technical Assistance for the Sixth Agriculture and Natural Resources Research at CGIAR Centers. Manila. 4 In the reorganized structure of ADB, the responsibility for review and short-listing of RETA proposals has been vested in the ANRRD Committee, which is comprised of select nominees from the regional and other key departments. 5 The TA first appeared in ADB Business Opportunities on 11 July 2002. 2 4. It is widely accepted in the development community that growth in the agriculture sector is key to poverty reduction in Asia because of the large percentage of the poor who live in rural areas and are directly or indirectly dependent on it for employment, income, and nutrition. The impact of agricultural growth on rural society was amply demonstrated by the “green revolution” that took place in the 1970s and 1980s in Asia, under which cereal production doubled and rural incomes increased substantially. The green revolution was the first major attempt at applying modern science and technology to agriculture in Asia. But after more than three decades, the package of technologies and the model that was applied have been largely exhausted, and in many instances new challenges have emerged that need to be addressed in order to reduce poverty and keep pace with food demand in rural Asia. 5. It is estimated that, during the next 30 years, Asia’s population will increase by 1.5 billion and the food requirement by 40–50%. The challenge is formidable, because future production will have to come largely from increasing cropping intensity and productivity from not so well- endowed lands; problems of degraded lands, soil, and water management will have to be addressed; ecological and resource management concerns will have to be integrated into the new technology options; and agriculture will have to be diversified to include vegetables, fruits, livestock, fisheries and a range of export crops. According to the estimates of the Food and Agriculture Organization of the United Nations,6 more than 550 million hectares of arable lands are degraded in Asia. These include areas that are prone to drought, desertification, soil erosion, loss of fertility, and depletion of forest cover. In many of these areas, existing technologies cannot support further increases in production, and new technological options are needed to increase food production and reduce poverty. There is therefore a major need and opportunity for supporting and catalyzing innovations in technology, enhancing capacities in national research and extension systems, and supporting appropriate public policy to boost growth in the agriculture sector. 6. ADB has been supporting agricultural research through an annual RETA since 1996 and has so far approved six umbrella RETAs for a total of $31.7 million involving 14 CGIAR centers. In December 2000, the Operations Evaluation Department reviewed ADB’s policy on ANRR and evaluated the investments made in agricultural research from 1975 through 2000.7 The study concluded that the policy on ANRR and support to agricultural research continued to be relevant to ADB’s operations and development objectives and should be continued. On research investments, the study evaluated a subset of projects funded by ADB in four of the major recipient CGIAR centers and concluded that ADB financing had paid high dividends: a total economic surplus of $4.2 billion was directly attributable to ADB funding, and there was an average internal rate of return of 65% for all funds invested for the projects. The study also confirmed that the RETA modality is an effective means of channeling funds to the IARCs; and that the IARCs had demonstrated their comparative advantages and proficiency in undertaking research, in leveraging additional funds, and in building capacity of the national agricultural research systems (NARSs). Appendix 1 provides a summary of all assistance provided by ADB to the IARCs, including CGIAR. 7. The proposed RETA will be the seventh umbrella RETA for agriculture and natural resources research at international agricultural research centers and is aimed at assisting the participating DMCs in achieving the commonly shared goals of sustainable agricultural development, improving rural incomes, and reducing poverty. This is