PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB1620

Project Name / National Agricultural Technology Project
Region / SOUTH ASIA
Sector / Agricultural extension and research (50%); Crops (30%); Animal production (20%)
Project ID / P084078
Borrower(s) / GOVERNMENT OF BANGLADESH
Implementing Agency / Ministry of Agriculture and Ministry of Fisheries and Livestock
Environment Category / [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared / June 15, 2005
Estimated Date of Appraisal Authorization / April 5, 2006
Estimated Date of Board Approval / September 20, 2006

1.  Key development issues and rationale for Bank involvement

Key Development Issues. Agriculture sector in Bangladesh accounts for about 23% of the GDP and another 33% of GDP is contributed by the rural non-farm economy, which is largely linked to agriculture. Thus, agriculture and rural non-farm economy are the main sources of livelihood for rural people. Despite substantial progress in overall poverty reduction, about half of the population still lives below the poverty line. With almost 85 out of 100 poor people living in rural areas, poverty in Bangladesh is largely a rural phenomenon. Improved economic performance of the agriculture and the rural non-farm sectors is, therefore, critical to reducing poverty.

Agriculture in Bangladesh is characterized by small farm size and rice dominated farming systems. The productivity of rice and other crops is low and there are large yield gaps between farmer’s fields and experimental plots. Same is true for other agricultural commodities such as fisheries and livestock. Over the last three decades, there has been a significant increase in the production of cereals, especially rice, to bring about food self sufficiency. However, this could be threatened in the future due to increasing population and stagnating yields. Diversification of agricultural production systems to high value commodities is slow with limited post-harvest value addition. The private sector makes limited contribution to agricultural research and its investment in agro-processing is a nascent activity.

Acceleration of agricultural growth is being constrained by: (i) weak technology generation and transfer; (ii) deteriorating and declining natural resource base, especially cultivable land; (iii)poorly functioning input and output markets and delivery of other support services; (iv) low private sector investment in agro-processing; and (v) weak local institutions such as Producer’s Organizations (POs) to influence performance of the government services, including the large agricultural technology system (research and extension) which is ill prepared to meet the emerging challenges. Since several constraints to accelerate agricultural growth are directly influenced by the performance of the technology system, a program designed to address its current weaknesses would be critical for the success of a strategy to reduce rural poverty.

Rationale for Bank Involvement. The Government of Bangladesh’s (GOB) draft-Poverty Reduction Strategy Paper (PRSP) gives high priority to accelerating agricultural growth to increase rural incomes, reduce poverty and improve food security. The potential sources of future agricultural growth are expected to be increased productivity, diversification into high value agriculture (HVA) and post-harvest value addition. In recognition of the critical role of the science and technology in exploiting these potential sources of agricultural growth, GOB has made a modest increase in 2004-05 budget for the National Agricultural Research System (NARS), which had declined from around 0.27% in 1997-98 to 0.2% of AGDP in 2003-04. However, GOB lacks resources to increase agricultural research investment to 0.6% of AGDP, the average for developing countries as a group, which is much lower than the corresponding 2% of AGDP for developed countries.

GOB has requested assistance from the World Bank to increase public investment in agricultural research and to reform the technology system so that it is able to help achieve the PRSP objectives. Since institution building is a slow process, requiring sustained support, GOB is keen to avoid the ‘stop and go’ development pattern experienced in the past, linked to cycles of the externally funded projects. As compared to other development partners providing support for the agricultural sector, the Bank is best placed to provide a longer-term assistance to enable Bangladesh to revitalize its agricultural technology system, which was established primarily with earlier support from the World Bank.

The Bank’s recent study of the rural non-farm sector and a policy review of the national agricultural technology system have identified key areas for reform to enhance the efficiency and effectiveness of the technology system. In addition, the lessons learnt from the earlier Bank projects and OED’s project performance assessment report have highlighted the importance of addressing the unfinished agenda on institutional reform, including issues related to governance and autonomy of NARS, decentralization of extension management and funding decisions, weak management systems and sustainability of funding. The Bank has wide experience in helping governments to improve and reform agricultural research and extension systems and the proposed project interventions respond to the valuable lessons learnt from earlier projects in Bangladesh. The Bank Group’s close association with the Consultative Group for International Agricultural Research (CGIAR) further adds to its unique position to help Bangladesh to strengthen linkages with the CGIAR’s international agricultural research centers and the wider international scientific community.

A well coordinated assistance program from the Bank and other development partners would help GOB to develop a long-term strategy for strengthening the technology system, taking into account the new challenges and the changing roles of the public and the private sectors. Such a strategy would also be able to help with the introduction of improved business processes, benefit from international experiences in reforming national agricultural research and extension systems, support access to new sciences and invest in developing the human capital. However, if left unsupported, the public institutions would continue to decline and fail.

2.  Proposed objective

The proposed project development objective is to strengthen the national agricultural technology system to increase productivity and value addition for selected agricultural commodities based on market opportunities.

3.  Preliminary description

Component 1. Agricultural Research Support. This component would aim to: (a)promote a pluralistic research system; (b) make agricultural research more demand-driven; (c) develop technologies to promote diversification of agriculture and post-harvest value addition; (d) bridge the yield gap between what is possible and what is being currently achieved by farmers; and (e) improve institutional efficiency of the NARS. Specific activities to be financed would include:

(i) Establishment of a Competitive Grants Program (CGP) and a funding mechanism through a dedicated Trust Fund. To enable GOB to provide long-term sustainable and stable funding, it is proposed that a professionally managed Trust Fund be established, with safeguards to prevent invasion of the principal sum, to provide an income stream (interest and dividends) to finance the CGP. To manage the CGP, GOB would need to establish an independent Bangladesh Agricultural Research Foundation (BARF). The CGP would fund pre-identified, high priority, multi-disciplinary and time-bound agricultural research and a more pluralistic system by opening the CGP to the NARS institutes, Universities, NGOs and the private sector.

(ii) Enhancement of Institutional Efficiency. To provide greater autonomy for improved efficiency of NARS, a reform program would be introduced. This would include a comprehensive Act to replace the BARC Act 1996 and other Ordinances governing the individual institutes. The new Act would provide unified governance structure for the NARS and greater autonomy to the Governing Body to develop and implement uniform service and business rules for the NARS. Capacity of the apex body, BARC, would be strengthened to coordinate research, including prioritization to allocate available resources between competing demands, M&E of research programs, preparation of need-based training programs, improve system capacity in social sciences and access to new sciences (e.g. biotechnology and IT). Relevance of agricultural research would be improved through farmer participatory on-farm production system’s research planning and implementation.

Component 2. Agricultural Extension Support. Based on successful pilots under past projects in Bangladesh, this component would promote decentralized, pluralistic extension system that is more demand-driven, knowledge-based and responsive to farmer’s needs based on market signals. It would promote involvement of all stakeholders, especially farmers, in planning, budgeting and implementation of programs. It would strengthen coordination between line departments and with research. Such a system has also been successfully pilot-tested in 7 states in India, under the Bank-funded National Agricultural Technology Project. Specific activities to be financed would include:

(i)  Decentralization of Extension Service. Public extension funding and management would be devolved to the Upazilla level. Participatory Upazilla extension programs, based on union level micro-plans, would be prepared covering farmer priority needs related to crops, livestock and fisheries sub-sectors. These would be approved by the Upazilla Agricultural Extension Coordination Committee (UAECC) and funded through the Upazilla Extension Fund to be established under the project. The project would support formation of Producer’s Organizations (POs) based on affinity groups of farmers. POs would be federated at the Union, Upazilla and District levels to influence extension (and research) agenda and help farmers in meeting their technical, financial and marketing needs. Other activities would include the establishment of Farmers’ Information and Advice Centers at the Union level, participation by NGOs to assist in community mobilization and on-farm technology validation and demonstrations.

(ii)  Enhancement of Institutional Efficiency. The organizational structure, core functions and the business processes of different units of line departments (DAE, DOF and DLS) would be evaluated in the context of the evolving public-private-NGO role in extension. As a result, a program for institutional reform would be agreed with GOB to shift the focus of public extension on serving the priority needs of the small and marginal farmers; provide increased funding for the operational costs of extension and human capital development.

Component 3. Private Sector-led Marketing and Value Addition. This component would support better market access and increased participation by farmers in contract farming and promote value addition. Specific activities to be financed would include:

(i)  Market Support Services. This would include activities such as the collection and distribution of market information to farmers, in collaboration with private sector; establishment of quality assurance facilities; and strengthening of regulations and implementation capacity.

(ii)  Value Addition Through Commodity Chains. Support would be provided to farmers groups to enter contract farming with processing and/or marketing organizations to produce high value commodities. Value chains of selected commodities would be promoted, based on comparative advantage and market opportunities, including support for community based seed production system to improve availability of quality seeds of self-pollinated crops such as rice.

Component 4. Project Management and Coordination. A Project Coordination Unit (PCU) would coordinate implementation and M&E activities. Oversight and policy guidance would be provided by an inter-ministerial Steering Committee (SC). The location and staffing of PCU and composition of SC would be agreed with GOB during project preparation. The key implementing agencies would include MOA, MOFL and BARF, when established. MOA agencies to be involved would include: BARC, ARIs, DAE and the Department of Agricultural Marketing, HORTEX, an autonomous foundation linked to MOA, would help with further development, promotion and marketing of HVA, mainly through the private sector. MOFL agencies to be involved would include DOF and DLS. Each agency would have a nodal point to oversee implementation of project activities.

4.  Safeguard policies that might apply

None of the safeguard policies are expected to be triggered by the proposed project.

5.  Tentative financing

Source: / ($m.)
BORROWER/RECIPIENT / 5
INTERNATIONAL DEVELOPMENT ASSOCIATION / 75
INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT / 20
Total / 100

6.  Contact point

Contact: Mohinder S. Mudahar

Title: Economic Adviser

Tel: (880-2) 8159001

Fax: (880-2) 8159029

Email:

Location: Dhaka, Bangladesh (IBRD)