PROJECT FOR AGRICULTURE COMMERCIALISATION AND TRADE (PACT)

Resettlement and Rehabilitation Policy Framework

PROJECT DESCRIPTION

Project for Agriculture Commercialisation and Trade

The project development objective is to assist the Government of Nepal in improving the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains in 25 districts (in all development regions of the country except the eastern development region) supported by the project. This will be achieved by: (i) helping farmer groups and cooperatives engage in profitable market-oriented production and improved access to markets through the provision of technology and information servicesand critical public infrastructure and linkages to agribusiness;(ii) creating and strengthening industry-wide partnerships along the value chain, thus forging linkages between producers, traders, processors, and other stakeholders and, (iii) reducing existing obstacles to agriculture and food trade thereby increasing the ability of farmers and agribusiness to respond to sanitary and phytosanitary (SPS) and food-quality standards to meet domestic and international market requirements.

Project Components and Activities

The Project for Agriculture Commercialisation and Trade has three components and each of them would finance sub-components as shown in the Table below.

Table: Project components and their sub-components

Components / Subcomponent
Component 1. Agriculture and Rural Business Development /
  1. Pre-investment and advisory support
  2. Technology support and market infrastructure
  3. Agribusiness support

Component 2. Support for Sanitary and Phytosanitary Facilities and Food Quality Standards /
  1. Food quality and safety enhancing activities
  2. Technical assistance and capacity building measures

Component 3. Project Management and Monitoring and Evaluation /
  1. Overall project management
  2. Monitoring and evaluation
  3. Reporting
  4. Support to Project Management Unit

The detailed project activities under each component are given below.

Component 1Agriculture and Rural Business Development

The component will finance demand-based sub-projects proposed by farmer groups, agribusinesses and other value chain participants to build strategic linkages with a view to increase competitiveness, productivity, quality and market access. The component will also finance the facilitation of value chain plans, sub-project proposal development and monitoring of sub-projects.

The objective of this component is to enable farmers to engage in profitable market-oriented production and to promote partnerships and market linkages with other value chain participants and agribusinesses.The component willhelp agro enterprises, commodity associations, cooperatives andfarmer groups to actively engage in the development of commodity value chains by partially financing demand-driven investment proposals through a competitive matching grant.The component will also support investments aimed at creating viable enterprise-based farmer institutions that are linked to other value chain participants and are actively engaged with the markets.

The specific activities supported under this component are: (i) providing pre-investment and advisorysupport to enable FOs and value chain participants to prepare subproject proposals and business plans for grant funding under the project; (ii) direct financing of approved subproject proposals in technology and information support and market infrastructure; (iii) agribusiness development through partial financing of demand-driven investment proposals by agro enterprises, commodity associations and cooperatives that are actively engaged in the development of commodity value chains.

Pre-investment and AdvisorySupport:The pre-investment sub-component will provide TA toFOs, processors, input suppliers, and other value chain participants to review their commercialization options and prepareviable business plans and investment proposals for funding under the project grant facility – the Value Chain Development Fund (VCDF). This will be done through organizingstakeholder workshops in the selected districts with an objective to identifying potentially viable sub-sectors, setting the longer-term vision and objectives of the value chain, identifying constraints and opportunities that are holding back growth and competitiveness and jointly agreeing on commercially viable solutions that can address these constraints. Eligibility criteria for accessing finance for this purpose and the process and procedures for submitting proposals, screening and award of grants is discussed in Annex 3 and in the Project Implementation Manual. The grants provided under these activities will be competitive and supported at 100% of costs.

Technology support and Market Infrastructure:For technology related services, the sub-component would finance, (i) acquisition of improved genetic/planting materials, as well as testing, multiplication, and dissemination/distribution and, (ii) small and medium-size quality improving technologies (such as processing, grading, and packaging) for testing and introduction. The VCDF can support demonstrations and extension of off-the-shelf technologies. Investments in rural market infrastructure will support subprojects such as storage facilities, grading and sorting equipment, value addition facilities, small irrigation systems, link roads, collection centers, improved technological inputs,facilities to improve access to market and other relevant information. The grants provided under these activities will be competitive and supported at 70% of costs with 30% contribution in cash/kind from beneficiaries.

Large rural market infrastructure (including link roads) involving several FOs can be proposed, but these would require local development authorities’ involvement and participation in the planning, implementation, operation and maintenance. Seventy percent of the investment cost in rural infrastructure will be grant and the remaining 30 percent will be contributions from either the local development authority or value chain participants, in cash or kind.

Agribusiness support: The VCDF directed towards agribusiness support will co-finance investment proposals from commercial and existing agro enterprises, commodity associations and cooperatives that are actively seeking to expand. Subproject proposals that qualify for VCDF competitive grants will have one or more of the following general characteristics: (i) provide clear linkage through formal contracts between farmer organizations and agribusiness and (ii) have some public good character that benefits many participants in a value chain. Matching contribution of 50% will be required of the agribusiness seeking financing under this facility.

All three types of activities noted above will be supported after a consultative process of value chain development. Value chain development plans will be developed through a consultative process involving different stakeholders. For each of the regions and all the districts within that region, one facilitation firm will manage the process of consultation and sub-project identification/proposal development. Local organizations, non-government organizations, district chambers of commerce and relevant government departments and agencies will participate in the development of subprojects.

Component 2Support for Sanitary and Phytosanitary Facilities and Food Quality Standards

This component aims to strengthen the efficiency and effectiveness of sanitary and phyto-sanitary services in order to reduce existing obstacles to agricultural and food trade. It also aims to support the private sector’s efforts to gain market advantage through improved food quality management. As such it provides critical backing to the value chain investments being supported by component 1 and other related projects by Development Partners.

The component will finance (i) food quality and safety enhancing activities through improving laboratory facilities and certification capabilities and (ii) technical assistance and capacity building measures to meet food safety and quality standards. It will also provide technical assistance to industries to help them meet hygiene requirements so as to earn the confidence of importing country authorities and private sector importers.

Implementation of the SPS and food quality managementwill be through three line departments of the MOAC and the private sector. The Department of Food Technology and Quality Control (DFTQC), Department of Livestock Services (DLS), and Department of Agriculture (DOA) will provide services to the value chains and private sector to support national and international quality requirements.The work program for this component will be prepared by the MOAC departments and presented to the NPSC on an annual basis with progress reports presented on a quarterly basis to the NPSC.

Component 3 Project Management and Monitoring and Evaluation

The component will financeoverall project management, monitoring and evaluation and reporting. This component will also supporta Project Management Unit (Team) comprising of a Project Director, a Deputy Project Director responsible for the competitive grant program, a Monitoring and Evaluation Officer, Finance Officer, Procurement Officer, Accounts Officer and two accountants. A Technical Secretariat, recruited as a firm, will be responsible for the overall functioning of the competitive grant program including monitoring and evaluation and the MIS and will report to the PMT. A public awareness company will be hired to managelocal and national level awareness activities for the project.

The PMT will also hire the firms responsible for facilitating and developing initial and final proposals for value chain development for each of the 4 regions, and for monitoring implementation of the sub-projects. The Terms of references (TORs) for these firms will be prepared by negotiations and the recruitment process will be largely completed by credit effectiveness.

The project management sub-component will provide honoraria for peer reviewers and for members of the sub-project proposal evaluation committee. Other expenses for project management will include operating expenses, goods, services and consultancies. The component will also support expenditures for the project Monitoring and Evaluation system.

Project Approach

The Project for Agricultural Commercialisation and Trade is fully demand-driven in nature and at this stage all the specific Subprojects are not known. Therefore a broad guideline/framework has been developed for generic type of activities envisaged in the project. The approach was therefore to provide broad environmental and social setting at the national level and in view of this identify impacts and suggest mitigation measures that respond to the needs of PACT in screening the proposals.

In general, the project approach is community driven and social mobilisation will be the key factor involving local communities in agricultural commercialisation efforts in value chains around the commodities. Viable farmers organisations will be formed or strengthened, the members of these organisations will be trained in various aspects of commercialisation, and in due course of time, these organisations will be gradually developed into rural institutions. Farmers will be grouped as producer groups, cooperatives, commodity associations, women groups, processing groups, marketing groups and many others. A viable and sustainable partnership between the farmer organisations and the agribusiness entrepreneurs will be formed. It is aimed that these groups could be members of much larger national and global supply chains.

Resettlement and Rehabilitation policy framework

A Resettlement and Rehabilitation policy framework has been devised as per the World Bank policy guidelines in an attempt to minimize and/ or mitigate potential adverse social impacts. The framework has defined different groups of potentially affected people with varied eligibility criteria. These constitute Project Affected People (PAP), Project Affected Families (PAFs), Significantly Project Affected Families (SPAFs), marginal farmers, displaced families, squatters, encroachers, and vulnerable groups. Based on the eligibility criteria and type of losses, the affected families / people will be provided compensation as well as resettlement and rehabilitation assistances. An entitlement policy matrix to this effect has been developed as safeguard measures to mitigate the losses by types of categories of affected people viz owners, tenants, encroachers, squatters, communities etc.

i)Policy Guiding Principles

The guiding principles according to World Bank Policy on involuntary land acquisition recognizes lost assets or income as fundamental right of all project affected persons and that physically displaced people must be relocated with basic amenities like school, health posts etc. Likewise all affected persons or entrepreneur or institution should be assisted to restore at least their pre -project income and livelihood sources.

Absence of legal title to land should not be a bar for compensation, resettlement, and rehabilitation assistance. Vulnerable groups such as indigenous people, Dalits, women-headed households, and senior citizens should be entitled to special benefit package in addition to compensation and resettlement.

Avoid or minimize involuntary resettlement where feasible, explore all visible alternative arrangements. Where resettlement is unavoidable provide compensation along with rehabilitation assistances.

ii) Resettlement Policy

The guiding resettlement policies and strategies for PACT are as follows:

  • The resettlement plan should ensure that the seriously project affected people (SPAP) are at least as well off, if not better off than they would have been without the subproject. The affected people as a minimum should be able to maintain and if possible even improve their living.
  • Develop exclusive mechanism to protect indigenous peoples, socially depressed and economically vulnerable people like ethnic minorities, women-headed households, and marginal farmers.
  • The affected people should be entitled for compensation for their lost assets. They should be paid a replacement cost as agreed between PAF and subproject beneficiaries. In general, the compensation rate would be based on valuation done by the district land acquisition committee presided by CDO at market price and /or negotiations reached between the parties and witnessed by a third party. VDC officials or District Agriculture Office can be requested to assume the role of witness as a third party. Compensation for loss of perennial crops and trees should be calculated as annual net product value multiplied by number of years for new crop to start producing
  • Ensure resettlement activities as a participatory process by informed participation and frequent consultation with the SPAP. Provide assistance to SPAF regardless of their ownership as title holders or non holders. Likewise assist the displaced people to reinstate their livelihood and income generating activities.
  • If possible provide “land for land” particularly to the vulnerable groups. Similarly the relocation should be as close to the previous land/house as possible.
  • The agreement should ensure that ownership of the compensated land, property is transferred to the community or the subprojects beneficiary.
  • The Resettlement Plan Framework shall be implemented in consultation with and participation of the affected people. Subproject structures will only start when full compensation to SPAP for their asset is paid.
  • If affected land is under tenancy, both the landowners and tenants as affected people will be bona fide for entitlements and compensation. Rehabilitation measures for restoration of the livelihood of SPAP will be devised under the subproject.
  • The affected people loosing assets due to the subproject will be given priority in employment during project construction works.
  • Project Resettlement Plan will be translated into Nepali and made available at the local Project Office for reference. It can be accessed by any body of the community as and when needed.
  • If an agreement on compensation can not be reached to the satisfaction of affected people and a stalemate is witnessed with no solution to the problem the subproject will be dropped.
  • A Subproject Implementation Plan (SIP) must include all the cost of resettlement and other social development activities. Likewise annual allocation if required is to be included in the yearly budget of the subproject.
  • Establishment of a functional mechanism of soliciting and resolving the grievances of the affected people.

iii) Eligibility Criteria

The following groups of people are entitled to compensation and assistance under the project:

Project Affected People (PAP) includes any populace, households regardless of their ownership status as encroachers / squatters etc that will face their living adversely affected; and/or loose their right or title on land, house, habitat, water resources or any other asset possessed, due to the subproject implementation.

Project Affected Families (PAFs). All members of a project affected household residing under one roof and operating as a single economic unit, who are adversely affected by the project or any of its components.

Significantly Project Affected Families (SPAFs). The affected Familieswho lose 25% or more of their land or income or a residential house because of project intervention.

Marginal Farmer. Farm families having less than 2 Ropani (0.1 ha) of land in hills and 8 Kathas.(0.25 hectare) in the Terai

Displaced family: Any tenure holder and his family members, tenant, Government lessee or owner of property, who on account of acquisition of his/her land or other property for the project purpose, has been displaced from such land or property

Squatters.People who have occupied land violating the laws and are not entitled to compensation for lost land under this policy. But, if displaced they are entitled to resettlement assistance as well as compensation for loss of other assets except land.

Encroachers. People who have trespassed into public/private/community land to which they are not authorized.

Vulnerable Groups. Distinct groups of socially distressed people who might suffer disproportionately from the effects of resettlement. These may be ethnic minority/ indigenous groups, women headed households, the most poor (based on the poverty line), the disabled, elderly and landless/ families.

Entitlement Matrix

The entitlement matrix describes entitlement of affected households for their loss of land and assets on land and the responsible organisation:

Compensation Entitlement Matrix

Loss Category / Affected households /
Organization / Entitlement / Responsibility
Agricultural land / Landowner /
  • Affected HH will be compensated as per the Land Acquisition Act. But since the compensation under this framework will have to be at replacement cost an additional allowance should be provided to cover the gap between market price and actual reparation given under the Land Act.
  • Provision of land for those who become landless.
/ Project Entity
R & R Committee under the project with the help of local governance agency
Agricultural crops, trees
(perennial/annual crops) / Landowner, tenant /
  • Allow harvesting of the crop, if possible. For this advance notice has to be given.
  • Compensation as settled by agreement between users’ organization and PAP or committee under District Administration.
  • Rehabilitation support to non titleholders
/ Local level Office of the Project
Local level Project Office with NGOs engaged
Occupied land
(public land) / Encroachers squatters /
  • Encroachers / squatters are not legally entitled for compensation. But they are entitled for resettlement assistance as vulnerable people to restore/ retain their livelihood.
/ Local level Project Office with local governance agency & NGOs
House or other property / Property owner
Non-title holder (en crotchers/squatters) /
  • Compensation at replacement cost or as settled by users’ organization and PAP or committee under District Administration Office.
  • Non-title holders (squatters) will not be entitled to any compensation for their affected unauthorized/ illegal extensions over public land but will be provided cost compensation to the structures at replacement value without deduction of depreciation.
  • Resettlement assistance to those most vulnerable groups to restore pre-displacement level livelihoods.
/ Local Project Office with local governance agency with support from District Administration Office
Loss of community building/structure ( irrigation, drinking water, schools, temples, etc) / Local community /
  • Re-establish or re-construct lost community resources, facilities like religious and cultural structures or provide alternatives in consultation with affected communities
/ Local Project Office
Business/Commercial establishment (shops, water mills & others) / Title holders /
  • Compensation for reestablishment/transition allowance in consultation with affected families
/ Project Office at the district level
Temporary losses / Title holders (Affected families) /
  • Cash compensation/transition allowance
/ Project Office at the district level

Framework for Resettlement Action Plans

An outline framework of a subproject level Resettlement Action Plan (RAP) is prepared consistent with the World Bank Involuntary Resettlement Policy (OP 4.12) in order to enable the project to prepare and implement RAPs at subproject levels when more details about the project components and affected families are known. The subproject as far as possible will consider alternative designs in order to avoid land acquisition and minimize adverse social impacts. But where social screening indicates that land acquisition and/or loss of assets are unavoidable, a subproject Resettlement Action Plan will be prepared.