GEORGIA
AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Project Appraisal Document
Europe and Central Asia Region
ECSSD
Date: January 11, 2000
Team Leader: Iain G. Shuker
Country Manager/Director: Judy M. O'Connor
Sector Manager/Director: Kevin M. Cleaver
Project ID: P065715
Sector(s): AE - Agricultural Extension, AR - Research,
VM - Natural Resources Management
Lending Instrument: Specific Investment Loan (SIL)
Theme(s): ENVIRONMENT; RURAL DEVELOPMENT
Poverty Targeted Intervention: N
Global Supplemental ID: P064091
Team Leader: Jitendra P. Srivastava
Sector Manager/Director:
Supplement Fully Blended? Yes
Sector(s): AY - Other Agriculture
Project Financing Data
Loan
Credit
Grant
Guarantee
Other (Specify)
For Loans/Credits/Others:
Amount (US$m): 7.54 (IDA); 2.50 (GEF)
Proposed Terms: Currency Pool Loan (CPL)
Grace period (years): 10
Years to maturity: 35
Commitment fee: 0.00
Service charge: 0.75%
Financing Plan: Source
Local
Foreign
Total
Government
1.01
0.71
1.72
IBRD
IDA
5.04
2.50
7.54
BENEFICIARIES
0.50
0.16
0.66
GLOBAL ENVIRONMENT FACILITY
1.84
0.64
2.48
Total:
8.39
4.02
12.41
Borrower/Recipient: GOVERNMENT OF GEORGIA
Responsible agency:
Ministry of Agriculture and Food
Address: 41 Kostava Street, Tbilisi, Georgia
Contact Person: Mr. George Maglakelidze
Tel: 995.32.999.942 Fax: 995.32.934.651 Email: ppiu@wbagro.ge
Estimated disbursements ( Bank FY/US$M):
FY
2001
2002
2003
2004
2005
Annual
1.8
2.5
2.0
0.6
0.7
Cumulative
1.8
4.3
6.3
6.9
7.6
Project implementation period: 5 Years
Expected effectiveness date: 07/01/2000 Expected closing date: 12/31/2005
GEF Estimated disbursements ( Bank FY/US$M):
FY
2001
2002
2003
2004
2005
Annual
0.4
0.4
0.5
0.6
0.6
Cumulative
0.4
0.8
1.3
1.9
2.5
OCS PAD Form: Rev. March, 2000
- 2 -
A. Project Development Objective
1. Project development objective: (see Annex 1)
The Overall Development Objective of the Project is to initiate the development of an efficient and
cost-effective agricultural knowledge system to demonstrate, disseminate and promote the adoption of
appropriate technologies that increase sustainable agricultural production and reduce pollution of natural
resources. In support of this objective, the Project would assist the Government of Georgia to:
l
Put in place a Competitive Grant Scheme for agriculture to be used as a vehicle for funding: (i)
appropriate on-farm technology acquisition, adaptation and dissemination to enable the new farmers to
respond better to the challenges of a privatized economy based on market principles; and (ii)
environmentally-friendly agricultural practices to reduce negative impacts on soil and water quality;
l
Support Reform of the Agricultural Research System through preparation of a detailed implementation
and investment plan for one high priority research direction, followed by investments to implement this
plan; and
l
Invest in Environmental Pollution Control (manure storage and handling facilities and biogas digesters,
as well as soil and water quality monitoring programs) to reduce agricultural nutrient pollution of the
Black Sea.
2. Global objective: (see Annex 1)
Project Global Environmental Objectives. The Project will initiate measures aimed at improving on-farm
environmental practices, which over the long-term would reduce nutrients entering the Black Sea. The
Project activities, especially those relating to better manure management, including its storage and
application, are linked directly to "The Black Sea Strategic Action Plan" formulated with the assistance of
GEF. It developed a systematic approach to policy development through the application of a
Trans-Boundary Diagnostic Analysis. Results of the pollution source inventory conducted during the
preparatory work show that non-point sources of agricultural pollution are a serious problem facing the
Black Sea. In addressing this problem, through support for relatively low-cost investments, policy
adjustments, changes in consumers' practices and employment of alternative technologies, the Project
would also complement the Danube Delta Environmental Program and assist the government in meeting its
international commitments under the Bucharest Convention. An ancillary global environmental objective of
the Project is to reduce greenhouse gas emissions from stored manure by promoting the use of biogas
energy among rural farmers.
3. Key performance indicators: (see Annex 1)
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)
Document number: 1700-GE
Date of latest CAS discussion: 09/12/97
The Project is consistent with the Bank's Country Assistance Strategy, which identifies agriculture as one
of the priority sectors, and fully supports the CAS objectives of: (i) deepening and diversifying the sources
of growth; (ii) reducing poverty; and (iii) protecting the environment through sustainable natural resource
management.
- 3 -
The main thrust of the Project is on providing services to private farmers in terms of technology
dissemination and adaptation so that they are better prepared to respond to the emerging market conditions
and global environmental needs. Strengthening the agricultural knowledge system and adopting
environmentally sustainable agricultural practices would assist farmers in realizing their potential for
increased agricultural productivity and profitability, and improve the competitiveness of Georgia's
agricultural sector. In line with government policy, the provision of more productive technologies and
improved access to information would also support more efficient and profitable production for traditional
export markets as well as the development and addition of new products. Higher farm-level output and
increased productivity would also have the consequent impact of raising rural incomes and reducing
poverty.
1a. Global Operational strategy/Program objective addressed by the project:
The Strategic objectives of this project are directly tied to the objectives of the Strategic Action Plan for the
Black Sea, supported by GEF, and would complement the initiatives under the Danube Delta
Environmental Program. The Project's objective of reducing non-point source pollution from agriculture is
consistent with GEF Operational Program Number 8, "Waterbody Based Operational Program," which
focuses "mainly on seriously threatened water-bodies and the most important trans-boundary threats to
their ecosystems". Under the Program, priority is accorded to projects that are aimed at "changing sectoral
policies and activities responsible for the most serious root causes or needed to solve the top priority
trans-boundary environmental concerns".
The objective of promoting the use of biogas is consistent with GEF Operational Program Number 6, "
Promoting the Adoption of Renewable Energy by Removing Barriers and Reducing Implementation
Costs." The Program is designed to promote widespread use of renewable energy technologies, such as
bio-digesters, because they "offer some of the best prospects for achieving deep reductions in greenhouse
gas emissions at the global level".
The Project will provide an opportunity for the GEF to be a catalyst for actions to bring about the
successful integration of land and water resource management practices. GEF support will reduce costs of
and barriers to farmers in adopting improved sustainable agricultural practices (including the use of
bio-digesters). It will also help develop mechanisms to move from demonstration level activities to
operational projects that reduce non-point source pollution from agriculture to the Black Sea and reduce
carbon emissions to the atmosphere. The Project builds on the Poland Rural Environment Project funded
by IBRD and GEF, and is expected to serve as a "model" for initiatives to be launched in the other littoral
states for which a strategic partnership between the GEF and Bank is envisaged. The World Bank is
preparing a Black Sea/Danube Strategic Partnership paper for GEF Council discussion in May 2000.
- 4 -
2. Main sector issues and Government strategy:
Agriculture sector highlights: Agriculture is the mainstay of the Georgian economy, accounting in 1997
for about 28% of GDP and about 55% of employment. The country produces a variety of agricultural
crops, including grain crops (54%), and fruits (11%). Agricultural production was seriously disrupted
during the civil conflict that followed independence in 1991. Since 1994, however, agricultural output has
started to recover and some progress has been made in areas of land reform and farm restructuring. Of the
total land area, only about 26% is privately owned; the rest is still owned by the Government, including
some arable land that is leased to farmers and most of the rangeland areas. In terms of land under arable
crops and perennial trees, about 58% is in private hands and a further 25%-30% is leased, implying that
approximately 85% of the total arable land is farmed privately. Distribution of land has essentially created
a smallholder, or subsistence sector, and a commercial sector. Smallholders, estimated to number 1.02
million, on average own less than 1.0 ha of garden and farmland in rural areas. About ten percent of
smallholder farmers lease additional land from the Government land reserve, increasing their farms by a
few hectares. As for the commercial sector, it comprises 41,000 individuals and 5,500 enterprises, with
farm size ranging from five ha to more than 100 ha, including leased land, and a few farms even larger than
this.
Main sector issues reflect the shift from a command economy to a market-based economy and the problems
faced by emerging private farmers, who have little experience with farm management or operating in a
market economy. These problems include, inter alia: a collapse of markets for Georgian products,
particularly high-value products, in the former Soviet Union (FSU); cash constraints and limited access to
credit; outmoded agronomic and farm management practices, ill suited to meet the needs of the emerging
market economy; shortage of inputs, particularly the lack of good seeds; obsolete agricultural machinery
and shortage of spare parts, equipment and service facilities; and inadequate rural infrastructure, including
roads and electricity supply.
Environmental Issues. During Soviet times, agriculture and livestock production systems were highly
intensified in Georgia to meet the needs of the FSU. Intensification resulted in the heavy use of mineral
fertilizers and pesticides. Georgia imported large amounts of pesticides, fertilizers, growth regulators and
other chemicals to meet the needs of agriculture. For example, in 1986, about 35,000 tons of pesticides
and 250,000 tons of fertilizers were imported. The lack of conservation tillage systems and crop rotations
promoted the movement of fertilizers and pesticides to rivers, resulting in the pollution of the Black Sea
from agricultural production systems. In addition, animal production systems were highly industrialized,
resulting in large amounts of manure flowing into major water bodies and causing large scale pollution of
the Black Sea. Since 1991, although livestock production has dwindled and been decentralized, there is
almost no adequate manure storage and management. Also, Georgia's biodiversity is under threat from
unsustainable agricultural practices, environmental pollution, over-exploitation of forests for commercial
purposes, drainage, eutrophication of lakes and other water bodies, and deforestation. The majority of
Georgian high mountain settlements are concentrated in sub-alpine zones and farms/meadows in these areas
are highly degraded because of agricultural activities and over-grazing. This is causing severe soil erosion
resulting in the loss of flora and fauna.
Government Strategy: Government strategy for the sector is set out in the Ministry of Agriculture and
Food's "Concept of Agrarian Policy of Georgia" (issued as a Presidential Decree, April 7, 1997). The
main strategic thrust is to ensure the country's food security and to strengthen the country's independence
by using its agro-industrial potential, both to meet internal demand and increase income from exports.
Government policies support the deepening of the reforms in the sector, particularly with regard to land
reform, the formation of an environment to stimulate competition, and the development of a market
- 5 -
infrastructure. Only those assets that are of strategic importance will be retained in state ownership for the
time being.
With the assistance of several donors, the Government is implementing its strategy by addressing the sector
issues laid out above. First, a number of donor-supported initiatives (including the World Bank
Agriculture Development Project (ADP)) to develop agricultural credit programs for farmers and
agro-processors are in progress. Success is dependent on the soundness of the overall financial system and
an encouraging start has been made working through commercial banks and the establishment of Credit
Unions. Second, an USAID-assisted project implemented by ACDI/VOCA in conjunction with GTZ and
CARE, is tackling the problem of improving seed production and getting it into private hands. Third, a
number of organizations (TACIS, British Know How Fund and GTZ, as well as several NGOs) have pilot
projects underway to provide private farmers and agro-processors with technical, price and business
planning advice. Fourth, a large number of donors, including KfW, USAID, Sweden, UNDP, and the
Bank are supporting the government's land titling program.
The Bank is supporting the Government in implementing the strategy through the ADP, which is
co-financed by IFAD. Its key components include: loans to private enterprises engaged in economic
activities in rural areas; a credit scheme for small farmers and micro-enterprises; promoting the
development of land markets through a systematic program of land titling; and preparation of an
agricultural sector investment program.
Two years ago, the Bank began supporting the reform of the agricultural research system through its "
Regional Initiative on Reforming Agricultural Knowledge Systems in Central Asia and the Caucasus". In
May 1998, the Government established a high level Inter-Ministerial Commission (IMC) to oversee the
reform process. Also, with the support of ISNAR (IFAD financing), the status of the agricultural
knowledge and information systems has been reviewed and a Country Profile report has been issued.
ISNAR also helped with the preparation of a conception framework for Reform of the Agricultural
Research, Extension and Training System.
Environmental issues: Georgia has entered a new phase of environmental activism, with the transition to a
parliamentary democracy. The Ministry of Environment, responsible for coordinating government efforts to
protect and conserve the country's environment, has made important progress in strengthening the legal and
regulatory instruments for improved management of Georgia's environment through enactment of major
environmental legislation. These include the "Environment Protection Law," (1996), the "Law on
Environmental Permits" and the "Law on State Ecological Expertise." A National Environmental Action
Plan (NEAP) is under consideration for formal adoption by the Government. Georgia has also ratified the
Bucharest Convention for the Protection of the Black Sea Against Pollution (1992), the Odessa Ministerial
Declaration (1993) and is a participating in the preparation of the Strategic Action Plan for the
Rehabilitation and Protection of the Black Sea (1996).
3. Sector issues to be addressed by the project and strategic choices:
Issues to be addressed. The Project will build on the initiatives currently being implemented under the
ADP, and extend and deepen the reform of the sector through measures aimed at addressing the following
key issues:
l
developing the capacity of private smallholder and commercial farmers through introduction, validation
and dissemination of improved technologies at the farm level, covering production, post-harvest
operations, inputs, marketing and natural resource management;
- 6 -
l
making research, extension and training more responsive to the needs of farmers and relevant to the
emerging market conditions;
l
fully integrating environmental concerns into agricultural practices to make them more sustainable,
including the better management of nutrient and chemical loads; and
l
as part of the overall management of nutrient load, demonstrating environment-friendly bio-digesters
and removing barriers to their more widespread use.
There is an immediate need to address the priority problems of private farmers through the validation of
improved technology (production, post-harvest operations, inputs, marketing and natural resource
management) and dissemination at the farm level, as well as to undertake studies to identify policy and
regulatory reforms needed to eliminate bottlenecks affecting the sector. Towards this, the Project will
support initiatives directed at on-farm technology adaptation and dissemination, i.e., support research
(adaptive field trials and demonstrations), extension and training activities that would directly impact
productivity and incomes of private farms, both smallholder and commercial.
To achieve the objectives of the Project, Georgia's agricultural knowledge system needs to be reformed.
Currently, Georgia's agricultural research, extension and training system faces five major challenges: (a) to
re-orient the system to make it serve private agriculture based on market principles; (b) to adopt
socio-economic ecological and business criteria in planning, priority setting, monitoring and evaluating
agricultural knowledge systems; (c) to restructure, selectively rehabilitate, decentralize and consolidate the
system to make it efficient, effective and financially sustainable; (d) to develop and strengthen the linkages
between researchers and users, and among research, extension and training activities; and (e) to facilitate
increased investment in agricultural knowledge systems (AKS), both public and private.
Reforming Georgia's AKS will require fundamental changes in decision making, priority setting, incentive
systems, cost-effectiveness, potential revenue generation through cost recovery and accountability to
stakeholders. These changes are long-term and would require about 10 years to achieve. As a first step,
however, there is a need to selectively support the research and extension system to serve private
agriculture with already available or selectively introduced technology and information. This is expected to
bring increased productivity of crop and livestock, increased profitability through better farm management
and collective bargaining for inputs and markets, and increased sustainability through more
environmentally sound technologies and practices. At the same time, it is important to assist the
government in a longer-term action plan to reform the agricultural knowledge system. Thus, the project has
a two-pronged approach: (1) support targeted, priority activities in research and extension that will provide
immediate benefits to farmers and agro-processors and will serve as a catalyst to jump-start the reform
process; and (2) provide assistance in developing a national strategy for reform of Georgia's AKS, in
preparing implementation and investment plans for one high priority research direction (to develop a model
for wider application), and in making investments in this selected area to act as a demonstration and pilot
project for restructuring the rest of the AKS.
- 7 -
The main vehicle to be used to support initiatives directed at on-farm technology adaptation and
dissemination, is the proposed Competitive Grant Scheme for Agriculture (CGS). The CGS will fund
adaptive research (essentially field trials and demonstrations), extension and training activities that would
directly impact productivity and incomes of private smallholder and commercial farms, as well as actions
to reduce agricultural pollution of the environment. Both private and public sector agencies would be able
to compete for funds under the CGS. Funds from the CGS would be additional to existing, core funds for
the research system. It will be essential to maintain this core funding but link it to a wider reform of the
agricultural research complex which would also be supported under the project.
The CGS will encourage, inter alia: (i) user participation in setting priorities for research and extension
activities; (ii) increased emphasis on cost effectiveness; (iii) shift from basic to applied research; (iv)
resource commitments based on monitorable outcomes; (v) cooperative research/extension by
multi-disciplinary teams; (vi) selectivity in research/extension programs; (vii) equitable access to
research/extension funds for research institutions, extension agencies and universities, private industry and
NGOs; and (viii) linkage with global research/extension community and private sector. Experience with
the CGS will feed into the recommendations for the reform of the agricultural research, extension and
training system to be prepared as part of the Project.
Strategic Choices. Two strategic choices were made before proceeding with the preparation of the Project.
First, whether investments in Georgia's agricultural knowledge system were justified at this juncture. In
this regard, land reform, an initiative supported by the Bank, had resulted in ownership of farmland being
vested in individuals with minimal experience with small-scale or commercial farming. Without providing
the smallholders and commercial farmers access to information on agricultural practices and technology, it
was highly unlikely that the reform would yield anticipated benefits. That existing institutions would be
able to provide such information in an efficient and cost-effective manner was also equally unlikely, given
that they were not designed to meet the needs of the sector as it has evolved. On that basis, the need for and
timing of the operation were deemed appropriate.
Second, whether to reform the existing institutions or build new ones. The latter was rejected on the
grounds that this would not only be divisive but also protracted and, hence, not in the interest of the
country. Also, institutional reform is a long-term process and it was agreed that the immediate need of the
country was to identify those priority areas of activities that could demonstrate quick successes and
underscore the importance of reforming the countries agricultural knowledge base. The reforms envisaged
are designed to meet three requirements: transparency through greater stakeholder participation;
accountability; and greater efficiency and cost-effectiveness. For this, establishing the proposed
Competitive Grant Scheme (CGS) is a key innovation of the Project. The CGS should not be seen as a
replacement for core funding of the research complex. However, it will encourage reallocation of limited
budgetary funds to relevant and effective institutions. Details of the CGS are discussed in the attached
Operational Manual.
C. Project Description Summary
1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost
breakdown):
Project components: The proposed 5-year project seeks to reform the Georgian agricultural knowledge
system through appropriate technology acquisition, adaptation and dissemination that would respond better
- 8 -
to the new realities and needs of the emerging private farmers, while at the same time promoting
environmentally friendly agricultural practices to protect Georgia's surface and ground water and reduce
agricultural pollution to the Black Sea.
The project will comprise four components: (i) Competitive Grant Scheme; (ii) Support for Reform of the
Agricultural Research System; (iii) Environmental Pollution Control; and (iv) Project Management Unit.
Component 1: Competitive Grant Scheme (US$5.6 million -- IDA Credit + GEF Grant)
The Competitive Grant Scheme (CGS) will support the following activities: (i) Adaptive Research and
Technology Dissemination (IDA funding); and (ii) Environment-friendly Agricultural Practices to reduce
negative impacts on soil and water quality (GEF funding).
(a) Adaptive Research and Technology Dissemination. This will combine a program of on-farm
technology acquisition, adaptation and dissemination, as well as the provision of agricultural advisory
services, to tackle immediate priorities for improving on-farm productivity, profitability and long-term
sustainability on private farms, both small-holder and commercial. The project will encourage the
participation of farmers, farmers' organizations, NGOs and other stakeholders in "needs assessments" of
farmers' priorities and constraints, identification of priority activities and their implementation. These
activities, to be funded under the Competitive Grant Scheme, will build national capacity and increase the
competitiveness of Georgia's agricultural sector.
The terms and conditions for operating the CGS have been set out in an Operational Manual, which has
been approved by the Inter-Ministerial Commission (IMC) and the Bank. The CGS will be implemented
by a Competitive Grant Board (CGB) that is responsible functionally to the IMC and administratively to
the Ministry of Agriculture and Food. The CGB will be serviced by a full-time Secretariat that would
report to the CGB and be responsible for day-to-day operations. Terms of Reference and job description
details are provided in the Operational Manual in Annex 12.
The British Know How Fund (KHF) is considering providing parallel financing of about US$400,000 to
support the dissemination of agricultural knowledge and encourage active participation of farmers,
farmers' organizations and NGOs in these activities. It is envisaged that KHF will support the training,
technical assistance and operating costs of the "needs assessments" for priority setting in developing
contracts between farmers associations and providers of agricultural advisory services to be funded by the
CGS.
(b) Support for Agricultural Practices to Reduce Environmental Pollution. The project will be used to
fund activities to improve Georgian surface and groundwater and reduce the nutrient load entering the
Black Sea from point and non-point sources of pollution from agricultural practices in Georgia. The
selected project area in Western Georgia comprises three districts Khobi, Chkhorotsku and Tsalenjikha
bordering the Black Sea. Activities to be implemented in these pilot watersheds would include: (i)
promotion of efficient manure management practices; and (ii) conducting on-farm trials and demonstrations
of improved sustainable agricultural practices, including reduced tillage, better chemical management
systems, contour farming and buffer strips for water quality benefits.
The testing and introduction of the above environmentally-friendly agricultural practices to reduce negative
impacts on water quality, would be funded through the Competitive Grant Scheme. Procedures would be
similar to those for adaptive research as described in the Operational Manual. The CGS Research
Specialist and Environmental Engineer would together handle the review of project proposals.
- 9 -
Component 2: Reform of the Agricultural Research System (US$3.52 million)
A Conceptual Framework for a National Strategy for Reform of the Agricultural Research, Extension and
Training System was approved June 17, 1999, by the Inter-Ministerial Commission set up by the President
to support reform of the Georgian AKS, and published. The Government has agreed with the Bank to pilot
reforms in one priority research direction, namely Horticulture and Viticulture. This component will
provide a combination of technical assistance, training and investments to pilot reforms in this research
direction.
At appraisal, an action plan to develop an Institutional Reform Implementation Plan for the Horticulture,
Viticulture and Winemaking Institute (HVWI) was agreed with MAF. It is expected that the draft
implementation and investment plan would be completed and the final plan agreed with all stakeholders by
December 2000. Finalization of this plan, and its subsequent approval by the Government, with agreement
by the Bank, is a Condition for Disbursement for the US$2.0 million (IDA credit) which is allocated for
implementation of the reforms. The project will thus earmark an amount of US$2.0 million for such
implementation efforts which will include activities related to civil works and rehabilitation; procurement of
laboratory and field equipment and goods; human resource streamlining; training and operational costs.
Component 3: Pilot Environmental Pollution Control Program (GEF funding -- US$1.17 million)
The project would support a pilot program in one watershed, in the areas of Khobi, Chkhorotsku and
Tsalenjikha in Western Georgia, and cover the following activities: (i) the promotion of efficient manure
management practices - installation of manure storage tanks/pits; (ii) adaptive research, on-farm testing and
demonstration of the use of bio-gas digesters in the villages to provide bio-gas for cooking and other
domestic use to rural families and to reduce methane emissions into the atmosphere; and (iii) the
establishment of a watershed scale water quality monitoring program to monitor agricultural pollution of
major rivers draining into the Black Sea.
Bio-digesters will be tested and evaluated for their performance in these villages to select the most desirable
design and size for western Georgia before moving into installing relatively large number of bio-gas
digesters. Following work on design issues during the pre-project period, in year 1, the project will install
about 10 bio-gas digesters in the project area. In the second year, the number of bio-digesters installed will
be nearly doubled, with a target of about 200 by project end. Pilot project activities to test the design of
bio-gas digesters will be launched in early Spring and completed in the Fall of 2000.
This demonstration component will familiarize and widen the understanding of farm/rural families and the
public at large of the benefits accruing from the use of bio-gas units through study tours, farm visits,
seminars/workshops and other outreach methods, including radio, video, leaflets and the Internet. Part of
the GEF funds will be used to provide training to technicians who will assist farmers in installation,
operation and maintenance procedures for the bio-gas units. The aim of this component is to pilot the
introduction of bio-digesters and manure management in one watershed and study its effectiveness at
reducing non-point source pollution, with the expectation that the program could be expanded at other
watersheds in the future.
The environmental pollution control investments above will be undertaken once the pilot project (due to
start in February 2000) is completed in end-2000, and these activities would follow normal Bank
procurement procedures for civil works and goods. Accordingly, investments in manure storage and
handling facilities and bio-gas digesters, as well as soil and water quality monitoring programs in the
- 10 -
selected watershed of western Georgia rivers that drain into the Black Sea would be handled under the
supervision of an environmental engineer located in the Project Management Unit.
Component 4: Project Management Unit (US$0.71 million)
The Project would provide for a Project Management Unit (PMU) to co-ordinate project implementation
and handle monitoring and evaluation of project activities (Figure 1). The PMU would be headed by a
Project Manager, who would report to the Minister of Agriculture and Food, and would comprise the
Environmental Engineer (heading the Environmental Pollution Control component), the Reform Component
Coordinator, an Administrative Officer and Secretary/Interpreter.
Indicative
GEF
Bank-
% of
Component
Sector
Costs
% of
financing
financing
Bank-
(US$M)
Total
(US$M)
(US$M)
financing
Component 1: Competitive Grant
Agricultural
4.71
38.0
0.00
4.07
54.0
Scheme.
Extension
Subcomponent (a): Adaptive
Research and Technology
Dissemination.
Component 2: Reform of the
Agricultural
4.14
33.4
0.00
2.76
36.6
Agricultural Research System.
Extension
Component 4: Project
Agricultural
0.85
6.8
0.00
0.71
9.4
Management Unit
Extension
0.0
0.0
0.0
0.0
0.0
0.0
Total Project Costs
12.41
100.0
2.48
7.54
100.0
Total Financing Required
12.41
100.0
2.48
7.54
100.0
- 11 -
2. Key policy and institutional reforms supported by the project:
The project would support the Government in improving the efficiency and cost effectiveness of the
agricultural knowledge system to meet the needs of the private farming sector (smallholder and
commercial). It would also assist the Government to honor its commitments under the Bucharest
Convention to protect and rehabilitate the Black Sea through, inter alia, the adoption of environmentally
sustainable agricultural practices. An initial review of the organization of agricultural research, extension
and training activities, undertaken with the assistance of ISNAR, underscores the need for making these
more cost-effective and efficient and equally importantly, responsive to the emerging needs of the
smallholder and commercial farmers, i.e. demand-driven. The CGS would launch the reforms needed to
foster the achievement of these objectives. Specifically, it would promote decentralized project
implementation, introduce greater transparency and accountability through broader stakeholder
participation in priority setting, reduce costs and promote efficiency by encouraging partnerships between
researchers, farmers, extensions workers and NGOs. At the same time, the Project would provide direct
assistance for testing approaches for the medium-term reform of the agricultural research, extension and
training system.
- 12 -
3. Benefits and target population:
Private farmers and agro-processors will be the main beneficiaries of the Project. Introduction of improved
technologies would result in agricultural diversification, higher productivity and lower costs of production
and, in turn, increase profitability and improve living standards in rural areas. Higher productivity and
better management will bring about improvements in product quality to meet specific market needs,
including those of export markets. The types of farms benefiting will range from smallholders (average
farm size one hectare) and part-time farmers with small crop or livestock surpluses to sell from time to
time, to larger leased farms with land ranging in size from 5 ha to about 50 ha.
Investments in applied agricultural research, coupled with effective technology transfer, can yield relatively
high returns, especially when starting from a low technological base, as is the case in Georgia. The
involvement of a broad range of stakeholders, especially farmers, in adaptive agricultural research will
increase its practical relevance, a related benefit of the Project. The establishment of CGS along with
capacity building and training will help build a sustainable system capable of generating improved
technologies responsive to the needs of end-users.
The country, the public at large and the global community would also benefit from the adoption of
environmentally sustainable activities to be implemented under the Project. Specifically, reducing the
discharge of nutrient load into the Black Sea will promote the maintenance of productive ecosystems and
critical natural habitats in the freshwater, estuarine and near shore waters along the Black Sea Coast.
Broad-based stakeholder participation will increase public awareness and demand-driven approaches for
protecting the Black Sea. Promotion of bio-gas digesters in the rural areas will help to meet the heating and
cooking needs of the rural communities, reduce felling of trees, and strengthen the global climate change
objectives.
The approach adopted under this project to reduce non-point sources of pollution to the Black Sea is
innovative and replicable. During Soviet times, manure management practices (such as manure storage
tanks, use of manure for crop production, and use of manure for biogas production, use of manure slurry
from biogas digesters) were almost absent and very little, if any, manure was disposed of in an
environmentally acceptable fashion. Reduced tillage, crop rotations, buffer strips, and other soil erosion
control practices will be first tested and evaluated on farmers' fields. If successful, these technologies will
be demonstrated to other farmers of western Georgia. Farmers will teach other farmers the usefulness of
these sustainable technologies and assist in such technology replication.
4. Institutional and implementation arrangements:
Project Co-ordination: The Project would be implemented under the aegis of the Ministry of Agriculture
and Food (MAF), with specific responsibility for overall co-ordination assigned to a high level Project
Manager, who would be selected following World Bank guidelines. The Inter-Ministerial Commission
(established by Presidential Decree #357 of May 28, 1998, to oversee the reform of the Agricultural
Research, Extension and Training System) Membership comprises: Minister of Agriculture (Chairman);
Ministers of Education and Environment, Deputy Ministers of Finance, Economics and Justice; Chairman
Agrarian Parliamentary Committee, Secretary Agricultural Science Department, Georgian Academy of
Sciences, President GAAS, Rector GAU, and PCU Director. The IMC, involving broad participation from
relevant ministries and agencies, including Ministry of Environment, will provide overall guidance and
support at the highest level (Figure 1).
- 13 -
The Project Manager would have the overall responsibility for the project and would report to the Minister
of Agriculture and Food. He would head the PMU comprising the Environmental Engineer (heading the
Environmental Pollution Control component), the Reform Component Coordinator, an Administrative
Officer and Secretary/Interpreter. In consultation with the Project Manager, accounting, financial
management, procurement and disbursement matters would be handled by the already existing World Bank
Projects' Coordination Unit (PCU). The expenses incurred by PCU, including staff time related to the
proposed ARET project, will be covered by the Project. This arrangement will make full use of already
available expertise at the PCU without hiring new personnel. The ARET Project Manager will discuss and
agree with the PCU Director on processes for budgeting and release of funds.
Implementation arrangements: Activities under component 1 will be implemented through the Competitive
Grant Scheme (CGS), to be managed by a Competitive Grant Board and Secretariat. The members of the
Competitive Grant Board (CGB) were appointed in December 1998 and comprise a Chairman and fourteen
members representing all relevant stakeholders, including farmers, farmers associations and NGOs.
Member affiliation is as follows: Private farming sector - 4; NGOs 1; Georgian Academy of Agricultural
Sciences 1; Agrarian University 1; MAF 1; Ministry of Finance 1; Ministry of Economy 1;
Ministry of Environment 1; PCU 1; Parliament 1; Head of Secretariat 1. The Chairman and
one-third of the members have no affiliations with either the Government or the research, extension and
training complex. The Secretariat will comprise three technical specialists covering research, extension and
economics disciplines plus administrative staff. The Head of the Secretariat, who will act as the economist,
has been appointed and is also a member of the Board as its executive secretary. Functionally, the
Secretariat would be responsible to the Competitive Grant Board, but administratively to the Project
Manager. Staff would be recruited on a competitive basis according to terms of reference acceptable to the
Bank.
The terms and conditions for operating the CGS have been set out in an Operating Manual that has been
approved by the Inter-Ministerial Commission and the Bank. Priority areas for technology validation,
adaptation and dissemination for which proposals would be requested under the CGS, have been finalized
under three categories import substitution, export-orientated production and services for production,
processing and marketing and approved by the CGB. The range of activities deemed eligible would be
reviewed annually as the reform process proceeds.
Proposals for work on priority areas will be solicited publicly by the Competitive Grant Board following
the procedures set out in the Operating Manual. The Secretariat will collect and collate relevant
information on the proposals provided by the applicants and also obtain comments of the pre-approved
local and international peer reviewers, who will evaluate the proposals against predetermined criteria such
as, relevance to the farming community, contribution to national priorities, technical quality and scientific
merit, qualifications and experience of the sponsor, plans for transfer of technology and environmental
impacts. The Secretariat will subsequently submit the proposals, with all the information, to the CG Board
for their decision for awards.
- 14 -
The Chairman of the Board will assign each proposal for in-depth review to 2 relevant Board members who
will lead the discussion on their projects at the Board meeting. Successful applicants would be contracted
by the CGB (contracts to be drawn up by the PMU/PCU on the instructions of the Secretariat) to carry out
the agreed works over a period of up to three years. Funds to be covered for approved proposals could
include laboratory equipment, vehicles, materials, office equipment, travel costs, short-term training, field
labor, fuel, supplies and up to 20% administrative overheads (see CGS Operational Manual Section 6).
Large items of equipment would not be normally financed under the Project. Institutions would contribute
15-20% of sub-project costs in cash or kind. The level of the initial payment would be determined by the
Secretariat and subsequent payments would be made on the basis of progress against specific milestones.
Overall policy direction and support for Component 2 the reform of the agricultural research system -
would be overseen by a small committee comprising the president of the Georgian Academy of Agricultural
Sciences (GAAS), the Rector of the Georgian Agrarian University (GAU), MAF's Representative and the
Project Manager. A coordinator for the component has been selected, following World Bank procedures, to
prepare implementation and investment plans for priority research at HVWI.
Financial Management:
The overall responsibility for the financial management of the project will rest with the PCU originally
established for the ADP by the Ministry of Agriculture. The Association conducted a financial
management assessment of the PCU during the appraisal of the ARET Project and concluded that while the
financial management arrangements of the PCU were sufficient for the existing project, they did not meet
the minimum requirements for the ARET project. The financial management arrangements of the project
will therefore be strengthened prior to project effectiveness and it is a condition of Board Presentation that
the financial management arrangements of the project are satisfactory to the Association. A time-bound
borrower-agreed action plan to strengthen the project's financial management arrangements is included in
Annex 6.
Staffing: The PCU already has a complement of accounting staff working under the supervision of a
Financial Manager for the project work for whose financial management the PCU is already responsible.
In addition, prior to project effectiveness, the PCU/PMU will hire another accountant for the specific needs
of the ARET project.
PMRs and disbursements: The format of the Project Management Reports (PMRs) for the project has
been agreed with the PCU and is enclosed as an annex to the PIP. The PCU will produce a complete set of
PMRs for every calendar quarter throughout the life of the project. The project will initially disburse under
the Association's traditional disbursement procedures, with the option of moving to the PMR-based
disbursement method at the mutual agreement of the Borrower and the Association. The Borrower and
Association will consider such a move on December 31, 2000 once the PCU has gained sufficient
experience in producing the PMRs and these PMRs have been judged to be reliable, particularly in respect
of their forecasting information.
Audit arrangements: External audits in accordance with International Standards on Auditing by
independent auditors and on terms of reference acceptable to the Association are already being
satisfactorily performed in respect of the projects for whose financial management the PCU is currently
responsible. The terms of reference for these audits will therefore be amended to include within its scope
the ARET project's: (i) the financial statements of the project as maintained by the PCU; (ii) the project's
Statements of Expenditures (SOEs); and (iii) the project's Special Account(s). The final audit report will
be presented to the Bank within six months of the end of every fiscal year.
- 15 -
Monitoring and Evaluation arrangements: Project monitoring and evaluation would be the responsibility
of the PMU. An international expert would assist the PMU to design a simple management information
system for M&E, reporting formats for each component, including targeted annual performance objectives
and monitoring indicators using Annex 1 details as the basis. Quarterly reports will cover progress in
physical implementation, the use of project funds and project impact. The format of reports will be agreed
with the Bank. Evaluation of completed research and extension projects on a sample basis would be
undertaken as a regular part of M&E. The results of these M&E activities will be fed back into the
implementation process as improved practices.
Quarterly reports will be consolidated by the PMU into half-yearly progress reports to be submitted
through MAF to the Bank within two months of the end of each six-month reporting period. These
half-yearly progress reports will also include an implementation plan and work program for the six months
following the reporting period.
A mid-term review will be carried out to assess overall progress. Lessons learned from the CGS and
progress with the reform of the research and extension complex would be used in restructuring the Project,
if necessary.
The PMU will continuously monitor and evaluate the project using performance indicators detailed in the
Project Design Summary in Annex 1.
- 16 -
D. Project Rationale
1. Project alternatives considered and reasons for rejection:
Alternatives considered were: (a) to make direct investments in the existing knowledge and information
systems institutions (universities, research institutes etc.) once a complete implementation plan for
restructuring the agricultural research, education and extension system had been agreed; (b) to attach a
small field trials and demonstration component to the Irrigation and Drainage Rehabilitation Project
(IDRP); and (c) whether to add an environmental component to the project to reduce non-point source
pollution entering the Black Sea from Georgia. With regard to (a), it was concluded that the work already
done in collaboration with ISNAR (including the conception framework for a national reform strategy)
demonstrated the readiness of the Government and agricultural research complex to tackle reform of the
system. However, it was considered desirable to proceed in a step-wise process, with the project first
providing technical assistance and capacity building to develop a reform investment plan for one research
direction and institution. Provision would be made for selected investments in physical structures,
equipment and training of personnel for the one research area/institution to develop a model approach to
institutional reform. Furthermore, farmers and agro-processors were urgently in need of technical and
business information and the longer-term building up of research institutes was therefore not considered to
be the best short-term strategy because it would delay addressing immediate needs. With respect to option
(b) above, simply adding a small component to the IDRP would unlikely have the desired results, as it
would not get the necessary attention of the research system nor of the management of the IDRP. It would
also not bring about effective reform of the Agricultural Knowledge System in Georgia.
With regard to (c), it was decided to expand the scope of the project and include an environmental
component. The Black Sea plays a crucial role in the welfare of Georgia's population. Sustainability of
Georgia's economic growth will depend, in part, on the Government's ability to integrate development of the
many productive sectors of the Black Sea coast, including agriculture and forestry. Over the past decade,
uncontrolled pollution from point and non-point sources, coastal erosion, intensified by human intervention,
and off-shore dumping in the region has devastated the Black Sea and its littoral zone. Lost revenues from
these traditional sectors and the cost of mitigating future environmental impacts from non-point source
agricultural pollution could have serious adverse impacts on public sector resources and places of strategic
and economic importance. To address this, the scope of the project was expanded to include a component
aimed at protecting the water quality of the Black Sea from non-point sources of agricultural pollution.
Also, the task of promoting environmentally sustainable agricultural practices could have been left to the
Ministry of Environment or NGOs. However, it was decided that to ensure the participation of all relevant
stakeholders, to develop a firm commitment for promoting sustainable agricultural practices, and to build
national capacity for improving and protecting the waters of the Black Sea, the best route would be to
ensure the participation of both MAF and MOE. Thus the Competitive Grant Scheme System would be
used for testing environment-friendly agricultural practices, while investments would be made in manure
handling and biogas digesters following a pilot period to test bio-gas digester design.
2. Major related projects financed by the Bank and/or other development agencies (completed,
ongoing and planned).
Latest Supervision
Sector Issue
Project
(PSR) Ratings
(Bank-financed projects only)
- 17 -
Implementation
Development
Bank-financed
Progress (IP)
Objective (DO)
Land reform, agro-processing,
Agricultural Development
S
S
agricultural credit
Project
Urgent investments for reduction of
Municipal Infrastructure
S
S
pollution in Black Sea cities
Rehabilitation--MIRP
National Environment Action
Environmentally Sustainable
Plan (IDF/Bank)
Agricultural Practices and Protection of
the Black Sea
Forestry Biodiversity Project
Cultural Heritage Project
S
S
Biodiversity Strategy and
Action Plan (GEF/Bank)
Integrated Coastal Management
S
S
Project
Other development agencies
Credit for grain production and support
to creation grain market
TACIS RARP1
Establishment of rural information
TACIS
centers
Development of agro-business
TACIS ABC
consultancy centers
Agro-business development,
Know How Fund
preparation of business plans
Seed privatization
FAO
Supply of agricultural machinery
Japan Grant
Development of private sector
GTZ
agriculture
Small farmer extension
CARE
Development of Maize, Wheat, Potato USAID
and Sunflower seed production in
private sector
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
3. Lessons learned and reflected in the project design:
Previous experience of agricultural support services aimed at developing private farming sector in other
countries in the region has shown that such projects must be focused on private farmer needs, facilitate
farmer participation in decision making and implementation, and have attainable objectives and targets
particularly in terms of sustainability. Competitive Grant Scheme funding has proved effective in
improving client orientation and the productivity of the agricultural knowledge system as well as in
reforming the supply-driven, centralized research management prevalent in many transition economies.
Key lessons learned from agricultural and environmental projects in the region include:
- 18 -
l
The need for long-term commitment to address agriculture and environment issues through phased
programs of interventions and broad-based participation;
l
The need to work directly with farmers and agro-processors to encourage ownership of the initiatives;
l
The high capacity of local and national Government officials for innovation and effective management;
l
The importance of calculating and disseminating the benefits of improved environmental management
in rural areas;
l
The importance of adequate counterpart training and specialized support for project related activities,
especially procurement, disbursement and supervision; and
l
The benefits of catalyzing support from within relevant government ministries, and other stakeholders,
for policy and environmental reforms.
The project design team consulted with and incorporated ideas from members in similar projects in the
region and across the Bank, as well as stakeholders in the country including government officials,
researchers, practitioners and farmers through public seminars and workshops. Lessons learned from
Bank-supported CGS in other countries are as follows:
l
there must be strong commitment from the government and managing organization to the concept of
CGS;
l
although the number of proposals received for evaluation may be small initially, there is an increase
over time as applicants and grant recipients become more aware of the benefits of participation;
l
CGS need to be designed after extensive consultation with potential participants ensuring both
awareness, a feeling of ownership and enthusiastic participation;
l
in the initial stages, applicants may face problems in completing application forms, and it may be
necessary to allow for a learning period and to provide some instruction;
l
project quality gradually improves as experience and awareness of the value of accurately articulated
proposals for successful competition become accepted;
l
transparency in operations and decision making is essential to remove suspicion that grants are destined
only for a favored few and that applications are not being fairly assessed; and
l
decision-makers should avoid any suspicion of a conflict of interest by absenting themselves from the
decision making process for any proposals with which they are personally associated or which involve
their institutions.
These lessons were taken into account when designing the CGS for the proposed Project. PPF funds have
been used for pre-project training in CGS procedures and include provisions for encouraging greater
private sector participation, including NGOs, farmers and farmer organizations. The Competitive Grant
Board and its Secretariat are: (a) running a publicity campaign to explain the CGS opportunities and
procedures to the agricultural research, extension and training community; and (b) holding training
- 19 -
workshops prior to project effectiveness to facilitate an early uptake once funds become available. Also,
procedures for the award and implementation of research projects are being tested through a pilot program
funded by the PPF 3 pilot technology adaptation projects together with one pilot project for the
environment component, are expected to be awarded and underway by Spring 2000. The risk of a potential
conflict of interest on the Competitive Grants Board (members representing a diversity of organizations that
could benefit from competitive grant funding) will be mitigated by: (i) setting clear criteria against which
submissions under each technology adaptation and dissemination category would be evaluated; (ii) the
process of evaluation using local and international specialists to do the technical evaluation of proposals;
and (iii) inclusion of farmer and private sector representatives on the Board.
The recipients of funds under the CGS would be expected to contribute either in cash or kind 15-20% of
the cost of any individual research project and about 20% to 25% of the cost of equipment for
environmental management. This provision would encourage institutes, individuals and other agencies
submitting requests, to confirm up-front the priority they give to the proposal. However the difficulty of
meeting this contribution under present budgets would be mitigated by including the salary costs of
research staff assigned to the proposal, as well as a value for existing building and machinery assets to be
used. Nevertheless, in some exceptional cases, and with prior approval of the Bank, this requirement could
be waived. Funds from the IDA credit will support the purchase of research equipment, machinery and
materials, training of researchers, incremental operating costs and 20% administrative/overhead charges.
4. Indications of borrower and recipient commitment and ownership:
In reaffirming its commitment to the Project, the Government established an Inter-Ministerial Commission
in May 1998 to oversee the reform of the agricultural research, extension and training complex. A working
group was established to work on initial data collection and analysis with the assistance of ISNAR. The
information collected by the working group formed the basis of a workshop held on September 15 and 16,
1998, which was chaired by the Minister of Agriculture and attended by representatives of research
organizations, development agencies, civil society, farmers associations and NGOs. A good dialogue was
established and a number of institutional issues were clarified, both during the workshop and the Bank's
Identification and Preparation Missions.
In December 1998, the Minister of Agriculture nominated the Chairman and members of the Competitive
Grant Board and a first meeting was held on December 10. The Competitive Grant Scheme was
established by Ministerial Order issued February 26, 1999, and a meeting of the Inter-Ministerial
Commission (IMC) on March 3, 1999, approved the Chairman of the CGB and the Head of the Secretariat.
An Operating Manual detailing the procedures for the CGS has been prepared and approved by the Bank,
CGS Board and the Inter-Ministerial Commission. Agreement has been reached between MAF and the
Ministry of the Environment to collaborate on the environmental component funded by the GEF.
Arrangements for handling the reform of the Agricultural Research, Extension and Training system were
agreed between the President of the Georgian Academy for Agricultural Sciences (GAAS), the Rector of
the Agrarian University (GAU) and MAF, in March 1999. A Working Group has prepared a vision
document, "Conceptual Framework for a National Strategy for Reform of the Agricultural Research,
Extension and Training System," which was approved by the Inter-Ministerial Commission June 17, 1999.
The appraisal mission agreed with MAF on an action plan covering the period from October 1999 to
expected project effectiveness July 1, 2000. This plan is proceeding satisfactorily.
- 20 -
5. Value added of Bank and Global support in this project:
Assistance from other donors in research and advisory services has rightly focused to date on tackling
credit and input issues as well as establishing some fledgling farmer information services. Now there is a
need for critical technological and information backstopping to support the Government's efforts to
improve the performance of the agricultural sector. Bank experience in other countries would help map the
transitional steps and create and maintain ownership for such transition on the basis of demand-driven
investments. The Bank's value added derives from its experience worldwide in reforming agricultural
research, extension and training services.
The principal value added of GEF support for the Project comes from providing additional funds to
promote address the priority trans-boundary water problems of the Black Sea and promote renewable
energy. The GEF has already added value by supporting the Poland Rural Environmental Project, which
underpins the Project.
Of the practices supported by this Project, GEF funds will specifically help reduce the barriers to farmers'
adoption of environmentally sensitive practices and will allow the Government to consider expanding early
pilot operations into a larger program. Without GEF support to coordinate these activities, Georgia might
undertake a series of small activities in different parts of the country to address these issues. It would lack
a mechanism to coordinate the financing, approaches and geographical targeting of activities. Without
support from the GEF, the project would lack sufficient resources to accelerate the program, to
demonstrate measures on a wide range of farm types and to undertake a public outreach program. The
GEF is thus leveraging funds from other donors and stimulating a program to coordinate activities, increase
coverage and generate a larger impact.
Because of their international scope, the World Bank and GEF can provide funds and finance the
incremental costs for replicating such activities both within Georgia and in other countries in the region.
This is particularly important, as agricultural pollution is a major local and trans-boundary problem in
most ECA countries, particularly those in the Baltic, Danube and Black Sea drainage basins. Some level of
financial support from the public sector and the international community will continue to be necessary,
particularly in lower income countries, because these activities address externalities, affect trans-boundary
pollution and involve an element of public good.
E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1. Economic (see Annex 4):
Cost benefit
NPV=US$ million; ERR = % (see Annex 4)
Cost effectiveness
Incremental Cost
Other (specify)
- 21 -
Predicting and quantifying economic costs and benefits ex-ante of research and extension activities is
problematic because the outcomes of the technology innovation or dissemination are not defined at the time
of project design, but instead evolve with the project through a process of priority setting and consumer
demand for the technologies. As a result, economic returns from such an exercise are therefore difficult to
predict. However, ex-post analysis of agricultural research and extension over the past two decades shows
that in most countries there are high returns to these investments, often in the range of 35-75% or higher.
For public sector agricultural research, average returns were 48 percent for developed countries and 80
percent for developing countries. Similarly, for agricultural extension, the average returns were 63 percent
for developed countries and 50 percent for developing countries. In Georgia, with the new private farmers
starting at such a low production and productivity base, the returns to the transfer of technology and
information are likely to be high.
The range of benefits likely to be realized by testing alternative technologies and methods, and promoting
their replication and adaptation would be diverse. New farming methods could lower production costs,
increase output efficiency; produce more profitable crops and livestock; improve product quality; reduce
capital expenditures on machinery, irrigation equipment and buildings; reduce crop and livestock losses;
make better use of available land, labor and other resources; and improve environmental sustainability of
production systems.
In many countries, ex-ante quantification of benefits of research and extension investments (rates of return)
is usually not undertaken, as it is difficult, if not impossible, to anticipate precisely the outcome of these
activities. Even large surveys give spurious results. This is mainly due to constraints in terms of
non-availability of reliable technical and economic data on different variables, including farmer adoption
rates, and difficulties in linking cause (costs) and effect (outcomes). Whatever parameters one includes
would be questionable. Social and environmental benefits of research and extension projects are
particularly difficult to express in monetary terms.
The Competitive Grant Scheme (CGS) will be implemented using a set of rigorous criteria and indicators
already established. These criteria and indicators will assess proposed investment priorities (in sector
development), client relevance, and cost-effectiveness in terms of providing immediately needed technology,
information and training which are critical to increase agricultural productivity, sustainability and incomes.
Since the conventional FRR/ERR analysis will not be done for purposes of investment decision-making in
the CGS, the project's M & E system has been designed to ensure that the proposals funded by the CGS in
applied research and extension are implemented in a cost-effective and efficient manner.
The goal of the Reform of the Agricultural Research System Component of the Project is to restructure the
Horticulture Institute. This is expected to increase the efficiency of resource use at the institute by
reorganizing the assets of the institute, modernizing equipment and reducing staff, to ensure that the level of
funding per staff is adequate to conduct research, and the research conducted by the institute is
well-focused on a few key priorities. While the direct benefits of restructuring this institute are relatively
small, the completion of this restructuring exercise is expected to have a demonstration effect that would in
time allow the restructuring of the whole National Academy of Agricultural Sciences. This restructuring
would have a significant positive benefit in terms of the efficiency with which Government expenditures on
research are used. At the present time, the Academy of Agricultural Sciences has about 2,700 staff, of
which 870 are considered to be scientists, operating in 16 institutes. In 1998, it had a total annual budget
of GEL 810,000. This is less than GEL 1,000 (or $750 at the time) per researcher per year, which is not
sufficient for conducting any meaningful research. In the longer run, the restructuring of the Academy is
expected to resolve this problem, and make more effective use of Government research funds.
- 22 -
The incremental cost analysis for the GEF-funded component is described in Annex 13. The analysis
assumes a baseline under which the prevailing agricultural practices are only partially corrected, resulting
in continued discharge of nutrients into the Black Sea and emissions of methane. Continued reliance on
fossil fuels and unsustainably harvested fuelwood, the source of energy in rural areas, further increases
greenhouse gas emissions. The Project would introduce and demonstrate more sustainable and
environmentally benign technologies and practices at an estimated incremental cost of US$2.5 million.
2. Financial (see Annex 5):
NPV=US$ million; FRR = % (see Annex 4)
Fiscal Impact:
The introduction of a CGS combined with the restructuring of one public research institute is expected to
initiate a process of increasing the cost effectiveness of publicly funded research in Georgia, while at the
same time increasing the overall level of government expenditures on agricultural research, in order to
make Georgia more competitive in this area. The project is designed to gradually introduce these changes
at funding levels that would be sustainable at the end of the project, given Georgia's very tight fiscal
situation. The CGS will shift current emphasis of Government funding for the AKS from the Georgian
Academy of Agricultural Sciences (GAAS) to strengthening national research, extension and training
systems, broadly defined to include agriculture research institutes, universities, private sector, farmer
organizations and NGOs, thus increasing competition and the efficiency of research, extension and training.
Supporting both public and private institutions may also gradually reduce the total dependence of research
and extension institutions on public funding by bringing diversification of funding support. However, it
should be pointed out that the CGS builds on, but does not replace, the need for government funding for the
core functions of key public research institutes. If the project is successful in enhancing the confidence of
farmers and other stakeholders in research and extension institutions as providers of new technologies,
information and training, it should convince policymakers to increase government budgets for research to
levels that are more in line with international standards, thus increasing Georgia's competitive position in
the longer run. The average expenditure on agricultural research in developed countries is about 2.4 percent
of agricultural GDP, whereas developing countries invest about 0.5 percent. Georgia currently invests
about 0.3 percent of agricultural GDP in agricultural research, and is therefore lower than the developing
countries average. In summary, a system of providing core budgets only to key public research institutions
combined with the supplemental funding from the CGS, is expected to lead to a research, extension and
training system that is more efficient, and therefore makes better use of Government expenditures in this
area. If the system is successful in delivering good results, it is expected that both government and private
expenditures in this area will increase.
3. Technical:
Based on available information, the majority of Georgian farmers would benefit from advice and
technology on: (a) farm planning and management; (b) crop agronomy and integrated cropping systems; (c)
new crops to diversify systems; (d) livestock management; (e) good quality seeds and planting material; and
(f) sustainable on-farm environmental management. During project preparation, farm surveys were
reviewed and additional information sought to better define priorities. These priorities will be used to
define the focus areas for which CGS proposals will be solicited and evaluated. In addition, an inventory
will be carried out of "on the shelf technology" to identify relevant farm and environmental technologies
that are fully developed and have been adopted in certain areas, but not yet promoted across the country.
The technologies for reducing water pollution are known; however, these have to be validated and
demonstrated under Georgian conditions. For example, bio-gas digester technology will require fine-tuning
- 23 -
and adaptation to Georgian conditions.
4. Institutional:
4.1 Executing agencies:
Ministry of Agriculture and Food has significantly changed its role in the Agricultural sector since
independence in 1991. It has disposed of most of its commercial activities and is beginning to focus more
on policy making and the provision of public services. This process is still ongoing and is expected to last
at least another five years. In the implementation of this program the Ministry has been open to the
introduction of new ideas and approaches that will enhance its role and position in a market economy. The
ministry has strong management, and has demonstrated in the ADP project that it has the capacity to
successfully implement a complex project. The project coordination unit for the ADP project is an
incremental part of the Ministry of Agriculture and Food and was established to supplement the capacity of
the Ministry. It has been instrumental in providing implementation capacity to the Ministry on new
initiatives. The Project Management for the ARET project will also be housed in the Ministry and be an
integral part of the Ministry's operations. It will also make use of the existing accounting and procurement
management capacity built up in the ADP project.
The Georgian Academy of Agricultural Sciences is in a financial crisis and has been unable to adjust to
the new economic environment. However, the leadership in the GAAS has demonstrated that they are open
to new concepts and are willing to pilot the restructuring of one research institute. The management of the
Horticulture Institute has also agreed to participate in program. They will be supported in the
implementation of their restructuring by local consultants and through a twinning relationship with an
international research institute.
4.2 Project management:
In order to supplement the capacity of the Ministry of Agriculture and Food, day-to-day project
management will be carried out by a project management unit hired under the project. The management
structure is presented in Figure 1. The CGS under component 1 will be managed by the Competitive Grant
Board with representation from government, GAAS, Agrarian University, farmers and agribusiness. The
15-member Board that has been established comprises an independent chairman together with fourteen
members, including representatives from the Georgian Parliament, Ministry of Agriculture and Food,
Ministry of Finance, Ministry of Economy (Department of Science and Technology), Ministry of
Environment, Georgian Academy of Agricultural Sciences, the Agrarian University, Farmers'
Organizations, Private Farmers and NGOs. The Chairman and a third of the members are independent of
GAAS and government Ministries. A list of the membership of the Inter-Ministerial Commission and CGS
Board are included.
The work of Reform of the Research System (Component 2) will be managed by the four-member
MAF/GAAS/GAU/Project Manager Advisory Committee with the assistance of the full-time Reform
Component Coordinator assigned to the PMU. Findings and recommendations together with
implementation and investment plans for the selected, priority research direction will be submitted to the
Inter-Ministerial Commission.
Component 3 will be managed by the Environmental Engineer in the PMU.
4.3 Procurement issues:
- 24 -
4.4 Financial management issues:
5. Environmental:
Environmental Category: C
5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including
consultation and
disclosure) and the significant issues and their treatment emerging from this analysis.
It is anticipated that the project would contribute to a more sustainable and environmentally responsible use
of agricultural resources.
Efficient use of farm inputs has been identified as one of the priority areas of research and extension needs
of farmers and agro-processors. Some of the CGS funds would be directed to contracts to address this
concern of farmers and agro-processors and would, over time, contribute to a reduction in nutrient runoff
from the agricultural sector. In the livestock sector, the project is expected to support interesting and
innovative adaptive research, demonstrations and proposals relating to the management and use of organic
wastes.
The Project will support environmentally-friendly and socially sensitive agricultural practices.
Demand-driven, productivity-oriented agricultural practices are expected to promote the efficient and
effective use of agricultural inputs. Proposals that imply any adverse environmental effects will not be
funded. In fact, because of the nature of the work likely to be funded, there should be long-term
environmental, and health and safety benefits.
5.2 What are the main features of the EMP and are they adequate?
5.3 For Category A and B projects, timeline and status of EA:
Date of receipt of final draft:
5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA
report on the environmental impacts and proposed environment management plan? Describe mechanisms
of consultation that were used and which groups were consulted?
5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the
environment? Do the indicators reflect the objectives and results of the EMP?
6. Social:
6.1 Summarize key social issues relevant to the project objectives, and specify the project's social
development outcomes.
Three recent farm-level studies (including a rural Poverty Study by IFAD) describe the existing farm
structure in specific regions. The results of these studies have been used for the priority setting process to
define topics for support by the CGS that would provide smallholders on-farm demonstrations of
appropriate agricultural and environmental management technologies. Sociological studies conducted as
part of the preparation of the Irrigation and Drainage Rehabilitation Component (IDRC) have identified the
- 25 -
different target groups within the areas to be rehabilitated. "Needs assessment" surveys will be carried out
during the project prior to funding of advisory services/extension sub-projects for farmers groups in
specific irrigated or rain-fed areas.
6.2 Participatory Approach: How are key stakeholders participating in the project?
The primary beneficiaries of this project are private farmers, i.e. individual producers that produce a
surplus for sale, members of family associations and formal associations, agro-processors, and contractors
for CGS projects. During project preparation, private farmers, agro-processors, and members of the
development community were consulted to ensure that adequate mechanisms are built into the project
design. A number of small consultative workshops and a national level workshop were held as part of
project design. This will be extended to more formal "needs assessment" surveys in selected areas as the
project proceeds. Two of the members of the Competitive Grant Board are private farmers and two other
members represent farmers' organizations.
6.3 How does the project involve consultations or collaboration with NGOs or other civil society
organizations?
For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000,
this section may be left blank.
6.4 What institutional arrangements have been provided to ensure the project achieves its social
development outcomes?
For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000,
this section may be left blank.
6.5 How will the project monitor performance in terms of social development outcomes?
For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000,
this section may be left blank.
7. Safeguard Policies
7.1 Do any of the following safeguard policies apply to the project?
Policy
Applicability
Environmental Assessment (OP 4.01, BP 4.01, GP 4.01)
Yes
No
Natural habitats (OP 4.04, BP 4.04, GP 4.04)
Yes
No
Forestry (OP 4.36, GP 4.36)
Yes
No
Pest Management (OP 4.09)
Yes
No
Cultural Property (OPN 11.03)
Yes
No
Indigenous Peoples (OD 4.20)
Yes
No
Involuntary Resettlement (OD 4.30)
Yes
No
Safety of Dams (OP 4.37, BP 4.37)
Yes
No
Projects in International Waters (OP 7.50, BP 7.50, GP 7.50)
Yes
No
Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)
Yes
No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
- 26 -
F. Sustainability and Risks
1. Sustainability:
The objective is to build a cost-effective and efficient institutional infrastructure for research, extension and
training services and promote environmentally sustainable agricultural practices, with the participation of
all stakeholders. The result should be technology adaptation and transfer programs responsive to the needs
of the end-users and in which they will share the costs. The CGS has deliberately been kept to a fairly
modest level of funding which could be further funded by the Government budget, other bilateral donors, or
a combination of the two, by the end of the project implementation period. The program is therefore
designed to be fiscally sustainable, within reasonable expectations for increases in government budget over
the next few years. The parallel reform and restructuring of the agricultural research complex will result in
a leaner, more efficient public sector structure. The project, through education, familiarization and
demonstration of environment-friendly practices, strives to increase the acceptability of these practices by a
large number of farmers, leading to commercialization of manure management and bio-gas digester
services.
2. Critical Risks (reflecting assumptions in the fourth column of Annex 1):
Risk
Risk Rating
Risk Minimization Measure
From Outputs to Objective
Research does not develop appropriate
M
Encourage development of strategic alliances
new technologies to raise productivity and
with national and international partners and
conserve the environment.
finance specific, well-defined projects with
agreed performance indicators.
Domestic and Export markets unable to
M
Promote increased exports through line of credit
absorb increased production.
under ADP.
Farmers don't have access to credit,
S
Continue to work on land reform and
machinery and inputs, as well as land.
development of rural credit under ADP.
Farmers not sufficiently organized to
M
Provide training and encourage formation of
develop partnerships with other farmers
farmer groups and associations under this
and the development community.
project.
Participating farmers implement
M
Careful validation of proposed practices, staff
unsustainable agricultural practices and
and farmer training methods; on-location advice;
continue to do so after project completion.
and advocacy of long-term benefits of the
project activities. Monitoring of adoption rates.
Low/inadequate commitment of GAAS
N
Participatory approach in developing plans and
and support from local and national
staff training.
governments
From Components to Outputs
- 27 -
Ministry of Finance unable to maintain
S
Agreements to be reached with the Ministry of
core funding for the agricultural research
Finance at credit negotiations. Disbursements
complex and research salaries remain
will be dependent upon continued government
very low.
contributions.
Process dominated by current research
N
Ensure participation of all stakeholders in
structure.
priority setting process.
Number of grant applications insufficient
N
Provide up-front training for potential
to apply stringent evaluation criteria.
applicants.
CGS is not sustainable after project
N
Ensure that reform of agricultural research
completion.
complex proceeds in parallel and seek other
sources of funding. The program has been kept
modest so that it can continue to be funded by
Government after the project closes.
Current technology in bio-digesters does
M
Use experiences with biodigester technology
not work in Georgia.
from similar climatic conditions in other
countries. Monitor developments closely and
stop program early if implementation is not
working.
Farmers are not willing to accept
N
Similar work has been done in Poland and
improved, environmentally-friendly
project will learn from experiences there.
agricultural practices.
Adoption rates will be monitored and analyzed
to determine why farmers are or are not
adopting new technologies.
New private sources of funding don't
M
Ensure their participation in project design.
come forward.
Overall Risk Rating
M
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
3. Possible Controversial Aspects:
None
G. Main Credit Conditions
1. Effectiveness Condition
l
PMU fully staffed, meaning hiring of: Project Manager; technical specialists for the Competitive Grant
Scheme, Reform, and Environment components; Office Manager; Office Assistants; and other relevant
staff as needed.
Condition of Disbursement
- 28 -
l
Prior to disbursement of any of the allocated funds for implementation of Component 2: "Reform of the
Agricultural Research System", the government, with the assistance of international experts, will
prepare a detailed plan for the reform of the HVWI, and present the plan for Bank approval.
Disbursement of any of the allocated funds under this category is contingent upon Bank approval of
this reform plan.
2. Other [classify according to covenant types used in the Legal Agreements.]
l
The CGB will implement the CGS in accordance with the requirements of the Operational Manual.
l
Government shall make annual budgetary allocations and contribute to the Agricultural Research,
Extension and Training System sufficient to maintain a level of core funding to be agreed with the
Bank.
H. Readiness for Implementation
1. a) The engineering design documents for the first year's activities are complete and ready for the start
of project implementation.
1. b) Not applicable.
2. The procurement documents for the first year's activities are complete and ready for the start of
project implementation.
3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory
quality.
4. The following items are lacking and are discussed under loan conditions (Section G):
PPF funds have been used to launch three pilot projects on Adaptive Research and Technology
Dissemination (Component 1). Also, under the GEF-assisted activities, a pilot study for validating bio-gas
digester technologies (prior to the investment phase under Component 3) has been started. The PHRD
grant will be used to continue preparing the detailed plan for HVWI under Component 2: "Reform of the
Agricultural Research System".
I. Compliance with Bank Policies
1. This project complies with all applicable Bank policies.
2. The following exceptions to Bank policies are recommended for approval. The project complies with
all other applicable Bank policies.
Iain G. Shuker
Kevin M. Cleaver
Judy M. O'Connor
Team Leader
Sector Manager/Director
Country Manager/Director
____________________
Jitendra Srivastava, GEF TL
- 29 -
Annex 1: Project Design Summary
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
\
Key Performance
Hierarchy of Objectives
Indicators
Monitoring & Evaluation
Critical Assumptions
Sector-related CAS Goal:
Sector Indicators:
Sector/ country reports:
(from Goal to Bank Mission)
Economic growth, poverty
Rural household incomes.
Agricultural statistics
Government policies do not
alleviation and environmental Capacity to address
change adversely.
protection.
environmental degradation of National reports
Policy and economic
the Black Sea.
environment encourages use
of improved agricultural
practices, which contribute to
the national economy and
welfare of population.
Investments in environmental
planning and management
yield concrete results in
reducing environmental
damages.
GEF Operational Program
The project's objective of
reducing non-point source
pollution to the Black Sea is
consistent with the GEF
Operational Program No. 8 -
Waterbody Based Operational
Program
The objective of promoting the
use of biogas is consistent
with GEF Operational
Program No. 6 - Promoting
the Adoption of Renewable
Energy by Removing Barriers
and Reducing Implementation
Costs
- 30 -
Key Performance
Hierarchy of Objectives
Indicators
Monitoring & Evaluation
Critical Assumptions
Project Development
Outcome / Impact
Project reports:
(from Objective to Goal)
Objective:
Indicators:
The overall development
End of Project Indicators:
Agricultural statistics
Technologies respond to
objective of the Project is to
farmers' needs.
create an efficient and
1. 20% of farmers in project
Social assessment
cost-effective agricultural
area adopting improved farm
Markets and prices provide
knowledge system to
production, marketing,
Economic and Financial
sufficient incentives to
demonstrate, disseminate and management, and post-harvest Assessment
producers and processors.
promote the adoption of
technologies.
appropriate technologies that
PIU progress reports
Continuing government
increase sustainable
2. 10% of farms in project
commitment
agricultural production and
area adopting production and Annual regional and national
reduce pollution of natural
resource conservation
reports
Continuing political stability.
resources.
technologies
(environmentally-friendly
Interviews with farmer groups
agriculture practices).
and local government.
3. 10% of farmers in project
area adopting manure
management plans, including
the use of bio-gas units.
- 31 -
Key Performance
Hierarchy of Objectives
Indicators
Monitoring & Evaluation
Critical Assumptions
Output from each
Output Indicators:
Project reports:
(from Outputs to Objective)
component:
End of Project:
1. An effective system for
1. Technology Development, Monitoring system to be
Research can develop
agricultural technology
Acquisition and Adaptation:
established by CGS
appropriate new technologies
development, acquisition and
l Competitive Grant
Secretariat.
to increase productivity and
adaptation established.
Scheme established with
conserve the environment.
peer review and
Project Monitoring and
monitoring systems in
Evaluation unit.
Export and domestic markets
place, sufficient to attain
develop to absorb increased
self-sustainability
production.
post-project.
l Quality of proposals
International research
received is consistently
programs continue to supply
high.
basic strategic research to
l For both Technology
support new technology
Development and
development.
Adaptive Research, the
total number of
approved grants by
project end should be at
least 40.
l At least 40 institutions
participating with active
grants.
2. Responsive production,
2. Development of
Agricultural statistics and
Farmers have access to credit,
post-harvest and natural
Appropriate Technology:
Special surveys
machinery and inputs, as well
resource management
l Release of at least 15
as land.
technologies developed and
new technologies in
transferred.
priority directions
CGS monitoring system
Farmers are sufficiently
responding to producer
organized to develop
and processors' needs.
Project Monitoring and
partnerships with other
l Release of at least 40
Evaluation unit.
farmers and the development
improved,
community.
environmentally-friendl
y, agricultural practices
responding to producers'
needs.
l 2400 farmers in areas
served by
advisory/extension
providers receiving
services.
- 32 -
3. Effective linkages between 3. Effective
CGS monitoring system
GAAS remains committed to
the agricultural research
Research/Extension Linkages:
reform of the system.
complex and other public and
l Joint proposals received Project Monitoring and
private sector development
from GAAS and
Evaluation unit
Participating farmers
agencies created.
development agencies
implement sustainable
(NGOs, Farmers
agricultural practices and
Associations etc.)
continue to do so after
completion of Bank/GEF
investments-technical and
financial.
4. Reform of the overall
4. Reform of agricultural
Project Monitoring and
Support from local and
agricultural research complex research complex:
Evaluation Unit.
national government
accelerated, with particular
l Conceptual Framework
continues.
emphasis on completion of
adopted.
reform and rehabilitation of
l Implementation and
HVWI.
investment plans agreed
for one priority research
direction.
l Successful completion of
the reform and
rehabilitation plan for
HVWI.
5. Improved capacity for
5. Training and capacity
Project Monitoring and
research planning and priority building:
Evaluation Unit.
setting created .
l 180 staff trained in
needs assessment and
priority setting for
advisory/extension
proposals.
6. Adoption of improved,
6. Environmental Pollution
Resource tracking system.
sustainable agricultural
l 700 farms in project
practices to reduce
area with improved
Water quality monitoring
environmental pollution.
manure handling and
storage.
l Installation of 196
biogas units and
associated slurry tanks.
- 33 -
Key Performance
Hierarchy of Objectives
Indicators
Monitoring & Evaluation
Critical Assumptions
Project Components /
Inputs: (budget for each
Project reports:
(from Components to
Sub-components:
component)
Outputs)
1. Competitive Grant
1. CGS US $5.68 million.
Project Monitoring and
Ministry of Finance initially
Scheme (includes IDA Credit
Evaluation Unit.
maintains and then increases
and GEF Grant). Includes
core funding, and does not
cost of CGS Secretariat.
reduce core funding when
CGS introduced.
The CGS is made sustainable.
2. Reform of Agricultural
2. Reform of Agricultural
Project Monitoring and
The reform of the agricultural
Research System.
Research System US $3.52 Evaluation Unit.
research system proceeds and
million.
achieves cost savings which
are reinvested in the system.
3. Pilot Environmental
Environmental pollution
Project Monitoring and
NGOs continue to support the
Pollution Control Program
Control US $1.17 million.
Evaluation Unit.
system and new private
(Biodigesters) (GEF).
sources of funding come
forward.
4. Project Management Unit.
4. PMU US $0.71 million.
Project Monitoring and
Farmers and other end-users
Evaluation Unit.
are able to contribute to cost
sharing.
Project incentives are
sufficient to motivate farmers
to participate in the project.
- 34 -
Annex 2: Project Description
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
By Component:
Project Component 1 - US$5.68 million
Competitive Grant Scheme
This component comprises a Competitive Grant Scheme (CGS) to fund: (a) a program of on-farm
technology adaptation and dissemination with provision of agricultural advisory services to tackle
immediate priorities for raising on-farm productivity, profitability and sustainability on private farms, both
smallholder and commercial (IDA funding); and (ii) support for environmentally-friendly agricultural
practices to reduce negative impacts on soil and water quality (GEF funding).
The Competitive Grant Board (CGB) for Agriculture was established by Ministerial Order No 2-55 of
February 26, 1999. The CGS will create a mechanism in Georgia's agricultural research, extension and
training system to provide, on a competitive basis, direct assistance for adaptive research, extension and
environmental activities that address the practical problems of increasing on-farm productivity and the
processing/marketing system. CGS will not replace the core funding of the agricultural knowledge system.
While the CGS will provide funds for priority activities in technology adaptation and dissemination and
environment-friendly agricultural practices, it should not be seen as a solution to the overall funding needs
of the agricultural knowledge system complex.
The purpose of the CGS would be to achieve full stakeholder participation in the adaptation and transfer of
technology responsive to the needs of the emerging private farming sector, both smallholders and
commercial farmers. It would foster a close association between the research scientist and the needs of the
private farmers in setting priorities for adaptive research and in the formulation and evaluation of adaptive
research project proposals. The CGS would also build more effective linkages between the agricultural
research, extension and training complex and the rest of the development community including universities,
NGOs working with small-holders, Farmers Associations and private industry, as well as the various
Georgian Farmers Unions and donor-assisted initiatives for establishing farm advisory services.
The CGS would be managed by a Competitive Grants Board (CGB), on which are represented all key
stakeholders, served by a Secretariat to handle day-to-day work. The charter of the Board including its
composition Member affiliation is as follows: Private farming sector - 4; NGOs 1; Georgian Academy of
Agricultural Sciences 1; Agrarian University 1; MOAF 1; Ministry of Finance 1; Ministry of
Economy 1; Ministry of Environment 1; PCU 1; Parliament 1; Head of Secretariat 1. and the
Chairman (who is a well-known citizen independent of MOAF and the GAAS) for the first term were
approved by the Inter-Ministerial Commission on March 3, 1999. The head of the Secretariat has also
been appointed.
- 35 -
Specifically the CGS would fund two categories of activities:
1.
Adaptive Research and Technology Dissemination. The CGS will fund proposals on priority
topics of technology adaptation, validation (crop and livestock production, post-harvest operations, inputs,
marketing and natural resource management) and dissemination (including pilot extension activities, use of
media etc.). The CGS would also support studies to identify policy and regulatory reforms needed to
eliminate bottlenecks affecting the sector. Priority areas of technology validation, adaptation and
dissemination for which the CGB would request proposals from the research and development community,
would reflect farmers immediate needs and would meet the national research priorities as set out in the
"Concept of Georgian Agrarian Policy" (issued as Presidential Decree, April 7, 1997). However, priorities
would be periodically examined and up-dated as the project proceeds, and commensurate with changes in
state policy with regard to the agro-industrial sector.
The broad areas of research and development have been provisionally identified as falling under three main
categories: (i) improved productivity in import substitution products; (ii) export product development and
(iii) production, processing and marketing services. A list of specific topics responding to immediate
on-farm needs has been identified for the first announcement of CGS grants within this broad classification
and approved by the CGB. Proposals would be evaluated against clear criteria on a competitive basis.
Proposals would be requested for work that could be completed in four years and progress would be closely
monitored against specific milestones. Payments would be made on the basis of progress against these
markers.
Proposals for funding under the CGS would be evaluated by the Secretariat with the assistance of local and
international peer reviewers, against pre-determined criteria (e.g. relevance to farming community,
contribution to sector strategy, technical quality and scientific merit, qualifications and experience of
researchers, plans for transfer of technology, and environmental impact). Funds for approved projects
could cover laboratory and field equipment, materials, vehicles, office equipment, computers, staff
allowances, travel costs, short term training, field labor, fuel and supplies. Large items of equipment
would not be funded. Participating institutions would provide 15-20% of costs in cash or kind.
In addition, the CGS will fund advisory services/extension activities to tackle immediate priorities for
improving on-farm productivity, profitability and sustainability on private farms, both smallholder and
commercial, in irrigated and rainfed areas. The objective of the CGS extension component would be to
help address the priority needs of rural agricultural producers and, at the same time, nurture embryonic
advisory services. Support for advisory services would be provided in areas likely to be receptive (to be
measured against agreed criteria). Some criteria to be used in determining eligibility for assistance are as
follows:
l
Farmers are organized in an association, e.g. Water User Association, Credit Union, Producer
Association, Service Union, NGO etc;
l
Farmers have access to a minimum level of inputs needed to benefit from extension services;
l
Other investments planned in an area (e.g. investments in rehabilitation of water management schemes
by the Irrigation and Drainage Rehabilitation Project, or support for establishing a Credit Union etc.);
l
The association is able to provide up to 15-20% of the cost of services in cash or kind; and
l
The experience is likely to be replicable in other parts of Georgia.
CGS grants would fund contracts between farmers associations and service providers Eligible agencies to
supply services could include the ABCs established with TACIS support, Rayon Department of
- 36 -
Agriculture, Georgian Farmers Union, Farmers Service Union, GAAS Agricultural Research Institutes,
Agricultural College, NGOs etc. who have, or have the potential to form strong links with local farming
communities, and who are able to demonstrate their abilities to address priority problems as identified
through "needs assessments". The contracts (generally for a two-year period) would cover the provision of
agricultural advice, carrying out on-farm trials and demonstrations, assistance with accessing inputs and
markets etc. The contracts would be drawn up following on-farm "needs assessments" conducted by the
service provider and farmer association with technical assistance (in the form of a facilitation team)
provided by the project.
The CGS Secretariat would contract an agency(s) to establish three facilitation teams (in west, center and
east) to work with farmers associations and potential service providers on the "needs assessments" and
drawing up contract proposals for evaluation by the CGS Secretariat and peer reviewers. The project
would provide the technical assistance, training and operating costs required for setting up the facilitation
teams and conducting the "needs assessments".
Technical Assistance from United Kingdom Know How Fund. The United Kingdom's Know How
Fund (KHF) participated in the appraisal mission and is considering funding the technical assistance,
training and operating costs (to a total of about US$400,000) of the "needs assessments."
2.
Support for Agricultural Practices to Reduce Environmental Pollution. The CGS will act as a
channel for the testing and introduction of environment-friendly agricultural practices to reduce negative
impacts on water quality. This activity, together with those described in Project Component 3 below,
comprise the GEF-funded program to promote agricultural practices that will improve the surface and
groundwater quality of Georgia's water bodies as well reduce nutrient loads entering into the Black Sea
from point and non-point sources of pollution.
Under the CGS, the project will invite competitive proposals from eligible research institutes and
universities for conducting on-farm trials of best management practices to control soil erosion and reduce
the leaching of nutrients from fertilizers and animal manure to surface and ground water. Proposals
selected for funding would conduct on farm experiments at farmers' field to demonstrate the use of reduced
tillage, different cropping systems, manure and chemical management practices, and buffer strips for
environmental benefits.
Project Component 2 - US$3.52 million
Reform of the Agricultural Research System
The long-term productivity, profitability and sustainability of Georgian agriculture will be determined to a
large extent by the capacity of its agricultural knowledge system, public and private, to respond to
emerging problems and opportunities. While the agricultural knowledge system (AKS) in Georgia is
gradually adjusting to changes in the economic systems and policy reforms, serious problems remain. The
AKS, comprising agricultural research, extension and training, needs to be critically analyzed and
examined for its relevance, efficiency and cost-effectiveness. It should then be re-structured to make it
responsive to market conditions, the needs of new stakeholders and financially sustainable. These changes
will require a longer-term vision for a reforming AKS for Georgia and an action and implementation plan
to rationalize the programs, structure, organization, management and financing of a lean, integrated
functional and viable AKS.
During project preparation, a "Conception Framework for a National Strategy to Reform the Agricultural
Research, Extension and Training System" has been prepared under the guidance of the Reform
- 37 -
Component Management Group. This framework, which reflects comments by the Bank on an earlier
draft, was approved by the Inter-Ministerial Commission on June 17, 1999. The Reform Component
Management Group has selected one priority research direction - Horticulture and Viticulture for the
preparation of implementation and investment plans to provide a model for institutional reform. The
Reform Management Group would develop a reform strategy, action and investment plans with the help of
consultants working with the Reform Component Coordinator by October 31, 2000. Subsequently, upon
approval by the Government of Georgia and the Bank of the final plans, an amount of US$2.0 million (IDA
loan) will be made available for implementing these plans. The project will thus earmark an amount of
US$2.0 million for such implementation efforts which will include activities related to civil works and
rehabilitation; procurement of laboratory and field equipment and goods; human resource streamlining;
training and operational costs.
Project Component 3 - US$ 1.17 million
Pilot Environmental Pollution Control Program
Investments in manure storage and handling facilities and bio-gas digesters, as well as soil and water
quality monitoring programs in a selected watershed of western Georgia rivers that drain into the Black Sea
will include the following activities:
l
install and promote manure storage facilities/pits and handling system in villages for efficient manure
management;
l
test, demonstrate and promote the use of bio-gas digesters in the villages to provide bio-gas for cooking
and other domestic use to farming families as well as to reduce methane emissions into the atmosphere
and to; and
l
establish a water quality monitoring program for the rivers in the project area that drain into the Black
Sea.
- 38 -
The selected watershed in western Georgia comprises three districts: Khobi, Chkhorotsku and Tsalenjika
The selection of the watershed by the Ministry of Agriculture and Food and Ministry of Environment was
endorsed by the appraisal mission.. The investment phase will be preceded by a pilot study (in Terjola,
Imereti) to determine the best design for the bio-gas digesters. This pilot phase is expected to start in
February 2000 with financing from the PPF and be completed by end-2000.
Investments in Manure Storage Facilities and Promotion of Best Management Practices. This
sub-component will aim to install and promote manure storage and handling facilities for eligible farmers of
western Georgia in selected villages for efficient manure management. Since 1991, animal and cereal
production systems have both been decentralized and under the present crop production systems, the
manure produced from decentralized animal production systems can be easily absorbed by the cereal
production system. This sub-component will also provide environmental advice to farmers on adaptive
technologies for efficient and cost-effective use of manure and slurry on croplands to reduce the risks of
water contamination from manure use and handling. These activities will include investments in manure
storage tanks, slurry pits, specialized equipment for manure spreading and handling, and on extension and
outreach activities.
Following the pilot phase, in the first year the project will install about 30 manure storage tanks/pits, and
establish one demonstration study on the use of best management practices for erosion and pollution control
in selected villages of the project area (Table A). In the second year, the frequency of installation of
manure storage pits/tanks will be increased to more than double, with a proposed installation of a total of
about 700 storage pits/tanks by project end.
Table A: Estimated number of manure storage tanks/pits to be installed
Region
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Watershed in
Western
30
70
150
200
250
700
Georgia
Proposals for the installation of manure storage tanks/pits will be invited from all qualified contractors in
Georgia and contracts will be awarded on competitive basis for the best and most economical design as
discussed in the Pilot study component of the project.
The project will work with qualified NGO's, commodity groups, university extension services, and private
contractors to arrange the farmers training programs. Selection of these groups for providing training
programs will be on a competitive basis and proposals for these programs will be invited by the CGB for
funding. These training programs will be in the form of on-site training at the demonstration sites and
through video/radio/TV or other media for mass communication.
- 39 -
The Project will provide handling equipment in the form of manure spreader and manure transportation
equipment to the selected villages if needed. Villages selected for field demonstration study will be located
in the selected watershed that will also be used for ground and surface water quality monitoring programs.
Work on environment-friendly agricultural practices funded through the CGS will be included to provide
comprehensive demonstrations of practices to reduce pollution. That is on-farm trials and demonstrations
to promote the use of improved sustainable agricultural practices including reduced tillage, better chemical
and manure management systems, and buffer strips for reducing soil erosion and improving water quality.
Investments in Manure Bio-digesters. This component will make investments in testing, demonstrating
and promoting the use of bio-gas digesters in villages as alternate source of energy to provide bio-gas for
cooking and other domestic use and ultimately help in reducing the emission of green house gases to
atmosphere. The project will implement programs in installation, testing, and evaluation of bio-gas
digesters in selected villages and will provide training for farmers and contractors on the use and
maintenance of bio-digesters.
Bio-digesters will be tested and evaluated for their performance in these villages to select the most desirable
design and size for western Georgia before moving into installing relatively large number of bio-gas
digesters. Following work on design issues during the pre-project period, in year 1, the project will install
about 10 bio-gas digesters in the project area. In the second year, the number of bio-digesters installed will
be nearly doubled, with a target of about 196 by project end:
Table B: Estimated number of bio-gas digesters to be installed
Region
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Watershed in
Western
10
19
39
58
70
196
Georgia
- 40 -
Since bio-gas technology is to be introduced slowly, training must be provided to farmers in operating and
maintaining the functions of bio-digesters such as feeding rates of manure, frequency of feeding, quality of
manure to be used for feeding, storage and handling of slurry from digesters. There is a possibility that
potential contractors may have to be trained on the use of quality material for construction as well as
construction techniques. Most farmers are not familiar with this technology and under the proposed project,
efforts will be made to educate them on the advantages of bio-digester use.
This demonstration component will familiarize and widen the understanding of farm/rural families and the
public at large of the benefits accruing from the use of bio-gas units through study tours, farm visits,
seminars/workshops and other outreach methods, including radio, video, leaflets and the Internet. Part of
the GEF funds will be used to provide training to technicians who will assist farmers in installation,
operation and maintenance procedures for the bio-gas units. The aim is to develop and build Georgia's
capacity for large-scale use of bio-digesters in the future.
The above GEF-funded activities will help in reducing non-point source pollution of Georgia's water bodies
as well as the Black Sea. Quantitatively, these sustainable practices have the potential of reducing the
discharge of chemicals and manure into water bodies by 20 30% from the project area.
Investments in a Water Quality Monitoring Program. This component will make investments in
implementing a water quality monitoring program for the rivers in the project area that drain into the Black
Sea.
A clear-cut methodology for monitoring the soil and water system will be developed with external
assistance in the first year of the project. Separate contracts will be signed with laboratories for carrying
out monitoring of groundwater, drainage water and soil quality on plots where any of the improved
technologies will be applied. Water quality will also be tested regularly in the rivers Chanis Tskali and
Khobis Tskali that drain from the project area into the Black Sea. The dynamics of water quality in these
rivers will be used as an indicator of the rate of nutrient pollution in the project area.
Project Component 4 - US$0.71 million
- 41 -
Project Management Unit
The Project would provide for a Project Management Unit (PMU) to co-ordinate project implementation
and handle monitoring and evaluation of project activities (Figure 1). The PMU would be headed by a
Project Manager, who would report to the Minister of Agriculture and Food, and would comprise the
Environmental Engineer (heading the Environmental Pollution Control component), the Reform Component
Coordinator, an Administrative Officer and Secretary/Interpreter. All accounting, financial management,
procurement and disbursement matters would be handled by the World Bank Projects' Coordination Unit
(PCU) under the overall supervision of the Director, who reports to the Minister of Finance. The PCU
would be reimbursed for these services by the Project. The Project Manager would agree with the PCU on
the budget process and release of funds, and would report to the PCU on the use of the funds.
For the CGS component (component 1), the CGS Board would approve annual work plans and budgets for
each component and the PCU and CGS Secretariat would execute the decision of the CGS Board as
described in the Operational Manual. The Reform Component Management Group would oversee the
work on the Reform Component (component 2) while the Environmental Engineer in the PMU would
manage the Environmental Pollution activities (component 3). The Inter-Ministerial Commission
(established by Presidential Decree #357, of May 28, 1998, to oversee the reform of the Agricultural
Research, Education and Extension System) would provide overall guidance and support at the highest
level.
- 42 -
Annex 3: Estimated Project Costs
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Local
Foreign
Total
Project Cost By Component
US $million
US $million
US $million
Competitive Grant Scheme
0.00
0.00
0.00
IDA Grants for Applied Research and Extension
2.55
0.85
3.40
GEF Grants for Dissemination of Pollution Reducing Practices
1.09
0.25
1.34
Competitive Grant Scheme Secretariat
0.71
0.23
0.94
Pilot Environmental Pollution Control Program (Biodigesters)
0.76
0.41
1.17
Support for Reform of the Agricultural Research, Education, and
1.63
1.89
3.52
Extension System
Project Management
0.70
0.01
0.71
Total Baseline Cost
7.44
3.64
11.08
Physical Contingencies
0.28
0.23
0.51
Price Contingencies
0.67
0.15
0.82
Total Project Costs
8.39
4.02
12.41
Total Financing Required
8.39
4.02
12.41
Note: Physical and Price Contingencies are spread throughout all components. Therefore, the individual
component total shown here in Annex Table 3, will not match the Indicative financing for each component
in the Component Table in the Description section of the main text of the PAD. The Component Table in
the Description section of the PAD shows totals for each component which include that component's
portion of physical and price contingencies.
- 43 -
Annex 4
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Predicting and quantifying economic costs and benefits ex-ante of research and extension activities is
problematic because the outcomes of the technology innovation or dissemination are not defined at the time
of project design, but instead evolve with the project through a process of priority setting and consumer
demand for the technologies. As a result economic returns from such an exercise are therefore difficult to
predict. Please see the Summary Project Analysis section of the main text above for more information on
the expected economic benefits, and fiscal impact, from the project.
- 44 -
Annex 5: Financial Summary
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Years Ending
2000, 2001, 2002, 2003, 2004
IMPLEMENTATION PERIOD
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Total Financing Required
Project Costs
Investment Costs
2.4
3.2
2.8
1.2
1.3
Recurrent Costs
0.3
0.3
0.3
0.3
0.3
0.0
Total Project Costs
2.7
3.5
3.1
1.5
1.6
0.0
0.0
Total Financing
2.7
3.5
3.1
1.5
1.6
0.0
0.0
Financing
IBRD/IDA
1.8
2.5
2.0
0.6
0.6
0.0
0.0
Government
0.4
0.4
0.3
0.3
0.3
0.0
0.0
Central
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Provincial
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Co-financiers
0.0
0.0
0.0
0.0
0.0
0.0
0.0
User Fees/Beneficiaries
0.1
0.2
0.3
0.0
0.1
0.0
0.0
Others
0.4
0.4
0.5
0.6
0.6
0.0
0.0
Total Project Financing
2.7
3.5
3.1
1.5
1.6
0.0
0.0
OPERATIONAL PERIOD
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Total Financing Required
Project Costs
Investment Costs
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Recurrent Costs
0.0
0.0
0.0
0.0
0.0
0.7
0.7
Total Project Costs
0.0
0.0
0.0
0.0
0.0
0.7
0.7
Total Financing
0.0
0.0
0.0
0.0
0.0
0.7
0.7
Financing
IBRD/IDA
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Government
0.0
0.0
0.0
0.0
0.0
0.7
0.7
Central
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Provincial
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Co-financiers
0.0
0.0
0.0
0.0
0.0
0.0
0.0
User Fees/Beneficiaries
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Others
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Total Project Financing
0.0
0.0
0.0
0.0
0.0
0.7
0.7
Main assumptions:
1. The total Government contribution of US $1.7 million includes approximately US $540,000 in taxes.
2. For the Operational Period, Years 6 - ?: The CGS proves the cost-effectiveness of using grants to distribute
limited government budget, and therefore government continues to finance the CGS at approx. US $500,000
per year.
- 45 -
3. For the Operational Period, Years 6 - ?: The government maintains core funding of the selected research
institute of approximately US $160,000 per year.
NOTE 1: "Others" in the Financing Implementation Table refers to Global Environment Facility (GEF).
NOTE 2: Due to rounding down in the PDS, the beneficiary contribution in Project Year 4 is shown as 0.0.
Beneficiaries will contribute approximately US $40,000 during PY4.
NOTE 3: For consistency in summation between tables, the Beneficiary contribution in Project Year 5 is
shown as US $100,000. The actual amount of Beneficiary contribution in PY5 is approximately US $25,000.
- 46 -
Annex 6: Procurement and Disbursement Arrangements
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Procurement
The procurement arrangement for goods and services to be financed under the project,
their estimated costs and proposed methods of procurement are presented in Table A.
All procurement of goods to be financed from IDA credit proceeds would be procured
in accordance with the World Bank Guidelines for Procurement under IBRD loans and
IDA Credits, January 1995, revised January and August 1996, September 1997 and
January 1999, and using the Bank's Standard Bidding documents. Consulting
Services and training would be procured in accordance with the Guidelines for
Selection and Employment of Consultants by World Bank Borrowers, January 1997,
revised September 1997 and January 1999. A "General Procurement Notice"
containing information about bidding opportunities will be published in January 2000,
issue of Development Business before project negotiations in accordance with paras.
2.7 and 2.8 of IBRD Guidelines. Specific Procurement Notices will also be published,
as appropriate, in Georgian newspapers with national circulation.
The PCU/PMU, staffed by a full time procurement specialist familiar with the Bank
procurement requirements (already on the staff of the PCU), would be responsible for
procurement arrangements with assistance of the PMU. Information regarding
procurement administration would be collected and recorded and quarterly reports
would be sent to the Bank. These reports would indicate: (i) status of procurement;
(ii) an updated procurement plan; and (iii) compliance with aggregate limits on
specified methods of procurement.
Competitive Grant Contracts
The Competitive Grant Scheme (CGS) that funds the research and extension activities of the research
and extension community from the public and private sector form the main element of the project. The
CGS, administered by an Competitive Grant Board (CGB), will award research and extension grant
(estimated to range between $5,000-$100,000 based on an initial assessment of the likely size of
proposals that would need grant assistance) to successful applicants of the grant. The Secretariat of
the CGB will solicit research and extension proposals. The CGB will establish broadly the priority
areas of research and extension services, the procedures for applying for the grant, and the criteria for
review of proposals. All qualified private and public sector research, extension and farming
specialists/organizations will be eligible to submit proposals to the CGB which will be reviewed with
the assistance of peer reviewers. Funds will be approved for projects based on pre-determined criteria
outlined in the CGS Manual and will be directly disbursed to the successful applicants.
In exceptional situations, if for one specific scope of work and same quality of proposal there are more
than one competing agencies, the following principles will guide procurement:
(a) Government-owned universities, research institutes and extension agencies that do not demonstrate
independence and do not operate under commercial law will not compete with private sector. However,
they may be subconsultant to private sector firms.
- 47 -
(b) If one or more government-owned universities, research institutes and extension agencies are able
to provide the same services of equal quality, the following procedures may be applied:
(i)
Single-Source Selection when the case meets the criteria for this method of selection as set
out in paras. 3.8 to 3.11 of the Consultant Guidelines.
(ii)
Quality-Based Selection (QBS) when more than one of these institutions qualifies to
execute the assignment and the assignment meets the criteria set out in the Consultant Guidelines
(para. 3.2).
(iii)
Selection Based on Qualifications when more than one of these institutions are uniquely
qualified to execute the assignment and the assignment meets the criteria set out in the Consultant
Guidelines (para. 3.7).
(c) Government-owned universities, research institutes and extension agencies under the direct control
of the borrower shall be excluded from provision of services.
For research agreements, the grant will finance mainly the operating expenses, materials, field labor,
fuel and supplies, project related over head costs and some expenses for capital items such as
laboratory equipment, field equipment for small plots, vehicles, computers, technical bibliographic
material and office equipment. For the extension agreements, the grant will finance items such as field
demonstrations, leaflets, booklets, training, overhead costs, and some office equipment and vehicles.
Procurement under the CGS will be done by the successful grant applicants through competitive
procedures requiring as a minimum obtaining of three offers from three different suppliers/contractors
and their thresholds would be same as described under Goods and Services.
Applicants, who are awarded the research and extension grants will carry out their own procurement as
the items procured will vary significantly among the agreements depending on the nature of their work.
It may be difficult to package items in terms of economy and efficiency since the items needed are quite
small and needed at different times and at different places in the country. Also, it is expected that most
of the grant agreements will use project funds to finance their operating costs of research and extension
services.
The PMU will be responsible for supervising the technical and administrative aspects respectively of
the contracted research and extension services. In order to ensure transparency, the successful CGS
applicants will be required to keep all quotations, receipts and invoices of their procurement requests
for inspection by PCU supervisors. For the implementation of CGS, a detailed Manual has been
prepared by MAF which has been reviewed and agreed by the Bank.
The grants will be disbursed in tranches, and second and subsequent disbursements
will require approvals by the technical team and the administrative team in the PCU
based on physical implementation progress report and financial records.
Works
The works (estimated to cost US $871,000) to be financed would include construction
of biodigesters, manure storage and handling will be procured through national
competitive bidding NCB. These works to be implemented over the life of the project,
are small, labor intensive and scattered through the county. Due to the nature of
- 48 -
works these contracts cannot be packaged in larger packages.
Goods
The goods (estimated to cost US $48,000) to be financed under the project would
include furniture, vehicles, and office equipment required for the Project Coordination
Unit and the Secretariat that administers the Competitive Grant Scheme. Furniture
valued not more than $11,250 in aggregate will be procured through national
shopping. Equipment packages valued under $50,000, which would consist mainly of
office computers, fax machines, copiers and vehicles would be procured through
national shopping obtaining price quotations from at least three qualified national
suppliers.
Consultants for Technical Assistance and Training
The Consultants for TA and training will be selected competitively using the methods defined in the
Loan Agreement and procurement plan. PCU/PIU staff competitively hired under PPF/PHRD will be
financed under the project. The CG Secretariat core staff also hired competitively under PPF funds
will be continued to be financed under the project. Other short-term consultants will be hired on a
need-basis.
Reform of AKS
The reform of AKS will be defined only after the review of the institutes have been
completed (possibly in the second year of the project). The procurement of the works,
goods and services, if any will be procured through competitive procedures using the
methods and thresholds defined in the Loan Agreement.
Incremental Recurrent Costs
The recurrent costs associated with the project includes O&M costs of office and
vehicles of the PIU and Secretariat and their per diem cost for field travel.
Institutional Capacity building in Procurement
An assessment of MAF/PMU capacity to implement project procurement in
accordance with the criteria outlined in Annex 3 of LACI Implementation Handbook
was completed. This review addressed the legal aspects, procurement cycle
management, organization and functions of the procurement unit in the PMU, support
and control systems, record keeping, and staffing. The review assessed the risks
(institutional, political, procedural etc.) that may negatively affect the ability of the
agency to carry out procurement processes and has rated it a high risk country.
Therefore, the prior review thresholds recommended are those applicable to a high
risk country. In collaboration with PIU, who already has a procurement specialist on
its staff, an action plan to address deficiencies has been prepared to strengthen
PIU/PCU capacity to administer procurement in an effective and transparent way as
part of sound governance and good project management. This includes: (a) provide
additional training for procurement and PIU staff on the World Bank procurement
procedures; (b) conduct a comprehensive procurement training for all project related
- 49 -
staff as part of the project launch workshop; and (c) use of Bank's Standard Bidding
Documents. The Bank will monitor procurement activities, contract management and
record keeping during periodic supervision missions. The Bank procurement specialist
will not only conduct ex-post reviews but will also provide guidance and support to the
PIU/PCU in carrying out the procurement plan.
Prior Review
First two contracts for procurement of civil works, and first contract for procurement
of goods would be subject to prior review. Consulting contracts in excess of $100,000
for firms and $20,000 for individuals would be subject to prior review procedures.
The Bank will also review, regardless of value, terms of reference of all consultants.
All other contracts would be subject to ex-post review by the Bank on a random basis.
The first international and national shopping contracts will also be subject to World
Bank prior review.
The Bank would review the first batch of contracts awarded from the CGS. Any that do not
correspond to the eligible types established in the Operational Manual would also be subject to prior
review.
Procurement methods (Table A)
- 50 -
Procurement Methods (in US $'000)
ICB
NCB
Other
NBF
Total
IDA *
GEF**
financing
financing
Works
Environmental Pollution Control Program
Pilot (Biodigesters)
Sub-total
871.00
871.00
871.00
(779.81)
(779.81)
Equipment
Vehicles
13.35
Furniture
11.25
Computers
16.31
Communications Eq.
7.20
Sub-total
48.11
48.11
(40.89)
*
(40.89)
Consultants and Technical
Assistance
Sub-total
1,539.70
1,539.70
IDA
(812.93)
*
(812.93)
GEF
(726.77)
**
(726.77)
Reform of AKIS
Study for AKIS Ref.
Implementation of AKIS Reform
800.00
1,554.21
1,313.65
3,667.86
(640.00)
(1,325.74)
*
(1,965.74)
Project Operating Cost
(Recurrent Cost)
Under IDA*
1,538.56
1,538.56
(1,312.39)
*
(1,312.39)
Under GEF
97.63
97.63
(82.99)
**
(82.99)
Research and Extension Program -
Competitive Grant Scheme
Under IDA
3,630.61
3,630.61
(3,115.06)
*
(3,115.06)
Under GEF
835.00
835.00
(709.75)
**
(709.75)
Training and Public Awareness - GEF
183.00
183.00
(183.00)
(183.00)
PPF
Sub-total
293.01
293.01
(293.01)
TOTAL
12,704.48
(7,540.03)
(2,482.32)
IDA*
(7,540.03)
GEF**
(2,482.32)
NOTE:
National Competitive Bidding for contracts for works (biodigesters) estimated to cost <US $ 100,000 in aggregate of US $871,000
National Shopping for contracts for goods estimated to cost <US $ 50,000 in aggregate of US $48,000
Research and extension grant Agreements - procurement aill be based on the Competitive Grant Scheme selection proces (US $4.47 million)
Technical Assistance includes peer reviewer contracts, local and foreign specialists for adaptive research and extension, environmental
specialists, monitoring/evaluation specialists, AKS reform specialists. All TA specialists, will be contracted form private sector and thus,
not Government staff.
Training includes: training on biodigesters quality control, manure handling, environmentally friendlly agricultural practices
- 51 -
Reform of AKS will be defined only after the review of institutes have been completed (possibly in a second year of the project)
Recurrent cost includes administrative staff, drivers, office maintenance cost, consumables, utilities, translations and interpretations,
Prior review thresholds (Table B)
(US$ million equivalent) Section 1: Procurement Review
Goods and Civil
ICB
NCB
IS
NS
Minor
Other methods
Percentage of loan
Works
Works
amount subject to
prior review
Procurement
G > 0.100
W<0.500
n.a.
G<0.050
n.a.
n.a.
thresholds:
(US$0.871)
(US$0.048)
individual and
aggregate, in ()
Prior Review
All
First two
n.a.
First
n.a.
n.a.
1.5%
Consultants
QCBS
QBS
LCS
Qualifications
Individual
Sole Source
Procurement
>0.200
n.a.
n.a.
<0.100
<$0.050*
Only cons.
method thresholds
contracts
competitively
selected under
PHRD/PPF
Prior Review
All
n.a.
n.a.
All
TORs for
All
US$0.63 million
all and
or 8.5%
contracts
>0.020
Expost Review All
Explain briefly the ex-post review mechanism:
other procurement
All the remaining procurement packages will be subject to ex-post review. Supervision missions will include a
packages
procurement specialist as needed To assist the TM with ex-post reviews.
Section 2: Capacity of the Implementing Agency in Procurement and Technical Assistance requirements
The capacity of the PIU, which will with the PCU implement the project, has been assessed. Based on the analysis compiled in the Attachment
2 of the Assessment, the result is that Georgia is high risk country form the public procurement point of view. It has been determined that PIU
is fully staffed and well equipped, and does have experience in Bank's project, procurement procedures and practices. The following is
recommended to build PIU capacity to undertake procurement: i) staff will be provided with the additional training during the project launch
workshop and other training organized by the World Bank and other institutions form time to time; ii) training shall also include the preparation
of documents for each type of the procurement method proposed in the loan agreement. PIU/PCU will follow the World Bank Standard bidding
documents, procedures, Guidelines and any other agreed procedures.
Country Procurement Assessment Report or Country Procurement
Are the bidding documents for the procurement actions of the first
Strategy Paper status: N/A
year ready by negotiations
Yes No X
* except for PMU Manager and Head of CGS Secretariat
- 52 -
Section 3: Training, Information and Development on Procurement
Estimated date of
Estimated date of publication
Indicate if there is procurement
Domestic Preference for
Domestic Preference
Project Launch
of General Procurement Notice
subject to mandatory SPN in
Goods
for Works, if
Workshop
January 2000
Development Business
applicable
February 2000
Yes X
Yes No X
Yes No X
No
Retroactive financing
Advance procurement
Yes No X Explain:
Yes No X Explain:
Explain briefly the Procurement Monitoring System: Procurement implementation progress will be monitored through progress reports and
supervision missions. Each supervision mission will include a procurement specialist. She/he will be responsible for updating the
procurement plan, and conducting ex-post reviews. His/her findings will be included in the supervision reports for monitoring their
implementation.
Co-financing: Explain briefly the procurement arrangements under co-financing: Procurement for GEF co-financing activities will be
administered by the PIU following the Bank procedures.
Section 4: Procurement Staffing
Indicate name of Procurement Staff or Bank's staff part of Task Team responsible for the procurement in the Project:
Name: Snezana Mitrovic, Procurement Specialist, Ext. 32812
Explain briefly the expected role of the Field Office in procurement: A project officer in the Resident Mission would be responsible for
helping to supervise project implementation and would provide procurement support, in which she he will have received training.
- 53 -
Disbursement
Allocation of credit/grant proceeds (Table C)
Although the IDA Credit and GEF Grant will be implemented together - Allocation of Loan Proceeds
(Table C) - is presented twice, to clearly indicate the different categories for each source of financing. The
project will be implemented over a five year period, during which the total loan amount from both sources
of $10.02 million will be disbursed. This total does not include approximately US $500,000 utilized during
project preparation from a Project Preparation Facility. This amount will be refunded from the proposed
Irrigation and Drainage Rehabilitation Project. The proposed closing date for the project will be December
31, 2005. The format of the Project Management Reports (PMRs) for the project has been agreed with the
PCU and is enclosed as an annex to the PIP. The PCU will produce a complete set of PMRs for every
calendar quarter throughout the life of the project. The project will initially disburse under the
Association's traditional disbursement procedures, with the option of moving to the PMR-based
disbursement method at the mutual agreement of the Borrower and the Association. The Borrower and
Association will consider such a move on December 31, 2000 once the PCU has gained sufficient
experience in producing the PMRs and these PMRs have been judged to be reliable, particularly in respect
of their forecasting information.
IDA Credit
- 54 -
Expenditure Category
Amount in US$ million
Financing Percentage
Parts A, C, and D
1) IDA Competitive Grants for
2.75
80% of total grant award
Applied Research and Extension
2) Consultant Services and
100%
Training
a) under Parts A, C, and D of the
1.07
Project
b) for the detailed design of Part
B of the Project
0.10
3) Goods
0.03
100% of foreign
expenditures, 100% of local
expenditures (ex-factory
costs); 80% of local
expenditures for other items
procured locally
4) Incremental Operating Costs1
1.21
80%
Part B
5) Reform of Priority Institutions
2.04
To be determined
6) Unallocated - IDA
0.34
TOTAL
7.54
1 Incremental Operating Costs include: salaries of project management staff; office maintenance;
vehicle operation and maintenance; local travel; and public relations. This definition also pertains to
Incremental Operating Costs under the GEF (see below).
Table C: Allocation of Credit/Grant Proceeds
Expenditure Category
Amount in US$million
Financing Percentage
GEF Competitive Grants for
0.89
80% of total grant award
Dissemination of Pollution Reducing
Practices
- 55 -
Civil Works - GEF (Pilot
0.79
100% of foreign expenditures; 80% of
Environmental Pollution Control
local expenditures for other items
Program)
procured locally
Consultant Services and Training - GEF
0.63
100%
Incremental Operating Costs - GEF
0.08
80%
Unallocated - GEF
0.08
Total Project Costs
2.47
Total
2.47
Use of statements of expenditures (SOEs):
For both the IDA Credit and the GEF Grant, the following disbursements will be supported by full
documentation: (a) goods with a contract value of US$50,000 equivalent per contract or more; (b) services
with a contract value of US$100,000 or more for consulting firms, and US$20,000 or more for individual
consultants. All other disbursements will be made on the basis of State of Expenditures (SOEs) against
eligible expenditures. Supporting documentation for SOEs will be retained by the Borrower and made
available to the Bank during supervision.
Special account:
As noted elsewhere, the PCU for the Agriculture Development Project will serve this project
administratively for financial, procurement, and disbursement matters. The PCU will, however, open two
new Specials Account for this project, one for the IDA Credit and one for the GEF Grant, in a Georgian
commercial bank acceptable to IDA. The PCU will manage both of these Special Accounts. For the IDA
SA, the total authorized allocation will be US $750,000. At project start, the initial allocation to the SA
will be limited to US $300,000. When total disbursements from the Credit, plus outstanding commitments,
equal or exceed SDR 1,500,000 equivalent, the total authorized allocation will be made available. For the
GEF SA, the total authorized allocation will be US $250,000. At project start, the initial allocation to the
SA will be limited to US $125,000. When total disbursements from the Grant, plus outstanding
commitments, equal or exceed SDR 500,000 equivalent, the total authorized allocation will be made
available. Withdrawal applications for the replenishments of both SAs should be sent to the Bank on a
monthly basis, or when the balance of the SA is equal to about half of the initial deposit or the authorized
allocation, whichever comes first. The SAs will be audited annually by independent auditors and the audit
report submitted to the Bank for review and approval within six months of the end of the fiscal year.
Financial Management
The following is a time-bound borrower-agreed action plan to strengthen the PCU's project financial
management arrangements for all projects for whose financial management the PCU is responsible:
- 56 -
Action
Responsibility
Due date
Copper (existing computerized) accounting system
1.
Development of printing routines for detailed
GL
Under review
account transactions
GL
Not met
2.
Resolution of problem of unbalanced general
ledger
Financial and Operational Procedures Manual
5. Draft of manual for sections: flow of funds;
BS
Under review
accounting documents; budgeting and forecasting; and
financial reporting for the existing projects managed by
the PCU
BS
2/28/00
6. Draft of complete manual for existing projects
managed by the PCU
Project Management Reports (for existing projects)
1. Partial production of PMRs as at September 30,
BS
10/31/00
2000 for reports 1A, 1B, 1B1, 1B2, 1C and 1F
2. Full production of complete set of PMRs as at
BS
11/30/00
September 30, 2000 (including forecasting, output
monitoring and procurement information)
Fixed Asset Register
Production of fixed asset register spreadsheet together
TT
Under review
with reconciliation of the same with the general ledger
Copper accounting system
Employee Advances
1. Reconcile outstanding employee advances
TJ, GL
Under review
receivable per the cashier's spreadsheet system to
the Copper accounting general ledger system
CUDC
· Reach agreement with IFAD on the arrangements
IS
Under review
for the audit of the Credit Unions
- 57 -
Audit arrangements for existing projects managed by
PCU
NM
Under review
1.
Appoint auditors
NM
3/31/00
2.
Submit final audited financial statements
ARET project financial management arrangements
1. Revise the financial operation procedures of the
NM
Under review
CGS as described in the CGS Operational Manual.
2. Produce a cash flow forecast for the project with a
NM/RA
Under review
view to determining the required authorized
allocation for the Special Account.
3. Confirm financial management staffing requirement
NM
Under review
of the PCU and PMU and assess adequacy of budget
allocation.
NM/BS
03/31/00
4. Devise ARET-specific financial management
procedures and controls for PMU and PCU
BS
02/29/00
5. Revise Financial Operational and Procedures
NM
02/15/00
Manual
RG
04/10/00
6. Recruit project accountant for the ARET
7. IDA to visit PCU and confirm adequacy of project's
NM
02/25/00
financial management arrangements
RG
03/05/00
8. Present shortlist of auditors to IDA for No-objection
NM
03/25/00
9. IDA to confirm no-objection shortlist of project
GOG/IDA
12/31/00
auditors
10. Appoint auditors
11. Consider moving to PMR-based disbursements
New Accounting Software (for all projects)
5. Devise consultant TOR and budget for the process to
NM
Under review
select and implement a new accounting software
6. Recruit consultant
NM
12/31/99
7. Revise plan for the selection and implementation of
Consultant
1/31/00
the new software and revise budget accordingly
8. Evaluate system and software requirements and
Consultant
2/28/00
produce TOR for software
9. Evaluate software alternatives
Consultant
3/31/00
10. Start implementation of software
Consultant
5/1/00
11. Complete implementation of software
Consultant
5/31/00
Key:
BS
B. Sharashidze
GL
G. Lordkipanidze
GOG
Government of Georgia
IDA
International Development Association
IS
I. Shuker
RA
R. Asatiani
RG
R Ganguli
NM
N. Mosashvili
TJ
T. Jaiani
TT
T. Tsintsadze
- 58 -
Annex 7: Project Processing Schedule
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Project Schedule
Planned
Actual
Time taken to prepare the project (months)
8
8
First Bank mission (identification)
05/25/98
09/25/98
Appraisal mission departure
09/01/99
09/26/99
Negotiations
03/01/2000
Planned Date of Effectiveness
07/15/2000
Prepared by:
Ministry of Agriculture / Ministry of Environment / PIU
Preparation assistance:
PPF, PHRD funds
Bank staff who worked on the project included:
Name
Speciality
Iain Shuker
Program TL Financial and Economic Analysis
Jitendra Srivastava
Project TTL Competitive Grant Scheme/Agricultural Research and
Extension
Snezana Mitrovic
Procurement
Meeta Sehgal
Economic Development
David Bontempo
Project Costs
Ranjan Ganguli
Financial Management
Darejan Kapanadze
Project Operations
John Hayward
Quality Assurance
Sharifa Kalala
Team Assistant
Peer Reviewers:--
Mahesh Sharma
Environment
Derek Byerlee
Agricultural Research
- 59 -
Annex 8: Documents in the Project File*
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
A. Project Implementation Plan
1. Operating Manual for the CGS main text plus annexes prepared by Project Preparation Unit (PPU)
2. Organization and Operating Costs of CGS Secretariat - PPU
3. Implementation Plan for CGS - PPU
4. Operational Plan for Reform of Agricultural Research, Education and Extension System PPU/M.
Boyd, ISNAR
5. Draft Project Implementation Plan - PPU
6. Report on the Implementation Plan for Pilot Study on Agricultural Practices that Reduce Environmental
Pollution
B. Bank Staff Assessments
C. Other
1. Background Data on the Agriculture Sector prepared by PPU
2. Country Profile - prepared by ISNAR
3. Farming Structure and Development Constraints (Conclusion of Farm Surveys) - PPU
4. Impact of Land Reform on Farm Structure - PPU
5. Environmental Impact Assessment of Agricultural Practices Ramesh Kanwar, Consultant
6. Environmental Study PPU/Local Consultants
7. Improved Agricultural Practices to Reduce Pollution; The Biogas Initiative Keith Openshaw,
Consultant
8. Reform: Agricultural Research, Extension and Training prepared by Ministry of Agriculture and Food
9. "Conception Framework for a National Strategy for Reform of the Agricultural Research, Education and
Extension System" prepared by Ministry of Agriculture and Food, Georgian Academy of Agricultural
Sciences and Georgian State Agrarian University
*Including electronic files
- 60 -
Annex 9: Statement of Loans and Credits
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Difference between expected
and actual
Original Amount in US$ Millions
disbursementsa
Project ID
FY
Borrower
Purpose
IBRD
IDA
Cancel.
Undisb.
Orig
Frm Rev'd
P008415
1997 Georgia
AGRICULTURE DEVELOP.
0.00
15.00
0.00
4.48
-2.48
0.00
P055573
1998 Georgia
CULTURAL HERITAGE
0.00
4.49
0.00
3.27
1.39
0.00
P064094
1999 Georgia
ENERGY SECAC
0.00
25.00
0.00
12.17
8.61
0.00
P008416
1999 Georgia
ENTERPRISE REHABIL.
0.00
15.00
0.00
12.87
2.88
0.00
P008414
1996 Georgia
HEALTH
0.00
14.00
0.00
7.40
7.87
0.00
P050911
1999 Georgia
INTEG. COASTAL MGT
0.00
4.40
0.00
3.92
0.47
0.00
P057813
1999 Georgia
JUDICIAL REFORM
0.00
13.40
0.00
12.65
-0.68
0.00
P050910
1998 Georgia
MUNICIPAL DEV.
0.00
20.90
0.00
16.79
10.48
0.00
P008417
1995 Georgia
MUNICIPAL INFRA. REH
0.00
18.00
0.00
0.46
2.08
0.00
P035784
1997 Georgia
POWER REHAB.
0.00
52.30
0.00
2.43
2.52
0.00
P052153
1999 Georgia
SAC III
0.00
60.00
0.00
39.67
52.07
0.00
P039929
1998 Georgia
SOCIAL INVEST. FUND
0.00
20.00
0.00
14.24
6.72
0.00
P052154
1999 Georgia
STRUCT. REF. SUPPORT
0.00
16.50
0.00
15.53
0.82
0.00
P056514
1999 Georgia
TRNSPT MIN RESTRUCT.
0.00
2.30
0.00
2.22
2.03
0.00
Total:
0.00
281.29
0.00
148.10
94.78
0.00
- 61 -
GEORGIA
STATEMENT OF IFC's
Held and Disbursed Portfolio
31-Jul-1999
In Millions US Dollars
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan
Equity
Quasi
Partic
Loan
Equity
Quasi
Partic
1997
Georgia G&MW Co.
0.00
2.80
0.00
0.00
0.00
2.80
0.00
0.00
1999
Georgia M-F Bank
0.00
0.48
0.00
0.00
0.00
0.48
0.00
0.00
1998
Ksani
6.32
2.50
0.00
0.00
0.00
2.50
0.00
0.00
1998
TBC Bank
3.00
0.00
0.00
0.00
1.20
0.00
0.00
0.00
1999
TbilComBank
3.00
0.00
0.00
0.00
0.68
0.00
0.00
0.00
1999
ninotsminda
0.00
0.00
6.00
0.00
0.00
0.00
0.00
0.00
Total Portfolio:
12.32
5.78
6.00
0.00
1.88
5.78
0.00
0.00
Approvals Pending Commitment
FY Approval
Company
Loan
Equity
Quasi
Partic
1997
GGMW
0.00
0.00
0.00
0.00
2000
GGMW RI
0.00
0.00
181.70
0.00
1998
TBC Bank
0.00
0.00
1000.00
0.00
2000
TCW LA Fund
0.00
0.00
70000.00
0.00
2000
Telasi
30000.00
0.00
0.00
0.00
1998
Titan Vinyl
18500.00
3500.00
0.00
34020.00
Total Pending Commitment:
48500.00
3500.00
71181.70
34020.00
- 62 -
Annex 10: Country at a Glance
GEORGIA: AGRICULTURAL RESEARCH, EXTENSION AND TRAINING PROJECT
Europe &
Lower-
POVERTY and SOCIAL
Central
middle-
Georgia
Asia
income
Development diamond*
1998
Population, mid-year (millions)
5.4
473
908
Life expectancy
GNP per capita (Atlas method, US$)
930
2,190
1,710
GNP (Atlas method, US$ billions)
5.1
1,039
1,557
Average annual growth, 1992-98
Population (%)
-0.1
0.1
1.1
Labor force (%)
-0.1
0.6
1.5
GNP
Gross
per
primary
Most recent estimate (latest year available, 1992-98)
capita
enrollment
Poverty (% of population below national poverty line)
11
..
..
Urban population (% of total population)
60
68
58
Life expectancy at birth (years)
73
69
68
Infant mortality (per 1,000 live births)
17
23
38
Child malnutrition (% of children under 5)
..
..
..
Access to safe water
Access to safe water (% of population)
..
..
75
Illiteracy (% of population age 15+)
..
4
14
Gross primary enrollment (% of school-age population)
88
100
103
Georgia
Male
89
101
105
Lower-middle-income group
Female
88
99
100
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1977
1987
1997
1998
Economic ratios*
GDP (US$ billions)
..
..
5.2
5.1
Gross domestic investment/GDP
..
28.6
7.2
7.8
Trade
Exports of goods and services/GDP
..
41.6
12.6
13.8
Gross domestic savings/GDP
..
29.7
-6.3
-6.4
Gross national savings/GDP
..
..
1.5
1.6
Current account balance/GDP
..
..
-7.2
-7.9
Interest payments/GDP
..
..
0.4
0.2
Domestic
Investment
Total debt/GDP
..
..
29.4
32.8
Savings
Total debt service/exports
..
..
5.4
19.0
Present value of debt/GDP
..
..
..
..
Present value of debt/exports
..
..
..
..
Indebtedness
1977-87
1988-98
1997
1998
1999-03
(average annual growth)
GDP
3.5
-15.4
11.0
2.9
4.1
Georgia
GNP per capita
2.7
-14.3
16.7
2.7
4.0
Lower-middle-income group
Exports of goods and services
..
..
29.6
2.9
9.2
STRUCTURE of the ECONOMY
1977
1987
1997
1998
Growth rates of output and investment (%)
(% of GDP)
600
Agriculture
..
24.2
29.2
26.0
450
Industry
..
38.0
15.8
15.8
300
Manufacturing
..
28.0
15.9
15.6
150
Services
..
37.8
55.0
58.2
0
Private consumption
..
56.9
97.2
97.5
-150
93
94
95
96
97
98
General government consumption
..
13.4
9.1
8.9
GDI
GDP
Imports of goods and services
..
40.4
26.1
28.0
1977-87
1988-98
1997
1998
Growth rates of exports and imports (%)
(average annual growth)
Agriculture
..
..
3.0
-8.0
60
Industry
..
..
16.0
3.0
40
Manufacturing
..
..
5.0
1.0
Services
..
..
9.9
9.5
20
Private consumption
..
..
24.6
10.0
0
General government consumption
..
..
19.3
7.2
93
94
95
96
97
98
Gross domestic investment
..
..
41.4
10.3
-20
Imports of goods and services
..
..
52.9
14.7
Exports
Imports
Gross national product
3.5
-14.4
16.0
2.7
Note: 1998 data are preliminary estimates.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will
be incomplete.
- 63 -
Georgia
PRICES and GOVERNMENT FINANCE
1977
1987
1997
1998
Inflation (%)
Domestic prices
(% change)
20,000
Consumer prices
..
..
7.1
3.6
15,000
Implicit GDP deflator
1.4
2.3
7.0
3.4
10,000
Government finance
5,000
(% of GDP, includes current grants)
0
Current revenue
..
..
9.8
10.9
93
94
95
96
97
98
Current budget balance
..
..
0.0
0.0
GDP deflator
CPI
Overall surplus/deficit
..
..
-4.6
-4.3
TRADE
1977
1987
1997
1998
Export and import levels (US$ millions)
(US$ millions)
Total exports (fob)
..
..
494
473
1,200
Black metal
..
..
115
111
Tea
..
..
41
38
900
Manufactures
..
..
219
223
Total imports (cif)
..
..
1,052
1,164
600
Food
..
..
286
332
300
Fuel and energy
..
..
191
186
Capital goods
..
..
198
213
0
92
93
94
95
96
97
98
Export price index (1995=100)
..
..
90
93
Import price index (1995=100)
..
..
101
93
Exports
Imports
Terms of trade (1995=100)
..
..
89
100
BALANCE of PAYMENTS
1977
1987
1997
1998
Current account balance to GDP ratio (%)
(US$ millions)
Exports of goods and services
..
..
661
705
0
Imports of goods and services
..
..
1,368
1,437
92
93
94
95
96
97
98
Resource balance
..
..
-707
-732
-3
Net income
..
..
134
115
Net current transfers
..
..
196
211
-6
Current account balance
..
..
-376
-406
-9
Financing items (net)
..
..
315
315
Changes in net reserves
..
..
61
91
-12
Memo:
Reserves including gold (US$ millions)
..
..
..
..
Conversion rate (DEC, local/US$)
..
..
1.3
1.4
EXTERNAL DEBT and RESOURCE FLOWS
1977
1987
1997
1998
(US$ millions)
Composition of total debt, 1998 (US$ millions)
Total debt outstanding and disbursed
..
..
1,542
1,682
IBRD
..
..
0
0
F: 78
IDA
..
..
227
300
B: 300
Total debt service
..
..
46
171
IBRD
..
..
0
0
IDA
..
..
1
1
Composition of net resource flows
C: 302
Official grants
..
..
55
..
Official creditors
..
..
78
-73
Private creditors
..
..
0
-1
E: 999
Foreign direct investment
..
..
50
..
D: 3
Portfolio equity
..
..
0
..
World Bank program
A - IBRD
E - Bilateral
Commitments
..
..
174
26
B - IDA
D - Other multilateral
F - Private
Disbursements
..
..
64
73
C - IMF
G - Short-term
Principal repayments
..
..
0
0
Net flows
..
..
64
73
Interest payments
..
..
1
1
Net transfers
..
..
63
72
Development Economics
10/14/99
- 64 -
- 65 -
Additional
Annex No.: 11
GEORGIA: AGR. RESTRUCTURING EXTENSION & TRAINING PROJECT
ENVIRONMENTAL DATA SHEET FOR PROJECTS
in the IBRD/IDA Lending Program - DRAFT
Country:
Georgia
Project ID No.:
GE-PE-55068
Project Name:
Agricultural Research,
Total Project Cost:
12 Million
Extension and Education
Project
Appraisal Date:
September 1999
Board Date:
May-June 2000
Team Leader:
Mr. Jitendra P.
Srivastava
Managing Unit:
ECSSD
Sector:
Environmentally and
Socially Sustainable
Development
Est. date for receipt of
EA by Bank:
EA Category (A/B/C):
C
Date Assigned:
March 4, 1999
Date Sheet Prepared/Updated: 02/11/1999
(Please do not leave any items blank: use "N/A" or "To be developed" when appropriate)
Major Project Components: ( present description of project components)
The objective of this project is to increase sustainable agricultural production while reducing the pollution
of natural resources. The proposed project would work towards this goal by developing efficient,
cost-effective, sustainable and responsive (to the needs of farmers and agro-processors) agricultural
knowledge and information systems with the full participation of all stakeholders. The consequent
redirection in the technology-generation-and-transfer system would lead to the adoption of agricultural
practices that are both economically and environmentally sustainable. The project would have three
components as follows:
(i) Adaptive Research and Extension
(ii) Support for the reform of the agricultural research, extension and education system
(iii) Reducing Pollution from Agricultural Practices to the Black Sea.
Major Environmental Issues: (describes major environmental issues identified or suspected in project)
N/A
- 66 -
Other Environmental Issues: (describes environmental issues of lesser scope associated with project)
It is anticipated that since the project would contribute to a more sustainable and environmentally
responsible use of agricultural resources, the overall impacts of the project will be positive. Competitive
Grant Scheme-funded (CGS) activities under the environment component will be screened for their impact
on the environment to ensure that there are no negative impacts or that the proposal has incorporated
mitigating measures.
Efficient use of farm inputs has been identified as one of the priority areas of research and extension needs
of farmers and agro-processors. Some of the CGS funds would be directed to research and extension
contracts to address this concern of farmers and agro-processors and would over time contribute to a
reduction of nutrient runoff from the crop sector. In the livestock sector, the project is expected to support
interesting and innovative research and extension proposals relating to the use of organic wastes and
biodigesters.
Demand-driven productivity-oriented farming is expected to promote the efficient and effective use of
agriculture inputs. Research proposals which imply any adverse environmental effects will not be funded.
In fact, because of the nature of the work likely to be funded, there should be long term environmental,
welfare and health and safety benefits. The project will support environmentally-friendly and socially
sensitive agricultural practices.
Most of the CGS-funded extension contracts would address environmental issues in a positive manner and
would, in many instances, include improved agricultural practices, and more efficient use of organic farm
wastes. This would reduce the impact that agriculture is having on the environment and could help
address other problems such as soil erosion.
Proposed Actions: (describes actions proposed to mitigate environmental issues described in project)
None necessary
Justification/Rationale for Environmental Category: (reasons for env. category selected & explation of
any changes from initial classification)
The project is primarily designed to provide Technical Assistance. There is no anticipated negative
environmental impact resulting from project activities. However, all physical investments will be screened
in accordance with Georgia's environmental regulations to address any impacts that might arise.
Status of Category A Environmental Assessment: (presents EA start-up date, EA first draft, and current
status)
N/A
Remarks: (gives status of any other environmental studies, lists local groups and local NGOs consulted,
tells whether borrower has given permission to release EA, etc.
Signed by:_____________________________ Signed by:_______________________
Jitendra P. Srivastava, Team Leader Karin Shepardson
for Michele de Nevers, Sector Leader
December 15, 1998
- 67 -
Additional
Annex No.: 12
Approval of Environmental component by GEF Council
Type
Proponent
Country
Title
Response Date
Remarks
FP
WB
Georgia
Agricultural Research,
5/7/99
Approved by and
Extension and Training
subject to
additional
Council
comments
- 68 -
Additional
Annex No.: 13
GEF Incremental Cost Analysis
GEORGIA
Agricultural Research Extension and Training (ARET) Project
Overview
1.
The general objectives of the GEF Alternative are to protect the quality of water of the Black Sea
by reducing point and non-point sources of pollution and promote biogas as an alternative source of energy.
The project development objectives for the GEF component are to: (i) take steps to protect the quality of
water of the Black Sea from non-point sources of pollution by promoting improved agricultural practices,
such as the use of reduced tillage, crop diversification and rotation, terracing, contour farming and buffer
strips; (ii) improved manure handling, storage and application and better nutrient management systems; and
(iii) promote the use of bio-digesters as an alternate source of energy, thus reducing dependence on wood
for fuel and controlling carbon emissions into the atmosphere. GEF funding will help remove institutional,
financial and knowledge barriers, which currently act as disincentive to the adoption of environmentally
sustainable agricultural practices and clean energy sources by farmers and rural populations, respectively.
The GEF Alternative intends to achieve this at a total incremental cost of about US$2.5 million which will
be financed by GEF.
Context and Development Goals
2.
Georgia is a mountainous country, with a diversity in climate, soils, crop and livestock production
systems. According to 1997 statistics, the total land area of Georgia is 6.97 million hectares of which
about 3 million ha is agricultural land including 0.5 million ha under arable agriculture. In addition, a little
more than 3 million ha is under forest and woodland. Georgia is divided into two main watersheds --
western and eastern -- with almost all major rivers originating in the central mountain ridge, an area
marked by glaciers and numerous small mountain lakes. The average annual rainfall varies from 2000 to
4000 mm in the western watershed and 400 to 500 mm in the eastern watershed. The western watershed,
covering an area of nearly 3.27 million hectares results in average runoff of about 41 billion cubic meters
which drains into Black Sea. The eastern watershed covering an area of nearly 3.73 million ha. This
generates an average runoff of about 12.7 billion cubic meters which drains into Azerbaijan and then
eventually into the Caspian Sea.
3.
Agriculture is the main sector of Georgian economy, accounting for 28% of GDP and as much as
55% of employment in 1997. During Soviet times, agriculture and livestock production systems were
highly intensified in Georgia to meet the food and fiber needs of the Soviet republics. Agricultural
production systems were unsustainable absence of conservation tillage and crop rotation and
diversification, excessive use of and improper storage of mineral fertilizers and pesticides, etc. Such
farming practices caused soil erosion and the movement of fertilizers and pesticides to rivers, which
resulted in Black Sea pollution. Also, animal production systems, especially swine and poultry, were
highly industrialized (i.e. too many pigs and poultry at one concentrated location) resulting in large
amounts of manure draining into major water bodies that fed into the Black Sea. All these pollutants
affected the bio-diversity and attractiveness of the area. Tourism declined. Dissolved oxygen levels
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diminished, adversely affecting fishing stocks and predatory jellyfish became dominant. Thus, the
environment and the economy of littoral nations have suffered and will continue to do so, unless urgent
measures are taken.
4.
Since independence in 1991, the broad development goals of Georgia focus on public sector
restructuring; private sector development; social protection and poverty reduction and environmental
protection. The Government's overall development agenda attempts to focus on these issues consolidating
the stabilization recently achieved, strengthening the current economic recovery while protecting the
environment. The Government of Georgia has taken important steps toward improved environmental
management in recent years, including the "Environment Protection Law", the "Law on Environmental
Permits", and the "Law on State Ecological Expertise". A National Environment Action Plan (NEAP) is
under consideration for formal adoption by the Government. Recognizing the importance of protecting the
waters of the Black Sea, Georgia signed and ratified the Bucharest Convention for the Protection of the
Black Sea Against Pollution (1992) and signed the Odessa Ministerial Declaration (1993). Further, the
government of Georgia collaborated with other Black Sea coastal countries, and developed the Black Sea
Strategic Action Plan. Under this plan, Georgia agrees to reduce nutrient loads into the Black Sea by
adopting environmentally friendly agricultural practices and thus preserve the country's rich biological
diversity and natural resource base for future generations.
5.
In addition, Georgia ratified the Framework Convention on Climate Change in July 1994. Its
National Communication under the UN Framework Convention on Climate Change is currently being
prepared. The document will analyze the potential measures to reduce GHG emissions and to adapt to
climate change. Georgia is currently preparing an inventory of GHG emissions and is making vulnerability
assessments for the Black Sea coastal zone. Preliminary investigations into the agriculture sector reveal the
use of fertilizer as an activity of serious concern, and recommends improved land cultivation technologies,
including irrigation.
Baseline Scenario
6.
The baseline scenario includes the activities under this project but without GEF support. This may
encourage non-point source pollution from increased agricultural productivity in Georgia, contributing
significant and excessive loads of nutrients into the Black Sea that may lead to widespread eutrophication
and the ecological damage and economic losses associated with this process. The long-term implication
will be continued degradation of a globally significant international waterbody and its associated
bio-diversity in the shared coastal and marine environment of the Black Sea.
7.
Since transition, unsustainable timber harvesting has accelerated to meet fuel needs for farming
operations, heating, cooking and other domestic use. This has led to the accompanying consequences of
excessive carbon emissions into the atmosphere, deforestation, and loss of natural habitat, to name a few.
The Baseline Scenario does not include an effective mechanism to address this issue. Biogas could be a
cost-effective and environmentally friendly alternative to the current fuel mix. However, its widespread use
is hampered by a number of barriers, including behavioral adjustments (inadequate manure handling),
technological risks (performance of digesters in cold climates), lack of familiarity and lack of capacity for
service and maintenance.
8.
Costs. Total expenditures under the Baseline Scenario are estimated at US$9.93 million, including
US$1.72 from the Government of Georgia.
Global Environmental Objective
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9.
The global environmental objective of the project is to demonstrate the application of
environment-friendly on-farm agricultural practices to reduce nutrient loads entering the Black Sea and
help decrease GHG emissions over time. The dissemination and outreach features of the project will
contribute to its replicability. The role of the GEF in this project is to reduce farmers' perceived risks in
adopting environmentally friendly on-farm agricultural practices and remove barriers for their adoption. It
would demonstrate that farmers who adopt these measures are able to get the most beneficial use out of
their lands and minimize negative impacts on the environment while improving the health of the Black Sea
ecosystem. In turn, this should lead to a sustainable increase in economic activities such as fishing and
tourism and to a healthier and wealthier population. Finally, activities promoted under the GEF Alternative
will facilitate the sharing of experiences on the search for feasible and affordable solutions to deal with
non-point source pollution from agriculture to international water bodies.
10.
Scope. The GEF Alternative would provide the means (above and beyond the Baseline Scenario)
for meeting the proposed project's goals. Specifically, it will: (i) install and promote manure storage and
handling tanks in villages for efficient manure management; (ii) provide manure spreaders/applicators for
efficient and cost-effective use of manure on croplands, together with judicious use of mineral fertilizers;
(iii) conduct on-farm trials and demonstrations to promote the use of improved sustainable agricultural
practices, including reduced tillage, better chemical management systems, terracing, contour farming and
buffer strips for water quality benefits; (iv) establish a water quality monitoring program; and (v) promote
use of bio-digesters in the villages to reduce carbon emissions into the atmosphere and to provide biogas for
cooking and other domestic use.
11.
Costs. The total cost of the GEF Alternative is estimated at US$12.41 million detailed as follows:
(i) Component 1: Competitive Grant Schemes for adaptive research and improved agricultural practices --
US$5.60 million (GEF financing US$1.19); (ii) Component 2: Support for Reform of Agricultural
Research, Extension and Training; US$4.14 million (same as baseline); (iii) Component 3: Pilot
Environmental Pollution Control Program US$1.82 million (GEF financing -- US$1.29); and (iv) Project
Implementation Unit US$0.85 million.
Benefits
12. Domestic and International Benefits. The GEF Alternative would go beyond the Baseline Scenario
by allowing the project to promote environmentally friendly agricultural and rural practices that will reduce
non-point sources of pollution to the Black Sea as well as carbon emissions into the atmosphere which has
strong implications for global climate and human health. Given the country's precarious budgetary
situation, the government can ill-afford to spend scarce funds as financial incentives to farmers to reduce
nutrient loads into the Black Sea for regional and global gains, nor invest in promoting biogas as an
alternative source of clean energy source for global benefits. GEF funds will allow additional investments
in sustainable farm management practices and manure storage etc. in the selected project area of Khobi,
Chkhorotku and Tsalenjikha regions that have an impact on the Black Sea and provide willing farmers with
an alternate source of clean energy. Under the GEF Alternative, the promotion of improved sustainable
agricultural practices and a decrease of manure flushing into water systems will provide greater
environmental benefits and augment the demonstration potential of the exercise. It should also improve
farm profitability. It will promote a public awareness program to effectively explain the benefits of
improved environmental practices at farm level. It will also allow the development of a strategy for project
replication within Georgia and internationally.
13. The proposed project is a pilot activity in the western part of Georgia comprising the three districts of
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Khobi, Chkhorotku and Tsalenjikha. Table 1 gives an estimate of global benefits on the project area of
64,100 hectares assuming that, by the end of the project, all farmers in the area are taking advantage of the
benefits the project is demonstrating. This assumes that all arable land of 20,100 ha is included in
improved farming practices, that the 37,000 t. of dry manure from the equivalent of 75,600 cattle are
handled and stored efficiently and 200 biogas units are in operation.
Table 1: Estimated Global Benefits from the Project Initiatives.
Units: tonnes per year
Project initiative
Saving of pollution
N
P
CO2
Organic matter
Improved farming practices
500
50
-
Appropriate manure handling etc.
500
200
-
17,500
Biogas digesters and slurry use
(including above)
2,300
2,300
Total
1,000
250
2,300
17,500
Note: Through improved farming practices, there is an annual saving of dissolved nutrients flowing into the
Black Sea of 25 kg/ha N and 2.5 kg/ha P.
The animals on the project produce an estimated 37,000 dry tonnes of manure each year. This is
made up of 1,100 t. N, 400 t. P, 400 t. K and 200 t. of other minerals. The remaining 35,000 t. are
of biodegradable material. It is assumed that through improved handling, half of the manure is
prevented from being flushed into the river systems and hence into the Black Sea.
Source: Agricultural statistics collected by the Project Team. Romania Agricultural Pollution Control
project (PCD).
14. Over a 20 year time period, the estimated saving of pollution flowing into the Black Sea from the
project area is the equivalent of 20,000 t. of N, 5,000 t. of P and 350,000 t. of biodegradable matter. In
addition, the equivalent of 46,000 t of CO2 will not be vented into the atmosphere.
15. This is a demonstration project that will provide training to farmers in the whole of Georgia and
surrounding countries. If after 10 years, all the farmers in Western Georgia adopted similar practices, then
the estimated annual saving of pollutants flowing into the Black Sea are: N 10,750 t.; P 2,575 t.; and
biodegradable materials 175,000 t. There should be a saving of 580,000 t. CO2 equivalent, assuming that
an estimated 50,000 digesters 25% of the potential - have been installed. The possible global benefits
from this GEF initiative are considerable. In addition, the farmer will benefit from reduced input costs and
increased productivity.
Incremental Costs
16. The difference between the cost of the Baseline Scenario US$9.93 million and the cost of the GEF
Alternative US$12.41 million is US$2.48 million, which will be financed by GEF. This amount represents
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the incremental cost of achieving the global environmental benefits of reduced degradation of international
waters and carbon emissions into the atmosphere detailed above.
Incremental Cost Matrix
Component
Cost
US$
Domestic Benefit
Global Benefits
Category
Mill.
International Water
Climate
Change
1. Competitive
Baseline
4.41
Improved local capacity
Reduced nutrient loads
Grant Scheme
and knowledge to
into the Black Sea by
respond to the demands
making available
Adaptive research
of emerging private
environmentally
and Technology
farmers for technology
sustainable agricultural
dissemination
innovation.
technologies.
(IDA funding)
Improve
Agricultural
Practices to
Reduce Pollution -
On-farm Trials
and
Demonstration of
sustainable
practices, such as
reduced tillage,
manure handling
systems, etc (GEF
funding)
With GEF
5.60
Improved land-use
Reduction of nutrient
Increased
practices and water
loads into the Black Sea
carbon
quality.
to guard against
sequestration
Reduced soil erosion.
eutrophication and
Increased profitability of
protect natural habitat.
agriculture production.
Enhanced technology
Increased rural incomes.
transfer opportunities
between riparian
countries.
Incremental
1.19
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2. Reform of the
Baseline
4.14
Strengthened policy and
Reduced nutrient loads
Agricultural
structural framework for
by improving extension
Research,
agricultural research,
and research services.
Education and
education and extension.
Extension System
With GEF
4.14
Same as above.
Same as above.
Incremental
0.00
3a. Pilot
Baseline b
0.53
Energy provided by
Increased nutrient loads
Increased GHG
Environmental
wood and imported
into the Black Sea
emissions
Pollution Control
kerosene
Program -- Biogas
Units
With GEF
1.47
Improved environmental
Reduction of nutrient
Reduced GHG
(CC)c
protection & nutrient
loads in the Black Sea.
emissions.
management
Reduce BOD
Reduced pressure on
discharges.
forest & imported
Enhanced possibilities
kerosene
for technology transfer
Reduced health hazards
between riparian
countries.
Incremental
0.94
3b. Water Quality
Baseline
0.00
Monitoring
With GEF
0.35
Improved national and
Enhanced credibility of
(IW)d
regional monitoring
riparian countries on
capabilities
environmental benefits
of agricultural practices
to reduce nutrient loads.
Incremental
0.35
4. PIU - Project
Baseline
0.85
Increased capacity for
Implementation
project management:
Unit
project successfully
implemented
With GEF
0.85
Same as above
(IW)
(CC)
Incremental
0.00
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Total
Baseline
9.93
No project; very slow
improvements in nutrient
control and GHG
reductions.
With GEF
12.41
With project; rapid
Above benefits
Above benefits
improvement in nutrient
control and GHG
reductions.
Incremental
2.48
Notes:
a. Participant farmers in trial demonstration schemes will contribute about 15 percent of the investment
cost (in kind contribution) in the on-farm sustainable agricultural practice trials.
b. The option to be adopted without the project continues with the over cutting of trees.
c. Participant farmers will contribute about 10 % of the investment cost of the biogas plants
d. The project will cover 100 % of the investment cost in establishing a water quality monitoring system.
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Additional
Annex No.: 14
Comments of STAP Reviewers
GEORGIA
Agricultural Research Extension and Training (ARET) Project
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