Request for Applications (RFA) No.RFA/HVOSV/03

U.S.-Pakistan Partnership for Agricultural Market Development (AMD)

Request for Applications (RFA) No.RFA/HVOSV/03

Matching grant for strengtheningPakistan’sChiliexportsthrough support to establish/strengthencommercialchili seed processing unit(s) and nursery(ies) in the chili growing areas of Sindh province.

Issuance Date: _April 13th, 2017______

Closing Date: _June 19th, 2017______

Closing Time: 05:00 pm [Lahore, Pakistan]

Subject: Request for Application (RFA)

Dear Applicant:

The U.S.-Pakistan Partnership for Agricultural Market Development (AMD), implemented through the United States Agency for International Development (USAID), is seeking grant applications for implementation of its vegetable sector activityinSindh—Strengthening ChiliExports, of the High Value/Off Season Vegetable Product Line,through Support toEstablish/StrengthenCommercialChili Seed Processing Unit and Nursery(ies)in the Chili Growing Areas of Sindh Province.AMD provides technical assistance and in-kind grants in order to support the development of Pakistan’s commercial agriculture, particularly through improving the ability of Pakistan’s agriculture and livestock sectors to meet both international and domestic demands in its targeted product lines of high value/off season vegetables, livestock, citrus and mango.

Grants will be awarded and implemented in accordance with USAID and U.S. Government regulations governing grants under contracts, and AMD’s internal grant management policies (AMD Grants Manual).

Award will be made to responsible applicant(s) fromSindh, whose application(s) best meets the requirements of this RFA and the selection criteria contained herein. Issuance of this RFA does not constitute an award commitment on the part of AMD nor does it commit the AMD to pay for costs incurred in the preparation and submission of an application. Furthermore, AMD reserves the right to reject any or all applications received. In addition, final award of any resultant grant(s) cannot be made until funds have been fully appropriated, allocated, and committed through internal USAID procedures. While it is anticipated that these procedures will be successfully completed, potential applicants are hereby notified of these requirements and conditions for award. Applications are submitted at the applicant’s own risk; should circumstances prevent award of a grant, all preparation and submission costs are at the applicant's own expense.

Annexes included with this Request for Applications:

- Annex A – Grant Application Form

- Annex B – Applicant Self-Assessment Form

- Annex C – Required Certifications

- Annex D – Survey on Ensuring Equal Opportunity for Applicants

- Annex E – Standard Provisions for non-U.S. Nongovernmental Organizations

SECTION I.A PROGRAM DESCRIPTION

The U.S.-Pakistan Partnership for Agricultural Market Development (AMD) activity in Pakistan is a $21.2 million activity funded by USAID and implemented by CNFA with the goal of supporting the development of Pakistan’s commercial agriculture, particularly through improving the ability of Pakistan’s agriculture and livestock sectors to meet both international and domestic demand in its targeted product lines oflivestock, high value/off season vegetables, citrus and mango. AMD aims to achieve this through two complementary objectives:

• Increase the efficiency, quality and profitability of select product lines through the adoption of production, marketing, and business organization management practices that will transform supply-chains of specific product lines to higher levels of production. AMD will facilitate increased demand for Pakistani agricultural products and foster supply-demand synergies between producers and buyers, thereby complementing supply-side improvements by the USAID Agribusiness Project (UAP);
• Improve market linkages within targeted product line chains and develop the institutional capacity of catalytic actors within chains. AMD will work with processors, traders, retailers, and ancillary service providers that support the targeted value chains.

To reach these goals, the AMD team envisions transforming the four targeted product lines into efficient, private sector-led value chains that deliver competitive products to domestic and export markets. AMD’s targeted training, matching grants, and technical assistance will leverage private sector investment and encourage innovation. Together, these approaches will support the upgrade and streamlining of supply chains, optimization of profit margins, increase in the participation of women entrepreneurs, and ultimately making Pakistani meat, HV/OSV, citrus and mango more profitable and competitive.

I.BOverview of HV/OSV Product Line

Pakistan is one of the topred chili producing and exporting countries in the world. Chilies are an essential part of everyday food in Pakistan and chili trade plays an important role in the local economy depending on the area and the varieties grown.The average production of chilies in Pakistan ranges between 1.64 and 2.7 ton per hectare, which is slightly lower than the neighbouring countries of India and China.

In 2014/15, chilies were grown on more than62,000 hectares in Pakistan, with a total production of 139,856 tons (Fruits, vegetables and codominant statistics of Pakistan 2014-2015). Pakistan is among the top five countries that produce chilies and contributes to 4 percent of the total world production. Therehas been a sizeable increase in chili production from 120,000 tons produced in 2005-06 up to 2013-14 (Agricultural Statistics of Pakistan 2005/06, 2010/11 and 2013/14). The present production is however much less to what Pakistan produced in 2009/10 and 2010/11,i.e. 188,859 and 171,736 tons respectively. The Sindh provinceof Pakistan is the main producer of chilies where a number of chili varieties are grown over 52,101 hectares, with an annual production of 129,552 tons. In particular, the Kunri, Umerkot and MirpurkhasregionsofSindh are known as the largest production areas of red chilies in Asia. Amongst the various types of chili, the Dundicut varieties, such as Longi and Mexi, are the most desired and are highly demanded in the domestic and international markets. Hybrid varieties are also available in the market with good production potential, but do not compare well in quality with the traditional Dundicut varieties in respects of color, aroma and heat index.

However, the poor yield and low productivity of dundicut verities are progressively reducing the area under these traditional and well demanded verities. The prime cause being the unavailability of certified/registered seed. The farmers store their own seed and the un-processed seed not only result in poor germination, but also in emergence of diseases plants that bears less and diseased fruits. This is augmented by absences of disease/insect free nurseries and a number of pests are known to infest at nursery stage resulting in to a spread of diseases like leaf curl virus, mycoplasma and spiroplasma.

There is no ambiguity in stating thatseveralinterlinked factors limit some importanthigh value vegetables,like chilies, in realizing their true potential in terms of sustainable profitability. Besides the production, these also include harvest and post-harvest factors, and weak marketing chain. The weak supply-chainis further compromised due tonon-availability of approved/certified seeds and disease free and healthy seedlings.Keeping in view the basic constraint of availability of certified, healthy and disease free seeds/seedlings to farmers,AMDaims to strengthen the sector and improve exports by supporting private sector investor(s) to establish/strengthen commercial seed processing units and nurseries for chili crops in the chili growing area of Sindh province. It is anticipated that provision of this activity will not onlyincrease per-hectare-yields, but will alsoraise the quality and quantity of product for export, leading to higher profitability for the value chain players, including farmers.

The Chili Supply Chain in Pakistan

The chili supply-chain in Pakistan encompasses crop production, handling, drying, transportation,storage, processing, and marketing. Chili nursery is sown in February every year and the crop is typically transplanted between April-May and fruit picking rounds start in October until January. Chili fruits are handpicked 3 to 4 times during each annual season. A small proportion of the harvest is sold as fresh produce, while the rest is sun-dried for subsequent storage and marketing to domestic and export markets. Freshly picked chilies have moisture content of 70–85%, and have been found to be virtually free of aflatoxins. These are dried to <12% moisture content to avoid spoilage during storage. Depending on weather conditions, and the type of chilli, sun drying may take 7–12 days.

Propagation is normally done by seeds;use of healthy and good quality seeds increases the crop yield by virtue of higher productivity, disease resistance and high germination percentage. In Pakistan, there is a shortage of approved seed, causing its price to spiral up, thereby killing farmers’ buying power. At this point in time, only 35% of vegetable seeds are processed and procured locally but the industry is heavily dependent upon the imported seeds of various vegetables from neighbouring countries. The proposed intervention will facilitate in fulfilling this gap by providing healthy and clean seeds suitable for sowing. Moreover, this activity can be considered as a lucrative investment for the long runsince the potential of quality seeds in the agriculture market is quite high. Processing is a value addition activity,which improves the physical purity and health of seed stock by removing various contaminants including undersized and shrivelled seeds, inert matter and seeds of other crops. Moreover, the seed treatment acts as corrective and preventive measure to control insect and diseases that may affect productivity

Chili is a transplanted crop. Generally, seeds are sown in nursery beds and 40–45 days old seedlings are transplanted in the main field. Raised seed beds of 90 cm width and of convenient lengths are prepared. The nursery production is done in a traditional and orthodox mannerwithout any consideration for using certified seeds or using sterilized material, or use of trays, or enclosing the nursery withnetting to prevent insect/pests attack. This results in insects and pests, and disease attack at nursery stage. Many of these insects are known to be the vectors of viral and bacterial diseases, including leaf curl virus, mycoplasma, and spiroplasma, etc. These plants, when grown in a field, are generally week and it is anticipated that 10–15 percent of these are not able to withstand the transplantation shock, resulting in near mortality. The remainder of plants become asource forspreading pest and diseases to neighboring plants and fields, and result in poor per hectare productivity. This situation is more pronounced in the traditional and famous Dundicut variety, known for its color and aroma,with strong international market acceptability.

Numerous insects and diseasesattack chili plants at field level. Dumping off, leaf spot, anthracnose, leaf curl, and powdery mildew are the common diseases, and aphids, leaf hoppers, thrips, fruit borer, and broad mites, etc. are the major insects. As most farmers are using seeds from the previous year’s crop without processing, there is a higher probability of producing week, infected, and poor quality of seedlings. When these are then transplanted to field, they either fail to establish themselves in the open environment, or are predisposed to numerous insect and disease attacks. A strong, healthy and disease-free seedling is therefore the foundation of good production of quality crops, that doesn’t exists in the chili sector.

The prevalent chili varieties sown in Sindh are the Dundicutcultivars that accountsabout 60% of the total area under chilies. Since the seed of Dundicut chili is commercially unavailable, the cultivation of this popular traditional variety is exclusively done by farmers who keep their own seeds. According to studies carried out by Pakistan Agriculture Research Council (PARC), the yield can be increased to 23% by just sieving and separating the small sized seed from the longer seeds and treating them with fungicide and insecticides. Therefore, in order to increase the per hectare productivity of Dundicut verities, it is essential that seed processing be streamlined and registered processed seed be provided to chili farmers.Similarly, commercial nurseries should also be made available in the chili growing areas to provide seedling developed from healthy and disease free seeds in the chilli growing areas of Sindh province.

I.CGRANT OBJECTIVE AND SCOPE

The broad objective of AMD’sHV/OSV grants is to support the development of Pakistan’s commercial HV/OSV sector to sustain both international and domestic market demand. The aim of this AMD partnership is to improve the ability of Pakistan’s commercial vegetable sector to help strengthen the competitiveness in international markets. The AMD partnership envisions a transformationof the vegetable sector into an efficient and private-sector-led value chain that delivers competitive products to domestic and international markets.To that end, this RFA envisions awarding grants in the activity area to strengthen chili exports, of the high value/off season vegetable product line, through support toestablish or strengthen commercial seeds processing unit and establishment of disease free nurseries in the chili growing areas of Sindh province. Through this RFA applicant will be supported through AMD grant to establish commercial seed processing unit and plant nurseries in chilies growing areas of Sindh province as per AMD specification.

1. Objective

The prime objective of this grant is to help farmers through the commercial sector forproducing high quality chilies for increased exports to higher paying markets by using healthy, disease free seeds and seedlings.

1. Expected Outcomes

• Strengthen the chili sector export by establishing/strengthening commercial seed processing unit and nurseries for marketing of good quality and disease free seeds and seedling in chili growing areas of Sindh;

• Provide platforms to chili producersand processors/packers/exporters to maximize their production using high quality and disease free seeds and seedlings;

• Through support to establish commercial nurseries, a large number of seedlings can be raised in minimum space under optimized and controlled conditions;

• Facilitate female chili producers/processor/packers/exportersfor contributing to chili supply chain.

• Increase employment of women and to integrate more women along the supply-chain and establish more formal agreements between buyers and women farmers.

I.EDESCRIPTION OF MATCHING GRANT

a.Description

Proposed in-kind grants are created to strengthen the chili sector that will be available on cost-sharing bases to commercial chili producers, processor, packers and or exporters. This grant will be available on a 1:2 (AMD: Grantee) contribution ratio (depending upon the grant amount), where upto 50% of the investor’s share can come from existing assets, while remaining 50% or more would be in shape of new investments, which must be considered at time of budgeting and planning.

An in-kind grant for establishing commercial seed processing unit and nurseries and its installation, as per AMD’s specifications, access to funds of 50,000–124,000 USD, with 1:2 (AMD: Grantee) contribution. The applicant will provide 2/3 of the total amount of the grant, which can be funded from non-USG sources, may include own equity, private sector or bank finance. AMD will fund the remaining 1/3 of the activity amount.

Similarly, if the activity cost is high, an in-kind grant for establishing commercial seed processing unit and nurseries and its installation, as per AMD’s specifications, access to funds of 125,000–150,000 USD with 1:3 (AMD: Grantee) contribution. The applicant will provide 3/4 of the total amount of the grant, which can be funded from non-USG sources, which may include own equity, private sector or bank finance. AMD will fund the remaining 1/4 of the activity amount.

1. Who can apply?

Those commercial producers, processors, packers and exporters of chilies who have several years of experience in the chili sectors and are able to take part in a cost-shared activity.

AUTHORITY/GOVERNING REGULATIONS

USAID’s AMD grant awards are made under the authority of the U.S. Foreign Affairs Act and USAID’s Advanced Directive System (ADS) 302.3.5.6, “Grants under Contracts.” Awards made to non-U.S. organizations will adhere to guidance provided under the following:

• ADS Chapter 303, “Grants and Cooperative Agreements to Non-Governmental Organizations”;
• Standard Provisions for non-U.S. NGOs;
• 2 CFR 200 UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS; and
• 2 CFR 700.

All awards made to non-U.S. organizations will be within the terms of the Prime Award and AMD’s grants procedures.

AMD is required to ensure that all organizations receiving USAID grant funds comply with the guidance found in the above regulations, as applicable to the respective terms and conditions of their grant awards.

SECTION II.AWARD INFORMATION

AMD anticipates awarding 3–4in-kindgrants,with a range of grant amounts from US$ 50,000 to US$ 250,000. The award funding can be increased depending on the nature and size of the project/grant. These grants will be awarded to privately-held,commercial production/processing/packing units and/or exporterspossessing strong financial capacity to meet the required cost-share contributions.

The duration of the grant awards under this solicitation will vary depending on the nature and size of the project/grant. It is expected that these grants will be issued for 12 months. AMD may increase the period of grant and funding depending on the performance of the project, availability of funds, and USAID approval. The estimated start date of grants awarded under this solicitation is six months after the issuing date of this RFA.

II.A.TYPE OF GRANT

While AMD will consider three different grant mechanisms during the implementation of the grants program (simplified grant, standard grant, and In-Kind grant), the project expects to primarily award In-Kind grants, whereby goods and services will be procured directly by AMD in close correspondence with the grantee. Once purchased, goods and services are delivered immediately to the grantee or to the grant activity. All procurement undertaken on the grantees’ behalf by AMD will be done in compliance with USAID’s procurement regulations. No financial disbursements are made directly to the grantee under an In-KindGrant, rather AMD procures all necessary commodities and services on behalf of the grantee.