ECUADOR LOCAL BUSINESS DEVELOPMENT PROGRAM (PRODEL) Cooperative Agreement #518-A-00-08-00002-00 st Fiscal Year 2010 1 Quarter Progress Report January 31, 2010 Submitted by: Submitted to: Sarah Mattingly, Hugo Ramos, USAID/Ecuador FIELD-Support LWA, AED Steve Beard, Program Manager, ACDI/VOCA DISCLAIMER The authors views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. ACRONYM LIST AACRI Río Intag Small Coffee Producer’s Association AAPPSME Agro-artisan Association of Producers of Dry Medicinal Plants of Ecuador AED Academy for Educational Development ANECAFÉ National Association of Coffee Exporters APECAEL Specialty Coffee Association of Loja APECAM Specialty Coffee Association of Small Growers of Marcabeli-Balsas APECAP Association of Ecological Producers of Palanda - Chinchipe APEOSAE Organic Farming Exporter’s Association APEOSAE Small Organic Farming Exporter’s Association APROCA Atacames Cacao Producers Association APROCAM Association of Cocoa Producers of Muisne APROCASH Shushufindi Cacao Producers Association ASOGUABO Association of Small Banana Producers of Guabo BCS Bio Control Systems BCS ÖKO Bio Control Systems Garantie C&D Conservation & Development CABP Certification of Agricultural Best Practices CAF Andean Development Corporation CEDEIN Indigenous Development Center CFN National Financial Corporation CONFITECA Ecuadorian Candy Company CORPEI The Ecuadorian Export and Investments Corporation DCA Development Credit Authority ECOCACAO Cacao Small Producer’s Association of Esmeraldas ECOLAC The Technical University of Loja Dairy Factory El SALINERITO The Salinas Salesian Family Foundation EPF Enterprise Partnership Fund ESCOFFEE Specialty Coffees of Ecuador ETIMOS Organization of Finance and Credit EUROAGRO The International Agricultural Production Fair FEDECADE National Federation of Cacao Growers of Ecuador FIELD-Support Financial Integration, Economic Leveraging, Broad Based Dissemination and Support FISPDICA Foundation of Social Initiative for the Development of the Atacames Canton FLO Fairtrade Labelling Organizations International FODEMI Microenterprise Development Fund FONCAFE National Coffee Fund FY Fiscal Year GOE Government of Ecuador GRUPPO SALINAS Salinas Salesian Family Foundation HOJA VERDE Trading Company Of Flowers And Cholcolate In Ecuador ICAM Italian Chocolate Company ICS Internal Control Systems INAEXPO Agricultural Export Industry INAGROFA Freund Arroyo Industrial Agriculture Company INCOP National Institute of Public Purchases in Ecuador INIAP Ecuadorian Institute for Agricultural Production IPM Integrated Pest Management IRS Internal Revenue Service ISO Quality Management System JUGO FACIL Leenrike Frozen Food KALLARI Chocolate Company in Ecuador LWA Leader with Associates MAGAP Ministry of Agriculture, Livestock & Fisheries MCPEC The Ministry for Coordination of the Production, Employment, and Competitiveness M&R Monitoring and Evaluation ME&R Monitoring, Evaluation and Reporting System MIPRO Ecuadorian Ministry of Production NAAT-E Association of Social Participation Nucleo Self of Technical Assistance of Esmeraldas PESTELI “Market Analysis”, Political, Economic, Social, technologic ecological, legislative, and industry PFI Potential for Inclusion PROCAP High Altitude Coffee Growers Association of Puyango PRODEL Ecuador Local Business Development Program PRONACA National Food Processing - Ecuador RA Rainforest Alliance RAS Sustainable Agriculture Standard RFN Rural Financial Network RTC Cooperative Transactional Network SALINERO Cacao Producer Company – Salinas Group SCAA The Specialty Coffee Association of America SME Small and Medium Enterprises SNV Netherlands Development Organization TRIARI S.A. The Coffee and Cocoa Industry Company UNOCACE Union of Cacao Farmer Organizations of Ecuador UROCAL Coastal Region Union of Farmer Organizations USAID United States Agency for International Development WOCCU World Council of Credit Unions TABLE OF CONTENTS PROGRAM OVERVIEW ................................................................................................................................................................. 6 EXECUTIVE SUMMARY ................................................................................................................................................................. 8 1. PROMOTE ANCHOR FIRM AND VALUE CHAIN COMPETITIVENESS ..................................................................................... 9 2. STRENGTHEN VERTICAL AND HORIZONTAL LINKAGES ..................................... ERROR! BOOKMARK NOT DEFINED.1 3. FOSTER THE PROVISION OF FINANCIAL SERVICES ............................................................................................................ 27 4. EXPAND AND TRANSFER THE VALUE CHAIN MODEL ........................................................................................................ 32 5. PULLING IN LOCAL SERVICE PROVIDERS ........................................................................................................................... 33 6. MONITORING AND EVALUATION ...................................................................................................................................... 34 7. SUBCONTRACTS AND GRANTS .......................................................................................................................................... 36 8. CERTIFICATION OF AGRICULTURAL BEST PRACTICES (CABP) ............................................................................................ 37 9. MANAGEMENT .................................................................................................................................................................. 44 ANNEX 1 – LESSONS LEARNED AND GUIDELINES FOR FUTURE ACTIVITIES FROM PRODEL PHASE I, FY 2009 .......................... 45 ANNEX 2 – PRODEL FY 2009 ACHIEVEMENTS TO DECEMBER 31, 2009 ..................................................................................... 48 ANNEX 3 – ANCHOR FIRM EVALUATION MATRIX ...................................................................................................................... 49 ANNEX 4 – ANCHOR FIRM SELECTION SCORES FOR PHASE I FIRMS .......................................................................................... 52 ANNEX 5 – SUBSECTOR EVALUATION MATRIX ......................................................................................................................... 53 ANNEX 6 - PRODEL I ANCHOR FIRM EVALUATION MATRIX SUMMARIES ................................................................................. 54 ANNEX 7 - NEW ANCHOR FIRM EVALUATION MATRIX .................................................................................................... 63 ANNEX 8 - ANALYSIS OF PROJECT EXPENSES BY GEOGRAPHICAL AREA .................................................................................... 66 LIST OF TABLES Table 1: PRODEL Program Indicators .........................................................................................................................7 Table 2: Selection of New Anchor Firms.................................................................................................................. 12 Table 3: Value Chain Competitiveness Strengthening Activities During the 1st Quarter of FY 2010 ..................... 16 Table 4: Strengthening Activities and Results for Value Chain Veritical & Horizontal Linkages ............................. 23 Table 5: PRODEL II Key Indicator Achievements ..................................................................................................... 35 Table 6: Certification Activities for Anchor Firms in the First Quarter of FY 2010 .................................................. 39 Table 7: CABP Key Progress Indicators and Targets ................................................................................................ 42 Table 8: Achievements to December 31, 2009 for PRODEL 1 Indicators ................................................................ 48 LIST OF GRAPHS Graph 1: Anchor Firm and Subsector Positioning Graph ........................................................................................ 11 Graph 2: PRODEL Strategic Orientation Approach ……………………………………………………………………………………………. 21 Graph 3: PRODEL Strategic Orientation Tool ……………………………………………………………………………………………………. 22 Graph 4: Total loan amount percentage by source of financing………………………………………………………………………. 28 Graph 5: Percentage of the loan amount by financial institution……………………………………………………………………… 29 PROGRAM OVERVIEW PRODEL, an associate award under USAID’s FIELD-Support Leader with Associates (LWA), aims to increase income and employment for families along the northern and southern border areas of Ecuador by supporting the expansion of private enterprises that will rapidly generate income and employment, and by strengthening local private producer groups and associations. Managed by the Academy for Educational Development (AED) and implemented by ACDI/VOCA in the field, PRODEL provides demand-driven assistance packages (technical assistance, targeted training and small grants) to stimulate and facilitate increased investments in strategically-selected agribusiness and non-agricultural anchor firms and their networks of suppliers and ancillary firms with a commitment to the growth of their businesses and the potential to generate significant increases in income and employment. In support of the