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Lao People’S Democratic Republic: Northern Region Sustainable Livelihoods Through Livestock Development Project

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Lao People’S Democratic Republic: Northern Region Sustainable Livelihoods Through Livestock Development Project Report and Recommendation of the President to the Board of Directors Sri Lanka Project Number: 35297 September 2006 Proposed Loan and Asian Development Fund Grant Lao People’s Democratic Republic: Northern Region Sustainable Livelihoods through Livestock Development Project CURRENCY EQUIVALENTS (as of 1 August 2006) Currency Unit – kip (KN) KN1.00 = $0.0000985 $1.00 = KN10,148 ABBREVIATIONS ADB – Asian Development Bank ADF – Asian Development Fund AFD – Agence Française de Développement (French Development Agency) ASEAN – Association of Southeast Asian Nations AusAID – Australian Agency for International Development CDD – community driven development CETDU – Central Extension Training Development Unit CGIAR – Consultative Group on International Agricultural Research CIAT – Centro Internacional de Agricultura Tropical (International Center for Tropical Agriculture) DAFEO – District Agriculture and Forestry Extension Office DLF – Department of Livestock and Fisheries EA – executing agency EGDP – ethnic groups development plan EIRR – economic internal rate of return EU – European Union GDP – gross domestic product GMS – Greater Mekong Subregion GTZ – Gesellschaft für Technische Zusammenarbeit (Partnership for Future Development) ICB – International competitive bidding IFAD – International Fund for Agricultural Development JICA – Japan International Cooperation Agency LEAP – Lao PDR Extension in Agriculture Project LECS – Lao PDR Expenditure and Consumption Survey LFNC – Lao Front for National Construction LWU – Lao Women’s Union MAF – Ministry of Agriculture and Forestry NAFES – National Agricultural and Forestry Extension Service NAFRI – National Agriculture and Forestry Research Institute NCB – national competitive bidding NCO – National Coordination Office NGO – nongovernment organization NGPES – National Growth and Poverty Eradication Strategy O&M – operation and maintenance PAFO – Provincial Agriculture and Forestry Office PCC – provincial coordination committee PIU – provincial implementation unit PPA – participatory poverty assessment PSC – project steering committee RIMS – Result and Impact Management System QCBS – quality and cost-based selection SAPE – Sector Assistance Program Evaluation SDC – Swiss Agency for Development and Cooperation SSS – single source selection TA – technical assistance TAD – Transboundary Animal Diseases GLOSSARY Appropriate – Technologies that meet the needs of smallholders and are technology within their resource capacity to adopt. Biosecurity – Processes and structures that prevent the transmission of disease between individual and groups of livestock. Cold chain – Cold chain or “controlled temperature chain” is maintaining vaccines within the required temperature range from the point of manufacture to the moment of delivery. Confinement – Livestock movements are restricted by a corral, pen, or shed for significant periods. Core and – Villages that participate in the first and second years of the expansion villages Project—core villages—receive more intense extension efforts. Based on experience with core villages, and using their successes for demonstration, the Project will move more rapidly to a larger number of expansion villages in later years in each district. Enterprise – Enterprise development comprises the creation of options for development smallholders and others to: (i) sell livestock or livestock products on a regular basis; (ii) provide input and output services including males for breeding services, seeds, chemicals, hardware, drugs, and vaccines; (iii) transport feed and livestock; (iv) construct pens and fences; and (v) process meat and livestock products. Extension worker – Staff of District Agriculture and Forestry Extension Offices (DAFEOs) dedicated to working with smallholders to identify problems with their agricultural production systems, and to introduce technologies to help with these problems. Forages – Grasses and legumes that can be used for feeding livestock. Mass organizations – Organizations including Lao Women’s Union (LWU), Lao Youth Union (LYU), and Lao Front for National Construction (LFNC), which have outreach among remote communities and are responsible for a variety of aspects of community life and development—including women’s participation, youth activities, and participation of ethnic groups in development. Mortality rate – Livestock mortality rates are expressed as the proportion of the population at risk that has died during an interval of 1 year. The mortality rate is given as a simple percentage. Off-take – A breeding herd comprises mature males and females and their offspring. As the population ages, breeding females and males need to be replaced. These older animals and younger animals not needed for breeding stock can be sold. This surplus to requirements—the number of stock “taken off” the breeding herd—is the off-take. The same word is used for all species. Participatory – A participatory approach involves farmers and extension approach workers in a learning cycle that identifies problems, introduces technical options, and reviews progress. Shifting cultivation – Involves rotation among cleared plots in cycles of 3–15 years, depending on soils and other conditions. Smart feeding – The application of improved knowledge on feeds and feeding requirements of livestock. Stylo – The common name of Stylosanthes guyanensis forage Swidden – See shifting cultivation. Technology options – The proposed extension approach is to allow smallholders to evaluate proven technologies and make their own decisions about which ones are appropriate for their situation. NOTE In this report, "$" refers to US dollars Vice President C. L. Greenwood, Operations Group 2 Director General R. M. Nag, Southeast Asia Department (SERD) Director U. S. Malik, Agriculture, Environment, and Natural Resources, SERD Team leader M. Mitra, Senior Social Development Specialist, SERD Team members A. Tayyab, Senior Natural Resource Management Specialist, SERD N. Ikemoto, Environment Specialist, SERD A. Musa, Financial Specialist, SERD Y. Kudo, Counsel, Office of the General Counsel (OGC) CONTENTS Page LOAN, GRANT, AND PROJECT SUMMARY i MAP I. THE PROPOSAL 1 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1 A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 3 III. THE PROPOSED PROJECT 8 A. Impact and Outcome 8 B. Project Outputs 8 C. ADF IX Grant Component 11 D. Special Features 11 E. Project Investment Plan 12 F. Financing Plan 13 G. Implementation Arrangements 13 IV. PROJECT BENEFITS, IMPACTS, AND RISKS 18 A. Benefits and Impacts 18 B. Environment Impacts 18 C. Economic and Financial 18 V. SPECIFIC ASSURANCES 19 A. Special Assurances 19 B. Conditions for Loan and Grant Effectiveness 20 VI. RECOMMENDATION 20 APPENDIXES 1. Design and Monitoring Framework 21 2. Chronology 26 3. Problem and Objective Tree Analysis 27 4. Sector/Subsector Analysis 28 5. External Assistance to the Livestock Sector 32 6. Summary Cost Estimates and Financing Plan 36 7. Procurement Plan 38 8. Implementation Schedule 40 9. Financial and Economic Analysis 41 10. Financial Management Assessment 47 11. Summary Poverty Reduction and Social Strategy 49 12. Gender Action Plan 51 13. Ethnic Groups Development Plan 52 14. Outline Terms of Reference 58 SUPPLEMENTARY APPENDIXES (available on request) A. Financial Management Assessment B. Detailed Project Cost Estimates C Revolving Fund Guidelines D. Infrastructure Fund Guidelines E. Relevant Projects and Lessons Learned F. Summary of Initial Environment Examination G. Initial Environmental Examination H. Consultants’ Terms of Reference I. Implementation Arrangements J. Sector Analysis K. Detailed Terms of Reference for LWU L. Institutional Analysis M. Ethnic Group Development Plan N. Gender action Plan O. Village Selection P. Problem Tree Analysis Q. Procurement Packages R. Economic and Financial Analysis S. Monitoring and Evaluation LOAN, GRANT, AND PROJECT SUMMARY Borrower/Recipient Lao People’s Democratic Republic (Lao PDR) Classification Targeting classification: Targeted intervention Sector: Agriculture and natural resources Subsector: Livestock Themes: Sustainable economic growth, inclusive social development, and gender and development Subthemes: Developing rural areas and indigenous people, and gender equity in livelihood opportunities Environment Category B Assessment An initial environmental examination was undertaken. Project Description Lack of access to adequate productive resources and marketing opportunities leads to the absence of sustainable livelihoods for the predominantly poor upland ethnic groups in northern Lao PDR. The principal constraints faced by the predominantly Lao Theung and Lao Sung ethnic groups in the project area relate, among other issues, to (i) falling productivity from upland agriculture, (ii) lack of adequate land and forest for food production and gathering, and (iii) lack of access to appropriate technologies and marketing opportunities for improved livestock production and trade. Given the dependency of upland communities on swidden agriculture, and its falling productivity and land availability constraints, there is an urgent need to shift to higher value production per hectare and per unit of labor. Improved livestock production provides such an option. Livestock production provides within a context of small farms in upland areas, an opportunity to capture higher value added per hectare than crop-based agriculture. The growing connectivity of Lao PDR also places it in an
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